Briefing by Minister of Finance and National Treasury on government’s plans for the flood disaster and recovery programme

Meeting report

Chairperson Frolick welcomed members to the meeting and introduced the Co-chairperson, Mr J Nyambi (ANC, Mpumalanga).

He expressed gratitude for the Minister and support staff being able to attend the meeting and noted the Deputy Minister’s apology. The Committee was in the Eastern Cape, and they were visiting provinces affected by the April floods. They completed their work in the previous week in KwaZulu-Natal, where they had visited several municipalities and sites that had been affected. Their three-day visit to the Eastern Cape was commencing on that day.

He handed over to the Minister of Finance, Mr Enoch Godongwana, to present a briefing on the Flood Disaster Relief and Recovery.

Minister’s Remarks
The Minister stated that he would have liked to start the meeting differently, as he was unsure of the Chairperson's expectations. He summarised the discussions to limit the length of the meeting.

According to his understanding, there were processes for managing disaster funds. There was immediate relief. This was the first part of the process, and four grants governed it. The grants were split into the following:
1. Provincial Disaster Response grant, which was about R145 million for this financial year;
2. Provincial Emergency Housing grant, which was almost R326 million;
3. Municipal Disaster Response grant, which was about R371 million;
4. Municipal Emergency Housing Grant, which was around R175 million.

These grants combined had a value of around R1 billion.

The problem was that people were saying they did not know where the R1 billion was, even though it was with National Treasury. For any of these amounts to flow into the disaster process, there needed to be documents submitted to them requesting release of these grants for their intended purpose.

To date, none of the funds had been requested for withdrawal or transfer. The Minister of Human Settlements was informed of this, and she then requested funds through a different process, but no documents were received.

For funds to be released, the relevant documents needed to be submitted to ensure a paper trail and that the funds would be used for the intended purposes. They could not transfer the grants without them being requested, and the law allowed them to withdraw funds even before the final approval of the requests in certain circumstances. There was no legal barrier for these funds to have their release prevented. The second part of managing disasters was called Recover and Repair. This was the stage when infrastructure would be repaired. This is after the emergency relief phase.

To date, no documents have been received to verify the assessed damage and how much it would cost to repair. The Minister was called to ask about this, and she responded that she had sent back the documents as their engineers did not sign them. This process was meant to take a day or so. Therefore, the second phase also had no paperwork relating to the damage and estimated costs to repair it.

The Department of Water and Sanitation had requested to move funds from different programmes so they could focus on the disaster, which was around R55 million. They had not submitted a request for funds to be released to them, and National Treasury had not received any documentation to date.

Briefing by National Treasury
The Minister requested Ms Ulrike Britton, Treasury’s Chief Director of Urban Development, to provide details on the information that National Treasury had.

Ms Britton greeted the Committee. She explained that the Minister mentioned four grants related to the budget for the Department of Human Settlements and Cooperative Governance. The NT had not received any requests from these offices to release the money.

National Treasury was aware that both departments had received requests from municipalities to access these grants. The grants had specific conditions that needed to be met, and they were different for the Human Settlements grant compared to the Cooperative Governance grant.

The conditions for Cooperative Governance grants included requirements that provinces and municipalities submit their disaster mitigation plans to show what they had done to reduce the damage incurred. They also had to include any information relating to insurance that they had on infrastructure.

Municipalities had taken out insurance for infrastructure, which was confirmed in some cases. They seemed to be "double-dipping' by choosing to either not submit insurance claims or choosing not to wait until the pay-out process was finalised before requesting funds from these additional grants.

In relation to Human Settlements, the applications needed to include verified beneficiary lists to ensure that the money went to the right people. Cash flows also needed to be included, and a verified assessment report. In many cases, the Department had not received complete applications from municipalities and provinces concerning the grant application requirements, which was delaying the process.

National Treasury had not received any requests to release funds, but the Departments processed claims from municipalities.

The Chairperson handed over to the Co-chairperson to facilitate the discussion.

Discussion
Co-chairperson Nyambi greeted the Minister and Members and then opened the floor for Members to engage in the presentation.
 
