Budgetary Review and Recommendation Report of the Portfolio Committee on
Water and Environmental Affairs on the Performance of the Department of
Environmental Affairs for the 2010/11 Financial Year, dated 19th October
2011
The
Portfolio Committee on Water and Environmental Affairs (Committee), having
assessed the performance of the Department of Environmental Affairs (the
Department), reports as follows:
1. Introduction
1.1 The mandate of the Committee
The mandate
of the Portfolio Committee is underpinned by the provisions of the Constitution
of the
The mandate
and the role of the Committee is therefore to:
·
Conduct oversight, on behalf of the
public, over the Department, to ensure the executive enforcement of
environmental rights as enshrined in the Constitution. Section 24 of the
Constitution guarantees all South Africans a right to an environment that is
not harmful to their health and well-being;
·
Oversee and review all matters of
public interest relating to the environmental sector and economic development
to ensure service delivery;
·
Regulate and review all matters of
public interest relating to the environmental sector to ensure service
delivery;
·
Ensure compliance by the Department
and its entities with relevant legislation;
·
Promote public participation in issues
pertaining to the environmental sector;
and
·
Monitor the expenditure of the Department
and its entities and ensure regular reporting to the Portfolio Committee,
within the scope of accountability and transparency.
According
to Section 5 of the Money Bills Amendment Procedure and Related
Matters Act, the National Assembly, through its
Committees, must annually assess the performance of each national department.
The Committee must submit an annual Budgetary Review and Recommendation Report
(BRRR) for each Department that falls under its oversight responsibilities for
tabling in the National Assembly. The Committee on Appropriations should
consider these when it is considering and reporting on the Medium Term Budget
Policy Statement (MTBPS) to the House.
The
Committee considered and recommended the adoption of the Budget of the
Department on 20 April 2011. The committee, in
compiling this report, interacted and engaged with the following source
documents:
·
The Annual Report of the Department
for 2010/11, in terms of Section 65 of the Public Finance Management, Act 1 of
1996, which requires the Minister to table the annual report and financial
statement for the Department and its respective public entities to Parliament.
·
Section 32 Expenditure reports, in
terms of the Public Service Finance Management Act of 1999 and reports of the
first quarter of 2011/12 financial year; and
·
The report of the Auditor-General
South Africa (AGSA) on the financial statements of the Department for 2010/11.
1.2 The mandate of the
Department
The mandate and core business of the Department is
underpinned by Section 24(b) of the Constitution, which stipulates that all
South Africans have a right to an environment that is not harmful to their
health or well-being and to have the environment protected for the benefit of
present and future generations. In line with the mandate, the vision and
mission of the Department is to create a prosperous and equitable society that
lives in harmony with the environment.
2. Department’s Strategic
Priorities and Measurable Objectives
2.1 Strategic Priorities of
the Department
The key
strategic priorities, in line with the vision and mission of the Department,
over the medium term, comprise the following:
·
Protecting and enhancing
environmental assets, natural and heritage resources;
·
Ensuring a sustainable and healthy
environment;
·
Contributing to sustainable economic
growth, livelihoods and social cohesion;
·
Providing leadership on climate
change action;
·
Promoting skills development and
employment creation through the facilitation of green and inclusive economic
growth; and
·
Creating a better
2.2 Measurable Objectives of
the Department
For the 2010/11
financial year, six critical programmes determined the work of the Department.
Within each of the programmes, the Department identified a number of measurable
objectives, which relate to the purpose of the Department:
Programme 1: Administration
The purpose
is to provide strategic leadership, centralized administration and executive
support and corporate services. Generally, the Department managed to attain the
target set for the vacancy rate, turnover rate, website uptime and call centre
requests in Programme 1. In addition, the Department exceeded its targets on
BEE enterprises and share on the media voice. The Department also spent 99.9%
of its allocated budget and received an unqualified audit report.
The Department
was, however, unable to meet its 2% target relating to the appointment of people
with disabilities. Notwithstanding, the Department has partnered with various
recruitment agencies to overcome this challenge. The Department reported on the
delays with respect to the construction of the new building for the Department,
which were attributed to outstanding issues with the bidder, although those concerns
have since been resolved and the construction will proceed during the 2011/12
financial year. Other challenges reported included the inability of the Department
to respond timeously to parliamentary questions, as these often required inputs
from stakeholders outside the Department, as well as finalising Presidential
hotline queries.
