ATC210216: 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: SANparks, IIWPA, SAWS & SANBI as well as Forestry and Fisheries Branches for the 2019/20 Financial Year, Dated 16 February 2021
Forestry, Fisheries and the Environment
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 branches FOR THE 2019/20 FINANCIAL YEAR, DATED 16 FEBRUARY 2021.
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 2019/20, 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:
1.1Mandate 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
- Consider the budgets, strategic plans, annual performance plans and related performance reports and targets of the Department and entities falling within its portfolio.
2PURPOSE OF THE BUDGETARY REVIEW AND RECOMMENDATION REPORT
The Money Bills Procedures and Related Matters Amendment 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.
To effectively undertake the oversight mandate of its work as required by the Money Bills Act, the Portfolio Committee on Environment, Forestry and Fisheries having received and considered briefings from the Department of Environment, Forestry and Fisheries (Marine Living Resources Fund), its respective entities, namely: the SANParks; iSimangaliso; SAWS and SANBI, as well as from the Office of the Auditor-General, on 26 January and 2 February 2021 on the Annual Reports and Financial Statements of the Department and its entities for the 2019/20 financial year, reports as follows:
3OVERVIEW OF THE AUDITOR-GENERAL’S AUDIT OUTCOME REPORT FOR 2019/20
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 2019/20 financial year. The AGSA reported that the overall portfolio improved from the prior year, as SAWS and SANBI progressed from a qualified audit opinion to an unqualified audit opinion with findings on audit of predetermined objectives (AOPO)/compliance with laws and regulations. Though the audit opinion of the Department remained unchanged, the AGSA commended the management effort exerted in addressing several qualification areas from prior years. However, financial statement preparation remained a concern at the Department and its entities (SAWS, SANBI & iSimangaliso), as material adjustments had to be made to the financial statements submitted for auditing. Similarly, consequence management, procurement and contract management were a general concern at most entities as irregular expenditure increased significantly from R342 million (2018/19) to R2.90 billion in the year under review (2019/20) within the portfolio due to inadequate monitoring of compliance with supply chain management (SCM) laws and regulations. These audit outcomes and findings are further described in the following sections, for the Department and the respective entities:
3.1Department of Environmental Affairs
The audit opinion of the Department remained unchanged, having retained the same audit outcome of a qualified audit opinion in the 2019/20 financial year as in the prior year. Notwithstanding, the Auditor-General commended the management effort exerted in addressing several qualification areas from prior years. The basis for the qualified audit opinion included, among others, irregular expenditure, fruitless expenditure, unauthorised expenditure, immovable tangible capital assets (buildings and other fixed structures), and supply chain management (SCM). It is noteworthy that the majority (87%) of irregular expenditure (IE) relates to the Department. Internal controls to identify, record and report IE were not adequately designed and implemented, which resulted in a qualification on the completeness of IE reported by the Department.
Fruitless expenditure (FE) also rose in the portfolio from R4.17 million in the prior year to R76.88 million in the year under review, of which the Department incurred 99% (R76.24 million) of the fruitless and wasteful expenditure. FE, in this instance, relates to pre-payments made to implementing agents for goods and services that were not in line with the contractual arrangements and agreed deliverables, cancellation of travel/no-show accommodation; payment of interest and penalties; payment of VAT charged by non-VAT vendors; and damaged stock, misuse of vehicles or overpayment to suppliers. The Department further incurred unauthorised expenditure of R149 million of which R133 million represents non-compliance in 2019/20, whereas R16.6 million represents non-compliance that occurred in previous years, but was identified in the year under consideration. This unauthorised expenditure derived from the fact that the Department followed a transfer payment process to fund the capital infrastructure projects of public entities. However, this process did not include the appointment of service providers through a procurement process, and the Department did not obtain approval from the National Treasury prior to transferring funds to public entities. Furthermore, there were also findings on supply chain management (SCM) issues relating to procurement without inviting competitive bids; expenses incurred on a contract exceeded the amount approved by the National Treasury; and preference point system was not applied or incorrectly applied.
