REPORT OF THE PORTFOLIO COMMITTEE ON WATER AFFAIRS AND FORESTRY ON THE BUDGET HEARINGS ON BUDGET VOTE NO.34
The Portfolio Committee on Water Affairs and Forestry, having considered the Memorandum on Vote No.34 – "Water Affairs and Forestry", Main Estimates, 2003 - 2004, referred to it (ATC No 24 – 2003), report as follows:
A. INTRODUCTION The Portfolio Committee held hearings on the 2003/04 Budget Vote no.34 on the 11 March 2003, 31 March 2003 and 2 April 2003. The Committee wishes to express appreciation to all participants for their contributions. Written presentations submitted by participants form part of the records of the Committee Section. The Committee also wants to express our gratitude to the Director-General and his staff for their presence and contributions during these hearings. A list containing the names of all those who made oral submissions is included in part of the report.
B. OVERVIEW OF THE BUDGET
1. Main Functional Areas DWAF is responsible for three main functional areas, namely water resource management, water services and forestry. In managing the three functional areas, the aim of the Department is to ensure the availability and supply of water on a national level, to ensure the equitable and efficient provision of water services at local level and to promote sustainable forestry management. A description of each of these functional areas was given.
2. Programme Developments in 2003/04 During the 2002/03 financial year the Department went through a process to restructure the programme structure to bring it in line with the main functional areas. The budget structure is now divided into four programmes on the exchequer account and two trading accounts, namely the Water and the Equipment Trading Account.
3. Expenditure 2002/03 The 2002/03 expenditure is shown in the table below, where the allocation for the three main functional areas as well as the support function is indicated. The Adjustment Estimates have been included and it is expected that further minor adjustments will still be made when the books are finally closed at the end of the financial year.
Expenditure 2002/2003 (Amounts in million Rand) Functional Adjusted Appropriation Expected Deviation
Area Voted Expenditure
Apart from the Exchequer Account, the Department also operates two trading accounts, the Water Trading Account and the Equipment Trading Account. In these trading accounts expenditure is offset against revenue and in the case of a deficit, augmentation is made from the Exchequer Account. Information on expenditure and revenue at the end of the financial year is given below:
The Department has transferred the water services projects from the former administrations into the Water Trading Account. Currently cost recovery on these schemes is very low and this is the reason for the deficit shown above.
4. Budget 2002/03 to 2005/06 The Medium Term Expenditure Framework (MTEF) Budgetary allocation for the three years for the three main functional areas and administration (which is considered as an overhead) is given in the table below. For convenience the 2002/03 allocation is also shown.
Exchequer Account: Budget 2003/04 to 2005/06 Functional Area 2002/03 2003/04 2004/05 2005/06
Reasons for significant changes from 2002/03 to 2003/04 in the various functional divisions are given below. Inflation and improvements of service conditions account for much of the increases.
Programme 1:Administration – Increase of R11,154 million The allocation increases by 5,7% a year over the medium term, having grown by an average of 7.3% a year between 1999/00 and 2002/03. The increase reflects the increase in the costs of IT management and restructuring.
Programme 2:Water Resources Management – Decrease of R105,372 million Expenditure increases by about 28% between 1999/00 and 2002/03 as a result of the implementation on the National Water Act, particularly in relation to resource information management, licensing, improving water quality and building water resources (in partnership with neighboring states like Swaziland). However, expenditure on this programme will decrease by about 9% in 2003/04 and by 27% as the poverty relief allocations for Working for Water will cease to exist pending the review of the entire poverty relief programme.
Programme 3:Water Services – Increase of R465 567 million
Expenditure between 1999/00 and 2002/03 has increased by about 7%, driven by the urgency to eradicate the backlog in basic water services, and especially the need to speed up the delivery of basic sanitation. Expenditure will increase by about 24% in 2003/04 due to the refurbishment of water schemes to be transferred to local authorities, and the acceleration of sanitation and basic services. In terms of government policy, the capital grant should be transferred to the Department of Provincial and Local Government in 2004/05.
