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Presentation to the Joint Budget Committeeon the 2007 Medium Term Budget Policy Statement

02 November 2007

Ms Cathy MotsisiActing Chief Financial Officer

Department Department

of of

Land AffairsLand Affairs

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ContentsContents

• Purpose• Expenditure Trends and Audit outcomes for 2006/07• Mandate & Medium Term Policy Priorities• MTEF Allocations• Infrastructure & Maintenance budget• Transfer & Grants Management• Personnel Establishment and vacancy ratios • Skills Development & Training Programmes • Monitoring & Evaluation systems

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Purpose Purpose

The purpose of this presentation is to present:

• the Medium Term Expenditure Framework and the audit outcomes for 2006/07 to the JBC

• to comment on the efficiency and effectiveness of systems and practices put in place to manage the activities of the Department

• to discuss measures put in place to address challenges and shortcomings

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Five Year Expenditure Trends

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Millions

'2002/03 '2003/04 '2004/05 '2005/06 '2006/07

Appropriated Spending

99%

97%

98%

73%99,9%

R1,091b R1,655b R2,031b R3,897b R3,730b

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SPENDING VS BUDGETSPENDING VS BUDGET FOR THE FIRST 6 MONTHS OF THE YEAR CURRENT FINANCIAL FOR THE FIRST 6 MONTHS OF THE YEAR CURRENT FINANCIAL

YEARYEAR

PROGRAMME BUDGET

2006/07

BUDGET

2007/08

Spending to date

Exp vs.

Budget

R ‘000 R’000 R’000 %

1 Administration 373 622 410 730 164 189 39.97%

2 Surveys & Mapping

79 155 100 311 28 220 28.13%

3 Cadastral Surveys 92 283 100 354 56 674 56.47%

4 Restitution 2 247 132 3 327 095 1 975 625 59.38%

5 Land Reform 907 289 1 696 680 544 640 27.65%

6 Spatial Planning 22 586 30 756 7 506 24.40%

7 Auxiliary & Ass. 8 129 12 593 2 876 22.84%

TOTAL 3 730 196 5 678 519 2 779 730 48.95%

Benchmark Spending for 6 months is 50.%

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Adjustment Estimates for 2007/08• The Department submitted a Treasury Committee

memorandum requesting the following adjustments to the current budget:

R1 bil - to augment the funding needs under Programme 4, Restitution

R18 mil - for ICT needs

R67 million for the State Land Audit and the finalization of the Area based Plans

• Save to say only R250 million was approved for the

Richtersveld claim. The Department is presently looking at reprioritising within Programmes to fund the prioritised activities

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FINANCIAL PERFORMANCE 2006/07FINANCIAL PERFORMANCE 2006/07

The Department has achieved a record spending of 99.88% (2005/06: 73.08%) against the adjusted appropriation of R3,73 billion for the year under review.

2006/07R’000

2005/06R’000

Budget allocation 3,73 billion 3,90 billion

Actual Expenditure 3,72 billion 2,85 billion

Spending as a percentage 99.88% 73.08%

Unspent funds 4,65 million 1,05 billion

Unspent funds as a percentage 0.12% 26.92%

The Restitution and Land Reform Programmes represent 85% of the Departmental adjusted appropriation.

Interventions put in place during the year yielded positive results as both programmes managed to spend 100% of their allocated budgets for capital transfers to household.

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Audit Report 2006/07Audit Report 2006/07

The Department received a qualified

audit opinion on:

• Asset Management

• Rental Revenue Receivable from Leased Land

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Asset ManagementAsset ManagementFinding• Assets could not be located for physical verification

• Asset register did not comply with the minimum requirements of the Asset Management Guidelines; e.g. order numbers not recorded

Root Cause

• Initial take-on of assets in 2002/03 had a number of serious flaws

• Non compliance with the Departmental Policy and Procedures

• Capacity

Interventions to address the problems:

•Reconcile the 2002/03 information – retrieve source documents for proper classification and capturing of order numbers

•Continue with the robust identification of non-verified assets

•Clean the register to reflect a true record

•Capacitate the unit

•Enforce compliance with the policy

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Rental Revenue Receivable from Leased LandRental Revenue Receivable from Leased LandFinding• Incomplete information on all land available for leasing• Revenue collected through the Power Of Attorney (POA) agreements to be transferred

to the National Revenue Fund• Incomplete and inaccurate information

Root Cause• Lack of approved policies to govern the relationship regarding the revenue collected

through POA• Lack of a complete database/register of leased land• Lack of a debtors management system• Inadequate contract management

Significant progress has been made to institutionalize the management of leased state land and some of the key achievements are:-

•Creating capacity in the PLRO - 49 posts created for the management of state land in order to capacitate provincial land reform offices.

