ATC121029: The Budgetary Review and Recommendation Report of the Portfolio Committee on Water and Environmental Affairs on the Performance of the Department of Water Affairs for the 2011/12 Financial Year, dated 25 October 2012
Water and Sanitation
The Budgetary Review and Recommendation Report of the
Portfolio Committee on Water and Environmental Affairs on the Performance of
the Department of Water Affairs for the 2011/12 Financial Year, dated 25
October 2012
1.
Background
The Money Bills Amendment
Procedure and Related Matters Act, 2009, Act No. 9 of 2009 (the Money Bills
Act) requires the National Assembly to review the Annual Report and conduct
annual assessments of the performance of each national department with regard
to the medium-term estimates of expenditure and the strategic priorities and
measurable objectives of each National Department of government.
The Portfolio Committee
on Water and Environmental Affairs (the Committee) having considered the Annual
Report, reviewed and assessed the Strategic Plan, having received a briefing on
the attainment of the Millennium Development Goals (MDG) in the water sector,
and having assessed the service delivery performance and financial governance
of the Department of Water Affairs (the Department), for the 2011/12 financial
year, reports as follows:
2.
Introduction
The governance of water
resources management in a water stressed country such as
Of primary importance in
the South African context is the success of service delivery, and the extent to
which institutions of service delivery are accountable to the citizens.
Institutional changes, which ensure that
service providers are accountable to all citizens, are an important political
imperative. Undertaking such changes on a pilot basis is difficult enough,
scaling it up across jurisdictions and sustaining it over time, is a daunting
challenge.
Yet, it is precisely the
scaling up of institutional change that is needed to ensure that the goal of
universal access to reliable basic services is realised. Whilst the Department
has made immense progress in ensuring access to water to the citizens of
The Committee, in
reviewing the work of the Department in the 2011/2012 financial year placed
emphasis on the following aspects:
·
An overview and analysis of the Departments strategic
priorities, measurable objectives, indicators and attainment of targets;
·
An overview of the service delivery environment of the
Department to contribute to the 12 Government outcomes;
·
An overview of the overall performance of voted funds: Vote
38 and Water Trading Entity;
·
Achievements and challenges in the service delivery
environment;
·
Committee observations; and
·
Recommendations.
3.
Departments
Strategic Priorities
In the course and prior
to the 2011/2012 financial year, the Department has grappled with and made some
headway in addressing the following:
·
Separating the responsibilities for the Main account and the
Trading account to address inefficiencies in financial management;
·
Addressing the aging computer network infrastructure;
·
Facilitation of access to water services through the
Regional Bulk Infrastructure Grant (RBIG) with a focus on rural communities in
·
The implementation of the seven water resources
infrastructure augmentation projects and maintenance of the existing national
dams and conveyance projects;
·
Policy adjustments related to the legislative review
(National Water Act, Water Services Act, and Water Research Act), National
Water Resources Strategy and the realignment of institutional arrangements to
enhance water resources management and service delivery;
·
Establishment of a rapid response unit for support on
technical water-related emergencies for municipalities (for example, floods,
droughts and pollution of water); and
·
Implementation of proactive water services interventions.
To assist the Department
in attaining its key priorities over the medium-term and to strengthen the
Departments ability to carry out its functions, the Minister appointed a
committee of experts in June 2011 to review and re-engineer the Departments
business processes to ensure that functions are carried out efficiently.
The Committee is expected to make
recommendations on optimal approaches to restructuring the Department to
address backlogs in the rehabilitation and refurbishment of national bulk water
infrastructure, integrate bulk water infrastructure with reticulation
infrastructure at the local level, support improvements in the management of
wastewater treatment works within local government, and improve the financial
position of the water trading entity.
4. Overview of the service delivery environment of the
Department to contribute to the 12 Government outcomes
Within the outcomes-based
performance management framework adopted by Government, the Department
contributes to two critical outcomes:
the development of an efficient, competitive and responsive economic
infrastructure network (outcome 6), and the protection and enhancement of
environmental assets and natural resources (outcome 10).
