Medium Term Budget Policy Statement: Departments of Agriculture & Land Affairs: briefings

JOINT BUDGET COMMITTEE
2 November 2007
MEDIUM TERM BUDGET POLICY STATEMENT: DEPARTMENTS OF AGRICULTURE & LAND AFFAIRS: BRIEFINGS

Chairpersons: Ms L Mabe (ANC) & Mr B Mkhaliphi (ANC, Mpumalanga)

Documents handed out:
Committee Request for Briefing on 2007 MTBPS – Department of Agriculture
Department of Land Affairs submissions to the 2007 Medium Term Budget Policy Statement
Department of Land Affairs Presentation

Audio recording of meeting [Part1]

SUMMARY
The Departments of Agriculture and Land Affairs briefed the Committee on their progress to date and their expenditure trends. The Department of Agriculture noted that R2.3 billion had been appropriated for the 2006/07 financial year and 6.3% was not spent due to claims not submitted timeously in respect of the Swine Fever outbreaks. The Department received only one matter of emphasis in the audit report, which was otherwise unqualified. The matter under emphasis was being discussed with National Treasury.  Cabinet requested advice on increasing government support to agriculture, and the urgency of acceleration of the land and agrarian reform programme was again emphasised. The Comprehensive Agricultural Support Programme had been progressively but only partially deployed and the allocation had been mainly utilised for infrastructure The provinces should be more directly empowered to provide support to agriculture through their equitable shares. Additional funding was requested for the programmes.

The Department of Land Affairs noted that it had received a qualification in the audit report in relation to asset management and rental revenue from leased land. Necessary interventions had been made, and increased capacity would be put in to provincial land reforms. A medium term priority included redistribution of 30% of white-owned agricultural land by 2015 for sustainable agricultural development, and development of other programmes for empowerment of needy groups. Most of the challenges arose from insufficient financial resources. There was a need to provide training and technical support to land reform beneficiaries. Internal controls were in place for ensuring value for money.

Members asked about the impact of the vacant posts, whether increased allocations would enable the Department to finalise land restitution claims, the move of funding from one budget to another, the staff retention strategies and the reasons for staff leaving, and the need to monitor human resources aspects. They questioned why the Departments were requesting more funds despite non spending in the past, whether there were proper plans for training, why graduates with technical degrees remained unemployed, and whether there were links between the land reform and land restitution programmes. The compensation for Swine Disease was clarified. Members also raised questions on transfers to Government Communications and Information Systems, whether this had addressed land beneficiaries, whether the Deeds Office was coping, the progress of the agricultural colleges and their contribution, post restitution settlement and monitoring of beneficiaries, and the capital expenditure over the adjustment budget. The Departments attempted to answer the questions and undertook to address any remaining issues in writing.

MINUTES
National Department of Agriculture (NDA)
Mr Masiphula Mbongwa, Director-General: National Department of Agriculture, gave a presentation on the expenditure trends and audit outcomes of the department. A total amount of R2. 3 billion had been appropriated by parliament for the Department for the 2006/07 financial year. 6.3% of the amount was not spent and the reason for that was mainly due to claims not being received on time for Classical Swine Fever from the Eastern Cape Provincial department of Agriculture.

The Department had received an unqualified report with only one matter of emphasis on the classification of assets. For the Agricultural Account, the Department received a qualified report that referred to the nature of pledged securities, such as crops, harvests and moveable assets. Mr Mbongwa also highlighted that the NDA was in consultation with National Treasury and the Office of the Auditor-General to amend the Agricultural Debt Management Act, 2001.

The International Investment Council advised that South Africa should put greater focus on the production of tradable and agricultural goods. Cabinet then requested the Directors-General to advise it on increasing government support to agriculture in the context of the World Trade Organisation (WTO) and the 2006 Organisation for Economic Cooperation and Development (OECD) report. At the recent Cabinet Lekgotla, the urgency of acceleration of the land and agrarian reform programme was again emphasised. A key objective of this programme was to acquire 5million hectares of white-owned land and to settle and provide support to 10 000 new farmers.

Mr Mbongwa commented that since its inception, the Comprehensive Agricultural Support Programme (CASP) had been progressively but only partially deployed and the allocation had been mainly utilised for infrastructure while the other five constituent pillars of CASP had not yet been fully addressed. While the CASP allocation would be continued in the interim and would be used for leveraging the support required, the provinces should be more directly empowered to provide support to agriculture through their equitable shares.

Mr Mbongwa said that the Department required additional funding for CASP, at R255.2 million per year, for Bio Security: import/Export Inspections at ports of entry, at R495 million over the Medium Term Expenditure Framework (MTEF) period, the Goat Productivity Improvement programme, for R202.4 million over the MTEF period, and the Co-ordinated Job Evaluation of Agricultural Specific posts, at R42.5 million over the MTEF period.