•Development of a lease contracts and debtors application system which is now going through a user acceptance testing phase.

•Setting up of systems for integrating revenue collection from Provincial Departments of Agriculture (POA)

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Mandate & Medium Term Policy PrioritiesMandate & Medium Term Policy PrioritiesMandate & Medium Term Policy PrioritiesMandate & Medium Term Policy Priorities

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Strategic ContextStrategic Context

Contribution to Poverty

Alleviation and Economic

Development through Land Reform and

Administration

Interventions and

participation of the State in

the land market to accelerate

land redistribution

Enhanced access to and/or

ownership of land by people

living on farms to improve their

livelihoods and economic

opportunities

Alignment of Spatial

plans

Development of capacity building

models and programmes for

Land Reform Beneficiaries,

DLA employees and other Key Stakeholders

Agrarian Reform

Economic Growth

HousingSecurity of Tenure

Reduction of un- employment

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Strategic ObjectiveStrategic ObjectiveCore Objectives

1.Redistribution of 30% of white-owned agricultural land by 2014 for sustainable agricultural development.

2.Provision of tenure security that creates socio-economic opportunities for people living and working on farms and in communal areas.

3.Provision of land for sustainable human settlements, industrial and economic development.

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Strategic ObjectiveStrategic ObjectiveCore Objectives cont.

4.Provision of efficient land use and land administration services.

5.Provision of efficient State Land management that support development.

6.Provision of skills development framework for land and agrarian reform to all relevant stakeholders.

7.Development of programmes for the empowerment of women, children, people with disabilities and those living with HIV/Aids and older persons within the context of the Department’s mandate.

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Challenges

• Major challenges facing the Department, and therefore contributing to the much debated slow pace of land reform delivery, are to a large extent attributable to: – Insufficient financial resources– High land prices– Capacity constraints– Lack of appropriate funding models– Providing training, and technical support to

land reform beneficiaries which is critical for sustainable land & agrarian reform

– Integrated planning

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Challenges cont.

• Finalizing restitution process in 2007/2008

• Managing risks inherent in the restitution and redistribution ‘high drive’

• The need for organized agriculture must demonstrate more concrete commitment to land reform

• Increasing the culture of respect for land rights of vulnerable groups like labour tenants, occupiers and other farm dwellers

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Initiatives to address the challenges

• In order to address the unacceptable slow pace of land delivery as well as promote integrated development, the Department has adopted the Pro-active Land Acquisition Strategy (PLAS) whereby prime agricultural land is acquired pro-actively based on the lands needs expressed in the Provincial Growth and Developmental Strategies.

• Other initiatives include strengthening of the relations with the key stakeholders like organized agriculture and NGO’s for post settlement support.

• Alignment of the implementation plans with the Department of Agriculture for improved and timely provision of agricultural support.

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Initiatives to address the challenges cont.

• Presidential Priority of delivering 5 million ha of agricultural land by 2008/09 which will be driven through the special project.

• Review of the grants models to enable a better means of providing land to the beneficiaries.

• Fast tracking the vesting of state land to create an enabling environment for restitution and redistribution.

• Revised delegations and increased capacity for the restitution and redistribution programmes.

• Discussions with NT with regard to the development of a strategy towards curbing the high land prices.

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Risk Assessments

• Risk management forms an integral part of the total management process of the Department, and to this end, the “BARNOWL” Risk assessments tool was procured for data management, monitoring and continuous review of the risk register.

• Periodical performance audits are also conducted by Internal Audit.

• Risk assessment registers are reviewed annually and aligned to the business processes and operational plans.

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Planning Assumptions

• In our planning for accelerated land delivery the following assumptions are taken into consideration:

– Government will provide a reasonable budget

– There will be a robust effort to source the relevant capacity

– There will be strong partnering with the Department of Agriculture and organized agriculture for post settlement support and transfer of skills

– Prime Agricultural land will be identified through various mechanisms like the Area Based Planning

– Provision of training to land reform beneficiaries

– Bringing in strategic partners for support and sustainability of projects

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New Policy OptionsNew Policy OptionsNew Policy OptionsNew Policy Options

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Activities not catered for in the current Activities not catered for in the current baselinebaseline

• Presidential priority in respect of land reform to redistribute 5 million hectares of prime agricultural land in the next two years.