The former Department of Agriculture, Forestry and Fisheries obtained a qualified audit opinion on its performance during the 2018/19 financial year and again in 2019/20. 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 from the Executive Authority). The Department had previously assured the Committee that they would conduct a study to determine the total value of the forests and set up effective systems for regular reporting and attend to the security challenges.
3.3iSimangaliso Wetland Park Authority
For the 2019/20 financial year, the iSimangaliso Wetland Park Authority attained an unqualified audit opinion with findings on compliance with key legislation. There were cases of non-compliance with procurement laws and regulations, for example, iSimangaliso procured goods/services from suppliers whose tax matters had not been declared by the South African Revenue Service (SARS) to be in order; and annual financial statements were submitted with material errors. In fact, financial statement preparation remained a concern at the iSimangaliso, as material adjustments had to be made to the financial statements submitted for auditing. The liquidity position of the public entity also turned unfavourable, as current liabilities exceeded current assets by R9.03 million. In addition, the entity incurred fruitless and wasteful expenditure, relating to cancellation of travel or no-show at accommodation facility; payment of interest and penalties; and damaged stock, misuse of vehicles or overpayment to suppliers.
3.4South African National Biodiversity Institute (SANBI)
SANBI improved from the past two financial statements (2018/19 & 2017/18), as the public entity progressed from a qualified audit opinion to an unqualified audit opinion with findings on compliance with key legislation. Those key areas of non-compliance related to the submission of annual financial statements with material errors; inadequate attention to prevention of unauthorised, irregular and/or fruitless and wasteful expenditure; and non-compliance with procurement laws and regulations. SANBI had inadequate internal controls in terms of proper record keeping, daily and monthly controls, and inability to review and monitor compliance. The entity lacked proper provision of quality assurance at senior management level. Consequently, financial statement preparation remained a concern at the SANBI, as material adjustments had to be made to the financial statements submitted for auditing. SANBI also incurred fruitless and wasteful expenditure on payment of interest and penalties on damaged stock, misuse of vehicles or overpayment to suppliers. Similarly, the entity incurred irregular expenditure due to procurement without competitive bidding or quotation process; and non-compliance with procurement process requirements.
For the 2019/20 financial year, SANParks audit outcomes remained the same as in the 2018/19, 2017/18 and 2016/17 financial years, having obtained unqualified audit opinion with findings on compliance with key legislation. This non-compliance was due to inadequate attention was paid to prevent unauthorised, irregular and/or fruitless and wasteful expenditure; insufficient evidence to prove that proper consequence management took place. The entity obtained irregular expenditure due to non-compliance with procurement process requirements, which appeared to be a common phenomenon in the environmental portfolio. In terms of internal controls, SANParks’ daily and monthly controls were of concern, whereas the ability to review and monitor compliance was inadequate, needing intervention. SANParks incurred fruitless and wasteful expenditure due to cancellation of travel or no-show at accommodation facilities.
3.6South African Weather Service (SAWS)
The South African Weather Service recovered from a qualified audit opinion with findings in the past 2018/19 financial year to an unqualified audit opinion with findings on audit of predetermined objectives/compliance with laws and regulations. The findings on compliance with key legislation were due to submission of annual financial statements with material errors; inadequate attention to the prevention of unauthorised, irregular and/or fruitless and wasteful expenditure; and there was insufficient evidence to prove that proper consequence management took place at the entity. SAWS fruitless and wasteful expenditure arose from cancellation of travel or no-show at accommodation facility; payment of interest and penalties; and payment on damaged stock, misuse of vehicles or overpayment to suppliers. Proper record keeping was a matter of concern at SAWS; review and monitoring of compliance needed intervention; and senior management at SAWS provided limited or no assurance. Financial statement preparation remained a concern at SAWS, as material adjustments had to be made to the financial statements submitted for auditing.
The Auditor-General highlighted SAWS’ inability to collect revenue on time and the resultant impairment of receivables. The debtor collection days remained high at 40 days, although this was a slight improvement compared to the prior year (2018/19) where it stood at 49 days. Similarly, SAWS realised a significant deficit of R37.5 million in 2019/20, though less than the prior year deficit of R65.5 million. The liquidity position of the public entity turned unfavourable, as current liabilities exceeded current assets by R40.34 million.
