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Date : 18/05/2005
Source: Department of Water Affairs and Forestry
Title: Sonjica: Water Affairs and Forestry Dept Budget Vote 2005/2006


Address by Minister Sonjica, MP, Minister for Water Affairs and Forestry, on the Budget Vote debate in parliament

BUDGET 2005/6 - LEADING THE WATER AND FORESTRY SECTORS INTO THE FUTURE

Chairperson
Honourable Members
In 2004 we received our marching orders for the second decade of freedom. In his State of the Nation Address in this, the 50th Anniversary Year of the Freedom Charter, President Thabo Mbeki reminded us of our strategic imperatives which include:

* achieving genuinely non-racial, non-sexist democracy
* eradicating poverty and underdevelopment * contributing to the African Renaissance. So we have declared war on poverty and unemployment, war on the divides between rich and poor in our country, war on unsustainable use of our scarce natural resources, war on the obstacles that prevent all of our people from realising their potential, war on the forces that keep Africa underdeveloped.

Today, we are privileged to stand on the shoulders of giants of our struggle for liberation and democracy whose foresight, wisdom and sacrifice has poised us to deliver on the mandate entrusted to our Department in this, the beginning of the second decade of our freedom. This budget provides for the Department of Water Affairs and Forestry’s (DWAF) part in this historic campaign.

We will achieve our goals by working as a team and much of the task of the Department is to create the conditions in which others can work. Therefore many of our programmes aim to “ENSURE” that service delivery programmes of government are effectively implemented. So we need to ensure that local government can deliver effective water services, sustainably to all our people and help it to do that.

We need to ensure that the way we use and manage the water resources of the country grows and transforms the economy for the benefit of all our people.

We need to ensure that our plantation and indigenous forests bring new prosperity to our rural areas.

Chairperson, this budget has a number of challenges, which can be categorised into three components:

* we are still carrying out many of the historic functions of the Department
* at the same time, we are developing the new functions that will be our focus in the future * we are also restructuring by transferring historic functions to other agencies.

Our current restructuring is to enable the department to focus on its leadership role, which entails policy-making, sector monitoring, regulation and support. This broadly involves:

* establishing catchment management agencies * establishing appropriate institutional
arrangements for the management and further development of the national water resource infrastructure
* delegating operation and maintenance responsibilities for other government water schemes to water user associations
* transferring the management of commercial plantations and indigenous forests to appropriate organisations
* transferring operations of water services systems to municipalities
* establishing and building DWAF’s capacity to regulate the agencies to which functions are transferred and to support them.

We still have to budget for all these activities in this year’s budget for the Department’s three core functions of water resource management, forestry and water services.

When we complete the current restructuring, we will have a smaller but more streamlined budget that will better reflect the new focus of the Department and make it easier for Parliament to exercise its oversight.

As we turn to the water services functions, I must tell you that today, I am breaking from tradition. Since the Department no longer manages the investment budget, I will emphasise the quality of the service we have to render rather than the quantity or statistics thereof. I will focus on whether our services are effectively and sustainably provided. I will report on how many people still do not have access to taps and toilets and, for those who already have access to infrastructure, I will report and highlight whether the services meet our basic standards. This information will guide our programmes of support to, and regulation of, the municipalities responsible for providing services. So I can advise you that the Department’s monitoring indicates that, at the end of the financial year, there were 3.6 million people with no access to safe water; a further 5.4 million had a source of safe water but, at more than 200 metres from the households, not yet meeting the Reconstruction and Development Programme (RDP) standards. Most worrying, 16 million people still do not have access to any hygienic sanitation.

The monitoring of service quality is just starting but already the results show how important it is to manage infrastructure effectively. Last year, I reported that water supply to 37% of households was interrupted for more than a day during the previous year – mainly for technical reasons rather than for non-payment, however this was still not acceptable. The survey will be repeated shortly and I hope to be able to report improved performance by the end of this year.

