Water Affairs & Forestry Department Strategic Plan & Budget 2008/09; Forestry hearings

Water and Sanitation

10 March 2008
Chairperson: Ms C September (ANC)
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Meeting Summary

The Department of Water Affairs and Forestry briefed the Committee on the Department's strategic plan and budget, beginning with an overview by the Acting Director-General, followed by presentations by the Deputy Directors-General for Administration, National Water Resources Infrastructure, and Regions. The Department thereafter briefed the Committee on the Forest Sector Transformation BEE Charter, the National Forest Action Plan and Industrial Policy.

In the discussion on whether there was a water crisis, the Department advised that South Africa had one of the highest availabilities of water per capita on the African continent: however, maintaining water quality was a matter of increasing concern.

According to the Department, the forestry sector faced major challenges to increase the local supply of round wood, and a sustainable supply of sawn timber resources as the country was facing a shortage of timber. The Charter attempted to address the challenge of poverty alleviation by new afforestation in KZN and in the Eastern Cape, and in improved yields from existing plantations and by making sure communal land would be supported. There would be extension support for new entrants to forestry and technical assistance to small growers. The expected warmer climate would lead to the increased prevalence of pests and disease. Mitigation measures would have to be examined.

The Department of Trade and Industry briefed the Committee on the Industrial Policy Action Plan for Forestry, Timber, Pulp and Paper. Their view was that afforestation would not meet the shortage of timber, at least in the short term.

Sawmilling South Africa, a new entity representing sawmill owners, gave a submission on the Department strategic plan and budget and briefed the Committee on the sawmilling industry's expectations. Forestry South Africa submission explained the strategic and priority issues facing the South African commercial forestry industry. According to Sawmilling South Africa the shortage of timber was a serious matter, but not a crisis. However, Forestry South Africa was convinced that there was a crisis in the forestry industry, which was facing the issues of industry growth and development; transformation and access to the industry; protection of forestry resources; forestry productivity and sustainability; and forestry profile and awareness. The industry had been stricken with a series of calamitous fires, and depredations from pests and disease. The Department needed to increase its support for pest and disease control; this was a national problem rather than one for the industry alone.
 
Committee members were disturbed that there was insufficient research in forestry and that there was a danger that there would be no forestry in South Africa within 30 years. Forestry South Africa suggestions were described as good. One member said that the briefing on DWAF’s strategy and budget reflected an attitude of “business as usual”.

Meeting report

DWAF Strategic Plan and Budget: Accounting Officer's Overview
Dr Shibu Rampedi, Acting Director-General, said that the Committee had asked the Department to reflect upon the achievements of the past five years; the challenges that the Department faced in terms of its capacity; its role in contributing to food security; the real purpose of the dams that the Department managed; the contribution of the Department to Land Reform; how much the Department had done towards the provision of basic water services; and the Department's plan for the 2010 world cup event. There were no major policy changes: the Department was more concerned with implementing the Acts previously enacted by Parliament. The Department recognised that it could not be relevant if it did not contribute to the reduction of poverty and the creation of jobs in South Africa.

The Department continued to work towards the growth of the economy including the creation of jobs. The Department recognised the importance of indigenous forests, and it was to be noted that some emphasis was placed on the establishment of the Forestry branch. Water reform was launched; water-pricing strategy was revised; with regard to water services the challenges were to ensure that people had access to water and sanitation. In terms of the bucket eradication programme, the Department had continued to support local government. The Department had initiated dam construction projects. In the next financial year the challenge was to implement the National Forestry’ Charter. With regard to the transfer of indigenous national forests, this would enable the Department to become the regulator as anticipated. Water services, an area that warranted more effort, offered to support to local government had capacity challenges. The Department was examining water security and the issue in terms of ground rehabilitation and repair of infrastructure.

Members would be aware that there was a water resources agency bill pending. was worth noting that the Department would receive substantial support from the European Union.

DWAF Administration: presentation
Mr Onesmus Ayaya, Chief Financial Officer, gave a briefing on DWAF’s finance and corporate services, and briefly examined the strategic review.

The Water Trading Entity, which was the Department's service delivery component, fell under finance. Some of its functions were shortly to be transferred away from the Department.

The overall strategy of the Department was supported by the main account which was financed by funds voted by Parliament.

The Department's underspending was in part explained by the transfer of some staff to municipalities under the transfer schemes to that particular sphere of government, and by the delayed start to certain capital projects because of delays in the completion of the environmental impact assessment. 

