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Updated Response on Budgetary Review and Recommendations Report

This report provides updates on governance, financial matters, and service delivery performance of the Department of Agriculture, Forestry, and Fisheries. Topics covered include filling of vacancies, integration of the Fisheries Management Branch, and progress on legislation.

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Updated Response on Budgetary Review and Recommendations Report

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  1. DEPARTMENT OF AGRICULTURE, FORESTRY AND FISHERIES UPDATED RESPONSE ON THE BUDGETARY REVIEW AND RECOMMENDATIONS REPORT7 June 2018

  2. TABLE OF CONTENTS GOVERNANCE AND OPERATIONAL MATTERS FINANCIAL MATTERS SERVICE DELIVERY PERFORMANCE ACRONYMS 2

  3. GOVERNANCE AND OPERATIONAL MATTERS

  4. Filling of vacancies Ensure that before the end of this financial year, vacant positions at Senior Management Service (SMS) level in the Department are filled including the Chief Executive Officer (CEO) positions at the Onderstepoort Biological Products (OBP) and the National Agricultural Marketing Council (NAMC); and also ensure the fast-tracking of disciplinary processes regarding the suspended Director General (DG) of the Department. Report on these matters in Parliament before the end of March 2018. RESPONSE • The National Treasury (NT) imposed ceilings for the first time in the 2016/17 Medium Term Expenditure Framework (MTEF) with significant cuts on the Compensation of Employees (COE) budget. • For the 2016/17 financial year, the cut was R69.736m; for the 2017/18 financial year R223.431m for the 2018/19 financial year, R258.607m. • The Minister of Agriculture, Forestry and Fisheries froze the filling of vacant positions and requested the Department to provide solutions to this challenge. • The Department then developed strategies to find practical solutions on how to manage the Compensation of Employment (COE) budget within the ceilings set by NT. 4

  5. Filling of vacancies (continuation) • The Department then decided on the following:- • a phased-in approach for the filling of critical vacant positions, depending on the availability of funds, and • that a business case to National Treasury be developed to secure additional funding to fill reprioritised vacant positions. • On the precautionary suspension of the Director General (DG), the North Gauteng High Court on 23 April 2018 found that the suspension of the DG was invalid and set it aside. • Mr Z Xalisa was appointed as the Chief Executive Officer (CEO) of the National Agricultural Marketing Council (NAMC) on 1 December 2017. • The interviews for the position of CEO of the Onderstepoort Biological Products (OBP) were held on 3 April 2018 and the OBP Board is to advise the Minister on the outcome of these interviews. 5

  6. Integration of the Fisheries Management Branch Submit to Parliament a progress report and an Action Plan on the full integration of the Fisheries Management Branch’s duplicate functions to the Department. It was previously reported in March 2016 that the integration will be finalised once an Accounting Officer (Director-General) is appointed and the DG was since appointed in June 2016. The progress report and Action Plan should be submitted to Parliament by the end of February 2018. RESPONSE • In 2015 the Department initiated a project aimed at examining the current organisational structure of the Department and make proposals on how it could be re-configured into an integrated whole and define a service delivery model to ensure that the mandate of the Department is met. • The expected outcome was full integration of the agriculture, forestry and fisheries functions that would eliminate duplications and structural inefficiencies. • A proposal to this effect was presented to the Minister in November/December 2015. 6

  7. Integration of the Fisheries Management Branch • Minister in response indicated that his view was that there would be greater efficiency and effectiveness if the Fisheries Branch (the Marine Living Resources Fund) became a fully-fledged public entity in terms of the Public Finance Management Act, 1999. • Minister indicated that he had instructed the Deputy Director-General responsible for Fisheries Management to approach the National Treasury to assist that branch do a cost benefit analysis of the model and advise accordingly taking into account that the Marine Living Resources Fund was already a Schedule 3 public entity in terms of the Public Finance Management Act (PFMA). • The establishment and reconfiguration of the Marine Living Resources Fund (MRF) has not been concluded. 7

