ATC131031: The Budgetary Review and Recommendation Report of the Portfolio Committee on Rural Development and Land Reform, dated 30 October 2013

Rural Development and Land Reform

The Budgetary Review and Recommendation Report of the Portfolio Committee on Rural Development and Land Reform, dated 30 October 2013

The Portfolio Committee on Rural Development and Land Reform having considered the performance and submission to the National Treasury for the medium term period of the Portfolio Committee on Rural Development and Land Reform and Ingonyama Trust Board reports as follows:

1.         Introduction

The Money Bills Amendment Procedures and Related Matters Act, 2009 (Act No.9 of 2009) requires that the National Assembly, through its committees, conducts annual assessment of the performance of each national Department with regard to the medium term estimates of expenditure. This report accounts for the processes carried out by the Portfolio Committee on Rural Development and Land Reform (the committee) during assessment of the performance of the Department of Rural Development and Land Reform (the Department). It further makes the recommendations for a budget review for the Department.

1.1 The mandate of the Portfolio Committee on Rural Development and Land Reform

The committee, as an extension of the National Assembly, is governed by the Rules of the National Assembly to oversee the portfolio of rural development and land reform. It therefore oversees the Department of Rural Development and Land Reform. The mandate of the Department is a transversal function that aims to create and maintain an equitable and sustainable land dispensation. Furthermore, the Committee oversees the work of the public entities and commissions that are linked to the Department; namely, the Commission on Restitution of Land Rights (the commission) established in terms of the Restitution of Land Rights Act, 1994 (Act 22 of 1994), and the KwaZulu-Natal Ingonyama Trust/ the Ingonyama Trust Board established in terms of the KwaZulu-Natal Ingonyama Trust Act, 1994 (Act 3 of 1994) amended by the National Act 9 of 1997.

The Committee, therefore, considers legislation from the Department and its entities, exercise oversight over implementation of the various programmes of the Department and related entities, facilitate public participation, consider Departmental budget votes, enquire and make recommendations about any aspect of the Department, including its structure, functioning and policy. The Committee exercises its powers guided by the Constitution, statutes and the Rules of the National Assembly.

1.2 The Department of Rural Development and Land Reform

The mandate of the Department is derived from the priorities of government’s Medium-Term Strategic Framework (MTSF). It coordinates implementation of outcome 7 of the 12 outcomes that the government has set for the period between 2009 and 2014. Outcome 7 is mainly about rural development - creation of vibrant, equitable and sustainable rural communities and food security for all. The key outputs linked to this outcome are sustainable agrarian reform with a thriving farming sector, improved access to affordable and diverse food, improving rural services to support livelihoods, improved employment and skills development opportunities and enabling institutional environment for sustainable and inclusive growth.

The strategic plan (2011 -2014) and the 2012/13 annual performance plan (APP), adopted outcome 7 as its vision, i.e. “vibrant, equitable, and sustainable rural communities” and its mission being to “initiate, facilitate, coordinate, catalyse and implement an integrated rural development programme”. The vision and mission of the Department is underpinned by the strategy of “agrarian transformation, interpreted to denote a rapid and fundamental change in the relations (systems and patterns of ownership and control) of land, livestock, cropping and community”. This strategy aimed towards contributing in social cohesion and development. The Department interpreted social cohesion and development to mean, shared growth and development, full employment, equity and cultural progress. The work of the Department is carried out in five key programmes. Table 1 of this report outlines the programmes within the MTEF period, aligning strategic goals to programmes.

Table 1: Strategic outcome oriented goals

Programme

Strategic Goal

Strategic Goal Statement

Administration

-         Corporate governance and service excellence

-         Reformed policy, legislative and institutional environment

-         Sound corporate governance and service excellence through compliance with legal framework achieved by 2014

-         Reformed policy, legislative and institutional environment by 2014

Geo-spatial and cadastral services

-         Spatial equity

-         Job creation and skills development

-         Effective land planning and administration that is based towards rural areas

-         Improved access to sustainable employment and skills development opportunities by 2014

Rural Development

-         Effective land planning and administration that is biased toward rural areas

-         Integrated institutional  arrangements for effective cooperative governance and stakeholder participation by 2014

-         Sustainable agrarian reform

-         Improved food production

-         Rural livelihoods

-         Job creation and skills Development

-         Effective land planning and administration that is biased toward rural areas

-         Improve intergovernmental relations through institutional arrangements for effective cooperative governance and stakeholder participation

-         Increased access to affordable, diverse and nutritious food by 2014

-         Increased access to affordable, diverse and nutritious food by 2014

-         Improved rural services that support sustainable livelihoods by 2014

-         Improved access to sustainable employment and skills development opportunities by 2014

Restitution

-         Settle land restitution claims and provide settlement support

-         Land rights restored or alternative forms of equitable redress awarded to claimants by 2014

Land Reform

-         Sustainable agrarian reform

-         Job creation and skills development

-         Increased access to and productive use of land by 2014

-         Providing tenure security for people living on commercial farms and communal lands

-         Improved access to sustainable employment and skills development opportunities by 2014

Source: adapted from the amended 2011-2014 Strategic Plan of the DRDLR

The purpose of this report

In accordance with Section 5 of the Money Bills Procedures and Related Matters Amendment Act (9 of 2009), the National Assembly, through its committees, must assess service delivery performance of each national department and submit BRRR for tabling in the National Assembly. The process allows the National Assembly to evaluate effective and efficient use and forward allocation of resources, and may make recommendations on forward use of resources. This report therefore presents overall assessment of the Annual Report of the Department of Rural Development, the Commission on Restitution of Land Rights, and the Ingonyama Trust Board. It further proposes some budget recommendations.

1.3 Approach and methods

In view of this mandate and Section 5 of Act 9 of 2009, the Committee has embarked on processes leading to this Budget Review Recommendations Report. The processes included:

Ÿ  Review of various policy documents, the current strategic plans of the Department of Rural Development and Land Reform and the Ingonyama Trust Board, documents; oversight reports; reports of meetings with stakeholders and community representatives.

