Department of Rural Development and Land Reform & Commission on Restitution of Land Rights on their 2015/16 Annual Reports with Auditor General input

Meeting report

Department of Rural Development and Land Reform Annual Report: AGSA presentation

Mr Alli Zakariya, Audit Manager: AGSA, gave the Portfolio Committee an overview of the entity’s role in enabling oversight, accountability and governance in the public sector through auditing, thereby building public confidence. He then moved on to the outcomes and key messages arising from the audit of the Department of Rural Development and Land Reform (DRDLR) for the 2015-16 financial year.

The portfolio’s overall outcomes had improved from the prior year, mainly due to action plans being implemented and monitored by management, as well as key vacant positions being filled with competent staff. One outstanding audit was the Ingonyama Trust Board (ITB), which needed to improve by giving attention to financial reporting and compliance with key legislation. Information technology for the entire portfolio required intervention to prevent the recurrence of internal and external audit findings.

The quality of financial statements for the Department, and deeds submitted for audits, still remained a concern due to inadequate review processes, as the internal controls did not prevent, detect or correct material misstatements to the annual financial statements before the audit of 2015-16 resulting in the non-compliance. There was also non-compliance with the Public Finance Management Act (PFMA) regarding the prevention and detection of irregular and fruitless and wasteful expenditure.

The quality of the annual performance report of DRDLR had improved over the past three years. The annual performance report, which includes the performance for the Agricultural Land Holding Account (ALHA) and Deeds, included information on performance against predetermined objectives that was useful and reliable for the programmes and objectives that were selected for audit, and no material misstatements were identified during the audit, apart from the ITB outstanding audit.

Despite the portfolio not receiving any modified financial audit outcomes (apart from the ITB outstanding auditing), focussed intervention and commitments were still required in order to improve the current status of the overall key controls for the portfolio. Attention needed to be given in addressing internal controls deficiencies via the implementation of effective plans that addressed the correct root causes.

The level of assurance provided had remained stagnant. However, senior management’s efforts in developing and implementing post audit plans and recommendations were commended. The internal audit and audit committee had provided assurance and contributed towards improved and sustained key controls, particularly relating to performance management. However, the focus of these governance structures must be intensified in the area of financial reporting and compliance with laws and regulations.

Mr Zakariya presented the outcomes of programmes and objectives selected for testing.

• DRD (geospatial and cadastral services, rural development, restitution and land reform): in terms of usefulness and reliability, there were no material findings reported;
• ALHA and Deeds: there was no separate performance report and performance plan for Deeds and ALHA. The performance targets for these entities were included in the Department’s performance report and audited as part of Programmes 2 and 5;
• ITB (strategic focus area 1: adjudicative excellence): in terms of usefulness and reliability, the audit had not yet been finalised.

There had been a slight improvement in compliance with legislation and quality of financial statements

Material misstatements in submitted annual financial statements (DRD and Deeds) had improved by 67% in 2015-16, and the prevention of unauthorised, irregular and/or fruitless and wasteful expenditure (DRD) had improved by 33%. There had been a 100% improvement in the outcomes for DRD and Deeds after corrections.

As regards unauthorised, irregular as well as fruitless and wasteful expenditure over three years and follow up, the amount incurred by entities in the portfolio for 2013-14 was R5 million, for 2014-15 was R6 million and for 2015-16 was R22 million. Irregular expenditure incurred in 2013-14 was R19 million, in 2014-15 was R27 million, and in 2015-16 was R6 million. Investigations to determine the root cause and consequences had resulted in four entities being investigated in 2014-15, and three in 2015-16,

Root causes that had to be addressed were the slow response by management (accounting officer and senior management); key officials lacking appropriate competencies; and instability or vacancies in key positions. Actions plans had been drafted and were being monitored by the audit committee on a quarterly basis. However attention needed to be given to make sure that the correct root cause was identified by management and addressed through action plans. This was because some repeat findings had occurred, which questioned the effectiveness of the action plans being implemented.

AGSA had met with the Minister on 1 September 2016. The outcomes had been discussed with him and the implementation status of certain commitments had been followed up with him. There must be implementation of the following proposed commitments by the Portfolio Committee and management:

1) regular monitoring of the action plans to ensure that the identified deficiencies were addressed to avoid repeat findings and continued non-compliance;

2) existing internal controls must be consistently monitored and adhered to by all employees; and

3) it was recommended that the Portfolio Committee engage with the audit committee and internal audit to confirm what processes departments had in place to submit credible information to the Portfolio Committee. For each of the above, the Committee was advised to request a feedback on the progress, status and implementation of the recommendations.

Discussion

Mr K Robertson (DA) asked what the problem was with the National Rural Youth Service Corps (NARYSEC), and why was it relevant that it be mentioned to the Committee.

Mr Eugene de Haan, AGSA Senior Manager, replied that NARYSEC was a Department programme that related to the up-scaling of rural youth and rural communities. The programme provided a stipend to all its participants to help them study but after some time, it had been realised that not all participants receiving stipends were also receiving the necessary training from the programme. This had then been revised and the programme had been restructured and revised by the Department from a four-year, to a two-year programme. Each student could be tracked to see where they were in the programme, what training they still needed to complete and what their overall progress and status was. The main challenge that had been faced by the programme had included having to rely on only two colleges to absorb all the students it had produced. The Department had since changed the model and was now contracted with specific colleges that could absorb these numbers, and had also done an assessment of the capacity of the colleges. The Department had built controls to try and mitigate these factors and what was presented today showed the results from before the implementation of the new controls.

