PROGRESS IN THE ESTABLISHMENT OF CMAS Task team on financial arrangements 31MAY 2013

1. PROGRESS IN THE ESTABLISHMENT OF CMASTask team on financial arrangements 31MAY 2013

2. OBJECTIVE • The responsibility of the task team is to provide what financial support and financial arrangement are required for the viability and sustainability for CMAs. • This task team will look into holistic viability of CMAs • To guide the development and implementation of the internal controls and financial management systems

3. Term of Reference • Alignment with all three task teams to ensure budget, functions and systems and inform the institutional business model • Co-chaired by CFO Main Account and Act CFO WTE • Task team makes recommendation to the NSC which then submits it to Top Management for approval

5. Road Map Task Team established 14 May TOR Agree on functions of task team Revised TOR and members Presentation on CMA viability study Presentation realignment of main and WTE Critical success factors enablers Policy recommendation agreed Alignment to all task teams Input to business case SLA/MOA Support implementation Discussion with NT

6. Policy Recommendations • Establishment Grant • An establishment grant needs be provided for CMA set-up and operation for first three years of its organisational development. • Responsibility for collecting charges should be delegated to the CMA within first 18 months or sooner • Requires resolution for: • the responsibility for billing those water users supplied from schemes, resolving the line items for the infrastructure charges and WRM charges; and • the specifications and requirements of the registration (WARMS) and billing systems that can or must be used by the CMA. Policy Recommendations

7. Policy Recommendations • Operating Subsidy • An operating subsidy should be defined for ongoing CMA support (motivated primarily by CMA public interest mandate and user affordability), to be linked to the CMA business planning process: • requiring final policy clarity on CMA functions and their allocation to user benefit or public interest. • The Pricing Strategy review should clearly address the issues of institutional viability for WRM charges, considering the way in which costs are allocated to users, including: • the issue of capping, • the effective collection of charges from waste dischargers, • a single charge for all user groups and catchments in a CMA jurisdiction, and • definition of function costs to be collected from different users or fiscally supported. Policy Recommendations

8. Policy Recommendations • CMA business planning and reporting requirements should be defined to dictate rules to: • CMA budgeting, linked to imperatives, functions and revenue, • establishing water use revenue targets for the CMA in line with the Pricing Strategy, • motivating financial support through CMA business planning, and • ensuring responsible financial governance and controls of public funds. Policy Recommendations

9. NEXT STEPS • Regional Coordination to identify which Regions to be members task teams • Finalise WRM functions in pricing strategy: Main or WTE to be consistent between all the Regions • Agree on which functions are for public interest • Financial support and financial arrangement • Presentation to National Treasury • Complete business institutional model • Regional Steering Committee meetings to inform stakeholders of progress. • Include Regional communication strategy