By way of a turnaround strategy, the Department sought to recover its expenditures on maintenance of water supply infrastructure from revenues.

The Auditor-General had observed that there was no clear separation of the Water Trading Entity from the rest of the Department. Without a legal mandate, the Water Trading Entity could not report directly to Parliament, but must report to the Director-General of the Department. in the light of the Auditor-General's observations, it was necessary to establish a clear separation of functions. This would lead to a distinct strategic plan for the Trading Entity. Performance management was receiving special attention, as was professional development in order to promote staff retention.

Discussion
Mr M Swathe (DA) asked if the corrective measures to which the Chief Financial Officer had referred had already been applied, in respect of 2007/2008, or were to be applied, with respect to 2008/2009.

Dr Rampedi responded that the Department could report that by the 30 April 2008 the Department would have completed its asset registers for moveable and immoveable items.

With regard to the next financial year, in order to deal with the issues of the Auditor-General's report, the Department had separated the business plan of the main account from that of the Trading Entity. Other issues in the Auditor-General's report would be addressed.

Mr J Combrick (ANC) wanted to know if the Department was going to receive an unqualified Auditor-General's report for the current financial year. If the Department received yet another qualified report, it would be the seventh consecutive such report, and if that were so, he really did not understand the purpose of having the meeting. Every year, he said, one proceeded in the same direction. He asked what the Chief Financial Officer was really doing to ensure that the finances of the Department were moving in such a direction as would ensure that the Department would in due course receive an unqualified report. Mr Combrick observed that in the Chief Financial Officer's own department, there were many vacant positions, as was the case in other branches. He asked, to the amusement of Members, how the Department could complete its work, and expend its allocated funds wisely, with so many vacancies.

Mr Ayaya said that a clean audit report could not be expected for March 2008, firstly, because of undocumented business practices; secondly, because of questions on revenue data: the top twenty customers who contributed 80% of the revenue had been contacted for verification purposes - it was expected that the Auditor-General would be satisfied on that particular point; thirdly, because of questions about the moveable assets that formed the core business; and fourthly, because the policies that were now being applied must have been in force for the year under review in order to qualify for a clean audit report. The Department had set itself a target of March 2009 for a clean audit report.

With regard to staff vacancies the Department was embarking on an aggressive recruitment campaign. Interviews for some top positions would be held at the end of March. Before June 2008 the lower level positions should have been filled.

The Chairperson observed many frowns from the Members. She noted that the Department had withheld performance staff bonuses because of the qualified audit, but vastly increased its use of consultants; she questioned the wisdom of doing so. in its last briefing to the Committee, the Department had promised to send the Committee a list of consultants.

Dr Rampedi said that it was correct to say that the Department had not paid any performance bonuses to senior staff since 2004/2005. The only bonuses that were paid were those to lower level staff. She could not at this stage give a categorical 'no' to the question of whether the Department would pay performance bonuses in future. This was left to the Minister's discretion. The concerns of the Committee had been noted.

Dr Rampedi said, on the use of consultants, that the Department was using contract workers whose labour was paid for under goods and services.

Mr J Arendse (ANC) said that before the Committee received the Auditor-General's report, the Department would have already received it. The reports were so clear that there was no room for misunderstanding. When the Department had received its report, would it not be possible for it to begin work immediately on taking steps to address the Auditor-General's concerns, and thereafter report to the Committee on progress to correcting the Auditor-General's concerns, without first coming to the Committee merely to express its intention to address those concerns.

Mr Arendse said that whereas the President had referred in his State of the Nation Address to business unusual, the Department's presentation to the meeting reflected an attitude of business as usual.

Mr Arendse said that it had been necessary to stop Mr Combrick from saying something that he might later regret.

Mr Arendse called for a proactive approach from the Department in addressing the Auditor-General's concerns. It would certainly be business unusual for the Department to receive an unqualified report.

Dr Rampedi said that the Department was committed to business unusual and would separate trading entity from the main account. The Department did face a challenge with the various systems in use, which were not always compatible with each other, but were transversal and under the control of the National Treasury.

Ms S Manana (ANC) asked with regard to the trading entity about the separation of powers. She asked if the necessary documentary procedures had been established for use by the separated trading account. 

Secondly, Ms Manana asked about the asset register. in view of the complaints from municipalities that transfer of relevant assets had not been effected, she asked how the Department could claim that the asset register would be completed by 30 April 2008.

