ATC191024: ENVIRO Budgetary Review and Recommendation Report (BRRR) of the Portfolio Committee on Environment, Forestry & Fisheries on the Annual Reports & Financial Statements of the Department of Environmental Affairs & its four entities, dated 23 October 2019
BUDGETARY REVIEW AND RECOMMENDATION REPORT (BRRR) OF THE PORTFOLIO COMMITTEE ON ENVIRONMENT, FORESTRY AND FISHERIES ON THE ANNUAL REPORTS AND FINANCIAL STATEMENTS OF THE DEPARTMENT OF ENVIRONMENTAL AFFAIRS AND ITS FOUR ENTITIES, NAMELY THE SOUTH AFRICAN NATIONAL PARKS (SANPARKS), ISIMANGALISO WETLAND PARK AUTHORITY (IWPA), SOUTH AFRICAN WEATHER SERVICE (SAWS) AND THE SOUTH AFRICAN NATIONAL BIODIVERSITY INSTITUTE (SANBI), AS WELL AS FORESTRY AND FISHERIES BRANCHES1 FOR THE 2018/19 FINANCIAL YEAR, DATED 23 OCTOBER 2019
The Portfolio Committee on Environment, Forestry and Fisheries (hereinafter the Committee), having considered the Annual Report of the Department of Environmental Affairs (DEA) for the year under review 2018/19, as well as the performance of the entities reporting under the Department of Environmental Affairs, namely: the South African National Parks (SANParks), iSimangaliso Wetland Park Authority (IWPA); South African Weather Service (SAWS); the South African National Biodiversity Institute (SANBI); and Forestry and Fisheries branches, and having further interacted with the Auditor-General of South Africa (AGSA), reports as follows:
- Mandate of Committee
The mandate of the Portfolio Committee is to enhance the principles of a developmental state through passing legislation and to facilitate public participation, monitoring and oversight functions over the legislative processes relating to the environment; confer with relevant governmental and civil society organs on the impact of environmental legislation and related matters; enhance and develop the capacity of committee members in the exercise of effective oversight over the Executive Authority. Thus, the core mandate of the Committee is to:
- Consider legislation referred to it;
- Conduct oversight of any organ of state and constitutional institutions falling within its portfolio;
- Consider international agreements; and
1 Forestry and Fisheries were moved from the former Department of Agriculture, Forestry and Fisheries (DAFF) to the former Department of Environmental Affairs to constitute the ‘new’ Department of Environment, Forestry and Fisheries in the Sixth Administration.
- Consider the budgets, strategic plans, annual performance plans and related performance reports and targets of the Department and entities falling within its portfolio.
2.PURPOSE OF THE BUDGETARY REVIEW AND RECOMMENDATION REPORT
The Money Bills Amendment Procedure and Related Matters Act (No. 9 of 2009) (the Money Bills Act) sets out the process that allows Parliament through its committees to make recommendations to the Minister of Finance to amend the budget of a national Department. In October of each year, portfolio committees must compile the Budgetary Review and Recommendation Reports (BRRRs) that assess service delivery performance given the available resources; evaluate the effective and efficient use and forward allocation of resources; and may make recommendations on forward use of resources.
The BRRR is based on a comprehensive review and analysis of the previous financial year’s performance, as well as performance to date. In addition to the Annual and Quarterly reports, the BRRR also sources documents for the Standing/Select Committees on Appropriations/Finance when they make recommendations to the Houses of Parliament on the Medium-Term Budget Policy Statement (MTPBS). The Budgetary Review and Recommendations Report of the Portfolio Committee is based on the information that it accessed through various engagements with the Department and its respective entities, namely, the SANParks; iSimangaliso; SAWS and SANBI; and Forestry and Fisheries branches as well as AGSA on their respective reports on the performance of the environmental portfolio. It is in this regard the Portfolio Committee reports as follows:
3.OVERVIEW OF THE AUDITOR-GENERAL’S AUDIT OUTCOME REPORT FOR 2017/18
The Auditor-General of South Africa (AGSA) has a constitutional mandate and, as the Supreme Audit Institution (SAI) of South Africa, established to strengthen our country’s democracy by enabling oversight, accountability and governance in the public sector through auditing of public governance and annual performance targets, inter alia. In so doing, the Auditor-General builds public confidence in the manner in which the Environmental Portfolio is governed and administered on behalf of the South African population.
In line with this mandate, the Auditor-General of South Africa provided an overview of the audit outcomes and other findings in respect of the Environmental Portfolio for the period
under review – the 2018/19 financial year. The AGSA reported that the quality of the annual performance reports submitted by DEA and entities for the audit had generally retrogressed, in terms of clean audits, quality of financial statements, quality of performance reports, findings on compliance with legislation and irregular expenditure, which rose from about R115 million in the 2017/18 financial year to R604 million, in the year under review (2018/19). These audit outcomes and findings are further described in the following sections, for the Department and the five respective entities:
3.1Department of Environmental Affairs
The Department progressed from receiving an adverse audit opinion to a qualified audit opinion, which reflects an improvement relative to the past two financial years (2017/18 & 2016/17) where the Department received adverse opinions. The basis for the qualified audit opinion included, among others:
- Goods and Services, where the Department did not provide sufficient appropriate audit evidence for the amounts disclosed for outsourced services, as the Department failed to retain transactional evidence for the utilisation of funds that were paid to implementing agents for expanded public works projects within the Environmental Programme. The internal controls that the Department implemented to record delivery of goods and services by implementing agents were not always substantiated by sufficiently reliable accounting records.
- Expenditure for capital assets, in which case the Department had not adequately separated capital expenditure and current expenditure as required by the Modified Cash Standards (MCS). The Department incorrectly accounted for the construction of immovable tangible capital assets mainly as goods and services (business and advisory services), instead of expenditure for capital assets (i.e., building and other infrastructure). This was attributed to inadequate internal controls within the Department to identify and recognise transactions containing capital asset purchases. As a result, disclosed expenditure for capital assets and payments for capital work-in-progress were understated by R78.646 million, whereas goods and services were overstated by the same amount.