Ÿ  Briefing sessions with the Commission on Restitution of Land Rights, the Ingonyama Trust Board and the Department of Rural Development and Land Reform

Ÿ  Analysis of financial statements and programme performance of both the Department and the Ingonyama Trust Board;

Ÿ  Analysis of the relevant reports from the Auditor-General of South Africa and Standing Committee on Public Accounts (SCOPA); and

Ÿ  Consideration of other performance reports such as the Management Performance Assessment Report and commitments to the outcomes agreements from the Department of Performance Monitoring and Evaluation (DPME).

1.4 Outline of the report structure

Following this introductory chapter, the report is divided into seven sections as follows:

Section 1& 2:    It provides overview of the key relevant policy focus areas. The section sets the scene for analysis of the performance of the DRDLR and the Ingonyama Trust Board. It assesses the extent to which the DRDLR is aligned to the current policy direction, especially implementation of government priorities.

Section 3:         It discusses an overview analysis of financial and performance recommendations of the Committee for the 2011/12 reporting period, and it is based on the previous Budget Review Recommendations Report.

Section 4:         This section provides an overview and assessment of financial performance for the 2012/13 financial year. It is based on the financial statements of the Department, also drawing from the other reports of the Auditor-General of South Africa and SCOPA.

Section 5:         This section is based on the assessment of the service delivery in terms of the planned interventions according to the predetermined objectives, priorities of the Department as well as those strategic projects. It is informed by the reports of the Department as well as the findings from the oversight visits.

Section 6:         This section makes observations and attempts to present the conclusions drawn from the observations of the Committee in the processes of assessment of the performance of the Department of Rural Development and Land Reform.

Section 7:         This section presents recommendations to the National Assembly in respect of the performance of the Department

2.         Key relevant policy focus areas

During the 2012 State of the Nation Address (SONA), President JG Zuma, identified inequality, poverty and unemployment as the foremost challenges confronting South Africa. He announced some of the initiatives relating to the portfolio of rural development and land reform that could contribute to addressing the identified challenges; namely, realisation of a constitutional obligation of restitution of land rights for those who were dispossessed by the Native Land Act of 1913 (Act 27 of 1913). The Green Paper on Land Reform, which had been widely circulated for public comments, was also identified as an opportunity for extensive public participation in the redesign of the programme of land reform. Among the issues to be addressed was the challenge of the slow pace of land reform, mainly attributed to the ‘willing buyer - willing seller’ or market-based approaches to land acquisition.

In line with the July 2011 Cabinet Lekgotla, a decision made to up-scale delivery of services in the identified 22 poorest districts; hence the Department prioritised Comprehensive Rural Development Programme (CRDP) interventions in those areas. Critical interventions were focussed on expanding agricultural production by small-scale farmers; extending core infrastructure to rural areas; increasing jobs and skills; and revitalization of small towns. The key priorities of the Department of Rural Development and Land Reform further draws on the outcomes approach of government, particularly Outcome 7.  The strategic plan and the APP have demonstrated the preparedness of the Department to address the triple challenges of unemployment, inequality and poverty. Priorities and strategic objectives of the Department expressed its strategy for addressing these challenges.

The foremost priorities of the Department in the Medium Term Strategic Framework are:

­    Improving productivity of land reform projects through effective implementation of the Recapitalisation and Development programme;

­    Expediting the finalization of land claims;

­    Rolling out the CRDP effectively so that livelihoods of rural communities are improved;

­    Improving corporate governance and ensuring enhanced service delivery;

­    Implementing proper change management and innovation strategies; and

­    Enhancing the efficiency of information management systems.

During the 2013 SONA, the President announced that government would reopen lodgement of land claims to accommodate those who missed to lodge land claims by the closing date of 31st December 1998, to provide for exceptions to the 1913 cut-off date in order to accommodate the historical land marks, heritage sites and descendants of the Khoi and San who lost their land rights prior to 1913.  The Committee was concerned that such a provision will have to comply  with the constitution. In addition, the President stated that government has put in place mechanisms to fast track land redistribution, especially to curb the weaknesses of the willing buyer willing seller through the application of the just and equitable principle of compensation as set out in the Constitution. The SONA further highlighted that particular interventions aimed at the youth development would be made, especially targeting the National Rural Youth Service Corps (NARYSEC) and Rural Youth Hubs. Both the Strategic Plan and the Annual Performance Plan have demonstrated how the Department would address these key pronouncements.

In February 2013, the Department amended the existing Strategic Plan (2011-2014). It also developed the 2013/14 Annual Performance Plan that clarifies the high level priorities and strategies contained in the amended Strategic Plan. The Department reported that the processes to develop the Annual Performance Plan were guided by the National Development Plan, the New Growth Path (NGP) and the Outcomes Approach of government, in particular Outcome 7.

3.         Financial and performance recommendations of the 2011/12 reporting period

This section presents an overview of the Committee’s financial and service delivery recommendations for the 2011/12 reporting period as presented in the Budget Review Recommendations Report of October 2012.

3.1     Financial recommendations

The Committee noted that the portfolio of rural development and land reform forms part of the top five priorities of government. It further recommended that budget allocation for this mandate should reflect the high priority accorded to this portfolio. It specifically recommended increases in allocation for the following programme areas:

- Restitution: Noting that restitution is a constitutional imperative in terms of Section 25(7) of the Constitution, and that those whose right in land was dispossessed under apartheid laws are entitled to equitable redress, the Committee recommended that National Treasury and Department should find appropriate mechanisms to finance finalisation of all outstanding and backlogs claims by 2014. The Committee further sought that the Department of Rural Development and Land Reform and National Treasury develop a programme around which funding for restitution, especially the backlog claims, would be executed.

- Funding for smallholder farmers : The Committee observed that success of land reform is assessed in terms of amount of land transferred, but most importantly whether, and how, the land was being used. Having identified that lack of equipment and poor infrastructure in land reform farms as well as the agricultural schemes, the Committee recommended increase in allocation to cater for infrastructure development on farms and start-up capital. Such increase in allocation would have augmented the costly recapitalisation and development fund and supported increase in farm productivity.

3.2        Service delivery recommendations

With regard to service delivery, the Committee’s recommendations were based on the Committee’s observations regarding inadequate coordination of government activities, weak post-settlement support, inadequate funding for rural development and support to rural livelihoods.