Programme 4:Forestry – Decrease R47,497 million The allocation will decrease by an average of 2,2% a year over the medium term as state-owned forestry assets are restructured.
Spending is expected to decrease over the MTEF period, due to the human resource costs involved in of restructuring. There has also been a shift in expenditure towards community and indigenous forestry management to compensate for past underfunding.
Summary of 2003/04 Expenditure
The total budget is R6 033903 00, of which R3 291 045 000 comes from the Water Trading Account and R2 742 858 000 from the Exchequer Account. Of the Water Trading Account R1 947 360 000 is from own revenue and R1 343 685 000 is augmented from the Exchequer Account.
Of the monies from the Exchequer Account 59% will be spent on Water Services, 26% on Water Resources Management, 9% on Forestry and 6% on Administration.
From the Trading Account 27% of the monies will be spend on Water Services, 63% on Water Resources management and 10% on the Working for Water Programme.
5. Provincial Distribution
The distribution per Province per programme of the Department’s Budget and Water Trading Account was also presented.
C. RESPONSES TO THE BUDGET
1. Civil Society Organisations
1.1. Transfer of Schemes to Municipalities DWAF has not budgeted adequately for the transfer of schemes. Extra funds must be made available for DWAF’s sustainability budget. Substantial funds must be made available for refurbishment of infrastructure and the setting up of viable water institutions. The budget should be increased by an extra R80 m over the next four years, to provide for an average of R400 000 per project.
Local and institutional and development support budget must be increased on medium term of another five years for the communities and the local government in order to ensure skills development and capacity to local communities.
1.2. Free Basic Water DWAF must ensure that sufficient finance is mobilised and catered for in the budget to cover the following points:
- Review of Free Basic Water and Indigent policy
- Ensure that DWAF is a stronger regulator regarding tariffs
- To implement a comprehensive water leakages policy
1.3. African Support The government has embarked on NEPAD with little consultation with interested and affected parties, which make it difficult for Civil Society to support NEPAD. The budget provision for African Support, show that NEPAD is inserting itself into the budget, which means an emphasis on the building of big dams, without using the recommendations of the World Commission on Dams.
1.4. Water Resource Protection Measures Only a small portion of the budget is allocated to protection measures. It is because DWAF does not place a priority on protection measures that companies like Thor Chemicals and many others are able to continue to pollute water resources.
The Green Network also highlighted the problems of stream water pollution by industrial dumping into rivers, broken sanitation pipes and build up of algae and that fact that communities downstream have to use polluted water. There is a lack of monitoring and the budget needs to look at the costs of monitoring. Although the budget provides for stakeholder empowerment it does not reach the right constituencies. Communities are therefore not empowered to participate in forums like catchments management agencies and cannot make inputs.
Dr.Mike Whitcutt of the Highveld Biological Association also informed the Committee of research that was done on the evaluation of the quality of water in the East Rand. He express the concern that very good legislation is in place against water pollution, but that it is not backed up by strong action by politicians. Business interests are being looked after and according to business clean water will cost more and therefore reduce employment and trade. However there is no proof that this is the case and government should take a stronger approach and implement the legislation.
1.5 Consultants The budget vote shows that 44% of the budget will be spend on consultants in the medium term. It was questioned, because if it is for consultants DWAF needs to build its own capacity rather than using consultants.
1.6 Dam building Programme 2 on Water Resource Management is geared on the building of dams. This section rotates around the building of 18 new dams and inter-basin transfers, which shows that it is business as usual rather than a new strategy. This stands in direct contrast to the World Commission on Dams, which DWAF has been involved in.
The budget should make provision for reparations/compensation for those who have been displaced because of construction of dams. Finances should be released to affected communities for workshops and information dissemination and accumulation.
1.7. Promotion of Productive Uses of Water for the Poor The Rural Women’s Association gave an input on the use of water for domestic food production. They recommend that the budget should provide for the following:
- That DWAF should promote and extend schedule 1. Promote productive uses of water by the poor. The Department should publicly provide permission for people to harvest, store and use water and it should allow the use of pumping devises for free.