The Chief Financial Officer replied that the Department had already prepared an action plan based on the briefing session with the Auditor-General's staff held in October 2007. The assets which had been transferred to the municipalities, had already been identified, but were not currently showed in the Department's books as assets.

Mr Combrick objected to the appointment of specialised consultants, instead of making sure that there were regular staff who were capable of performing the Department's work.

Dr Rampedi said with regard to the use of consultants, that the Committee should note that for construction projects the Department was using contract workers whose labour was billed under goods and services. If the Committee appreciated the asset base of the Department, the newly started projects and the number of people employed on them, and the fact that they were paid out of goods and services, it might then begin to explain why it might appear that the Department was using many consultants. It was a matter of precaution, because such individuals could not be employed permanently.

Ms Thandeka Mbassa, Deputy Director-General: Regions, said that National Treasury had been approached for additional funds for personnel. It was essential to make sure that services were delivered at local government level. Without the use of consultant many of those services would not have been delivered. 

Mr Combrick said that the maximum cost of water-borne lavatories had been set at R9 000. However, the Western Cape paid an average of R20 000 per unit, whereas the unit cost in the Eastern Cape varied between R2 500 and R37 000. He wanted to know what measures DWAF had in place to ensure that municipalities did not overspend on lavatories.  

Ms Mbassa said that the cost of lavatories was a matter of concern. However, the inflation rate within the construction industry was much higher than the national rate. However, what might appear as a high unit cost related to the cost of bulk infrastructure. If one were to build a lavatory in an area without water pipes and sewerage, then one would have to meet the cost of laying pipes and drains. It might even be necessary to raise funds to upgrade the local sewage treatment works.

The Chairperson thanked the Department for its responses. It would help, however, to give the Committee full details of its expenditure on consultants. She wanted the Department as far as possible to transfer skills to staff within the Department.

DWAF Water Resources presentation
Dr Cornelius Ruiters (DDG: Infrastructure) said that South Africa was rated as one of the driest countries of the world, and in recent years had suffered spells of below average rainfall. South Africa's dams were currently 80% full overall. Agriculture was the biggest user of water in South Africa. Domestic and industrial use was around 25% of the total usage. Forestry used the least amount of water. The Department had promulgated regulations for assistance in supply of water to poor farmers. The Water Allocation Reform process had been launched by the Minister in 2005. Education and awareness campaigns had been conducted. The South African National Water Resources Strategy had been launched. Working for Water, the campaign to remove invasive alien plants, had resulted in the creation of 12 000 jobs.

Water resource quality management was a major programme of the Department. This included the monitoring of ground water quality. There had been prosecutions for unlawful discharge of waste. A wide spectrum of dams were being inspected on a five year cycle. Agreements had been signed with Cuba, Russia, and China on water resources and water services. A water use efficiency information system had been introduced. A South African flood strategy was being developed in cooperation with the Department of Provincial and Local government. A study had been developed for the national hydrological network. The gathering of information was of critical importance. It was not possible to plan without data. River health programs were being conducted throughout South Africa.

Ms Mbassa said that this presentation focused on the water crisis. The technical terminology used by scientists did not always answer the concerns of ordinary citizens. The Department had information systems in place to know at any time the amount of water that was available in the country. The Department was worried that Eskom was using too much water in the power generation programme. The presentation addressed the overall management of the water resource. It spoke to the concern of citizens over the pollution of the rivers. This should be linked to the water services function, which was a responsibility of local government. If the latter could not manage their infrastructure, there would be a disastrous effect on water supplied. DWAF would henceforth be taking its water regulatory function more seriously. It was important to see the link between water resources and water services.

Discussion
The Chairperson asked where exactly the water crisis was. She asked the Department if it was trying to perform an Eskom stunt on the committee. She had read that the crisis was tantamount to 'an Eskom crisis'. If there really were a crisis, then the Committee would have to ask for funds from Parliament to perform an oversight function.

Mr Combrick asked that the Department was doing to pass on the information to the public If the media did not want of carry the information, then pay for advertisements in the media. Also he asked about Eskom's demand for water in the light of the electricity crisis.

Mr Swathe asked about the principle that the polluters must pay. There was a problem with municipalities that did not maintain their sewerage plants. He asked how many people DWAF had prosecuted. He asked in which provinces the water-wise programme had been launched. He asked for figures on the number of dams which still needed to be repaired.