Mr T Mhlongo (DA) referred to page 9 of the presentation and said that he was concerned about what the Committee’s oversight responsibility was. When looking at the indicator, it was reflected by a yellow colour, which meant that the Committee was not doing well and perhaps something needed to be done, like an evaluation. He then said that under the recommendations, he wanted to find out if he understood correctly that what was being mentioned was that the Committee needed to engage the audit committee if further recommendations needed to be made.

Mr De Haan said that if Members looked at page 9, the right hand side was showing yellow for the different levels of assurance provided. The oversight responsibility referred to was on the left hand side of the page and the first yellow block was referring to the Department, and the remaining to management.

Mr M Filtane (UDM) said that he wondered how far the Department would go if there was no audit conducted on it, to make sure that there was compliance. He then referred to page 9 of the presentation and highlighted that there was a clear and extensive problem with the leadership, made worse when it was within the Department. The oversight responsibility was not being conducted efficiently nor was the human resources (HR) management, which he thought was one of the root causes.

He then referred to page 16, where he pointed out that because of the weakness of the HR department and the on-going leadership problem, one could not delink the one from the other. He understood slow responses by management to be a result of the poor HR management and oversight responsibility and there needed to be a look into that because it was the people who were slow and not working efficiently. He then referred to performance management on page 9, and said that proper record keeping was a basic thing and that no Department with a budget of over R9 billion should be comfortable with poor record keeping. He recalled that a few years back there had been a similar problem with oversight that had been raised by the Auditor General (AG), when they could not verify why certain expenditures had been incurred. Based on that, it was clear that it was a recurring problem and he wondered what the Minister had done about it, or planned to do about it.

Also on page 9, the ITB was a matter of on-going serious concern and the Committee did not know what it needed to do in order for the Department to take both the Committee and the problem seriously. The ITB could not have this yellow rating, showing that its improvement had been stagnant.

He asked the Minister and DG why the Department had continued to employ people who lacked the relevant competency for their jobs. He was raising these questions with serious concern because in the last year, and the one before, the concerns about the competency of the people on the staff had been raised and so he did not understand why the Department had continued to keep them and why they had been employed in the first place if they did not have the necessary competency. The media had reported that there was a need to get rid of the dead wood in government as a means to curb expenses, and there were graduates who needed to get hired. There was a need to get rid of the dead wood, because these were public funds and the Committee did not want people who were not qualified to do the job when there were other people who were qualified and able to the job.

Mr De Haan replied that with regards to the oversight issue and quality control on page 9, he wanted to clarify that they had identified three root problems, one being the slow response by management and another being the vacancies which had since been cleared, because they had assessed that certain appointments, such as the CFO, had made a big difference in how the Department handled its finances. This was not to say they have resolved the issue completely, but it had been addressed from outside.

With regard to the slow response by management, they had discovered that this was the result of the action plans created and implemented by management which did not always address the root cause that had been identified, which was why there was a recurrence of the issue. Management was more likely, through its action plans, to address the symptoms rather than the root cause, hence the slow response. He added that the main yellow and red blocks seen under the oversight responsibility related more to financial reports, so there have been some improvements in the process, but they had been picking up some material responses here and there. These material responses had decreased over the years, hence the improvement, but they had not been eliminated completely, which was why they were able to still detect them.

Mr T Walters (DA) said that there were a number recommendations and commitments to be made by the Portfolio Committee on these issues, and he suggested that they accept these recommendations.

Mr L Mbinda (PAC) said that he was interested in finding out what the report meant by competency. Did they mean that people lacked technical skills, technical competency or general competency, or was it that they were not performing because they were incompetent. He also noted that regardless of the fact that some people may have the necessary qualifications, that did not mean that they would perform to the expected level.

On the issue of performance auditing, he understood that according to the AG, there would be a shift from financial auditing to performance auditing, because the latter was related to service delivery and this was where the focus was. He wanted to know if the AG’s report expressed an opinion on the performance of the Department, or was the opinion on performance given only on a need basis. He asked if the AG would be willing to express an opinion if some improvements were made on the performance of the Department because as politicians, they were concerned about service delivery and because performance was tied to it, it was the of importance to them that an audit be carried out on that particular area so that the poorest of poor people were able to benefit from the services being provided.

Mr De Haan responded that with regards to the performance information, they had not yet expressed an opinion. They would be in a position to give an opinion only in 2018, but for now had carried out only the audit report as requested by the Committee, but would later on express an opinion. So far, an opinion had been expressed in the audit management report. When AGSA conducted an audit, it checked for its usefulness and reliability and so when it reported, it showed that their achievements were a true reflection of their targets, based on those two measures. This meant that while they may not have achieved everything, they had been successful in achieving some of the targets they had set out to do. He also noted that most of the areas had been marked as improved, because assessments were being carried out on a quarterly basis, and with more frequent audits they had been able to monitor the improvements closely.

Mr S Matiase (EFF) said that the AG’s office had been created precisely to audit government and state-owned enterprise groups and to send the details conveyed in their audit to the Committee. He also noted that there were reputational damages that could result if they were unable to fulfil their mandate, and thus they should tell no lies and claim no easy victories. They needed to reveal the entire truth as it was because if they did not, they would be unable to help the Committee to fulfil its constitutional obligations. The presentation had made them aware that the ITB had fallen back, which was a recurring issue, as well as the fact that the ITB audit had not yet been completed. He asked if AGSA could tell the Committee what the risk factors involved in the current performance of the ITB were, in order for them to draw the attention of the authorities of the Ministry to those particular areas. The Committee would not be happy to have the ITB presented as a failure, so highlighting what the key risk factors were would assist them greatly in trying to deal with it.