- DWAF should assist in promoting the use of water for productive uses by the poor by providing information and technical support.
- All punitive measures should be removed. Information on alternative sources of water should be promoted. The Department should also develop collaborative relationships with civil society organizations.
1.8 Water Leakages and Cut-offs The Ilithe Lomso Children and Youth Organisation of Khayalitsha noted that the organization had conducted its own research to try and find strategies and solutions for water issues. They had established forums to address issues like water cuts and household leakages. To address problems the budget should focus on projects that target the youth and unemployed women. The budget should promote the funding of community research and training, and investing in user skills to attend to household water leaks.
1.9.Water Services Backlog The South African Water Caucus concern is that Programme 3 on Water Services does not address the main problems in this sector. DWAF’s assertion that 10 million more people have received access to water since 1994 is incorrect, as many of the projects that were set up have since collapsed. In addition, many communities that previously received water for free now have to pay. This lack of access to water has resulted in the emergence of problems such as cholera. The budget vote comes to problematic conclusions – it talks about extending access to all, but then later reduces the targets to 7 million for access to water and 18 million for access to sanitation.
1.10. Privatisation of Water Services The South African Water Caucus expressed concern that the mention of National Water Utilities for provision of water services was in fact a major step toward privatization. They further note that the budget vote endorse s public sector delivery in theory but does not show any ways of strengthening it. It encourages privatization in the sense that there is an assumption that if the local authority cannot provide a service it should be privatize, rather than improve the capacity of local authorities.
Other organizations, like the Rural Development Services Network, echoed these sentiments. They requested that government should halt all privatization initiatives and to prioritise public-sector delivery. The restructuring of the public sector should be prioritized to build the capacity of development-oriented local authority to deliver more effective services while reducing costs and redistributing existing resources.
2. SALGA (South African Local Government Association)
2.1. Implementation of Free Basic Water Sound progress has been made with 765 of municipalities providing to 26 704 348 people. The 2003/4 budget makes provision for R2.7 billion for Free Basic Water, sanitation and refuse. It is envisaged that this allocation will increase over time.
2.2 Sanitation Delivery SALGA has identified the delivery of sanitation as one of the key priorities. SALGA has currently a special focus on bucket eradication in support of the Ministerial target set for 2007. For ease of reference, it would be proper to indicate specifically the budget allocation for sanitation implementation.
2.3 Transfer of DWAF’s Water Assets Significant progress has been made in this critical area, which shall see the transfer of 321 bulk schemes and 3027 rudimentary schemes transferred to 84 Water Service Authorities. DWAF, SALGA, DPLG and National Treasury have finalized a Joint Transfer Policy to guide implementation. SALGA notes the additional budget allocations made to the transfer program, but wish to see an increasing trend in this regard.
Further, a dedicated grant to fund the transfer programme is welcome as it provides better planning, transparency and accountability. It further noted that the timeframe outlined in the 2003 Division of Revenue Bill under this grant, may not be feasible given the complex nature of the programme.
2.4 Water Boards Transfer payments to Water Boards are noted, and the allocations over the three budget cycles with a gradual phasing out of the transfer totals R301 million. It is however anticipated that in the next budget, there shall be more specific information on these transfers to better inform policy.
2.5 Catchment Management Although SALGA supports the goal of managing our scarce water resources effectively, concerns exists regarding the governance of these agencies and the role of the local sphere of government. Concerns regarding the financial impact of the implementation of the national pricing strategy on municipalities, are heightened by the expenditure trends noted in the budget which indicate a significant decrease over the next budget cycle.
2.6 Water Services Project Grant This programme showed an increase of about R103 million from the 2002/3 allocations, to the present level of R1 102 812. The DWAF Transfer Programme makes special provision for the transfer of 375 of 1003 completed RDP projects.
It would be proper for DWAF to ensure that the transfer of the balance of these schemes and those under implementation are sustainably transferred to Water Services Authorities.
