Tourism Budgetary Review and Recommendations Report; Howick Oversight Report

Meeting report

The Chairperson pointed out that on 15 October 1989 some of the Rivonia trialists had been released from imprisonment as a way forward to forming a new SA. For many it was the first time that they had laid eyes on the Trialists. Most ANC comrades had over the years just imagined how the trialists looked. All South Africans were thankful to them for their contribution towards SA becoming a democracy. He brought it to the attention of the Committee that a reporter from the Daily Maverick had written an article in which it was stated that Parliament was not doing work but merely idling. Such reports should not be taken to heart as the truth is that Parliament was working.

He asked the Committee Content Adviser to take the Committee through both the Committee’s 2019 Budgetary Review and Recommendations Report and its Draft Howick Oversight Report. The Committee would adopt both Reports the following week.

Draft 2019 Budgetary Review and Recommendations Report (BRRR)

Dr Sibusiso Khuzwayo, Committee Content Advisor, said that he would not take the Committee through the entire BRRR. Members were already familiar with issues contained in the BRRR. It contained information that was covered in Committee research reports and provided during briefings etc. The BRRR also looked at external factors. The BRRR was the Committee’s Report and should be tabled in the House. Suggestions and proposals were made in the BRRR which Members could delete, add onto or make new proposals. Members were urged to strengthen the provisions where they deemed it necessary. Of importance to Members were the observations and recommendations made in the BRRR. This was what the Executive focused on. Being the first BRRR of the Committee, he briefly spoke to the purpose of the BRRR and also touched on the broad priorities and focus areas of the Committee. These included a change in the oversight approach by the Committee, that tourism efforts needed to focus on villages, townships and small dorpies and that given tourism was not doing as well as it should there was a need to rebrand SA, there should also be a focused approach on repositioning tourism development and to have tourism renewal in SA. Committee observations and recommendations were presented to the Committee. These included the following:

Committee Observations

-The Committee observed with concern that the Auditor General of SA (AGSA) had found that the SA Tourism (SAT) had not complied with key legislation and that appropriate steps had not been taken to prevent irregular expenditure.

-The Committee also observed that both the National Department of Tourism (NDT) and SAT had not set targets that were Specific, Measurable, Achievable, Relevant and Time-based (SMART).

- On governance and operational issues, the Committee observed that the internal Risk Management Committee (RMC) was unable to sensitise the NDT about several risks that led to poor performance in the year under review.

-On service delivery performance by the NDT, the Committee noted the concern by the AGSA that there was a lack of standardised infrastructure project management practises and no standardised construction industry contracts were used. The Committee also observed that there was a lack of consequence management at both the NDT and SAT. In addition, the Committee observed that over the years the NDT had implemented ad hoc programmes in villages, townships and small dorpies. There were no deliberate planning processes to use tourism to alleviate poverty and address inequalities that existed in these areas.

- The Committee observed that transformation in the tourism sector remained a challenge as structural imbalances of the past remained.

- The Committee further observed that municipalities were failing to maintain tourism attractions under their jurisdictions.

- The Committee observed with serious concern that international tourist arrivals to SA were declining.

Recommendations to the Minister of Finance

-That National Treasury must work with the NDT to reprioritise the budget for the tourism vote in line with the Committee’s new oversight approach and in line with its focus on villages, townships and small dorpies.

- Notwithstanding the constraints on the national fiscus, National Treasury should consider the contribution of the tourism sector to the Gross Domestic Product (GDP) of SA and the labour intensive nature of the sector. Bearing this in mind innovative ways should be found to increase the budget appropriated to the tourism vote.

Recommendations to the Minister of Tourism

-The 2019-2024 Strategic Plans for the NDT and SAT must be geared towards increasing participation of citizens in villages, townships and small dorpies. There should be explicit programs and projects that prioritised these areas of society.   

- SAT should engage an independent and capable body to test whether its targets as contained in its five- year strategic plan and its annual performance plan were SMART, before finalising and tabling the plans to parliament.

- The NDT needed to develop a comprehensive transformation strategy with innovative implementation programmes, timelines and budgets and these should be presented to the Committee on a bi-annual basis for monitoring and oversight purposes. The NDT in addition should relax its qualifying criteria to enable potential and emerging tourism entrepreneurs to access the Tourism Transformation Fund. Funds should be made available to capitalise the Fund.

