CONTENT ADVISORY NOTE

Committee : Portfolio Committee on Tourism

Content Advisor : Dr Sibusiso Khuzwayo

Date : 26 May 2020

Topic for discussion

This briefing note provides issues for Committee consideration on the:

(i) Department of Tourism 2020/21-2024/25 Strategic Plan.

(ii) Department of Tourism 2020/21 Annual Performance Plan.

Legislative framework:

(i) Section 27 (i) of the Public Finance Management Act No. 29 of 1999) stipulates that the Minister must table the annual budget for a financial year in the National Assembly before the start of that financial year or, in exceptional circumstances, on a date as soon as possible after the start of that financial year, as the Minister may determine.

(ii) Section 27(4) further stipulates that when the annual budget is introduced in the National Assembly or a provincial legislature, the accounting officer for each department must submit to Parliament or the provincial legislature, as may be appropriate, measurable objectives for each main division within the department’s vote.

(iii) In the wake of the COVID-19 pandemic and the necessary national response, Section 27(2)(a) of the Disaster Management Act of 2002 authorises the release of any available resources of national government. This has an impact on the financial resources available for the department to pursue its mandate.

Policy Framework:

The Department’s Strategic Plan was revised in line with the 2019-2024 Medium-Term Strategic Framework (MTSF).

The National Treasury’s Framework for Strategic and Annual Performance Plans stipulates that the departments are expected to:

· Produce and table a 5-year Strategic Plan (SP), including sequencing of projects and programme implementation and resource implications;

· Produce and table an Annual Performance Plan (APP) including forward projections for a further two years, in line with the MTEF period, including annual and quarterly performance targets;

· Identify core indicators to monitor institutional performance;

· Adopt a quarterly reporting system, including submission of agreed information to the Presidency, Premier’s Offices, the relevant treasury and the Parliamentary portfolio committees; and

· Ensure alignment between Strategic Plans, APPs, budget documents, and annual and quarterly reports.

Background

The Department of Tourism tabled the 5-year Strategic Plan for 2020/21 -2024/25 and the Annual Performance Plan for the 2020/21 Financial year on the 18th March 2020. However, due to the impact of COVID-19 on the tourism sector, the Minister withdrew the Annual Performance Plans of both the Department and South African Tourism in the letter dated 8 May 2020 as published in the ATC No 51 – 2020. The Minister tabled a revised Annual Performance Plan on the 20th May 2020. The Strategic Plan is the blueprint of how the Department of Tourism will deliver on its mandate under the 6th Parliament as overseen by the Portfolio Committee on Tourism.

The 5-year Strategic Plan and the Annual Performance Plan have attempted to incorporate the new oversight philosophy of the Committee anchored on transformation and inclusive growth that prioritises Villages, townships, Small Towns and Dorpies (VTSDs). However, the little ground gained in including township precincts in the withdrawn APP was lost in the revised APP as all township precincts have been removed. More could have been incorporated in the plans to fully embrace the oversight approach of the Committee. The Committee would have to keep asserting its vision for the next five years to the Department so that the implementation programmes are perfectly aligned to the oversight philosophy.

However, revised Annual Performance Plan has removed a number of useful projects that were contained in the initial document. In the interaction with the Department on the revised APP, the Committee should solicit information on:

(i) Projects removed per Programme.

(ii)   Projects added per Programme.

(iii)  Quantification of budget savings per Programme.

(iv)  Implications of removed projects on service delivery.

(v)  How will the saved budget be re-allocated/ used?

The Department has been requested to provide more information on the above mentioned issues, which may be available when the Committee meets on the 26th May 2020.

Summary of the issues:

(i) Budget allocation

The Tourism Vote changed from being Vote 33 in the previous administration to Vote 38 in the 6th Administration. The purpose for Vote 33 is to promote and support the growth and development of an equitable, competitive and sustainable tourism sector, enhancing its contribution to national priorities. Table 1 shows the budget allocated to Vote 38 as outlined in the 2020 Estimates of National Expenditure (ENE) issued by the National Treasury.

The changes in the budget necessitated by the COVID-19 pandemic are not taken into consideration in this budget allocation.

Table 1: Budget allocation to vote 38

Programme

Budget

Nominal Rand change

Real Rand change

Nominal % change

Real % change

R million

2019/20

2020/21

2021/22

2022/23

2019/20-2020/21

2019/20-2020/21

Programme 1: Administration

295.9

308.6

327.0

340.5

12.7

- 0.3

4.29 per cent

-0.10 per cent

Programme 2: Tourism Research, Policy, and International Relations

1 331.1

1 391.4

1 465.8

1 522.7

60.3

1.7

4.53 per cent

0.12 per cent

Programme 3: Destination Development

463.3

485.9

519.1

537.6

22.6

2.1

4.88 per cent

0.46 per cent

Programme 4: Tourism sector support Services

302.4

295.1

274.3

287.0

- 7.3

- 19.7

-2.41 per cent

-6.53 per cent

TOTAL

2 392.7

2 481.0

2 586.2

2 687.8

88.3

- 16.3

3.69 per cent

-0.68 per cent

The Department has removed a number of projects across the four Programmes in the Annual Performance Plan re-tabled on the 20th May 2020. The budget is still presented in the MTEF baseline without a clear indication of how much budget has been saved in each Programme and where it has been reallocated. The budget provided in the Annual Performance Plan still resembles the one in the Estimates of National Expenditure (ENE). It would have been preferred if the Department provided a separate detailed information on the projects that were discontinued and how the associated budget has been re-allocated.