Mr Arendse asked about dam refurbishment. He asked why it had taken so long to begin the project for raising the walls of the Clanwilliam dam. He asked what had happened to the money allocated for the project in the meantime. He asked how soon it would take to roll out the pilot project countrywide to find out the quality of water in any locality. He asked about the clearing of invasive alien plants. The rate of infestation far exceeded the rate of clearing. He wondered if the Department had considered the study and reconsidered the budget available for the clearing of invasive aliens. He asked, if a dam was found to be unsafe, who paid for repairs.

Dr Ruiters, responding to Mr Arendse and Mr Swathe, said there was much misunderstanding in the media. The Department had three categories of dams. Dam safety legislation was simple with regard to small dams. For larger dams there were internationally agreed norms, according to which in-house and independent safety inspections were carried out. The Department sought to ensure that all new dams were multi-purpose unlike the single-purpose dams of the apartheid era. The Clanwilliam Dam was to be raised. If there was a water crisis, it was more in terms of maintaining water quality than in terms of the absolute availability of water. There was considerable damage to water quality from discharges from mines. South Africa had one of the highest availabilities of water per capita on the continent of Africa.

The Chairperson reminded Members that the legislation permitting floor crossing was about to be repealed: there was no need for ANC Members to speak on behalf of the IFP.

Mr Swathe said that he had not heard mention by the Department of the need to protect the wetlands and to prevent farmers from contaminating water.

The Chairperson, given the talk of crisis, wanted to give the Members maximum opportunity to ask the Department questions whilst its officials were present: people's lives were at stake. It was important to ask whether there was a crisis or not.

Mr Sibuyana asked who was laying out the pipeline – the Department or a contractor; and from where the pipes were obtained. He said that it was important to give people a water supply that was separate from that used by animals.

Mr Arendse said that the maintenance of assets had been a major issue recently, and additional funds had been made available. The talk about crisis had been raised because of a backlog of maintenance. From the dams there was an extensive network of pipes; one had to ask who was responsible for maintaining them.

The Chairperson asked the Department to initiate an update to the Committee on a regular basis and not wait to be invited. It was important to remain a caring society and give assurances to the people. She urged the Department to carry out a study of bottled water. It was extremely irresponsible to exploit people's fears to promote bottled water for commercial reasons. It was important to include the Committee at the beginning of the Department's planning processes. She asked if the Department was considering any legislative changes with regard to water conservation. She asked if the present legislation was sufficient. She asked if the Department was under political pressure to deliver services, at the risk of compromising on water quality.

Ms Rampedi replied that the she would give a continuum response. The Department was doing its best, but there was a challenge with regard to the supply of water. There was a relationship between DWAF and Eskom, in so far as there was an agreement that Eskom should consult the Department with regard to its water supply needs. The Department was carrying out clearing, but the classification of alien species was not the responsibility of the Department.
the right to land was not linked to the right to water use. Wetlands were the mandate of Environmental Affairs and Tourism.

Ms Mbassa said that the Department had learned from the Eskom crisis, and, especially at local government level, was detecting areas of concerns. The water services function was concerned with ensuring that municipalities delivered at the local level. The Department had limited resources which affected its ability to attend to its functions. There were issues around the illegal use of water. There were many municipalities that were doing a good job, but there were others that were not performing their functions. The Department might have to take over some of their functions.

The Chairperson asked Ms Mbassa to condense her response, and her presentation.

Ms Mbassa said that in some areas more than 50% of water was illegally used; the Department would have to find creative ways to address the problem and ensure that the polluters paid. She said that the Department would have to restructure its strategy. All parties and role players would have to participate. She called for a comprehensive approach.

The Chairperson said that the Committee had been proactive and conducted such a comprehensive approach.

DWAF Water Services presentation
Ms Thandeka Mbassa (DDG: Regions) noted the directorate’s strategic objectives were to ensure basic water supply and sanitation; ensure effective delivery of water services; ensure effective water supply institutions effective transfers of DWAF water service schemes to appropriate institutions and effective operation and support water services in Africa.

Ms Mbassa drew attention to trends in water service delivery since 2005/2006. She had already made a statement on the Department's support for municipalities. The Department had widened the initiative to devise a comprehensive strategy for water services in South Africa as a whole, with particular reference to drinking water quality.