- On strengthening internal controls, the Internal Audit and Risk Management Committees of the NDT and SAT should provide quarterly briefings to the Committee on how they were working with the AGSA to mitigate risks.

- The NDT should provide the Committee with monthly reports to assist with early detection of challenges in governance and on project management. In this way the Committee could provide feedback on financial and non-financial risks.

- The NDT and SAT should apply consequence management in their respective organisations and should undertake investigations to apportion wasteful and fruitless expenditure to individual employees.

- The NDT, together with the Department of Cooperative Governance and Traditional Affairs (DCOGTA), should develop a Municipal Tourism Framework which would be signed as a Service Level Agreement (SLA) between the NDT and the DCOGTA to prioritise tourism in their Local Economic Development (LED) Plans.

- The NDT and SAT should work with the Department of Transport, the Airports Company of SA (ACSA), provinces, cities and airlines to develop a National Airlift Strategy.

- The NDT needed to improve on forward planning, project management and contract management. It should therefore develop and present its improvement plan to the Committee. 

- SAT should track the impact of its Super Charge 5-5 Turnaround Strategy to bring tourism into a growth trajectory that would achieve President Cyril Ramaphosa’s 2019 State of the Nation Address’ goal of SA having 21m arrivals by 2030. 

Draft Howick Oversight Report

Dr Khuzwayo said that the Draft Howick Oversight Report was self-explanatory and did not take Members through it.

The Chairperson tabled the Draft Howick Oversight Report with the Committee. Inputs by Members could be forwarded to Committee Staff. Both the BRRR and the Draft Howick Oversight Report would be adopted by the Committee on Tuesday, 22 October 2019.

Discussion

Ms T Xego (ANC) understood that the Chairperson only wished for the BRRR to be tabled with the Committee but Members had things which they wished to raise which could possibly be included in the BRRR.

The Chairperson asked Members if they were in agreement that Members could express their views and that certain issues could be incorporated into the BRRR.

The Committee was in agreement with Ms Xego.

Ms Xego, on the matter of safety, said that the Minister of Tourism had to continue to engage with the Minister of Cooperative Governance and Traditional Affairs on the impact that violent service delivery protests had on tourism. The protests were after all directed to municipalities. She was not sure whether the safety issue should be included in the BRRR. The Chairperson should lead the Committee on continuous engagement with the Minister of Tourism. President Cyril Ramaphosa had, in his 2019 State of the Nation Address (SONA), stated that 21m tourists should be coming to SA by 2030. The Committee needed to directly engage with National Treasury to increase the budget of the National Department of Tourism (NDT). The SONA pronouncement could be used as a basis to get the budget increased. The Minister of Tourism had already bought into the Committee’s call for greater focus on tourism in villages, townships and small dorpies. Job creation was what SA needed and the tourism sector was very labour intensive. However, the jobs created had to be sustainable.  

The Chairperson responded that safety of tourists should be covered in the BRRR.

Mr G Krumbock (DA) asked whether it was possible to adopt the Draft Howick Oversight Report other than on Tuesday 22 October 2019. He had an important engagement on that very day and would have liked to be present on the day that the Draft Howick Oversight Report was adopted by the Committee. He brought it to the attention of the Committee that the Draft Howick Oversight Report contained mistakes and had contradictory statements all of which needed to be corrected. For instance on page 23, paragraph 8.5 with respect to the George Walk Restaurant he was not sure whether the Committee was calling for the municipality to run the restaurant or whether it should be placed in the hands of the private sector. There were also mistakes on statistics in the Report. The 40% decline in tourism was a two-year-old figure. The figure at present was 90%. Figures captured in the Report needed to be correct. He nevertheless appreciated the good work done on the Report and was grateful that the Committee had gone on oversight to Howick. He noted that the Chairperson had made seventeen suggestions and asked how many of the suggestions were binding. He hoped that the suggestions were binding. Was concurrency with DCOGTA needed?

The Chairperson responded that it was not a problem for the Committee to adopt the Draft Howick Oversight Report other than on Tuesday, 22 October 2019. The BRRR however had to be adopted on Tuesday, 22 October 2019.

Mr H Gumbi (DA) asked that the issue of airlift strategy in the BRRR should be elaborated upon. Costs were a huge factor in travel. Costs and taxes should be reduced. The role of embassies abroad should also be elaborated upon in the BRRR.  