  8. Legislation During each quarterly performance briefing for the 2017/18 financial year, provide progress reports on the processing of legislation such as the Preservation and Development of Agricultural Land Bill (PDALB), Aquaculture Bill, etc. and also submit a Legislative Review Programme to Parliament by the end of February 2018. RESPONSE Preservation and Development of Agricultural Land Bill • The Subdivision of Agricultural Land Act No. 70 of 1970 (SALA) is considered to be inadequate and was in fact repealed but the repeal did not come into effect. • It was decided that SALA be reviewed in order to better protect the preservation and development of agricultural land. Hence the development of PDALB. • In an effort to resolve the cross cutting mandates and other technical concepts, the Department established a task team in 2018 consisting of legal and technical experts to enable the legal and constitutional issues to be addressed. Inevitably these relate to the roles and responsibilities relating to the 3 spheres of government. • Cheadle Thompson and Haysom Attorneys (CTH Attorneys) was appointed to redraft the Bill and finalize it within 3 months. 8

  9. Legislation (continuation) • It is expected to provide the refined Bill on or before 29 June 2018. The refined Bill will undergo public consultation and the comments received from the public will be consolidated. • The Department envisages submitting the Bill through the parliamentary processes during 2019/20 financial year. Aquaculture Development Bill • The Department has extensively consulted relevant stakeholders throughout the drafting process and below is the summary of the consultation process. • The consultative process began with the publishing of the “Aquaculture Development Bill Concept Document” (the Concept document) which served to inform the first draft Aquaculture Development Bill. • The first draft of the Aquaculture Development Bill was generated after taking into consideration inputs received from the public participation process undertaken for the Concept Document. • The Department undertook the Socio-economic Impact Assessment (SEIA) process and received the sign-off form from the Department of Planning, Monitoring and Evaluation (DPME) on the 19th June 2016. • The Department generated the second draft of the Bill incorporating relevant inputs received during the Public Consultations Process.   9

  10. Legislation (continuation) • The third draft of the Aquaculture Development Bill incorporating inputs from the NEDLAC engagements and feedback from the Office of the Chief State Law Advisor (OCSLA’s) preliminary legal opinion was submitted to OCSLA for precertification on 19 July 2017. • The Bill was presented to the Economic Sector, Employment and Infrastructure Development (ESEID) Director-General’s Cluster meeting held on 18 January 2018 where it was supported for tabling before Cabinet. • The Bill was tabled before Cabinet on the 02 May 2018 by the Minister and the Cabinet recommended the Bill to go through to Parliament. • The Department will prioritise the Aquaculture Development Bill for this financial year 2018/19. 10

  11. Legislation (continuation) Agricultural Produce Agencies Amendment Bill • The consultative process began with the publishing of the first draft which served to inform stakeholders about the first draft of the Agricultural Produce Agencies Amendment Bill and invite public comments on the Bill. • The Department generated the second draft of the Bill incorporating relevant inputs received during the Public Consultations Process. • The Bill was presented to the Economic Sector, Employment and Infrastructure Development (ESEID) Director-General’s Cluster meeting held on 18 January 2018 where it was supported for tabling before Cabinet. • The Bill was submitted to the Minister requesting approval for tabling the Bill before Cabinet on 01 March 2018. 11

  12. Legislation (continuation) Perishable Products Export Control Bill • The Perishable Products Export Control Act, 1926 (Act No. 53 of 1926) was enacted to provide for the control of perishable products intended for export from South Africa and for matters connected therewith. • The main objective of the Act is to regulate the cold-chain. • On 15 March 2018, the Perishable Products Exports Control Bill was presented to the Economic Sector Employment and Infrastructure Development (ESEID) Cluster. • The ESEID cluster registered its satisfaction with the Bill and all processes followed in having the Bill ready for submission to Cabinet. 12