The following issues are notable from Table 1:

(a) Allocation over the MTEF

The budget allocation in the Medium Term will grow from R2, 418.0 billion in 2020/21 to R2, 586.2 billion in 2021/22 and R2, 687.8 billion in 2022/23. The Committee should note that 56.3 percent of this budget will be allocated to South African Tourism for international and domestic marketing. This is an increase from an average of 53 percent in the previous MTSF period. This will be an average annual increase of 4.6 percent from R1.3 billion in 2019/20 to R1.5 billion in 2022/23. The Tourism Vote has always been located the budget that does not allow the Department and South African Tourism to fulfil the tourism mandate. The Department should find innovative ways to collaborate with other sector departments and the private sector in order to develop and grow tourism.

(b) Nominal rand change.

In economics, nominal value is measured in terms of money, in Rands and cents. The nominal change in budget for the 2020/21 financial year is an additional R88.3 million, amounting to 3.69 per cent increase. This is the actual Rand value amount added by the National Treasury to the budget for Tourism Vote 38 in the current Medium Term Expenditure Framework (MTEF) Estimates of National Expenditure.

(c) Real budget change

The real budget change is the amount as measured against goods or services. A real value is one which has been adjusted for inflation, enabling comparison of quantities as if the prices of goods had not changed on average. Changes in value in real terms therefore exclude the effect of inflation. In contrast with a real value, a nominal value has not been adjusted for inflation, and so changes in nominal value reflect at least in part, the effect of inflation.

The real change in the 2020/21 financial year is a decrease by R16.3 million, amounting to a -0.68 per cent decline in the budget available to the department of Tourism to pursue the tourism mandate.

(d) Revised Annual Performance Plan

The Department has been forced by the COVID-19 outbreak to revise the Annual Performance Plan tabled in March 2020. The revised Annual Performance Plan tabled on the 20th May 2020 focuses on the back office planning work for the Department as it became infeasible to undertake infrastructure rollout under the protocols of the Risk Adjusted Strategy, with the tourism industry mainly under Level 5 conditions.

This has necessitated the removal of some projects and addition of others in the Annual Performance Plan. The various Programmes have been affected as follows:

(i) Programme 1: Administration

The following changes were made in Programme 1;

· Removal of the development of mentorship and coaching framework and initiate pilot for the Department.

· Reduction from ten to eight of the initiatives implemented to promote reasonable access.

(ii) Programme 2: Tourism Research, Policy and International Relations

· Addition of four Tourism Quarterly Performance Reports.

· Addition of two reports on the impact of COVID-19 on the tourism sector.

· Addition of the monitoring report on the implementation of the Tourism Relief Fund.

· Removal of the development of the National Tourism Analysis System

· Removal of the development of the prototype of the National Visitor Membership and Information Management System (NVM &MS).

· Cancellation of one regional activation facilitated to profile South Africa as a destination of choice - (This had a possible duplication with the work done by SA Tourism).

· Cancellation of the exhibition of Destination South Africa Expo 2020 showcased at the Dubai 2020 - (This had a possible duplication with the work done by SA Tourism).

· Reduction from five to four of the initiatives to advance South Africa’s tourism priorities within multifora.

· Cancellation of Indaba Ministerial Session 2020.05.21 removal of the report on the leveraging of tourism bilateral relations to advance national priorities.

· Removal of the draft National Tourism Innovation Programme.

· Cancellation of training of 600 youth on multimedia skills.

(iii) Programme 3: Destination Development

· Removal of the establishment of piloting of a tourism project preparation facility for the development of concepts for Karoo, Magwa Falls, Port St Johns precinct, Orange River, Northern Cape Coastal Waterpark.

· Removal of the development of designs of prioritised elements of township tourism precincts, i.e. Vilakazi Street, Mdantsane, Galeshewe, Khayelisha. This is a serious setback on the implementation of the recommendations to develop and promote tourism in the Villages, Townships, Small Towns & Dorpies (VTSDs).

· Removal of supporting the implementation of five iconic sites in World Heritage sites.

· Removal of interpretative signage in six iconic sites.

· Removal of the implementation of Leopard Trail at Baviaanskloof World Heritage Site.

· Removal of construction at Shangoni Gate.

· Removal of Bid Documents for the appointment of contractor for Phalaborwa Wild Activity Hub.

· Reduction of Work Opportunities from 5109 to 2500. This is a setback for poverty alleviation and further entrenches hardships caused by COVID-19 in vulnerable communities.

(iv) Programme 4: Tourism Sector Support Services

· Cancellation of the World Tourism day celebrations in September 2020.

· Removed Market Access Support Programme.

· Removed Tourism Grading Support Programme.

