Public Works: Minister's Budget Vote Speech & Respones by ANC, DA and IFP

Minister of Public Works , Mr Thulas W Nxesi , gave his Budget Vote Speech on the 08 May 2013
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1. Introduction

Honourable Chairperson,
Members of Cabinet,
MECs,
Honourable Chairperson and members of the Portfolio Committee,
Honourable Members of Parliament,
Let me also recognise in the gallery the presence of:
Chairpersons and senior management of our Public Entities,
The Director-General and senior management of the department,
Representatives from DPW’s Young Professionals training scheme, and beneficiaries of the EPWP programme,
Members of my family, in particular my wife.

Welcome.

In the time available, I want to present the budget vote for 2013/14; account for what we have done as a department over the last year; and, most importantly, convince this House that the Department of Public Works is serious about turning itself around, and that we have a plan to take us forward.

2. The budget vote

The Departmental budget allocation has been reduced by 20% from R7.7 billion in 2012/13 to R6.2 billion in 2013/14. The decrease is attributable to the following:

• The phasing out of the devolution of the property rates grant to provinces
• Cabinet approved budget reductions of R1.5 billion over the Medium Term Expenditure Framework (MTEF)
• Shifting of R290 million to the Department of Home Affairs for border management in line with the devolution of budgets to line departments. 

Adjustments to the department’s baseline reflect the ongoing reorganisation of the department and new priorities, and include the following:

• A reprioritisation of R827 million to the Administration and the Immovable Asset Management programmes to provide for the implementation of a turnaround programme in the department.
• A reprioritisation of R150 million to the Independent Development Trust for the implementation of its transformation programme; and
• A reprioritisation of R247 million from the Expanded Public Works Programme (EPWP) Integrated Grant for Municipalities to the EPWP programme for the Non-state Sector – seen to be particularly effective in the creation of work opportunities.

The department’s budget reflects government priorities and the department’s efforts to address – in particular - Outcomes 4, 8 and 12.

In relation to the National Development Plan (NDP), my department – and the branches – are currently aligning their activities to support many of the identified goals of the NDP.

In addition to its core mandate as custodian and manager of the state’s immovable assets, the Department of Public Works (DPW) has a further mandate to create jobs and work opportunities and to address skills shortages in the Built Environment.

3. Expanded Public Works Programme

The Expanded Public Works Programme (EPWP) remains an effective part of government’s response to the triple challenge of poverty, unemployment and inequality.

Our initial target in the second phase of the EPWP - for the period 2009 – 2014, was to create 4.5 million work opportunities. This has now been increased to nearly 5 million new work opportunities – with a special emphasis on unemployed youth and women. As part of this, some 8 000 youth will be recruited for artisan training to be employed by the national and provincial departments of public works.

Moreover, in our choice of projects we seek to improve the quality of life of poor communities in particular.

Examples include:

• road maintenance projects
• working for Water projects involving removal of alien vegetation
• home Community Based Care projects
• the Community Safety Programme and
• a cemetery maintenance programme piloted in rural municipalities.

The EPWP programme is making a real difference to people’s lives. Indeed, earlier this week, with Deputy Minister Cronin, I visited the Lentegeur Police Station in Mitchell’s Plain – a state of the art project of Public Works. We were thronged by community members who impressed upon us the positive impact of EPWP for individuals and the community.

I am pleased to announce that the problem of under-spending on the EPWP incentive grant – which amounted to R358 million in 2011/2012 - has been eliminated in financial year 2012/13.

None of this would have been possible without the active partnership, coordination and participation of municipalities, provinces and non-profit NGOs, Community Based and Faith Based Organisations.

As we move into Phase III of EPWP, we have to ensure that all these stakeholders are on board, that they are supported where necessary – and that, collectively, we further up-scale EPWP programmes. Amongst others we need to investigate an expanded role for EPWP in the roll out of the Strategic Integrated Projects (SIPs), and ensure that - collectively as government departments and state owned enterprises - we all utilise EPWP and labour intensive methodology to maximise job creation.

4. Capital projects

In the course of 2012/13 some 214 projects were completed. These included high-profile projects for: the Department of Justice, Correctional Services, South African Police Service (SAPS), and the South African National Defence Force (SANDF).

Capital projects created some 18 815 jobs during 2012/13. The target for 2013/14 is approximately 40 000 jobs. Some 300 capital projects will be completed by end of March 2014. This includes the Matola Raid Monument in Mozambique.

The erosion of core professional services of the department has impacted negatively on our ability to deliver on the mandate. The following mitigating measures have been adopted:

• The department has secured a budget appropriation of R66 million to fill 88 out of 219 vacant and unfunded core professional positions.
• Joint professional teams have been created to support smaller regional offices, and to work with major clients.
• We are currently reviewing training programmes for young professionals, technicians, and artisans – as part of our vision to rebuild state capacity in the Built Environment.
• The department has mapped out the roll-out programme to resuscitate maintenance workshops with priority areas being Western Cape and Gauteng.

Working through EPWP, with the Eastern Cape Provincial Department of Public Works and Roads, and the Department of Defence, we are rolling out low cost bridges initially in Eastern Cape, before extending the programme to other provinces. These bridges, as well as providing safe river crossing during rainy seasons, especially for school children, also improve access and social and economic mobility for entire communities.

5. Asset investment management

The department’s Long Term Infrastructure Plan comprises three key elements:

• First, new buildings, replacements and upgrades– to ensure service delivery to clients and the public from appropriate buildings;
• Second, maintenance and repairs – to safeguard the assets we have.
• Third, rehabilitation, renovations and refurbishments. The conservation of state buildings is central to the Inner City Regeneration strategy, as well as our strategic goal of shifting the larger percentage of government accommodation away from leases to occupation of our own buildings.

Concrete achievements and plans include the following:

• Eleven buildings were rehabilitated in 2012/13, with a further 15 earmarked for the current year in order to accommodate user departments.
• As part of the Accessibility Programme, 42 buildings were made more accessible for people with disabilities last year, with a further 146 buildings prioritised for the current year.
• Two properties measuring 433 hectares earmarked for sustainable human settlements were approved for release in 2012/13. A further 5 properties have been identified for release in the current year.
• In terms of Inner City Regeneration, targets for 2013 include: the completion of Precinct Development Plans for West Capital and Paul Kruger Street, as part of the Tshwane Inner City Project and Master Plan, and identification of four sites within the Paul Kruger Street Precinct for head office accommodations for national departments.

In implementing the Green Building Programme a number of pilot projects in water efficiency, waste management, energy efficiency and eco-labelling of construction materials are being rolled out. Key amongst these is the current base-line study on energy efficiency in public buildings. The pilot will target 1 000 buildings and contribute to the creation of green jobs.

6. Prestige

We have taken firm control of Prestige by centralising it, implementing a new structure, and creating a direct reporting line to the Director-General. This has already resulted in the cancellation of a number of high-priced projects.

All Prestige projects are now undergoing investigation. The process is complete in regard to Pretoria. We have now extended the investigation to Cape Town where R100 million was spent on renovating 11 houses. Similarly many of the problems surrounding the security upgrade at Nkandla are rooted in the failure of supply chain management processes, poor management and lack of accountability.

As a department we completed our preliminary internal investigation at the beginning of the year. We have referred our findings to the SIU for further investigation. We are also cooperating with the Public Protector’s investigation. Parliament is planning to discuss our report, and the Auditor-General has undertaken to audit Prestige projects.

I can assure honourable members, no stone is being left unturned. I have given an undertaking, that as a department, we will act against any official where evidence of wrong-doing exists.

We have revived the parliamentary village boards. Our priority is to now deal with unauthorised and illegal residents and to introduce an access card system and review all aspects of security.

Additionally, policy proposals on norms and standards will be presented to the Executive for a decision by 30 June. These measures will be underpinned by the deployment of additional resources in Cape Town and Pretoria. The new systems will be fully operational within 6 months.

I also need to mention that we have completed an audit of heritage buildings and drawn up a detailed inventory of moveable assets with photos and valuation certificates. This greatly assists in safeguarding these important heritage items. It also provides a baseline for decision making on the future care of heritage sites. In this respect I need to point out that maintenance of heritage buildings is an expensive business.

7. Policy: Transforming the Built Environment

The Department of Public Works remains responsible for the regulation and transformation of the construction and property sectors. Skewed property ownership patterns need to be addressed, and the construction industry has to create an environment where emerging contractors graduate into sustainable businesses.

The following processes were finalised in the last year:

• The Construction Sector Charter Council was registered as a section 21 Company.
• The National Contractor Development Programme (NCDP) – driven by the Construction Industry Development Board (CIDB) – was launched in December 2012, and a National Contractor Development Forum - comprising DPW and other national infrastructure development departments - has been established to coordinate contractor development. The NCDP is also being rolled out to municipalities in partnership with COGTA and South African Local Government Association (SALGA).

On the legislative front, this year the department will be tabling in Parliament the Expropriation Bill, as well as a bill to establish Agrément South Africa as a public entity. Deputy Minister Jeremy Cronin is driving these processes and will provide further details.

[As an aside: Having recently rebranded themselves as leaders of the Anti-Apartheid struggle, I have no doubt that the Democratic Alliance (DA) will lend their full support to the Expropriation Bill.]

8. The department’s public entities

I need to mention the important work done by the entities that report to the Minister of Public Works.

Agrément South Africa – The Department of Public Works has utilised Agrément certificated products in the construction of new schools in the Eastern Cape and North West provinces.

The Construction Industry Development Board (CIDB) – It’s outputs include: developing standards for government tenders; and maintaining a national Register of Projects, as well as the contractor registration and grading system which is both a risk management tool for clients, as well as a development tool for emerging contractors. The CIDB can also de-register contractors for non-performance and for breaches of the CIDB Code of Conduct.

CIDB also promotes skills development through its Employment Skills Development Agency creating 2,800 learning opportunities per year.

The Council for the Built Environment (CBE) ensures that only registered and competent professionals are allowed to practice. It remains a major concern that only a quarter of registered professionals in the built environment are black. Last year the CBE established a candidacy programme to help remove bottlenecks and assist young black graduates to attain professional registration.

Meanwhile, the CBE bursary scheme produced its first batch of 8 graduates last year, one of whom is in the audience today.

Key outputs for CBE for the upcoming year include:

• contributing to the skills plan for the infrastructure roll out programme
• environmental sustainability in the built environment
• research into labour intensive construction and
• health and safety in construction.

The Independent Development Trust (IDT) - supports the DPW to fulfil its mandate, as well as providing project management services to other national and provincial departments. IDT supports the EPWP’s management information system, ensuring verifiable statistics - and the Non-state Sector programme. As part of SIP 13, IDT has been appointed as one of the implementing agencies for the national Schools Beautification programme.

IDT has championed women contractors in the construction sector. 30% of its projects in 2012/13, with a value of R1.7 billion, were awarded to women contractors. DPW is currently working with IDT to develop a new business case to review the organisation’s mandate, funding model and institutional form – to ensure the long-term sustainability of the organisation.

9. The Turnaround Strategy: Rebuilding Public Works

The department’s past performance has been characterised by corruption and mismanagement. This is a large and complex organisation where, all too often, there is misalignment between the mandate and the structure of the organisation. We are currently addressing the challenge of organisational structure with the assistance of the Department of Public Service and Administration (DPSA).