The Department contributes to these outcomes
by ensuring the maintenance and supply availability of the countrys bulk water
infrastructure, protecting and enhancing environmental assets and natural
resources, and improving water quality and quantity of water resources.
During the year under
review, the Department focused its service delivery programme on the following
six strategic priorities, informed by the twelve government outcomes. Within
the Main Exchequer Account and Water Trading Entity, the following priorities
gave effect to Government outcomes:
4.1
Economic growth, rural development, food security and land
reform
This priority was
implemented with consideration of broad objectives outlined in outcomes 6, 7
and 9, which talk to the contribution of infrastructure to economic
development, rural development and support to local government.
During the year under review, the Department
cumulatively created 4 505 job opportunities through the Regional Bulk
Infrastructure Programme (RBIG).
The
programme completed five (5) bulk infrastructure schemes for the availability
of water supply for domestic use.
A
total of 4 174 additional resource poor farmers had access to water while 598
776 additional people, as informed by the Municipal Infrastructure Grant (MIG)
allocations, were provided with access to water.
A total of 8 068 rainwater harvesting tanks
were distributed, 6 308 of which were for access to water and 1 760 for food
production.
4.2
To promote sustainable and equitable water resources
management
This priority is driven
by the programme that ensures that the countrys water resources are protected,
used, developed, conserved, managed and controlled in a sustainable manner for
the benefit of the people and the environment through effective policies,
integrated planning strategies, knowledge base and procedures.
It further addresses government outcome ten
(10) which ensures that the country maintains environmental assets and natural
resources that are well protected and continue to update a range of strategies
for water management.
The following
frameworks have been on the agenda of the Department during the year under
review:
·
The National Water Resource Strategy;
·
The Pricing Strategy;
·
Desalination Strategy;
·
Ground Water Strategy; and
·
Re-use Strategy.
4.3
Strengthening the regulation of the water sector
This priority is to
address issues around the regulation, governance and control of the use,
development, conservation and management of water throughout the value chain
within the context of the relevant legislation.
To facilitate access to water for historically disadvantaged groups a
process of compulsory licensing was undertaken in a number of areas including
Tosca, Jan Dissel and Mhalthuze. Reports have been completed which will lead to
redistribution and final water use authorisations.
In an effort to improve
the issuing of water use licenses to various water users, the Department has
established a dedicated backlog eradication programme, known as Letsema.
Since the inception of Letsema, 3 358
applications dating from 2001 to 2010 have been finalised, leaving a backlog of
549 applications.
The Department also
facilitated the improvement of the regulation of drinking water quality through
compliance, monitoring and enforcement. The Department of Water Affairs had in
a previous financial year introduced incentive-based regulation in the form of
the Blue and Green Drop Certification Programmes as a means to improve drinking
water quality and wastewater service respectively.
These programmes were designed and developed
to inspire managers, specialists, and practitioners alike towards excellence;
based on the simple principles of setting stringent criteria; subjecting
municipalities to thorough auditing; ensuring improvement through consultative
auditing; and revealing performance by means of annual publications.
4.4
Support local government to deliver water services
To contribute to
Government Outcome 9, which facilitates a responsive, accountable, effective
and efficient Local Government system; Programme 4 of the Department
coordinates the Departments service delivery plan and strategic objectives at
the regional level.
The programme is
also charged with supporting service providers to ensure the acceleration of
providing water to communities.
5.
Overview of
attainment of targets to specific indicators
There is reasonable progress
in some of the key projects and slow progress in other projects, as will be
gleaned from below:
5.1
Regional bulk infrastructure programme (RBIG)
On infrastructure
projects, the following progress was achieved:
·
91% of the Inyaka Water Treatment Works was completed
against a target of 98%;
·
On the Nandoni Water Distribution Network and Water
Treatment Works, its achievement is 58% against a target of 79%; and
·
On the construction of the Nandoni Pipeline, its performance
is 20% against a target of 27%. For Hluhluwe, the Departments percentage
progress exceeded the targeted percentage by 1% (93% versus the target of
92%).