· Removed the Green Tourism Incentive Programme.

· Removal of Market Access for Women.

· Removal of the implementation of the Tourism Safety Strategy.

· Removal of the awareness and feedback on Climate Change Risk and vulnerability on 27 sites.

· Removal of 15 chefs supported through RPL process.

· Removal of 15 chefs designated.

· Removal of 20 candidates designated as travel Advisors.

· Cancelation of the National Tourism Careers Expo.

· Food safety Assurers reduced from 1500 to 500 youth participants.

· Removal of the Coastal Marine Tourism (CMT) skills development programme.

· Removal of the Tourism Incentive Programme.

· Addition of the development of the Tourism Environmental Implementation Plan (TEIP) for 2020 - 2025.

· Clarity needed on the Tourism Transformation Fund

· Clarity needed on the Tourism Equity Fund

(e) Budget implications for the revised Annual Performance Plan

The financial information presented in the tabled revised Annual Performance Plan is the same as the one tabled in March. The reason is that the Minister of finance has not tabled the Adjustment Appropriation Bill, which takes into account the imperatives imposed by the COVID-19 pandemic. The budget is therefore in accordance with the 2020 Estimates of National Expenditure tabled by the Minister of Finance in February 2020.

However, the Department could have packaged the information in a more user-friendly manner for the Committee through:

· Indicating how many projects have been removed or added per Programme.

· Quantifying how much was saved by removing initially planned targets.

· How will the saved funds be re-allocated or used?

In this regard, the Department was requested to include additional slides to the presentation to make the information user-friendly for the Committee. However, no response had been received at the time of transmitting this document to the Committee.

(f) The Medium-Term Strategic Framework (MTSF) 2020/21-2024/25

The Department is pursuing its mandate as guided by the 2019-2024 MTSF. The seven MTSF priorities are:

· Priority 1: Economic transformation and job creation

· Priority 2: Education, skills and health

· Priority 3: Consolidating the social wage through reliable and quality basic services

· Priority 4: Spatial integration, human settlements and local government

· Priority 5: Social cohesion and safe communities

· Priority 6: Building a capable, ethical and developmental state

· Priority 7: A better Africa and world

Of these seven priorities, the Department is pursuing priorities 1, 2, and 7. The budget is spread across the government priorities, with 56.3 percent allocated to marketing activities.

(g) Implications for service delivery

The Department has revised down its targets. This will have a huge impact on various projects and programmes of the department. The impact will be more on infrastructure and training projects. The implications for each Programme is as follows:

The following budget related information should be noted:

· Programme 1: Administration – this Programme is responsible for the Ministry, Management, Corporate management, financial management and Office Accommodation. The Programme is allocated R308 million, of which R163.1 million is towards compensation of employees. The Committee should look at how the Department has addressed the issue of employment equity in the Department. The Department always has challenges in managing the amount allocated to Office Administration, particularly late payments for office accommodation. This always leads to poor quarterly reporting on expenditure and should be immediately addressed with the Department of Public Works and Infrastructure. The general corporate governance and internal controls in the purview of Programme 1 have led to negative audit findings. The tabled strategic plan and annual performance plan outline a number of corporate and financial management mechanisms which seem adequate to address the identified challenges. The Committee should pay particular attention to this Programme to ensure good governance in the organisation.

· Programme 2: Tourism Research, Policy and International Relations – the sub-programmes in Programme 2 are Tourism Research, Policy ad International Relations; Research and Knowledge Management; Policy Planning and Strategy; South African Tourism and International Relations and Cooperation. Programme 2 is allocated R1.4 billion for 2020/21 of which R1.3 billion will be transferred to South African Tourism. The transfers to South African Tourism represent 93.7 percent of Programme 2 budget. The Committee should note that South African Tourism has received a baseline budget reduction of -R19.1 million in 2020/21. The remaining allocation after transfers to South African Tourism is R87.1 Million, of which R56.0 million goes to compensation of employees. The Branch also makes international transfers to the United Nations World Tourism Organisation (UNWTO) amounting to R2.4 million in the 2020/21 financial year.

The Committee should scrutinise the transfers to South African Tourism as this represents 56.3 percent of the departmental budget. Most of this budget is allocated to international marketing. In the previous meeting, the Minister indicated that the Tourism Relief Fund will be disbursed and monitored by South African Tourism. This means that additional budget will be placed under the care of the Entity. The Committee should ensure that the internal controls are strengthened within SA Tourism to monitor the expenditure of transfers from the Department.

The Committee should also ensure that a reasonable amount is also allocated to domestic tourism marketing activities. This will assist in promoting tourism facilities in Villages, Townships, Small Towns and Dorpies in line with the oversight philosophy of the Committee. The budget should also be used to facilitate cheaper domestic tourism deals. This is imperative given the volatility of the international tourism markets.

The domestic tourism is important as it could be used as a tool to eliminate poverty at a local level, generate employment and Local Economic Development, improve local infrastructure, spread tourism benefits to non-tourism suppliers such as crafters, address seasonality caused by fluctuations in the international markets, and put local communities to the international map to attract international tourists. The marketing for domestic tourism is therefore central to the Committees’ oversight approach focusing on VTSDs. The Committee should therefore impress upon the Department to ensure that the Board of South African Tourism improve on the incorporation of domestic tourism in its plans for the current MTSF.

