1 Presentation to the Portfolio Committee on Water Affairs and Forestry and Select Committee on Land and Environmental Affairs 2005 Department of Water Affairs and Forestry VOTE 34

2 Department of Water Affairs and Forestry 2005/06 Total Expenditure

3 DWAF Allocation for 2005/06 R 272 million R1 507 million R1 405 million R 373 million R 937 millio n Augmentation to Trading Account Admin R 550 millio n WRM Water Services Forestry WRM Total Exchequer Allocation R3 557 million

4 Department of Water Affairs and Forestry 2005/06 Exchequer Account per Economic classification

5 Department of Water Affairs and Forestry 2005/06 Exchequer Account per Programme

6 Department of Water Affairs and Forestry Expenditure Trend for the period 2001/02 – 2007/08

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9 Department of Water Affairs and Forestry Expenditure Provincial Distribution of the 2005/06 Budget PROGRAMMESENE NON - ALLOCATA BLENWWCECNCLIMPMPFSKZNGP R'000 Administration272,491 Water Resource Management956,672780,2456,15028,39839,5559,23741,46513, ,32311,424 Water Services:467,641198,14616,9863,19377,4255,518129,18515, ,3134,177 Water services Projects 9,4821,18956,1072,55093,68011, , Other Services 198,1467,5042,00421,3182,96835,5053, ,8684,077 Forestry373,18938,2414,2163,360192,5762,38040,0878, ,0891,035 Total2,069,9931,289,12327,35234,951309,55617,135210,73736,88216,896110,72516,636 Water Trading Account4,103, ,831296,619216,672101,598580,496423,708180,559153,480 1,994,434 Total Spending6,173,3901,289,123183,183331,570526,228118,733791,233460,590197,455264,205 2,011,070 ENE = Estimates of National Expenditure NW = North West WC = Western Cape EC = Eastern Cape NC = Northern Cape LIMP = Limpopo MP = Mpumalanga FS = Free State KZN = Kwazulu Natal GP = Gauteng

10 Trading Account Is different to the Exchequer account Is different to the Exchequer account Consists of 4 Trading Entities (Accounts) Consists of 4 Trading Entities (Accounts) Trading Accounts intended to generate REVENUE Trading Accounts intended to generate REVENUE Poor revenue generation requires AUGMENTATION from the National WRM and WS allocations Poor revenue generation requires AUGMENTATION from the National WRM and WS allocations Revenue + Augmentation = Total Trading Budget Revenue + Augmentation = Total Trading Budget

11 Department of Water Affairs and Forestry 2005/06 Trading Account:R Million

12 Trading Account Allocation: Water Resource Management R3 166 million R 633 million R million R 206 million Integrated Catchment Management Integrated Systems Bulk Water Supply Expenditure Augmentation R 550 million Revenue Estimate R million

13 Trading Account Allocation:Water Services R937 million Subsidy (DORA) R 937 million Million

14 Trading Account Detail

15 Department of Water Affairs and Forestry 2005/06 Expenditure Trend

16 Department of Water Affairs and Forestry 2005/06 Main Functions Administration Administration provides financial, human resources, information and management services, and general administrative support to the department

17 Department of Water Affairs and Forestry 2005/06 Expenditure Trends: Administration

18 Department of Water Affairs and Forestry 2005/06 Expenditure Trend: Administration Expenditure on Administration increased steadily over the last four years, rising from R211,4 million in 2001/02 to R282,0 million in 2004/05, an annual average increase of 10,1 per cent. It is expected to fall slightly in 2005/06, and then continue to increase steadily, reaching R303,3 million in 2007/08. Much of the increase is to cover the costs of transferring of water service operations to local government. These costs include the personnel costs associated with the transfer, and not just the direct operational costs of the transfers as well as the accompanying restructuring costs.

19 Department of Water Affairs and Forestry 2005/06 Main Functions Water Resource Management Ensure that the country’s water resources are protected, used, developed, conserved, managed and controlled in a sustainable and equitable manner for the benefit of all people

20 Department of Water Affairs and Forestry 2005/06 Expenditure Trends: Water Resource Management

21 Department of Water Affairs and Forestry 2005/06 Expenditure Trends: Water Resource Management Expenditure increased rapidly from 2001/02, rising from R904,5 million to R1,6 billion in 2004/05. The increase in 2004/05 was mainly as a result of the increase in expenditure on the Operations of Water Resources (Augmentation of the Water Trading account). For 2004/05 will decrease to R1,506 billion and will then increase to an expected R2,1 billion in 2007/08. The future increases will finance the operations and maintenance of infrastructure, and the Working for Water programme. The Sustainable supply sub programme sees particularly rapid increases, rising from R344,4 million in 2005/06 to an expected R473,8 million and R624,1 million for the 2006/07 and 2007/08 financial years. The increase in 2006/07 and 2007/08 is as a result of additional amounts of R150 million and R350 million which was allocated to the Department for Dam Safety.

22 Department of Water Affairs and Forestry 2005/06 Main Functions Water Services Ensure that all people living in South Africa have access to adequate, safe, appropriate and affordable water and sanitation services, use water wisely and practice safe sanitation

23 Department of Water Affairs and Forestry 2005/06 Expenditure Trend: Water Services

24 Department of Water Affairs and Forestry 2005/06 Expenditure Trends: Water Services Expenditure rose from R1.932 billion in 2001/02 to R2,4 billion in 2003/04, as investment in infrastructure and the support of water services operations increased. Expenditure fell sharply in 2004/05, with the transfer of the expenditure on new water and sanitation projects to the municipal infrastructure grant. As a result of this total expenditure of this programme will decrease to R1,405 billion in 2005/06 and R1,343 billion in 2006/07 but will then increase to R1,413 billion in 2007/08. This increase is mainly due to the increase in the expenditure in respect of the augmentation of the Water Service Trading account (Subsidising of Water Services).

25 Department of Water Affairs and Forestry 2005/06 Main Functions Forestry Promote the conservation of plantation and indigenous forests, and their commercial and community use, to achieve optimal social and economic benefits. Promote rural development through policy development, regulation, facilitation, monitoring and evaluation

26 Department of Water Affairs and Forestry 2005/06 Expenditure Trends: Forestry

27 Department of Water Affairs and Forestry 2005/06 Expenditure Trends: Forestry Expenditure on the Forestry programme is focused on the commercial and indigenous forests that are under the department’s control. The strategy is for these to be transferred out of the department at which point the budget will be transferred to new managers. Expenditure has been relatively constant with savings from transfer balanced by increased spending on restructuring. The industrial plantation trading account cease to operate in 2002/03 and revenue was transferred to National Treasury. This revenue was reassigned to cover ongoing operating costs for the Mpumalanga commercial forests.