- Immovable tangible capital assets, where the Department did not disclose immovable tangible capital assets as required by the MCS, which requires that additions to capital work-in-progress in the financial statement are transferred to the note for capital work-in- progress. The completed capital work-in-progress in the financial statement is transferred
to non-cash additions in the immovable tangible capital assets. Additionally, when completed assets are transferred out of the Department to third party recipients as per section 42 of the PFMA, the Department is required to disclose the disposal of those assets in a separate disclosure note to the financial statements. Contrary to the foregoing requirements, the Department did not make the required disclosures, including the descriptive narratives and a relevant age analysis as required by the reporting framework for the current and prior period.
- Additional basis for the Department’s qualification derived from irregular expenditure, as the AGSA was unable to determine whether the awards made to implementing agents were fair, transparent and equitable as required by section 38(1)(a)(iii) of the PFMA. The Department could not provide sufficient evidence of a rotational process followed when inviting suppliers from the prospective supplier listings or established panels of services providers. As a result, the AGSA was unable to determine the amount of the further adjustments that may be necessary to irregular expenditure stated at R72.832 million in the 2018/19 financial year relative to R77.584 million in 2017/18. Furthermore, the Department did not record and include the required information on irregular expenditure in the notes to the financial statements, as required by section 40(3)(i) of the PFMA. Expenditure was incurred in contravention of the supply chain management (SCM) requirements, resulting in an understatement of irregular expenditure by R241.064 million.
- Section 40(3)(b)(i) of the PFMA requires the Department to include particulars of fruitless and wasteful expenditure in the notes to the financial statements. However, the Department did not have adequate systems to maintain complete records of fruitless and wasteful expenditure due to lack of internal controls. Consequently, the Auditor-General was unable to determine whether any adjustment to fruitless and wasteful expenditure, stated at R3.152 million, was necessary.
- The Auditor-General was unable to determine whether any adjustment was necessary to the prepayments and advances expensed stated at R2.371 billion and R55.003 million, respectively, owing to inadequate record keeping by the Department. The Department further recognised items as accruals where it did not meet the recording requirements as prescribed by the MCS. In this regard, goods and services were not received by the Department before year-end. Invoices for some of these items were also received by the Department before the reporting date, which required the Department to record it as payables not recognised. As a result, the Auditor-General noted that the accruals were overstated by R56.404 million.
- Additional problems detected by the AGSA related to the commitments, which were overstated by R598.519 million, relative to R165.477 million in 2017/18. The Auditor- General noted that the corresponding figures for 31 March 2018 were restated as a result of errors in the financial statements of the Department, and so were those for the year ended, 31 March 2019. The Department materially underspent the vote by R693.561 million, which was largely attributed to the underspending of R662.280 million on the Environmental Programmes Programme. Additionally, material impairments to the extent of R129.253 million were estimated on loans advanced by the Green Fund to commercial projects.
- The Auditor-General further made material findings in respect of the usefulness and reliability of the selected programmes, which are Programme 5 (Biodiversity and Conservation) and Programme 6 (Environmental Programmes). The Auditor-General noted in Programme 5 that “the planned target of 77 per cent of state managed protected areas assessed with a METT score above 67 per cent was not specific (as an indicator) in clearly identifying the nature and required level of performance in terms of the size of the area that was planned to be assessed during the performance period”. Similarly, in Programme 6, the Auditor-General found that “The achievement for the planned target of 153 862 accredited training person days reported in the annual performance report was 108 487. However, the supporting evidence provided did not agree to the reported achievement and indicated an achievement of 146 146 accredited training person days”. The Auditor- General also indicated that “The reported achievement for the planned target of 2400 of small, medium and micro-sized enterprises (SMMEs) used reported in the annual performance report was 972. However, the supporting evidence provided did not agree to the reported achievement and indicated an achievement of 144”. This was attributed to the Department’s inconsistent application of the qualifying definition of an SMME (in line with the National Small Business Amendment Act, 2003 (Act No. 26 of 2003) when assessing qualifying suppliers).
3.2iSimangaliso Wetland Park Authority
For the 2018/19 financial year, the iSimangaliso Wetland Park Authority attained an unqualified audit opinion with emphasis of matter on uncertainty relating to future outcome of exceptional litigation, where the Wetland Park Authority was a defendant in a fire claim lawsuit. The entity has referred the claim to its legal counsel and hence the outcome could not be determined at the time of the audit. Material losses of R6.83 million were incurred as a result of disposal of assets. The Auditor-General made material finding in respect of the reliability of the selected programme: “Programme 1 – park operations Number of hectares burnt in the controlled burning programme”. Other matters relate to achievement of planned targets, where the Auditor-General was unable to obtain sufficient appropriate audit evidence for the reported under/over achievement for the targets; and adjustment of material misstatements due to material misstatements in the annual performance report submitted for auditing.
In terms of compliance with legislation, some of the bid documentation for procurement of commodities designated for local content and production, did not meet the stipulated the minimum threshold for local production and content as required by the 2017 Preferential Procurement Regulation 8(2). Additionally, effective and appropriate steps were not taken to prevent irregular expenditure amounting to R0.69 million as disclosed in the annual financial statements, as required by the PFMA. Finally, the Auditor-General pointed out internal control deficiencies in the entity, systems and controls were not designed in a manner that would prevent, detect and address risks that had an impact on performance reporting and compliance monitoring. Consequently, compliance was not reviewed and monitored and the annual performance report was not adequately reviewed to ensure compliance with applicable laws and regulations and that reported achievements are supported by appropriate evidence.
3.3South African National Biodiversity Institute (SANBI)
SANBI had not improved its audit outcome in the year under review, having obtained qualified audit opinion with findings in the past two financial years (2018/19 & 2017/18), respectively. The grounds for the qualified opinion in the year under review are as follows:
- Irregular expenditure, where the entity made payments in contravention of supply chain management (SCM) requirements, which were not included in the irregular expenditure disclosed as required by the PFMA. SANBI did not quantify the full extent of such irregular expenditure, and hence it was impracticable for the AGSA to determine the resultant
understatement of irregular expenditure of R17.437 million as disclosed in the financial statements.
- Revenue from exchange transactions, where the Auditor-General was unable to obtain sufficient appropriate audit evidence, such as sales receipts, admission fee invoices and contracts or agreements for revenue from exchange transactions. This was because adequate control processes were not in place to ensure that sufficient appropriate audit evidence is readily available for audit purposes. The AGSA was unable to determine whether any further adjustments were necessary relating to revenue from exchange transactions, stated at R183.007 million in the statement of financial performance, or whether any further adjustments were necessary to the financial statements arising from revenue from exchange transactions not brought to account or incorrectly stated.