Mr M Hlengwa (IFP) commented that the Minister’s words were elementary to the reality of what happens with any disaster management regarding funding and whether departments decided to utilise the funds available. He said that this was a high-level explanation, and there needed to be caution exercised in how these matters were communicated to the public. Shortly after the disaster, an announcement of the R1 billion was made to the public, setting expectation into motion from those hit hardest. They were expecting to receive assistance from these funds. From April to June, very little movement had occurred. What assistance was National Treasury giving to the affected municipalities and provinces to facilitate in a manner consistent with the law so that applications made would meet the basic expectations required for funds to be released?

They had visited KwaZulu-Natal (KZN), and they had not received money from National Treasury (NT) in every instance. The moment it was declared a national disaster, the NT assumed responsibility, but it was not an implementing agent in so far as disaster relief was concerned.

A concern was that South Africans had been informed that money was available. The Deputy Mayor of eThekwini came down on them like a ton of bricks and, given this week, backtracked on a very arrogant outlook that they had to say that money was required but did not have any. When a metro like eThekwini could not even meet the basic requirements and was still lamenting about not receiving funds, it was concerning as there seemed to be no end to this disaster. This was mainly concerning funds being made available.

The basic outlook was to the extent that National Treasury involved itself to ensure that the reprioritisations that they spoke of and the R1 billion reached the people. Technical and nuanced explanations were being given, but those meant very little to the ordinary people in the street who had been hard hit by this disaster and whose hopes were hung on an announcement made "hot on the heels" of the disaster of money being available.

Mr F Du Toit (FF+, Free State) said that, during their visit to KZN, it was evident that more than R1 billion would be needed to address the disaster. In the presentations, it was mentioned that initial documents and requests were sent through to National Treasury by the province. It was also mentioned that rain fell after the disaster, which caused further damage, resulting in those figures being amended and for the requests to be amended and sent through to National Treasury.

Initially, they said that no documentation was received. Ms Britton then said that documents were submitted but the engineers' signatures were missing, so the documents were sent back to the KZN Premier. Could they confirm if any of the requests were successful in obtaining funds from the promised R1 billion?

Did National Treasury have the capacity to avail more funds than the R1 billion promised by the President, in the light of more than R25 billion mentioned being needed to address this issue?

Mr C Dodovu (ANC, North West) expressed his dissatisfaction that the amount allocated for the disaster had not been accessed, and the Minister stating that no department indicated that they would not use the money. When the Members were in KZN, it was clear that the money was needed and that the affected communities were still deeply devastated and were lacking the necessary help.

In the Umlalazi Municipality, there were about 80 allocated houses, but fewer houses than that were built. The only explanation given was that they needed more funds to do so. That demonstrated that the need was still huge, and it was unacceptable that the Departments had not coordinated themselves at a national level to ensure engagement, and plans were not submitted to Treasury.

The Department should have been able to raise that matter as the need was dire. Based on this, was there any coordination at a national level amongst the departments to ensure they sat, discussed and assessed progress for allocation of funds? This would ensure that the allocated funds were going to be used for the intended purpose.

Even though the need was there, and the money needed was more than the allocated R1 billion, the actual R1 billion had also not been allocated yet, which was disappointing.

Ms M Lesoma (ANC) confirmed that the presentation document that the Minister was speaking on had not been sent to the Members. Could the Committee be given this report? This would allow them to review the details on items mentioned.

She agreed that National Treasury could not release funds without being given a plan on how they would be used, as they needed quality assurance. However, the Committee’s mandate was to provide oversight on what had been promised by Ministers and assist them by bringing to light that communities were in a dire state and becoming impatient with the government.

Where they could assist and inform the transfer officers, how best could they do so? She understood that the Presidency, along with COGTA, had the responsibility to coordinate this, but they could also provide assistance, as it was public knowledge that the funds had been made available.

She recommended that they request these documents from provinces to provide more evidence than just stating that submissions had been made, but evidence was there. This would help with future engagements during oversight, as they would have clarity on what was still outstanding. This would make it easier for the Committee to request the outstanding information from provinces so that the funds could be released.

Mr M Rayi (ANC, Eastern Cape) agreed with the questions asked by the Members. He requested reports so they could compare what the Departments were saying to what National Treasury was saying. While listening to the Minister, no reports were presented, and they would have understood better if these reports had been provided.

On the R1 billion, were there any arrangements for further funding? They received a report from COGTA that showed that the damage to roads alone exceeded R1 billion. This was one aspect in one province, even though three provinces had been affected.

