Department Budget: briefing

Meeting report

This report is produced by the Contact Trust - www.contacttrust.org.za

WATER AFFAIRS AND FORESTRY AD HOC COMMITTEE; LAND AND ENVIRONMENTAL AFFAIRS SELECT COMMITTEE: JOINT MEETING
31 May 2004
DEPARTMENT BUDGET: BRIEFING

Chairperson: Ms Khomphela (ANC)

The following documents are available:
Presentation by SALGA
Presentation by Rand Water

SUMMARY:
The Department of Water Affairs and Forestry came to present its Budget to the joint meeting of the Portfolio Committee on Water Affairs and Select Committee on Environmental Affairs and Land. The Minister, Ms Sonjica was present in the meeting to give a broad political overview and she also reflected broadly on some of the challenges facing her Department.

MINUTES
The Chair told the meeting that the discussions on the Department Budget would inform a report that would be tabled in Parliament. The other purpose was to see whether there is a need to realign the budget.

Address by the Minister
The Minister, Ms Bulelwa Sonjica, expressed her appreciation for being deployed to the to the Water Affairs Department by the President. She emphasised that there is a need to look at social and economic contribution of the Department. " Water is central in the functioning of life. We need to review issues in the context of 2014 deadline. By 2015, we must half the backlog. The President has set specific targets. The Water Resources is hailed around the world and the Integrated Water Resources Policy is being developed ". The major challenge is the implementation of the laws and policies. South Africa needs to address the issue of water users – mines and farmers. Resources need to be shared. There is a need to support water conservation campaigns".

"We must plan thoroughly to ensure water conservation and sustainability. We intend working with the Departments of Health and Education to ensure schools are given clean water. Education and Health do not have water as their core functions and need to release funds to allow Water Affairs to meet its mandate. We have established toll free line for public to register concerns regarding water services. There is sanitation backlog in peri-urban and rural areas. There is a need to encourage Water Affairs and other departments to develop strategy on sanitation. We have established the National Sanitation Task Team. We are looking at community-based programme to promote rural sanitation. Sanitation is a priority in the next 5 years and this work has to be done with local government. Coordination and cooperation is necessary amongst departments. DWAF has announced a programme to deal with sanitation challenges. The Department must emphasise the importance of hygiene. Water campaign should be strengthened".

The Minister alluded to the fact that one of the success stories of the government is the policy development and restructuring of forestry to provide opportunities to previously disadvantaged. The Minister further stated that there is a need for BEE companies to be self sustaining and some would need to be assisted to be competitive. DWAF is prepared to assist and would need to discuss this matter with the Department of Public Enterprises. The Minister mentioned that there are reports that some commercial companies are not coming to the party when it comes to helping poor areas in terms of their social responsibility.

She told the meeting that there is progress in terms of transformation in her department. The culture and environment is also changing. "There is freedom of expression and mutual respect. The Department needs leaner machinery for evaluation. The department is in the process of restructuring. She said that there are 18 000 in the employ of the Department, and because the Department will focus on monitoring, the changing role would mean that some people would be lost to local government where implementation is expected to take place. The government is committed to redistribution of wealth and restructuring should expose corrupt practices. There are dams that are being built. These dams are Olifants Dam in Limpopo Province and Berg Dam in the Western Cape. These developments provide social and economic benefits. The Department is contributing to the improvement of economic situation of poor people.

With regard to Water for Food Security, DWAF is working with the DLA to find ways in which water can contribute to food security. Local development needs need to be included. Free Basic Water is being implemented. Poor people have 25 litres per day.

On international cooperation, DWAF is sharing courses in the region. Mozambique, South Africa and Botswana are involved. High Land Water Project is dubbed a NEPAD flagship. The African Minister’s Council for Water share experiences relating to Water. The Department needs to improve its finances especially the trading account. There is also a need to create skills and the Department is recruiting in terms of placing students. The EPWP is seen as important in delivering water services and development of forestry programme to create jobs. Local people should be involved. On labour issues, the Department is going to continue negotiating with trade unions like NEHAWU.

Discussion
Mr Maluleke (DA) wanted clarity when the Minister mentioned that some companies are not fulfilling community commitments.

The Minister responded that their monitoring system would need to improve. "We are investigating what is happening in BEE companies and we are mooting the idea of a charter".