Department of Land Affairs (DLA) Briefing
Ms Catherine Motsisi, Acting Chief Financial Officer, Department of Land Affairs, briefed the Committee on the performance of the DLA. The Department had received a qualification in their audit report in relation to asset management and rental revenue from leased land. With respect to asset management, the asset register did not comply with the minimum requirements of the Asset Management Guidelines, in that order numbers were not reordered and also assets could not be located for physical verification. The interventions to ensure better asset management included the Department continuing with robust identification of non-verified assets, and cleaning the asset register to reflect a true record.

In relation to rental received from leased assets, the Department received a qualification due to incomplete information on leasing assets and revenue collected through the Power of Attorney (POA). This would be addressed by creating capacity in the Provincial Land Reforms Offices (PLRO) where 49 posts would be created for the management of state land in order to capacitate provincial land reform offices.

Medium Term Policy Priorities included the redistribution of 30% of white-owned agricultural land by 2015 for sustainable agricultural development. There would be development of programmes for the empowerment of women, children, people with disabilities and those living with HIV/AIDS and older persons within the context of the Department’s mandate. The challenges facing the Department, which in turn contributed to the much debated slow pace of land reform delivery, were to a large extent attributable to insufficient financial resources. There was a need to provide training and technical support to land reform beneficiaries, which was critical for sustainable land agrarian reform.

Ms Motsisi then briefly explained that the infrastructure budget related to payment for repairs and maintenance of building. Internal controls were in place for ensuring value for money and this includes constant reconciliation of payments and quality control of work.

Discussion
Mr G Schneemann (ANC) asked about the impact that vacant posts had on the NDA and DLA’s ability to spend, because it stated in the report that these vacant posts led to considerable savings. Mr Schneemann also asked whether the allocations of the MTEF would enable the DLA to finalise claims with respect to land restitution.

Ms B Dambuza (ANC) commented that maintenance and vehicles should have been budgeted for, instead of taking money from other programmes. She added that the statement from National Treasury presented to the Committee had noted that “based on a history of understanding between certain directorates, certain budgets were cut.”  She said this raised serious concern about the Department achieving their objectives. She asked whether the Department had a strategy of dealing with that sector and also asked for the reasons why staff were leaving the department. Ms Dambuza acknowledged the internships programme as one of the strategies. She said that serious monitoring would need to be done to ensure that the Department sorted out the problem within human resources, and that she would like timelines for this to be given to the Committee.

Ms J Fubbs (ANC) commented that what seemed to come through in the presentations was that both Departments seemed to require more money for various reasons. She said that this was not a problem in itself, but would become so when the Departments requesting more money had a history of under spending. She asked for clarity in this regard.

Ms Fubbs then went on to say that the NDA always spoke about financial shortages with respect to training. The issue in previous years was capacity. She then asked whether the Department was able to present a proper plan to National Treasury of what they required and what they had been able to achieve. Ms Fubbs said that she believed that when in training it was the innovation, and not necessarily the amount of money available, that counted.

Ms J Fubbs told the DLA that she believed that the land reform and land restitution programs were linked. She then asked what measures this Department had, other than asking for more money, in speeding up the land claims. She also asked the Department what measures they had in place to bring up people from school level into the Department. She added that there were people in her constituency who had technical degrees who were still unemployed, yet the Department reported that there were so many posts available. She asked where the Department was advertising these posts.

Ms L Chikunga (ANC) asked whether the DLA had any retention strategies and how effective they were, as they reported that 80% of the staff who left them moved to other departments. She then asked the how the NDA monitored the money they transferred and whether they received value for money.

Mr Z Kolweni (ANC) asked the NDA whether the amount set aside for the Swine Disease was spent for treatment or compensation, and also asked what happened to those farmers who lost their pigs. He said that he was aware that farmers were compensated when their cows were infected with foot-and-mouth disease. He then posed a question to the DLA asking why there were no claims offices except in two provinces.

Mr B Mkhaliphi (ANC) referred to the adjustments in the NDA report where R250 million had been transferred to Government Communications and Information Systems (GCIS) for communication purposes, and asked whether the Department allowed the DLA to piggy- back on these resources specifically to address group dynamics relating to land beneficiaries.

Mr Mkhaliphi asked about a special adjustment relating to capital expenditure at the Land bank and asked whether the Land bank would assist people, especially land restitution beneficiaries.

Mr Mkhaliphi further asked whether the number of people stated as working in the deeds office represented the capacity of people or just merely numbers. He was asking this question in the light of constraints that this office experienced in the past. With a booming economy he could imagine that there were still many applications coming into the Deeds Office. He asked whether this office was coping and whether they would not experience the delays that prevailed in the past years.