The Department has also
completed five (5) bulk infrastructure schemes out of a target of seven (7)
schemes.
The main reasons for the under-achievement
vary from the delayed appointment of professional service providers to tender
bids being awarded late.
5.2
Local government support
A total of 68
municipalities have been supported in implementing water conservation and water
demand measures to reduce water losses against a target of 62
municipalities.
The higher achievement
is due to the interventions that were in place to support municipalities
through the Departments Accelerated Community Infrastructure Programme (ACIP)
and donor funding.
5.3
Water schemes
A total of 52 water
schemes have been refurbished against a target of 51 schemes.
5.4
Water licenses
Although 93 water
licenses were issued to Historically Disadvantaged Individuals against a target
of 1 088 licenses, this is because licenses are demand driven and insufficient
information from applicants delayed the evaluation process.
6.
An overview of the
overall performance of voted funds: Vote 38 and Water Trading Entity
6.1
Overview of financial statements on Vote 38 for the 2011/12
financial year
The spending focus over
the medium term of the Department will be on developing bulk water
infrastructure, to accelerate delivery of water services to households,
agriculture and industry.
The Department
will also focus on strengthening economic regulation within the water sector.
Spending increased from
R5.1 billion in 2008/09 to R9 billion in 2011/12, at an average annual rate of
20.6 per cent.
This is driven by the
increase in expenditure on the development of the bulk water infrastructure,
which includes funds allocated for the construction of new dams and ancillary
infrastructure, and rehabilitating and repairing existing bulk infrastructure
in line with government's renewed emphasis on infrastructure development.
Transfers and subsidies
expenditure increased from R2.7 billion in 2008/09 to R3.5 billion in 2011/12,
at an average annual rate of 9.2 per cent, as a result of the development of
bulk water infrastructure.
These
included funds allocated for the construction of the De Hoop Dam and ancillary
infrastructure such as distribution pipelines for the Nandoni Dam, and the
rehabilitation of repair and existing bulk infrastructure.
The table below reflects
the spending trends of the Department over the current financial year.
|
Budget 2011/2012
|
YTD Expenditure
|
Variance
|
% spent
|
% Variance
Under
Expenditure
|
Programme
|
R 000
|
R 000
|
R 000
|
|
|
Administration
|
878 379
|
781 491
|
96 888
|
89%
|
11%
|
Water
Sector Management
|
852 351
|
511 807
|
340 544
|
60%
|
40%
|
Water
Infrastructure Management
|
2 384 963
|
2 384 020
|
943
|
100%
|
0.0%
|
Regional
Implementation and Support
|
4 774 145
|
4 375 501
|
398 644
|
92%
|
8.4%
|
Water
Sector Regulation
|
112 370
|
91 153
|
21 217
|
81%
|
18.9%
|
International
Water Cooperation
|
26 111
|
20 934
|
5 177
|
80%
|
19.8%
|
Total
|
9
028 319
|
8 164 906
|
863 413
|
90.4%
|
|
The Department had spent
R8.1 billion of the total allocation of R9 billion, which represented 90.4% of
the total expenditure of the Department.
In terms of spending trends within the programmes of the Department, the
following Programmes under spent on their allocations for the 2011/12 period.
Programme 1: Administration by 11%; 40% on Programme 2: Water Sector
Management, 8.4% on Programme 3: Regional Implementation and Support, 18.9% on
Programme 4: Water Sector Regulation and 19.8% on Programme 5: International
Water Cooperation.
The under expenditure in
Administration related to an allocation of R34 million that could not be spent
in respect of the Business Process Review (BPR) as the BPR Committee was
appointed in the middle of the financial year.