Another important initiative in this Branch is monitoring and evaluation (M&E) which will improve accountability and track progress on projects to facilitate decision making. This is a critical component that tracks the effectiveness and Return on Investment of the Programmes and projects implemented by other Branches of the Department. The Committee should conduct robust oversight on the M&E of the departmental Programmes.

· Programme 3: Destination Development – the sub-programmes in this Programme include Destination Development management, Tourism Enhancement, Destination Planning and Investment Coordination, and Working for Tourism (infrastructure projects). This Programme is allocated R485.9 million for 2020/21 of which R393.2 million is allocated to the Working for Tourism sub-programme. Working for Tourism consists of the Expanded Public Work and Expanded Public Work Incentive Programme. An allocation of R60.6 million is made to compensation of employees.

The Committee should note the importance of the Working for Tourism sub-programme as it is responsible for funding the infrastructure projects by the Department. The Committee should scrutinise the funded projects and influence future funding or replacing some of the funded projects in the MTSF. This funding could be rechannelled to promote tourism development in VTSDs. The funding is currently mostly used to fund projects in the jurisdictions of other government departments, such improving tourism facilities within SanParks. The modus operandi could be changed and funding channelled to more Community-Based Tourism Enterprises (CBTEs). The Department used to fund CBTEs in the past, but scaled down due to internal capacity challenges in implementing such infrastructure projects. The Government Technical Advisory Centre was engaged and recommendations to improve implementation were made to the Department. The implementation of the CBTEs would go a long way in ensuring the implementation of the Committee’s oversight approach on VTSDs through increasing community ownership of tourism businesses.

The Department will implement tourism plans through the District Development Model in the three pilot areas, namely, OR Tambo district, Waterberg district, eThekwini Metro. The Department should clearly demonstrate to the Committee how it has also integrated the Tourism Sector Master Plans developed in the previous financial years to the District Development Model.

The Department has revised the title of the target of Full-Time Equivalent (FTEs) jobs to Work Opportunities. More information is needed to illustrate the difference between the two, and how the Work Opportunities will provide better employment stability as compared to FTEs driven through EPWP criteria. In the revised APP, there has been a reduction of Work Opportunities from 5109 to 2500 in the 2020/21 financial year.

· Programme 4: Tourism Sector Support Services – the sub-programmes in the Branch include Tourism Support Services Management, Tourism Human Resources management, Enterprise Development and Transformation, and the Tourism Incentive Programme

The Tourism Transformation Fund is a good initiative under this Branch in expediting the transformation of the sector. However, the Department has been struggling with the uptake on the implementation of the Tourism Transformation Fund. The Committee should ensure that the processing of applications is scaled up and the VTSDs should be prioritised in granting funding.

The Tourism Equity Fund is another good initiative under this Branch. However, the Department struggled with the implementation and processing of this funding in the 2019/20 financial year. The Committee should note that although this was announced by the President as a new funding, it was already in the Annual Performance Plan for the 2019/20 financial year, therefore not exactly a new funding. The Committee should be apprised about the status of the Tourism Equity Fund in the 2020/21 financial year.

The Tourism Incentive Programme could also be used to improve tourism development in the VTSDs. The funding criteria could be improved to be biased towards the previously disadvantaged communities and geographical areas, thus improving chances of tourism enterprises to grow and participate in the mainstream tourism economy, particularly in villages and townships.

However, the Tourism Incentive Programme has been removed in the revised APP and it not clear what will happen with the Tourism Transformation Fund and the tourism Equity Fund. The removal of these funding mechanisms will slow the pace of transformation and have a negative impact on the vision of the Committee to expedite transformation in the sector during the tenure of the 6th Parliament.

The Department had previously reported that it will change the implementation method of the SMME incubators into virtual incubators. However, the Strategic Plan indicates that the Department will be implementing more incubators in the MTEF from 6 in 2020/21 to 10 in the 2022/23 financial year. The Department should provide more information on the implementation philosophy with regard to the methodology and choice of the provinces/sites of incubators. The Department should update the Committee on the status of the incubators in the 2020/21 financial year.

· Alignment of the VTSDs with the District Development Model – on the one hand, the Committee has a sharp focus on tourism development and growth in Villages, Townships, Small Towns and Dorpies. On the other hand, the governments’ Medium Term Strategic Framework (MTSF) for 2019-2024 focuses on the Khawuleza District Development Model/ Approach. The Department should indicate to the Committee how the VTSD oversight model has been incorporated into the District Development Model. The integration could assist in entrenching the philosophy of tourism development at a local level. These tourism development plans could be incorporated into municipal Integrated Development Plans (IDPs). This may assist in streamlining tourism development budgets amongst various spheres of government.

With the revision of the APP, the Committee’s oversight approach on the VTSDs has been seriously compromised. The Department should indicate to the Committee how they will make up for this lost opportunity is infusing tourism development in previously neglected communities.