The Department admitted that it had perhaps not done enough to make the public aware of the need to maintain water quality and maintain water service infrastructure. in some cases it had exceeded its constitutional mandate in taking over from municipalities their water infrastructure functions when it had become apparent that that they had failed to maintain them.

The Department regarded water supply as a critical factor in ensuring economic growth.

Forest Sector BEE Charter; National Forest Action Plan; Industrial Policy presentation
Mr Tshepo Malatji, Chief Director: DWAF, said that his presentation comprised three parts: the Forest Sector Transformation BEE Charter; the National Forest Action Plan; and the Industrial Policy, framework and plan.

The presentation focused on progress and the challenges facing the sector, how the charter addressed those challenges, and how to ensure compliance with the charter and that everyone gained benefits from it. The Charter process was launched by the Minister on 18 April 2005; the steering committee composed sub-sector working groups such as growers, forestry contractors, and sawmillers, began its work began in June 2005.

Regional consultation meetings were held. Stakeholder input was sought. Six drafts of the charter were prepared between December 2005 and July 2006. A DWAF- DLA workshop on how to fast-track land reform issues for forestry areas was held January 2006. A user guide to the Charter was prepared. 13 stakeholder consultation meetings were held in the provinces until August 2007. Comments from the public consultations were incorporated in the charter. The Minister appointed the Charter chairperson in February 2008.

The Charter sought for the forest sector equity, sustainability and profitability for all its participants and to contribute to rural development. The sector faced challenges to increase the local supply of round wood, and a sustainable supply of sawn timber resources. It was known that the country was facing a shortage of timber. The charter attempted to address the challenge of poverty alleviation by new afforestation in KwaZulu-Natal and in the Eastern Cape, and in improved yields from existing plantation and by making sure communal land would be supported; there would be extension support for new entrants to forestry and technical assistance to small growers.

DWAF was aiming to achieve a high rate of black ownership. Most new afforestation would be on communal land, especially that identified within KwaZulu-Natal and Mpumalanga and within the Eastern Cape. 30% of restitution claims were on private forest land. Potential outcomes from the Charter included 30% black ownership within ten years. Also within ten years there would be 12% black women ownership within the sector. It was aimed to achieve afforestation of 100 000 hectares mostly within the Eastern Cape within the next ten years.

The National Forest Action Plan was completed by the end of 1997. It was a framework for action, not a rigid plan, designed to meet international obligations, while meeting provincial and local needs. It covered all aspects of forest development. Some of the targets had been unrealistic, especially allocations to other government departments. The plan emphasised participatory forest management. The DTI was mandated to from an industrial policy. 80% of forests within SA were certified compared with 51% of plantations worldwide. Water use was contentious. There was now a forestry branch within DWAF.

The Forestry Charter was to be the major instrument for forest development in the medium term. A key recommendation of a workshop was the dissemination of information to the sector with a focus on SMEs, raising the profile of forestry, and identification of priorities.

To date 407 000 fruit and 107 000 indigenous trees had been planted countrywide towards the target of 1 million trees nationally. It was aimed to ensure that water use licenses benefited emerging growers. Many communities still awaited settlement of their land claims so that they could receive the rentals to which they were entitled. DWAF was to negotiate with Land Affairs to ensure communities benefited more than they did in the past.

Trade and Industry Department on Industrial Policy Action Plan: Timber, Pulp & Paper
Mr Masizakhe Zimela, Chief Director: Resource Based Industries: DTI, said that the National Industrial Policy Framework (NIPF) was approved by Cabinet in January 2007 with a directive to develop an implementation plan. Its vision was diversification and a more labour-absorbing industrial path, intensification of SA's industrialisation and movement to a knowledge economy. His colleague from DWAF had overlapped some of the points in the NIPF. It was approved by Cabinet on the condition that the action plan was an ongoing process conducted with stakeholders. The forestry industry was identified as one of the four sectors identified for their potential for growth. Realisation of the importance of forests was approved by DTI in 2006.

DTI was in the process of developing a strategy for the furniture industry. One of the key issues was to lead the industry, a capital intensive one, to a higher level. One would expect to see more players in the pulp industry.

The current timber shortage would not be met by afforestation in the short term. They hoped that together with the CSIR to help communities provide value added activities. It was hoped that there would be increased participation of SMEs in the Eastern Cape. The DTI had realised that many furniture manufactures had closed down. The aim was to help prospective entrepreneurs start their own businesses and also to examine the issue of design rather than low value furniture. On competitiveness, industrial upgrades, and how DTI could help the industries to improve its equipment, DTI was working with other stakeholders in KwaZulu-Natal.