4OVERVIEW OF PERFORMANCE BY THE DEPARTMENT OF ENVIRONMENTAL AFFAIRS IN THE 2019/20 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 (2019/20), 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 (DEA) 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, under the Biodiversity and Conservation Programme, the action to expand the conservation estate by 0.14 per cent to 15.74 per cent land under conservation (19 209 923 ha) was achieved; 6 557 640 ha of state managed protected areas were assessed with a METT score above 67 per cent; the UNCCD Drought Management Plan was developed; and 446 Biodiversity entrepreneurs were trained. In terms of the Department’s contribution to alleviate the challenges of unemployment and poverty, 73 568 work opportunities were created; 53 192 youth benefited from the implementation of Environmental Programmes; and all (1 852) the reported incidents of wildfires were successfully suppressed. Similarly, 234 enforcement notices were issued for non-compliance with environmental legislation; and 56 criminal cases were finalised and dockets were handed over to the NPA. In the same vein, five adaptation projects/interventions were implemented through civil society organisations with the support from the Government of Flanders; and all (4/4) Annual Pollution Prevention Plans (PPPs) were processed in line with the regulations to protect the environment and human health or well-being.
4.1PROGRAMME 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 65 per cent (11/17) of its targets; and partially or substantially achieved 35 per cent (7/31). This number of targets and achievement were less than the number of targets and proportion of achievement in the prior year, which were 77 per cent (24/31) achievement of targets; and partial or substantial achievement of 23 per cent (7/31).
4.2PROGRAMME 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 60 per cent (6/10) and substantially achieved 40 per cent (4/10) of its performance targets, which were less than the 67 per cent achievement of performance targets (8/12) and substantial achievement of 33 per cent of the remaining targets (4/12). Although the Department finalised and handed over to the NPA 56 criminal cases more than the 41 in the prior year, this does not actually mean much, as there is no indication of the total number of dockets pending processing. Notwithstanding, the Department’s achievement under the LACE Programme in the 2019/20 financial year is both below the 2018/19 and the 2017/18 financial year achievements where the Department successfully met all its annual performance targets (12/12) in the later (2017/18).
4.3PROGRAMME 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 82 per cent of the annual performance targets (9/11) and partially achieved 18 per cent (2/11) of the set targets. This might appear to be a significant achievement when looked at on its own. However, this impressive achievement pales in the light of prior year’s achievement when the number of targets are considered. For example, 77 per cent of the annual performance targets (17/22) were successfully achieved; 14 per cent (3/22) were partially achieved; and nine per cent of its targets (2/22) were not meet. This achievement was below the other 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. It is apparent that the overall departmental targets in the year under review were actually half of the past two prior years, respectively.
4.4PROGRAMME 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 13 targets, 12 targets (12/13) were achieved and one target (1/13) was substantially achieved, translating into 92 per cent success and eight per cent partial achievement. Prior year’s 75 per cent (12/16) success rate met exactly the same number of targets as in the year under review, but with more targets than in 2019/20. Significant achievements in this Programme relate to the processing of all Phase 1 carbon budget applications within 6 weeks; development of Mitigation Potential Analysis 2019; operationalisation of Climate Change Information Management System (CCIMS); and the effective processing of all Annual Pollution Prevention Plans (PPP), consistent with the applicable regulations. It further emerged during the engagement with the Department that the National Climate Change Bill would be tabled in Parliament in the current 2020/21 financial year.
4.5PROGRAMME 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 13 targets, 12 targets were fully met and one targets was partially met. In contrast, of the 22 annual targets, 18 targets (18/22) were fully met, two targets (2/22) were partially met and missed, respectively, in the prior year (2018/19). This translated into 82 per cent success, nine per cent partial achievement and nine per cent off target. This was 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. Thus, the Department achieved more in the two prior years than what was achieved in the current reporting year, especially when the number of performance targets are taken into account.
4.6PROGRAMME 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 15 annual performance targets, four (4/15) were achieved (27 per cent), nine targets (9/15) were partially achieved (60 per cent) and two (2/15) annual performance targets were not met (13 per cent). This was a poor performance relative to the 2018/19 financial year where of the 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 again was 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.