Unfilled vacant posts in Administration amounted to R12 million; goods
and services amounted to R32 related to accrual and commitments, machinery and
equipment amounted to R16 million while funds, in respect of the Learning
Academy amounted to R2.3 million.
The under expenditure in
Water Sector Management related to an allocation of R250 million for the
response to Acid Mine Drainage (AMD) in the
The spending on Programme
3: Water Infrastructure Management was at an acceptable level. The Programme
managed to make use of its allocated budget, which reflected an insignificant
variance.
The under expenditure in
Programme 4: Regional Implementation and Support related to an allocation of
R209 million not being spent on water services projects such as the Nandoni
Pipeline, Hluhluwe and Inyaka.
The approval
of service providers took longer than anticipated.
In respect of Moutse Bulk Water Supply, an
amount of R20 million could not be spent as the payment could not be captured
before the payment cut-off date.
Unfilled
vacant posts, including OSD posts amounted to R88 million.
Material ordered for regional bulk
infrastructure projects were not delivered at year-end.
This amounted to R81 million.
The under expenditure in
Programme 5: Water Sector Regulation was due to accruals and commitment
amounting to R5 million in the Goods and Services subprogramme.
Unfilled vacant post, including OSD posts
amounted to R16 million.
The under expenditure in
Programme 6: International Water Cooperation reflected an allocation of R3.7
million due to a number of planned international engagements not taking place.
This was mainly attributed to political
dynamics and postponements of certain activities in certain countries.
Unfilled vacant posts amounted to R1.4
million in this programme.
6.2
Overview of financial statements of the Water Trading Entity
for the 2011/12 financial year
The Water Trading Entity
(WTE) performs two functions: water resource management and infrastructure
management.
Water resource management
deals with the management of water quality, conservation and allocation of water
through the catchment management agencies or proto- catchment management
agencies (regional offices).
Infrastructure management deals with the operation and maintenance of
existing infrastructure as well as the development of new infrastructure.
To fund the development of new
infrastructure, the entity receives an allocation from the Department.
Funding for operation and maintenance comes
from revenue generated from raw water charges.
Water resource management charges cover the operational costs of
catchment management agencies.
The basis used to prepare
the WTE financial statements differed from the processes used by the
Department.
The WTE changed its
accounting framework from the International Financial Reporting Standards
(IFRS) Generally Accepted Accounting Practices (GAAP) to the Accounting
Standards Boards (ASB) Government Regulated Accounting Practices (GRAP).
The WTE adopted GRAP for the first time in
2011/12, which resulted in the re-classification and re-measurement of certain
annual financial statement items.
The increase in revenue
(24% compared to 2010/11) resulted primarily from increase in water consumption
volumes from some of the Departments major customers and the annual tariff
increase.
There was a decrease in expenditure
(11% compared to 2010/11) due to the following:
·
Operating expenditure decreased by 6% due to the
construction costs, which decreased by R20 million emanating from less spending
on Nandoni replacement of GRP pipes due to delays in appointing PSPs.
The pumping cost decreased by R23 million due
to less pumping demand on the
·
There was an increase in employee costs (7% increase
compared to 2010/11) due to annual salary adjustments; and
·
A decrease in impairment on financial assets of 78% due to
the management analysis that the historic plus current impairment provision on
debtors is sufficient.
This is perceived
as a revenue turnaround plan.
There was an increase in
total assets (2% compared to 2010/11), due to the following:
·
Increase in cash and cash equivalents by 46% due to
improvements in cash collections;
·
Receivables from exchange transactions have increased by
30%.
Although revenue from water sales
has also increased by approximately 30%, much work is still required to ensure
that debt collection is improved;
·
Property, plant and equipment increased by 1% (R925 million)
primarily due to an increase in Asset under Construction of some R1.1 billion
reduced by an increase in depreciation of R269 million compared to 2010/11; and
·
Increase in total liabilities (1% compared to 2010/11, an
amount of R236 million) resulted mainly from an increase of R160 million in the
provision required for dam safety rehabilitation.