- The AGSA further identified many other basis for the entity’s qualification (unclean audit), including payables from exchange transactions; material amendments made to the financial statements during the audit; expenditure management; procurement and contract management; usefulness of the selected programmes: programmes 2 and 4, and their respective indicators 2.2 and 4.1.3; and deficiencies in internal control, which to a larger extent, constrained the entity’s ability to recover from the previous year’s (2017/18) qualified audit opinion.
- For the 2018/19 financial year, SANParks audit outcomes remained the same as in the 2017/18 and 2016/17 financial years, having obtained unqualified audit opinion with findings relating to the restating of the corresponding figures for 31 March 2018 as a result of an error and reclassification in the financial statements of the entity at, and for the year ended 31 March 2019. The second basis for the findings relate to the achievement of planned targets for the year and explanations provided for the under/over achievement of a number of targets. There were also material misstatements in the annual performance report submitted to the Auditor-General for auditing purposes. Finally, effective and appropriate steps were not taken to prevent irregular expenditure of R199 374 000, as disclosed in the annual financial statements as per the PFMA requirement.
3.5South African Weather Service (SAWS)
The South African Weather Service regressed from an unqualified audit opinion with material findings in the 2017/18 financial year to a qualified audit opinion with findings in the year under review (2018/19). The basis for qualified opinion are as follows:
- Property, plant and equipment, where the entity did not correctly apply the accounting treatment for a change in accounting estimates to property, plant and equipment, as required by GRAP 3 (Accounting policies, estimates and errors). SAWS incorrectly effected accounting adjustments retrospectively instead of prospectively. Consequently, the property, plant and equipment, the depreciation charge as well as the accumulated surplus were misstated by the adjustments processed to the opening balances of the comparative figures presented. In addition, the entity did not record adjustments for all indications of impairment relating to property, plant and equipment in accordance with GRAP 21 (Impairment of non-cash-generating assets), thereby resulting in an overstatement of property, plant and equipment by R9 840 209 as disclosed in note 9 to the financial statements.
- Intangible assets, wherein the entity did not correctly apply the accounting treatment for a change in accounting estimates to the intangible assets, as required by GRAP 3 (Accounting policies, estimates and errors). The entity incorrectly effected accounting adjustments retrospectively instead of prospectively, leading to the misstatement of the intangible assets, amortisation charge as well as the accumulated surplus. Additionally, SAWS did not record adjustments for all indications of impairment relating to intangible assets, consistent with GRAP 21 (Impairment of noncash-generating assets), which resulted in an overstatement of intangible assets by R6 835 481 as disclosed in note 10 to the financial statements.
- SAWS did not disclose commitments in accordance with GRAP 1 (Presentation of financial statements). Processes to determine the remaining amounts on contractual commitments mainly did not take into account all contractual commitments entered into by SAWS during the year and did not adequately adjust for foreign denominated contracts. Consequently, the disclosure for commitments in note 31 to the financial statements, was understated by R6 449 633.
- There were material findings in respect of the usefulness and reliability of the selected strategic objectives, for example, “Strategic objective 1.2 – develop and market
meteorological and related products and services for specific economic sectors” and the planned target for the certain indicators were not specific in clearly identifying the nature and required level of performance.
4.OVERVIEW OF PERFORMANCE BY THE DEPARTMENT OF ENVIRONMENTAL AFFAIRS IN THE 2018/19 FINANCIAL YEAR
The Department is mandated to ensure the protection of the environment and conservation of natural resources, balanced with sustainable and climate change-resilient development and the equitable distribution of the benefits derived from natural resources. In its quest for better use and engagement of the natural environment, the Department is guided by its constitutional mandate, as contained in section 24 of the Constitution of the Republic of South Africa of 1996. Consequently, the Department fulfils its mandate through formulating, coordinating and monitoring the implementation of national environmental policies, programmes and legislation with the additional support from entities such as the iSimangaliso Wetland Park Authority, SANBI, SANParks and the SAWS.
The execution of the Department’s mandate, in the year under review (2018/19), is reflected in the performance of its seven departmental programmes outlined below, which operate within the context of the Department’s Strategic Outcome-oriented Goals, comprising:
- Environmental Economic Contribution Optimised;
- Environmental/ Ecological Integrity Safeguarded and Enhanced;
- Socially Transformed and Transitioned Communities:
- Global Agenda Influenced and Obligations Met; and
- A Capable and Efficient Department.
The Department of Environmental Affairs is directly responsible for delivering on, and coordinating the work and priorities outlined in Outcome 10 (Environmental Assets and Natural Resources that are Valued, Protected and Continually Enhanced) of the 12 Government Outcomes, and also make a contribution to other outcomes, mainly Outcome 4 (Decent Employment through Inclusive Economic Growth). The two outcome-oriented goals of the Department (1. Environmental assets conserved, valued, sustainably used, protected and continually enhanced; and 2. Enhanced socio-economic benefits and employment creation for the present and future generations from a healthy environment) are actually aligned to Outcome 10 and priorities. The progress made in achieving the two outcomes are summarised below.
The Outcome 10 Delivery Agreement addresses first, the key sub-outcome from the National Development Plan (NDP) Vision 2030 of ensuring that “Ecosystems are sustained and natural resources are used efficiently”. Consequently, the action to expand the conservation area estate by 0.59 per cent to 13.55 per cent of land under conservation (16 523 975 ha) was achieved;
87.95 per cent (5 632 293 ha) of state managed protected areas achieved a METT score above 67 per cent; and 10 business plans for biodiversity economy entrants were developed and the necessary funding secured. The Department further created 67 364 work opportunities, 1 878 (100%) of the reported wild fires incidents were suppressed and 2 116 kilometres of accessible coastline were cleaned.
PROGRAMME 1: ADMINISTRATION
The purpose of the Programme is to provide leadership, strategic, centralised administration, executive support, corporate services and facilitate effective cooperative governance, international relations and environmental education and awareness. The programme is made- up of six sub-programmes, including Management; Corporate Affairs; Environmental Advisory Services; Financial Management; Office Accommodation; and Environmental Sector Coordination. The Department’s performance in this Programme can be summarised as having successfully achieved 77 per cent (24/31) of its targets; and partially or substantially achieved 23 per cent (7/31). There was no target off mark.