I want to assure this House that the turnaround project to ‘Rebuild the Department of Public Works’ is now well under-way:

• We have the funding from National Treasury
• The core of the Turnaround Team is in place under the office of the Director-General, not in the Ministry, so if the Minister is recalled tomorrow it will not derail the whole turnaround.
• The planning processes are well-advanced – with annual, 3-year and 7-year plans in place – developed in consultation with National Treasury.
• Much of DPW’s problems can be traced to a long period of unstable and constantly changing leadership. I have also said that any turnaround strategy needs to be led from the top. I believe we have now stabilised leadership with the appointment of the new DG and CFO, and other changes at leadership level.

Our strategic focus has been on taking control of five key areas:

1. Combatting fraud and corruption

We have worked closely with the SIU (Special Investigations Unit) to investigate irregular leases and projects – some 40 investigations in all, of which 23 are completed. This has resulted in successful disciplinary actions, the suspension of six officials and the dismissal of three, including one DDG. We have instituted court actions to recover monies wrongly paid by the department. We are also awaiting reports from disciplinary hearings involving a further two senior officials.

Arising out of the completed investigations into Prestige in Pretoria, the SIU has recommended that we suspend and discipline the responsible officials – which we have started to implement.

SIU investigations, taken together with recent findings of the Competition Commission, tell the same story: over-pricing and collusion between some officials and sections of the construction industry – a timely reminder that it takes two to tango; that corruption and greed in the private and public sectors are mutually reinforcing each other.

In the light of this, we have started to enhance investigating capacity within the department:

• Internal Audit was empowered to commission forensic investigations. Some 19 investigations have been completed.
• We are also establishing an internal Compliance and Enforcement Unit – advised by SARS – as part of a separate Risk Management Branch.
• Looking forward, we are establishing a separate Supply Chain Management (SCM) Branch. In this regard we are working closely with National Treasury to review and strengthen SCM processes.

Our broad approach can be characterised as follows:

We will investigate and prosecute cases of fraud and corruption, but it is equally important to but in place robust systems, and here I am quoting from our South African Revenue Service (SARS) colleagues, with the intent: “to make it easy for weak people to do the right thing, and difficult for bad people to do the wrong thing.”

2. The immovable assets register

The state land reconciliation with Deeds Office records has been substantially completed. This exercise involved scrutinising the records of some 180 000 land parcels, ascribing custodianship to the responsible department or level of government, and commencing the vesting process where necessary - a complex process involving numerous stakeholders. The figures we now have will form the basis of a physical verification process due to commence in July 2013.

National DPW still has to allocate custodianship to some 4 500 land parcels, and approximately 24 000 land parcels need to be vested – a lengthy process which will take until March 2016 to complete.

My main point: although this is a lengthy exercise, I am are very confident that we are on-track for the creation of an Asset Register that will – for the first time ever - accurately reflect the state’s assets.

Let me make a further point: that this is a real game-changer. With a sustainable register of state immoveable assets in place, we will have at our disposal the tools to leverage this massive property portfolio for economic development. This will also assist us to drive the transformation of the property sector in South Africa.

3. Audit of leases

The department presently manages a portfolio of 2 788 leased properties across the Republic. In his 2012 Budget speech, the Minister of Finance announced Treasury’s support for a national audit of leases by DPW – a timely response to the numerous lease scandals at the time.

To date, 100% of these leases have been reviewed. Of these, 1 316 required attention, revision or renewal. These we regard as backlog leases. 365 of these leases have already been addressed. Recommendations for the remaining 951 leases will be in place by the end of June, 2013.

4. Improving audit outcomes

The clean audit project was initiated in December 2012 to address audit queries – and includes a consortium of specialist service providers which has been deployed across the Department’s Head Office and 11 regional offices.

I am pleased to announce that the department has appointed 64 unemployed commerce graduates as part of this initiative. Indeed this is working out so well, that the Department is considering employing an additional 40 unemployed graduates. Skills development of Finance and Property staff is a secondary, but vitally important, output of this project.

A key area of focus is the reduction of late payments and compliance with the President’s instruction to pay suppliers within 30 days.  As part of this project, the DG and I are visiting the regions to meet with service providers, and to work with officials to address complaints.

Irregular expenditure is also a key focus of the Clean Audit Project.

This involves the inspection of every transaction in terms of compliance with supply chain management policy. I am pleased to confirm that all transactions for the department and the PMTE will be fully tested for the 2013/2014 financial year – in order to eliminate irregular expenditure going forward.

5. Operationalising the PMTE (Property Management Trading Entity)

Honourable members will be aware of the background to this issue. In 2006 Treasury approved the establishment of the Property Management Trading Entity within DPW with the injunction that a business case be submitted within two years. The failure to finalise these processes contributed significantly to both DPW and PMTE receiving negative audit opinions in subsequent years.

I am pleased to confirm that we have now formalised the establishment of the Entity. A detailed business case is under development and will be submitted to Cabinet for approval in August, 2013.

I wish to assure this House that the turnaround is proceeding in full consultation with organised labour. I have also given an undertaking that no retrenchments are envisaged. The parties have agreed to develop a National Framework Agreement to guide the change process.

10.  Concluding remarks

I would like to conclude by thanking the following people.

• The President for entrusting me with the Public Works portfolio
• The Auditor-General, Public Protector and members of the parliamentary committees for their constructive criticism
• Members of the SIU for arming us in the fight against corruption
• Treasury and TAU for the assistance and support in developing and implementing a turnaround strategy
• The DPSA for assisting us to address HR challenges.
• The Director-General and senior management of the department, as well as the previous Acting DG - who have kept the ship afloat, even as we try to turn it around.
• The entities of Public Works who have contributed their personnel and their knowledge to assist in the turnaround; and
• I particularly want to thank all those officials of the Department of Public Works who are actively assisting in the process of rebuilding.
  My message to them – and to honourable members - is this:
• Whilst we must never underestimate the magnitude and scope of the task we face, even so:
  • We have stabilised the department
  • We are making real progress in tackling the immediate and systemic challenges
  • We have put in place the building blocks and we have a plan to rebuild Public Works.

Together we can make Public Works work.

I thank you!

 

Speech by the Deputy Minister of Public Works, Hon Jeremy Cronin, during the National Assembly Budget Vote Debate Onpublic Works

Debate on Public Works budget vote by Mr Jeremy Cronin, Deputy Minister of Public Works in the National Assembly.

Jeremy Cronin, Deputy Minister

When I joined the Ministry of Public Works in June last year, the Department was still in the midst of very difficult but absolutely necessary fire-fighting. Minister Nxesi who was appointed a few months before me, in late 2011, arrived to find three large and daunting files on his desk - from the Auditor General`s Office, from the Special Investigations Unit, and from the Public Protector. Cracking down on corruption, dealing decisively with malpractices, focusing inward on ourselves - all of this has been a necessary posture.

But while the Turnaround and Stabilisation effort continues, the Department is now relatively stabilised. I would like to believe that many old-hands in the Department, professional colleagues who have remained at their posts, now have a renewed sense of purpose. They have been joined by new appointments, including Director General, Mziwonke Dlabantu and a new CFO, Cox Mokgoro.

All of this means that we can now focus more intently on our key strategic responsibilities, we can begin to look outwards and forwards, and not just inwards and backwards. One such essential move is to take seriously what is surely our core strategic responsibility - our multi-billion rand property portfolio.

The Property Management Trading Entity

According to the SA Property Owners Association (SAPOA) the South African property market is worth some R4,9-trillion - of which R188-billion is owned by national government departments and public entities.

Although not all of this, of course, falls under the National Department of Public Works, we are certainly the largest single property owner (whether public or private) in SA. Unfortunately we have not always managed this multi-billion rand asset with the necessary public sector professionalism.

We often say that "we have good policies, we just fail to implement them". I am sure this is often true. But this too easily excuses the policies themselves and the need to self-critically evaluate them as we learn from experience. Back in 1997 the DPW White Paper identified structural and operational weaknesses that impeded DPW`s performance in property management. The White Paper championed budgetary reforms that would introduce a quasi-market mechanism into the relationship between DPW and what were now called "client" departments using state-owned accommodation.

Capital expenditures, rental and rates costs for state-owned accommodation would now be devolved out of DPW`s budget and transferred to the budgets of national departments. In the words of the White Paper:

"client departments will [then] be required to pay a fee comprised of a capital charge, a notional rent and management fee, for the accommodation and related services which the DPW will provide. This will entail the DPW developing mechanisms for service level agreements with clients, thus `contractorising` its most important set of external relationships."

This marketization of the relationship between DPW and "client" departments was not necessarily entirely misguided. However, in keeping with the times, it was encased unfortunately within a set of neo-liberal/new public management assumptions and priorities. The first of these was that introducing a market mechanism into the relationship would result in transparency, budgetary cost-cutting, and the right-sizing of what was said to be a "bloated state". What this assumption neglected was that for the new "contractorising" relationships to be set-up, considerable initial expenditure (at least) would be required, particularly on professional skills, to capacitate the DPW to run a Property Management Trading Entity, not least given the vast portfolio it would be dealing with.

The second problem is that the policy then got stuck between its budget reduction ambitions and its equally neo-liberal ambitions to set up a new property SOE, spun out of the Department and modelled on private property companies - a publicly-owned Growth Point, if you like.

Again, it is not as though there is nothing to be learnt from private sector property companies - but a Property Management Trading Entity within the DPW should have different developmental priorities and possibilities - beyond business efficiency to achieve profit maximisation. These priorities should include using our property portfolio to help catalyse integrated urban development to turn around the decay of many of our CBDs, for instance. We also need to integrate much more fully labour intensive approaches (and the EPWP) into the maintenance of our property portfolio. Likewise there are many possibilities for driving green retro-fitting and accessibility - the public sector property portfolio should be a trend-setter in these important social and developmental objectives, rather than the laggard that it often currently is.

Finally in April 2006, in line with the White Paper, the DPW devolved its maintenance, property rates, municipal services and leasing budgets to its national user departments and introduced accommodation charges. At the same time it was recognised that this budgetary reform would require structural changes within the DPW. In response to DPW`s White Paper, National Treasury approved the establishment of a Property Management Trading Entity (PMTE) in March 2006. The approval was subject to several requirements including -

During the first year of operation of the trading entity, Public Works must seek approval from National Treasury to establish a fully-fledged trading entity by 1 April 2007, which would comply with all the conditions for trading entities ;.

In 2006, the Department developed a draft business case for the establishment of the "fully fledged" PMTE, but, I suspect for reasons noted above, it was never finalised. The Department also failed to properly segregate the functions of its "main account" from those of the PMTE. This has contributed significantly to both the Department and the PMTE receiving disclaimed audit opinions over the past few years. Added to this, the manipulation of narrow BEE objectives in the space of these new "contractorised" arrangements - (manipulation by established and aspirant property developers, and dishonest elements within the Department) - further muddied the waters. What had set out to be an intervention to achieve greater transparency and cost-saving has turned out often to be the exact opposite. It is time to make a new beginning.

Interim measures

To address these long-delayed issues, the Department, with effect from 01 April 2013, has now adopted interim structural measures to clearly segregate the functions of the PMTE and DPW`s Main Account. All relevant Asset and Property Management functions within DPW have now been ring-fenced to form part of the PMTE`s operations.

At present, the PMTE is operating as an account rather than a fully-functional trading entity.

Medium/long term measures:

The intention is for the PMTE to be suitably positioned and structured to enable the Department to better deliver on its mandate to (a) provide fit-for-purpose accommodation to its user departments at appropriate rentals; and (b) obtain and retain funds for future property developments. We have therefore commenced a fast-tracked process to develop policy options for the long term operating model for the PMTE in order to finalise and submit the business case for approval.

