Thank you, Deputy Speaker, hon Deputy President, hon Ministers and hon members.
Madam Deputy Speaker, section 42 of the Municipal Finance Management Act of 2000 requires water boards to submit proposed tariff increases for each financial year. The Minister of Water and Environmental Affairs must table the prices structure in Parliament or the relevant legislature on or before 15 March, yearly, for the tariffs to be effective on 1 July, yearly. Whilst the portfolio committee can only make certain recommendations and cannot amend or change the proposed tariffs, it is critical for the committee to be briefed on the proposed tariffs as they have an impact on the end user through the value chain process.
To this end, the committee received briefings from the Department of Water and Environmental Affairs, the South African Local Government Association, SALGA, National Treasury and 13 water boards on 30 June 2009 and 01 July 2009. The water tariff increases of bulk water resources for 2009-10 were tabled to Parliament on 13 March 2009. Due to the global economic recession, the previous Minister of Water Affairs issued the directive to water boards to decrease their tariffs by 5%. This directive was implemented by all water boards.
The tariff reduction impacted on a number of water boards. It noted the following implications of the reduced tariffs, namely that it would have a negative impact on board cash flows and would therefore, require a reduction in the operating expenditure. The viability of water boards and a delay in capital expenditure programmes were further issues raised.
The committee, as part of the future project, recommended that a new funding model for water be explored, and that boards be penalised for not spending their capital expenditure, capex. Good co-operative governance and the building of partnerships in long-term planning was a necessity between the water boards. I thank you. [Applause.]
There was no debate.