Programme 2: Environmental Quality Protection
The purpose
is to protect and improve the quality and safety of the environment to give
effect to the right of all South Africans to an environment that is not harmful
to their health or well-being. In this programme, the Department completed two
National Environmental Management Frameworks (EMFs) and exceeded its target by facilitating the approval of six out of
four Provincial Environmental Management Frameworks. The Department also finalised
87% of the Environmental Quality Protection complaints/incidents and conducted
16 sector based strategic compliance inspections. The Department conducted 62
compliance inspections in terms of environmental authorisation and waste
licenses.
It was also
stated that for the 2010/11 financial year, the Department undertook 62
reactive administrative enforcement interventions; trained 50 Environmental Management
Inspectors and 244 justice officials in Environmental law, and established 42
ambient air quality monitoring stations to provide information to SAAQIS. The
Department also faced some challenges in running this second programme despite
those significant achievements, such as human resource capacity constraints on
the processing of Environmental Impact Assessment applications within legally
required timeframes. There were also delays in the stakeholder consultation
process on the development of Environmental Impact Assessment procedural and
technical guidelines. This work is to be prioritised in 2011/12. There was also
insufficient time in finalising the 3rd South African National
Antarctic Programme (SANAP) report due to the timing (March 2011) of the third
voyage. This report was only finalised in the first quarter of 2011/12.
Finally, the Department encountered challenges in rolling out the Compliance and
Enforcement Information Management System in the provinces.
Programme 3: Oceans and Coastal Management
The purpose
is to manage and protect
Programme 4: Climate
Change
The purpose of
the Climate Change Programme is to
facilitate an effective national mitigation and adaptation response to climate
change. During the 2010/11 financial year, the Department secured the Durban International
Convention Centre as the host venue for COP17 conference and achieved
reasonable progress in implementing
Programme 5: Biodiversity and
Conservation
The
purpose is to promote conservation and sustainable use of natural resources to
contribute to economic growth and poverty alleviation. The achievements for this financial year include the implementation of
two Convention on International Trade in Endangered Species (CITES) provisions
and Threatened or Protected Species (TOPS) in seven provinces. All the
applications relating to Bio-prospecting, Access and Benefit Sharing were
processed and the Biodiversity Climate Change Strategy Framework was developed.
Nonetheless, there were challenges noted by the Department, notably the lack of
finalisation of the guidelines for negotiating benefit sharing due to lack of
time and the complexity of agreements. Approval of the draft guidelines is to
be fast-tracked in 2011/12. The implementation of the Biodiversity Research
Programme lagged behind, as part of the process is within the control of the Department
of Science and Technology. There are ongoing engagements with the Department of
Science and Technology in this regard. Furthermore, the 8% target of
Transfrontier Conservation Area (TFCA) projects, which are financed by
investors, was not met, as this depended on the willingness and participation
of private sector/investors. The Department will continue with investment
promotions and consider other unorthodox methods of attracting private
investment in the management of protected areas.
Programme 6: Sector Services,
Environmental Awareness and International Relations
The
purpose of this sixth programme is to create conditions for effective corporate
and cooperative governance, international cooperation and implementation of the
Expanded Public Works projects in the environmental sector. The Department made
some significant progress under this Programme. For example, a total of 18 493
new employment opportunities were created through the Expanded Public Works Programme,
focusing on the environmental sector; 35 784 accredited person training days
were created; 860 SMMEs were used as service providers by the Department; 459
youth benefited from the National Youth Service Programme; nine Provincial
Environmental Education and Awareness workshops and 40 teachers were trained in
three provinces; and 40 out of 50 learners completed the Environmental Training
and Development Practice Learnership Programme. Furthermore, the carbon footprint
report was completed; 60% success rate in the negotiations of
Notwithstanding,
the Department noted three important challenges under this sixth programme,
pertaining to the delay in the approval and implementation of the National
Sustainable Development Strategy for which there was no international benchmarking
in the year under review. However, the strategy is expected to be finalised in
2011/12. The implementation of the public education and awareness annual plan was
also delayed due to the time spent on revision/alignment of climate change key
messages in the plan. Similarly, the mapping of all national, provincial and
local reserves was not done on time, as the consultation processes took longer
than originally planned. Consequently, the outstanding work is to be prioritised
and finalised in the 2011/12 financial year.