Mrs Lydia Ngwenya (ANC) noted that it was good that DWAF is working with other departments like Health, Education and Agriculture. She further raised that as parents they are negligent in seeing schools as a priority. " Children spend 95% of their time in schools". She was however happy that the Water Board was present in the meeting to look into some of the issues raised. She was also impressed with the process of restructuring and felt delivery should be accelerated.

The Minister indicated that they are working with other sister departments. "There is a need for Cabinet approval. I got calls from clinics where there is no potable water and children get waterborne diseases".

On transformation, Mrs Ngwenya was disappointed about the progress made.

The Minister’s response was that transformation is not only a problem for Water Affairs. She raised that transformation must be seen in the context of nation building.

Ms Dlulane (ANC) commented that she was looking forward to the Budget hearings but registered her worry about local government and their ability to deliver on some of the challenges that have been transferred over.

Ms Nyakane (ANC) wanted to understand the process of recruiting students.

The Minister replied that the students need to send their CV’s to the Department.

Rev Moatshe (ANC) commented on the issue of the toll free line for the public. He wanted to know the number.

The Minister referred that question to the DG.

Mr Mogase ()wanted clarity about 18 000 personnel in the Department and still the drive of the department to recruit students. "Is this not a contradiction", he asked.

The Minister told the committee that the issue of recruiting students should be looked at within the context of skills development. " We transfer skills to young people because some people are old. We develop skills to replace them and deal with the issue of demographic reflection".

The Chairperson wanted information on how many people are affected by transformation and the costs of the Voluntary Severance Package and any other costs.

The Minister indicated that she needed to check statistics and advised the chairperson to maybe formalise his request to be provided with that information.

Input by the Director General: Mr Muller
The DG indicated that the intention of the presentation was to look at the estimates of national expenditure. He outlined the procedure of their presentation and that Mr Mbala (Chief Financial Officer) would outline the expenditure perspective.

Presentation by Chief Financial Officer
Mr Mbala told the committee that the total expenditure for 2004/05 will be R6,7 billion. He further indicated that the Department has 4 programmes. He told the committee that they operate a trading account. "As we generate revenue, we use it within the Department. This revenue sometimes does not match expenditure. We use money from Exchequer Account in the Treasury". He told the committee that the trend is that forestry has been stabilising and they need to improve revenue collection.

He added that the total expenditure for 2000/01 and 2003/04, increased from R3,0 billion to R4,6 billion, that was an annual average increase of 15,1 per cent. The increase in 2003/04 is due to transfer costs related to: the transfer of the water service schemes to local authorities, with additional transitory costs being incurred related to the preparation, planning and implementation of the transfer; an increase in expenditure on the sanitation programme; and the writing off of water user association debt.

During 2003/04 once-off additional allocations were made for restructuring the department, flood damages, drought relief and writing off loans.

Over the next three years expenditure is expected to rise steadily after an initial decline from R4,6 billion in 2003/04 to R3,3 billion in 2004/05, reaching R3,6 billion in 2006/07, an annual average increase of 4,9 per cent from 2004/05 from 2006/07. The sharp fall in expenditure is due to the removal of capital and operating costs for the water services schemes from the department's vote, as reflected in the reduced allocations to the Water Services programme.The subsequent increase in overall expenditure is driven by adjustments for inflation and allocations in the outer years of for Water Resources Management.

Departmental receipts
Receipts from the sale of water are paid into the Water Trading Account. Other receipts are from the repayment of loans to water boads, irrigation boards and local government, interest on these loans, revenue from the sale of wood and wood products, and miscellaneous income. The increase during 2002/03 can mainly be ascribed to the closure of the Industrial Plantation Trading Account, which was transferred to the National Revenue Fund. The projected growth in receipts over the medium term takes adjustments for inflation into account.

Programme 1 Administration
Administration provides for the management of the department, including: policy formulation by the Minister and senior management; and cetralised administrative, legal and office support services; departmental personnel management and financial administration; IT; determining working methods and procedures; and exercising control through head office and regional offices.

Expenditure trends
Expenditure on Administration increases from R189,8 million in 2000/01 to R285,1 milion in 2006/07, an annual average increase of 7,0 per cent. This increase is due, in part, to the need to pay for the management of the transfer of water service operations to local authorities and to restructuring costs that the department will bear in shifting its focus from operations to policy development.

Programme 2 Water Resource Management
Water Resource Management ensures that national wate resources are used and managed in a sustainable and equitable manner for the benefit of all people.The programme is organised into 14 subprogrammes. The first six relate to the development of policies and strategies at the department's head office, and the remaining eight relate to implementation activities in the nine regional offices.