  13. Progress on PoliciesFinalisation of the Draft Policy on Comprehensive Producer Support and the Integrated Funding Development Support Policy Report on progress on the finalisation of the Draft Policy on Comprehensive Producer Support and the Integrated Funding Development Support Policy; the development of a National Policy on Mechanisation Support and the implementation of the Small-Scale Fisheries Policy by the end of February 2018. RESPONSE • Draft Policy on Comprehensive Producer Development Support The Policy on Comprehensive Producer Development Support has been developed and tabled at MINTECH, MINMEC and the Clusters and has been referred back for more consultation with National Departments and Stakeholders. • Integrated Funding Development Support Policy The Integrated Funding Development Support Policy is now included in the above Policy for uniformity- integrating Grants and Loans (Blended Finance). • The development of a National Policy on Mechanisation Support The development of a National Policy on Mechanisation Support Policy has been drafted and included within the Policy on Comprehensive Producer Development Support (CPDS). 13

  14. Progress on PoliciesFinalisation of the Draft Policy on Comprehensive Producer Support and the Integrated Funding Development Support Policy The development of a National Policy on Mechanisation Support • The development of a National Policy on Mechanisation Support Policy has been drafted within the Policy on Comprehensive Producer Development and Support (PCDPS) to address the following: • Poor and uncoordinated services to smallholder and subsistence producers; and • Guide the mechanisation support amongst provinces and advise on acceptable service standards through tariffs and equipment suitability. 14

  15. Progress on Policies…Small-Scale Fisheries Policy Implementation of the Small-Scale Fisheries Policy: 2017/18 • The final list of successful small-scale fishers for Northern Cape was approved by the Minister and this has been announced to the respective communities in the Northern Cape in November 2017. • Training of co-operatives was undertaken in February 2018. Appellants have been assisted with appeals, and receipting was successfully closed in Eastern Cape and KwaZulu-Natal. • Appeals assessment and quality control thereof for the Eastern Cape and KwaZulu-Natal communities have been completed successfully. • Submissions of the final list of successful small-scale fishers for Eastern Cape and KwaZulu-Natal communities have been approved by the Minister in February 2018. • The quality control of the appeals assessment for the Western Cape communities was also completed in April 2018. Tip-off information provided for Western Cape fishers were followed-up on. • Small-scale fisheries co-operative constitution template was completed in 2017. Training material on small-scale fisheries co-operative has been developed and finalised in October 2017. 15

  16. Deregistration of Ncera Fast-track the deregistration of Ncera and the transfer of the Centre to the Agricultural Research Council (ARC) before the end of this financial year. Report on progress to Parliament including action taken regarding the improper salary increase for the entity’s CEO by the end of February 2018. RESPONSE • The transfer of Ncera has been concluded. • The final documents for the 2017/2018 audit are being prepared and the final annual report for 2017/2018 is being finalised. • The Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of Ncera have been transferred to DAFF. • The disciplinary matters emanating from the improper salary increase are being pursued. 16

  17. Restructuring of the Policy, Planning, Performance Monitoring and Evaluation Unit The Policy, Planning, Performance Monitoring and Evaluation Unit of the Department should be restructured to ensure its effective functioning and the Department should submit to Parliament the reviewed full Organogram of the Department inclusive of all levels not just the Senior Management Service (SMS) level, to show alignment with the Department’s mandate and strategic goals, before the end of February 2018. RESPONSE • A work study investigation was conducted by the Organisation Development Committee (ODC) of DAFF in terms of repositioning and capacitating the Department’s Policy, Planning and Monitoring and Evaluation Branch to ensure effective and efficient institutional monitoring and evaluation. • The investigation report has been finalised with pertinent recommendations for consideration. 17

  18. Implementation of Audit Action Plans to form part of the DG, DDGs and CEOs performance agreements Ensure that the implementation of the Department and the Entities’ Audit Action Plans forms part of the DG and DDGs as well as CEOs’ performance agreements by the end of November 2017. Report on progress to Parliament by the end of March 2018. RESPONSE • The Minister has directed that with effect from 1 April 2018 the performance of all senior managers in the Public Service will be administered in terms of the centrally determined system for performance management and development that will have mandatory dimensions as indicated below. • The outcome of the AGs audit is included in the performance agreements of all Senior Managers and CEOs of the Entities. 18