3. Analysis of the Department’s current Strategic, Operational and
Financial Framework
The Department’s
5-year strategic plan took into account the key Government priorities as set
out in the Medium Term Strategic Framework (MTSF). It was further guided by the
outcomes outlined in the Presidency Monitoring and Evaluation system, which
serves as a service delivery framework for the next 5 years. The Department
responded directly to outcome 10 “Protect and enhance our environmental assets
and natural resources”. However, environmental protection being a cross-cutting
function, other outcomes were also integrated into the departmental strategy,
plans and programmes.
The Department was also guided by the Environment
Outlook Report, which provided an objective picture of the state of
The Department has further indicated that the coming
years will see the strengthening of coordination and integrative instruments,
improving monitoring and evaluation systems across all spheres. The pillars of the
strategy going forward are based on ensuring the enhancement of the sector
through protection and conservation of the country’s environmental assets in
order to improve environmental quality for its citizens and contribute to
sustainable economic growth. There will also be scaling up of compliance with
environmental legislation and enforcement in order to minimise land
contamination, health risks and illegal trade in wildlife.
4. Analysis of Section 32
Expenditure Reports
For the
2010/11 financial year, the Department was allocated an amount of R2 488 514
billion. However, the total budget
amounted to R2 390 023 billion when the adjustments are taken into account. This
has decreased the final appropriation of the Department from R2 607 794 to R2
488 514. The Department had spent R2 390 023 or 96% at the end of the 2010/11
financial year.
4.1 The Overall Departmental
Allocations and Expenditures 2010/11
The
Department of Environmental Affairs (DEA) was allocated an amount of R2.5
billion in the 2010/11 financial year of which R2.4 million or 96% had been
spent at the end of the fourth quarter. The Department had under-spent by R98
491 million or 4% of the budget. A significant amount of this under-spending
occurred in programmes 2 and 4, which spent 94.5% and 86% of their adjusted
budget, respectively. In terms of economic classification, under-spending is notable
under transfers to entities (R11.5 million), which was due to funds not
transferred to Buyisa e-Bag because of non-compliance in relation to financial
reporting. See Annex 1 that shows the breakdown of spending trends in each
programme of the Department.
4.1.1 Programme 1: Administration
The total
budget for the Administration Programme amounted to R273 million. The programme
had spent R273 million or 100% of this budget at the end of the fourth quarter.
4.1.2 Programme 2:
Environmental Quality and Protection
The total
budget for the Environmental Quality and Protection Programme amounted to R313
million. The programme had spent R296 million or 94.5% of its budget at the end of the fourth quarter. This means that
the programme under-spent by R17.2 million. The under-expenditure in this
programme was mainly due to funds that were not transferred to Buyisa-e-Bag as
it failed to submit its business plans, resulting in the funds having been
rolled over to National Treasury.
4.1.3 Programme 3: Oceans and
coastal management
Programme 3
had a budget of R166.million after adjustments. Of this budgeted amount, the
programme spent R166.million or 100% of the appropriated funds by the fourth
term of 2010/11 financial year.
4.1.4 Programme 4: Climate
Change
Of
the R570 million total budget allocated for this programme, R490 million or 86%
was spent at the end of the fourth quarter due to the exchange rate saving from
the replacement of the Polar Research Vessel.
4.1.5 Programme 5: Biodiversity
and conservation
Programme 5
was allocated a total amount of R422 million after adjustments for the 2010/11
financial year. Of this budgeted amount, the programme had spent R422 or 100% of
the allocation by the last quarter.
4.1.6 Programme 6: Sector Services Environmental Awareness and International
Relations
Programme 6
was allocated a total amount of R745.2 million after adjustments, of which 100%
of the total allocation was spent by the last quarter due to EPWP incentive
funds that were not rewarded for programme implementation.
