Department of Water and Sanitation briefing on Presidential Proclamation No. 43 of 2014; Committee Programme

Meeting report

Apologies
The Chairperson noted the apology from Mr A Mpontshane (IFP) who would be late as he was in a Chief Whips Forum meeting. Mr B Mnguni (ANC) was present but had decided to leave because just last night he had received the sad news that his sister had passed away. There was also an apology from the Deputy Minister as she was ill and the Minister had taken leave.

Briefing the Portfolio Committee on Water and Sanitation on the Proclamation by the State President
Mr Trevor Balzer, DWS: Acting DG, began the presentation noting the new Cabinet announced on 25 May 2014 and introduced a number of changes to the previous configuration of the national Executive and departments in terms of section 91 (2) and 93 (1) of the Constitution. The announcement had a direct impact on the structure in support of Ministers and Deputy Ministers – new departments were created, some with the transfer of functions between departments to give effect to government’s mandate for efficient delivery. For the Department of Water Affairs, the functional content of departments will change to give effect to that new ministerial portfolio mainly by transferring the sanitation function from the Department of Human Settlements (DHS) to form the Department of Water and Sanitation (DWS).

The Presidential Proclamation Number 43 of 2014, dated 8 July 2014, paved the way for the establishment of various departments in support of the new ministerial portfolios. This included the establishment of the Department of Water and Sanitation. DWS thus incorporated the mandates of the Department of Water Affairs and the sanitation function which will be transferred from the Department of Human Settlements. The transfer of the sanitation function from DHS was facilitated through the National Macro Organisation of the State (NMOS) Programme coordinated by the Department of Public Service and Administration (DPSA), National Treasury and led by the Presidency.

The NMOS terms of reference were developed to describe the programme of action needed to ensure that the macro organisational changes gave administrative effect to the President’s new Cabinet portfolios, ensured alignment between the announced ministerial portfolios and the administrative structures in support of ministers responsible for such portfolios and set out the roles and functions of the primary role players governing and contributing to the roll-out of the NMOS programme. These role players included governance structures of the National Steering Committee (NSC), National Project Team (NPT) and the Department Project Team (DPT), stakeholders like labour, entities and departments and support staff.

Mr Balzer explained the Public Service Regulation (PSR) 1/III/H stated that if the Minister or a premier of a province made a determination regarding the transfer of functions between departments, the relinquishing department shall transfer all concomitant resources, including personnel, to the receiving department, the recipient department shall co-ordinate the transfer, the recipient department shall also accept accountability for the functions on the date of transfer, the accounting officer of the relinquishing department shall retain accountability for matters originating prior to the date of transfer, the transfer of personnel shall take place with due regard to the requirement of the Labour Relations Act and the transfer of funds shall take place in accordance with the requirements of paragraph 6.5 of the Treasury regulations.

Looking at the NMOS governance structure, the NPT consisted of, as already mentioned, the Presidency, DGs from the Presidency, Department of Public Works and Treasury making up the NSC and DGs from DPSA making up the NPT. The NSC and NPT were made up of six work streams, namely, organisational scoping/human resources staff audit, infrastructure and assets, finance and budgets, ICT systems, legal and policy matters and labour, change management and communications. This was a common structure for all Departments’ affected by changes to ministerial configurations.

Mr Balzer moved onto look at the functions of the NSC which was to implement the mandate of government as determined by the President and Cabinet, overall management of the NMOS programme, provide overall guidance pertaining to issues that may emerge from time to time as a clearing-house, to resolve and trouble-shot any ambiguity in the interpretation of political decisions and legal mandates and referral back to political principals, to unblock obstacles that may emerge during the roll-out of the programme in any line department, to receive progress reports from the NPT on the work done in the NPT and DPTs, to ensure quality assurance of the final products and reports for decision-making by political officer bearers and to act as a high level forum for consultation for affected departments and to support those departments.

The functions of the NPT included the overall management of the reconfiguration process at departmental level, to oversee the implementation of the domesticated work-plan for each DPT derived from the generic work plan, to provide regular progress reports, render support and advice to the DPTs, to ensure quality assurance of the products and reports of the relevant DPT, unblock obstacles that may be encountered by the DPTs, to act as a forum of consultation between NPTs and DPTs and to integrate the product of the DPTs before submission to the NMOS Secretariat.