Mr P Mguni (ANC) said he wanted to speak to page 16 and support the idea of recommendations which had been brought up by his colleague. He suggested that in adopting these recommendations, the Committee would need to be unanimous in their decision.

The Chairperson said this presentation had just been an eye opener to where there challenges existed and where improvements needed to be made. Members needed to bear in mind not to ask the AG all the questions that should in fact be directed to the Department. She then asked for clarity on the issue of the Trust Board, and also to get an indication of why the audit for the ITB had not yet been finalised.

Mr De Haan responded that the Ingonyama Trust audit had been was finalised last week, and they had all agreed on its completion. It was not outstanding. AGSA had been approached by the Chairperson and CEO of the Trust, and they had asked if they could go to KZN to assist them. There had been a meeting with Accountant General, at which AGSA advised them how to deal with the land. There had been an agreement on the suggested approach, but they had later been informed that a decision had been made that the Trust should be two separate entities -- the one entity would be the Trust, and the other entity would be the Board. Following this, the AG’s office had decided that they would look for their own legal advice regarding the matter, and the Ingonyama Trust would also do the same. From the information that had emerged, an adverse opinion had been reached which disagreed with the way the financial statements of the Trust had been prepared. A meeting and discussion was then held last week with the Chairperson, the CEO and a representative from the accounting department, and they had mentioned that they would be seeking assistance for the following year. This presented itself as a technical regression in terms of the information that had only recently become available to them, which had resulted in the adverse opinion. There had therefore technically not been any movement in the Trust from the previous year to the coming year.

Mr Filtane said that the AG’s response to his query on page 9 concerned him. When an issue had been red-flagged as concerning, but they then proceeded to say that it did not need intervention, why would the status of that issue be downplayed if it was raised as a matter of concern in the report? With regard to page 14, there report mentioned that R22 million had been recorded as fruitless and wasteful expenditure and he saw this as a matter of serious concern, considering what could have been achieved with that money. He asked why the Department incurred had that kind of expense, which essentially now was money down the drain. Where had management been, to see to it that this was avoided, because this linked back to the issue of leadership and senior management raised on page 9, and it seemed they were lacking at doing their job.

Mr De Haan answered that with regard to page 9, he was only giving more clarity on what the oversight related to. He was not in any way trying to downplay anything, because he agreed that their findings had indeed been concerning. What was actually being said was that there were material mistakes and concerns that otherwise would not have been picked up had the audit not been conducted. There were daily controls of management that needed to be monitored by senior managers as a way to avoid the material mistakes being picked up. He added that the improvements noted in the performance information were a direct result of having financial statement being prepared on a quarterly basis, which had helped to improve the overall accuracy of the financial statements.

Mr Robertson said that he was in agreement with what had been raised by Mr Filtane, because the AG had mentioned that NARYSEC had improved yet, on page 14 -- looking at the 2015-16 fruitless expenditure which far exceeded previous years -- there were clear concerns. He asked where the AG  would categorise their concerns of NARYSEC under the three UIF amounts incurred by the entities in the portfolio, and if it did not have its own category, had it contributed to the R22 million, because that would be concerning. Were there any figures to report on the fruitless and wasteful expenditure of NARYSEC, because he wanted to know what the precise contribution of NARYSEC had been towards the R22 million.

Mr De Haan replied that of the R22 million recorded as fruitless and wasteful expenditure, about R13 million was from NARYSEC, and it was categorised as fruitless and wasteful expenditure. He stressed that it must be remembered that some of the information presented today had been captured before any of the interventions to the programme had been put in place. With the new and updated controls in place, they expected that the next report would reflect the changes.

Mr Robertson said that while he appreciated the work of the AGSA, he wanted to add on to why they did the kind of work they did. He had brought up the issue of NARYSEC because he needed clarity on it, as there were still issues with the programme which he had recently uncovered in the last week or two. This was specifically with regards to service providers not performing their mandate at the Matsulu TVET college.  NARYSEC students had approached him told him that they had been asked to pose for photographs so that those photographs could be contributed at the end of the month towards payment, to show that the service providers were providing their service when in fact they were not. Another allegation was that the students would have to assemble in a central area where they had to pull out the attendance register for the class, mark everyone as present, and that was the end of it. The students were being used in photographs and attendance registers so that the service provider could get paid.

Mr A Madella (ANC) mentioned his concerns regarding stipends being paid to NARYSEC students while they were not receiving the necessary training.

The Chairperson then thanked Mr De Haan and his team for presenting and answering the questions raised by the Members.

Department of Rural Development and Land Reform: Annual Report

Mr Gugile Nkwinti, Minister of Rural Development and Land Reform, began by thanking the Members for their input into the earlier discussion on the report presented by AGSA. He said the Department’s the report contained a Ministerial foreword which would assist the Committee in understanding some of the questions and issues that had been raised during the first presentation. He also mentioned that as a result of previous reports, there had been a deeper look into the Department, and their findings had been presented in the report. An audit had also been conducted on the qualifications and experiences of specific people. With all that said, the foreword would indicate that part of the problem remained the issue of oversight. In order to rectify the issue of oversight, it could not be expected of the Department to be everywhere in Pretoria, as this would not be possible. There needed to be a systematic move, first into the provinces and then next to the various other districts, because it was clear that at the moment, district levels seemed to be suffering compared to the overall provincial level.

Mr Mduduzi Shabane, Director-General of Department of Rural Development and Land Reform (DRDLR), began by thanking the Members for the discussion that had taken place on the earlier presentation. The Department was grateful to the AG for the support that they had been receiving for last three years. It had had an unqualified audit, even with the ALHA account and while they were aware that they still had many challenges to overcome, they still appreciated the objective consideration by the AG of the continuous improvements by the Department. He acknowledged that the DRDLR’s mandate was a hard one to achieve on their own, hence they worked with a range of stakeholders. They also worked closely with local government to assist in implementing its mandate.