Discussion
Mr Swathe asked for more information about the pilot project for the furniture industry mentioned by Mr Zimela. He asked if DTI were focussing on the Eastern Cape alone, since there were furniture makers in Limpopo and Mpumalanga too. He asked if there was a plan to extend the pilot project to other provinces.

Mr Zimela said that DTI's focus was to do work on four different provinces, the Eastern Cape, KwaZulu-Natal, Mpumalanga and Limpopo. These were the provinces that the DTI thought had a significant sawmillling industry. However, the DTI's programme would not be limited to those provinces. The industrial upgrading policy applied to everyone in the industry. Mr Zimela said that the DTI had been approached by the municipality to support it. However, it was the DTI's policy to extend beyond that particular area. With regard to the furniture incubator, there was already a furniture incubator in KwaZulu-Natal, and one in George in the Southern Cape. It was also felt that there was potential to develop one in the Umtata area.

Mr Sibuyana asked if there were effective measures for fire protection. Much money was wasted in the forestry sector because of fire.

Ms S Maine (ANC) asked about the forestry presentation, slide number nine. She asked if any of the excellent items mentioned had been implemented, or if they were still at the planning stage. She asked also if a costing would be undertaken of the targets highlighted in the plan. A decrease in the forestry percentage was reflected in the forestry oversight regulation and governance sub-programmes. She asked if the Department could provide reasons for that decrease. The Committee wanted to see the Department on top of everything and not only at the stage of investigating problems so that the Committee could join hands with the Department in eradicating poverty. She asked if the Department could provide details of the progress towards achieving the targets set against the challenges noted for the 2006/2007 and 2007/2008 financial years. She asked how the Department was addressing the issue of climate change in relation to forestry.

With regard to Ms Maine's question on Slide 9, the Charter and the Industrial Policy both had the same basis. They identified the same sort of problems. The action programme was more or less the same. The workshop identified six challenges. The key to all this was timber. If one had timber, then one could have the factories. If one did not have timber, then the factories would not survive. Right now there was a timber shortage. There was an urgent need to plant 100 000 hectares at a minimum. The Charter was a growth and transformation strategy. Growing trees was not the end of the process. It was necessary to process them thereafter. It was necessary to link the growing of trees with the beneficiaries on the other side of the value chain. If one achieved targets for women and the rural poor, then one got bonus points. The communities must benefit from the sale of timber. People must be included along the value chain. People must be trained as well and funding must be available too. Sustainability all depended on the availability of trees. This meant issuing of licensing for trees and making land available. The DWAF was seeking to drive afforestation in the Eastern Cape. Community trusts would be established to build capacity for the youth and women. in the Eastern Cape the reason for the increasing high profile of forestry was that people were more aware of opportunities. The DWAF was playing a supporting role and was conducting the Working for Water campaign.

The Chairperson asked if the DTI was included in the Working For Water programme. The Committee was interested in the species that were cleared, and if local people could participate in the clearing process, since they were close to forestry. She asked DWAF if in the Forestry Charter there was accommodation for a sustainability programme to ensure that people stayed within the economy and the criteria that had been worked out to enable them to remain there. DWAF had correctly identified the Western Cape issue and the Southern Cape issue. Where the Government had transferred forests to the private sector, one had not observed any benefits thence to ordinary people. Government was no longer followed the mode of privatisation. She asked if the Department was still conducting any privatisation exercises.

Mr Zimela, with regard to the working forward process, said that there had been discussion as to the contribution that DTI could make in the value added projects. The Department did not yet have a definite programme to implement. With regard to the dominant players, especially the pulp industry, if one did not have security of supply, one would not have the confidence to enter. With regard to the vertical integration of the industry, it was hoped that there would be be more players in the industry.

Mr Molatji said, with regard to beneficiaries, a community in KwaZulu-Natal would receive R11 million from rentals from the privatisation process that was started in 2001. These were the accumulated rentals that had been accumulated in the coffers of the department for that specific community. There was a community next door to that one that would receive less but it would depend on the size of their plantation. in terms of those plantations that had been privatised communities would benefit mainly from the rentals. That is why DWAF was conducting a study of the consequences of the privatisation process that had taken place and how to mitigate those areas that DWAF thought should be improved. Four packages were now in private hands.  At least 10% of the shareholding in those companies had been reserved for black empowerment. It was necessary to find out through that study what that had meant to the communities on the ground. It would also help DWAF in its deliberations of how to take Komatiland forward. DWAF was in discussions with the Department of Public Enterprises. The discussions were ongoing. Komatiland needed to be looked at in a different manner from the category A plantations that had been restructured in the past especially from the viewpoint of communities on the ground.