It is envisaged that this process will be concluded in August /September 2013.

Legislation

Another area in which we are beginning to see a shift from internal fire-fighting towards assuming forward-looking responsibility for our strategic responsibilities - is in the area of legislation. And again we are picking up on a long delayed matter.

The second sub-clause of the "Property Clause" in our Bill of Rights reads:

"Property may be expropriated only in terms of law of general application - for a public purpose or in the public interest;" But, as we speak, there is no such legislated "law of general application" outlining an administratively just process in cases of expropriation, and ensuring just and equitable compensation for those expropriated. There was an attempt in 2008 to pass an Expropriation Act, but the Draft Bill was withdrawn.

This Portfolio Committee now has an historic responsibility later this year to finally pilot a constitutionally-compliant (indeed, a constitutionally REQUIRED) Expropriation Act through Parliament. Since we last reported to the Committee in mid-April on the Draft Bill gazetted for public comment we have received a significant number of public responses.

We would like to use this opportunity to thank all of those who have made submissions, our departmental officials are busy processing them. I understand that many inputs are generally supportive. Others raise concerns which appear to be based on mis-readings of the Draft Bill -but that often tells us something - that our intentions are not coming through as clearly as they might. Expropriation is an emotive issue and, therefore, not all of the submissions received are constructive, some are quite emotional. Many of these are, in effect, not quarrelling with the Draft Bill, but with the requirements of the Constitution itself -which, for instance, explicitly does not regard market value as the sole criteria in assessing compensation.

IDT

Among the many challenges confronting the DPW is the sustainability of one of our key developmental entities - the Independent Development Trust. The IDT was established in 1990, as an independent, civil society, grant-making agency with a R2 billion government endowment earmarked by the apartheid government for the enhancement of the standard of living conditions of disadvantaged communities - basically a last gasp attempt to create a black middle class buffer in the face of impending democratic change.

In April 2000, the Trust was reconstituted as a Schedule 2 Public Entity in terms of the Public Finance Management Act. In March 2007, Cabinet took a decision that "IDT must be transformed into a government development agency that will implement projects which are commissioned by government departments. It must cease to be a civil society organization, an independent agency or a funding agency".

The changes and expansion of IDT`s mandate since its inception have eroded the R2 billion capital injection it received back in 1990. The entity is currently severely constrained financially and is being sustained through State funding. For IDT to continue to exist it needs to be redefined within a prescribed mandate that will ensure over a predetermined period IDT becomes self-funded and sustainable. Over the past few years there has also been the matter of mandate creep leading to duplication in function with other State institutions.

We believe that the IDT has a critical developmental role to play -particularly in regard to the project management of social infrastructure construction (schools, clinics, community centres, libraries, etc). Private sector contractors and even government departments or municipalities often fail to foster active community participation in the planning, construction and maintenance of social infrastructure. This results in a sense of community alienation - and even, sometimes, in the wanton destruction of what is meant to be community-owned public property. An active, developmental approach to project managing the construction of social infrastructure is the critical niche we believe the IDT needs to specialise in.

In line with all this, the Department (working closely with Treasury) is actively developing a new business model for the IDT. We have set ourselves the task of producing an agreed business model for the IDT by the end of July this year.

Expanded Public Works Programme

Earlier this year an international workshop on Public Employment Programmes was jointly hosted by UCT and the UN`s ILO here in Cape Town. As the DPW we were actively involved in the event. I am not sure if South Africans appreciate the extent to which many countries (now also facing serious unemployment crises) are extremely interested in our own EPWP and particularly the sheer scale of it, as well as the multi-sectoral and innovative approaches we have pioneered.

When the programme was first started, I think that the belief was that it was to be of short duration. Alas, we now know that our unemployment crisis is deeply systemic and stubbornly present. Even the National Development Plan envisages some 431,000 EPWP participants in 2030 on its more optimistic growth projection of 5,4%. It rises to 2,6million participants a year if the growth rate is 4,8%.

In the present 13/14 financial year we are committed to accelerating participating numbers. This will be achieved, through amongst other things:

Working with Provincial Roads Departments to ensure increased labour-intensity on projects funded by the Provincial Roads Maintenance Grant.
Increased technical support to municipalities to ensure projects are designed and implemented labour-intensively. Technical support will be provided to at least 255 municipalities in this financial year, with a particular focus on the 23 least resourced districts in line with the PICC`s Strategic Integrated Project 6.
EPWP will continue to promote skills development by implementing programmes like the National Youth Service where youth are trained in artisan trades in, for instance, the built environment. The DPW is targeting 3,500 youth this financial year as part of our contribution to the NYS programme.
The budget we are debating today will, I believe, enable us to consolidate the important shift of emphasis now under-way in the DPW -from fire-fighting and inward-looking through stabilisation to a much more active and strategic forward drive.

Speech by Hon Catherine Mabuza during National Assembly Debate on Budget Vote 7: Public Works

Debate on Public Works Budget Vote by Ms Catherine Mabuza, ANC MP - Chairperson of the Portfolio Committee on Public Works.

Honourable Minister of Public Works;
Honourable Deputy Minister of Public Works
Director-General of the Department;
Members of the Portfolio Committee on Public Works;
Entities reporting to the Department;
Officials and Employees of the Department;
Distinguished Guests;
Ladies and Gentlemen;
Good Morning;

The Constitution of the Republic of South Africa is the supreme law of the country and speaks of not forgetting the past; but also to look beyond that. The Constitution emphasises this at the beginning with the words:

"We the people of South Africa": reminding us that we are one and that the past is there, not forgotten, and also helping us. But I will quote the main reason I believe we are here today, and that is to: "Improve the quality of life for all citizens and free the potential of each person".

The "quality of life for each citizen", is written into our Constitution and asks that we all make an effort to make sure that people do not lose hope in this promise. The Portfolio Committee on Public Works saw this hope from the people, when doing its oversight work in the different provinces.

The Committee believes that the Department of Public Works can contribute to this constitutional obligation, of improving the lives of people, at the same time as it is addressing its own challenges. The Minister of Public Works said that the challenges are there in the Department. But after broad consultation with stakeholders, especially, the staff within the Department he identified key areas that prevented the Department from properly carrying out its mandate. In 2012 the Minister introduced a Turnaround Strategy with the immediate focus on:

Stabilising the Department by providing strong leadership at Ministerial and Departmental levels, and
Evaluating the mandate of the Department to determine how, why and how well it is being implemented.
The Minister reported to the Committee that some of the 18 main points that are included in the Turnaround Strategy will only be implemented in phases. The planned result is the gradual transformation of the Department from its current negative image as a Department of slow delivery, or no-delivery, to that of a Department that will ensure that it provides a quality service to all its Client Departments. We all know this is a process that will take time.

The Department has a number of challenges that include mismanagement of resources, fraud and corruption, as mentioned by the Minister. The Minister presented a report to the Portfolio Committee highlighting issues affecting the delivery of the Department. These included persons suspended and the finalisation of the disciplinary processes being extended through the use of court action.

The report indicated cases that had been resolved or were in the process of being resolved. An example is the request for the resignation of the Chief Financial Officer (CFO) of the Department. This was to address the challenge of not being able to fill the positions where persons were suspended, until their cases were finalised. The Minister emphasised that this did not mean that criminal charges could not be instituted against persons who were guilty of fraud or corruption. The Portfolio Committee also found instances of irregular expenditure which led to large variations in the cost of the Lebombo and Skilpadshek Border Posts; as well as the Kimberley New Generation Prison. The Portfolio Committee was informed during its oversight to the Lebombo Border Post, that: the facility was not being used due to the flawed design; and the processing area that was not properly laid out. Also, the area where cash was received did not have any bullet-proof glass, which the Portfolio Committee considered as a risk.

In 2012, a Joint Meeting was also held with the Portfolio Committee on Home Affairs on the challenges it identified at the Border Posts. The issues identified at the Lebombo Border Post include design of the processing area; directional flow of people and traffic between South Africa and the Mozambique Border did not function as intended. During peak seasons, for example the Easter and Christmas Breaks, large volumes of traffic and pedestrians came through the Border that resulted in long delays.

The systems that must be in place for the Client Departments to be happy with the services they receive from the Department of Public Works, will only happen when all structures are fully functional. The Portfolio Committee on Public Works remains concerned about the Department receiving two Disclaimers of Opinion from the Auditor-General. The Minister reported to the Committee that while the Turnaround Strategy is beginning to transform the Department, it will take time before the Department receives a clean audit. The Minister also reported that proper systems are being put in place for the Department to properly bill the Client Departments, lease accommodation on behalf on National Departments; and have correct procurement and SCM systems in place.

The need for proper systems in the Department was again highlighted by the findings of the Auditor-General for the 2010/11 financial year. Particular emphasis was placed on the functioning of the Property Management Trading Entity (PMTE). The PMTE received a disclaimer of opinion due to; among others; the lack of adequate systems for identifying and recognising the following instances of fruitless and wasteful expenditure:

An amount of R6.8 million occurred due to the lack of monthly preparation of supporting documents in the payment of Municipal bills.
Interest paid resulting from late payments.
Flawed contracts and client departments vacating the property before the lease expired.
The Committee therefore remains concerned about the Department`s lack of proper systems and controls especially the challenges experienced in its leasing, procurement, supply chain management (SCM) and billing systems. The Committee has raised these concerns before with the Department because some Departments have had to do work which would ordinarily be done by the Department of Public Works. These Departments felt that the work that needed to be completed was done too slowly. Now the Department of Public Works must claim back its mandate.

The Department identified the following areas that impacted on its service delivery:

A lack in capacity to clear the entire backlog in payments to Municipalities; and experts to assist with the management of its property portfolio.
The Department must still complete an effective, usable Immovable Asset Register by 2014. Completing the Asset Register is important for Government. It will then know what it owns, what state it is in, and how it can be used. The Department has been struggling to complete the Asset Register. In response to these capacity constraints; the Department appointed Earnest and Young as service providers to assist in the completion of the outstanding issues relating to the Immovable Asset Register. But the Asset Register must be managed and maintained by officials within the Department and not be dependent on consultants.

The Committee has raised the issue of the Department`s capacity constraints. This has negatively affected the Department`s ability to carry out its mandate. It is currently undertaking a Skills Audit to understand the available skills in the Department and what vacancies it must fill. The Department has already identified that technical skilled professionals (engineers; architect; project managers; quantity surveyors) must be appointed.

A call was also made to retired professionals to come and mentor graduates so that they can also have the proper experience so that they can qualify to be engineers, architects with the Built Environment Professions Councils. The Council for the Built Environment (CBE) is responsible, along with its 6 Professional Councils, for overseeing the transformation of the built environment professions.

The participation of women in the different Built Environment professions does not reflect the demographics of the country, especially in engineering. The Committee was concerned about the number of unemployed graduates who were not able to qualify as they did not receive proper experiential training. This is especially a concern as there is a shortage of engineers, project manager, and quantity surveyors.

The Department is also working together with the Departments of Public Service and Administration; and Higher Education and Training to train artisans and technicians. The opening of workshops is planned to allow the Department to improve its maintenance programme. This is important because it gives unemployed youth a chance to be trained to get a proper job.