· Appropriated budget vs the tourism mandate – the National Development Plan (NDP) identifies tourism as one of the main drivers of labour intensive employment and economic growth. The government has also identified tourism as a growth sector and set a target of 21 million additional arrivals by 2030. However, the appropriated budget in the MTEF is not commensurate to the huge mandate assigned to the tourism sector. The Committee should acknowledge the fiscal constraints facing the country in appropriating more budget to the Tourism Vote 38. This calls for the Committee to conduct a robust oversight on tourism in a whole government approach to maximise allocated budget and extended tourism mandate to other departments.

· Intersectoral collaboration – the strained financial resources allocated to Vote 38 and associated huge mandate necessitate a focussed collaboration with other sector departments and the private sector. The District Development Model has also established the Public Private Growth Initiative (PPGI), which aims to develop a more coherent partnership with government, and drive inclusive economic growth and job creation. The Department has always struggled with projects implemented in collaboration with other departments. The Committee should be provided with information on how has the Department has consolidated its intergovernmental and intersectoral collaborations as these will become progressively more important during the 6th Parliament through formal institutional arrangements. The Committee should also push its philosophy of the “bicycle wheel approach” where various government departments are rallied together, with tourism at the centre, in a coordinated nexus to drive the tourism mandate. Whilst the Committee will be coordinating parliamentary Committees, the Minister should also be urged to push for the whole government approach for tourism development within the Cabinet.

· Re-industrialisation of the economy – the government is pursuing re-industrialisation, localisation and exports. The tourism sector, together with automotive, agriculture & agro-processing, CTLF, chemicals, gas, steel and metal fabrication, ICT, defence, health, mining, renewables, green economy, oceans economy, and creative industries have been identified to drive this strategy. Besides increasing the number of international arrivals, with its associated export like spin-offs, it is not clear how the Department is pursuing localisation through investing in domestic tourism development and growth. The Minister should provide the tourism response to the county’s re-industrialisation of the economy.

· Promoting domestic tourism - the global outbreak of the corona virus pandemic has further emboldened the call by the Committee to anchor tourism development on domestic tourism. The Department should outline the plans for domestic tourism development in the next five years. The Minister should also guide the Board of South African Tourism to invest a more budget to domestic tourism. The Departmental 56.3 percent transfer to South African Tourism should also be focused on promoting VTSDs. The Strategic Plan and Annual Performance Plans of South African Tourism do not adequately reflect this imperative as recommended by the Committee across the Programmes implemented by the Entity.

· Accelerating transformation – the oversight model of the Committee emphasises inclusive growth through accelerated transformation. The Department has allocated R856 million in the over the medium term for the implementation of 31 capacity-building programmes and 15 incentive programmes. The Department should provide a Consolidated Transformation Plan based on the activities across departmental Programmes, not the activities of the BBBEE Charter Council. The BBBEE Charter Council should also provide a Comprehensive Tourism Transformation Plan. The Committee should then conduct oversight on these transformation plans. This will assist in enhancing the Annual Transformation Summit planned by the Committee every September during the current MTSF.

· Funding SONA commitments – in the State of the Nation Address, the President announced that the SAPS will increase visibility at identified tourist attraction sites, and that a reserve police capacity to focus on the policing of the tourist attraction areas will be established. However, there is no specific budget either in the Estimates of National Expenditure for the Department of Police and Tourism to fund these initiatives. The Committee should seek clarity oh how the safety initiatives will be funded. In the 2020 Budget Speech, the Ministry of Finance indicated that to support tourism, the government will engage with the tourism industry on formalising the Tourism Levy. There are no details in the future plans of either the Department or South African Tourism on how the Tourism Levy will be formalised. The Minister should provide details on how will this happen. The Committee should impress on the Minister, the South African Tourism Board and the Tourism Business Council of South Africa that the TOMSA Levy should be made compulsory.

· Impact of COVID-19 on tourism businesses – the corona virus and subsequent lockdown has had serious unintended consequences for the South African economy in general, and the tourism sector in particular. Ironically, the corona virus came to South Africa through tourism, and this necessitated, inter alia, the closure of all the South African ports of entry to prevent the further spread. This was a necessary intervention by the government to flatten the curve, and buy time for screening and testing, and eventually taking control of the virus.

The ban on travel and lockdown have put the aviation sector and the related tourism jobs in jeopardy. Since the tourism sector comprises the majority of small businesses, the lockdown has majorly affected the tourism SMMEs and put these businesses in the brink of closure and job losses.

· The Tourism Relief Fund

In response to the COVID-19 pandemic, the government set aside a R200 million Tourism Relief Fund, capped at R50 000 per qualifying entity which opened for eligible businesses from April 7 to May 30. The categories eligible to apply for the Tourism Relief Fund include, as published by the Department of Tourism, the following:

(i) Accommodation establishments: Hotels, Lodges, Bed and Breakfast (B&B’s), Guest Houses and Backpackers.

(ii) Hospitality and related services: Restaurants (not attached to hotels); Conference venues (not attached to hotels); Professional catering; and Attractions.