Equitable Supply covers the policy, planning and regulatory functions to ensure the reliable and equitable supply of water for sustainable economic and social developmen, including the eradication of poverty.

Protection Policies ensures the protection of water resources.
Institutional Regulations provides support for developing and establishing effective water management institutions.

Strategic Alignment ensures that policies and strategies are internally consistent and aligned with relevant external policies and legislation, develops and maintains monitoring and information systems, and promotes capacity-building among water resource management practitioners and stakeholders.

African Co-operation promotes intergrated water resource management in Africa in support of the NEPAD.

Water Resource Administration ensures efficient general administration of the Water Resource Management programme.

Sustainable Supply support the provision of a reliable and equitable supply of water at regional level, for sustainable economic and social development, including the eradication of poverty.

Protection Measures initiates and supports the protection of water resources at the regional level.

Institutional Development ensures that there are effective water management institutions at the regional level.

Stakeholders Empowerment develops empowered, skilled and representative staff and capacities stakeholders and the general public at the regional level to achieve intergrated water resource management.

African Support is a donor-funded programme that implements intergrated water resource management in Africa and at the regional level, in support of NEPAD.

Water Resource Support provides regional support services (management, human resources, finance, and general administration) for water resource management.

Operations of Water Resources provides for the augmentation of the Water Trading Account

Capital Equipment provides for the augmentation of the Equipment Trading Account.

Discussion
Mr Naicker (Rand Water) wanted to know the difference between administration and support as was presented.

The DG responded that Administration reflects head office in Pretoria and support deals with functions that are performed in regional offices.

Rev Moatshe commented that the Harteespoort Dam is highly polluted and the Modipang community uses water from the dam. He wanted to know if the water could be purified and the steps DWAF is taking to remedy the situation.

The DG responded that he was happy that this issue was raised in the presence of SALGA in the meeting. "There are questions that must be addressed about who is responsible and who must pay. The costs of purifying are high. This is the problem that must be funded by water users. There is a need to use wastewater disposal charges. We need to clean dams and treat water once polluted. There is a need for those polluting to share costs. The interventions are underway to deal with water resource management".

Mr Combrink wanted to know why in the presentation the amount allocated for Free State was 51, 518 million.

The DG replied that it could be Working for Water or Working for Wetlands. He promised to provide the answer in a week’s time regarding the question.

Mr Mabuyakhulu (ANC) wanted to know why the line on restructuring in the presentation remains constant when restructuring was already taking place.

The DG responded that forestry is not about forestry plantation. "The line looks straighter. We felt we needed to keep the money in the budget until restructuring is completed".

Mr Lushaba from Rand Water wanted to know what integrated systems mean.

The DG replied that they refer to pump stations that deal with integrated water infrastructure that took place across national and regional boundaries.

Mr Maleka commented that water is polluted and was surprised that the problem remains. He wanted to know when would it be resolved.

Rev Moatshe commented as well that the smell from Harteespoort Dam makes people vomit. "Something has to be done because the smell is dangerous".

The DG told the meeting that some issues are not water challenges but urban development challenges. SALGA charges for waste management and control. The problem is not going to be solved in a short time. " We are working actively with communities and other agencies need to contribute. Every year, there will be pollution and we prefer to look at the source" .

Mr Phala raised that the Minister spoke about many dams. He mentioned that some of the dams are not upgraded and therefore not clean.

Mr Mvekela wanted to know if DWAF has teams that monitor dams and whether they get reports.

The DG responded that not all dams are maintained by DWAF. He reported that there are about 10 000 dams in South Africa and 250 of those belong to DWAF. "We check dams for safety. Dams belong to other people and they need to work on their dams. We are concerned about the safety of poor people" .

Mr Mack (ANC) referred to Presidential nodes and commented that the document presented did not make reference to the nodes.

The DG responded that money for water and sanitation is divided into formula, not nodes.

Current services are a formula of allocation. There are attempts to ensure the Provincial Growth Strategies are supported. The Eastern Cape has got the potential for Forestry. "There is a dam to be announced shortly, but it is a contentious issue and I cannot at this stage divulge the details". Municipalities would be assisted in water services. The monitoring and evaluation of municipalities is done in terms of WRM and IDP. "We are moving towards allocating resources to meet those priorities. The difficult position is that municipality may have 20 IDP priorities but may get Municipal Infrastructure Grant for four of them. Municipalities will be given full responsibilities this year".