Mr M de Freitas (DA) referring to the BRRR said that he could not recall that the Committee would “effect a paradigm shift from international tourism to domestic tourism” (page 1, paragraph 2). Both international and domestic tourism should be increased. The BRRR should be corrected to reflect as such. On the maintenance of tourist attractions (page 62), he suggested the use of an asset register for Parliament to monitor tourist attractions. It was important for members to do oversight on whether tourist attractions had been upgraded. On ineffective marketing efforts by SA Tourism (page 63, paragraph 9.3.17), he felt that more could be said. Perhaps the Committee could monitor performance. He would draft something for inclusion in the paragraph. On quality assurance (page 63, paragraph 9.3.18), he noted that there was a great deal of problems around grading. Many of the problems would disappear if grading was for free. The illegal use of grading plaques would also be a problem of the past if there were no costs attached to grading.

Mr K Sithole (IFP) referred to BRRR recommendations of 2017/18 (page 11) and asked that it be linked to the current BRRR recommendations of the Committee (page 67).

Mr P Moteka (EFF) said that transformation should start with efforts by the Committee. He noted that Dr Khuzwayo had said that Parliament had a requirement that members should be accommodated in four-star accommodation facilities.  What if the Committee wished to support a smaller establishment? The Committee had to lead by example. If a previously disadvantaged person only had a three-star establishment and the Committee agreed to stay there, then it should be allowed.

On the BRRR, he said that it was important that the Committee put people of SA first. If the budget of the NDT did not speak to the priorities of the Committee then it should be rejected. In the BRRR it was reflected that land expropriation without compensation was a threat to tourism. It could not and should not be accepted. SA could not compromise on its key policies. Tourists could not interfere with transformation policies. He also felt that the Committee needed to invite National Treasury to the Committee so that the importance of tourism could be put to them. The budget of the NDT needed to be increased. The budget of a Department spoke to how much value the government placed on that department. How could it be that the NDT was given a budget of R2.4bn when tourism contributed R425bn to the fiscus? It did not make sense. Tourism also contributed 1.5m jobs. Tourism made up 8.6% of the Gross Domestic Product (GDP). The Committee could make the case for tourism.

Ms Xego referred to the BRRR and said that she would draft something around the lack of consequence management (page 56). 

Ms M Gomba (ANC), on the BRRR (page 69, paragraph 10.2.11), was pleased with how the paragraph had been written. She however doubted whether there was a working relationship between the Internal Audit Committee and the SAT. She suggested that their relationship be strengthened. She felt that there was no relationship at all. She brought up the matter of a management letter which was issued by the Auditor General of SA (AGSA). She had come to hear of it before she had become a member of Parliament. She pointed out that the management letter contained informative information on where things had gone wrong. She asked the Chairperson to perhaps be privy to the management letter. The Committee needed to get down to root causes of the problems. She continued that on matters of emphasis the AGSA had not been open about how many there really were. The number could be as high as 50. The Committee was only made aware of about four. She asked that all the matters of emphasis be provided to the Committee. Previous years matters of emphasis should also be included. She stated that the Chief Financial Officer (CFO) of the NDT had said that there was 2.1% in under expenditure. The Committee needed a report in this regard. She pointed out that the Committee had requested many reports but that they were not forthcoming. She was aware of much of what she had said was perhaps not to be included in the BRRR.

Ms L Makhubele-Mashele (ANC) said that the BRRR reflected the Committee’s deliberations with the NDT and SAT. The recommendations it contained also reflected what Members had said. She did point out that the Committee had raised concerns around the oversight model of Parliament and had made a proposal in this regard ie Legislative Oversight Tourism Forum (LETOFO). The Committee had adopted the LETOFO model of oversight which brought on board provincial legislatures and municipal committees. The Committee had a concept paper which was adopted. She wished for it to be included in the BRRR. NDT and SAT had spoken about the development of a China-India Strategy. She preferred that the strategies for India and China be separate. She suggested that a recommendation in this regard be included in the BRRR. China and India might have different issues. For instance, Chinese tourists had complained about SA’s signage not being user friendly. Emphasis needed to be placed on these strategies as SA had to ensure that it captured its share of tourists from these countries. SA had only captured 3% of the Chinese market of tourists. She would draft something in this regard.