The DPT was composed of representatives from relinquishing and recipient departments under the chairmanship of the recipient DG. Departmental work streams were supported by officials from the NPT. Functions included the overall management of the different departmental work streams, implementation of the domesticated work-plan, to provide regular progress reports, to ensure quality assurance of the products and reports, unblock obstacles that may be encountered by the various work streams, act as a forum of consultation between various work streams, integrate the product of the work streams before submission to the DG and NPT, render secretariat services and maintain minutes of all meetings and ensure that the DG/HOD of the recipient and relinquishing departments sign off on progress reports.

In terms of the general NMOS reporting protocol, the DPSA was responsible for the project management, or Secretariat, on support of the NMOS programme and channels reported to the NSC via the DG of the DPSA. The NMOS Project Team and Secretariat, in consultation with the NSC, determined a schedule of meetings. The NPT sequenced and scheduled their own meetings and reporting arrangements with reporting meetings taking place once every second Friday. A generic project plan and template for reporting had been developed and the DPT sequence and scheduling of their own meetings and reporting arrangements would be aligned with those of the NPT.

Mr Balzer looked at the NMOS programme timeline noting the tasks completed included the establishment of a programme for governance structures, preparation for programme execution by work streams, transferring of the administration of legislation to Ministers and the creation of departments and transfer of functions. What still needed to be completed was the organisational structuring of affected departments by 26 September 2014, infrastructure and assets would be moved by 29 August 2014, finance and budgets would be completed by 26 September 2014, ICT systems would be sorted out by 29 August 2014 while legal matters would be attended to by 26 September 2014. The Department was on schedule with all these tasks. Change management and communication was an ongoing function.

Turning to the sanitation, the sanitation mandate was derived from section 10 of the Constitution – every person has inherent dignity and the right to have their dignity respected and protected and section 24 (a) – everyone has the right to an environment that is not harmful to their health or well being. The sanitation mandate was also derived from the National Water Act (NWA) and the Water Services Act (WSA) which were the primary legal instruments relating to the accessibility and provision of water services which included drinking water and sanitation services. The WSA made particular references to the right to access to a basic water supply and basic sanitation. The Act stated everyone had a right of access to basic water supply and basic sanitation, every water services institution must take reasonable measures to realise these rights and every water services authority must, in its water services development plan, provide for measures to realise these rights. Reference to water services authority was an actual reference to local government in essence. The water service development plan was a chapter of the Integrated Development Plans (IDPs) as contained in the Municipal Systems Act. The rights mentioned in this section were subject to the limitations contained in this Act. In terms of the WSA, it was the responsibility of water services authorities to ensure access to both water supply services and basic sanitation.

Mr Balzer provided a current overview of the sanitation programme noting DHS was relinquishing a sanitation function to the Department of Water Affairs, after which it will eventually translate into the Department of Water and Sanitation. The Department name change had already taken place but the sanitation function was in the process of being transferred. Even though this transfer was taking place, the function of sanitation kept operating and had not come to a standstill. The function was performed at a Chief Directorate level named, National Sanitation Programme. The function was being executed in line with the following key functional outputs: implementation of the Rural Household Infrastructure Grant (RHIG), the implementation of the Bucket Eradication Programme (BEP), supporting Municipalities on the implementation of the sanitation programmes funded by the Municipal Infrastructure Grant, supporting municipalities on Health and Hygiene advocacy, mainstreaming of sanitation in IDPs including councillor induction and developing the White Paper on Sanitation with DWS handling the approval and finalisation process of this White Paper. The Millennium Development Goal (MDG) target on sanitation was met, but SA needed to meet the country target of universal access.

Looking at the sanitation functional configuration, the function was located under the Branch Programme Management Unit in DHS at a Chief Directorate of the National Sanitation Programme level. This was further divided into four directorates, namely, sanitation, administration and coordination, sanitation programme support, sanitation interdepartmental coordination and regional operations. The function was performed at both national level, through these four directorates, and provincial levels across all nine provinces at a sub-directorate level.