Mr Eugene Southgate, Deputy Director General: DRDLR, described the following key policy developments and legislative changes from the review period:

• District Land Reform Committees (DLRCs) arising from the Nation Development Plan (NDP) were established in 44 districts. DLRCs would advise on matters relating to land targeted for distribution, and beneficiaries to be prioritised for land per district.
• District Agri-parks Management Councils were established to oversee the operations of Agri-parks. Together with DLRCs, these entities had changed the architecture of the Department by involving stakeholders and interested persons in matters of land reform and agricultural transformation.
• The policy on “The Strengthening of Relative Rights for People Working the Land” had promoted new companies on joint ventures, most of which were going concerns and employed a new approach towards support, securing state investment and protecting the interests of new beneficiaries.

The following policies were in progress:

• Policy on rural enterprise and industry development;
• Policy on rural development investment and finance facilities;
• Electronic deeds registration Policy

The role of DRDLR in supporting the Ingonyama Trust Board (ITB) was to provide technical support towards the development of its strategic plan (SP), annual performance plan (APP), operational plans and annual report (AR); quality assurance for the plans and ensuring the tabling of the plans; and

The AG had not raised any material findings on the usefulness and reliability of the reported performance information for Programme 2 (geospatial and cadastral services), Programme 3 (rural development), Programme 4 (restitution) and Programme 5 (land reform).

The DRDLR’s 71% achievement against targets for 2015/16 was its highest ever performance, while the percentage of targets ‘not achieved’ was at the lowest ever, at 8%. The main findings by programme were:

Programme 1: Administration

The Department achieved six out of ten planned targets. The areas of inadequate performance were the percentage of disciplinary cases finalised; the percentage of vacancies filled within 120 days; and the percentage of external audit findings resolved and financing model approved.

Programme 2: Geospatial and Cadastral Services

The Department achieved most of the targets set for the year (nine out of 13). The areas of inadequate performance were on district rural development plans, state domestic facilities, the percentages of deeds made available within seven days, and the sets of solutions models deployed,

Programme 3: Rural Development

The Department achieved all but two of the planned 14 targets of the year. The areas of inadequate performance were the number of jobs created in rural development initiatives and rural information desks established.

Programme 4: Restitution

The Department achieved all but one of the five targets planned for the year under review. Claims lodged by 1998 still had to be researched.

Programme 5: Land Reform

The Department achieved nine of the planned 16 targets. The areas of inadequate performance were recorded under hectares acquired; hectares allocated to farm dwellers and labour tenants; farms under-capitalised allocated to smallholder farmers; pilot projects on policy for strengthening relative rights; labour tenants applications settled; and state land parcels confirmed as vested.

Future plans of the Department included the implementation of agri-parks, introduction of the “one household, one hectares” programme, and the Strengthening the Relatives Rights (SRR) of People Working the Land (50/50 Policy Framework)

The Department continued promoting good governance in conducting its business through promoting good ethical conduct necessary to combat and prevent fraud and corruption, minimising conflict of interest, and establishing a code of conduct as a measure of promoting and improving ethical conduct

Key projects undertaken in HR management had included a skills audit, a review of the organisational structure, a cultural diversity survey, aligning the staff structure to the budget and improving the HR data.

Ms Rendani Sadiki, Chief Financial Officer: DRDLR, said the Department’s appropriation had decreased by 2.7%, or R257.9 million, from R9.455 billion in 2014/15 to R9.197 billion in 2015/16, mainly due to a reduction by R182.3 million of the Adjusted Estimates of National Expenditure (AENE) allocation by National Treasury. R200 million of declared unspent funds identified under the Agriculture Land Holdings Account (ALHA) had been taken away, and there had been an additional allocation of R17.7 million for higher than expected salary adjustments. The Department’s revenue had decreased from R87.4 million in 2014/15, to R54.6 million in 2015/16. She provided detailed statistics of the revenue and expenditure, assets and liabilities, cash flow and closing balances. (See attached document).

Discussion

Mr Filtane asked what sort of infrastructure was being developed for agri-parks. He commented that there had been no improvement in the development of rural enterprises at all, even though the DRDLR had reported that they were at the apex of the programme, with certain enterprises they had developed on the go. He recalled that last year he had asked about these enterprises and the Department had responded that they were there to develop them, but not necessarily to monitor their progress. However, this report shows that there had been a target of 215, and none had been established at all. Rural capital financing was key in helping to start the enterprises, but no finances had been provided.

He raised the issue of the capacity that had been added to sphere of local government, and asked how local government had been capacitated. Local government often lagged behind provincial standards, so what had been done to provide them with the necessary skills to supplement what they already had. He asked why the Spatial Planning and Land Use Management Act (SPLUMA) was up to Cabinet, and what the effects of this shift were. He wanted to know how many white youths were employed in the lowest and unskilled categories of employees in the Department.

Lastly, he wanted to know how much land had been transferred to farm dwellers. He recalled that in September, when the Committee had gone on a site visit to Howick, they had had the opportunity to engage with the mayor and council members, who had said there were large numbers of people coming from farms looking for land, and they were in need of land to resettle these people, but were struggling to acquire it. He suggested that if land could be made available within the farms and not outside, this could be a solution to the problem, because it appeared that at the moment there was a transfer of a national problem to local government, when it was not their responsibility. Finally he asked how the R2 billion had been spent on agri-parks, and what had been the impact of that R2 billion had been.