The Chairperson, on the Draft Howick Oversight Report, thanked Mr Krombock for pointing out corrections that needed to be made on the Report. On the George Walk Restaurant, he said that the Committee preferred for there to be a Public-Private Partnership (PPP) in place. It should be linked to the Mpophomeni Township. If provinces and municipalities requested information from the Committee, then it should be provided. The issues raised by members would be taken on board by the Committee. On transformation, it was correct that the Committee should lead by example. Going forward meetings of the Committee would be held in townships and informal settlements. He agreed that there should be separate strategies for India and China. These should be done in the context of the Brazil, Russia, India, China and SA (BRICS) Agreement. There were three things that the Committee would focus on. The first was to strengthen oversight. In the context of intergovernmental relations, the Committee would work with provincial legislatures and municipal committees. On oversight engagements there would be some sort of forum. Standard on the agenda would be budgets, boards and implementation of Annual Performance Plans (APPs). There was also a need for municipal indabas. Linked to it would be how community based oversight forums would execute mandates. The second thing was to identify where poverty was concentrated and how tourism could be used to alleviate poverty. The third thing was to look at transformation. The Committee would monitor from September 2019 to September 2020 how far the sector had transformed. This was the foundation phase. It would be done each year from September to September. There would be three phases of work. The first was because tourism had challenges there had to be rebranding of opportunities. Thereafter there needed to have a repositioning programme.  The last phase was renewal which was the ultimate goal. He referred to the actual Annual Report of the NDT said that on page 208 there was a list of establishments. Page 209 spoke to advance payments made by the NDT to implementing agents on the Expanded Public Works Programme (EPWP). The NDT did however not specify in terms of which clause of the Public Finance Management Act (PFMA) the advance payments had been made. This should be captured in the BRRR. The Committee together with the AGSA, the Standing Committee on Public Accounts (SCOPA), the NDT and SAT work on challenges faced by SAT.

Dr Khuzwayo responded that most of the issues raised by members were doable. There were a few things that he wished to speak to. The first was on accommodation below four stars when members travelled. The four-star requirement was parliamentary policy. The Committee could however make a formal resolution in this regard. On the linking up of 2017/18 BRRR recommendations with current 2019 BRRR recommendations, the problem was that for the 2017/18 recommendations the Minister of Tourism had already responded to them. The 2017/18 recommendations had already been rejected. The Committee needed to make new recommendations. It would be difficult to link the BRRR recommendations of 2017/18 with that of 2019. He asked whether it was possible for Mr Sithole to draft something in this regard. It was difficult to infuse old matters with new recommendations. On the issue of the management letter, the Committee had raised it before. National Treasury had responded that it was an internal auditing issue with the Executive. It did not need the attention of the Committee.

The Chairperson stated that efforts by the Committee to support small establishments was not only for accommodation. It was for services provided to the Committee that were up to three stars. He would draft a letter in this regard.

On the management letter, he understood what was being said but felt that it was about how taxpayers’ money was being used. The issue would be looked at again by the Committee. It was about transparency.

Dr Khuzwayo agreed to include the management letter issue in the BRRR.

Ms Gomba stressed the need to include the management letter issue in the BRRR. The NDT after all received a qualified audit report.

Mr Jerry Boltina, Committee Secretary, on whether grading should be compulsory or not said that the Tourism Bill was on its way to the Committee. The Tourism Grading Council of SA (TGCSA) would be briefing the Committee in two weeks.

The Chairperson, on whether grading should be free or not, said that it should be in included in the BRRR. The Committee would meet with the TGCSA and deal with the Tourism Bill once it was before the Committee.

Mr Gumbi reiterated the importance of including the embassy issue into the BRRR.

The Chairperson said that he would invite the Chinese ambassador and his delegation to the Committee. Perhaps a trip to China for members could be discussed so as to unpack tourism related issues.

.[There was a brief break in proceedings as members wished to have a discussion off the record]

Proceedings continued with Ms Makhubele-Mashele stating that the Chairperson needed to guide the Committee on the processing of Committee reports. If there were members who wished to share Committee reports with constituencies if should be done after the Committee had processed them.

Mr Krumbock responded that on the Draft Howick Oversight Report he did not wish to share the Report with his constituencies but wished to engage with stakeholders. He fully understood that the Draft Howick Oversight Report was not yet a public document. All he wished to do was to make corrections to the Report in order for it to be reflective of the visit. He agreed with the Chairperson that a PPP was the best option for the George Walk Restaurant.

The Chairperson said that the Committee would finalise the Draft Howick Oversight Report sometime in the future. No date had been decided upon as yet.

The meeting was adjourned.