Turning to operational budget allocations, the total budget for the compensation of employees was R38.2 million and R52.5 million for goods and services. The total expenditure from 31 May 2014 until today (period of two months) was R6 million while the remaining budget as from 31 May 2014 was R85.3 million. For the capital budget allocation and specifically the Bucket Eradication Programme (BEP), there were ring fenced budgets per province based on the estimated use of buckets in that province with numbers provided by the various implementing agents. The total budget for BEP for 2014/15 was R899 177 million and R975 399 million for 2015/16. For 2014/15, the targeted delivery was 30, 000 units while for 2015/16 the target was 32, 500 units. During 2013/14, 28 146 toilets were delivered through RHIG and 6000 buckets were replaced up until 31 March 2014. For the RHIG allocation, the total allocation to provinces for 2014/15 was R113 124 million and R118 328 million in 2015/16. 3700 units were targeted in 2014/15 and 3900 until were targeted in 2015/16. 

Mr Balzer discussed the scope of the work of the NMOS implementation programme stating the establishment of the DPT was done to manage the work of the work streams and manage reports to the NPT, to manage the transfer of the sanitation function from the DHS to DWS. A review of the functional content of Department would be conducted to give effect to the new ministerial portfolio. Minister Mokonyane had also said the organisational structure would be looked at given the new Department of Water and Sanitation.

Turning to the progress on milestones of the various work streams, with the establishment of the DPT on 9 June 2014, six work streams were established with membership from both departments.
The progress made on the organisational scoping, staff audit and organisational design included an analysis of the function, organisational design, posts and staff audit and the transfer of posts and employees was underway. The identification of posts to be transferred had been done with 99 posts related to the sanitation function transferred from DHS and 67 of those posts filled. Employees would be transferred once the entire administrative process was completed. The audit of personnel files was currently underway under the guidance of the DPSA to ensure that no member of staff was negatively affected by this transfer of the sanitation function. With infrastructure and assets, an audit and analysis of the asset register was underway with the verification of assets to commence from 10 August 2014. The determination of office accommodation and parking requirements were underway as part of the transfer of assets.

Mr Balzer moved on the finance and budget noting the budget was as published in the Estimates of National Expenditure (ENE) document and discussions were underway to identify other related financial implications. With ICT systems, the purpose was to gather information on the ICT systems, audit and analyse the ICT assets to be ring fenced for transfer. An audit of ICT assets was in progress to cover data systems used, hardware, servers, laptops, desktops and any other assets used which would be ring fenced for transfer.

With legal and policy matters, a list of all contracts relating to sanitation services had been compiled and due diligence was being performed on these contracts. The draft transfer agreement had been completed and would be finalised for approval once all annexures and work streams were completed. This would then be signed off by both heads of department.

Looking at labour relations, change management and communication, the DPSA was managing the engagement with labour at a high level. At a departmental level, the general internal communication had gone out to all employees and consultation with labour through the bargaining chambers had been begun. There was also the Department’s own in-house communication and weekly bulletins.

Risks were identified but mitigation measures were put in place. The first risk noted was with NMOS and the transfer of staff along with function and budget. This would be mitigated by ensuring the staff transfer was smooth and the budget transfer was done with National Treasury and Programme Management in terms of BEP and RHIG carrying on in an unhindered seamless way while the transfer was happening. Another risk was the lack of an operation and maintenance budget. This could possibly impact through a backlog increase against increased delivery as the relationship was no inverse. This could mitigated by DWS and National Treasury considering the establishment an budget ring fenced for operation and maintenance. Meeting the universal target backlog was another risk. An increased population without adequate sanitation could impact a disease outbreak but this could be mitigated through water services authorities, Department of Cooperative Governance and Traditional Affairs and National Treasury ring fencing a sanitation budget within MIG. There was also engagement for a possible increased allocation. The last risk related to inadequate bulk infrastructure with the possible impact of waterborne sanitation to limited households and the contamination of water resources. Mitigation for this risk included increased budget allocation for bulk infrastructure.