• The settlement of 5 279 remaining restitution claims in the next three years.

• Capacity building through the phased-implementation of the new organisation structure by creating and filling 1 221 posts.

• Scaling up of Information, Communication and Technology (ICT) to respond to the increase in number of users, business requirements and technology deficiencies.

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Financial Implications of the Policy Financial Implications of the Policy OptionsOptions

Policy Options2008/09R’000

2009/10R’000

2010/11R’000

TOTALR’000

Redistribution of 5 million hectares (Presidential Priority)

18,665 b 20,522 b 21,757 b 60,944 b

Settlement of 5 279 restitution claims

1,289 b 2,273 b 1,568 b 5,130 b

Filling of new posts and the concomitant operating costs (proposed new structure)

492,4 m 696,4 m 1,021 b 2,210 b

Scaling up of ICT 109 m 64 m 53,1 m 226 m

TOTAL 20,556 b 23,556 b 24,400 b 68,510 b

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Indicative Baseline AllocationIndicative Baseline Allocation

for the new MTEF for the new MTEF

2008/09 – 2010/112008/09 – 2010/11

Indicative Baseline AllocationIndicative Baseline Allocation

for the new MTEF for the new MTEF

2008/09 – 2010/112008/09 – 2010/11

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2008 MTEF Per Programme excluding Policy Options

Programmes 2007/08 2008/09

R’m

2009/10

R’m

2010/11

R’m

P1: Administration 410 730 370 521 384 482 405 655

P2: Surveys & Mapping 100 311 88 189 95 053 100 756

P3: Cadastral Surveys 100 354 105 334 110 868 117 520

P4: Restitution 3 327 095 2 497 305 1 248 465 1 326 066

P5: Land Reform 1 696 680 2 888 469 3 303 789 3 502 016

P6: Spatial Planning 30 756 32 286 34 194 36 246

P7: Aux Services 12 593 13 321 14 025 14 867

Total 5 678 519 5 995 335 5 190 876 5 503 126

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2008 MTEF Per Regional Land Claims Office

Provinces 2008/09

R’m

2009/10

R’m

2010/11

R’m

Eastern Cape 130 940 122 394 129 738

Free State 116 341 107 057 113 481

Gauteng 289 788 135 947 144 105

Kwa Zulu Natal 588 448 279 785 296 573

Limpopo 595 151 228 479 242 188

Mpumalanga 635 749 240 101 254 507

Western Cape 122 609 113 672 120 489

Total 2 479 026 1 227 435 1 301 081

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2008 MTEF Per Provincial Land Reform Office

Programmes 2008/09

R’m

2009/10

R’m

2010/11

R’m

Eastern Cape 292 889 385 510 408 650

Free State 281 784 547 717 580 589

Gauteng 176 158 181 751 191 165

Kwa Zulu Natal 716 420 569 884 604 077

Limpopo 56 838 73 131 77 525

Mpumalanga 567 735 568 164 602 464

Northern Cape 146 959 168 962 180 426

North West 228 255 382 460 405 413

Western Cape 287 712 291 563 309 069

Total 2 754 750 3 169 142 3 359 378

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Year on Year comparison of budget against hectares delivered

0

100000

200000

300000

400000

500000

600000

700000

800000

900000

'2002/03 '2003/04 '2004/05 '2005/06 '2006/07

Hectares

Baseline

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Impact of the Proposed new baseline Impact of the Proposed new baseline including policyincluding policy options for the period 2008/09 – 2010/11options for the period 2008/09 – 2010/11

2008/09 2009/10 2010/11

Economic Classificatio

n

Current baseline

R’m

Additional Funding

Proposed

R’m

New Baseline

R’m

Currentbaseline

R’m

Additional Funding

Proposed

R’m

New Baseline

R’m

Currentbaseline

R’m

Additional Funding

Proposed

R’m

New Baseline

R’m

Compensation of employees

580 556 1,136 612 744 1,356b 648 951 1,599b

Goods & Services

459 377 836 489 393 882 519 512 1,031

Transfers to Households

4,909b 8,465b13,374

b4,041b 10,196b

14,237b

4,284b 9,991b14,275

b

Capital Assets

42 58 100 44 14 58 47 9 56

Land & Subsoil

- 11,098b11,098

b- 12,206b

12,206b

- 12,936b12,936

b

Others 5 2 7 5 2 7 5 1 6

TOTAL 5,995b 20,556b26,551

b5,191b 23,555b

28,746b

5,503b 24,400b29,903

b

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Infrastructure & Maintenance Budget

2008/09

R’000

2009/10

R’000

2010/2011

R’000

Capital Works

10 162 10 772 11 419

The Infrastructure budget relates to payment for repairs and maintenance of building largely to Public Works.