Mr R Mohlaloga (ANC) commented that special attention needed to be paid to the vacancy rate especially given the challenge that the DLA had in terms of land reform. He then asked what confidence the DLA had that the targets of settling 30% of the land claims by March would be met. He commented that when addressing skills shortage, no mention was made of having agricultural colleges. He said that it was much easier to chase the number of debtors, and receiving a performance bonus for that, but asked if the Department was making an assessment of that process.

Ms A Mchunu (IFP) acknowledged the good intention of the extension programmes of the NDA as the people driving it would engage the communities. She added that it would be good to include subjects such as Home Economics in the programme.

Ms L Mabe (ANC) referred to post restitution settlement and asked what the two departments were doing to ensure that they achieved the hectares of land that they said they would achieve. She then asked how the Departments would monitor that beneficiaries would use the land for small businesses. She than raised concerns about the fact that for capital expenditure, the Departments spent more than had been allocated in the Adjustment Budget.

Mr Tommie Marais, Chief Financial Officer, NDA responded to some of the questions as follows:

On the 27% spending of adjusted appropriation, he noted that the Department had received R700 million plus R400 million as new money by parliament. The stipulations were that the Department could only start spending this money in September.

In regard to vacancy savings, Mr Marais said that if a person resigned, that post could stay vacant for a period of 3 to 4 months with the result that  that salary was not spent;. The Department would then try to utilise it for something else. For example, no budget was set for vehicles in the department and the saving was thus allocated to vehicles.

In regard to retention of staff, he said that if people wanted to resign to go to greener pastures, the salary offered by the Department would not make that person change their mind.

In regard to compensation for Classical Swine Fever Mr Marais noted that the province was responsible for the campaign for compensation. They would process everything and then claim from the national department. Payment would be done on a two-fold process. There would be compensation for the farmers whose animals had been slaughtered,  and then payment for officials from other provinces that assisted with roadblocks and monitoring.

In relation to the funding transferred to GCIS, Mr Marais said that it was a government-wide communication programme where all the provinces were requested to assist with a campaign. After that, the NDA made a transfer to the Department.

Ms Vangile Titi, Deputy Director General: Sector Services & Partnership, NDA, responded to other questions as follows:

In respect of Land care and post settlement support, she said that she had given the Portfolio Committee and Select Committee the assurance that the Department would go back and structure a report about the impact of support. She did give a report about the outcomes and the Department also mentioned it in their annual report.

In regard to extension, she said that the NDA and National Treasury went through a process of Intergovernmental Fiscal Review to assess spending trends within the various provinces, and the major challenges that came through were those of extension. The Department then engaged with the provinces and articulated what they called the norms and standards of extension, and then conducted a study that profiled extension in the various provinces. That profile then gave information about where extension officers were based, what they were doing, and what their challenges were. One of the challenges was that extension officers were not adequately trained and the Department decided, together with National Treasury, to train the officers and ensure that they were well resourced.

In regard to Agricultural Colleges, Ms Titi said that at the time of the provinces’ demarcation, there were colleges that remained within the provinces and only one college was assigned to the Department of Agriculture nationally. The Department then proceeded to look at government requirements with regard to agricultural colleges. It was concluded that the colleges falling under provincial government should remain there and there should be retention of the one under national government. However, the Department has opened up scope for discussions with the provinces if they felt some of the colleges should move to the national department. The NDA’s mandate was to make these colleges centres of excellence.

Mr Anton van Staden, Deputy Director General. DLA, responded to questions directed to the DLA as follows:

In regard to human resources, the Department was in the process of developing a new structure based on business process re-engineering, and that would be finalised in the next two months. He said that this would address most problems around human resources within the Department.

Mr van Staden said that the staff turnover rate was at 12.6% over a year period, and that was not excessively high. Normal parameters would be between 10% and 15%. He said that the 200 people who had departed had left for vacancies in other departments. DLA had been looking at this very closely and strategising the best way to deal with it.

Mr van Staden added that the DLA had a retention strategy in place that had been approved, but the Department still continued to lose people. He said that the DLA was working towards reducing the staff turnover rate to below 12%.

Scarce skills were identified as surveyor, industrial planner positions and so forth, and the Department was working on trying to reduce this, in conjunction with other departments. The Department also had a graduate project that would also address this problem and the problem of graduates struggling to get employment. The Department was further engaging in skills training based on skills requirement in the market.

Dr Nozizwe Makgalemele, Deputy Director: Sector Service & Partnerships, NDA, added to these answers as follows:

In regard to the Deeds Office, she said that the DLA did not have any problems in the small offices but rather that problems were experienced in the bigger offices. The major problem lay in the Pretoria office. The Department undertook a strategy to decentralise their operations so that there were smaller offices. Dr Makgalemele added that the Pretoria office alone was servicing the Limpopo province, and previously Mpumalanga as well. Last year, the Department opened an office in Mpumalanga and was in the process of opening one in Limpopo.

The Chairperson requested that the two Departments respond to the unanswered questions in writing and make them available to the Committee soon.

The meeting was then adjourned.