Chairperson, hon Minister, hon Deputy Minister and hon members, I am honoured and deeply humbled by this opportunity to address the House and support the Budget Vote of the Department of Water and Environmental Affairs.
Since 1994, water has been included in discussion and policy documents, laws, regulations and programmes to meet the realities of the South African landscape. This process has entailed the instantaneous addressing of inequities for long-term outcomes and the setting up of water regulatory governance mechanisms.
Prior to 1994, an estimated 30% to 40% of South Africa's population was without adequate water supply services and some 21 million people were without adequate sanitation. Furthermore, in rural areas that had access to the supply of drinking water, the quality was often poor and that water could not be considered safe.
The water services sector has received significant government attention. The introduction of a new municipal system, new water policies and legislation, and a new financial framework have resulted in landmark changes in the approach to water service delivery in South Africa.
The institutional framework for the provision of water and sanitation services in South Africa involves many different players. These include the Department of Water and Environmental Affairs, catchment management agencies, water service authorities, water service providers and water boards. The key players in this diversity of institutions - considering both the scale of provision and the type of service provider - are the water boards.
Although water boards play a critical role in the water sector, they are somewhat of an anomaly within the institutional framework. Tensions arise from this dual accountability and these need to be addressed. I say this because the dissonance that emerges is in the law. A review of the legislation is critical in respect of any contradiction between the Water Services Act, Act 108 of 1997 and section 78 of the Local Government: Municipal Structures Act, Act 117 of 1998. This needs further interrogation.
The functions of the water boards involve operating dams and providing bulk water supply, infrastructure, some retail infrastructure and some waste water systems. Some also provide technical assistance to municipalities.
The portfolio committee's engagement with water boards from 2005 to date reflects a number of major recurrent challenges, namely the critical issue of operations, maintenance and infrastructure development; water quality issues; the need for updated technology due to the treatment required for the purification of water of increasingly poor quality; the failure of debt collection in weaker water boards, which affects viability; poor municipalities using their equitable share for other purposes, even after water services are provided; staff retention and skills shortages; the poor relationship between water boards and municipalities; and the outstanding debt owed to water boards by some municipalities. However, the municipalities, an important client of the water boards, face the challenge of ensuring the sustainability and achievement of the water boards. This has an impact on the workings of the water boards.
Some of the underlying causes of incompetent service delivery in municipalities can be identified as the following. Many municipalities are not served by any water board and many do not have the means or skills to increase their sources of supply. This limits the municipalities' ability to respond to demand for additional water and improved service levels. There are significant skills gaps in many municipalities. The poor state of wastewater treatment in many municipalities poses severe risks to the health of people downstream and to the natural environment.
According to the Departments of Water Affairs and Environmental Affairs as well as Forestry, the 2012 scorecard for the water boards' performance is generally satisfactory and their level of compliance is improving. However, underspending in the last financial year and debt owed by municipalities pose problems. Nevertheless, the department has created a new database to record performance, and it has drafted norms and standards.
I applaud the department for working through these issues, but for water boards to provide efficient water services and play a critical role in the water supply chain, the following require attention. The department must clarify the roles and responsibilities of the water boards in respect of governance and oversight. The performance contracts of the chief executive officers and chief financial officers of the water boards should be reviewed on an annual basis to address gaps and weaknesses in their operations. The department should also prioritise assistance to the ailing water boards and municipalities so that service level agreements can be drafted.
There is a marked absence of any formal economic regulation of water tariffs throughout the water cost chain. Self-regulation is evident in a number of instances but no formal economic regulatory function exists in any part of the water sector.
Regarding water tariffs, the department, together with the water boards, need to do the following. They need to take responsibility for debt resolution. The tariffs of water boards need to be structured in a way that makes it possible to recover operations and maintenance costs. They must ensure that assets are maintained and rehabilitated. Financing for capital expansion is critical for water boards that are operating "on the margins". Lastly, and most importantly, the sector needs leadership from the Department of Water and Environmental Affairs, particularly on the pricing strategy review, institutional realignment and reform, and legislative review.
It is important to highlight the challenges, but also to highlight the concomitant opportunities in the water sector to create synergy, balance and improved institutions to ensure service delivery to citizens in this country.
Some of the current challenges that confront the water sector in South Africa are the following. Improved water demand management is no longer considered a possible option, but rather a necessity that must be implemented as a matter of urgency. The municipal sector is the fastest- growing area of demand and it is becoming imperative that leaks, losses, inefficient use and poor revenue management are addressed. [Applause.] It should be noted that Salga outlined six recommendations for the water boards in its recent presentation to our portfolio committee.
In conclusion, I wish to urge that we as a country should place emphasis on the need for institutional capacity building in the form of water boards, their relationship with municipalities and, critically, the need to rebuild institutions such as water boards and municipalities rather than beginning a process of restructuring. As part of its approach to addressing the water sector challenges at all levels, the department established a business re- engineering committee, which is engaging on these issues. I wish the department well in this process. The ANC supports the Budget Vote. [Applause.]