Responses
The Co-chairperson handed over to the Minister for responses.

Minister Godongwana suggested that it would be helpful for the Committee to have a joint meeting with all the relevant stakeholders so that they would be able to separate fact from fiction. It would be useful for them to meet with COGTA, The Department of Human Settlements and the provinces to determine the facts.

When presenting, they answered whether they had provided assistance, which they had done, to the limited capability. When the MEC for Finance expressed an inability to understand, he personally explained the processes to the MEC. The DG also explained the processes to the HOD of Treasury in KZN. They explained what it was about, what the processes were and what additional documentation was needed.

Treasury could only provide technical advice on how to do things which they had done. They could not assist with filling in the forms. The provinces were responsible for filling in the forms after receiving the explanations, and National Treasury could not do this for them.

Even the eThekwini Municipality, which had a developed treasury used to borrow money from the financial markets, could not claim to have been unable to fill in a form. "They would end up barking up the wrong tree", he added.

The R1 billion fell under phase one, which was ‘Immediate Relief’. The second phase, which could be about R25 billion, was part of ‘Recover and Repair’. Once that amount was submitted to National Treasury, they would look at where they could obtain the resources to fund it, including considering the contingency reserves.

The second phase would make the necessary adjustments for that funding once the claims had been received. In the absence of that information being submitted to them, they could not deal with it. The first phase itself had still not been completed. The second phase would be assessed and made adjustments once information on it had been received.

There was coordination in disaster management. They were not meeting as regularly as they should, but there was coordination.

The Minister would ask the team to circulate the presentation and briefing documents they had circulated to everybody.

From their view, they had done everything possible. The Minister had spoken to the Minister of Human Settlements, expressing disappointment that they had not used the available R1 billion, and they assured him that the CFOs were submitting.

There was nothing wrong with making an announcement and ensuring people were under pressure since the money was available. People not doing the right thing could not be pinned onto National Treasury.

Co-chairperson Nyambi found the result of the meeting to be very unfortunate. The Ad-Hoc Joint Committee was very clear on its programme. The first thing they did was meet with the Ministers and AG. When they went to KZN after the joint sitting and Parliament establishing the Ad-Hoc Committee, the magnitude of the problem on the ground was extreme. This meeting was unfortunate because people on the ground would hear that the problem was filling in forms.

The sooner the administration of the meeting with all the stakeholders could be finalised, the better. They needed to get to the bottom of the matter. They had met the other stakeholders, but it would be good to extend the meeting beyond the Ministers and have all the MECs and Premiers of the affected provinces so they could deal with it.

The situation in KZN was dire, and people were spending a lot just to access some towns and villages. More than 600 schools were affected, yet the problem was forms. They were able to cover much ground in KZN and what was presented to the Committee was completely different to the understanding they were getting. They needed to establish a lasting solution to the problem.

He thanked them for the presentations and emphasised that the Committee needed to meet with all the stakeholders.

In the Eastern Cape, they were dealing with a similar problem. Along with the April floods, they were also dealing with a backlog of December disasters not dealt with. It was difficult to believe that the problem was merely filling in forms. Perhaps there was a problem with capacity that needed to be dealt with when they made appointments to ensure that the correct people were put in the correct positions.

Follow-up Discussion

Co-chairperson Nyambi allowed for further commentary from the Committee.

Mr Hlengwa agreed on the necessity of the additional meeting. He said that he struggled to understand National Treasury's not taking responsibility.

Of the immediate relief money allocated, how much of it had been transferred to any department, municipality or any affected provinces? The operative word was ‘immediate’. The floods were in April and it was now June.

Minister Godongwana responded that they had an emergency IMC on this matter. They made sure that assets and liabilities in Treasury had made sure that these funds were available. He refused to take responsibility for people failing to submit documents to Treasury, and the institution would not just dish out money without any documents.

The Co-chairperson thanked the Minister and agreed with Mr Hlengwa on the necessity of the meeting to get to the bottom of the matter.

Chairperson Frolick thanked the Minister, delegates and Members who attended the meeting. The way forward was to get heads of departments in one meeting because the need was out there. There was even a belief in KZN that the political heads were under pressure since people thought the money had already been provided. They were now hearing that it had not even been accessed. The Committee would put in the necessary measures to ensure that all the relevant parties were present at the meeting.

The meeting was adjourned.