PROGRAMME 2: LEGAL, AUTHORISATIONS, COMPLIANCE AND ENFORCEMENT
The purpose of this Legal, Authorisations and Compliance Enforcement (LACE) Programme is to promote the development and implementation of an enabling legal regime and licensing/authorisation system to ensure enforcement and compliance with environmental law. The Programme is made-up of six sub-programmes, comprising Legal, Authorisations and Compliance Management; Integrated Environmental Authorisations; Compliance Monitoring; Enforcement; Corporate Legal Support and Litigation; and Law Reform and Appeals. The Department achieved 67 per cent of its annual performance targets (8/12) and substantially achieved 33 per cent of the remaining targets (4/12). Significant achievements in this Programme relate to the issuing of 249 enforcement notices for non-compliance with environmental legislation and inspection of 173 environmental authorisations for compliance. In addition, 41 criminal cases were finalised and the dockets were handed over to the National Prosecuting Authority (NPA). Notwithstanding, the Department’s achievement under the LACE Programme in the 2018/19 financial year is below the 2017/18 financial year
achievement where the Department successfully met all its annual performance targets (12/12) in the LACE Programme.
PROGRAMME 3: OCEANS AND COASTS
The purpose of the Oceans and Coasts Programme is to promote, manage and provide strategic leadership on oceans and coastal conservation. The programme is made-up of five sub- programmes, including Oceans and Coasts Management; Integrated Coastal Management; Oceans and Coastal Research; Oceans Conservation; and Specialist Monitoring Services. The Department’s performance in this Programme can be summarised as having successfully met 77 per cent of the annual performance targets (17/22); partially achieved 14 per cent (3/22); and did not meet nine per cent of its targets (2/22). This achievement is below the previous year’s (2017/18), where the Department met 82 per cent (18/22) of the annual performance targets, with three of those having been exceeded; two targets were partially achieved; and another two targets were not met.
PROGRAMME 4: CLIMATE CHANGE AND AIR QUALITY
The purpose of the Programme is to improve air and atmospheric quality, lead and support, inform, monitor and report efficient and effective international, national and significant provincial and local responses to climate change. The programme is made-up of seven sub- programmes, which comprise Climate Change Management; Climate Change Mitigation; Climate Change Adaptation; Air Quality Management; South African Weather Service; International Climate Change Relations and Negotiation; and Climate Change Monitoring and Evaluation. It is in this regard that out of the Programme’s Annual Performance Plan of a total of 16 targets, 12 targets were achieved and four targets were partially met, translating into 75 per cent success and 25 per cent partial achievement. Significant achievements in this Programme relate to the gazetting of the National Climate Change Response Bill for public comments; development of the Final Low GHG Emissions Development Strategy; and the approval of 38 carbon budget Pollution Prevention Plans within timeframe. However, the Department achieved 13 targets, reflecting 77 per cent achievement; three were partially achieved and one target was missed by a significant margin, when the Department had a total of 17 annual targets in the 2017/18 financial year.
PROGRAMME 5: BIODIVERSITY AND CONSERVATION
The purpose of the Biodiversity and Conservation Programme is to ensure the regulation and management of all biodiversity, heritage and conservation matters in a manner that facilitates sustainable economic growth and development. The Programme consists of eight sub- programmes, including Biodiversity and Conservation Management; Biodiversity Planning and Management; Protected Areas Systems Management; iSimangaliso Wetland Park Authority; South African National Parks; South African National Biodiversity Institute; Biodiversity Monitoring and Evaluation; and Biodiversity Economy and Sustainable Use. The Department’s performance in this Programme shows that out of the 22 annual targets, 18 targets (18/22) were fully met, two targets (2/22) were partially met and missed, respectively. This translates into 82 per cent success, nine per cent partial achievement and nine per cent off target. This is better than the achievement in the 2017/18 financial year where the Department achieved 16 targets, reflecting 73 per cent success, whereas the remaining six annual targets were partially achieved.
PROGRAMME 6: ENVIRONMENTAL PROGRAMMES
The purpose of the Environmental Programmes Programme is to implementation of expanded public works and green economy projects in the environmental sector. The programme is made-up of five sub-programmes, consisting of Environmental Protection and Infrastructure Programme; Working for Water and Working on Fire; Green Fund; Environmental Programmes Management; and Information Management and Sector Coordination. It suffices to state that of this Programme’s 16 annual performance targets, six (6/16) were achieved (38 per cent), seven targets (7/16) were partially achieved (44 per cent) and three (3/16) annual performance targets were not met (18 per cent). This is a poor performance relative to the 2017/18 financial year where the Environmental Programmes had a total of 18 annual performance targets, of which 15 were achieved, reflecting 83 per cent success rate, whereas the three remaining targets, which were partially achieved, made up 17 per cent.
PROGRAMME 7: CHEMICALS AND WASTE MANAGEMENT
The purpose of the Chemicals and Waste Management Programme is to manage and ensure that chemicals and waste management policies and legislation are implemented and enforced in compliance with chemicals and waste management authorisations, directives and agreements. The Programme is made-up of five sub-programmes, which include Chemicals and Waste Management; Hazardous Waste Management and Licensing; General Waste and
Municipal Support; Chemicals and Waste Policy, Evaluation and Monitoring; and Chemicals Management. The Annual Performance Plan of this Programme for the 2018/19 financial year covered 15 annual targets, of which a total of nine were achieved (60 per cent), five targets (5/15) were partially achieved (33 per cent) and a target (1/15) was not met (7 per cent).
FISHERIES (MARINE LIVING RESOURCES FUND)
The Fisheries Management Branch has an entity that carries out most activities called the Marine Living Resources Fund (MLRF). The Fisheries Management function is a national competency, except for some aquaculture functions. Marine Living Resources Act (MLRA), No. 18 of 1998 establishes the MLRF that, in terms of the Public Finance Management Act No. 1 of 1999, is a Schedule 3A Public Entity. The MLRF is the primary source of funding for the operational activities of the Fisheries Management Branch (the Branch) of the Department. The MLRF generates the other income from levies on fish products, licence fees and permits, fines, sales of confiscations, and harbour fees. In terms of section 10(3) of the MLRA, the Director-General of the Department administers the MLRF in consultation with the Minister. The staff of the Fisheries Branch, in partnership with other stakeholders in the fishing industry, execute the functions of the MLRF.