The following paragraphs summarises the Committee’s recommendations to the Minister of Rural Development and Land Reform for the 2011/12 financial year:

-                Enhance effective coordination among the various spheres of government and integration of rural development at local and/or district levels in a manner that fosters intergovernmental approach to rural development.

-                Develop an intensive programme for staff development to address capacity challenges in the area of policy development, monitoring and evaluation, and coordination of rural development programmes. Particular focus was on development of monitoring and evaluation systems to track implementation progress and identify problems and deficiencies in project implementation across the programmes, especially CRDP and land reform. The second main area was in the implementation of the Risk Management Strategy and Fraud Prevention Plan.

-                Build capacity, structures and systems to implement land reform as proposed in the National Development Plan. The Committee recommended an alignment of land reform with agricultural/farmer support programmes of the Department of Agriculture, Forestry and Fisheries. Crucial aspects of the recommendation related to provision of access to input costs, access to markets, agricultural research and extension support. In addition, the Committee recommended that land reform be used as a strategy to create and support smallholder farmers.

-                Enhance the performance of the NARYSEC programme and present plans on how it would ensure that the graduates from this programme are deployed or integrated in work place.

-                Facilitate the review and harmonisation of all legislation that impacts on development of the rural areas, For example, the Communal Property Associations Act, 1996 (Act 28 of 1996), The Traditional Leadership and Governance Frameworks Act, 2003 (Act 41 of 2003) and the Traditional Courts Bill [B15 – 2008].

Further recommendations relating to the Ingonyama Trust Board were:

-                Development of a policy on disbursement of funds to relevant traditional communities.

-                Holistic assessment of the proposed decentralised district offices of the Ingonyama Trust Board and provision of report on the implications (financial and governance) of the decentralisation process.

-                Review its bursary policy and clarify the criteria through which deserving students in its area of jurisdiction qualify for bursary funds.

-                Seek ways to resolve the longstanding matters by the Auditor-General, especially the reasons for receipt of qualified audit opinion. The Committee suggested that management meetings with the Auditor-General should be used to clear up any differences between the Auditor-General and the Ingonyama Trust Board.

During the 2013/14 processes to consider Budget of the Department of Rural Development and Land Reform, the Committee made the following recommendations:

The Department of Rural Development and Land Reform

The Department should finalise and implement the Human Resource Development Strategy as well as the Organisational Renewal Plan in order to enhance its capacity to deliver on its mandate to coordinate and facilitate rural development and land reform. The Committee further urged the Department to enhance its monitoring of the financial support it provides to the holders of its bursary scheme, and further requested that it present their performance in relation to completion of the programme and placement within the Department.

The Commission on Restitution of Land Rights was urged to present a report about the extent of outstanding claims and their research statuses. The report was meant to include those being settled in phases as well as the total estimates for cost requirements for finalisation of outstanding land claims. In addition, the Committee recommended that it should build capacity for monitoring and evaluation of land reform projects, especially the recapitalisation and development programmes which seeks to fulfil the intention to bring all land reform under full production. Among the most important matters was the fact that most of the work of the department was being hamstrung by silo approach to interventions, hence the Committee recommended that the Department should devise mechanism that fosters joint planning and integrated approach to rural development.

The Ingonyama Trust Board

The matters relating to payment of rates and taxes topped the agenda of issues that the Ingonyama Trust Board should address. The Committee recommended that the ITB should continue to engage with the municipalities about the matter of payment of rates and taxes by beneficial occupiers and report to Parliament via the Minister about these matters. The Committee further recommended that the ITB present a detailed plan with financial implications of the decentralisation of its operations to the districts, and how the offices would work with the offices of local municipalities and district municipalities, the Committee was concerned about competition instead of these offices complementing each other. The Ingonyama Trust Board should present a detailed plan about its programme to disburse funds (or 90 per cent of its own income) to traditional communities as well as its programmes to ensure that the lives of residents on the Ingonyama Trust land are improved through integrated development initiatives for a comprehensive rural development.

4.       Overview of financial performance

4.1     Vote allocation and spending (2009/10 – 2014/15)

Over the three years since 2009/10 financial year, the Committee observed significant increases in Administration and Geo-spatial and Cadastral Services. Such an increase has been linked to the implementation of the CRDP, a new programme that started at the beginning of this current administration. Part of the reasons for the increase in the Geo-spatial and  cadastral services Programme was an implementation of the occupational specific dispensation for land surveyors. In addition, rural development programme has also seen dramatic increases due to a number of projects implemented under this programme, such projects included, but not limited to, construction of the Dalibhunga Mandela Legacy Bridge, roll out national fencing scheme, establishment and registration of cooperatives and rural enterprises. The programme for restitution and land reform accounted for the overall factors influencing the expenditure over the medium-term. Funds were allocated to settle land claims, transfers to the Agricultural Land Holding Account (AHLA) to recapitalise and develop distressed farms, and acquire land for redistribution.

Table 2: Expenditure Estimates for the Department of Rural Development and Land Reform

Programme

R million

2009/10

2010/11

2011/12

2012/13

2013/14

2014/15

Outcomes

Outcomes

Outcomes

Adjusted

Outcomes

Estimates

Estimates

Administration

574.8

686.6

934.4

1 091.3

1 091.3

940.7

893.0

Geo-spatial and cadastral Services

311.0

371.7

583.0

595.9

595.9

508.5

542.5

Rural Development

76.8

360.5

786.3

1 041.2

1 041.2

1 227.4

1 278.7

Restitution

2 331.6

3 776.6

2 376.3

2 961.5

2 961.5

3 388.0

3  717.3

Land Reform

2 569.6

1 937.2

3 317.8

3 284.2

3 284.2

3 395.1

3 473.8

Total

5 863.8

7 122.9

7 997.7

8 974.1

8 974.1

9 459.7

9 905.3

Source: National Treasury (2013)

4.2     Financial performance for the 2012/13 financial year

As illustrated in Table 3, during the period under review the Department appropriated a budget of R8.877 billion, which was adjusted with an increase of R96 519 million in September 2012. Therefore, the final appropriation was R8.974 billion. By 31st March 2013, the total expenditure of the Department was R8.919 billion representing a spending of 99.4 per cent of its adjusted allocation. The Committee noted that the expenditure was an improvement from 2011/12 total expenditure of 98.3 per cent of the adjusted allocation. It is reported that the under-spending was attributed to inability to fill vacant posts (R33.6 million), unpaid household grants (R17.8 million) and non-payment of goods and services (R2 million) due to late submission of invoices.