4.7PROGRAMME 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 2019/20 financial year covered eight annual performance targets, of which a total of four were achieved (50 per cent), three targets (3/8) were partially achieved (38 per cent) and a target (1/8) was not met (12 per cent). This 2019/20 performance achievement was suboptimal even when compared to the 2018/19 financial year where the Department had 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). At a time when the Department had about half of the performance targets of the prior year, it performed unsatisfactorily.
4.8PROGRAMME 8: FORESTRY AND NATURAL RESOURCE MANAGEMENT
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 nine targets as set out in the 2019/20 Annual Performance Plan. The Branch fully achieved 78 per cent (7 out of 9) of the set targets and, in some instances, exceeded the targets. This is a slight decrease of 2 per cent from the 80 per cent achieved in the 2018/19 financial year. The achieved targets include rehabilitation of indigenous forests and agricultural land, piloting of agro-forestry projects in two provinces, and writing reports. The target on the recommissioning of the Western Cape State forest plantation was missed in the 2018/19 financial year due to failure to establish six legal entities to oversee the plantation. The target was missed again in the 2019/20 financial year due to inability to appoint a service provider. The undertaking was that the recommissioning of the plantations will continue in the 2020/21 financial year, but was not included in the APP. Another target that was missed is the weather-dependent planting of trees in temporary unplanted areas due to poor rainfall and high temperatures. The missed hectarage (393 ha) was added to the target of 2020/21 to make it 1 280 ha.
4.9PROGRAMME 9: FISHERIES MANAGEMENT (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 fifteen targets on the 2019/20 Annual Performance Plans in the annual reports. The Branch fully achieved 60 per cent (9 out of 15) of the set targets and, in some instances, exceeded goals. The slight increase is 7.1 per cent from the 52.9 per cent achieved in the 2018/19 financial year. The fully met or exceeded targets include the supported Operations Phakisa projects; development of fish stock recovery plans; fisheries investigations, inspections and joint operations under Operation Phakisa; and writing of reports. 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 the creation of jobs under the Working for Fisheries Programme, finalisation of the Aquaculture Development Bill, revision of fisheries policies and the fishing rights allocation to the small-scale fisheries. The main reasons for not achieving the targets is due to poor contract management, inadequate consultations on the Bill and general administrative challenges. These listed targets were missed in the 2018/19 financial year, and again in the period under review.
5OVERVIEW OF PERFORMANCE BY THE DEPARTMENTAL ENTITIES
5.1iSimangaliso 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 2019/20 financial year, the iSimangaliso Wetland Park Authority had a total of 68 performance targets, of which the entity met 59 (59/68), while nine targets (9/68) were off target. This reflects about 87 per cent success against predetermined objectives for the 2019/20 financial year. This was better than the 2018/19 financial year, where 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 reflected about 77 per cent success against predetermined objectives for the 2018/19 financial year. The entity had more targets in 2019/20, nearly double the target it had in the prior year, but still achieved a higher success rate unlike the parent Department.
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 (2019/20), SANBI had 43 planned targets of which the Institute achieved 29 and partially achieved 11 and three targets were off target. This translates into the total achievement percentage of 67 per cent, 26 per cent partial achievement and seven per cent non-achievement in the current reporting period. This performance achievement is below that of the previous year (2018/19), where SANBI had 42 planned targets of which it achieved 37, 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 previous reporting period, which is higher than the 2019/20 success rate.
5.3South African National Parks
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.
SANParks met 41 of its targets out of 60, with some of those 41 being exceedances; nine targets were partially or substantially achieved; and 10 targets were not met. This translates into 68 per cent achievement, 15 per cent partially achieved and 17 per cent unachieved. The details of SANParks performance against predetermined objectives for the 2019/20 financial year are contained in the entity’s annual report for the year under review, which is below its performance in the 2018/19 financial year where the entity recorded 74 per cent achievement, nine per cent partially achieved and in 17 per cent unachieved. Notwithstanding, the entity had more performance targets in 2018/19 than in the review year. Similarly, SANParks attained a better success rate in 2017/18 where it 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 (2019/20), SAWS achieved 14 of its 21 targets; substantially achieved five targets; and did not meet two of its planned targets. Overall, SAWS achieved a total performance percentage of 66.7, substantially achieved 23.8 per cent and did not achieve 9.5 per cent. This is unfortunately below SAWS’ performance in the 2018/19 financial year, where the entity 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. Thus, the entity recorded a higher success rate when it had more targets than in the review year.