(iii) Travel and related services: Tour operators; Travel agents; Tourist guiding; Car rental companies; and Coach Operators.

The Committee should encourage the Minister to check whether all affected tourism suppliers and freelancers who are not covered by the eligibility criteria of the Tourism Relief Fund may be assisted trough the SMME funding announced by the President under the Economic Stimulus Package.

· Delays in implementing the Tourism Relief Fund

At the meeting of the 4th May 2020, the Minister informed the Committee that when the criteria for the Tourism Relief Fund were being finalised, the Department was taken to court by Solidarity and then by AfriForum. AfriForum applied for an urgent court hearing and the Department requested the court to join the two cases and they were heard on the same day by the North Gauteng High Court. The Department submitted affidavits and defended the criteria, and won the case. The AfriForum and Solidarity then took the matter to the Constitutional Court. The matter was dismissed by the Constitutional Court on the 15th May 2020.

In the statement released by the Office of the Minister on the 15th May 2020, it was indicated that applications received then, far exceed 13000. The Department had already started processing payments to beneficiaries.

(iv) The Economic Stimulus Package

On the 21st April 2020 the President announced a R500 billion economic stimulus package for the country. In that package, there will be various interventions to stabilise the economy and provide a response that is equal to the scale the COVID-19 pandemic is causing. These interventions include:

· Firstly, an extraordinary health budget to respond to coronavirus,

· Secondly, the relief of hunger and social distress,

· Thirdly, support for companies and workers,

· Fourthly, the phased re-opening of the economy.

The Committee should acknowledge that the tourism industry involves travelling, congregation of people in accommodation establishments, restaurants, tourist attraction and meetings through business tourism. The phased re-opening may still further affect the tourism sector. The opening of the tourism sector may therefore be delayed and this may cause a further strain to the tourism businesses. International travel may also remain banned in the foreseeable future, causing a further strain in the inbound tourism.

The Committee should ascertain from the Minister how will the tourism business further benefit from the third pillar of the economic stimulus package geared towards supporting companies and workers. Establishing these facts is critical for the tourism sector since the R200 million for the Tourism Relief Fund has already been implemented in the sector that is dominated by small businesses. The Minister should also apprise the Committee on how the government is monitoring and preventing “double dipping” of tourism businesses where the businesses may want to benefit from various schemes meant as a relief from the impact of COVID-19.

(v) Risk Adjusted Strategy for Economic activity

On the 23 April 2020 the President further addressed the country on the status of the corona virus and plans to gradually open the economy. As of Friday 22nd May 2020, there were over 5.2 million cases reported worldwide with 335 053 000 deaths. Of these, South Africa had 19 137 positive cases reported and 369 people having succumbed to the virus. A total of 1473 had recovered from the disease. Based on lower figures then, the President reiterated that the Lockdown had assisted in reducing the rate of infection and was probably the most effective means to contain the spread. However, the lockdown cannot be sustained indefinitely and there was a need to enable the companies to produce and trade and generate revenue to keep their employees in employment.

To achieve this, the President announced a Risk Adjusted Strategy for Economic Activity with measures categorised into 5 levels which will balance the need to resume the economic activity with the imperative to contain the virus and saving lives.

The 5 corona virus levels are as follows:

· Level 5 - means that drastic measures are required to contain the spread of the virus to save

lives.

· Level 4 - means that some activity can be allowed to resume subject to extreme precautions

required to limit community transmission and outbreaks.

· Level 3 - involves the easing of some restrictions, including on work and social activities, to

address a high risk of transmission.

· Level 2 - involves the further easing of restrictions, but the maintenance of physical distancing

and restrictions on some leisure and social activities to prevent a resurgence of the virus.

· Level 1 - means that most normal activity can resume, with precautions and health guidelines

followed at all times.

The implications for tourism are dire and the Committee needs to urgently discuss these with the Minister of Tourism. The following announcements were made which have a direct impact on tourism:

· The borders will remain closed to international travel, except for the repatriation of South

African nationals and foreign citizens.

· No travel will be allowed between provinces, except for the transportation of goods and

exceptional circumstances such as funerals.

· The public is encouraged to stay at home, other than for essential personal movement,

doing essential work and work in sectors that are under controlled opening. People can

exercise under strict public health conditions.

· All gatherings, apart from funerals and for work, will remain prohibited.

· Conference and convention centres, entertainment venues, cinemas, theatres, and concerts

will remain closed.

This means that both international and domestic tourism remained under Level 5 conditions when the country moved to Corona Level 4 on 1 May 2020, meaning all businesses will remained closed. The continued prohibition of all gatherings and closure of conference and convention centre also means business tourism also remains closed. These restricts are necessary to save lives and flatten the curve, however, they have detrimental consequences for the tourism sector. This will have a devastating impact on the sector like never experienced before, particularly on tourism SMMEs. Without further assistance, business will definitely be forced to lay off staff or even close shop.

The tourism sector might be the last to be allowed to trade maximally and this calls for a special dispensation with deliberate measures to save the industry. The indications are that domestic tourism will only open in December whilst international tourism will open in February 2021. The R200 million Tourism Relief Fund given to the sector will not be enough to deal with the pending negative economic impact that will be experienced by the sector. The Minister, therefore, should provide clarity on how will the sector be further assisted in dealing with the continued economic lockdown and post COVID-19.