This year, we focused on the quality of drinking water and I regret to say that 63% of municipalities could not confirm that they met the Drinking Water Quality guidelines. Many of them may be achieving the standard but their controls could not show it.

There are serious problems in the management of wastewater treatment works – even in Metro municipalities such as Cape Town. An acute example is Emfuleni, in Gauteng where, repeatedly, untreated sewage has been discharged into the Vaal River. This problem has correctly been highlighted by environmental non-governmental organisations (NGOs). The Department is working with the Gauteng Provincial Government, the Department of Provincial and Local Government (DPLG) and National Treasury to help the municipality to improve its performance. A programme of action has been agreed, funding negotiated and some progress has been made although the situation is not yet resolved. Our role and intervention lends eloquent testimony to the constitutional imperatives of co-operative government and highlights the importance of DWAF’s local government support in co-operation with Project Consolidate.

While funding for water supply and sanitation projects will in future come from the Municipal Infrastructure Grant (MIG) of the DPLG, there is still R937 million for water services operations in DWAF’s current budget. This will be shifted to local government’s equitable share when the schemes still operated by the Department are transferred to municipalities by the end of 2006. The Department’s water services budget will then fall to around R400 million in 2007/8 from a high of R2 391 million in 2003/4.

Funding for water services will then come from the MIG, local governments’ equitable share, helped by municipalities’ own revenue.

This does not mean there is no more work for DWAF in water services. On the contrary, our role was spelt out in the Water Services Strategic Framework, approved in 2003, which outlined how we will ensure sustainable service delivery in the long term.

Good progress is being made with the programmes to set norms and standards, monitor and regulate the performance of municipalities and support them to ensure that they provide and expand access to services.

We will have to intensify on the campaign for water conservation as the country’s record of unaccounted-for-water is unacceptably high even by world standards.

We are supporting proper planning of operation and maintenance as well as planning for capital projects. The free basic water and sanitation policy is being further developed with particular attention to the sanitation component to ensure that universal access to basic water and sanitation is maintained. Support units are already in place in every province.

In consultation with organised local government, we will ensure that our support strategy is well designed, co-ordinated and implemented and meets the needs of municipalities as well as contributing to Project Consolidate.

We will continue to bring municipalities and water boards together to consider how best to organise service provision in their areas. Water boards could indeed be the basis of future regional water distributors – along the lines of the Regional Electricity Distributors – although not all boards are achieving the efficiencies we would desire. And if institutional reform requires us to amend the Water Service Act, we will do so as we have already done to enable our water utilities to support the New Partnership for Africa’s Development (NEPAD).

Rural sanitation remains a major challenge and the health consequences were demonstrated by recent outbreaks of bilharzia in Mpumalanga and tapeworm infections in Coza village, in Libode, in the Eastern Cape. Tapeworms are spread from one person to another either directly or by pigs in the absence of hygiene and adequate toilet facilities.

We will be building on our annual and highly successful Water Week campaign by introducing a Sanitation Awareness Week to raise the profile of sanitation in the country. This week will precede National Water Week.

In urban townships, good progress is being made in eradicating the bucket system thanks to the injection of R1200 million into the MIG for which we commend the President and the National Treasury. And while the rural sanitation backlog remains huge, I am pleased to announce the Department’s partnership with the Labour Job Creation Trust, established by COSATU, FEDUSA and NACTU, to help provide sanitation while creating jobs and construction skills in poor communities.

We are encouraging municipalities to ensure that adequate MIG funds are ring-fenced for sanitation provision. However, the challenge is to assist municipalities to implement sanitation projects since there is still limited expertise for this in the country.

Our water services work benefits greatly from the invaluable support of our international partners. These include countries such as Ireland, the United Kingdom and Denmark as well as the European Union itself whose Masibambane programme is helping to support municipalities in sanitation provision and water supply. The Japanese Government is assisting us to provide groundwater supplies in the Eastern Cape, which have already benefited thousands of rural dwellers.

A key priority is to ensure that we create permanent capacity so that when the external funding ends, the projects continue to function.

