WATER AFFAIRS AND FORESTRY
WATERWESE EN BOSBOU
METSI LE DIKGWA
ZAMANZI NEZAMAHLATHI

REVIEW OF BUDGET
2003/2004
PORTFOLIO COMMITTEE

BUDGET REVIEW 2003/2004
Department of Water Affairs and Forestry


Main functional areas

The Department of Water Affairs and Forestry has three main functional areas: water resources management, water services (previously called community water supply and sanitation) and forestry. A brief description of each of these areas is given below.

1.1 Water Resource Management

The Water Resource Management function ensures that the countryís water resources are protected, used, developed, conserved, managed and controlled, in a sustainable and equitable manner for the benefit of all people.

Water Resource Management ensures the long-term availability of water in sufficient quantity and of appropriate quality to support South Africa's social and economic development needs and to meet international water-sharing agreements, by, among other things, implementing an equitable water-use authorisation system and measures to protect water resources, and establishing effective and representative water management institutions.

1.2 Water Services

The Water Service function ensures that effective, efficient, sustainable, and affordable water and sanitation services are provided to the people of South Africa, as well as economic users.

Water Services provide adequate water services to the people of South Africa, including additional basic water supply to 1 million people and basic sanitation to 300 000 households.

1.4 Forestry

The Forestry function promotes the conservation, commercial and community uses of plantation and indigenous forests to achieve optimal social and economic benefit, and promote rural development through policy development, regulation, facilitation, and monitoring and evaluation.

Forestry ensure the sustainable management of all forests, and transfer ownership of state-owned and/or management of forests to appropriate agencies within 10 years.

Programme Developments: 2003/2004

During the 2002/03 financial year the Department went through a process to restructure the programme structure to bring it in line with the main functional areas. The budget structure of the Department is now divided into four programmes on the exchequer account and two trading accounts namely the Water and the Equipment Trading Account.

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Expenditure 2002/2003

The 2002/2003 expenditure is shown in Table 1, where the allocation for the three different functional areas as well as the support function are indicated. Although the Adjustment Estimates have been made, it is expected that further minor adjustments will still be made when the books are finally closed at the end of the financial year.

TABLE 1: Expenditure 2002/2003 (Amounts in million)


Functional
Area

Adjusted Appropriation
Voted
2002/03

Expected
expenditure
2002/03

Deviation



Administration

Water Resources
Water Services
Forestry

Rí000

225 917
1 161 485
1 974 155
401 134

Rí000

224 733
1 157 182
1 957 550
400 981

Rí000

1 184
4 303
16 605
153

Total

3 762 691

3 740 446

22 245


Apart from the Exchequer Account, the Department also operates two trading accounts, the Water Trading Account and the Equipment Trading Account. In these trading accounts expenditure is offset against revenue and in the case of a deficit, augmentation is made from the Exchequer Account. Information on expenditure and revenue at financial year end is given below:

2002/2003 Budget (R million)
Trading Account Expenditure Revenue Deficit/Surplus

Equipment 31 917 49 077 17 160
Water 2 933 271 1 838 601 (1 094 670)

The Department has transferred the water services projects from the former administrations into the Water Trading Account. Currently cost recovery on these schemes is very low and this is the reason for the deficit shown above.

Budget 2002/2003 to 2005/2006

The Medium Term Expenditure Framework (MTEF) Budgetary allocation for the three years for the three main functional areas and administration (which is considered as an overhead) is given in Table 2. For convenience the 2002/2003 allocation is also shown. A more detailed breakdown per budget programme is given in Table 3.

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TABLE 2: Exchequer Account: Budget 2003/04 to 2005/2006

Functional area

2002/2003

2003/2004

2004/2005

2005/2006



Administration

Water Resources
Water Services
Forestry

Rí000

225 917
1 161 485
1 974 155
401 134

Rí000

237 071
1 056 113
2 439 722
353 637

Rí000

251 129
768 061
2 287 241
347 935

Rí000

267 210
827 376
2 487 539
371 410

Total

3 762 691

4 086 543

3 654 366

3 953 535

Percentage (%) change from previous year



8í6


(10,58)


8,19


Reasons for significant changes from 2002/2003 to 2003/2004 in the various functional divisions are given below. Inflation and improvements of service conditions account for much of the increases.

Programme 1: Administration: Increase R11,154 million

The allocation to Administration increases by 5,7 per cent a year over the medium term, having grown by an average of 7,3 per cent a year between 1999/00 and 2002/03. The increase reflects the increase in the costs of IT management and restructuring.

Programme 2: Water Resources Management: Decrease R105,372 million

Expenditure on Water Resources Management increases by about 28 per cent between 1999/00 and 2002/03 as a result of the implementation of National Water Act, particularly in relation to resource information management, licensing, improving water quality and building water resources (in partnership with neighbouring states like Swaziland). However, expenditure on this programme will decrease by about 9 per cent in 2003/04 and by 27 per cent in 2004/05 as the poverty relief allocations for Working for Water will cease to exist pending the review of the entire poverty relief programme.

Programme 3: Water Services: Increase R465,567 million

Expenditure between 1999/00 and 2002/03 on Water Services has increased by about 7 per cent, driven by the urgency to eradicate the backlog in basic water services, and especially the need to speed up the delivery of basic sanitation. Expenditure will increase by about 24 per cent in 2003/04 due to the refurbishment of water schemes to be transferred to local authorities, and the acceleration of the delivery of sanitation and basic services. In terms of government policy, the capital grant should be transferred to Department of Provincial and Local Government in 2004/05.

Programme 4: Forestry: Decrease R47,497 million

The allocation to Forestry will decrease by an average of 2,2 per cent a year over the medium term as state-owned forestry assets are restructured.

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In 2002/03 the Industrial Plantations Trading Account ceased to operate, and the costs of managing state-owned forestry enterprises were brought onto the budget. Spending is expected to decrease over the MTEF period, but due to the human resource costs involved in of restructuring (VSPís etc.) it increased during 2001/02. There has also been a shift in expenditure towards community and indigenous forestry management to compensate for past underfunding, and to cover the costs of staff redeployed to these functions.

Geographic distribution

The geographic distribution per Province of the Departmentís budget andWater Trading Account is shown in Table 3 below.