2.7 Sectoral Investment SALGA commends DWAF and National Treasury for recognizing the constraints under which some municipalities operate as evidenced in the increased allocations. The additional budgetary allocations and financial certainty that they brought to the sector are most welcome, but it is clear that to meet delivery targets even greater investment will be required.
Current challenges facing municipalities, including reducing the infrastructure backlog, and eventually targeting subsidies to those most deserving, need to be addressed through the budget. Commitment is therefore necessary from DWAF to continue to increase budget allocations to improve service delivery.
3. NAFU (National African Farmers Union of South African)
NAFU does not believe that adequate attention has been given to the requirements of the emerging Black farming sector in DWAF’s strategy and the Budget.
NAFU also raise the following concerns:
- One of the primary reasons for the inability of Black farmers to develop from emerging to commercial status relates to the imbalances that continue to exist in the allocation of water usage rights.
- The decrease in subsidies for charges for water provided from government water schemes to emerging farmers over a period of five years, will have a negative impact on a sector that battle to achieve commercial viability.
- Capital costs subsidies are available to emerging farmers who are members of water user associations. Very few emerging Black farmers have been enabled to participate in such associations.
- White farmers are now moving from water intensive activities e.g. game farming, but they still hold water rights. The Department should come up with an audit of these water rights so that they can be re-allocated.
- The budget allocation to address these issues is not sufficient, and the Minister and Committee need to review the amounts.
. E. ISSUES RAISED BY THE COMMITTEE MEMBERS
1.Changing Role of DWAF As a result of legislative and policy changes, DWAF’s role is changing from implementation agency towards providing the national policy and regulatory framework within which other institutions will manage the water resources, water services provision and forestry resources. DWAF’s focus will therefore be more on developing policy and implementing policies, implementing monitoring and evaluation mechanisms and providing support. The Committee is comfortable that this changing role of the Department is reflected in the budget.
2.Transfer of Water Schemes The Committee welcomes the increased budget in 2003/04, which provides for the refurbishment of water schemes to be transferred to local authorities and the acceleration of the delivery of basic water services. We further note the finalisation of the Joint Transfer Policy to the guide the implementation of the transfer of water schemes, but want to express the concern that the time-frames indicated in the Division of Revenue Bill may not be feasible given the lack of capacity at local government level.
3.Santitation Backlog Although the additional money for sanitation delivery is welcomed the Committee wants to urge the Department as leading agent in the National Sanitation Task Team, to remove capacity and other constraints which hampers the eradication of the huge sanitation backlog.
4. Poverty Relief Programme The Committee notes the decrease in the allocation to Programme 2 on Water Resources Management, because of the termination of the poverty relief allocations during the review of the entire poverty relief programme. We want to question the necessity to cease poverty relief allocations during the review of the programme, as it will have a negative impact on the beneficiaries of these allocations. Our question is whether the findings of the review should not determine the nature and extent of changes to poverty relief allocation, instead of terminating all allocations prior to the finalisation of the review.
5.Free Basic Water The Committee take notice of the issues raised by the civil society organizations about free basic water, including the revision of the policy, increasing the lifeline (25 liter to 50 liter per day), influence of tariff structures, choices of technology, water leakages, water cut-offs, affordable services, cross subsidization, use of equitable share, indigent policy, etcetera. SALGA has also raised the challenges facing the implementation of free basic water. It is therefore recommended that the Portfolio Committee should have special hearings on the implementation of the free basic water policy.
6.Consultants The Committee raised concerns about the use of consultants and the fact that 44,2% of the budget will be spend on professional and special services over the medium term. The concern was raised that too much money is spend to pay consultants, while not enough is done to develop this kind of capacity within the Department and at Local Government level.
The Department’s response was the allocation is mostly for contractors and consultants, but 90% is for contractors and design consultants. This is work, which it is not worth the Department doing itself. The Department needed to focus on its work and could not develop its capacity in areas where there would not be much need for full time employment, for example building.
