Clean water and sanitation are essential for poverty reduction, economic development and food security. The Intergovernmental Fiscal Review, (IGFR), highlights the need to extend services to all, to ensure the poor are catered for and to review the water services tariff setting process. This IGF Review must be seen as a process that engages with and accommodates input from various stakeholders during the course of the financial year, and not merely serve as an annual report.

Consider what has been achieved to date.

• Since 1994 basic water has been supplied to almost 11 m people; (about 80% by DWAF).
• 26.8 million South Africans now have access to free basic water, (FBW). At least 12 million of these are poor people who would otherwise have been unable to afford a basic supply of clean water.
• Over 133 000 households have received sanitation. If one considers that 65 000 of these were in the last year alone, then the tempo is clearly increasing.
• By 2008, the entire water supply backlog will have been eradicated and by 2010 that of sanitation. This means that South Africa will not only have met the Millennium Target of wiping out 50% of the backlog by 2015, but in fact the entire backlog.

3. Discussion of Issues Raised in IGFR

DWAF is in the process of restructuring to align itself to it's new role as sector leader, supporter and regulator. It is also currently reviewing the WS policy. A revised WS Policy White Paper will be tabled in Parliament later this year. This review is looking at issues such as the role of water boards, the regulation of the WS sector and the support role to be played by they department. This white paper could result in amendments being made to the WS Act.

The recent formalisation of the division of powers and functions, requires co-ordination and co-operation between the new and old WSAs. Transferring a WS function is by no means a simple matter. Also to be transferred are staff, budget, assets, liabilities, rights, obligations, administrative records and sometimes by-laws. It goes without saying that water services will have to be ring-fenced before it can be transferred. This ring-fencing, as the review points out is not in place.

The DORA provides for the equitable distribution of national revenue for the next 3 years, although only the 2003/4 allocation is definite. It gives National Treasury the authority to delay or withhold funds to local government due to the breach of treasury norms and standards; (such as the submission of a budget and financial statements and the provision of implementation information, including total spending on free basic services). Where a WSA fails to provide a public entity WSP with the funds required to ensure service provision, the responsible national department, with Treasury approval, may provide such funds directly to the entity. These measures are welcomed.

The Municipal Finance Management Bill proposes that municipalities be required to provide budgetary and other financial information to relevant national departments, such as DWAF in the case of water services. This is essential and supported.

Whilst FBW has been successful, a number of difficulties still need to be resolved.

• Many poor people practice subsistence farming and for them 6kl is not adequate. In this regard one must bear in mind national government's 1994 undertaking to provide 50-60 litres of water per household in the medium to long term.
• People using more than their basic allocation, often will not pay. Whilst we find disconnection of someone's supply abhorrent, it appears the only way to enforce payment by higher consumers.
• The equitable share is often not used for the provision of basic services; (the DoRA does go some way to helping in this regard). With the recent increases in the equitable share, lack of funds is not an issue.
• The availability of reliable data to plan for the provision of FBW is often lacking.
• Some municipalities lack capacity – DWAF’s provincial support units are assisting them in this regard.

A Free Basic Sanitation policy is in the process of being developed and should be available with guidelines and tools toward the end of this year. From initial investigation the following is relevant:

• It will be necessary to stipulate exactly which technologies and levels of services meet the basic requirements
• Need to investigate whether free to all is economically affordable for the country

Although the policy for basic household sanitation is in place, implementation has been slow. It is now being given added importance and an increase in delivery tempo has already been experienced.

Despite being a water scarce country, SA has the 2nd cheapest water in the world. This means tariffs sometimes do not cover actual costs and there is pressure to increase them substantially. On the other hand government has set inflation targets and one does not want to undermine this initiative. Tariff increases should however not exceed inflation significantly. Further work will be done on the tariff regulations, for example capping of profit and ring-fencing of water services.

Water losses or unaccounted for water is a major problem. It is caused by illegal connections or losses due to the poor condition of infrastructure, (due to inadequate maintenance). It is also a case of water not being metered and billed. Assisting municipalities implement FBW, involves helping them put billing and administrative systems in place. Once an established system is in place it becomes easier to monitor and eradicate illegal connections.

Levels of service for water supply are a contentious issue, with many seeing communal standpipes as insufficient. Access is regarded as a very important element of service delivery. In this regard DWAF is currently investigating the option of yard tanks.

Although the legal framework for regulating the water services sector is in place, there has to date not been a system in place to do so. There is however a system in place for the regulatory oversight of water boards. A short term monitoring and intervention system will be established this year and a more comprehensive system should be in place within 18 months.

Many WSIs also need national government to provide service delivery benchmarks. Investigation has for example shown that the allocation of administrative staff per 1000 customers varies enormously. Such guidance will help WSIs operate more efficiently.

3. Conservation functions

1. Working for Water

Although water resource management is a national function, nature conservation is concurrent with the provinces. In this context, the work of the Working for Water Programme whose essential focus is on protecting biodiversity should fall under the purview of the IGFR.

4.2 Indigenous forestry

The Administration of indigenous forestry is a concurrent provincial function which also fits into the broader nature conservation function. This is another area where the rationalisation of functions between national Departments and provincial government will be addressed in terms of current efforts to reform Protected Areas legislation. Financial issues could usefully be dealt within a IGFR context.

4. Conclusion

This review highlights valuable issues. These have been, or will be, taken up by DWAF during the course of this year via its various initiatives.