In conclusion, Mr Balzer believed there was sufficient support and collaboration from the DPSA and National Treasury towards NMOS processes at the DPT and the NPT levels. Work-streams from both departments have sound working relationship and are implementing such joint work-stream plans that yield fruitful results on a regular basis this far.

Discussion
The Chairperson noted this was a straightforward briefing, administrative exercise and a legal requirement. The floor, however, was open for Members to raise any issues unless silence meant consent.

Ms M Khawula (EFF) felt the briefing was good and she was grateful the issue of human rights and clean water was emphasised. She requested the Committee and Department go to communities and see firsthand what was happening there. Infrastructure was important so why were some contractors being paid before the work was completed? Nonetheless, she was happy with the briefing and promised water services. 

Mr Balzer said in the case of such contractors, it would be useful to have reference to a specific municipality as this assisted the Department with following up the issue logically.

The Department official responded that specifics were needed. DWS’s implementation model, or modus operandi, was clear on Schedule Six, or indirect, grants with payments based on milestones reached. This would be accompanied by an assets register to be audited by the Auditor-General. There were some hiccups with some implementing agencies but the process worked out. The direct component of the grant was disbursed directly to municipalities with municipalities appointing the contactors and developers themselves. The Department held the municipalities accountable on a quarterly basis on performance and budget targets. A month ago the Department received a letter from the Minister of Finance cautioning the Department not to utilise government agencies as implementing agencies for BEPs or any other programmes for that matter. The risk was that some of the entities were not economically viable. Treasury would prefer that the Department go out and make use of market players for implementation. This meant improved procurement processes and the matter was being attended to in the work streams. The Department did not, however, pay contractors up front. 

An official from National Treasury clarified that the Select Committee on Appropriations, when passing the Division of Revenue Act, requested National Treasury ensure that public entities were not used in the implementation of indirect grants.

Mr M Shelembe (NFP) sought clarity on the transfer of sanitation and movement of staff to another Department. Looking at aging infrastructure and maintenance, infrastructure in some municipalities were very old so how would this be dealt with? He asked the Department to provide names of those districts affected by the bucket system instead of broadly naming provinces. He felt it would be better to know the exact towns affected. He knew collating this information would take time but it was needed for monitoring and oversight.
 
The Department official explained that bucket systems were broken down into two categories – one, buckets used in formal or established townships with the biggest use of the bucket systems in the province of the Free State, Northern Cape and Eastern Cape. In the last financial year, these provinces were prioritised in assistance with Treasury. Appropriately 88 000 buckets were used in these three provinces but the exact number would be provided to the Committee. The magnitude of the problem was in the second category of informal settlements. Here the Department was chasing a moving target with approximately 200 000 buckets used but again the exact figure would be provided.
Initially there was no earmarked or ring fenced budget for bucket eradication but instead funds came from the Municipal Capital Grant or managed as part of MIG or as part of the municipalities equitable share. The amount was significant the problem was that it did not get prioritised. The Department along with Treasury last year, agreed to top slice 5% of the R19 billion Housing Development Grant over two years. After two years, that money would go back into the Housing Development Grant. The intention of this was to prioritise BEPs in formal and informal townships. The public finance principle was clear that when functions were transferred, capital and operational budgets would have to follow.  

Ms J Maluleke (ANC) requested that projects in process were not stopped because of the movement of the function of sanitation.

Mr Balzer assured the Members that projects were not delayed as it was the Department’s aim to make the transfer process seamless.

Mr T Makondo (ANC) questioned the transfer of staff and the problem of retention when personnel were transferred from one department to another. DWA had this experience when it transferred staff from the Department to municipalities some three or four years ago. The problem was that some pensions and benefits had not beam transferred to municipalities. He urged the Department to have the proper mechanisms on the ground so that the transfer of functions did not hamper service delivery.

Mr Balzer said those issues were noted along with the experience highlighted.

Ms Z Balindlela (DA) appreciated the way in which the Department was handling the transfer but she highlighted the risk of meeting the universal target backlog in relation to the problem of funds being returned to Treasury from provinces. She wanted assurance that the MIG funds would be utilised and not be sent back to Treasury. With the issue of workers and the transfer of personnel, she was concerned about outstanding legal cases and if they would be completed. The DA wanted to know if the areas still using the bucket system could be made known. She heard about funds being sent back to DHS but the Department had not utilised it – could these funds not come back to DWS to be utilised?