We cannot have water services without water resources, which also support the needs of a growing economy. We are confronted by the major challenges of managing our scarce resources and extending service delivery to the previously excluded communities. We also have an obligation to research and mitigate the vagaries of climate change.

The 2004 National Water Resource Strategy has outlined the systematic approach that is being taken by the Department to address these huge challenges. This includes:

* water allocation reform to promote equitable access to water
* monitoring water resources and water use to provide information for its management; * development of institutions such as Catchment Management Agencies and Water Users Associations.

* ensuring that all our people can participate in these processes.

Progress is now being made with the establishment of Catchment Management Agencies (CMAs): the Nkomati CMA was established in March 2004 and I will be approving its Governing Board within a month. Another five CMAs are just awaiting financial feasibility studies. It will cost up to R3 million to establish each CMA.

Our water is scarce, yet for many users, still very cheap. An important principle is that, users of water for economic purposes should know the cost of making it available and contribute to those costs. So this year we will complete the statutory review of the 1999 water pricing strategy, which determines how prices for water are calculated. After extensive consultation, the revised pricing strategy will shortly be published for final comments and should be approved by September in order to align our processes with the Municipal Finance Management Act of 2003 (Act No. 56 of 2003).

This will also include new “polluter pays” tariffs for waste discharges and consolidate other water use charges - including those relating to the water research levy and the control of invasive alien vegetation.

The water resources management charge, introduced in 2002 is already making an important contribution to water management with payments of over R75 million in 2003/04. This will provide the financial foundation for the work of the CMAs whose establishment will in turn ensure that water users see real benefits from the charges.

Given the excellent co-operation we have received from the majority of water users in agriculture and industry, including forestry, we will ensure that everybody complies without any fears or favours. No mercy will be shown to people who wilfully ignore the law. Dams have been demolished, pumps sealed and prosecutions made and this will continue. Indeed, after concerns about illegal water use were raised a few years ago by farmers in the Tosca area of Northern Cape, a technical team is in the field with legal and police support as I speak. On Monday and Tuesday, boreholes were dismantled and sealed on Belvedere farm and Nokani farm and today and tomorrow, two more will follow.

I will not allow people to disregard the law at the expense of those who obey it. Government may work slowly on complex matters of water use, but as soon as we have our case ready, we will act firmly and decisively against those who are illegally taking their neighbours’ water.

Similarly, while mines have been the foundation of the economy, they have a limited life. When it ends, they must be closed in a responsible manner, which does not leave environmental problems. I am concerned about the current rash of court actions which suggest that some companies are trying to avoid these responsibilities and must warn that although Government is committed to working constructively with the industry to manage its challenges, we will not hesitate to use more robust methods if that is what is needed to protect the peoples’ water.

The National Water Resource Strategy focuses on institutional arrangements, but we cannot ignore the need for new water resource infrastructure to supply the growing first economy and open new opportunities in the second as well as to provide water security in the face of climate change.

The raising of the Flag Boshielo Dam, in Limpopo, begun in June 2004 is expected to be completed in 2006; the design of the Olifants River project, approved by Cabinet last year, has commenced and consultations are underway with the mining industry on their funding contributions; the Berg River project is progressing well; and a major project to increase supply to ESKOM and SASOL in Mpumalanga is about to start.

The Western Cape drought highlights the importance of these projects although I am pleased to report that dam levels have begun to rise in the province with Theewaterskloof Dam up to 29.5% from 28.9% last week. But the Berg River project also illustrates the new approach to funding large water projects. Within three years, the R1.5 billion Berg project should again bring Cape Town’s water supply to an acceptable level of assurance. But members will find very little funding allocated in the budget for the project since it is being implemented by the Trans - Caledon Tunnel Authority (TCTA), our state owned water-financing enterprise, on behalf of DWAF and the City of Cape Town. By spending just R15 million over the past 15 years on planning and preparation, we have unlocked an investment of more than 100 times as much. This is similar to the way the first phase of the successful Lesotho Highlands Water Project was funded.