But the workshops are currently not functioning properly and will be piloted in Pretoria and Cape Town. The training of the artisans and technicians is a medium to long-term strategy of the Department. The training can eventually allow the Department to reduce the outsourcing of its maintenance function. By employing artisans and young people trained to undertake maintenance of Government`s buildings, will eventually be more cost effective. If the buildings are well-maintained, the life-cycle of these assets can be extended.

The Department will also introduce legislation to Parliament. The Agrément South Africa Bill will create Agrément SA (an entity reporting to the Department) as a juristic person. Usually when Public Works is mentioned it is to find out what it does wrong. But sometimes things can also be right. The work done by Agrément SA is one, and it successfully implements its mandate to test and certify innovative building technologies which are safe for the public to use; cost effective, and energy efficient.

Agrément is the smallest entity, receiving the least allocation from the Department of just under R10 million for 2013/14. But, it has made a large contribution to the work of the Department as well as other Departments that include Science and Technology; Human Settlements and Transport. The work of Agrément includes:

The technical certification of many new labour-intensive construction methods, such as the development of criteria for using thin concrete technology in road construction that was developed and implemented in Gauteng and the Eastern Cape, and the
Environmental assessments such as thermal performance and energy efficiency that contribute towards environmental sustainability.
The CEO of Agrément SA presented its Annual Performance Plan to the Committee, said that the vision of the entity is to make "building cheaper and simpler so that people can build their own houses, especially in rural areas". The Committee agrees with this, and suggests that the Department encourage the use of the products certified by Agrément. It should facilitate the introduction of these products to more of the Government Departments, municipalities and Entities. This is something that has gone right and says that if there is commitment, things can work.

The Department also has 2 additional entities reporting to it:

The Construction Industry Development Board (CIDB) which is tasked with the transformation of the construction industry and monitoring its progress. The CIDB presented a report by the Competition Commission on collusion in the construction industry. The Committee was informed that collusion by big companies in the construction sector led to the exclusion of contractors at grades lower than 8-9 from progressing in the construction industry.

The Committee learnt from its oversight to the provinces that emerging contractors were negatively affected by bigger companies. The smaller contractors struggled because they did not have a large capital base; cannot easily get loans from banking institution and sometimes failed due to late payments from the main contractor or Government.

The Independent Development Trust (IDT) has been tasked to assist in the eradication of mud schools and unsafe structures. The IDT has used innovative construction methods to speed up the process. The Committee observed the schools built in the Eastern Cape, but was concerned that the projects were not using the EPWP principles of skills development and labour intensity due to the short duration of these projects.

The replacement of inappropriate school buildings and the provision of basic services has been a focus of concern since 2007. In December last year, the Minister pledged the Department`s support to the Department of Basic Education and other stakeholders in the implementation of the Strategic Integrated Project 13 the National School Build Programme. SIP 13, wants to address the inheritance of apartheid spatial planning by ensuring that there is uniformity in planning, procurement, and contract management in the school refurbishment and building projects.

Again, I quote from the Constitution that says:

"We respect those who have worked to build and develop our country; and believe that South Africa belong to all of us, who live in it, united in our diversity".

This year, is the Centenary of the 1913 "Natives" Land Act. This is the proper title that says who was most affected by this legislation. But we must also not forget that other people, for example, the San who also lost their land. I mention this because members of the public expressed fears that the introduction of the Draft Expropriation Bill will lead to "land grabs", with no compensation. But this is not the intention of the Draft Bill as it wants to bring the existing Expropriation Act (No. 63 of 1975) in line with the Constitution, under Clause 25 - the Property Clause in the Bill of Rights.

The aim of the Bill is to "provide for the expropriation of property for a public purpose or in the public interest, subject to just and equitable compensation; and to provide for matters connected thereto".

The Draft Expropriation Bill has already been published by the Department for public comment on 23 April of this year. In answer to a request made by the Committee, the Deputy Minister of Public Works briefed the Committee on the content of the Bill. The information session assisted the Committee and prepared it for its own engagements in public participation processes and deliberations of the Draft Bill once it is tabled in Parliament and is referred to the Committee. Clause 9 (3) of the Constitution clearly states a number of areas that citizens may not be disadvantaged. I will mention a select few here:

"The State may not unfairly discriminate directly or indirectly against anyone on one or more grounds, including race, gender, age, or disability."

The country must deal with high rates of unemployment, poverty and inequality. In 2004, the Department of Public Works was tasked with leading Phase I of the Expanded Public Works Programme (EPWP). The EPWP is one of Government`s main programmes to reduce poverty and provide skills development to marginalised communities, especially those who live in the rural areas. The programme uses labour intensive methods on infrastructure projects, so that ordinary people can work, learn a skill and get a daily stipend for the work.

We are now in Phase II of the programme and it must create 4.5 million work opportunities by 2014. From 2009 to date the programme produced 2.6 million work opportunities and will continue to scale up the participation in the programme. The Committee, from its oversight visits to the provinces, recommended to the Department that low income municipalities receive assistance in creating work. The Grant was amended to give low income municipalities a chance to create these work opportunities. They receive 40 per cent of the Grant upfront and the other 30 per cent each once they have reported on the work opportunities created.

The Committee is pleased that low capacity municipalities can take part in the EPWP. The targets for youth and women are reached. But the Committee is concerned that the 2 per cent target for people with disabilities is still not being reached. The Committee suggested to the Department that they engage with organisations that represent people with disabilities, so they can also take part in the programme. Finally, I end where I started with the quote from our Constitution that we are here to: "Improve the quality of life for all citizens and free the potential of each person".

We must all do this and the Department is expected to fulfil its mandate and implement it for the good of all people. The budget of the Department must be used for all people, but especially the poor and marginalised communities in the rural areas where economic development is usually very slow; so they too can see that the quality of their lives does improve.

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Speech by the Minister of Public Works, Hon Thembelani Thulas Nxesi During National Assembly Debate on Budget Vote 7: Public Works

Debate on Public Works Budget Vote by Mr Thulas Nxesi, Minister of Public Works

Rebuilding the Department of Public Works: Rebuild capacity, improve service delivery and expand job creation

1. Introduction

Honourable Chairperson
Honourable members of Cabinet
Honourable MECs
Honourable Chairperson and members of the Portfolio Committee on Public Works
Honourable Members of Parliament

Let me also recognise in the gallery the presence of:

Chairpersons and senior management of our Public Entities;
The Director-General and senior management of the Department;
Representatives from DPW`s Young Professionals training scheme, and beneficiaries of the EPWP programme;
Members of my family, and particularly my wife
Distinguished guests, ladies and gentlemen
Welcome.

In the time available I want to cover the following:

To present the budget vote for 2013/2014, and to share with you what we intend to accomplish with the funding that is being availed;

To account for what we have done as a Department over the last year - 2012/2013 - the successes and the challenges; and

Most importantly to convince this House that the Department of Public Works is serious about turning itself around; that we have a plan to take us forward; and that we have put in place the building blocks to rebuild Public Works .

2. The budget vote

The Departmental budget allocation has been reduced by 20% from a total budget of R7.7billion in 2012/13 to R6.2 billion in 2013/14. Over the MTEF, the budget will increase at 6% per annum to provide for inflationary escalations. The 20% decrease in 2013/14 is attributable to the following:

The phasing out of the devolution of the property rates grant to provinces which will constitute part of the provincial equitable share.

Reductions of the department`s infrastructure budget over the MTEF period as follows:

Cabinet approved budget reductions of R1.5 billion over the MTEF.
Shifting of R290 million from the Department`s infrastructure budget to the Department of Home Affairs for border management in line with the devolution of budgets to line departments
Adjustments to the department`s baseline to be effected over the medium term reflect the on-going reorganisation of the Department and new priorities, and include the following:

A reprioritisation of R827 million to the Administration and the Immovable Asset Management programmes to provide for the implementation of a turnaround programme in the department.

A reprioritisation of R30 million to the Council for the Built Environment for the acceleration of transformation in the built environment sector.

A reprioritisation of R150 million to the Independent Development Trust for the implementation of a transformation programme within the entity.

Additional funds of R133 million provided for improved conditions of service in the Department as well as additional allocations to the Council for the Built Environment and the Construction Industry Development Board.

A reprioritisation of R247 million from the EPWP Integrated Grant for Municipalities to the EPWP programme for the Non-state Sector to capitalise on the effectiveness of the Non-state Sector`s programmes in the creation of work opportunities.

The Department`s budget reflects government priorities and the Department`s efforts to address the following outcomes:

Outcome 4: Creating decent employment through inclusive economic growth

Outcome 8: Sustainable human settlements and improved quality of household life, and

Outcome 12: Creating an efficient, effective and development oriented public service and an empowered, fair and inclusive citizenship.

My Department contributes to attaining the further two outcomes:

Outcome 5: A skilled and capable workforce to support an inclusive citizenship, and

Outcome 6: to create an efficient, competitive and responsive infrastructure network.
In relation to the National Development Plan, whilst my Department supports many of the identified goals, our emphasis is on the following:

A social compact to reduce poverty and inequality, and raise employment and investment.

A strategy to address poverty and its impacts by broadening access to employment, strengthening the social wage, improving public transport and raising rural incomes.

Steps by the state to professionalise the public service, strengthen accountability, improve coordination and prosecute corruption.

An education accountability chain, with lines of responsibility from state to classroom.

Phase in national health insurance, with a focus on upgrading public health facilities, producing more health professionals and reducing the relative cost of private health care.

Public infrastructure investment at 10% of gross domestic product (GDP), financed through tariffs, public-private partnerships, taxes and loans and focused on transport, energy and water.

Interventions to ensure environmental sustainability and resilience to future shocks.

New spatial norms and standards - densifying cities, improving transport, locating jobs where people live, upgrading informal settlements and fixing housing market gaps; and

Reduce crime by strengthening criminal justice and improving community environments.

In addition to its core mandate as custodian and manager of the state`s immovable assets, the Department of Public Works has a further mandate to create jobs and work opportunities and to address skills shortages, particularly in the Built Environment professions. All of these speak to the outcomes I highlighted earlier.

It is important to make the point, that despite serious flaws, major sections of the DPW remain productive - due to the commitment and hard work of officials. EPWP is a case in point.

3. Expanded Public Works Programme

EPWP is a flagship programme of this Department and of government - a successful and effective part of government`s response to the triple challenge of poverty, unemployment and inequality. Our initial target in the second phase of the EPWP - for the period 2009-2014 - was to create 4.5 million work opportunities. We have made steady progress towards achieving our targets.

Indeed, in response to the President`s call in the State of the National Address to increase efforts to combat unemployment, I am pleased to confirm that EPWP`s target for the creation of new job opportunities in the current year - 2013/2014 - have been up-scaled from 1.2 million to 1.65 million.

What this means, in real terms, is that an additional 450,000 job opportunities will be created this year - benefitting both unemployed individuals, and their families. This increase brings the new target for the period 2009-2014 to almost 5 million - with a special emphasis on unemployed youth and women. As part of this, some 8,000 youth will be recruited for artisan training to be employed by the national and provincial departments of public works.

Moreover, in our choice of projects we seek to improve the quality of life particularly of poor communities. Examples include:

Construction and road maintenance projects.
Working for Water projects involving removal of alien vegetation - which is a threat to water tables.
Home Community Based Care projects in which caregivers are trained to look after sick patients in their homes.
The Social Sector piloted the Community Safety Programme in four municipalities in 2012/2013. This project will be replicated in other provinces in the future.
The Environment and Culture Sector has piloted the cemetery maintenance programme in rural municipalities.
Let me give a concrete example: Ms Happiness Notwane from North West province joined an EPWP project in 2010 to clean pavements and eradicate alien plants. She had this to say:

"Raising a child alone is not easy. The stipend from EPWP made sure I could take care of my child and I also managed to save money to buy a fridge."