4.1.7. Expenditure per Economic
Classification
The
Department of Environmental Affairs had spent 822 million or 100% of its
current payment allocation. The total transfers and subsidies payments amounted
to 99% of the Department’s allocated budget. See Annex II for the details of
the Expenditure Per Economic Classification.
4.2. Virements and Shifting of Funds
from and to, within and between Programmes during the Adjustment Period in line
with the Legislative Framework (PFMA)
Though
section 43 of the Public Finance Management Act 1 of 1999 makes provision for
virements and shifting of funds from one programme to the other, as well as
movement of funds within the programme, there are certain requirements that
need to be met by an accounting officer. These conditions are as follows:
Section 43
(2) of the Public Finance Management Act provides that “the amount of a saving
under a main division of a vote that may be utilised in terms of (1) may not
exceed 8 per cent of the amount appropriated under that main division.”
Moreover section 43 (4) states that this section does not authorise the utilisation
of a saving if:
(a) An
amount is specifically and exclusively appropriated for a purpose mentioned
under a main division within a vote;
(b) An
amount is appropriated for transfers to another institutions; and
(c) An
amount is appropriated for capital expenditure to defray current expenditure.
4.3. The First Quarter Expenditure Report for Financial Year 2011/12
4.3.1. The Overall Departmental Allocations and Expenditures 2011/12
The
Department was allocated an amount of R2.8 billion in the 2011/12 financial
year of which R400 million or 14% was spent at the end of the first quarter.
Slower than projected spending occurred within the programmes, except for Programme
6 (Sector Services, Coordination and Information Management and International
Relations), which over-spent by R34 million or 29% over the first quarter.
Slower than
projected spending was especially notable in Programme 1: Administration (R70
million) and Programme 4: Climate Change (R9 million), which spent 56% and 61%
of their projections respectively. This was due to the Presidency placing the
Department of International Relations and Co-operations in charge of the logistics
for COP 17 instead of the Department, as anticipated through the budget
process.
5. Analysis of the Annual Report and Financial Statements of the
Department
The strategic aim of the Department is to lead
The
Department promotes behaviour that contributes to sustainable development
through the National Environmental Management: Waste Act (2008), particularly
recycling efforts, and the National Environmental Management: Air Quality Act
(2004) to address monitoring and enforcement in air quality management. The
Department also has a focussed approach to tackle the adverse impacts of
climate change, cognisant that climate
change impacts on global environmental, social and economic systems. It is in
this regard that the Department published the 2010 National Climate Change
Response Green Paper for public comment that has progressed to the current
National Climate Change Response Policy White Paper that was recently approved
by Cabinet, this October. Parliament, through the Committee, is presently
holding public hearings on the White Paper.
5.1. Financial Management
The Internal
Audit Committee of the Department reported that it had complied with its
responsibilities that derive from sections 38(I) (a) of the PFMA and Treasury
Regulations 3.1. The Audit Committee stated that the Department’s system of
internal control provided reasonable assurance that safeguarded the effective
management of assets, liabilities and working capital. The Committee was
satisfied with the content and quality of the monthly and quarterly reports
prepared and issued by the Department during the year under consideration.
Additionally, the Audit Committee evaluated the financial statements, conducted
its Internal Audit Function affairs in terms of the approved Internal Audit
Charter, was satisfied with the Department’s risk strategy, and met with the
Auditor-General to ensure that there were no unresolved issues.
5.2. Report of the Auditor-General
The
Auditor-General’s responsibility is required by section 188 of the Constitution
and Section 4 of the Public Audit Act (25 of 2004) of
The
Auditor-General’s report on other legal and regulatory requirements stated that
there were no material findings on the annual performance report concerning the
presentation, usefulness and reliability of the information. There were equally
no findings concerning material non-compliance with applicable laws and
regulations concerning financial matters, financial management and other
related matters. The Auditor-General considered internal control relevant to
his/her completed audit work and noted that there were no
significant deficiencies that could result in a qualification of the
Auditor-General’s opinion. The Auditor-General reported that donor funding
engagements covering the period April 2010 to March 2011 were due on 30th
September 2011.