Following the Committee’s interaction with the AGSA, Department of Environmental Affairs and its four departmental entities as well as the Fisheries (MLRF) and the Forestry branches on their annual reports, financial statements and the audit outcomes in the period under review (2019/20 financial year) as well as engagements with their respective quarterly reports for the current year, the Committee made the following observations:
6.1Committee observations on the Auditor-General’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 2019/20 financial year and noted the following:
- The Committee noted with concern that none in the environmental portfolio received a clean audit, although there had been an improvement in overall performance compared to the prior (2018/19) financial year;
- Preparation of financial statements remained a concern at the Department and its entities (SAWS, SANBI & iSimangaliso), as material adjustments had to be made to the financial statements submitted for auditing;
- Consequence management, procurement and contract management were a general concern at most entities as irregular expenditure increased significantly within the portfolio due to inadequate monitoring of compliance with supply chain management (SCM) laws and regulations; and
- The Committee considered the inability of the entire portfolio to achieve a clean audit outcome and to meet higher levels of performance targets in the review year (2019/20), relative to the previous (2018/19) financial year, to the challenge of filling critical vacancies expeditiously.
6.2Department of Environmental Affairs
- The Department had been one of those well-functioning government departments for a very long time. However, it is apparent that the Department has not recovered from the Modified Cash Standard (MCS) departure exemptions that it received since 2013/14. That 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 four financial years. It is, nonetheless, commendable that the Department’s challenges in obtaining a clean audit had significantly reduced to three in the review (2019/20) year as opposed to 11 in the prior (2018/19) year;
- The Committee noted with concern that the Department received a qualified audit opinion with three findings in the 2019/20, relative to a qualified audit opinion with 11 findings in the 2018/19 financial year and that the portfolio has comparatively progressed well;
- The Committee noted the massive irregular expenditure, wasteful and fruitless expenditure, flouting of supply chain management legislation and overpayment of invoices;
- The Committee is concerned that the Department has for the past fourth consecutive financial years received a qualified audit opinion with findings, which the Committee considered unacceptable, considering the amount of effort spent on facilitating the Department through a series of engagements in Parliament to overcome this challenge;
- The Committee is concerned about the huge amount (R160 million) of under-expenditure in the Environmental Programmes, which the Department seemed to have allowed to occur to avoid the ‘cumbersome’ accounting methodology of MCS for which it had already been qualified several times, from which the Department had not recovered; and
- The Committee was pleased that the Department was starting the New Year with a new Director-General who had a well-established record of accomplishment in senior management in the public sector (government), and hoped that the era of qualified audit opinions would finally be over.
6.3iSimangaliso Wetland Park Authority
- The Committee appreciated the iSimangaliso Wetland Park Authority’s achievement of an unqualified audit opinion, though with findings;
- The Committee noted with concern the non-achievement of the Employee Satisfaction Survey target due to lack of budget and wanted to know how the entity would know if its employees were satisfied in order to deliver effectively, if the survey was not conducted;
- The Committee noted that many SMMEs ended up collapsing as a result of non-payment of those SMMEs by contracting parties, such as the iSimangaliso Wetland Park Authority;
- The Committee was concerned that the skills development target was not met and wondered how this would be addressed in moving forward; and
- The Committee noted that the entity has taken over seven facilities, which were previously under the Ezemvelo KwaZulu-Natal Wildlife whose operation would require funding.