The EPWP programme is making a real difference to people`s lives. I was reminded of this earlier this week when, together with Deputy Minister Jeremy Cronin, I visited the Lentegeur Police Station in Mitchell`s Plain - a state of the art project of Public Works. We were thronged by community members who impressed upon us the positive impact of EPWP for individuals and the community.

I am also pleased to announce that the problem of under-spending on the disbursement of the EPWP incentive grant - which amounted to R358 million in 2011/2012 - has been largely eliminated in financial year 2012/2013, as a result of revisions to the grant model.

None of this would have been possible without the active partnership, coordination and participation of municipalities, provinces and non-profit NGOs, Community Based and Faith Based Organisations.

As we move into Phase III of EPWP, we have to ensure that all these stakeholders are on board, that they are supported where necessary - and that, collectively, we further upscale EPWP programmes. Amongst others we need to undertake the following:

to see how we can replicate the successful Zibambele model - employing local communities for road maintenance in KZN - in other spheres such as schools maintenance;
to investigate an expanded role for EPWP in relation to the roll out of the SIPs; and
to ensure that collectively as government departments and SOEs we all utilise EPWP and labour intensive methodology to maximise job creation.
4. Capital Projects

In the course of 2012/2013 some 214 projects were completed. These included:

For the SANDF:

Upgrade of Boston Base Air Force Base
Phase 2 runway upgrade at Waterkloof Air Force Base
For the Department of Justice:

New magistrates court buildings in Katlehong
Renovations to Bloemfontein Magistrates Court
Refurbishment of Gelvandale Magistrates Court (Port Elizabeth)
For Correctional Services:

Maintenance at Glencoe and Kroonstad prisons
Upgrading of the power supply at Goedemoeg Prison
Repairs at Tulbagh Prison
For SAPS:

Renovation of buildings at Port St Johns, and
Upgrade and new accommodation for Clocolan Police Station.
Capital projects created some 18,815 jobs during 2012/2013. The target for 2013/2014 is approximately 40,000 jobs - based on current and planned projects.

Currently 518 projects are in the construction phase, with 300 projected to be completed by end of March 2014. High profile projects to be completed this year include: 7 military projects, the Tzaneen prison, the Matola Raid Monument in Mozambique, the Skilpadhek Port of Entry; upgrading of 38 Church Street (National Treasury); and Golela Port of Entry Residential Complex.

Diagnostics undertaken as part of the turnaround process have revealed major capacity deficiencies within the professional services of the Department which, if not corrected, impact negatively on our ability to deliver on the Department`s mandate, also resulting in under-spending on capital projects. The following mitigating measures have been adopted:

The Department has secured a budget appropriation of R66 million to fill 88 out of 219 vacant and unfunded core professional positions.
A joint professional team consisting of Architects, Engineers, and Quantity Surveyors has been established in April 2013 to provide professional and technical support to smaller regional offices which lacked capacity (Mthatha, Nelspruit, Polokwane, Mmabatho, and Kimberly).
The Department is rearranging itself around Client Portfoli
Structures with major clients afforded full-scale professional resources to manage the life cycle of infrastructure. Joint Teams of professionals have been appointed for key departments who constitute the highest proportion of infrastructure budget of the Public Works Capital Building Programme.
We are currently reviewing training programmes within the Department for young professionals, technicians, and artisans - as part of our vision to rebuild state capacity in the complete value chain of the Built Environment.
The Department has mapped out the roll-out program to resuscitate maintenance and minor works workshops with priority areas being Western Cape and Gauteng, to be operational in financial year 2014/2015.
The Department will provide mentorship and training for 165 emerging contractors in grades 1 to 4 during the current year.
The Department confirms the importance of improving social infrastructure in rural villages. Working through EPWP, with the Eastern Cape Provincial Department of Public Works and Roads, and the Department of Defence, we are rolling out low cost bridges initially in Eastern Cape, before extending the programme to other provinces. These bridges, as well as providing safe river crossing during rainy seasons - especially for school children - also improve access and social and economic mobility for entire communities.

5. Asset Investment Management

The Department`s Long Term Infrastructure Plan comprises three key elements:

First, new buildings, replacements, upgrades and additions - to ensure service delivery to clients and the public from appropriate buildings;
Second, maintenance and repairs - to safeguard the assets we have.
Third, rehabilitation, renovations and refurbishments. We are committed to the conservation of state buildings - some of which are heritage buildings. This is central to the Inner City Regeneration strategy, as well as our strategic goal of shifting the larger percentage of government accommodation away from leases to occupation of our own buildings.
Concrete achievements and plans include the following:

Eleven buildings were rehabilitated in 2012/2013, with a further 15 earmarked for the current year in order to accommodate user departments.
As part of the Accessibility Programme, out of the 100 state buildings prioritised for last year, 42 buildings were completed and made more accessible for people with disabilities, with a further 146 buildings prioritised for this current year.
Two properties measuring 433 hectares earmarked for sustainable human settlements were approved for release in 2012/2013. A further 5 properties have been identified for release in the current year as suitable for human settlement.
In terms of Inner City Regeneration, targets for 2013 include: the completion of Precinct Development Plans for West Capital and Paul Kruger Street - as part of the Tshwane Inner City Project and Master Plan - and identification of four sites within the Paul Kruger Street Precinct for head office accommodations for national departments of government.
The Department is currently establishing a Green Building Programme Project Management Office. In implementing the Green Building Programme a number of pilot projects in water efficiency, waste management, energy efficiency and eco-labelling of construction materials are being rolled out. Key amongst these is the current base-line study on energy efficiency in public buildings. The pilot will target 1,000 buildings and contribute to the creation of green jobs and training energy scouts.

6. Prestige

The Prestige programme covers the management of national government offices and the accommodation of the Presidency, cabinet members, MPs and senior judges - as well as the organising of national events. Prestige is a fraction of the mandate of Public Works, but accounts for much of the negative publicity which the Department has attracted.
Given this profile, we have taken firm control of Prestige by centralising it, implementing a new structure, and creating a direct reporting line to the Director-General. This has already been accomplished, and has already resulted in the cancellation of a number of high-priced projects. Meanwhile, underperformance by service providers, the pricing of renovations and other irregularities are being investigated. Culprits will be held to account.

Let me add: all Prestige projects are now undergoing investigation. The process is complete in regard to Pretoria. We have now extended the investigation to Cape Town where R100 million was spent on renovating 11 ministerial houses.

Similarly many of the problems surrounding the security upgrade at Nkandla are rooted in the failure of supply chain management processes, poor management and lack of accountability. As a Department we completed our preliminary internal investigation at the beginning of the year. We have referred our findings to the SIU for further investigation. We are also cooperating with the Public Protector`s investigation. Parliament is planning to discuss our report, and the Auditor-General has undertaken to audit Prestige projects.

I can assure honourable members, n* stone is being left unturned. I have given an undertaking, that as a Department, we will act against any official where evidence of wrong-doing exists.

We have revived the parliamentary village boards. Our priority is to now deal with unauthorised and illegal residents and to upgrade the security system by introducing an access card system and reviewing all aspects of security.

The Department has now started the process of clearing the backlog of services outstanding. In tandem with the Supply Chain intervention, we are streamlining procurement processes to ensure enhanced service levels and the application of appropriate norms and standards. In this respect policy proposals on norms and standards will be presented to the Executive for a decision by June 30th. These measures will be underpinned by the deployment of additional resources in both Cape Town and Pretoria. The new systems will be fully operational within 6 months.

I also need to mention that we have completed an audit of heritage buildings and drawn up a detailed inventory of moveable assets with photos and valuation certificates. This greatly assists in safeguarding these important heritage items. It also provides a baseline for decision making on the future care of heritage sites. In this respect I need to point out that - regardless of other problems - maintenance of heritage buildings is an expensive business.

7. Policy: Transforming the Built Environment

The Department of Public Works remains responsible for the regulation and transformation of the construction and property sectors. Skewed property ownership patterns need to be addressed, and the construction industry has to create an environment where emerging contractors graduate into sustainable businesses.

The following processes were finalised in the last year:

The Construction Sector Charter Council was registered as a section 21 Company, and the necessary structures and procedures established.
A training manual has been developed, and training will take place this year for the public sector on compliance with Construction Sector Charter Codes.
The National Contractor Development Programme (NCDP) - driven by the Construction Industry Development Board (CIDB) - was launched in December 2012, and a National Contractor Development Forum comprising DPW and other national infrastructure development departments has been established to co-ordinate contractor development. The NCDP is also being rolled out to municipalities in partnership with COGTA and SALGA.
The Contractor Incubator Programme (CIP) contributing to the development of emerging contractors between grades two and six is to be implemented during the current year.
On the legislative front, this year the Department will be tabling in Parliament the Expropriation Bill, as well as a bill to establish Agrément South Africa as a public entity. Deputy Minister Jeremy Cronin is driving these processes and will provide further details.

8. The Department`s Public Entities

I need to mention the important work done by the Entities that report to the Minister of Public Works:

Agrément South Africa - is a world class technical assessment agency whose primary role is the assessment and certification of non-standard construction products in South Africa. An example of where the Department of Public Works has utilised Agrément certificated products is in the construction of new schools in the Eastern Cape and North West provinces. [`Agrément` - is a French word meaning `agreement`.]
The Construction Industry Development Board (CIDB) - was established to mitigate risks in the public sector construction procurement environment; to provide leadership to the construction industry and to stimulate sustainable growth. The Board`s outputs include: developing standards for government tenders; and maintaining a national Register of Projects, as well as the contractor registration and grading system which is both a risk management tool for clients as well as a development tool for emerging contractors. The CIDB can also de-register contractors for non-performance and for breaches of the CIDB Code of Conduct.
CIDB is currently exploring a transparency and integrity system based on the internationally recognised Construction Sector Transparency Initiative (CoST).

CIDB also promotes skills development in the built environment through its Employment Skills Development Agency which will create 2,800 learning opportunities per year.

The Council for the Built Environment (CBE) - advises the minister, whilst enhancing public protection by ensuring that only registered and competent professionals are allowed to practice.
It remains a major concern that only a quarter of registered professionals in the built environment are black. Last year the CBE established a candidacy programme to help remove bottlenecks and assist young black built environment graduates to attain professional registration.

Meanwhile, the CBE bursary scheme produced its first batch of 8 graduates last year - one of whom - Ms Sandra Christine Serumaga-Zake - is in the audience today. She will participate in the CBE`s candidacy and workplace training programme.

Key outputs for CBE for the upcoming year include:

Contributing to the skills plan for the infrastructure roll out programme;
Initiatives to contribute to the further production of built environment professionals;
Environmental sustainability in the built environment, and
Research into labour intensive construction, and
Health and safety in construction.
The Independent Development Trust (IDT) - supports the DPW to fulfil its mandate to deliver social infrastructure - as well as providing project management services to other national and provincial departments. IDT supports the EPWP especially in relation to its management information system and the Non-state Sector programme. As part of Strategic Infrastructure Project (SIP) 13, IDT has been appointed as one of the implementing agencies for the national Schools Beautification programme.
IDT has championed women contractors in the construction sector. 30% of projects in 2012/2013 - with a value of R1.7 billion - were awarded to women contractors. During the same year, 72% of the 75 contractors enrolled by IDT in its Contractor Development Programme were women.