Table 3: Budget allocation and spending per Programme for 2012/13

Programme

Final

Appropriation

Actual Expenditure

Variance

Expenditure as % of final appropriation

R’000

R’000

Administration

1 107 274

1 103 430

3 844

99.7%

Geo-spatial & Cadastral Services

550 932

548 364

2 568

99.5%

Rural Development

1 086 208

1 075 584

10 624

99.0%

Restitution

2 885 753

2 865 733

20 020

99.3%

Land reform

3 343 918

3 326 456

17 462

99.5%

Total

8 974 085

8 919 567

54 518

99.4%

Source: DRDLR (2013) Annual Report of the Department of Rural Development and Land Reform

The Committee further noted a slight decrease in the usage of consultants. For example, in 2012/13 R441.419 million was used for payment of consultants whereas the previous financial year the Department had spent R496.307 million. The Department has used consultants to address the capacity constraints in relation to internal audit and infrastructure project management. The Committee welcomed the decrease in the use of consultants however expressed concern that this figure was still very high and urged the Department to find mechanisms to ensure that usage of consultants was kept at a minimal level and actually used where necessary. The Department does not have conditional grants. However, it transferred R195 million to government entities supporting the Department’s work.

The Committee and the Department engaged in a debate about using budget expenditure as a gauge for service delivery targets. The Committee expressed concern that although 99.4 per cent of the budget was spent, the department has achieved 8 of its 26 targets, representing only 38 per cent of the targets. For example, the Department has spent enormous amount of time in policy development processes, yet the legislation has not come to finality. The Committee’s view was that this is a planning matter and that the department should be realistic about what it could achieve.

Whilst the Department has made payments to an amount of R853.296 million to conveyancers, the actual transfer of properties has not taken place. The Committee urged the Department to find mechanisms through which land transfers for land reform could happen in a timely manner. Another significant concern of the Committee relates to an increase in fruitless and wasteful expenditure due to court interest linked to land restitution. The Committee welcomed that the Department has established a Finance Compliance Committee to analyse all transactions that have been identified as possible fruitless and wasteful expenditure. It is anticipated that this Committee could resolve the long standing matter of fruitless and wasteful expenditure. The most worrisome issue is an irregular expenditure of R61.857 million of which R56.169 million relates to previous years and R5.688 million for 2012/13 financial year. Irregular expenditure for 2012/13 is due to non-compliance with supply chain (R1.496 million) and overspent on Restitution Projects (R4.192 million).

The Sections below summarises the financial performance of programmes:

4.2.1  Administration : The Department reported that this programme managed to spend R1.103 billion of the R1.107 billion of its final appropriation. The expenditure represents 99.7% of the final appropriation for the programme. The Committee noted with concern that whilst there were a lot of capacity constraints; the Department has not spent about R33.6 million in filling vacant positions.

4.2.2  Geo-spatial and cadastral service : Of the entire final appropriation of R550 million to this programme, R548 million or 95.5 per cent was spent. Much of the expenditure of this programme went into survey of state land in the former homelands and capacity building in terms of skills training in the field of geomatics. It was however reported that there was a need to build up capacity for this programme to combat capacity constraints which contributed to the failure in meeting some of the set targets under this programme (the details are provided in the section which provides details on service delivery performance per programme).  The virements of R45 million from this programme to Rural Development to augment the shortfall on the NARYSEC programme for stipends.

4.2.3  Rural Development : The Programme received a final allocation of R1.086 billion and managed to spend 99 per cent of the allocation. The under-expenditure for this programme can be attributed to inability to spend in purchasing of goods and services due to project delays. The Department further reported about an under-expenditure of 13.24 per cent of the final appropriation in transfers and subsidies to provinces, especially after the virements. The programme further reported about the roll-overs of R 96 million for finalisation of the Mvezo Bridge in the Eastern Cape. Furthermore, shifts of 26.8 per cent of the funds within the Programme were reported during budget adjustment in September 2012.  However,   according to the Department most of the shifts were due to incorrect classification in the 2012 Estimates National Expenditure (ENE).

4.2.4  Restitution: Restitution received budget allocation of R2.885 billion and spent R2.865 billion, representing an expenditure of 99.3 per cent of the total allocation. The Committee noted that the final appropriation was adjusted down from R3 billion during the September 2012. Furthermore, R22 million allocated for compensation of employees was declared savings. The report shows virements of R75.766 million from restitution grants in order to implement development support for restitution projects under the Recapitalisation and Development Programme.

4.2.5 Land Reform: The final allocation for the land reform programme for the year under review was R3.343 billion, of which R3.326 billion or 99.5 per cent was spent. The Committee noted the improvement in the expenditure as compared to the 99.1 per cent expenditure during the 2011/12 reporting period. However, the greatest concern was that a total of R26.071 million in the adjusted budget was shifted from compensation of employees due to inability to fill vacant positions, of which R20.957 million of that was used for consultants.

4.3     Financial performance 2013/14

This section analyses the performance of the Department for the 1st and 2nd quarters of 2013/14 financial year. The Committee noted that the total budget available for the Department is R9.5 billion, a nominal increase of R485.7 million from the 2012/13 financial year.

Table 4:  Second quarter expenditure report, 2013/14

R’000

Current
budget

Spending

Balance

%
spent

Budget as % of total

Spent as % of total

Drawings

Under / (over)

spent

%

spent Q1

Administration

940,652

602,904

337,748

64.1%

9.9%

11.8%

456,268

(146,636)

30.2%

Geo-spatial & Cadastral Services

508,504

328,736

179,768

64.6%

5.4%

6.5%

237,698

(91,038)

22.4%

Rural Development

1,227,423

881,640

345,783

71.8%

13.0%

17.3%

616,881

(264,759)

34.6%

Restitution

3,388,048

1,703,793

1,684,255

50.3%

35.8%

33.5%

2,425,459

721,666

11.6%

Land Reform

3,395,113

1,571,582

1,823,531

46.3%

35.9%

30.9%

1,640,439

68,857

21.7%

Total

9,459,740

5,088,655

4,371,085

53.8%

-

-

5,376,745

288,090

20.6%

Source: DRDLR (2013) Quarterly Report

As illustrated in Table 4, the largest share of the budget of the Department has been allocated for the two programmes; restitution (35.8%) and land reform (35.9%) programmes. Rural development and Administration programmes have been allocated 13% and 9.9% of the entire budget allocation of the department respectively, whereas Geo-spatial and cadastral services allocations accounts for only 5.4 per cent.