- The Committee commended SANBI for improvements in its audit outcome, but felt concerned about non-compliance both in the period under review and the previous financial year. To-date, the entity has not initiated consequence management and disciplinary actions against those responsible for incurring irregular expenditure;
- The Committee noted with concern that the entity was aware of non-compliance with supply chain process, such as the irregular appointment of companies, but they (at SANBI) did not present to the Committee how the irregularities occurred and the roadmap for rectifying them; and
- The Committee raised a concern about the protracted process involved in the recruitment of the new Chief Executive Officer for SANBI to enhance organisational stability.
6.5South African National Parks
- The Committee raised a concern about the water leakages target that was not met and blame being apportioned to the guests and workers when it was clear that SANParks could not achieve this target due to burst pipes at Pretoriouskop. It was improper for SANParks to use the COVID-19 pandemic lockdown as a reason for not installing water metres where needed;
- The Committee noted the ongoing concerns about high rhino poaching numbers, especially in the Kruger National Park. The fact that the Committee could not receive regular updates on poaching statistics creates difficulty for the Committee in exercising effective oversight on information that they do not have;
- The Committee was disappointed that the Stakeholder Mapping Policy was not approved due to meetings not being conducted as a result of COVID-19 pandemic despite the options offered by virtual platforms such as Zoom or Microsoft Teams;
- The Committee noted with concern that the funds, which were meant for infrastructure maintenance were not used despite the fact that park facilities were in a bad state of disrepair and needed an urgent upgrade;
- The Committee noted the completion of the social legacy project, relating to the provision of Phase 2 of Makushu Primary School ablution facilities and wanted to know whether the ablution services were functioning well and useful; and
- The Kruger National Park was commended for appointing the first black pilot and the Committee further emphasised the importance of maintaining aircrafts to ensure safety while protecting the integrity of national parks and biodiversity resources.
- The Committee commended SAWS for improvements in its audit outcome, notwithstanding the several significant findings. This is better than the prior year (2018/19) where the Committee was alarmed 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; and
- The Committee appreciated the effort that SAWS made in its presentation as it entailed employment equity information and requested the other entities to follow suit.
- The Committee noted that the Auditor-General (AG) issued the MLRF with a qualified audit opinion for the 2019/20 financial year. This opinion followed a disclaimed audit report with matters of emphasis with findings for the 2018/19 fiscal year. The audit outcome indicated a minor improvement in addressing the significant issues that were raised by the AG in the previous two fiscal years;
- The Committee noted with concern the underspending on conditional grants meant to create jobs that are needed in poor communities;
- The Committee enquired about the status of the Aquaculture Development Bill, and the Inland Fisheries Policy; and
- The Committee was further concerned by the high vacancy rates in financial management function of the Entity as a root cause for all the non-compliance with the PFMA.
- The committee noted that the former Department of Agriculture, Forestry and Fisheries obtained a qualified audit opinion on its performance during the 2018/19 and 2019/20 financial years. 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).
7CONCLUSION AND RECOMMENDATIONS
The Portfolio Committee, in its conclusions, thanked officials from the Department, entities and officials from the a 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 commends 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 Portfolio 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 against staff for 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 expenditures would have been prevented, had effective and appropriate steps been taken to avert them;
- The Minister should ensure that her Department becomes more visible in making 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 ensure that her Department fully complies with s40(1)(b) of the PFMA that provides the timeframe for submitting financial statements, considering the ensuing challenges in the preparation of annual financial statements. It is time for the Department and entities to work smartly around the challenges posed by the COVID-19 lockdown, rather than using it as a justifiable excuse for why certain things were not done;
- The Department should continue to work very closely with the Office of the Accountant-General (OAG) to encourage full compliance with the set accounting standard (MCS) that applies to all government departments. There should be no room for any unclean audit opinion in moving forward from the 2019/20 audit outcome. The progress that the Department makes in this regard should regularly be presented to the Committee; and
- Internal control systems must be 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 purposes can wasteful and fruitless and irregular expenditures be fully detected and curtailed. It is only when we hold staff accountable for a hundred rand or so, that staff will be alerted to the need to protect and use public money more appropriately; and
- The Minister should ensure the full reconstitution and proper separation of Bid Specification, Bid Evaluation and Bid Adjudication committees to ensure that members of a particular bid committee do not influence the process that takes place in another committee to avoid the many irregularities, which was nearly R3 billion in the review year.