However, there is some glimmer of home in the far future for domestic tourism as the President alluded that:

· To ensure that our response to the pandemic can be as precise and targeted as possible,

· there will be a national level and separate levels for each province, district and metro in the

country.

· The National Coronavirus Command Council will determine the alert level based on an assessment of the infection rate and the capacity of our health system to provide care to those who need it.

This may mean that at some point, certain provinces may start to open some of the tourism related business, which will boost domestic tourism and save businesses and jobs.

(vi) The Impact of COVID-19 on employment

Tourism is one of the world’s most labour intensive sectors that supports 330 million jobs worldwide. One in four jobs created globally across sectors in 2019 came from the tourism sector. In South Africa, tourism contributed more than 1.5 million jobs and more than R425 billion in 2019. However, the world Travel and Tourism Council (WTTC) has warned that COVID-19 pandemic could cost up to 50 million jobs worldwide in the tourism industry. The World Bank has reported that one in 20 jobs in sub-Saharan Africa is in the travel and tourism sector. This means that the job losses in the continent, and South Africa in particular is going to be devastating. The rate of job losses may be even more in South Africa given the continued closure of the tourism sector, and this needs an urgent attention.

The anecdotal information from the leading tourism experts indicate that the COVID-19 pandemic will lead to a loss of 555 000 to 600 000 direct and 1 100 000 to 1 200 000 jobs in total indirect employment. This is a serious regression in job creation by the sector given that in 2019 the World Travel & Tourism Council (WTTC) indicated that tourism and travel sector was responsible for creating one in five new jobs in the last five years in South Africa. The pandemic will also have a repercussion on the contribution of the tourism sector in the economy, which currently contributes R425 billion to the GDP, which is an 8.9 percent contribution to the country’s total GDP. The Department and South African should work closely with the Tourism Business Council of South Africa (TBCSA) to determine the real impact of the pandemic. The additional target of developing two reports on the impact of COVID-19 on the tourism sector is most welcome as this will assist the Committee in conducting oversight.

(vii) Governance

The latest findings by the Auditor-General revealed that there is a lax in governance by the Department, especially on internal controls. This has serious implications for efficient and effective use of available financial resources. The evidence is in the challenges identified in the implementation of Working for Tourism infrastructure projects in relation to poor conceptualisation, poor project management, and management of implementing agents. The Department has also reported cases of financial malpractice and maleficence, with certain cases having served before the courts. The Department should prove to the Committee that it has addressed all the challenges of governance and financial misconduct to optimally utilise the budget available to drive its mandate.

(viii) Human resources

The Department should provide a comprehensive information on the approved human resource structure and update the Committee on the number of vacant posts against the approved establishment. According to the latest reports made to the Committee, the Department currently has 478 personnel against 514 posts on the approved establishment. This indicates that the Department has 36 vacant positions. The Department should update the Committee on how they will deal with the increasing pressure on the mandate given to the Department against the reduction in the budget available for the compensation of employees. The Department should also indicate whether all critical posts are filled to facilitate delivery on the mandate. The Department should also provide an update on employment equity, especially females vs males caused by the imbalances in Programme 1, as previously reported.

The Committee should also note that the Cabinet meeting of the 12 – 13 May 2020 confirmed the extension of the employment contract of Mr Nkhumeleni Victor Tharage as the Director-General (DG) of the Department of Tourism with effect from September. This will assist in ensuring stability in the departmental interventions on the post-COVID-19 recovery as the DG has been with the sector for many years. This will also assist in advancing the Committees’ VTSDs oversight approach as the DG has been with the department since the incumbent Committee started outlining the new oversight approach. It will therefore be easy to conduct oversight and make follow up on the Committee recommendations.

(ix) Tourism Amendment Act

The Committee has identified a number of legislative gaps and matters that need to be addressed through the Tourism Amendment Bill. Some of these issues include the National Grading Scheme and Sharing Economy (e.g. Airbnb). The five-year strategic Plan and the Annual Performance Plan do not have any indication of when the Tourism Amendment Bill will be introduced. The Committee should urge the Department to provide the details of where the process of developing the Bill is currently, and when will the Bill be ultimately tabled in Parliament. The Committee should recall that this is one of the serious legacy issues from the 5th Parliament whereby the Department failed to introduce the Bill to Parliament.

Strategic Advice

The Committee should encourage the Minister to:

· Expedite the finalisation of the post COVID-19 Tourism Recovery Plan.

· Work closely with the tourism industry in developing the planned COVID-19 Impact Reports on the tourism sector.

· Advocate in Cabinet for more tourism funding assistance in addition to the R200 million Tourism Relief Fund as the sector will remain on Corona Virus Level 5 for the foreseeable future.

· Develop a comprehensive plan that details collaborative partnerships between the Department, South African Tourism, the private sector, provincial departments, and provincial Destination Marketing Organisations to maximise the available budget across government and private sector.