The Fisheries Branch and the MLRF accounted for all the seventeen targets on the 2018/19 Annual Performance Plans in the annual reports. The Branch fully achieved 52.9 per cent (9 out of 17) of the set targets and, in some instances, exceeded goals. The decline is 5.40 per cent decline from the 58.3 per cent achieved in the 2017/18 financial year. The achievement was
72.7 per cent in the 2016/17 fiscal year. The fully met or exceeded targets include the supported Operations Phakisa projects; finalising the FRAP 2015/16 appeals; development of fish stock recovery plans; fisheries inspections and joint operations under Operation Phakisa. Since the management of patrol and research was under the South African Maritime Safety Authority, the vessels have been operational resulting in the Monitoring, Control and Surveillance function consistently exceeding its set targets. The availability of small crafts, favourable weather conditions and fishing activities are responsible for the sustained achievement of law enforcement targets.
The targets not achieved include creation of jobs under the Working for Fisheries Programme, finalisation of the Aquaculture Development Bill, and the fishing rights allocation to the abalone, lobster and small-scale fisheries. The main reasons for not achieving the targets is due to poor contract management, tabling a Bill towards the end of the Parliamentary term and general administrative challenges.
The Forestry Branch derives its core mandate from the Conservation of Agricultural Resources Act (CARA) No. 43 of 1983, National Veld and Forest Fire Act No. 101 of 1998, and the National Forests Act (NFA) No. 84 of 1998. Through CARA, the Department promotes the conservation of the soil, water sources and vegetation and the combating of weeds and invasive plants. The NFA promotes the sustainable management, development and transformation of the sector for the benefit of all. The mandate excludes some aspects of indigenous forests. The Forestry Branch executes the forestry management and development function with internal capacity, short-term contracts and through its partners such as the Forestry Charter Council and the South African Forestry Company Limited, a State-Owned Company (SAFCOL). The Veld and Forest Fire Act is a concurrent and local government function, and pertains to combating fires on land, forests and mountains. The Department directly manages Category B and C plantations (mostly land reform plantations), and indirectly contracted Category A plantations through lease agreements to four private forestry companies and the SAFCOL.
The Forestry Branch committed to the achievement of ten targets as set out in the 2018/19 Annual Performance Plan. The Branch fully achieved 80 per cent (8 out of 10) of the set targets and, in some instances, passed targets. This is a slight increase of 2.2 per cent from 77.8 per cent achieved in the 2017/18 financial year. The achieved targets include revitalisation of the Vaalharts Irrigation Scheme, rehabilitation of indigenous forests and agricultural land, draft reports. The missed targets are due for implementation in the 2019/20 financial year.
5.OVERVIEW OF PERFORMANCE BY THE DEPARTMENTAL ENTITIES
- iSimangaliso Wetland Park Authority
The iSimangaliso Wetland Park Authority in KwaZulu-Natal was established in terms of the World Heritage Convention Act (Act No 49 of 1999), with the mandate to ensure that effective and active measures were taken in the Park for the protection and conservation of World Heritage Convention values; promote empowerment of historically disadvantaged communities living adjacent to the Park; promote, manage, oversee, market and facilitate optimal tourism and related development in the Park; and encourage, sustain, invest and contribute to job creation. Covering a 3 280-square kilometres area, iSimangaliso is the third largest park in South Africa and the first listed World Heritage Site in South Africa in 1999.
For the 2018/19 financial year, the iSimangaliso Wetland Park Authority had a total of 35 performance targets, of which the entity met 27 of its targets, while four targets each were partially or substantially met and off target. This reflects about 77 per cent success against predetermined objectives for the 2018/19 financial year.
5.2South African National Biodiversity Institute (SANBI)
SANBI was established in September 2004, in terms of the National Environmental Management: Biodiversity Act (Act No. 10 of 2004). The mandate of the Institute is to monitor and report regularly on the status of South Africa’s biodiversity, which includes all listed threatened or protected species, ecosystems and invasive species; and the impact of any genetically modified organisms that have been released into the environment. The Institute is also mandated to act as an advisory and consultative body on matters relating to organs of State and other biodiversity stakeholders; coordinate and promote the taxonomy of South Africa’s biodiversity; manage, control and maintain all national botanical gardens, herbaria and collections of dead animals that may exist; and advise the Minister of Environmental Affairs on any matter regulated in terms of the Act, and any international agreements affecting biodiversity that are binding on South Africa.
In the year under review (2018/19), SANBI had 42 planned targets of which the Institute achieved 37 and partially achieved four and one target was off target. This translates into the total achievement percentage of 88 per cent, 9.6 per cent partial achievement and 2.4 per cent non-achievement in the current reporting period.
5.3South African National Parks’ Mandate
SANParks’ mandate is derived from the National Environmental Management: Protected Areas Act (Act No. 57 of 2003), which is to conserve, protect, control and manage national parks and other defined protected areas and biological diversity. SANParks is a Schedule 3A Entity, in terms of the PFMA. Thus, the mandate of SANParks is to develop, expand, manage and promote a system of sustainable national parks that represents biodiversity and heritage assets, through innovation and best practice for the just and equitable benefit of current and future generations. It is in this context that for the 2018/19 financial year, SANParks adopted four outcome-orientated goals to guide its MTSF Strategic Plan. These include:
- Sustainable Conservation Asset;
- Diverse and Responsible Tourism;
- Radical (equitable& fair) Socio-Economic Transformation; and
- Effective Resource Utilisation and Good Governance.
These four outcome-orientated goals were further broken down into 13 strategic objectives, which gave rise to the entity’s 65 targets contained in its annual performance plan in the year under review (2018/19). SANParks met 48 of its targets out of 65, with some of those 48 being exceedances; six targets were partially or substantially achieved; and 11 targets were not met. This translates into 74 per cent achievement, nine per cent partially achieved and in 17 per cent unachieved. The details of SANParks performance against predetermined objectives for the 2018/19 financial year are contained in the entity’s annual report for the year under review, which is better than its performance in the previous financial year (2017/18) where SANParks overall achieved 72 per cent of its goals, with 11 per cent being work in progress and 17 per cent being off target.