7.3iSimangaliso Wetland Park Authority
- The iSimangaliso Wetland Park Authority should 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 (and other entities) for effective implementation of Park operations, which are dependent on government grants;
- iSimangaliso should provide the details of those seven facilities that were previously under the Ezemvelo KwaZulu-Natal Wildlife whose operations would require funding, clarifying the nature, ownership and locations of those facilities as well as the envisaged funding needed; and
- There needs to be clarity on the findings of fruitless and wasteful expenditure against the Chief Financial Officer (CFO) that led to her suspension and subsequent discharge from iSimangaliso: the amount of money involved, duration over which the fruitless and wasteful expenditure occurred and the point at which the CEO or the Board became aware.
7.4South African National Biodiversity Institute (SANBI)
- The Minister should take necessary steps to ensure that SANBI does not retrogress to a qualified audit opinion anymore in moving forward or else SANBI risks having unclean audit institutionalised in it in the absence of consequence management;
- SANBI should develop and table a clear plan for improving the status of those venues that obtained average green star rating to improve the rating in the future; and
- The entity should submit detailed written responses on the breakdown of how the R80 million irregular expenditure arose; numbers and positions held by black staff members in senior management and the annual turnover of senior managers; and delays to the transfer of funds to implementing agencies, as exemplified by the Umgeni Resilience Project.
7.5South African National Parks (SANParks)
- SANParks should work 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 Committee would like to receive regular updates on the status of white and black rhinos in our national parks and other forms of protected areas for oversight purposes without communicating this information in a manner that compromises the wellbeing of these iconic species.
- Members would like to know the number of elephants in the Kruger National Park, as well as an update on the implementation of the elephant management plan in light of ongoing funding constraints. The Committee further would like clarity about the “ethics requirement by the Nelson Mandela Metropolitan University”, precisely the details of those;
- The Committee would like to know the quantity of water that SANParks loses annually due to water leakages as a result of ageing or decaying infrastructure;
- There needs to be a clarity on the current ratio of drone technology, aircraft and human capital deployment by SANParks, and whether there are plans underway to change this combination, as SANParks moves forward and whether this ‘envisaged’ transition is pegged to a specific timeframe;
- The Committee is concerned about the problematic supply chain management process that were not followed, as reported in the year under review, and hence requested SANParks to present an action plan to address this, in moving forward;
- The Committee would like to know the environmental education programmes at schools that SANParks could provide for neighbouring communities without reliance on SETA. SANParks should report back on this matter when it appears before the Committee;
- The Committee seeks clarity on why there were no audit committee meetings held after 4 March 2020;
- The Committee also requested a list of farms that were approved for game loans to be submitted;
- The Committee was concerned about the high vacancy rate in the Air Wing vacancies and wanted to know how SANParks could effect a successful counter-poaching programme when there were so many vacancies;
- SANParks should clarify to the Committee the methodology it uses to conduct rhino and elephant census in national parks;
- SANParks should submit a written response regarding the Colchester land claim;
- SANParks should submit in writing the information on wildlife-related beneficiaries; and
- SANParks should exert more effort to meet its employment equity target for women in senior management and people with disabilities, having failed to meet these two targets in the year under review (2019/20).
7.6South African Weather Service (SAWS)
- The Committee requests a comprehensive report on criminal cases against employees who had been charged for wrongdoing at SAWS, whether they had resigned or not and further needs SAWS to clarify why it had witnessed such a high rate of staff turnover at the executive management.
7.7Marine Living Resources Fund (MLRF)
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;
- There is also a need to look into the concerns raised by small-scale and artisanal fishers that they 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.
- The accounting support extended by the National Treasury to clean up poor governance and ineffective financial management at the Fisheries Branch should be extended until there is a hand over to the new CFO in the MLRF; and
- Online and other expeditious alternative ways for application and granting of fishing licenses should be devised for the whole fisheries sector to effectively eliminate the current inefficient system, which requires them to travel to Cape Town for permitting purposes.
- The Department should present 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; and
- All critical posts, especially senior management positions should 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 90 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 2019/20 financial year.
 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, effective from 1st April 2020.
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