6. Consideration of Reports of Committee on Public Accounts
The
Department of Environmental Affairs did not appear before the Standing
Committee on Public Accounts in the 2010/11 financial year. The Department has
no outstanding resolutions to report.
7. Consideration of other Sources of Information
The Committee
considered the following sources of information in compiling the Budgetary
Review and Recommendation Report, besides the conventional Committee briefing
meetings with the Department, National Treasury and Auditor-General officials:
·
Technical inputs by scientists from
·
Oversight visits, where some of the
Department’s programmes/projects are being implemented (e.g., the
·
In-depth engagement with departmental
officials in the Department’s offices in
·
Public hearings;
·
Unsolicited confidential submissions
by individuals raising certain concerns about the management activities of the
Department and/or its associated entities;
·
Parliamentary research works,
bringing certain anomalies in the work of the Department or that of any of its
entities to the attention of the Committee members;
·
Attendance of conferences, seminars
and workshops; and
·
Media and authoritative writings of
academics or researchers on certain aspects of the work of the Department and
those of the entities.
8. Committee’s Observations
Retrogression of two entities: The
Committee observed that the financial affairs of the Department were run well
in the 2010/2011 financial year, but noted with concern that two of the
entities falling under the mandate of the Department, which were in the past
financial year performing optimally; had retrogressed in the 2010/11 financial
year. These retrogressing departmental entities consist, firstly, of the South African National Parks (SANParks), which has
been entrusted with the responsibility of running the nation’s network of
national parks and other statutorily protected areas; and secondly, the South African National Biodiversity Institute (SANBI),
a statutory departmental entity established in terms of the National
Environmental Management: Biodiversity Act (10 of 2004) to conduct biodiversity
research to inform the management of the nation’s biodiversity asset. Of
particular concern is the fact that SANBI is taking on responsibilities beyond
its mandate and hence, in some instances failing to meet its core mandate. The
entity had a deficit of R25 million in the 2010/11 financial year. The
Auditor-General felt that SANBI was a going concern, but noted the possibility
that it would not maintain this status, for the following reasons: (1) SANBI
was unable to pay creditors; (2) Government grant was not enough; and (3) the
ongoing deficit since 2008 ─ SANBI’s debt collection was bad and would
collapse soon if there is no financial intervention. The Committee noted the
National Treasury allocation of R42 million to SANBI.
Transfers to Entities: It was noted that the iSimangaliso
Payment of Bonuses: The Committee was concerned that
the Department went ahead with the payment of bonuses to departmental staff
without recourse to the Committee, although it was explicitly pointed out to
the Department that they should present their proposals for bonuses to
Parliament for scrutiny during the presentations of the Department’s Strategic
Plan in April 2011. The Committee wanted to interrogate the criteria for
payment of bonuses to avoid situations where departmental officials are paid
for doing the normal tasks they were recruited to do. The Department then
presented an input on this matter, which the Committee found satisfactory.
Use of Consultants: This was of a serious concern to the Committee, as the Committee felt
that this could be a reflection of a deep lack of capacity within the Department.
For example, R185 million was spent on legal services, including legal drafting,
despite the fact that the Department has a well-staffed legal services unit. The
Committee is also concerned that there might not be institutional capacity in
the Department to interpret some of the specialist consultant investigations
and associated recommendations, as some Government Departments had dismantled
internal research capacity.
Centralisation and Prioritisation of Waste Projects: There
has been poor prioritisation and hence coordination of waste projects throughout
the country, as hands-on waste management activities have been fragmented and situated
in largely poorly-resourced municipalities, without appropriate national or
provincial coordination, although waste management stretches across the three
spheres of Government.
9. Conclusion
This Budgetary
Review and Recommendation Report presents the performance landscape of the Department during
the most recent financial year, covering the period from 1 April 2010 to 31
March 2011. This analysis contains the mandate, vision, and mission statement
and the key strategic values of the Department. Accordingly, the mandate of the
Department is to lead environmental management in the interest of sustainable
development and to contribute to the improvement of the quality of life for all
South Africans.