  19. FINANCIAL MATTERS 19

  20. Audit Matrix and Audit Action Plan Ensure that the Department and its Entities engage regularly and timeously with the Auditor-General of South Africa (AGSA) on all audit findings. In addition, during each Quarterly Report briefing, ensure that the Department present progress on the implementation of its Audit Action Plan and those of Entities to address audit queries, root causes as highlighted and previous findings by the AG for both the Department and its Entities. Additionally, the Audit Plans should include consequence management. Report on progress to Parliament, every Quarter. RESPONSE • DAFF prepared an Audit Matrix in order to keep track of all the audit findings. • The audit matrix included the action plans to be taken and monitoring the implementation thereof. On a quarterly basis DAFF is presenting the progress on the audit matrix to the Audit Committee of the Department. • DAFF has also presented the progress on its audit matrix to the Portfolio Committee on Agriculture, Forestry and Fisheries on 30 January 2018. DAFF Internal Audit also performed an audit on the progress of the audit matrix and has issued a report on 15 May 2018. 20

  21. Audit Matrix and Audit Action Plan (continuation) • Twenty-one audit findings have been raised in the 2017/18 AG Interim Management Report that is in various stages of being resolved. • The following attachments are included in the report:- • Audit Matrix for 2016/17 • Audit Matrix 2017/18 • Internal Audit Report 21

  22. Business case presented to National Treasury Ensure that the Department develops a strong business case that will be presented to the National Treasury for additional funding, highlighting the impact of the budget cuts to the sector (including the role of Entities) that has been identified in the National Development Plan and the New Growth Path as one of the key sectors through which increased employment and poverty alleviation can be achieved. In this regard, the negative impact of the budgetary cuts to the ARC in particular, should be highlighted including its role in sector development and in addressing sectoral challenges through research. The Department should report on the submission to Parliament by the end of January 2018. RESPONSE • For the past three years, DAFF has been requesting for additional funding at National Treasury, National Treasury consistently said that there is no new money. • In the 2017/18 Medium Term Expenditure Framework (MTEF) allocations DAFF received additional funding as follows: • Land Bank – commercialisation of black producers– R100 million; • Developing and Agricultural Census – R90 million; • Extended Public Works Programme (EPWP) – Working for Fisheries – R9,872 million; and • Import- Export System – R25 million. 22

  23. The DAFF increasingly experienced difficulty to deliver on its regulatory mandate specifically with respect to Programme 2: Agricultural Production, Health and Food Safety. • In view of the critical service delivery of Programme 2 that impacts on the country and the sector and also due to National Treasury not having new money; DAFF decided that Programme 2 has to be prioritised in terms of allocation of resources over the 2018/19 MTEF. • In its 2018 MTEF submission to National Treasury, DAFF motivated additional funding to the total amount of R2,793 billion over the 2018/19 MTEF for critical services in Programme 2. • The National Treasury only allocated an additional amount of R120 million over the MTEF for critical services in Programme 2. 23

  24. Progress on the monitoring of Conditional Grants During each Quarterly Report briefing for 2017/18, submit and present a progress report on the monitoring of conditional grants, which get more than two thirds of the Department’ budget. The Department should regularly report on the Comprehensive Agricultural Support Programme (CASP) grant in particular as it has put aside R60 million for the MTEF period ending in 2018/19 for its monitoring. This should be indicated during every Quarterly and Annual briefing to Parliament. RESPONSE • The R60 million received from National Treasury (NT) was ring-fenced to strengthen Comprehensive Agricultural Support Programme (CASP) management, oversight and monitoring. • This was allocated as follows: R10 million in 2016/17; R20 million in 2017/18 and R30 million in 2018/19. • The Food Security and Agrarian Reform (FSAR) Branch has ensured that the programme management and oversight role of CASP office is strengthened and has identified key positions to be filled. 24