5.4South African Weather Service (SAWS)
The mandate of the South African Weather Service (SAWS) was established in terms of the South African Weather Service Act (Act No. 8 of 2001), which is to provide two distinct services, i.e., the public good service, which is funded by government and commercial services where the user pays principle applies. This entails maintaining, extending and improving the quality of meteorological services; providing risk information, which is essential for minimising the impact of disasters; collecting meteorological data over oceans; and fulfilling government’s international obligations under the World Meteorological Organisation and the International Civil Aviation Organisation.
For the period under review (2018/19), SAWS achieved 23 of its 33 targets; substantially achieved eight targets; and did not meet two of its planned targets. Overall, SAWS achieved a total performance percentage of 70, substantially achieved 24 per cent and did not achieve six per cent, respectively, in the following strategic objectives: provision of products and services; capability and capacity development; engage stakeholders; research and knowledge/intelligence creation; and growth and sustainability.
Following the Committee’s interaction with the AGSA, Department of Environmental Affairs as well as the four departmental entities as well as the Fisheries (MLRF) and the Forestry
Function on their annual reports, financial statements and the audit outcomes in the period under review (2018/19 financial year) as well as engagements with their respective quarterly reports for the current year, the Committee made the following observations:
6.1Auditor-General of South Africa’s findings
The Committee welcomed the audit report and findings by the Auditor-General for the former Department of Environmental Affairs and the Forestry and Fisheries branches of the former Department of Agriculture, Forestry and Fisheries for the 2018/19 financial year and noted the following:
- The Committee noted with concern that the Office of the Auditor-General could not recommend disciplinary actions against Accounting Officers and Authorities of government departments and entities responsible for qualified audits and findings, some of which appear as deliberate actions to breach, for instance, supply chain and other legislation. Notwithstanding, the Committee was pleased with the expanded mandate of the Auditor-General to prevent the abuse of limited public resources that should be used for the greatest public good;
- The Committee noted with concern the poor audit outcome in the majority of the environmental portfolio, raising questions about the apparent lack of leadership, especially the role of Risk Management Committee of Boards of entities, Audit Committees, Chief Executive Officers and Supply Chain Management when non-compliance incidents were taking place; and
- The Committee noted the instability created as a result of unfilled critical vacancies as a possible factor that underpinned the suboptimal audit outcome of the environmental portfolio.
6.2Department of Environmental Affairs
- The Department had been one of those well-functioning government departments for a very long time. However, it seems as though the Department has not fully recovered from the Modified Cash Standard (MCS) departure exemptions that it received since 2013/14. The exemption required adjustment of the Department’s method in accounting for transactions with implementing agents as capital assets and goods and services, but more significantly, a change of internal controls that should apply to EPWP projects, for which the Department had been qualified in the past three financial years. It is of concern that the Department’s challenges in terms of obtaining clean audit appeared to have increased;
- The Committee noted with concern that Department received a qualified audit opinion with findings in the 2018/19 financial year and that the overall portfolio has regressed receiving three modified opinions compared to two in the 2017/18 financial year;
- The Department and its entities did not comply with the PFMA and supply chain management legislation and that 100 per cent of the AGSA’s recommendations were not implemented;
- The Committee noted the irregular expenditure, flouting of supply chain management and double payment of invoices and regarded them as deliberate actions on the part of the Department and concerned entities;
- The Committee is concerned that the Department has for the third consecutive financial year received a qualified audit opinion with findings, which the Committee considers unacceptable, considering the amount of effort spent on bringing the Department on board through a series of engagements in Parliament to overcome this challenge;
- The Committee noted contradiction in the Department’s presentation, as they indicated that only one vacancy was not filled, whereas the AGSA made a finding on the backlog of vacancies in the Department; and
- The modified cash standard is an accounting framework that public sector departments have to comply with, including the Department in all material aspects as part of their daily accounting routine.
6.3South African National Parks
- The Committee was pleased with the concerted effort that SANParks had made in obtaining an unqualified audit opinion with findings;
- The Committee noted the reduction in visitor numbers to national parks and the factors driving it;
- Poaching continues to pose a huge challenge to South Africa’s conservation efforts in protected areas;
- The Committee appreciated SANParks’ efforts in introducing climate change mitigation and adaption measures in national parks, especially in the Kruger National Park to reduce the consumption of fossil fuel-generated energy as well as undertaking clearings of invasive plants to allow recovery of natural vegetation;
- The Committee noted the 39.6 per cent achievement on women in the establishment; and
- The Committee noted with concern that SANParks did not achieve the target of implementing the Wildlife Utilisation Strategy, and hence the sector remained largely untransformed.
6.4iSimangaliso Wetland Park Authority
- The Committee appreciated the iSimangaliso Wetland Park Authority’s achievement of an
unqualified audit opinion, though with findings;
- The Committee is concerned about the material misstatements reported by the AGSA that should not have occurred in iSimangaliso that has an established track record of clean audit reports;
- The Committee is concerned about the late transfers by the Department of Environmental Affairs to the Wetland Park Authority, which hampered the timeous running of Park operations; and
- There were internal control deficiencies in the entity, as systems and controls were not designed in a manner that would prevent, detect and address risks that had an impact on performance reporting and compliance monitoring. As a result, compliance was not reviewed and monitored and the annual performance report was not adequately reviewed to ensure compliance with applicable laws and regulations and that reported achievements are supported by appropriate evidence.
- The Committee noted with concern that the entity received a qualified audit opinion for the period under review for the second consecutive time after nine years of obtaining a clean audit; and
- The Committee is concerned about the declining number of visitors entering the National Zoological Gardens in Pretoria due to security concerns as well as due to the poor state of the infrastructure of the National Zoological Gardens.
- The Committee noted with concern the protracted suspension and disciplinary action against the Chief Executive Officer despite the timelines prescribed by the South African Weather Service Amendment Act No 48 of 2013 for managing such cases; and
- The Committee was disturbed by SAWS’ regression that led to qualified audit opinion with many issues, thereby raising serious concerns about the role of the SAWS Board in stabilising this uniquely vital entity of our country.