There is still some work required to enhance
the processes involved in the formulation of the dam safety
rehabilitation.
There was also a
marginal increase in TCTA financial liability compared to the previous year.
7.
Report of the Auditor-General
The Committee has noted
with satisfaction that the Water Trading Entity has moved from a
disqualification to a qualified audit with emphasis of matters. Based on the
audit report of 2010/11, which highlighted 19 audit recommendations, management
of the WTE implemented or devised alternative actions to resolve the prior year
audit findings.
Fifteen (15)
recommendations are still in the process of being implemented.
The Department in its
Main Account too has begun the process of improving on its financial
management, and this may improve in the future years. In relation to the
Main Account
(Vote 38), the Department
received a qualified audit on issues relating to expenditure for tangible
assets and prepayments and advances, goods and services, irregular expenditure,
commitments, immovable tangible capital assets, movable tangible capital
assets, contingent liabilities, and loans. An emphasis of matter was given on
material under spending of the vote and financial reporting framework.
In relation to the
WTE
, the Department received a
qualified audit with emphasis of matters on the following:
·
Inadequate review and monitoring of compliance with
applicable laws and regulations;
·
Poor review and monitoring to ensure accurate and complete
daily and monthly financial and performance reporting; and
·
No reliable evidence to support regular, complete and
accurate financial and performance reports;
The WTE has a shared
internal audit division with the Main Exchequer Account, the division did not
have adequate personnel to carry out its mandate, and as a result, the internal
audit function is not effective.
Two
audit committee members resigned and they have not been replaced.
The Committee was
particularly concerned by the overview provided by a representative from the
office of the Auditor-General.
The
particular emphasis was on the risks posed in the public sector if no effective
checks and balances were systematically undertaken in the internal units. A
number of issues in the Department should be dealt with proactively instead of
reactively and these could be achieved if the Department committed to the
submission of quarterly reports.
On Procurement,
the Committee was
extremely concerned at some of the flaws and risks identified in the
procurement system of the Department.
This entailed deviations from the procurement process due to lack of
proper planning by project managers which lead to projects being outsourced
through deviations from normal procurement processes.
A deviation from procurement processes can
facilitate the risk of utilisation of favourite service providers, and
compromises the procurement process as the market and value for money is not
properly tested.
It can also
disadvantage other companies who might want to enter the market.
On irregular expenditure,
the
Department showed a number of cases of irregular expenditure which resulted in
poor/bad planning where appropriate approval is not sought.
Lack of contract management skills in the
Department and lack of accountability where non-Supply Chain Management
practitioners perform Supply-Chain Management function poses major risks to the
Department.
On the findings of
performance
against predetermined objectives, compliance with laws and regulations and
internal control
, the audit reflected the following:
·
The reasons for major variances between the planned and
reported (actual) targets are not adequately explained;
·
In terms of measurability, the performance indicators are
not well-defined;
·
The performance indicators are not verifiable;
·
Targets are not measurable;
·
Performance targets are not specific; and
·
The validity, accuracy and completeness of the actual
reported performance relevant to 82% of Programme 1 and 4.
8.