The chairperson raised that a school is not a school without offices and sanitation. Provincial governments have responsibilities. There are changes that need to be made when it comes to monitoring. " Water treatment is a challenge". Monitoring needs to be prioritised. The other key things are the standards and pollution of dams. The chairperson wanted to know if the Department would have problems in reshifting the budget.

The DG replied that policy changes are imminent. He also stated that they are R350 million short to implement the Water Act. The DG also stated that monitoring is priority and they need to take action.

Rev Moatshe wanted clarity when the DG said that the investment was going down as was approved by Parliament.

The DG responded that DORA had been passed. "I am suggesting that the government is spending less on infrastructure".

Mr Maleka wanted to know about Working for Water.

The DG told the meeting that WfW is the programme that clears alien vegetation and is run by DWAF. However, there was a need to talk to counterparts from Agriculture and Environment.

Mrs Ngwenya wanted to know if money allocated to municipalities includes skills development. She further commented that there was a problem of reticulation.

The DG responded that the budget identified is for 2004/05 and it would go to municipalities.

Mrs Ngwenya also wanted to know if some of the money is used to fast track free basic water services.

The DG replied that there is budgetary provision for capacity building.

Mr Mabuyakhulu noted that DWAF has got the responsibility to make sure that people use clean water. The Department must also take strong action against polluters.

The DG replied that there was a need to monitor drinking water. He raised that there is also a need to avoid a culture where polluters rely on others to fix their mess. " We will provide technical support ".

Mr Mabuyakhulu further wanted to know if DWAF was planning anything to empower new entrants in the forestry industry.

The DG replied that there are some concerns about companies paying less money for forestry. Communities are not organised in a legal form.

The Chairperson wanted the DG to reflect on displaced people when dams are being built. This information was to be made available to the Portfolio Committee on Water Affairs and Forestry.

South African Local Government Association (SALGA)
Councillor Mayathula Khoza applauded DWAF budget allocation.

Discussion
The chairperson wanted to know if the transfers from SALGA to municipalities are coupled with finance and technical know how. " If you are not doing this, what are you doing to build capacity", he asked.

Ms Khoza responded that there should be no unfounded mandate and emphasised the need for technical know how. "The Minister gave an indication to staff transfers".

Mr MaCleod (SALGA) commented that the transfer agreement has to be done with funds." There were some problems with some municipalities. SALGA is acting as support to these municipalities ".

Ms Ndzanga (ANC) wanted to know about the sanitation targets.

Ms Khoza responded that they are within range and she could not say they were ahead.

Mr Maluleke mentioned that there were cries from communities about municipal services. "How are your member municipalities communicating information about free water and water to be paid for", he asked.

Mr MaCleod resonded SALGA can’t force municipalities but can only encourage. " Some municipalities are doing a good job. Some do show the information and some don’t ".

The Chairperson wanted to know where it does not show, to what extent are the municipalities assisting.

Mr MaCleod responded they have not forced any municipality.

Mrs Ngwenya expressed confusion about the role of municipalities and water boards.

South African Association of Water Utilities.
The main objective of SAAWU is to build a united association of public sector water utilities which coordinates, mobilises and uses its collective capacity to optimise the ability of municipal authorities to provide sustainable, efficient and affordable water services to all the people of South Africa.

Strategic Relevance of Water Utilities.
The key strategic relevance of the existing water utilities in South Africa must be recognised and factored into all initiatives taken on implementation of the Strategic Framework for Water Services. This strategic relevance is directly related to all forms of socio economic development in that:

- Approximately 80% of the GDP of South Africa takes place in the service areas of existing water utilities.

- Approximately 60% of the population of South Africa is resident in the service areas of water utilities.

General Comments on DWAF Budget
Strategic Overview
* Effective integration of institutional reform initiatives between Water Resource Management and Water Services Institutions (all part of the same supply and cost chain).

Concerns are:
* Effective alignment and integration* Efficiencies and costs * Slow pace of implementation of CMAs
* Access to resources to meet demands for services.

Discussion
Mr Phala wanted to know who is funding SAAWU. He further commented that there would be questions about whether water boards are representative.

Ms Nyakane responded that SAAWU is the mother body to all water boards. It is funded by members and some projects are funded by SAAWU. " SAAWU has a coordinating function. We have to report on the Water Trading Account ".