· Demonstrate to the Committee that it has formalised partnerships with other sector departments that assist in fulfilling the mandate of the Department through formal institutional arrangements.

· Implement initiatives that promote domestic tourism to engender transformation and resilience of the tourism sector against the volatility of international markets.

· Channelling the Working for Tourism funding to the implementation of Community-Based Tourism Enterprises instead of funding projects within SanParks.

· Ensuring that the funding criteria of the Tourism Transformation Fund, the Tourism Equity Fund, and the Tourism Incentive Programme are in favour of previously disadvantaged communities, particularly enterprises in villages and townships.

· Develop a clear implementation plan to integrate the Tourism Safety Monitors to the South African Police Services initiatives.

· Conduct a study to understand the future of the tourism jobs and conceptualise innovate adaptation mechanisms to future jobs.

· Review the Rural Tourism Strategy and the Heritage Tourism Strategy to implement practical projects to be funded through the Working for Tourism infrastructure budget in facilitating tourism development in the VTSDs.

· Engage the private sector in revising/dropping prices to stimulate domestic tourism to boost the recovery of the sector in mitigating the aftermaths of COVID-19.

· Address geographic spread and ensure the equitable tourism development and promotion to boost domestic tourism, working in partnership with the industry and South African Tourism.

· Ensure that transformation is the key driver of all departmental and South African Tourism programmes to expedite inclusive growth that benefits all citizens. The Committee should scrutinise the implementation methods and funding criteria for the Tourism Transformation Fund, the Tourism Equity Fund, and the Tourism Incentive Programme to ensure they serve transformation purposes in general, and bring the VTSDs into the value chain in particular.

Policy Advise

· The Committee should pin the Department down to time-frames on the introduction of the Tourism Amendment Bill to Parliament.

· The Committee should ensure that the Departmental programmes are perfectly aligned to government priorities and programmes, such as the District Development Programme.

· The review of the White Paper on the Development and Promotion of Tourism in South Africa should consider the current tourism delivery environment, such as the sharing economy.

· Given the lessons from the COVID-19 Tourism Relief Fund, the government should look at legislative and policy review, either through the Tourism Amendment Bill or improvement in the Consumer Protection Act, to include the protection tourism suppliers in areas such as cancellation policies, commissions, refunds, and insurance in the tourism sector. This includes engaging the United Nations World Tourism Organisation on similar matters on matters that involve international tourism.

· In addition to the improving visa regime for South Africa, the Department should engage the Department of Home Affairs to look at the possibility of recognising other reputable visas, such as the United Kingdom, Australia, United States of America, and Schengen to allow tourists to come to South Africa.

Possible questions for the Department of Tourism:

(i) With regard to the revised Annual Performance Plan for 2020/21, what are the relevant details in terms of:

(a) Projects removed per Programme.

(b) Projects added per Programme.

(c) Quantification of budget savings per Programme.

(d) Implications of removed projects on service delivery.

(e) How will the saved budget be re-allocated/ used?

(ii) What is the update on the post-COVID-19 Tourism Recovery Plan being currently being developed by South African Tourism?

(iii) At a strategic level, what has the Department done to ensure structured collaborations with other Departments and the private sector to compensate for inadequate budget allocations towards fulfilling its mandate?

(iv) At a policy level, what has prompted the Department to review the tourism White Paper on the Development and Promotion of Tourism in South Africa given that the Department previously said the current policy was adequate?

(v) At a legislative level, when is the Department planning to introduce the Tourism Amendment Bill to Parliament?

(vi) At a governance level, what has the Department done to improve its internal controls, and what has been the progress thus far in dealing with the undesirable audit findings by the Auditor-General?

(vii) What has the Department done to ensure funding of the initiatives announced by the President during SONA?

(viii) In light of the changes caused by the COVID-19 pandemic in the departmental plans, how has the Department carefully considered the oversight approach of the Committee focussing on Villages, Townships, Small Towns and Dorpies in the 5-year Strategic Plan and Annual Performance Plan?

(ix) Does the project pipeline or the project investment portfolio of the Department include Community-based projects in line with the focus on VTSDs?

(x) How is the uptake on the Tourism Relief Fund since the dismissal of the AfriForum and Solidarity case by the Constitutional Court?

(xi) What are the plans for the Department in implementing the Working for Tourism infrastructure projects recommended by the Government Technical Advisory Centre (GTAC) as they do not feature in the departmental 5-year Strategic Plan and Annual Performance Plan?

(xii) Will the Minister be advocating for more tourism businesses funding support given the continued closure of the tourism sector?

(xiii) How has the Department improved the uptake on the Tourism Transformation Fund, and how many beneficiaries so far?

(xiv) How will the department strike a balance between vacant posts and fulfilling its mandate given constraints on the budget available for the compensation of employees?

(xv) What is the Department doing differently to improve domestic tourism as the planned social tourism initiatives have not yielded positive results in the past?

(xvi) What will the Department do differently through changing Full-Time Equivalent Jobs to Work Opportunities in the Public Works Programme?

(xvii) What mechanisms have been put in place to increase the chances of the youth trained in various departmental skills programmes to be absorbed in the workplace?

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