Oversight by the
Department over its Entities
Due to time and other
constraints, the Committee could not call each of the entities to the Budgetary
Review and Recommendation Review hearings. The Department presented the
relevant information to the Committee on the following entities:
·
Trans-Caledon Tunnel Authority (TCTA)
·
Water Research Commission (WRC)
·
Catchment Management Agencies: The Breede-Overberg Catchment
Management Agency (BOCMA) in the
8.1
Trans-Caledon Tunnel Authority (TCTA)
The TCTA, for the
financial year under review funded and implemented the following primary
projects the Lesotho Highlands Water Project (LHWP) in relation to the South
African portion of the delivery tunnel, the Berg Water Project (BWP), the Vaal
River Eastern Subsystem Augmentation Project (VRESAP), the Mooi-Mgeni Transfer
Scheme Phase 2 (MMTS2), the Komati Water Scheme Augmentation Project (KWSAP),
the Olifants River Water Resource Development Project Phase 2 (ORWRDP2), the
Mokolo-Crocodile River Water Augmentation Project Phase 1 (MCWAP1), the Metsi
Bophelo Borehold Project (MBBP) and issues relating to Acid Mine Drainage
(AMD), which in the main, focused on the pump station and treatment plant on
the West Rand.
In terms of the
performance of the TCTA, the focus was on the deficit for the 2010/11 and
2011/12 financial years.
The audited
results for 2010/11 recorded a R24 million surplus and this had been restated
to a deficit of R284 million in the current financial statements.
The overall reason for the restatement was
due to a change in accounting policies applied retrospectively to 31 March
2011, in accordance with the International Accounting Standards Presentation
and Disclosures, related to construction assets, previously recognised as
property, plant and equipment and intangible assets.
In terms of borrowing
rates and/or credit rating, the TCTA had gained and maintained market
credibility that enabled it to access off-budget funding for projects at
excellent rates.
The TCTA obtained a
clean audit report for the 2011/12 financial year.
8.2
Water
Research Commission (WRC)
The
Water Research Commission (WRC) derives its mandate from the Water Research
Act, Act No. 34 of 1971.
During the
2011/12 financial year, the WRC continued to leverage levy income by striving
to obtain funds from other sources to support water research.
During the year under review, the WRC managed
322 research projects at various stages of project life cycle, of which about
79% (259 projects) were active projects.
In addition, 133 reports were published.
The
WRC obtained an unqualified audit with matters of emphasis relating to IT
systems and procurement.
8.3
Overview
of Catchment Management Agencies
The
National Water Act, 1998 mandates the Minister of Water and Environmental
Affairs to establish Catchment Management Agencies (CMAs) for the management of
water resources at the catchment level.
In March 2012, the Minister of Water and Environmental Affairs approved
the establishment of nine CMAs in nine water management areas and these have
been gazetted for public comment.
The
Breede-Overberg CMA (BOCMA) in the
The
BOCMA and ICMA have made significant and effective strides in positioning the
entities to fulfil the mandate of protecting, using, conserving, managing and
controlling water resources in and equitable and sustainable manner while
appropriately involving all stakeholders in their WMA.
Key strategic challenges of skills and
capacity building are being addressed and overall the performance over the
reporting period has been satisfactory. Both CMAs received unqualified audits
with no matters of emphasis.
9.
Committees
Observations
The Committee has noted a
significant improvement, as stated in the report of the Auditor-General, in
relation to the financial management of the Water Trading Entity and the Main
Account of the Department. The Committee commended the Departments work
towards attaining the Millennium Development Goals in relation to the water
sector. The Committee acknowledged that institutional changes are in progress
in the Department, and whilst an overview was provided, detailed briefings on
an ongoing basis on certain issues would require further scrutiny by the
Committee.
Variances in attainment of performance indicators/targets
against specified indicators/targets
Concerns were raised on
whether the targeted outcomes of the Department not being attained in the
financial year resulted in the Department receiving an adverse, qualified or
disclaimer audit.
The methodology and
criteria used by the Department on ascertaining specific performance
indicators/targets during its planning and drafting of its strategic plan
needed further scrutiny to aid in better management and assessment of
performance.
The criteria and methodology
at which the present performance indicators/targets are being arrived at need
to be engaged with. A pre-audit is required to look at the usefulness of
targets and whether they are meaningful, attainable and time-bound to meet the
requirements set by the National Treasury.
There needs to be a linkage between the strategic plan and the budget.