DPW is currently working with IDT to develop a new business case to determine the organisation`s mandate, funding model and institutional form - to ensure the long-term sustainability of the organisation.

As the Department sharpens its vision for the future - as part of the turnaround - it will be essential to engage closely with the entities to develop synergies and coherence.

9. The Turnaround Strategy: Rebuilding Public Works

The Department`s past performance has been characterised by corruption and mismanagement, evidenced by eight years of qualified audits, and disclaimers in the past two financial years. The root causes of this deteriorating situation can be attributed to a lack of controls in Supply Chain Management practices, poor lease management, lack of accountability of our Regional Offices, lack of an appropriate accounting platform for the Property Management Trading Entity as well as the non-existence of a reliable Immovable Asset Register.

The issues and challenges facing the DPW are not new. They have been well-publicised and several prior attempts have been made over the last ten years to remedy the obvious defects. Despite some good work, little traction was gained in a large organisation, where all to* often there is misalignment between the mandate and the structure of the organisation.
We are currently addressing the challenge of organisational structure with the assistance of the Department of Public Service and Administration, which is undertaking an Organisational Functional Analysis of the Department.

Early last year the Department embarked on a turnaround project that aims, over time, to return the Department to a state of full functionality. We have now put in place the building blocks for turnaround:

We have the funding from National Treasury for the turnaround;
The core of the Turnaround Team - now renamed the Business Improvement Unit - is in place under the office of the DG so that we build capacity in the Department - not the Ministry - to address stabilisation and for the long haul of transformation. so if the Minister is recalled tomorrow it will not derail the whole turnaround.
The planning processes are well-advanced - with annual, 3-year and 7-year plans in place - developed in consultation with National Treasury, and fully consulted within the Department. Increasingly we talk less about `turnaround`, and use the language of `Rebuilding Public Works`.
We have also - crucially - stabilised the leadership of the Department. Remember, when we started out 18 months ago, we said that much of DPW`s problems could be traced to a long period of unstable and constantly changing leadership. We also said that any turnaround strategy would need to be led from the top. I believe we have now stabilised leadership with the appointment of the new DG and CFO, and other changes at leadership level.
While the turnaround project that we designed consists of 23 discrete projects, our key focus has been on taking control of five key areas:

1. Developing a complete and credible register of state immovable assets.
2. Conducting a comprehensive audit of leases and the establishment of a Lease Management Framework.
3. Ensuring progressively improving audit outcomes for the DPW with particular attention to processes, systems and controls and better supply chain management.
4. Actively reducing fraud and corruption in the DPW, and
5. Operationalising the Property Management Trading Entity (PMTE).

I can report clear progress on all these projects.

Combatting fraud and corruption

When I stood before this House a year ago, it was in the midst of major scandals around fraudulent leases. Since then we have worked closely with the SIU (Special Investigations Unit) to investigate a number of irregular leases and projects - some 40 investigations in all, of which 23 are completed. This has resulted in successful disciplinary actions, the suspension of six officials, and the dismissal of three - including one DDG. We have instituted court actions to recover monies wrongly paid by the Department. We are also awaiting reports from disciplinary hearings involving one DDG and one Chief Director.

I need to add, that the SIU has completed investigations into Prestige in Pretoria, relating to renovations of ministerial houses. They have recommended that we discipline officials involved - which we have started to implement.

SIU investigations, together with recent findings of the Competition Commission, tell the same story: over-pricing and collusion between some officials and sections of the construction industry - a timely reminder that it takes two to tango; that corruption and greed in the private and public sectors are mutually reinforcing each other. In the light of this, and mindful of the limitations of the SIU due to multiple commitments, we have started to enhance investigating capacity within the Department:

Short-term, as part of the funding for the Turnaround, Internal Audit was empowered to commission forensic investigations. Some 19 investigations have been completed.
We are also establishing an internal Compliance and Enforcement Unit -advised by SARS - as part of a separate Risk Management Branch.
Looking forward, we are establishing a separate Supply Chain Management (SCM) Branch. I am mindful that the Auditor-General has identified SCM as `a major risk area`. In this regard we are working closely with National Treasury to review and strengthen SCM processes.
Our broad approach can be characterised as follows:

We will investigate and prosecute cases of fraud and corruption, but
It is equally important to but in place robust systems - and here I am quoting from our SARS colleagues - with the intent: "to make it easy for weak people to d
the right thing, and difficult for bad people to d
the wrong thing."
We also trust that the Competition Commission will work with the Department and its relevant entities in developing a longer-term strategy to combat collusion in the construction sector.

The Immovable Assets Register

The state land reconciliation with Deeds Office records has been substantially completed and the asset register updated. The results currently reflect the following - and indicate the magnitude of the task that we have undertaken:

Custodian - Number of land parcels

National DPW 28 841
Department of Rural Development & Land Reform 25 435
9 Provincial Departments of Public Works 50 606
9 Provincial Departments of Human Settlements 70 176
Work in progress, still to be allocated 1 174
Other custodians being confirmed 3 341
Total according to original Deeds download 179 573

These figures will form the basis of a physical verification process due to commence in July 2013.
We have commenced work in conjunction with the Chief Surveyor-General in addressing the completeness and accuracy of surveyed-not-registered and other unregistered state land.

We have established a process of engagement with the above state land custodians on an on-going basis to update registers and keep track of the balance of registered land parcels. This has never been attempted before and is proving to be more time-consuming than expected.

We have targeted the completion of the Immovable Asset Register in line with the revised requirements of the PMTE established with effect from 1 April 2013. This requires us to substantially complete the Immoveable Assets Register by 31 March 2015 with final adjustments effected by 31 March 2016.

National DPW still has in the region of 24,000 land parcels to be vested. These are planned for completion by March 2016.
We are confident that we are on-track for the creation of an asset register that will - for the first time ever - accurately reflect the state`s assets.

This is a game-changer, colleagues. With a sustainable register of state immoveable assets in place, we will have at our disposal the tools to leverage this massive property portfoli* for economic development. This will also assist us to drive the transformation of the property sector in South Africa.

Audit of Leases

One of the key functions of the Department is to provide office accommodation to National Departments. The Department presently manages a portfoli* of 2,788 leased properties across the Republic. In his 2012 Budget speech, the Minister of Finance announced Treasury`s support for a national audit of leases by DPW.

Our focus has been to review leasing business processes, policies and strategy while concurrently addressing a significant lease backlog.

The lease backlog is being progressively addressed by a newly-established Bid Adjudication Committee for Leases.
to date, 100% of the 2,788 leases have been reviewed. Of these, 1,316 required attention, revision or renewal. These we regard as backlog leases. Of the backlog leases, recommendations have already been made in respect of 365 leases. These included leases for Pretoria, Nelspruit and Polokwane. Recommendations for the remaining 951 leases will be in place by the end of June, 2013.

Challenges have been experienced in sourcing information and documentation for the Lease Review which has impacted our ability to conduct a physical verification of leased accommodation. At this stage only 42% of floor plans and tenant contact details are in place. In other words basic information to accompany leases was either not collected, or lost. As a result, the project is approximately one month behind schedule.

Improving audit outcomes

The Clean Audit project was initiated in December 2012 and includes a consortium of service providers to assist in its roll-out. 165 specialists and interns have been deployed across the Department`s Head Office and 11 regional offices. I am pleased to be able to announce that the Department has appointed 64 unemployed commerce graduates as part of this initiative. Indeed this exercise has gone so well that the Department is requesting that we employ a further 100 graduates.
The team is progressively clearing the myriad negative audit findings in the areas of Finance and Supply Chain. Skills development of Finance and PMTE staff is a secondary, but vitally important, output of the project. This process is well under way.

A key area of focus is the reduction of late payments and compliance with the President`s injunction to pay suppliers within 30 days. For the first time all invoices are now logged in a central registry to make possible the tracking of payments. We have also approved the establishment of a Help Desk to assist suppliers to comply with payment requirements. As part of this project, the DG and I are visiting the regions to meet with service providers, and to work with officials to address complaints.

The verification of expenditure - and the highlighting of irregular expenditure - is also a key area of focus of the Clean Audit Project. This involves the inspection of every transaction in terms of compliance with supply chain management policy. Given over 1,1-million transactions a year, this is a huge task. I am pleased to confirm that all transactions for the Department and the PMTE will be fully tested for the 2013/2014 financial year in order to eliminate irregular expenditure going forward.

Let me add, one of the crucial strategies for improving audit outcomes and dealing with irregular expenditure is to ensure individual accountability and ownership of problems. to this end DPSA has assisted us in reviewing performance agreements of management to include ownership of audit issues. In the same vein, the DG has now instituted bi-weekly `Accountability EXCOs` exactly to monitor and enforce compliance in this regard.

Operationalising the PMTE (Property Management Trading Entity)

Honourable members will be aware of the background to this issue. In 2006 Treasury approved the establishment of the Property Management Trading Entity within DPW with the injunction that a business case be submitted within two years. The failure to finalise these processes contributed significantly to both DPW and PMTE receiving negative audit opinions in subsequent years.

I am pleased to confirm that we have now formalised the establishment of the Entity. With effect from 1 April 2013, the DG has approved interim measures to ring-fence all relevant asset and property management functions in the Department and to clearly separate the activities of PMTE and DPW main account.

The PMTE has, ahead of schedule, adopted GRAP (Generally Recognised Accounting Procedures) as its accounting system and the first formal training interventions have been completed.

A detailed business case is under development and will be submitted to Cabinet for approval in August, 2013. This relates to the final structure of the PMTE.

I wish to assure this House that the turnaround is proceeding in full consultation with organised labour. I have also given an undertaking that n* retrenchments are envisaged. The parties have agreed to develop a National Framework Agreement to guide the change process.

10. Concluding remarks

I would like to conclude by thanking the following people.

The President for entrusting me with the stewardship of the Public Works portfolio

The Auditor-General, Public Protector and members of the parliamentary committees for their constructive criticism

Members of the SIU for arming us in the fight against corruption

Treasury - and TAU - for the assistance and support in developing and implementing a turnaround strategy

The Department of Public Service and Administration for assisting us to address challenges with HR and the structure of DPW.

The Director General and senior management of the Department - as well as the previous Acting DG - who have kept the ship afloat, even as we try to turn it around.

The entities of Public Works who have contributed their personnel and their knowledge to assist in the turnaround; and

I particularly want to thank all those officials of the Department of Public Works who are actively assisting in the process of rebuilding. My message to them - and to honourable members - is this:

We have stabilised the Department;
We are making real progress in tackling the immediate - and systemic - challenges;
We have put in place the building blocks - and we have a plan - to rebuild Public Works;
Together we can make Public Works work.
I thank you.

Speech by Hon Celiwe Madlopha in the National Assembly during the Budget Vote Debate on Public Works

The role of EPWP in Public Works

Honourable Speaker
Honourable Minister Nxesi
Honourable Deputy Minister Cronin
Honourable Members

The context of this budget vote debate needs to be analysed as Public Works and respective programmes do not exist in a vacuum but rather as an integrated plan and strategy to address both the policy mandate of the Department but critically the policy objectives of the ANC.