Mr Shabane replied that the SPLUMA was being returned to the President to be reassigned, as it was a national framework legislature. In the act, there was a chapter that delved deeply into, and dealt with, the Spatial Planning and Land Use Management Act. It had been decided by the Constitutional Court in 2010 that the act was a local government issue, and thus it had been taken back for the purpose of its reallocation. The Department was working on the modalities of the recommendations that could hopefully be taken to the President.

The Department may require the Portfolio Committee to submit its requests on the hectares that should be given to farmers, but it should be noted that while the Department had land available for reallocation to farm dwellers, the land in relation to the number of people that needed it would still mean that many would still be left without land. There was thus a need to look further into the issue and how to possibly resolve it.

He said that the Department had several programmes for agri-parks. There was a river catalytic system that had seen the establishment of irrigation schemes across the country. For production, irrigation schemes were considered to be very important and the Department was currently working on eight projects. On the animal and veld initiative, it was working with a non-governmental organisation (NGO) to improve the herds in KwaZulu-Natal (KZN), as well as building necessary infrastructure. The Eastern Cape had a similar programme, but the Department was looking at specific commodities that could be improved through its help. Overall, there were about 800 programmes that the Department had running across the country.

In terms of municipal support, when SPLUMA had started, it had been discovered that no planning capacity existed in the rural municipal areas. Since this realisation, the Department had had to develop generic templates that could be provided to these municipalities in order for them to create by-laws that would make it possible for them to implement the SPLUMA.

Mr Southgate said that he did not have information on how many white youths were occupying the specified categories, but it would be possible for him to provide it at a later stage.

Mr Mhlongo asked if the Department had implemented all the recommendation from the 2014/15 AGSA report. If the answer was ‘yes’, which of the recommendations had been implemented, but if the answer was ‘no’, why had they not been implemented? He said that since the establishment of the office of the Valuer General, no progress or feedback had been reported back on the running of the office. In line with this, were there opportunities of employment available, and did a relationship exist between the Valuer General’s office and the ALHA? What disciplinary action or any other actions had been taken against the issue of non-compliance with the PMFA? What was causing the delay with regard to the several policies and bills that were outstanding, and could the Committee get a progress report on the various policies? Lastly, he asked to get clarification on the terminology of ‘achieved’ and ‘partially’ achieved.

Ms Sadiki replied that 93% of the AG’s action plans had been implemented, meaning 7% had not yet had been implemented, which was what had affected the overall performance of the report. Some of the recommendations had been partially implemented because they could not be addressed in one year -- for example, the number of leases on the farms and land. This was a staggered process that could be completed only over a number of years, so different parts were at different stages of completion, hence the conclusion that 93% had been implemented and 7% had been partially implemented, and the DLDRL was working on having all the recommendations fully implemented in the financial year to come.

Mr Shabane replied on where the delay in legislation was occurring. The bill before Parliament was the Extension of Security of Tenure Act (ESTA) amendment. Public consultation on the Deeds Registries Amendment Bill in respect of electronic registration of deeds, had been finalised and from this, they had been able to conclude the consultation at the technical level, and the bills should be complete. Other priority bills promised to be brought before Parliament after approval by cabinet included the 50/50 programme, or SRR (Strengthening of Relative Rights). The Department had received very good responses after quite a bit of resistance after the initial implementation of the bill. There had been 30 applications and quite a few had been approved, and the remaining applications were in the process of being implemented. It should be noted that the Department had also been learning as they implemented some of the programmes and bills because it was their first time doing this, but a lot of the programmes were slowly moving out of their pilot stages and were being implemented.

Mr Southgate replied that where non-compliance had been noted, he would be able to provide that information at a later stage, as the Department kept a database of all the disciplinary actions that had been taken.

Ms N Magadla (ANC) asked how many Valuer General desks had been established in rural areas, considering the challenges that they had encountered. Did the Department have a provincial database of all the small scale farmers? She appealed to the Ministry to look into and attend to the issue of Newcastle in KZN, because while the Committee had been there, matters had not been as they should have been.

Mr Shabane replied that the Department did not have a provincial database of small scale farmers. However, it did have a database of all the farmers it had assisted over the years. In compiling this database, the Department had also sought the assistance of StatsSA.

Mr Madella congratulated the Department on doing better with less money. However, he was disappointed that the Department had failed to employ a higher number of people with disabilities. The target had been set at 2%, but the 1.1% realised had been shy of the target. The Department was not prioritising or failing to understand the need to employ disabled people. He asked if there were any consequences for any of the issues with non-compliance the audit committee had uncovered during their audit. Committee Members had raised the issues of land allocation to farm dwellers, but the Department had not responded in the manner that would result in the issue being addressed. Furthermore, the Department’s failure to implement the recommended establishment of the 27 rural information desks could be the missing dynamic and link between it and the people on the ground. He hoped that the desks would be implemented in the following financial year.

Mr Shabane said that the rural service desks were dependent on space being made available for their establishment and implementation. However, the Department had taken note of the points made by the Committee, even though it was not in a position to fund the programme at the moment. He suggested that the Department should look into how useful the NARYSEC youth programme could be in helping to bridge the current gap that should be filled by the rural service desks.

Mr Southgate said that Department had had major problem with the issue of employing persons with disabilities, and would have a new focus on transformation, which was related to HR. Regarding the investigations that had been conducted by the auditors, appropriate disciplinary measures had been implemented which had led to the dismissal of certain people in some cases.