Projects like the Berg River and the Lesotho Highlands show that major water infrastructure development can be funded off-budget – leaving more funds for key social programmes. But this process must be systematic. We are therefore undertaking a feasibility study for Cabinet to consider whether it would be desirable to establish a National Water Resource Infrastructure Agency to develop and manage the infrastructure identified in the National Water Resource Strategy – which identified 18 major projects that may be required over the next 20 years at a cost of at least R21 billion.

An important part of any proposal will be to ensure that potential users are not excluded from service provision because they are, for historical reasons, unable to pay. We are working with National Treasury to ensure that we come up with the most suitable vehicle that will ensure economic benefit while providing for social needs.

Already the Department has established a new branch to develop and manage water resources infrastructure. This will separate the development and operation of all DWAF major dams, canals and large pipelines from policy and regulatory functions. The lack of separation was one reason for the Auditor-General’s qualification of the Department’s accounts over the past three years, and this approach should help to address the problem.

Our water resource management is also aimed at developing opportunities for the many South Africans on the margins of the second economy in the rural areas. Leadership in this area requires us to make the principles of co-operative government and intergovernmental relations enshrined in our venerable Constitution work. To realise this vision, I will be hosting a series of Water Summits in different provinces at which we will be engaging with the provincial governments and other stakeholders around their Provincial Growth and Development Plans (PGDPs). We have already convened such a summit in Limpopo.

In 2005/06, we will extend financial support to resource poor farmers, particularly women, for rain-water harvesting tanks and other appropriate technologies. We have consequently built a common approach with colleagues in Land Affairs and Agriculture. We are also working with the relevant provincial departments of Agriculture to test the feasibility of developmental projects proposed for resource poor farmers that will utilize the Orange River water that has been reserved for them.

At least three projects should commence during this financial year, namely the Karoo Irrigation Project near Hopetown, the Blocuso Trust project between Upington and Keimoes and the Tella Community project near Pofadder. These projects will involve funding for infrastructure as well as training for participants. Recognising the role that women play in agriculture in poor communities, we will also ensure that there is meaningful participation of women farmers in decision -making in water user associations.

The delegation of operation and maintenance functions to Water User Associations will continue during 2005/06. We should conclude the transfer of staff to the Boegoeberg and Kakamas WUAs in Northern Cape and the Lower Olifants River WUA in the Western Cape as well as to the Sand Vet and Van Der Kloof WUAs in the Free State. To fund the costs associated with staff transfers, arrangements have been made with National Treasury to consider an additional appropriation as the programme evolves.

Finally, since job creation in rural areas is such a high priority, I must refer to the Working for Water programme for which R452 million has been earmarked. The challenge is to maintain and enhance its efficiency and to ensure that as much of the funds as possible end in the pockets of the workers who clear the alien plants that threaten our biodiversity and consume our water.

Turning to forestry, our key objective is to maximise rural development and empowerment in a sustainable manner. To give focus to this process, the Forestry Broad Based Black Economic Empowerment (BBBEE) Charter process was launched in April and I am pleased to say that this has met with a generally positive response. This is reflected in the many nominations I have received for Steering Committee members, for which I must express my gratitude.

At the Indaba I undertook to announce the names of the members of the Steering Committee, which will take the process forward. Under the able leadership of Ms Gugu Moloi, who is currently the Chief Executive Officer of Umgeni Water, I have nominated a Steering Committee of twenty individuals from the Forestry sector. I am sure that this group will meet the Minister of Trade and Industry’s target and produce a draft Charter before the end of the year.

Meanwhile, the Department is continuing to transfer plantations to commercial organisations and indigenous forest management to the national and provincial conservation organisations best equipped to manage them. Good progress has been made with the larger packages – the most recent being the transfer, a few weeks ago, of 97 000 hectares of indigenous forest in the Knysna and surrounding Southern Cape area to SANParks.