- The Committee noted that the Auditor-General (AG) issued the MLRF with a disclaimer audit opinion for the 2018/19 financial year. This opinion followed a qualified audit report with matters of emphasis with findings for the 2017/18 fiscal year. The audit outcome indicated a further regression and lapse in addressing the significant issues that were raised by the AG in the previous two fiscal years;
- The Committee noted with concern that the six burglary incidents that occurred in abalone stores could not have been an outside work;
- The Committee appreciated the fact that the disciplinary process of the suspended Deputy Director-General of the Fisheries (MLRF) was underway as well as the decisive role of the Minister in this regard;
- The Committee was concerned about the arrest of the nine officials on allegations of corruption in Gansbaai, considering the public trust that society placed in them to enforce law and ensure the sustainability of marine living resources; and
- The Committee further observed that fishers have to travel to Cape Town to drop their permit application documents or post them. Despite this demanding exercise, there are reports that permit applications are lost regularly, which is frustrating, mainly when fishing seasons are about to open, which is a matter of great concern.
- The Committee noted that the former Department of Agriculture, Forestry and Fisheries obtained a qualified audit opinion on its performance during the 2018/19 financial year. The main contributor to the audit finding is the Forestry Branch. The repeat or ongoing findings are the inability to appropriately quantify and provide evidence on the value of biological assets (forests); and poor controls and oversight on biological assets and unreliable reports – ineffective monthly, quarterly and year-end reconciliation processes. The Department struggled throughout the 2014-2019 period to address these challenges and the leadership matters (acting arrangements, infighting, and lack of leadership and oversight by the then executive authority).
7.CONCLUSION AND RECOMMENDATIONS
The Committee, in its conclusions, thanked officials from the Department, entities and officials from the Forestry Branch as well as the Fisheries (MLRF) for their professional conduct and skills in continually updating their knowledge base in line with key government policies such as the National Development Plan, and other international and regional agreements and conventions. Consequently, the sustainability of the South African environmental sector is
being ensured despite the ever-growing myriad of challenges on the sector. The Committee applauds the sustainability of environment assets in their various facets, as South Africa’s natural environment is the bedrock of its economic and social development; it underpins our economy, health and safety, which are the very elements that encourage us as citizens to live and work in our country, although this reality is not always appreciated by us all, considering the history of our country where the costs of environmental protection had been borne mainly by poor South Africans, especially in terms of pollution and evictions to create national parks and other forms of protected areas. Overall, the Portfolio Committee was pleased with the performance of the Department and entities as well as those of the Forestry and Fisheries branches, especially in terms of meeting predetermined objectives. Notwithstanding, the Committee remains deeply concerned about the audit outcomes of the entire environmental portfolio and hence recommends the following:
7.1Recommendations (for the Committee)
- The Committee welcomed the Auditor-General’s extended mandate and hopes to work more closely with the Auditor-General to ensure in-depth oversight to ensure that all issues raised by the Auditor-General are addressed expeditiously to prevent loss and wastage of public resources;
- The Committee should closely monitor the implementation of the recommendations of the AGSA directed at the Department and entities to ensure that all those recommendations are implemented to ensure desired results; and
- The Committee should ensure that departmental and entity officials as well as boards responsible for any negative audit outcome should be held to account. Where possible, the Committee should work with the executive authority to ensure that repeat findings do not occur or public funds are not used in a trial-and-error fashion to obtain clean audits.
7.2Department of Environmental Affairs
- The executive authority (Minister of Environment, Forestry and Fisheries) should pay due attention to the Auditor-General’s findings and take such necessary action for the dismal performance in the majority of the environmental portfolio. The Minister should authorise forensic audits where there are findings of irregular expenditure and fruitless and wasteful expenditure in the Department and/or entities to ensure that public funds are used optimally for the greatest public good. This is necessary in light of Auditor-General’s determination that irregular expenditure would have been prevented, had effective and appropriate steps been taken to avert them;
- The Minister should ensure that the Department makes a meaningful contribution to growing and transforming the economy through the various programmes and/or projects that the Department implements. Departmental entities also have an important role to play in this regard, especially, IWPA, SANBI and SANParks, which undertake restoration ecology as well as infrastructural upgrade and maintenance work;
- The Minister should take appropriate steps to ensure that unnecessary litigation costs are avoided by the Department and all the entities that report to her;
- The Minister should ensure that the Department continues to work very closely with the Office of the Accountant-General (OAG) to encourage full compliance with the set accounting standard that applies to all government departments. There should be no room for any unclean audit opinion in moving forward. The progress that the Department makes in this regard should regularly be presented to the Committee. The same approach is required of the concerned departmental entities, especially SANBI and SAWS; and
- The Minister should ensure that internal control systems are strengthened to prevent even ‘mundane’ things such as misstatements. It is only when the Department and entities become concerned about misstatements in the annual financial statements submitted to the Auditor-General for auditing can fruitless and irregular expenditures be fully detected and curtailed.
7.3iSimangaliso Wetland Park Authority
- The Minister should ensure that the iSimangaliso Wetland Park Authority regain its clean audit status by improving its internal control systems to prevent, detect and address risks that have an impact on performance reporting and compliance monitoring. The system should include effective compliance review and monitoring to ensure that annual financial statements, which are submitted to the Auditor-General for auditing are free of material errors; and that strategic goals, targets and indicators are appropriate and measurable;
- The Minister should ensure that the Department effects timeous transfers to the iSimangaliso Wetland Park Authority for effective implementation of Park operations, which are dependent on government grants; and
- The Minister should ensure that the Wetland Park Authority improves communication with the adjacent communities as key stakeholders, especially in local languages to deepen the sense of stewardship or ownership of the Park. They need to know the socio-economic usefulness of the Park to them, both directly and indirectly.
7.4South African National Biodiversity Institute (SANBI)
- The Minister should request a reputable independent forensic company to conduct forensic audit into the Auditor-General’s findings of irregular expenditure at SANBI. It is important that the Minister orders this forensic audit rather than the Board of SANBI, which is an accounting authority under which the irregular expenditure occurred;
- The Minister should take necessary steps to ensure that SANBI does not retrogress any further or else SANBI risks having unclean audit institutionalised in it in the absence of consequence management; and
- The Minister should ensure that SANBI develops and presents to the Committee a strategy for infrastructure upgrading and maintenance at the National Zoological Gardens in Pretoria that addresses safety and security concerns as well as the comfort of visitors to the National Zoological Gardens. The strategy should be realistic and thus sensitive to the needs of both current and potential visitors as well as intrinsic biological assets in the Gardens. The aim should not be to restore the National Zoological Gardens to what it was, but rather improve it to a facility that can appeal to city dwellers.