Internal controls are in place for ensuring value for money, this include constant reconciliation of payments and quality control of work done.

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Systems for the Transfers and Grants Management

Restitution• Delegations up to R100million given to Commissioners

• Quality Assurors have been appointed to provide support to commissioners with regard to risk and financial management

• Information Management Unit ensures that approved claims are properly recorded

• Effective control measures and segregation of duties in place

• Payment is done on original documents and centrally at National Office

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Systems for the Transfers and Grants Management

Redistribution• Every project is loaded on BAS

• Grants are approved through the Provincial Grants Approval Committees

• Delegations given to Land Reform Chief Directors

• Payments are centrally done at National Office – (Safety net)

• Clear segregation of duties

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Personnel Establishment and Vacancy ratiosPersonnel Establishment and Vacancy ratios

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Personnel Establishment and Vacancy ratios

ProgrammeNumber of posts

Number of posts filled

Number of vacant posts

Vacancy Rate

Administration 767

516

251

33%

Surveys and Mapping 254

217

37

15%

Cadastral Surveys 562

434

128

23%

Restitution 1,135

642

493

43%

Land Reform 722

547

175

24%

Spatial Planning 96

35

61

64%

Deeds Registration 1,236

962

274

22%

Total

4,772

3,353

1,419 30%

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Analysis of Vacant Posts

Description Numbers

Vacant Posts as 16 March 2007 1186

New appointments 425

Internal Promotions 375

TOTAL POSTS FILLED BY OCT 07 800

POTENTIAL O/S VACANCIES 386

Add: Internal Promotions 375

Deaths 9

Resignations 168

Retirements 26

Dismissal 5

New balance of Vacant Posts 969

And therefore effectively only 217 posts were filled

217

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Skills Development & Training Programme

Internship Programme

• Assist DLA create a pool of suitably qualified and skilled people to drawfrom by equipping students with necessary practical experience.

Bursary Scheme • DLA has 168 prospective bursary holders studying degrees and

diplomas in Geomatics, Surveys, Cartography, Town and Regional

Planning at various Universities and Technikons.

• 22 diploma and 6 degree students are to complete their qualification at the end of this year and be placed in Branch LPI in 2008.

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Graduate Programme• The DLA has embarked on the above programme to

build capacity and fill vacant entry level positions

• Graduates undergo a structured training programme and practical work experience and sign a 4 year contract

• Training is done by DLA in partnership with different tertiary institutions

• 21 graduates commenced in deeds on 1 Oct 07 and other branches will follow in a staggered approach. All graduates have allocated mentors

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Human Resource Development Strategy

Officials

• The Department is currently in the process of conducting a skills audit of all employees at different levels. This exercise is aimed at identifying the current skills gaps, job fit, and training needs in order to create a knowledgeable and productive workforce.

Beneficiaries

• An MOU with the University of Fort Hare. Through this partnership training programmes for land reform beneficiaries in the Eastern Cape have been developed. Training for beneficiaries will commence in November.

• Consultation with stakeholders and beneficiaries in all provinces are continuing to develop a skills development framework.

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Monitoring & Evaluation Systems• Risk and Compliance Directorate have developed

standardised systems and procedures for components to report on operational plans.

• The Monitoring and Evaluation Directorate on the other hand, has been more closely aligned and its capacity increased to capacitate it to monitor (as well as report on) both the organisational performance as well as validate effectively, source of information.

• Operational and Financial performance is also monitored closely through various structures in the Department, the Strategic Committee (STRATCOM) which meets monthly to discuss strategic issues including operational and financial performance.

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Monitoring & Evaluation Systems cont.

• The Department is in the process of implementing an electronic system called “project tracking tool” which enhance the close monitoring of projects.

• Performance agreements and work plans are actively monitored by the Human Resource section. Assessments are also conducted quarterly for junior staff and annually for senior managers.

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In Conclusion….

• Yes indeed, it is not only the budget that will enable the Department to reach the 2014 target, but an integrated radical approach that will provide progressive systems, mechanism and capacity for accelerated land reform.

• On the other hand, the challenges faced by the Restitution programme clearly indicates that the commission will not be able to wind up its activities by 2008.

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THANK YOUTHANK YOU