When one considers the composition of the budget according to economic classification, transfers and subsidies accounts for 60% of the allocation or R5.4 billion, goods and services 23% or R2.0 billion, and compensation of employees R1,5 billion or 17%. By the end of the second quarter of 2013/14, the Department had spent R5 billion or 53.8 per cent of the current budget. The main drivers were the programme of Rural Development (71.8%), Administration (64.1%), Geo-spatial and cadastral services (64.6%). Restitution and Redistribution’s expenditure was at 50.3% and 46% respectively. As illustrated in Table 4, the programmes of Administration, Geo-spatial and Cadastral Services had over-expenditure which the Department explained that it would be resolved as they do adjustments.

By the end of the 2nd quarter, the Department had spent R5.0 billion or 53.8 per cent of the appropriated funds.

Table 5: Total adjusted appropriations for 2013/14

Voted

(Main appropriation)

R’000

Total adjustments

Adjusted appropriation

Administration

940,652

249,141

1,189,793

Geo-spatial and Cadastral Services

508,504

286,210

794,714

Rural Development

1,227,423

565,000

1,792,423

Restitution

3,388,048

(471,210)

2,916,838

Land Reform

3,395,113

(629,141)

2,765,972

Total

9,459,740

-

9,459,740

Source: DRDLR (2013)

4.4     Summary of the 2014/15 MTEF financial allocations

The 2014/15 financial allocations takes into consideration of CRDP framework’s strategic thrust of an integrated programme of rural development, land reform and agrarian change, with intensions to achieve social cohesion and development. It further considers the challenge of marginalisation of the poor, with many rural areas and households trapped in a vicious cycle of poverty as stated in the NDP. Against this background, the view that rural areas and communities require greater social, economic and political opportunities to overcome the legacy of marginalization and poverty has influenced the thinking in determining allocations for 2014/15.

The Department has worked with other sector partners to draft the Priorities for the 2014 – 2019 Medium Term Strategic Framework (MTSF). This prioritization was guided by the above frameworks and the resources available to meet the demands of the tasks. At the end of the process it was clear that the current baseline was not aligned with the CRDP process flow to assist with effective implementation of the priorities. Following the Green Paper on Land Reform processes, the department introduced a set of new policies and legislation that have financial implications on the budget of the department. This necessitated reprioritization. In consideration of the reprioritizing the budget within the current baseline and existing structural deficiencies in the budget, further funding requests were necessary. The Department therefore recommended additional funding of R6.8 billion over the MTEF period.

National Treasury advised the Department to review its reprioritisation so that it realises savings of R2 billion over the 2014 MTEF baseline. The Department therefore attempted to ensure that the existing commitments should be funded as far as possible but still save R2 billion. Key strategic commitments were for restitution, land reform and administration, and these catered for compensation of employees, goods and services contracts, land claims (with a possibility to conclude them within the MTEF period), recapitalisation and development, as well as land acquisitions for redistribution.

4.4.1  MTEF financial reprioritisation

· Administration: The current indicative allocation amounts to R892.9 million. The Department reprioritized R316.7 million to administration, hence the budget allocation increased to R1.209 billion, constituting 12% of the total department’s budget.  When one considers the costs relating to the provincial support services of R324.5 million and office accommodation costs of R141.7 million, the total allocation for administration in real terms amounts to R743.5 million which constitutes 7.5% of the total department’s budget of R9.905 billion.

· National Geomatics Management Services : Its indicative allocation is R542.5 million. An amount of 262.3 million was reprioritized for National Geomatics Management Services. The budget allocation for this programme was increased to R804.8 million, catering for e-cadastre, Spatial Planning and Land Use Management Act (SPLUMA) and state domestic facilities. The programme remains a budget shortfall of R258, 3 million for the implementation of SPLUMA and the development and implementation of the e-cadastre.

· Rural Development : The indicative allocation amounts to R1.278 billion, the reprioritization an amount of R832.8 million to this programme increased budget allocation to R2.211 billion. The programme still remained with a budget shortfall of to R872.5 million for Rural Enterprise and Industrial Development (REID). Additional funding for NARYSEC will be requested through economic competitive bid.

· Restitution : Current indicative allocation amounts to R3.717 billion. An amount of R756.6 million was reprioritized through CRDP process and decreased budget allocation to R2.961 billion.  Therefore the programme remained with a budget shortfall of R686 million for the reopening of the lodgment of land claims. The Department will make a submission to National Treasury.

· Land Reform: The current indicative allocation amounts to R3.474 billion, but R655.4 million was reprioritized through CRDP process and decreased budget allocation to R2.818 billion. The programme therefore remains with a budget shortfall of R570, 5 million for recapitalization to support small holder farmers and the establishment of the Office of the Valuer-General.

5.         Overview and assessment of service delivery performance

This section draws on the analysis of the programme performance against the predetermined objectives as presented in the strategic plan and the Annual Performance Plan. It further draws on other monitoring work on the performance on commitments in the Outcome programme by the Department of Performance Monitoring and Evaluation.

5.1.       Overview of performance: Service delivery predetermined objectives 2012/13

5.1.1     Programme 1: Administration

The programme contributes to the two strategic goals; namely, sound corporate governance and service delivery through compliance with legal framework by 2014; and reformed policy legislative and institutional environment by 2014. Some of the strategic deliverables for the year under review were implementation of audit management plans, submission of 11 pieces of legislation to Parliament and 10 policies to Cabinet, and ensure not more than 10% of funded vacant position.