Mr E Nchabeleng (ANC) said that there had been calls from his constituency for the establishment of information desks in the townships. There had also been a call for land, but this same land had been used rather to build infrastructure, offices and malls. He understood this as being a failure to provide land to the people who had asked for it. He asked the Department if the Committee could be integrated into its processes so that they could have more of a say on the distribution of land either for agriculture, food production or for future generations.

Mr Shabane said that the application for the establishment of new towns lay with the DRDLR, as it was the custodian of the former homelands land. If people wanted to make applications for land, then they needed to do so through the Department, and anyone wanting to make township improvements, needed to be directed to the chief Surveyor General. There had already been such applications by people from Limpopo and Mpumalanga that had been approved, and construction was under way. He added that where land rights management facilities were concerned, they had appointed a new black firm of attorneys based in Johannesburg. They had recently advertised for a new panel, and were in the process of retraining panellists, and there would be an outreach programme developed. In the past, there had been complaints laid about lawyers not consulting their clients or informing them of the dates when they would be appearing before court, but since they had changed the firm, they hoped that these complains would no longer be an issue, as there was a new set of attorneys and different panellists.

Mr Mnguni pleaded that the financial report next time be in a format that was understandable. For example, when the Committee had a lawyer present on a particular issue, they were often asked to simplify the legal terms and present their findings in a manner that was not only understandable to the Committee, but to the average person on the street too. He he hoped he would not have to raise this point again, because in order for the people to trust the Members as politicians, they needed to have an understanding of the financial documents. and thus made a plea with the Department to comply with understandable reporting formats.

He referred to the non-implementation of the rural information desks, and stressed that the rural people were the ones who sustained the government. The Department needed to show its commitment to recognising their loyalty and thus deliver the services they had said they would provide. The rural masses and farm dwellers had lost their patience and felt sorely betrayed by government. This state of affairs could not be accepted, and the Department needed to reach a stage where it stopped piloting the different programmes it had developed and started implementing them. He concluded by asking what was being done about the different policies and bills on restitution, as the Committee could not wait indefinitely for them.

Mr Southgate said that the Department was now aware that the format of the financial statements was an issue, and had taken note of it.

He said that the Department had embarked on 400 programmes since 2014, and while they did not have the list with them, they had kept the information on which province the programme was taking place in, the name of the project and who the representative was that they had taken on and would work with on the project.

Mr Mbinda said that while listening to the presentation, he had realised that the action plans being implemented did not address the root causes of the problems. He asked if, when compiling the action plans, the Department had given thought to involving the AGSA before implementing them as a way of reducing their material mistakes, but also to ensure that that the developed action plan addressed the problems at hand.

On the management of IngonyamaTrust, he mentioned that the DRDLR seemed to have been experiencing the same problems as in the previous financial years, which again could also be related to the action plans, as the report had reflected that there had been no movement on the issue. He then spoke to the issue of the competence and qualifications of staff members, asking again if by competence they were referring to technical or general competence, and whether the training that they were being given was assisting them, now that this had been raised as a concern.

Mr Southgate replied that the skills audit had referred to a range of competencies, including critical and scarce skills, and as a result they had tried to map a way forward for the current structure.

Mr Shabane asked the Chairperson to advise the Department whether they should answer the question relating to the ITB, because they would be presenting tomorrow on the topic, so many of the questions raised by the Members may be answered then.

 Mr Mhlongo asked if Mr Shabane would be present at tomorrow’s meeting.

Mr Shabane said that he would.

The Chairperson commented that Mr Shabane was not part of the ITB, but that the ITB had to report to the Department.  This was the only time Mr Shabane was involved with ITB.

She indicated that there were some outstanding questions, including ALHA and operation of the office, credit facilities for rural enterprises, how the Department dealt with consultants, and if there were any contingent liabilities.

Ms Sadiki replied that incomplete action plans would affect the audit, because they did not address the root causes immediately but rather after their effects were observed over a couple of years. As a result, the effect would not be seen as soon as one would hope. Irregular and fruitless and wasteful expenditure had not increased, resulting in the financial compliance committee dealing with the transgressors through a labour relations process. The AG had noted that it was possible to detect the problem, but there was a need for a detective measure to pick up the mistakes before they actually happened and it was too late to attempt to rectify them.

On the issue of consultants, there had been complaints regarding the issue of restitution, and Treasury had taken a decision to increase the budget for consultants. On contingent liabilities, when properties were dissolved, the budget did not follow, so the current available funds did not cover the number of properties the Department had. Instead, what had happened was that there was a transfer of the surplus, if there was one, to cover the rates and taxes of the other properties.

Lastly, she asked the Committee to provide the Department with the kind of format they preferred, because the current format being used was from the National Treasury and because they were provided as templates, the Department was expected to comply with the national standard.

Mr Southgate stated that the Valuer General’s office had to remain separate from the ALHA in order to keep its relationship by providing support. There was a staffing problem when filling vacancies, largely related to the lack of funding for the vacant positions.

The Minister added that page 9 of AG’s report explained the variance between what had been achieved by the Department, which areas were concerning, and which were still in the process. On page 17 of the report, there was a further explanation of the different progressions in achieving set targets.

Mr Mhlongo asked for clarification on why the report reflected ‘in progress’, but the presentation had implied that it had been ‘achieved.’ His question then was that if something was ‘in progress’, could one say that it had in fact been achieved?

The Minister responded that if something had been reflected as ‘in progress’, it had been partially achieved.

Mr Mnguni added that he was joining Mr Mhlongo on that point, as it had been raised before. The annual report needed to reflect the final results, because all that was ‘in progress’ or had been ‘partially achieved’ had not in fact been achieved. He said that a report on incomplete progress did not go down well with the Committee, and encouraged the Department that when presenting on their annual reports, they needed to present to the Committee something final. It was more acceptable to report on progress in a quarterly report, but the true was not when presenting the annual report, and that was the principle he was trying to put across.