SALGA’s response to the use of consultants at local government level was that some municipalities have not been able to build up their structures. Once that is done there should be very little use for consultants. There also needs to be a way for consultants to leave some of their skills behind.
7. Contamination of Ground Water Sources The Committee takes note of the issues raised by the civil society organizations about water quality and contamination of water. Members raised the issue of ground water as a source of water supply and concerns about the contamination of ground water. It is proposed that the Committee must approach the Department about this issue.
F. ISSUES RAISED NOT RELATED TO THE BUDGET VOTE
1.Future role of Water Boards SALGA supports the concept of the regionalisation of water service provision that is driven by Water Service Authorities to achieve efficient and effective service delivery. There is a need to investigate whether the current Water Board structure reaches the above objective, as this may contribute to the future clarity on the role of water boards. This issue will be address during the briefing by the Minister and Department on the White Paper on Water Services.
2. White Paper on Basic Household Sanitation
SALGA raised concerns with regards to the adequacy of consultation between municipalities and DWAF in the development of the White Paper on Basic Household Sanitation and the National Strategy. It is anticipated that these concerns shall be addressed and the outcome shall result in enhanced municipal support consideration to re-visit the policy Mvula Trust raised the concern that DWAF is not playing its regulatory role adequately, especially in the sanitation sector. The National sanitation Task Policy is not being implemented as the CMIP money is going into building toilets in rural areas and has no health and hygiene component. This radically undermines the national policy. It is unlikely therefore that the 2010 target will be reached. There needs to be an alignment and consistency from funding government departments. There needs to be a comprehensive rethink around the national sanitation policy. There also needs to be integration of a comprehensive sanitation policy into the Water Services White Paper process.
3. Civil Society Engagement Mvula Trust raised the concern of inadequate support and promotion of civil society organizations. DWAF is funding a civil society engagement process, but not enough money is allocated. Water sector NGO’s are in serious trouble and face collapse. If DWAF is serious it must help to support and promote NGO’s.
They ask for:
- Short-term financial support for water sector NGO’s under threat;
- That DWAF must instruct Programme Management Units at Provincial level to assist NGO’s prepare business plans for municipalities;
- DWAF must engage DPLG, SALGA and municipalities at senior level to increase NGO and CBO participation in Masibambane. They also claim that the DWAF Head office has under-spent its Masibambane budget.
G. LIST OF PARTICIPANTS
The following people made oral submissions before the Committee, representing different organizations. These submissions are available on request from the Committee Section of Parliament.
Ms. Julie Smith, Water Action Campaign
Mr. Sandile Ndawonde, Green Network
Mr.Eddie Cottle, Rural Development Services Network
Mr.George Dor, South African Water Caucus
Mr.Abegnego Matu, South African Water Caucus
Ms.Tshepo Khumbane, Rural Women’s Association
Ms.Marne de Lange, Rural Women’s Association
Mr.Patrick Bond, Municipal Services Project
Ms.Kathy Eales, Mvula Trust
Mr.Mike Whitcutt, Highveld Biological Association
Mr.Buntu Morolong, Mashakane Youth for Future
Mr.Mashile Phalane, Batlhabine Development Trust (Tzaneen)
Mr.Vukhile Manzana, Gariep and Van der Kloof Dam Affected Communities
Mr.Richard Mokulo, Anti Privatisation Forum
Mr.Senza Kula, Ilithe Lomso Children and Youth Organisation
Councillor N.M.Khoza,South African Local Government Association
Ms.B.Pretorius, South African Local Government Association
Ms.S.Makotoko, South African Local Government Association
Mr.Motsepi Matlala, National African Farmers Union of South Africa
Mr.Wilkenson, National African Farmers Union of South Africa
Mr.Hendricks, National African Farmers Union of South Africa
Mr.M.M.Muller, Director-General, Department of Water Affairs and Forestry
Mr.M.J.Mabala, Chief Financial Officer, Department of Water Affairs and Forestry
Ms.M.Modipa, Deputy Director-General Corporate Services, Department of Water Affairs and Forestry