The Committee noted that the Department did not achieve any the targets set under this programme. The vacancy rate increased from 11 per cent in 2010/11 to 11.4 per cent in 2011/12; for 2012/13 the Department had 16% funded vacant posts. The Department reported that the increase resulted from the number of new positions that were established, especially in the programme of Rural Development whose vacancy rate was 48.6 per cent by 31 March. Whilst concerned about 68% instead of 100% implementation of audit management plans, and 48% instead of 50% implementation of organisational renewal plan, the Committee welcomed the attempts to ensure that these targets were achieved.  The Committee observed that the Department has a challenge in filling positions at senior management level, which has led to its dependence on the use of consultants. The Committee therefore, recommended the Department to reduce the high dependence on consultants. The Committee also urged the Department to fill the vacant posts and to relook at its staff retention policy. It emphasised implementation of audit management plans as a strategic intervention in addressing the internal system weaknesses.

The Committee commended the Department for completion of the Spatial Land Use Management Bill, signed into law by the President in 2013. The Committee expressed concern over the inability to submit to Parliament the strategic legislation; namely Restitution of Land Rights Amendment Bill, Extension of Security of Tenure Amendment Bill, Property Valuation Bill, and Communal Property Associations Amendment Bill. In addition, it was concerned that the Department submitted 1 of the 10 policies to Cabinet. However, the Committee has noted that during 2013/14 financial year, progress has been made in policy work and the Minister has approved many policies emanating from the work done under the Green Paper on Land Reform. However, there was still lack of progress in tabling legislation in Parliament. At the time of consideration of this Annual Report, only the Restitution of Land Rights Amendment Bill was tabled and referred to the Committee. The Committee urged the Department to improve on its capacity for policy and research in order to address some of these challenges.

5.1.2     Programme 2: Geo-spatial and Cadastral Services

Through this programme, the Department provides cadastral surveys, geodetic and topographical surveys, spatial planning and information, and technical services in support of sustainable land development. For the year under review, its key deliverables were: to complete the State land register, to develop Spatial Development Plans for municipalities; and to address the challenge of scarce skills by piloting cadastral skills training programme.

The Committee commended the Department for verification of 99.5% of the State land register, surveying 2.4 million hectares of state land in former homelands and for the introduction of state land administration and tenure reform branches. This was hailed as a success because it was a longstanding matter upon which the Auditor-General always found a basis for giving the Department a qualified audit opinion. In addition, the Committee expressed appreciation for the capacity building programmes which include trainings in geomatics as well as partnerships with some of the leading universities in South Africa to mitigate against scarcity of technical expertise in the geomatics profession.

The Committee urged the Department to address the service backlog of development of spatial plans for the municipalities because during the period under review, 14 Spatial Development Frameworks were formulated against the target of 37. The Committee noted that the Department expressed its capacity challenges because this area of work is considered as one of the scarce skills, hence its training programme with the universities.

The development of an operational e-cadastre system was considered as a critical matter for the Committee to follow-up with the Department. The Committee had noted that the Internal Audit Committee had recommended a forensic investigation on the e-cadastre project. It was unclear at the time of reporting if the forensic investigation was conducted and whether the outcomes had been released to the Department.

5.1.3     Programme 3: Rural Development

This programme is responsible for the implementation of the CRDP, and the National Rural Youth Service Corps (NARYSEC) as a sub-programme to the CRDP.

The Committee commended the Department for assisting some of the rural communities in the identified 22 rural districts with agricultural infrastructure and services, providing households with access to socio-economic infrastructure using the CRDP model, skills development mainly under the NARYSEC, and contribution to rural employment through the rural development initiatives. In this programme the Department has also exceeded many of the targets it had set for itself; in particular 2 131 food security interventions, skills training for 4 500 people, and training for 5 881 people under the NARYSEC programme.

As per the report of the Department of Performance and Evaluation (DPME), the contribution of NARYSEC is marginal reduction of youth unemployment in rural areas. Therefore, the Committee whilst acknowledging the contributions and success rate, it urged the Department to look for a broad based and cost effective means of job creation in these areas. This was a pertinent question because of the rate at which the youth from the skills training programmes and NARYSEC were graduating. The department needed to work closer with all the relevant departments to enhance the NARYSEC programme.

Again an important issue that CRDP needs to clarify is its mandate and roles. The Committee expressed this sentiment in line with the fact that CRDP interventions also deals with revitalisation of irrigation schemes, and this was understood to be the core mandate of the Department of Agriculture, Forestry and Fisheries. There was a concern that the DRDLR may be implementing programmes of other government departments.

In overall, the Committee welcomed the progress made in terms of the CRDP. It urged the Department to conduct the CRDP evaluation to consider the questions related to the cost-effectiveness of CRDP interventions and whether the model and interventions could be replicated elsewhere without modifications.

5.1.4. Programme 4: Restitution

The Restitution Programme is responsible for settling land claims in accordance with the provisions of the Restitution of Land Rights Act (1994), and also provides settlement support to beneficiaries.  The focus for 2012/13 was to settle claims on State land and financial compensation claims.

The Commission on Restitution of Land Rights (“the Commission”) did not reach its target to finalise 380 claims in 2012/13 by a margin of four claims. The failure to deliver on this target is attributed to disputes between family members and delays in the conveyance processes. The Commission exceeded its target to settle 133 new claims during the period under review and settled 602 claims.

The excellent performance of the Commission in settling new claims is appreciated. However, it means that more backlog claims are added whilst the Commission is struggling to finalise them. This implies that the Commission might face more court cases in the near future. With regard to commitments, it is reported in the Annual Report that by 31 of March 2013 there were claims at the value of R205.424 million that were ready for Minister’s consideration. Upon approval they will be a commitment to the Department. Currently there are total commitments of R6.179 billion, which includes commitments that are older than 3 years (R1.309 billion) due to community and family disputes, untraceable claimants and changes in the settlement options.

5.1.5.    Programme 5: Land Reform

The Land Reform Programme is responsible for providing sustainable land reform programmes in South Africa. During the period under review proposals were made to the Department of Public Service and Administration (DPSA) to split the land reform Programme into two branches, namely, Land Redistribution and Development, and Land Tenure Reform and Administration. This was to provide more focus on land redistribution and tenure reform.