Mr Blazer said the information on the bucket system would be made available to Members through the Committee’s Secretariat. Through the audit of the personnel files, he assured that disciplinary cases were in hand and would not fall through the cracks of the transition.

The National Treasury official explained that, in terms of the Division of Revenue Act, it was clear unspent grant allocations would be returned to Treasury unless the receiving officer could show the funds would be committed to identifiable projects, the money would be rolled over or re-appropriated. So when money came back to Treasury it was because the municipality could not show the funds were committed to identifiable projects.  

Mr L Basson (DA) noted there was discussion between the Department and Treasury for MIG funds to be utilised for old infrastructure bin places with high water losses. He felt the MIG funds could also be used for projects to replace old infrastructure. He sought a comment from the Department on this matter.  

Mr Balzer said old infrastructure was a risk but it would be mitigated through three levels – cooperative governance, delivery committee for Outcome nine and other committees. Operation and maintenance and refurbishment were included in the MIG allocations but this condition needed to be considered in other grant transfers. Further engagement on the matter would be held on the Medium Term Expenditure Framework (MTEF) discussions with Treasury. 

The National Treasury official explained the use of the MIG for rehabilitation, refurbishment and replacement of ailing infrastructure fell under capital funding or investment and MIG was a capital grant. One of the clauses of the MIG said that funds could be used for the replacement of infrastructure because, by nature, it was a capital investment. Operations and maintenance of infrastructure was a bit more complex as for low-income households, funds would come through the equitable share. However municipalities did not always prioritise the operation and maintenance of infrastructure. The Department, the South African Local Government Association (SALGA), the Financial and Fiscal Commission (FFC), the Presidency and COGTA were currently doing a review of local government infrastructure grants as this was a recurring theme. The outcome of the review would address these issues.

The Chairperson explained the Department’s briefing today was simply to explain the sanitation function transfer – this was the only purpose of the exercise – nothing more, nothing less. But Members would always use any opportunity to raise other issues, although very relevant. The timing of these questions posed was the issue in question. Department officials were always ready to answer questions of any Members. He pleaded with Members, given that the Department was present along with members of the public, to consider that sensitive issues around dignity were in question. He thought Members should be careful of highlighting party positions even though the matters were relevant. The issue on the agenda was simply the transfer of the function of sanitation, staff and budgets. Adverse impacts on staff needed to be looked at closely and monitored as time went by. Issues of Members were to be responded to but the time would come when these issues would need to be dealt with in length. It was also important in meetings of this nature to speak to the relevant issue instead of naming and shaming or making specific reference to contractors or companies as events did not happen in isolation but occurred in a pattern. Many of the matters raised would need further engagement at the level of the encompassing quarterly review. The sanitation unit in DHS would be present then as well.

The Chairperson said it was clear some issues would need to be returned to judging by the responses. On the important matter of planning, building of settlements were linked to water, sanitation, electricity etc and there were realities to consider when people put up settlements for whatever reason. The Committee was emphatic on the need for a very strong Department of Public Works and it could be necessary that the role of this Department be redefined. By right, the Department should come on board with implementation. During the 1960s and 1970s, Public Works was practically involved in all implementation. In the new democracy there were tenders and grades. These matters would be raised again in the quarterly review. A briefing by the Auditor-General would prepare the Committee for this review. This would take place in the second term. Grants and earmarked funds for municipalities would particularly be addressed and as part of the Committee’s oversight work, follow-ups would need to be made with COGTA.

The Chairperson thanked the Department’s team for the briefing. 

Adoption of Minutes
The Chairperson noted the Committee had an efficient administrative team who were on top of things.

The Chairperson took Members through the Minutes page by page 

Committee Minutes dated 9 July 2014 were adopted without amendments. 

Draft Committee Programme
The Chairperson noted this was the draft programme until 10 September 2014.

The Chairperson discussed issues relating to the programme as to issues to be discussed and oversight visits to undertake.

The meeting was adjourned.