  25. Progress on the monitoring of Conditional Grants (continuation) • This means that the structure although falling within the DAFF budget, must be approved and positions advertised or reorganization happens internally. • As at the end of September 2017, 314 of the 468 planned projects were initiated (67%) with 39 CASP projects completed. The 3rd quarter reports are due 31 January 2018. DAFF has conducted monitoring visits to all nine provinces as at end December 2017; visiting 96 projects. • As at end of March 2018, 159 projects of the 314 implemented projects were monitored (51%) by DAFF. A quarter one and two performance review meeting was held during 8 – 10 November 2017 hosted by the Limpopo Province and three implemented projects were visited during the visit by all delegates to share lessons and provide constructive criticism to improve performance. • Similarly the quarter three and four performance review meeting was held in the Eastern Cape Province with all provinces. 25

  26. SERVICE DELIVERY PERFORMANCE 26

  27. Alignment and contribution to the specific MTSF targets During each Quarterly and Annual Report briefing, the Department’s Report and Plans should clearly show alignment and contribution to the specific MTSF targets to which the Ministry of Agriculture, Forestry and Fisheries contributes. Currently this is not the case as there are MTSF targets that the Department is not reporting on. In addition, the Department and Entities’ Annual and Strategic Plans should show impact of each funded target and intervention. This should be indicated during every Quarterly and Annual briefing to Parliament. RESPONSE • Based on the advice of the Portfolio Committee on Agriculture, Forestry and Fisheries, DAFF has since 2017/18 been reporting on the performance of the Agriculture, Forestry and Fisheries sector against the Medium Term Strategic Framework (MTSF) targets. • Such reporting has been part of all the Quarterly reporting information reports submitted to the Portfolio Committee and DPME. • The submitted 2017/18 quarterly performance reports may still be accessed by the Portfolio Committee for reference in this regard. 27

  28. The alignment of the activities of the Department with its Entities Submit to Parliament a Plan that clearly shows the alignment of the activities of the Department with its Entities to prevent and/or minimise duplication including funding arrangements for effective budgetary use. As an example, the alignment of DAFF and NAMC’s activities in respect of market access for all producers. NAMC reported that it is partnering with DAFF among others, in the AGRIBIZ for Women and Making Markets Matter capacity building programmes; and the alignment of activities between the NAMC, DAFF and the ARC in terms of the National Red Meat Development Programme and the Vineyard Development Scheme. Submit the Plan to Parliament by the end of February 2018. RESPONSE • To ensure alignment of work between DAFF and its Public Entities, the CEOs of all Public Entities are invited to DAFFs premier sector planning session which takes place around June of each year. • From such planning where the CEOs participate actively, we emerge with a collective document entitled Sector Priorities and High Level deliverables (for the ensuing financial year). 28

  29. The alignment of the activities of the Department with its Entities (continuation) • This document is used by DAFF, Provinces and Public Entities, including the Private Sector as a guide to develop their respect Annual Performance Plans (APPs). Over and above this, on an annual basis, the DAFF planning team gets invited to all the respective Strategic Planning sessions of the Public Entities. • The DAFF planning team participates actively in such strategic planning sessions of the entities. It becomes important for DAFF’s Planning session to participate in such because it is from such strategic planning sessions that the Entities will develop their Annual Performance Plans for the ensuing financial year. • Furthermore, once the Entities have finalised the 1st draft of the APP, they are sent to DAFF’s Planning section for inputs and validation. Such drafts are sent back to respective entities with DAFF’s written inputs where corrections need to be made. It is in this way that alignment of work between DAFF and Public Entities is ensured. 29