The Department achieved one target out of the 4 set targets under this programme during the period under review. The target to create jobs in land reform projects was significantly exceeded. It has failed to achieve the target for the number of hectares acquired strategically. One of the reasons given for failure to meet this target was that 25 per cent of the acquisition budget was shifted to fund the Recapitalisation and Development Programme (RADP). However, from initiation of the Programme it was decided that RADP was going to use 25 per cent of the acquisition budget for revitalising struggling land reform projects. This means that when setting its targets the Department should have taken that into consideration. The Department even failed to meet its target to recapitalise 416 new farms in 2012/13, instead 200 farms were recapitalised, which is almost half of the set target. The reason given for failure to meet this target is limited financial resources. This points to poor planning by the Department as it did not budget enough money for the target.

6. Observations and responses

In view of the above observations/findings, the Committee drew the following conclusions.

6.1. Technical Issues

6.1.1.    This year the Department filed its Annual Report late, which was after the end of September 2013. As required by the Public Finance Management Act, 1999 (PFMA, Act No.1 of 1999), the Minister tabled a letter to explain why the Annual Report could not be tabled in time. Late tabling of the report affected the ability of the Committee to engage with the report effectively. Therefore, the Committee urged the Department to improve on compliance with the dates for submission of its Annual Reports and Strategic Plans.

6.2. Governance

6.2.1.    The Committee noticed that significant improvements were made in the internal control environment, with the required Risk Management Framework and Fraud Risk Register in place and updated. However, the internal control system of the Department was not entirely effective in 2012/13 due to poor capacity in the Internal Audit Committee. As a result it had to rely on out sourcing to carry its responsibilities. Therefore, the Department needs to improve the capacity of the Internal Unit.

6.2.2.    The Committee welcomed the fact that for the first time in many years the Department has received an unqualified opinion from the Auditor General although there were matters of emphasis.

6.3. Service Delivery Performance: Targets

6.3.1 The Committee noted with concern that in 2012/13, out of 26 targets planned for 2012/13 the Department only achieved 8 (30.8 per cent) and did not achieve 18 of the set targets (69.2 per cent) while it spent 99.4 per cent of the allocated budget. Compare to the expenditure of 98.3 per cent of its budget in 2011/12 this is an improvement in its spending capacity. However, an improvement in the expenditure does not talk to improvement in meeting its targets, which indicates that there is no value for money in services delivered.  The Department needs to improve its capacity to implement its projects and achieve its targets as set in the strategic plan.

6.3.2. The Committee expressed concern that the Department has failed to table in Parliament the number of bills and policies it planned to table in the 2012/13 financial year and this has become a trend. It was more of a concern because it failed to table strategic legislation that is key in redressing the legacy of Natives Land Act, 1913 such as the Property Valuation Bill.  The explanation from the Department is that more time was spent on consultation for policy development process, which delayed the tabling of policies to Parliament. The Committee, however, welcomed the progress that has been made during the 2013/14 financial year in processing policies and bills emanating from the work done under Green Paper on Land Reform but  urged the Department to improve its capacity  to process legislation and policies.

6.3.3. Although the Committee raised concerned about the huge increase in the vacancy rate from 11.4 per cent in 2011/12 to 16 per cent in 2012/13, it welcomed the fact that it was due to the increase in the number of new positions in Rural Development Programme which is one of the key priorities for Government. However, it raised a concern that 48.6 per cent of vacancy rate of personnel could not be filled for Rural Development Programme.  It urged the Department to develop a strategy for recruitment and retention of highly skilled professionals to address the challenge of high vacancy rate.

6.4. Spatial Equity

6.4.1. The Committee commended the Department for the completion of the Spatial Land Use Management Bill, which has already been signed into law by the President. The Act is critical in addressing racial inequities in terms of settlement planning and transforming the settlement patterns of this country in a manner that gives effect to the key constitutional provisions. However, the Committee expressed concern that the Department is still faced with challenges of capacity to deliver of the number of Spatial Development Frameworks due to scarce skills in this area. The Committee noted that the Department is addressing this challenge through its bursary schemes.

6.4.2. The Committee welcomed the commitment showed by the Department to finalise the audit of State land and the surveying of State land in former homelands. It requested the Department to submit the Land Audit report to Parliament and also to brief the Committee.

6.5.    Supporting rural development and livelihoods

6.5.1. The Committee noted that the Department has done well to support rural communities in the identified 22 rural poor districts with agricultural infrastructure and services, and providing households with socio-economic infrastructure using the CRDP model.

6.5.2. The Committee commended the Department for the number of job opportunities created in rural areas through CRDP and NARYSEC as it exceeded its targets. However, it raised a concern that young people are offered skills through NARYSEC but government is not fully utilising them in its programmes.

6.5.3. The Committee noted that the Department under its rural development programme has exceeded its targets for establishment of food gardens which are critical in enhancing food security for rural poor.

6.5.4. Although the Committee appreciated the fact that the Department managed to revitalise seven irrigation schemes in 2012/13 it raised a concern that this responsibility  also falls under the core mandate of the Department of Agriculture, Forestry and Fisheries. It was concerned that the Department might be duplicating work done by other departments. Therefore, it urged the Department to clarify its mandate and roles with regard to CRDP. This would require the Department to be capacitated as the coordinator and facilitator of rural development.

6.6. Restitution

6.6.1. The Committee appreciated the excellent performance of the Commission in settling new claims. However, it raised a concern that while the Commission has exceeded its targets on the settlement of new claims it failed in finalising backlogs, including commitments older than three years. As a result it is increasing the number of backlogs which explains the increase in the amount paid for interests due to court orders.

6.6.2.    The Committee noted that the budget allocation of R2.96 billion for 2014/15, which is a shortfall of R686 million from the baseline allocation, which means that the reopening of the lodgement of claims is not factored in the budget for the 2014 MTEF. Although, the Department is still not clear how much it will need to process the new claims as this will be influenced by a number of claims lodged as well as the extent of such claims. The Regulatory Impact Assessment (RIA) estimated that 397 000 valid claims will be lodged and that it will cost between R129 billion to R179 billion, depending on the options that will be selected by claimants and if those claims are settled in 15 years. This means that the Department will need an additional allocation of R8.6 billion to R11.9 billion per year for the next 15 years to settle the new claims. The Department indicated that it will make submission to National Treasury for additional funding.  However, the Committee has noted the comment made by the Minister of Finance during the medium –term budget statement.