As an integral part of the second phase of our transition from apartheid to a national democratic society, we need to accelerate growth and intensify our programme of economic transformation. Public Works has a key role to play in this regard

Over the next five years, the ANC will take decisive and resolute actions to overcome the triple challenges of poverty, inequality and unemployment, which are at the heart of South Africa’s socio-economic challenges. We intend to transform the structure of the economy through industrialisation, broad-based
black economic empowerment, addressing the basic needs of our people, including women and youth, strengthening
and expanding the role of the state and the role of state owned enterprises.

Our most effective weapon in the campaign against poverty is the creation of jobs. The challenges of unemployment, poverty and inequality require that accelerated growth takes place in the context of an effective strategy of redistribution that builds a new
and more equitable growth path.

1. The Expanded Public Works Programme (EPWP) is one of the initiatives agreed to at the Growth and Development Summit in June 2003 as an initiative of the ANC government to bridge the gap between the growing economy and the large numbers of unskilled and unemployed people who have yet to fully enjoy the benefits of economic development.

2. The EPWP is one of the government’s array of programmes aimed at ensuring the creation of work opportunities and the provision of training for unskilled, marginalised and unemployed people in South Africa (SA). Its key focus is to provide poverty and income relief through short time and full time equivalent jobs for the unemployed. Government launched the EPWP in May 2004 o promote economic growth and create sustainable development.

3. At the official launch of the EPWP on 18 May 2004, President Thabo Mbeki said, and I quote “today, we would like to say to all these people who are going to be at the centre of the implementation of this programme that we will not accept any failures, that we have made the firm commitment to confront the challenges of poverty and joblessness and that we have made the solemn pledge to do everything possible to achieve the goal of a better life for all our people.” unquote.

4. During phase 1, the programme surpassed its Cabinet, mandated target of 1Million work opportunities a year ahead of schedule, with 1.6 million work opportunities created at the end of the scheduled initial five year period (2004 – 2009). The programme aim is to achieve its objectives and targets through the delivery of public and community services. Public bodies from the National, provincial, local spheres of government and non state sector are expected to collaborate with the national Departments of Public Works (DPW)

5.As recently as the ANC’s Mangaung Conference it was resolved that one of the fifteen pillars of the Polokwane Conference, namely programmes that directly absorb the unemployed, including expanded public works programmes , continues to define the ANC’s perspective on economic transformation.

6.In his 2009 State of the Nation Address President Zuma mentioned that, “as part of the contribution to the income of the poor, the target for 1 million work opportunities through the Expanded Public Works Programme was attained in 2008, a year earlier than envisaged in the 2004 electoral mandate. This has created the possibility massively to expand this programme and improve its quality”.

7. EPWP Phase 2, which covers the period 2009/10 – 2013/14 aims’ to create 4.5 million work opportunities for poor and unemployed people of S.A, thereby contributing to the Millennium Development Goals (MDG’s) of halving unemployment by 2014.

8.1 Honourable Speaker - through its successes and achievements so far the Expanded Public Works Programme has made a positive change in many people`s lives.

Beneficiaries Stories
8.2 The programme has made a positive change in many people’s lives.

Partners in Development was established to empower the people of Stedham to recultivate their land so that in long term the beneficiaries can farm their own maize fields and sustain themselves through selling of maize. The project employs 150 EPWP Non – State Sector beneficiaries.

Ms Buyisile Zulu, a beneficiary of the project said “ I am happy that I am working for something that will sustain all of us. We are removing alien plants and roots so that we can farm our fields. We have been working on this land for 2 years and are looking forward to fencing the fields in preparation for planting season. In any government it is important to teach a person to fish than only giving him / her a fish. So sustainability is key
EPWP and its Achievements (Phase 2)
9. By the end of the 2011/12 financial year, more than two million work opportunities have been created since the start of the second phase. This achievement positions the EPWP as one of the key catalysts in the ANC-led government’s jobs creation drive.

The programme created 540 423 work opportunities and 137 525 permanent jobs in 2011/12. Of these, 66 355 were under the Community Works Programme. The agricultural sector, including the Comprehensive Agriculture Support Programme, contributed 7 092 jobs of which 1 105 were permanent. The use of local labour in housing and infrastructure development contributed significantly to job creation and skills development.

The Programme easily reached its target for women and youth participating in the programme, with 60 per cent of the participants being women and 50 per cent being youth, compared to the targets of 55 per cent women and 40 per cent youth. The target for people with disabilities was not met.

In 2011/12, eight new EPWP District Steering Committees were created, in addition to the 11 operational District Steering Committees already existing. Furthermore, 277 out of 278 municipalities have signed protocol agreements,committing them to achieve their EPWP targets.

The incentive grant model was revised to give rural municipalities’ easier access to grants in order to increase labour intensive work opportunities through the EPWP projects. The revised model has been implemented since the 2012/13 financial year.


The EPWP spending focus over the medium term will be on creating work opportunities and providing training for unskilled, marginalised and unemployed people. Performance Based Incentive Allocations disburse funds to provinces, municipalities and non-governmental organisations based on set job creation targets to ensure the creation of work opportunities in the infrastructure, environment and culture, social, and non-state sectors.

This entails incentivising eligible public bodies and non-governmental organisations to increase job creation efforts in these sectors through the use of labour intensive methods in line with expanded public works programme guidelines. Projects include municipal and provincial expanded public works programme projects for collecting refuse, beach cleaning, clearing alien vegetation, pothole or road mending and painting government buildings.

These performance based incentives have contributed to the expanded public works programme’s overall performance of having created approximately 2.1 work opportunities against a target of 2 million, and 595 000 full time equivalents against a target of 833 000 between 2009/10 and 2011/12.

Given South Africa’s persisting poverty and unemployment problem, it is hardly surprising that the EPWP are seeing massive up – scaling in order to continue to provide employment opportunities to poor and low income households in the near future. Naturally, this will require addressing many of the lessons learnt from the first and second phase of EPWP programme such as:

Inadequate authority and coordination amongst different government departments, as well as the different spheres of government in charge of driving the programme.
A lack of additional fiscal commitments where the programme is performing well.
Creating a continued demand for public employment interventions in all spheres of government that support up scaling job opportunities and income generations for those who are willing to work,
Ensuring that public employment programmes remain labour intensive and this avoid shifting to employment methods that avoid maximum labour intensity.
Ensuring that the implementers of EPWP are well capacitated and the Department of Public Works ensures that the implementers of this programme are monitored whether objectives of EPWP are realised in particular training.
Whilst it is difficult to assess at this early stage of the second phase of EPWP 2 whether these challenges have been adequately addressed, it is encouraging to note that some of the problems have been overcome. It is probable that the level of the upscale and the roll out of the EPWP’s will be determined by the overall growth rate of the economy. Given the gravity and extent of the global economic crisis that led to a slow GDP growth and massive loss in jobs, public employment programmes will continue to play an important role in alleviating poverty, creating employment opportunities and providing some income.

In this respect the ANC’s 2010 National General Council reaffirmed the Polokwane resolution which stated that the building of schools to replace mud schools must be included in the Expanded Public Works Programme.

The methodology used by the Independent Development Trust is the constructive alternative methodology. From 2009 the IDT, as the implementing agent for the EPWP non-state sector, set aside an amount of R150 million to initiate the programme, not only for funding the infrastructure of schools, but also for information technology laboratories, furniture and the employment created thereby.

In the Department of Public Works’ 2012/16 Strategic Plan the Honourable Minister of Public Works states that, in the next five years, the department needs to be more responsive to the priorities of government. While Phase 2 of the implementation of the EPWP has enabled all three spheres of government to contribute enormously in the creation of work opportunities, skills provision and the redistribution of wealth, there is still more that needs to be done in this regard.

In responding to direction given by the January 2012 Cabinet Lekgotla in the planning period ahead, the role of the EPWP will be scaled up significantly. The focus in rolling out an upscaled EPWP with local and district municipalities will take into account the spatial and gender patterns of poverty and unemployment in South Africa in order for the EPWP to have any significance in improving the lives of the growing numbers of vulnerable and unemployed South Africans.

The scaling up of the Expanded Public Works Programme (EPWP) should remain a priority Department.

The creation of long-term sustainable work opportunities should be a focus of the programme. Consideration should be given the unemployment figures released by Statistics South Africa on 6 May 2013. South Africa’s figure for persons employed who are between the ages of 15 to 64 stood at 13.6 million. However the number of unemployment people between Quarter4 of 2012 and Quarter 1 of 2013 reached 4.6 million

Honourable Speaker, we wholeheartedly agree with the Honourable Minister for Public Works when he said that the EPWP is the lead flagship of the department as it seeks to address the single greatest challenge facing South Africa today, namely that of unemployment and poverty. By succeeding in the tasks and targets we have set for ourselves, we will bring hope and opportunities to those who are desperate to improve their condition in life.

The ANC supports Vote 7 of the Budget.
I thank you
Speech by Hon Dorris Ngcengwane in the National Assembly during the debate on Public Works Budget Vote

8 May 2013

Honourable Chairperson
Honourable Minister and Deputy Minister
Members of Parliament
Ladies and gentlemen in the gallery

Today marks yet another year that Members of Parliament debate the budget that was passed by the National Treasury to the Department of Public Works and its entities.

The Department has got four entities it takes responsibility for, viz:

1. Agrément SA, which was established by the Minister of Public Works in 1969 and is mandated to “enable the introduction of innovation and minimising associated risk in the market.” It is an internationally recognised centre for the assessment and certification of construction products, systems, materials, components and processes.

2. Independent Development Trust (IDT) which is a public entity with national presence that can benefit the most marginalised areas of our country.

3. Construction Industry Development Board (CIDB) has as its main focus the development of industry contractors, while at the same time managing delivery enhancement and improving capacity through strategic intervention and partnerships.

4. Council for the Build Environment (CBE) is mandated as a Schedule 3 A entity by the Built Environment Act, No 43 of 2000. As a statutory council, it was establish as an overarching body for the six built environment professions and were given a mandate which I will talk to in the next few minutes.

Chairperson, before I speak to each one of the entities, I feel I need to make an overall message to all of them. We all know our democracy was achieved and attained through the loss of many lives. A lot of people died for this democracy; we would not be here today where we are, enjoying the fruits of democracy, had it not been for the people who laid down their lives for the rebirth of our country South Africa.

A lot of families lost their loved ones in order to achieve freedom and democracy, and the only way to say “thank you” to those brave heroes and heroines, is for us to work and build this country to where it is supposed to be. We need to put extra effort to bridge the gap between the rich and the poor, the needy as we all know that it was not by choice to be in the state that they are in today. South Africa is one of the countries with the highest Gini co-efficiency.

Chairperson and honourable members, we need to understand that the success of our democracy should and will be measured by the concrete steps this ANC-led Government takes to improve the quality of life of the most vulnerable, the down-trodden in our society.

Chairperson, we have made some progress toward equality and in restoring human dignity. However, a lot still needs to be done in transforming our country and society at large, by building a nation free of the past.

There’s nothing impossible in this world, if we are really determined to make a change in this country, we will achieve it; as we all know the difference between the impossible and the possible lies in a person’s determination.

To honour those who were tortured and jailed by the apartheid government and those who died for this country, we need to strive to make what they fought for a reality. Let us just think deeply about the poor, the unemployed, and those who go to bed hungry and put them first as our priority.

Chairperson and honourable members, Agrément SA is internationally affiliated through membership of the World Federation of Technical Assessment Organisations. The WFTAO is a world-wide network for co-ordinating and facilitating the technical assessment of innovation in the construction field.