The Chairperson wanted to know if it is overseeing its members or go beyond its boundaries. He felt that water boards could be integrated into municipalities.

Mr Modisha replied that the main duty is to coordinate but the interest is to go to the end user to make sure that they get the best service.

Water Research Commission
Rivka Kfir stated that the Water Research Commission will continue to focus on building a sustainable water related knowledge base in South Africa by:

* investing in water research and development * building sustainable and appropriate capacity. *developing competencies/skills for the water sector* being adept in forming strategic partnerships in order to achieve objectives more effectively while making optimal use of the latest global information/knowledge and other available technologies.

The WRC has initiated and implemented a number of drives regarding the strengthening of the water centred knowledge base of South Africa during 2003/04. In the area of capacity building the WRC has greatly improved its support to students with special emphasis on historically disadvantaged students. Currently about 428 students are supported by the various WRC projects.

The Water Research Commission had a number of key strategic areas:
1. Water Resource Management
2. Water Linked Ecosystems
3. Water Use and Waste Management
4. Water Utilisation in Agriculture
5. Water Centred Knowledge
6. Cross Cutting Domains

Water Advisory Council
The presentation was made by Mr Modisha.

Sanitation
Mr Modisha first indicated that DWAF should intensify its efforts to educate and persuade municipalities that sanitation programmes that focus only on hardware, and ignore or pay lip service to software run on extremely high risk of failing. He also raised that programmes should not be left entirely up on officials to run, and councillors should be fully involved and be accountable to the success of sustainability of the services provided. Failed experiments with untried technologies should be rectified and adequate ans sustainable solutions be provided. DWAF should undertake a study of proprietary systems, such as the Enviroloo, and make unequivocal recommendations to municipalities including decision support information so that they are not misled by manufacturers.

Manufacturers of proprietary systems should be held accountable for installation and ongoing maintenance training. The Free Basic sanitation Policy, currently being developed, should include pit emptying, but only under certain conditions, i.e. where the user cannot be expected to do so.

Private Sector Involvement in the Water Services Delivery
The Advisory Council is proposing mandatory review of all existing contracts due to changed regulatory framework and control. They also identified the lack of policies for tariffs. The issue of unconditional use of equitable share and wrongly though that equitable share cannot be passed on to service provider. Lack of payment for services need to be urgently addressed by political leadership. The private sector providers are not subjected to the same regulation/compliance requirements of PFMA.

Discussion
Mr Mabuyakhulu wanted the presenter to show them the areas they visited. Who guides you in terms of priorities and communities need urgent attention.

Mr Masala wanted to know who are the people seeking to de establish Water Chamber.

The Chairperson asked the issues Water Advisory Council would like the Budget to address.

Lepelle Northern Water
The presentation was made by Mr Lehong

Key Achievements
Lepelle Northern Water extended water services to rural communities. Effective water metering and cost recovery systems have been implemented in rural areas. There is also computer driven system on cost recovery at RDP standard which ensures equitable water access by communities. Lepelle Northern Water piloted partnership with Mogalakwena Municipality and Anglo Platinum to increase water supply in Mokopane. It has enjoyed labour stability over a number of years.

Some Challenges on Access, Affordability and Sustainability
There is a need to assess capacity of local government or receiving institutions to ensure sustainability and viability. This should be in line with Strategic Framework for Water Services. Proper indigent policy by municipalities is critical to success. Effective costing and ring fencing of free basic water granted is necessary. The Municipal Infrastructure Grant is to be utilised to achieve affordability of water services especially in rural areas.

In most areas where the Department is providing water services, there exists no culture of payment of services. A need to change this culture is important even before the function is transferred.

Rand Water:
The presentation was made by Mr Lushaba (see document for full details of the presentation)

Community Development Initiatives
Since 1994, Rand Water has:
* established community development support units (CBPD and Rand Water Foundation) * implementing Agent for (inter alia) DWAF* work on cost recovery basis only

Focus Areas
Rand Water focuses on the following projects/programmes
* water supply provision *sanitation services * water conservation* alien plants eradication* domestic leaks repairs

Challenges
* increasing access to Water and Sanitation Services* ensuring affordable and sustainable services

Important Issues Going Forward
* conclude the amendments to the Water Services Act (1997)
* Do Water Utilities have a role to play in NEPAD?
* Water service provision is premised on water resource management - guiding the reform process
* set clear guidelines and criteria for the sector reform process
* encourage partnerships rather than boundaries.