Mr Molatji said that the privatisation process in relation to plantations was led by the Department of Public Enterprises. The DWAF and the Department of Land Affairs were engaging with the Department of Public Enterprises to see how best communities could benefit from Komatiland. However, DWAF still managed category B plantations. Those were the ones that DWAF intended to rehabilitate and transfer to communities that had some rights in terms of proximity to those plantations. This would also examine the potential benefits to women and youth. It was acknowledged that category B plantations were mostly poorly managed. There was a high temporarily unplanted rate. DWAF did not want to transfer these plantations to communities as a liability but to rehabilitate them first. Category B plantations were looked at as an exercise in empowerment of women and black people.

The Chairperson said that there were many questions arising from the departmental responses. However, there would be two more presentations, and there would be a further response from DWAF the next afternoon.

Ms T Carroll, Director: DWAF, said that although South Africa was a net carbon sink for carbon, South Africa's forestry base was small. Variability of climate and drought was a major problem. The warmer climate expected would also lead to the increased prevalence of pests and disease. Mitigation measures would have to be examined. Strategic use of forestry resources would include carbon sequestration, also using biomass for energy production, for example, using forestry waste to generate energy. It was also necessary to restore degraded forest areas to ensure that there were enough areas that could be used for carbon sequestration.

Sawmilling submission
Mr G Mokoena, Chairperson of Sawmilling South Africa, said that Sawmilling South Africa was a new organisation representing sawmill owners. It was conducting a big recruiting campaign and aimed to be a progressive organisation. It was a successor organisation to one that had been closed down after intense monitoring by the Competition Commission. There had been a lapse in representation of the sawmilling industry. Sawmillling had members who were members of the emerging sector, but sought more members from the Eastern Cape. All the smaller sawmills were to be exempted from subscription fees. Its objectives were to promote the sawmilling industry on behalf of big and small members. This organisation was looking at ways of promoting the identity of sawmillers.

It was only from this month that Sawmilling was undertaking road shows to promote emerging industries, and the participation of blacks in the saw milling industry; it supported education and training in the industry, and affiliating with other forestry and sawmills bodies, and with SITAs.

A major issue facing sawmills was the shortage of timber. It was not a crisis, but it was a serious matter. It was necessary to increase the planting of trees and examine water licences. Otherwise there was the threat of imports with a consequent loss of 20 000 jobs or more. The industry was also a contributor to the local building industry.

Komatiland Forestry was currently sitting before the Competition Tribunal. The feeling in the industry was that DWAF could intervene to a greater extent and give more leadership. There had been no leadership from the Department of Public Enterprises and from DWAF. From the industry point of view, there were challenges with dealing with the communities. The current structure of these communities did not encourage accountability nor did they encourage audit or monitoring. This led to fighting amongst communities and the breakup of communal structures and deterioration of assets.

Normally communities wanted to see results within five years. It was important from the industry's viewpoint that communities would benefit not only from the rentals of R11 million, but be able to use part of the land to generate income in the short term.

DWAF had made it clear that it was in the process of commercialising Komatiland. This was an asset owned by Government that could easily be managed by the previously disadvantaged communities. The regional offices of DWAF were working on a small scale because most of DWAF's functions were centralised. It was important that those offices could actually serve communities effectively. So far the Department had generally been positive.

Members of the industry were keen to work with the communities to ensure sufficient supply of timber, but in an environment of good corporate governance. Sawmillers by themselves were not going to solve the problem, so they would appreciate government support, together with that of NGOs and the parastatal sector.

Forestry South Africa submission on DWAF’s Strategic Plan and Budget
Mr Mike Edwards, Executive Director, Forestry South Africa, said that he was encouraged by the views of colleagues within DWAF and Sawmilling SA. He emphasised that there had been no collusion. It was important in the industry to work together. He was encouraged by what he had heard from the private sector. He emphasised here that he was talking about commercial forestry, because that was his mandate.
 