Human Resources Issues
within the Occupational Sector Dispensation
The vacancy rate in the
Department across all programmes is quite high, and of concern to the
Committee. However, of particular importance is the unavailability of
professional specialists (namely engineers, technicians, project managers,
amongst others) within the Occupational Sector Dispensation.
This impacts negatively on the implementation
of projects, and may compromise the efficacy of attaining the Departments core
objectives, that is, the provisioning of bulk water infrastructure for
effective water service delivery.
The
Committee requested further details on the way in which the Department would
address the issue.
Appropriate
infrastructure delivery mechanism
The Committee urges
further engagements with the Department on the appropriate and optimum
mechanism or vehicle through which water infrastructure provisioning should
take place.
In this context, questions
were raised about the transfer of assets from the Trans-Caledon Tunnel
Authority (TCTA) to the Department and the ability of the TCTA, without assets
on its books, to borrow from capital markets and financial institutions.
The Committee would like to start a
conversation with the Department on optimal funding arrangements for the TCTA.
Procurement challenges
The Committee noted that
one of the principal weaknesses in the Department is in the area of
procurement, and maintained that there should be appropriate checks, balances
and protocols in place to prevent problems in this regard.
With regard to the WTE, the Auditor-General
could not ascertain whether full disclosure was achieved in terms of irregular
expenditure.
There were a number of
issues that constituted irregular expenditure due to disclosure problems in
relation to procurement.
The Committee requested a
report from the Department on all problems related to procurement and the way
in which the Department would handle these critical issues.
Financial controls
responsibility of Chief Financial Officer (CFO)
A number of instances of
financial accountability and irregularity in the regions were noted and this
required immediate action.
The Committee
is of the view that all financial aspects in regions and other branches should
have oversight from and be under the control of the national office. Therefore,
the regional and other branch officials dealing with financial matters should
be reporting to the Chief Financial Officer (CFO). The Committee wanted
assurance from the Director-General (DG) that these issues would be addressed,
and further requested that by the end of the year an implementation plan be
presented to the Committee reflecting the implementation of these changes.
Water infrastructure and
services for human and economic development
In
The key risk and/or
success factors are timely planning, appropriate solutions, new and appropriate
technology, skills and capacity (for effective project and operational
management), appropriate institutional arrangements, as well as financing and
financial management.
In dealing with
this, it is important to ensure effective use and management of water resources
(water use efficiency), culture and attitude, as well as effective
governance.
Water security should cover
the water resources management across the full value chain:
from source to tap and tap/waste to source.
This includes effective waste management and
associated infrastructure. This approach has major implications on aspects of
integrated planning, programme alignment; water services development planning
and outcomes based management.
To address key risk
and/or success factors extended partnerships with municipalities, and the
agricultural, industrial (including mining), energy and business sectors is
required. A core concern is the way in which some municipalities are managing
infrastructure and associated grants. Other challenges faced by municipalities
in relation to infrastructure relate to operational budgets for service
delivery and funding to maintain the current infrastructure.
In cases where municipalities have taken the
additional infrastructure, the requisite skills to function effectively is
limited due to limited technical staff. Another concern is the fact that some
municipalities, after the demarcation process, are required to deliver, operate
and maintain services across much larger areas than previously.
To address this, the
Department has entered into a collaborative arrangement with COGTA, which
includes work streams covering accelerated delivery, high-risk areas, debt
recovery, and finance and skills development.
It was noted that functionality of water infrastructure does not at
present form part of the mandate of this arrangement.
Furthermore, the
Department embarked on the development of a national water investment framework
and the development of an interim basic service programme focusing on 24
priority district municipalities, mainly in
Relevance of research
undertaken by the Water Research Commission
On the relevance of the
research undertaken by the Water Research Commission (WRC), the Committee
requested clarity on whether the research produced was benefiting anyone apart
from the academics who researched and published the research.