Challenges remain however with the smaller plantations and indigenous forests. These include determining appropriate partners for transfers – as an example, the transfer of Manzengwenya and Mbazwane in KwaZulu-Natal was delayed after a successful land restitution claim because negotiations had to begin again with the new owners. This matter is likely to be resolved and the transfer completed by 2006.

The development of forestry will create further opportunities for those rural communities in the Second Economy. Together with KwaZulu-Natal Provincial government, we have completed detailed studies of potential sites for small growers to plant trees. We are calling on local and district municipalities to seize the opportunity and work with small growers and industry partners to realise the empowerment potential - incomes totalling about R60 million could be generated from the initial 30 000 hectares we have identified and much more from an eventual 70 000 hectares.

Similarly, in the Eastern Cape, we are continuing to create the conditions for trees to be planted by small growers on about 60 000 ha of communally owned land. This should transform the rural economy of some of the poorest areas of our country, with potential incomes totalling as much as R100 million per annum. We want to help these rural communities to become net producers of wealth instead of depending on government grants and remittances from migrant workers as has happened over the past century.

The forestry budget still reflects ongoing management responsibilities and when forests are transferred, there are high once-off expenditures for transfer costs. Although the budget shows growth from R373,2 million in 2005/06 to R415,2 million in 2007/08, the final amount will be reduced unless transfers are delayed.

As I close, I would like to address some management issues. The many challenges I referred to earlier have contributed to the difficulties, which have led to audit qualifications over the past three years. As I indicated, we have taken steps to separate accounts for the different functions, which should assist where the same regional office and staff have been operating both Trading Account and exchequer activities. The Department will also be phasing in an accrual accounting system, which should be fully operational by 1 April 2006 to address other concerns.

Pertaining to those qualifications that were due to the failure to respond adequately to the auditor’s queries, action has been taken both to strengthen administrative systems and, where appropriate, to take action against the staff members concerned.

Since we no longer directly provide taps and toilets or grow trees, we need to develop our capacity to lead these sectors. We need the ability to monitor progress in our strategic areas of delivery so that we can intervene quickly when things go off track, to organise ourselves with clear strategies to guide the sectors and to draw support from other institutions.

We have begun to evaluate whether we are equipped to provide the leadership needed to help build the capacity of local government in water services and sanitation, and to help communities take advantage of new opportunities in forestry.

We need technical capacity so that we can understand and solve the problems that are confronted on the ground. The pool of specialist skills from which we must recruit is still very shallow in the water sector particularly, and the internal group of professionals, whose dedication has enabled the Department to achieve its successes to date, is aging. There is a shortage of trained personnel at all levels of government throughout the country. We will look at all options that will help us enhance our capacity.

I must mention the contribution of the Water Research Commission, which not only funds university centres of excellence in fields such as climate, hydrology and water treatment, but also supports hundreds of post graduate students who will be the water managers of the future.

During the coming year, we shall build on this foundation, consulting with educational institutions and training agencies and encouraging them to co-ordinate with each other and expand their facilities to train the people that the water sector needs - from operators and supervisors to administrators, water economists, engineers, microbiologists and water scientists of all the many varieties.

Already, in the Department, we are seeing the fruits of the investments we have made since 1994 with many up and coming young technical stars, some of whom are in the gallery today.

Chairperson, at this stage I would like to thank each and every official in the department for ensuring that we deliver on our mandate. I want to extend a special word of gratitude to the Director-General, Mr Mike Muller, for his leadership to the department. At this point I would like to wish him well as his contract expires at the end of August this year.

We are not managing the water and forestry resources of our country for ourselves alone but for future generations as well. So we are not just building our capacity to lead today but also tomorrow. The activities that will be funded by this budget will not only address the needs of today but also ensure that tomorrow and in the future, there will be enough water and enough forests to meet the needs of all.

In conclusion I would like to thank the leadership of the Water and Forestry sectors that are present in the gallery – your contribution and support to the sector has been invaluable and we look forward to further cooperation for the realization of the programme of the second decade of our democracy.

I thank you.

Issued by: Department of Water Affairs and Forestry
18 May 2005
   

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