Forestry South Africa was a registered non-profit organisation in terms of the Non-Profit Organisations Act and was a voluntary membership organisation of growers of commercial timber throughout South Africa. Approximately 90% of all timber growers throughout South Africa were members. Their plantations covered close to 1.2 million hectares, including almost 20 000 emerging timber growers located primarily in the Eastern Cape, KwaZulu-Natal, Limpopo, and to a lesser extent Mpumalanga provinces. The current chairperson of Forestry South Africa was Mr Watson Nxumala, an emerging timber grower from KwaZulu-Natal.

The five most important issues facing the industry at present were: industry growth and development; transformation and access to the industry; protection of forestry resources; forestry productivity and sustainability; and forestry profile and awareness.

Mr Edwards believed, quite frankly, that there was a crisis in the forestry industry.

The annual demand for timber was 23 million cubic metres per annum, but the industry, on a sustainable basis, could produce only 20 million per annum. If forestry were resources were not increased, the deficit would become huge.

Good environmental management would result in a loss of 70 000 hectares to commercial forestry as a result of a new delineation of land for indigenous forest or for wetlands. A further 70 000 hectares could be lost because of the Government's exit strategy from its privatisation exercise. 70 000 hectares had been lost this year because of fires.

The shortly to be published Forest Sector Transformation Charter acknowledged that without growth, transformation would be much more difficult. So in order to achieve the desired level of transformation the Industry had to grow and develop. Industry and government were at one in supporting the Charter. That was not an issue.

Forestry was a rural-based activity which contributed directly to the well-being of rural economies and rural social upliftment. In many instances forestry took place in remote rural areas where other forms of economic activity were lacking. Growth in forestry would therefore contribute greatly of rural economic development as well as providing many vital products required by citizens on a daily basis, and contributing substantially to the national economy and contributing over R5 billion per annum to the country's foreign trade balance.

Growth was an imperative. Afforestation had to be increased. Some of the important factors contributing to the low rate of afforestation currently being experienced included the current afforestation licensing process; uncertainty and non-resolution of land claims; risks associated with forestry, for example, fires, pests and disease affecting financial returns; low profile, unawareness and misunderstanding about forestry and the low priority given to forestry by the government; the lack of appropriate financing packages, afforestation incentives and tax concessions to encourage development, the key negative factor being the long term nature of forestry – 10 to 30 years. It was difficult to facilitate the development of new growers when one had to invest for 30 years without any income being generated.

Forestry South Africa currently contributed R3.5 million or 18% of its budget to forest protection, with individual members spending 30 times this amount in their own right. These sums were huge but necessary. DWAF's support for pest and disease control was minimal in comparison and would have to be increased if the problem were to be addressed. Whilst Members of the Committee might consider these to be industry problems, the industry considered them to be national problems. Mr Edwards pleaded with the Committee for its support in requesting increased government support for combating pests and plant diseases.

Surely the power crisis was an opportunity to promote the planting of trees as a means of offsetting increased carbon emissions from the burning of fossil fuels to alleviate the power crisis.

Fire was a constant danger. in 2007 nearly 100 000 hectares of plantations in South Africa and Swaziland were ravaged by fire with losses of 3 million tons of timber with a product value of R4 billion. This was the worst fire season in the industry's 130 years of existence. Neither the country nor the industry could sustain these losses.

Forestry South Africa and the wider forestry industry had worked closely with DWAF over the years, and had formed close alliances on many issues that had been beneficial to the industry. The advent of the Forestry Transformation Charter had strengthened and cemented those alliances.

Discussion
Mr J Combrick (ANC) said that he was in shock: there was a great danger that there would be no forestry in South Africa within 30 years. Moreover there was insufficient research in forestry.

Mr Mokoena said that Sawmilling South Africa had drafted a business plan. Another element was to ensure recruitment of emerging growers. At the appropriate time this would be discussed with DWAF, which had received the entity well. Most of the work on the factory floor was done by women to the extent of 60% of the sawmill workforce. The entity could obtain more information. The entity had regional representatives would aim to align its plans with the Committee's and DWAF's plans.

The Chairperson assured Sawmilling South Africa and Forestry South Africa that they would receive copies of the Committee's report on the hearings after it had completed its deliberations. She emphasised that it was a people's Parliament and their input was welcome, not only to DWAF as the executive authority, but also to Parliament as the legislature. Parliament was there for anyone to access, not just for complaints, but also for suggestions. She assured DWAF that in the current year the Committee would be putting a good deal more emphasis on forestry.

The meeting was adjourned until the following day.

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