7.5South African National Parks (SANParks)
- The Minister should ensure that SANParks works towards the attainment of a clean audit opinion by improving its internal control systems to prevent, detect and address risks that have an impact on performance reporting and compliance monitoring. The system should include effective compliance review and monitoring to ensure that annual financial statements, which are submitted to the Auditor-General for auditing are free of material errors; and that strategic goals, targets and indicators are appropriate and measurable;
- The Minister should ensure that the entity develops a strategy for increasing the number of visitors that enter national parks despite the ongoing challenges that constrain visitors from using national parks. It is indisputable that nature tourism provides the motivation and the means for effective conservation of national parks, and hence the need to maintain steadily growing numbers of tourists using national parks. The envisaged strategy should be presented to the Committee in the first quarter of 2020;
- The Minister should ensure that SANParks clarifies whether it has obtained any documentation on the issue of fence dropping between the Kruger National Park and the Associated Private Nature Reserves (APNR), which is an association of privately owned nature reserves bordering on the KNP. The Committee would like clarity on: when the fence was dropped, the reasons and assumptions for dropping the fence and whether such assumptions are still valid today;
- The Minister should ensure that SANParks clarifies what it is doing differently in terms of anti-poaching measures/strategy now that the number of species, which are being poached has increased beyond rhinos. SANParks should further state those ‘new’ species, which are being affected by environmental crimes;
- The Minister should ensure that SANParks fully implements the Wildlife Utilisation Strategy to achieve the transformation of this multi-billion rand sector by effectively meeting the annual performance target set for this function;
- The Minister should request a reputable independent forensic company or the Auditor- General to conduct forensic audit into the Auditor-General’s findings of irregular expenditure at SANParks. It is noteworthy that the Minister orders this forensic audit rather than the SANParks Board whose role in the irregular expenditure would need to be determined, as an accounting authority for the entity; and
- The Minister should ensure that SANParks makes a concerted effort to increase the percentage of women in the establishment.
7.6South African Weather Service (SAWS)
- The Minister should ensure that the SAWS Board clarifies the irregular appointment of an official that was referred to by the Auditor-General whether the ‘said’ irregular appointment was not the same irregular appointment that was brought to the attention of the then Portfolio Committee on Environmental Affairs in the Fifth Parliament, which held several meetings on the matter with the SAWS Board, but the Board insisted that the concerned official’s appointment was above board;
o The Board should provide further clarity on who made the irregular appointment and the consequences for such appointment, as confirmed by the Public Protector;
- The Minister should determine the suitability of the current SAWS Board to continue serving as an accounting authority in light of the ongoing challenges in the entity that plays such a critical domestic and international role, especially in terms of international aviation safety on the African Continent;
- The Minister should request a reputable independent forensic company to conduct forensic audit into the Auditor-General’s findings of irregular expenditure as well as fruitless and wasteful expenditure. It is important that the Ministers orders this forensic audit rather than the SAWS Board whose role in the irregular expenditure and fruitless and wasteful expenditure would need to be determined in this process, as an accounting authority; and
- The Minister should follow up and report to the Committee on the progress being made in the implementation of the resolution of the Portfolio Committee on Environmental Affairs in the Fifth Parliament that required the then members of the SAWS Board who voted for
the premature termination of the contract of the former SAWS CEO, Dr Linda Makuleni to be held personally accountable for the fruitless and wasteful expenditure of about R2 million.
7.7Fisheries (Marine Living Resources Fund)
- The Minister should capacitate the Fisheries Branch to facilitate the effective allocation of small-scale fishing rights and curb the slow progress to prevent illegal activities by small- scale fishers. In fact, the fishing rights allocation process (FRAP) has often resulted in the Fisheries Management Branch being in the media spotlight due to alleged corrupt activities conducted by officials within the Branch and/or Court cases instituted by commercial fishing companies;
- The Minister should look into the concerns raised by small-scale and artisanal fishers who were not benefitting from the FRAP as it favours commercial fisheries. Where rights were allocated to small-scale fishers, they were minimal, for a short period and were not accompanied by proper support programmes to ensure that the fishers derive livelihoods and economic benefits from such rights. They also highlighted fronting and paper quotas, where black faces or names were reportedly used by commercial companies to gain rights without providing any benefits to those black people.
- The Minister of Finance should ensure that the accounting support provided by the National Treasury to clean up poor governance and ineffective financial management at the Fisheries Branch be extended until there is a hand over to the new CFO in the MLRF;
- The Minister of Environment, Fisheries and Forestry should report to the Committee on measures that she intends putting in place to bridle break-ins at abalone storage facilities;
- The Minister should expedite the disciplinary action instituted against the nine departmental officials, which is currently underway to prevent abuse of public financial resources, in terms of salaries regularly drawn by those allegedly corrupt officials. Every effort should be made to conclude their case;
- The Minister should look into the feasibility of acquiring a research vessel that will replace the operationally expensive FRS Africana; and
- The Minister should ensure that online and other expeditious alternative ways for applying for and granting of fishing licences be devised for small-scale fishers to effectively eliminate the current inefficient system, which requires them to travel to Cape Town for permitting purposes.
- The Minister should ensure that the Department presents a strategy for tackling the repeat findings by the Auditor-General on biological assets in moving forward to ensure that the issue of biological assets does not recur in the ‘new’ Department of Environment, Forestry and Fisheries;
- The annual performance targets, which were presented under Forestry were too few to appropriately capture the diversity of issues in the sector. Consequently, the Minister should ensure that the Department’s next Annual Performance Plan includes the broad range of issues in the forestry sector, comprising community forestry aspects, matters that pertain to title deeds and trusts, and so forth; and
- The Minister should ensure that all critical posts, especially senior management positions be filled as a matter of urgency to ensure that Forestry issues are effectively and appropriately accounted for, including public resources appropriated for sustainable forest management and assets.
The Minister should submit a detailed response to the Committee on all the recommendations made in this report within 60 days after the adoption of this report by the National Assembly.
The Portfolio Committee on Environment, Forestry and Fisheries recommends the adoption of this Budgetary Review and Recommendation Report (BRRR) for the Department of Environment, Forestry and Fisheries and its Public Entities for the 2018/19 financial year.
Report to be considered.
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