6.6.3. The Committee noted that the cost of commitments (claims that have been signed off for settlement by the Minister of Rural Development but have not been finalised) is more than the budget allocated for the Restitution Programme per year. Therefore, the Committee urged the Department to develop a plan to address this issue.

6.7. Redistribution

6.7.1. The Committee noted with concern that the failure by the Department to meet the target to acquire strategically located land is undermining the process to increase access to land by historically disadvantaged South Africans. It urged the Department to improve on this.

6.7.2. The Committee pointed that the Department failed to recapitalise the number of new farms it planned to capitalise by almost half during the 2012/13 financial year. It noted with concern that the failure was due to limited financial resources, which points to poor planning. This also indicates that funding for the Recapitalisation and Development Programme was not enough. The Committee was concerned about poor funding for the programme because  it also affected funding for land acquisition as more funds have to be shifted from restitution and redistribution grants to Recapitalisation and Development Programme. The explanation from the Department was that Recapitalisation and Development Programme needed twice the money spent for acquisition for each project.  Despite these challenges, the Committee, however, welcomed the development of a policy on Recapitalisation and Development Programme that will address the policy gap on comprehensive strategy for support to land reform beneficiaries and emerging small-scale farmers which the Committee raised in the previous report.  It also welcomed the fact that the Recapitalisation Programme is currently under review by the Department of Monitoring and Evaluation.

6.7.3. The Committee raised concern about poor monitoring of strategic partners, which has contributed to the collapse of number of land reform projects. However, it welcomed the fact that the Department has started the process of creating a monitoring unit for monitoring of strategic partners and building relationships with land reform beneficiaries.

6.8.    Land Tenure

6.8.1. The Committee welcomed the proposal by the Department to split Land Reform Programme into two branches in order to create a separate branch for Land Tenure Reform and Administration. This shows the commitment of the Department to provide more focus on tenure reform, which has not received proper focus in the past. There are already policy review proposals that are meant to strengthen tenure security for people in living in communal areas and on commercial farms such as the Communal Property Association Amendment Bill and the Extension of Tenure Security Amendment Bill.  The Committee urged the Department to urgently address the issue of urban tenure reform.

6.9.    Ingonyama Trust Board

6.9.1. The Committee raised a concern about Auditor’s report that the Ingonyama Trust Board failed to comply with section 53 of the PFMA and Treasury regulations by accumulated surplus without the approval of the National Treasury. It urged the Board to meet with the Department to resolve this issue.

6.9.2. The Committee noted that the Ingonyama Trust Board received a qualified opinion from the

Auditor General and matters for qualifications were recurrent issues that have been raised

for many years.

6.10.  Financial Performance including funding proposals

6.10.1. The Committee appreciated the fact that the Department has improved its spending

capacity in 2012/13 compared to 2011/12. However, it raised concern that since the

Department has not achieved most of its target while it has spent most its budget for the

Year it means there is no value for money in services delivered. The explanation from the

Department is that it spent more time on consultation in the policy development process,

which used most of its budget.

6.10.2.  The request to the National Treasury for additional funding of R6.8 billion for 2014/15 MTEF was rejected instead the Department was advised to realise a savings of R2 billion over the 2014/15 MTEF baseline. This means a reduction of its baseline for 2014/15 MTEF and therefore, it will be operating with a shortfall on its commitments, which will affect its priorities such as land acquisition, rural development and implementation of SPLUMA.

7.       Recommendations

In view of the above observations and conclusions, the Committee recommends, to the National Assembly, that the Minister of Rural Development should consider:

7.1.      Financial performance including forward funding recommendations

7.1.1.    The reopening of the lodgement process that is recommended by the Restitution of Land Rights Amendment Bill, 2013 (B35 – 2013) which is currently before Parliament will mean more budget is needed to cater for new claims. Therefore, the Department should approach the National Treasury for additional allocation for restitution and should report the progress to Parliament.

7.1.2.    The failure to finalise outstanding claims and backlogs has meant that the budget allocated to restitution has to cover increased interests for court orders due to commitments. The Committee recommends that the Department together with National Treasury should devise a plan to finance for finalisation of outstanding and backlog claims by 2014.

7.1.3.    Since the Recapitalisation and Development Programme is critical for the implementation of National Development Plan (NDP) for rural development, in particular by providing the required development support for smallholder farmers, it is important that it is adequately funded. The Committee recommends that the Department should request for more funding for the Recapitalisation and Development Programme.

7.1.4.    The Spatial Planning and Land Use Management was signed into law by President in August 2013. However, the budget shortfall of R258.3 million for the implementation of SPLUMA in 2014/15 MTEF means that its implementation to address inequalities in spatial and settlement patterns in the country will be undermined. Therefore, it is important that more funding should be allocated for implementation of SPLUMA.

7.2.      Service Delivery Recommendations

7.2.1.    The capacity of the Department to implement programmes and achieve targets needs to be improved. In particular, a strategy and plans need to be developed, implemented and regularly monitored for recruitment and retention of skilled professionals especially in the internal audit unit, policy unit, geospatial services and rural development.

7.2.2.    The Department need to put mechanisms in place for monitoring of NARYSEC to ensure that rural youth get the necessary skills and will be able to utilise those skills in their communities. It should report to Parliament within two months of the adoption of this report on status of NARYSEC beneficiaries in terms of allocation, skills received and job opportunities.

7.2.3.    In response to new developments in the 2014/15 MTEF due to budget cuts which has forced the Department to focus on its key mandate and allow the relevant sector departments to deliver other services in rural areas there is a need for the Department to build its coordinating and facilitating capacity. The Department should develop mechanisms to enhance its capacity for effective coordination of all relevant departments or units in all spheres of government in a manner that foster the intergovernmental approach to rural development.

Ingonyama Trust Board

7.2.4.    To submit to Parliament within two months of adoption of this report the resolution that has been taken by the Board with regard to non-compliance with PFMA and treasury regulations on the issue of surplus.

7.2.5.    To report to Parliament within three months after the adoption of this report on how it is going to address matters raised by the Auditor General, especially reasons for the qualified audit opinion.

Report to be considered.

Documents

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