While there was acknowledgement that the WRC
was conducting some work of very high importance to the water sector, the
Committee was of the view the WRC needs to increasingly reflect on the overall
value of all its research to the South African water sector and determine
methods that measure the usefulness of its research outcomes, especially for
Government at all levels.
The Committee was of the
view that the WRC should sit down with the Department to discuss performance
indicators in the WRCs strategic plan. The South African Law Reform Commission
may be a good example of the type of strategic research that can be provided to
a Department. . The South African Law Reform Commission undertakes research on
behalf of the Department of Justice and Constitutional Development. Research is
aimed at problems being experienced in the justice system. The Water Research
Commission could look at a similar process. This would assist when evaluating performance
indicators at the end of the year and would give meaning and value to
performance auditing.
10.
Conclusions and
Recommendations
The Committee
acknowledges the successes attained by the Department during this financial
year. Most notably, the movement of the financial statements of the Water
Trading Entity (WTE) from a disclaimer over the last few years to a qualified
audit is praiseworthy.
Although, the
financial statements of the main account of the Department remains a qualified
audit, the Auditor Generals assessment that the financial affairs of the
Department has improved significantly, in some respects, is very encouraging
and must be acknowledged. The improvement of the financial management system of
both the Main Account of the Department and of the WTE, is a substantial step
in the right direction in terms of sound financial management.
In light of the above,
the Committee recommends the following:
·
It was difficult for the Committee to assess the performance
indicators/targets of the Department, as contained in the Annual Strategic Plan
of the Department, as the Committee was not part of the process of determining
these performance indicators/targets.
The Committee needs to sit down with the Department and the Office of
the Auditor-General to agree on the criteria for deciding the annual
performance indicators/targets and to assess if performance indicators/targets
for the current year were justified and relevant. Two days, in January 2013,
will be set aside to deal with these issues and to discuss how best to work
towards the determination of realistic performance indicators/targets for the
Department;
·
The Committee will convene a workshop, at the beginning of
next year, of relevant Portfolio Committees (Human Settlements
and Cooperative Governance and Traditional
Affairs), with the Department of Water Affairs and the Department of
Environmental Affairs, together with other relevant stakeholders and government
Departments, like Departments of Human Settlements, Cooperative Governance and
Traditional Affairs and Treasury,
to
discuss cross-cutting issues in water and environmental governance and service
delivery;
·
With reference to Goal 7 of the MDG relating to water
services issues, performance indicators/targets are only made applicable to
access to water infrastructure, whereas functionality of such infrastructure
does not form part of the performance indicators/targets.
Therefore, specific performance indicators on
the functionality of water infrastructure should be developed for
·
The Department and the Department of Local Government have
established a structure to process cross-cutting issues relating to water
services and provisioning. The Committee proposes issues of functionality of
water infrastructure should be included within the mandate of this structure;
·
The Committee strongly recommends that the Department
urgently embark on the drafting of a national water services strategy;
·
The Department should create a facility/database to assess
and monitor incidents of vandalism and destruction of water infrastructure and
record the losses in each instance, and annually report to the Committee in
this regard;
·
The Committee expects a detailed plan on all procurement
challenges faced by the Department. as well as the strategies to be
followed
by the Department to resolve
these problems;
·
A detailed report should be provided to the Committee on the
way in which the WRC undertakes research on relevant, current and critical
water issues facing South Africa, and how the WRC intends to measure the
effectiveness of its research outcomes, including the establishment of relevant
performance indicators/targets;
·
The Department and TCTA must engage with the Committee on a
possible appropriate infrastructure provisioning mechanism for the Department,
including future funding models for the TCTA, and whether TCTA should have some
capital assets on its books;
·
A list of pending disciplinary cases involving senior staff
needs to be provided to the Committee, along with recently completed
disciplinary cases; and
·
The Department in its reporting of oversight of entities
next year should also include water boards and water user associations.
Report
to be considered.
Documents
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