  30. The alignment of the activities of the Department with its Entities (continuation) • From such planning where the CEOs participate actively, we emerge with a collective document entitled Sector Priorities and High Level deliverables (for the ensuing financial year). • This document is used by DAFF, Provinces and Public Entities, including the Private Sector as a guide to develop the respective APPs. • Over and above this, on an annual basis, the DAFF planning team gets invited to all the respective Strategic Planning sessions of the Public Entities. • The DG has further approved that signed Shareholder Compact Agreements between the Minister of Agriculture, Forestry and Fisheries and its Public Entities be finalised for the 2019/20 financial year which will specify the Minister’s expectations in terms of service delivery. 30

  31. Funding arrangements for Operation Phakisa for Agriculture, Land Reform and Rural Development Submit and present to Parliament in collaboration with the DRDLR, the implementation plan including funding arrangements for Operation Phakisa for Agriculture, Land Reform and Rural Development, by the end of January 2018. RESPONSE • The Department of Agriculture, Forestry and Fisheries (DAFF) along with the Department of Rural Development and Land Reform (DRDLR), and the Department of Planning, Monitoring and Evaluation (DPME) hosted a five-week planning process known as the Operation Phakisa Lab for Agriculture, Land Reform and Rural Development. The purpose of hosting this Phakisa was to strengthen our understanding of what impedes inclusive growth and the long term patterns of job loss in the sector. 31

  32. Funding arrangements for Operation Phakisa for Agriculture, Land Reform and Rural Development (continuation) • This problem analysis led to the identification of twenty-seven (27) initiatives across seven (7) work streams, namely: • Land Reform • Rural Development • Livestock • Horticulture • Grains • Producer support, and • Labour • Each of the twenty-seven (27) initiatives has implementation plans known as three (3) feet plans in Phakisa terms. • Currently there are thirty three (33) activities that are on track or completed; nine (9) that are behind schedule, and four (4) with critical challenges. These challenges include a lack of funding and/or poor stakeholder buy-in. The details below provide an up to date report per work stream. 32

  33. Addressing the challenges on the utilisation of Conditional Grants Submit and present to Parliament an Action Plan on how the Department is addressing challenges associated with the utilisation of conditional grants by provinces including timeous validation of performance information to ensure its reliability. Submit to Parliament by the end of January 2018. RESPONSE • As per the CASP Monitoring Framework, monitoring visits were conducted by DAFF as per the monitoring schedule. • Monthly financial expenditure reports are submitted by Provinces and reviewed against planned projects by the National Department. • Quarterly Review meetings are being held where Provinces present the performance of the Quarter against approved Plans and provide reasons for any variation. • Furthermore, the Planning and Monitoring and Evaluation Unit on a quarterly basis physically visiting CASP/Ilima-Letsima projects on the ground for verification purposes. 33

  34. ACRONYMS AG - Auditor-General ARC - Agricultural Research Council AGSA - Auditor-General of South Africa APP - Annual Performance Plan CASP - Comprehensive Agricultural Support Programme CEO - Chief Executive Officer COE - Compensation of Employees CPDS - Comprehensive Producer Development Support CTH - Cheadle Thompson and Haysom DG - Director-General DDG - Deputy Director-General DAFF - Department of Agriculture, Forestry and Fisheries DPME - Department of Planning, Monitoring and Evaluation DRDLR - Department of Rural Development and Land Reform EPWP - Extended Public Works Programme ESEID - Economic Sector Employment and Infrastructure Development 34

  35. ACRONYMS (continuation) MTEF - Medium Term Expenditure Framework MINTECH - Ministerial Technical Committee MINMEC - Minister with Members of the Provincial Executive Council MLRF - Marine Living Resources Fund MTSF - Medium Term Strategic Framework NT - National Treasury NAMC - National Agricultural Marketing Council OBP - Onderstepoort Biological Products ODC - Organisational Development Committee OCSLA - Office of the Chief State Law Advisor PPECB - Perishable Products Export Control Board PFMA - Public Finance Management Act PDALB - Preservation and Development of Agricultural Land Bill SALA - Subdivision of Agricultural Land SEIAS - Socio-Economic Impact Assessment System SMS - Senior Management Service 35

  36. Thank you

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