The mandate and core business of the Department are underpinned
by the Constitution and all relevant legislation and policies applicable to the
South African Government. The vision of the Department is to foster a prosperous
and equitable society living in harmony with its environmental resources,
whereas the mission of the Department is to lead sustainable development of the
environment for a better life for all. The Department was guided by the core
values of people-centeredness, integrity, enhanced organisational performance
and sustainability in order to maximise impact, return on investment,
continuity and knowledge management in all its strategic programmes. The
Committee is generally satisfied with the Performance of the Department in
fulfilling its core mandate in the year under review, and has drawn the
attention of the Department to its observations, with the aim of timeously
attending to them. The Auditor-General’s report and the Committee’s engagements
with the Auditor-General and the National Treasury all confirm that the
Department performed well in the year under review.
10. Recommendations
·
The Committee recommends that the iSimangaliso
Wetland Park Authority should receive more funding from the Department to scale
up the operational capability of the Wetland Park Authority and ensure the
conservation of hitherto utilised landscapes;
·
The Committee recommends that the
Department should present future departmental bonus proposals to the Committee
for consideration prior to any bonus payments. After all, it is the duty of the
Committee to interrogate the manner in which public funds are being used by the
Department;
·
The Department should submit a
progress report on the envisaged additional conservation sites that cannot be
realised, including objections from the Department of Mineral Resources;
·
The Department should submit a
detailed report on the steps that it aims to take to scale down the use of
legal and other specialist consultants;
·
The Department should interact with
the National Treasury to get the buy-in of the National Treasury, with the aim
of centralising or consolidating waste management through focused and regular
appropriation of waste management budgets that promote optimal waste management
at all spheres of Government; and
·
The Department, 10 years after the
Cabinet approval of the Commercialisation Strategy of the SANParks, needs to
begin a review of the implementation process of the Strategy to determine
whether any adjustments are required to the Strategy to improve conservation of
our national protected areas;
Report to be
considered.
Annex I: Breakdown of spending trends in each departmental programme
|
Programme |
Original allocation R’000 |
Adjustments R’000 |
Final appropriation R’000 |
Expenditure R’000 |
Variance R’000 |
|
1. Administration |
255 037 |
17 194 |
272 231 |
272 231 |
- |
|
2. Environmental quality and protection |
321 311 |
(8 275) |
313 036 |
295 833 |
17 203 |
|
3. Oceans and coastal management |
229 356 |
(63 006) |
166 350 |
166 350 |
- |
|
4. Climate change |
573 865 |
(4 195) |
569 670 |
489 666 |
80 004 |
|
5. Biodiversity and conservation |
399 588 |
22 386 |
421 974 |
421 974 |
- |
|
6. Sector services environmental awareness and international relations |
828 637 |
(83 384) |
745 253 |
743 969 |
1 284 |
|
Total |
2 607 794 |
(119 280) |
2 488 514 |
2 390 023 |
98 491 |
Annex II: Expenditure Per Economic Classification
|
Economical classification
|
Original allocation R’000 |
Adjustments R’000 |
Final appropriation R’000 |
Expenditure R’000 |
Variance R’000 |
|
Current Payments |
910 178 |
(87 270) |
822 908 |
821 785 |
1 123 |
|
-
Compensation of employees -
Goods and services |
324 869 585 309 |
2 161 (89 431) |
327 030 495 878 |
327 030 494 755 |
- 1 123 |
|
Transfers and Subsidies |
1 224 337 |
(49 884) |
1 174 453 |
1 162 369 |
12 084 |
|
-
Departmental agencies and accounts -
Universities and Technikons -
Foreign gov. and international organisations -
Non-profit institutions -
Households |
610 883 - 9 000 40 080 564 374 |
33 398 980 10 077 7 444 (101 783) |
644 281 980 19 077 47 524 462 591 |
644 280 980 19 077 36 024 462 008 |
1 - - 11 500 583 |
|
Payment for capital
assets |
473 279 |
17 480 |
490 759 |
405 475 |
85 284 |
|
-
Software -
Machinery
and equipment |
367 472 912 |
232 17 248 |
599 490 160 |
599 404 876 |
- 85 284 |
|
Payments for financial
assets |
- |
394 |
394 |
394 |
- |
|
TOTAL |
2 607 794 |
(119 280) |
2 488 514 |
2 390 023 |
98 491 |