The Minister then raised a point of order, saying that he had made reference to the AG’s report only to point out an answer to a question that had been raised by a Member. He added that he noted that the conversation was not about the English language used, but ‘partially achieved’ would be referring to work in progress.

The Chairperson then clarified that the Minister had been trying to answer a question on achievements, and when looking at all these reports, there were targets, actuals and variances. The report made reference to roll-over projects, which were those projects that had not been completed within the financial year and as a result, their implementation would be in progress, making them partially achieved in the current financial year, and would be completed in the coming financial year.

The Minister responded to an outstanding question on the progress of the implementation of Departmental programme, and said that they had passed the piloting stage. On the question of transferring land to people, so far nothing had happened, so the Department of Agriculture, Forrestry and Fishers (DAFF) was taking it over, because it had now become too difficult for the DRDLR. On the question on the rural information desks, what the Department was doing now in all districts was establishing district land reform committees. The district joint operation centres had written to the committees to mandate people to sit at the desks, as they found it important to deal with information and participation. This was an example of how the Department provided tools for municipalities and to empower the districts to be better equipped at efficient implementation.

Mr Matiase stated that the annual report by the Department and the report by the AG attempted to serve as a yardstick to see where the policies were at and the kind of social impact these policies had on the people. It was not possible measure that which one could not manage, and he had a sense that the DRDLR was at that level. The statistics in the report looked very good and impressive but most importantly, they served more as a mirror of the successes and failures of government policies. The truth was that people were fixated on the idea that the ruling party was the alpha and omega and as a result, the ANC got the brunt of the criticism when people were unhappy. The Committee and the Department needed to begin to asking themselves what the purpose was of hiding the failures of the Department behind statistics, because it was also hiding the truth of what the people were exposed to on the ground.  Those miseries were hidden behind the glossy reports. He appealed to the Department to provide tangible reports on the work that it had been doing, and data that reflected that.

Lastly, he mentioned that the livelihood of people was tied to land and so more needed to be done to ensure that land was being transferred back to the people. These were areas that required an activist attitude from the Committee Members in order to intervene when the Committee had the means and the ability to do so. He urged that they should not spend a lot of time discussing the statistics because the misery of the people was hidden behind the glossy paper. The Department should rather present a quality of life survey, with clear indicators of how the livelihood of the people was being transformed.

Mr Mnguni said that the point raised by Mr Matiase was spot on. He had noticed that the Committee did oversight led by a governance team, but there ought to be a status quo. From the many books that get discussed, the discussions needed to translate into socio-economic impacts or outcomes. The essence of the report should be about the impact and about the quality of life of the people out there. There must be a link between the documents and the impact, because the Committee was unanimously aware that the people were unhappy. Accountability was accountability, and he felt that everyone must humble themselves and put the work in, and if that work had not been achieved at the end of the financial year, this should not be accepted.

Mr Filtane said that he was relieved that this issue was being raised again, because he had tabled it back in 2014 because people had been really upset with ineffectiveness of government. Referring to the AG’s report, he wanted to know why no rural enterprises had been established, and why people who were identified as lacking competency were still kept as employees.

Mr Mhlongo stated that next time the Department presented, the Committee would like to see separate columns that reflected the following: targets achieved, not achieved, budget allocated and budget not used. He added that the two presentations were not aligned, because there were issues being hidden within the documents.

Mr Robertson said that the essential work of the Department was the transformation of land and of the agricultural sector. Unless the Committee had the data, they were unable to measure the impact that was being made. There was a need to look at solving that process and using the right indicators to measure the impact.

Mr Shabane said that the Department had heard the position of the Committee in terms of reporting. The report was currently in a particular format because that was the standard, but the issue of the socio-economic impact of the programmes was a far important one. The Department had stopped conducting quality of life surveys and so there needed to be a look into the period of time in which these had been conducted. Moreover, if the surveys were conducted on a more frequent basis, it would allow for them to be monitored, as some actions would take time to implement.

Mr Mcebisi Skwatsha, Deputy Minister: DRDLR, said he felt the Department might have been misunderstood in their responses, both in tone and spirit. He apologised if any of the Members felt that the response from the CFO had been rude when speaking on the format. The DRDLR wanted to come out of the meeting stronger in helping the people of South Africa. The Committee had the role of doing oversight, which helped sharpen the Departments tools. The DRDLR had a huge responsibility to South Africa, and were not present at the meeting to suggest that everything was well in the country. The Department was aware that there were various challenges faced by the people. There was no intention to hide that behind glossy books, but the books were a reflection of the work the Department had done, and some of the things that they had done, had had a direct effect on the lives of the people.

The Minister added that districts were a part of the Department’s implementation process. On the restitution amendment, there was nothing substantively wrong with the bill, but Parliament just refused to pass it and it was a matter that the Department was also anxious about.

The Chairperson said that the reports showed that there had been an improvement, and for that she commended the Department. However, gaps had been noted and the Committee would monitor to see if the recommendations were being implemented, as well as the policies, so that the Committee could engage the Department on the policies. The Department would be invited again to talk on the issues of UIF and compliance, and other matters that had been raised. The problems had to be resolved. For example, on the issue of compliance, people should either be fired or suspended, but the Committee would not allow people to keep doing things in the Department that they did not stand by. If people failed to comply, action must be taken so that they knew that the Committee was serious. She agreed that for quarterly reports, a format to the liking of the Committee could be used, and when presenting annual reports, unless directed by the Treasury, she asked that they change the format, because at the moment all the Departments followed the same format. On the issue of disability, she acknowledged that the Committee needed the Department to act on its targets and make the necessary transformation changes.

Commission on Restitution of Land Rights: Annual Report

Mr Thami Mdontswa, Deputy Chief Land Claims Commissioner: Commission on Restitution of Land Rights (CRLR) said it was responsible for investigating and processing restitution claims. It also developed and coordinated restitution policies and oversaw restitution court cases. The strategic objective of the Commission was the restitution of rights in land or awards of alternative forms of equitable redress to claimants within Medium Term Expenditure Framework (MTEF) budgetary allocation.

Giving a summary of the CRLR’s service delivery achievements, he said:

• The CRLR spent 97% of its operational budget in the 2015/2016 financial year;
• R2.065 billion had flowed to restitution beneficiaries in the form of land or financial compensation;
• Further to the targets set out in the APP, the CRLR could report that it had settled 101 885 hectares of land and benefited 14 318 households, of which 6 999 were female-headed households;

• The total financial value of the claims that had been approved during the period under review amounted to R1.420 billion;
• Total expenditure was R2.155 billion. This included expenditure on backlog claims which had been approved in previous financial years, where payments had not yet taken place.
• Expenditure per category for the period 1 April 2015 to 31 March 2016 was: Land purchase and land subsoil - R1.196 billion (56%); Conveyancing: R5 million; Re-capitalisation and grants: R151.1 million (7%); and financial compensation: R802.6 million (37%).

Discussion

The Chairperson said that delaying research was a critical issue in the area of land restitution. She asked what terms of reference had been agreed upon by the service providers.

Mr Mhlongo said that since he had been a Member of the Portfolio Committee, there had been vacancies, and there had been no movement since 2014. He also noted that there were some inconsistencies in the budget allocation shown in the annual report.

Mr Mdonstwa replied that just as the Department had reported on the lack of funding available to fill the vacant positions, this had also affected them, hence the continued vacancies in certain positions.

Mr Mnguni said he wanted to raise two issues. The first was a road map towards the autonomy of the Commission, including a cost breakdown and timelines attached to the plan. The second was on the issue of researchers, as he suggested that researchers should be contracted to work for the Commission, which would be far better than contracting a research facility or service provider. He was a bit concerned about whether this was too simplistic to help resolve the problem, but in the spirit of thinking outside the box in order to generate solutions to a problem, he suggested that the Commission contract individual academics at postgraduate level with research experience to carry out the necessary research.

Mr Mdonstwa replied that the CRLR was going to outsource the researchers and had created a panel with a timeline in which they would have to submit their reports. At the end of the financial year, they had noticed that there had been gaps in some of the submissions, and had struggled to manage the service providers, which had given them an even poorer quality of work than the Commission had become accustomed to. The allocation of complex cases had had to be finalised through the appointment of researchers from the University of South Africa (UNISA) to help complete the research outstanding for the financial year, but they were hoping to finalise the claims from 1998 by the end of this current financial year.

Mr Madella expressed some concern that the Commission’s indication of employment equity had made no inclusion of people with disabilities, which led him to assume that this may be because the Commission’s office did not hire disabled people. Furthermore, this could be an indication that they were against hiring disabled people, which would in fact be against the constitution of the country.

Mr Mdonstwa replied that they did not have a policy in place that stated that they could not hire disabled people. The fact that this was not included in the report was a weakness in their report, but they would improve on that going forward.

Mr Matiase mentioned that there had been claims which had been made for land that had not been dealt with for 16 years, and with such a long gap he wondered how much land could have been given back to the people. It seemed as though the Commission only acted on claims from 1998 until April 2014. The Departmental statistics reported that R30 billion had been spent on restitution. He wanted to know how much of that had actually been spent on the resettlement of people on the land, and how much had been spent on land restitution. Regarding the households that had benefited, regardless that many of the households that had been given land restitution were female-headed households, it would have been helpful to still know how much had been spent on each household. Lastly, he asked if restitution was really what it was in the true sense of the word, or if it was a quick way to get money for people, which then disappeared as soon as it was received.

Mr Mdontswa replied that they had made reference to information for the whole land, but often had to review a specific timeframe, so that information was sometimes not shared unless it had been asked for. He added that not all the land had been transferred. There were a whole lot of issues and community disputes, but the Commission’s office was hoping to resolve the disputes by putting in place specific structures that allowed for the correct transfer of land to the state. They had done all that they could to provide land, and not just push people to take financial compensation for their land claims.

Mr Robertson suggested that now that they were about to go into a 24 month recess because of the extensions of land claims, it would be feasible to look at state-owned land and undeveloped land as a means to give land back to people sooner, rather than going after privately-owned land.

Mr Mdontswa replied that 14% of the land belonged to the state, but this state-owned land was already occupied. The State could only give back state land that had been claimed. It had been found that when the intention had been to give state-owned land as an alternative, people residing in those communities had legitimate rights and a claim to that land, meaning that it was no longer available to be used.

Mr Filtane said that nowhere in the report did it refer to any other division of the Department, to the extent that there was no mention of the land that the state had purchased. He felt as though the Committee was in the dark and was suffering from the extreme brevity and lack of information in the report.

Mr Mhlongo said that Mr Mdontswa’s responses had appeared rushed, and he did not go into more detail when answering questions.

The Chairperson said that if Members felt like answers had not been adequately addressed, they could ask again. What she did suggest, however, was that any questions of clarity and further questions be sent to the Department, and that a written response to those questions be forwarded within seven days.

The meeting was adjourned.