Some people argue that it should fall under the Council for Scientific & Industrial Research, NO, NO! It’s only the finance of the Board and the Board’s Agency that is administered by CSIR’s Built Environment Operating Unit and is subject to CSIR financial systems and auditing processes. Otherwise Agrément SA belongs to and enjoys being under the DPW because it deals with built environment issues.

Chairperson,, Agrément SA has some activities planned for the coming years which will have both local and international impact. These include, among others,

a) Undertaking technical certification of many new labour-intensive construction methods that include the development of criteria for using thin concrete technology in road construction.

b) Facilitating the introduction, application and utilisation of satisfactory innovation and technology development, in a manner that adds value and supports the construction industry.

c) Assessment and certification of non-standardised construction products.

d) Implement key solutions for Government and communities through social and public processes.

e) Participate in the CSIR initiative to form and build strategic partnerships with the Development Bank of SA (DBSA), SASOL, Transnet and Eskom.

f) Technically assesses technologies that can improve the performance of dwellings in rural areas (through improved traditional building methods) using lightweight building construction technologies and materials.

In addition to Agrément SA’s ties with the WFTAO, it also maintains close working relationships with the following stakeholders:

Construction Industry Development Board (CIDB)
Council for the Built Environment (CBE)
Independent Development Trust (IDT)
International Council for Building Research Studies & Development (ICD)
The three spheres of Government
SA Bureau of Standards (SABS)
SA National Roads Agency Ltd (SANRAL)
National Home Builders Registration Council (NHBRC)
Chairperson, honourable members, this entity does all the good work to the best of its ability, but does not go without some challenges:

i) Agrément SA does not have an enforcement mandate. With all its expertise, it cannot make its mandate felt, like the ability to detect all instances of inferior materials that enter our country, e.g. inferior cement, corrugated iron that impact negatively on the consumer, especially poor communities

Agrément SA has a quality control mechanism in place to ensure that construction products that are certified by the Agency are in fact fit for purpose. For the entity to effectively carry out its mandate in the 9 provinces, to broaden its scope and mandate, the entity will require additional staff and premises and definitely more funding.

To broaden the mandate of Agrément SA, the Department reported that it intends to introduce legislation to Parliament towards the end of the 3rd quarter of 2013, which aims to align Agrément SA’s current management to PFMA. The Public Works Portfolio Committee members will really appreciate that; as widening the scope of work and mandate is very crucial.

ii) Honourable Chairperson and members, we now come to the Construction Industry Development Board, CIDB.

CIDB is a public Schedule 3 A entity that reports to the Minister of Public Works. Its main objective is to provide leadership to stakeholders and to stimulate sustainable growth in, and reform and improvement the construction sector for effective service delivery. It seeks to enhance the construction industry’s role in the country’s economy.

This entity has eight strategic goals:

To provide contractor and client support through CIDB provincial offices. This assists the participation of the emerging sector in the construction industry; provide support in the enterprise development and reform of the industry players.
Siyikomiti ka Public Works sadinwa kukubona abantu basemakhaya besuka nyaphaya eMbizana, eBayi, ePolokwane, eMpumalanga bezofuna uncedo kuCIDB ePitoli. Okwesibini mabancediswe onokontraka abancinane ukuze nabo bakhule, kwezo ndawo bakuzo. Nathi siyabafuna oLTA, Group Five, Ezilaline, ibe kufuneka lomba ucaciswe xa ikontraka enkulu ingekanikwa kwa-itender leyo uba ukuze equalifaye wazi imfuno zika Rhulumente okhokelwa yi-ANC-kungejalo juya wutya abantu abanye kuyovalwa.

To improve the construction register service through business excellence. The CIDB plans to maintain the integrity and reliability of the construction registers and improve efficiency of the contractor registration process.
To improve compliance to and maintenance of the CIDB prescripts and combat fraud and corruption in the construction industry. The CIDB plans to promote compliance with its prescripts and minimize the rate of fraud and corruption.
To promote uniformity of construction procurement systems in the organs of State, in order to improve infrastructure delivery.
To monitor and evaluate the performance of the construction industry.
To improve the performance of the sector and value to clients, thus promoting contractor development and performance improvement.
To improve the infrastructure delivery skills and management practises in the construction industry, thus supporting the development of infrastructure delivery skills.
To build, strengthen and maintain relationships with stakeholders. The CIDB plans to facilitate information sharing among industry stakeholders to continually improve performance and growth of the sector.
The Portfolio Committee observed that most of the disadvantaged groups or contractors are registered in thousands as grade one and two. Also, these grade one contractors have to compete with more experienced contractors on a higher grade for the same contracts. As a result CIDB is sometimes viewed as a gatekeeper, that’s why the Committee asked for a demographic profile of contractors registered with CIDB in different provinces, as well as woman-owned contractors.

Lastly on the CIDB, it is very sad to report that the Competition Commission of South Africa discovered that there was collusion in the construction industry by the big major construction firms, including in the building of the 2010 FIFA Soccer World Cup stadiums. A total of 291 projects involving 21 firms were being investigated against an amount of R26 billion. These projects include major infrastructure projects such as stadiums, roads, dams, mines and shopping centres.

Kumnandi ke ukwazi okokuba le corruption yongxowa-nkulu ibonwe, yavezwa ngulo Rhulumente ukhokelwa yi-ANC. Sithetha ezo nkampani zenze oko kungcola zintylempa-ntyu mpeka emantyaleni, ekuzakuthi le nyanya sikuyo iphile sele zisaziwa nanya thathatha.

iii) Council for the Built Environment (CBE)

The CBE is a Schedule 3 A public entity and one of its main roles is to oversee the six built environment professions councils who regulate the professions of architects, engineers, landscape architects, quantity surveyors, project & construction managers, as well as property valuers.

The CBE is responsible for the provision of strategic leadership to the six professional councils, and it must also ensure that the various professional councils operate and adhere to the industry regulatory norms and standards.

The CBE plans to focus on the following over the medium term expenditure framework (MTEF):

v Roll-out of built environment career awareness programmes, as well as maths and science support programmes in schools.
v School support programmes through awareness campaigns and workshops to support academic staff within universities.
v Upgrade internal infrastructure that will assist the research department to become an efficient knowledge hub for the built environment.
v Structured candidacy programme as well as workplace training to accelerate professional registration.
v Initiate mentorship projects to assess and accredit mentors within the CBE.
v Knowledge and practices of the built environment professionals.
v Increase the representation of women and black people within the built environment professions.
v CBE to continue the engagement with African counterparts and expand partnerships within the built environment professions through current international memoranda of understanding (MoU’s)
v Quarterly reports on the three public functions of the professional councils, viz:
- professional registration
- appeal
- continued professional development

The Portfolio Committee has noted with concern the delay in the re-introduction of the Built Environment Professions Bill which was withdrawn from Parliament in the 2008/9 financial year due to the need for further consultation. The Department has indicated that the Bill would be re-introduced in the 2013/14 financial year.

iii) Independent Development Trust (IDT)

The IDT’s strategic goals articulate its commitment and responsibility to promote sustainable development in poor and marginalised areas through delivery of integrated social infrastructure. The IDT aims to achieve these strategic goals by using resources in a prudent and efficient manner.

a) Programme 1:

Integrated service delivery: focuses on enhancing the Government’s delivery capacity and integrated social infrastructure development.

b) Programme 2:

Administration: concentrate mainly on the administration matters which include governance issues, such as:

Performance planning and management
Risk management
Corporate governance; and
Sustainability, monitoring and evaluation
A total of 50 new or replacement schools have been targeted for the 2013/14 financial year which is an increase of 10 schools. The quarterly report indicates a gradual increase in the number of schools completed which is a much appreciated achievement.

Anchen Dreyer, Shadow Minister of Public Works 
Highlights:
•    Public Works priorities in 2013 cause of a department in financial disarray, failing to meet the vision and objectives as laid out in the NDP; 
•    Lack of financial records causing millions in departmental losses of rental income;
•    Spending on the Executive reveals a department prioritising luxuries over the needs of millions of poor South Africans;
•    Spending on ministerial mansions and presidential palace trumps social infrastructure investment and maintenance;
•    Department entrusted with public property doesn’t know what it owns, where it is or how much it is worth due to it not having a reliable, complete and up to date immovable asset register.

The vision of the National Development Plan for the year 2030 says:

"We, the people of South Africa, have journeyed far since the long lines of our first democratic elections on 27 April 1994, when we elected a government for us all.  We began to tell a new story then.  We have lived and renewed that story along the way. Now, in 2030, we live in a country which we have remade."

Só kan ons ook vir openbare werke 'n visie 2030 voorstel.  Dink u in, vandag is 8 Mei 2030.

Ek wens minister Thulas Nxesi geluk met die prestasies van sy departement oor die afgelope sewentien jaar, vanaf destyds 2013 tot vandag 2030.

Die eerste rede vir die sukses van openbare werke vandag, in 2030, is dat sy prioriteite tans die volgende is:

•    die bou van sosiale infrastruktuur, soos skole en klinieke;
•    die instandhouding van hierdie geboue;
•    deeglike boekhouding van verhuurde geboue, en
•    die stiptelike invordering van huurgeld vanaf huurders en die betaling van huur aan privaateienaars.

Sewentien jaar gelede, in 2013, het hierdie prioriteite nie bestaan nie.  Die begroting vir openbare werke was toe vanaf 8 miljard rand tot 6.2 miljard rand gesny, grootliks weens die onderbesteding op infrastruktuur.

In his annual report during that time the Auditor-general noted that Public Works did not keep proper records of its lease agreements resulting in the department losing R20.7 million in rental income during the 2011/12 financial year.

Ons onthou ook dat openbare werke destyds berug was vir die wanbetaling van huurgeld aan privaateienaars.  Byvoorbeeld, nadat die betaling vir die streekspolisiekantoor in Worcester minstens ses maande agterstallig was, het die desperate eienaar einde laaste sy gebou met kettings toegesluit en die polisie het toe letterlik op straat gesit!

'n Tweede kernrede vir die prestasie van openbare werke vanaf 2019 tot vandag in 2030, is die indiensneming van bekwame amptenare.  Die personeel is tans tegnies gekwalifiseerd, kundig, eerlik en partypolities neutraal.  Hulle word gekeur, nie volgens kleur of politieke kontakte nie, maar volgens hulle geskiktheid vir die pos.

Veels geluk ook hieroor aan die minister!  

Dit was voorheen egter nie so nie.  Inteendeel!

•    In 2013 was duisende amptenare nie gekwalifiseer vir hulle poste nie, want hulle was politieke aangestellings.
•    In 2013 was twintig persent van tegniese poste vakant en begrotingsgeld moes dus op konsultante bestee word.
•    In die 2012-boekjaar is 98 amptenare in dissiplinêre verhore skuldig bevind aan ernstige wangedrag, soos diefstal en aanranding.

However, Minister Nxesi turned the department around successfully, in accordance with the Development Plan states, which states:

"Therefore, in 2030, we experience daily, what we contribute in our taxes; we get back through the high quality of our public services.  That is why we have good clinics and hospitals and good schools."

A third reason for the success of the Public Works today in 2030 is service delivery, not to ministers but to all citizens! 

Soos die Ontwikkelingsplan dit stel vir vandag in 2030: 

"We know that those to whom we have given the privilege to govern our land, do so on our behalf and for the benefit of all the people."

After the 2019 and 2024 elections, the minister of public works followed the example of the Western Cape DA government and re-prioritised the budget to meet the needs of ordinary citizens.  There are fewer ministers in the cabinet and they are living modestly.  Primary schools, police stations and medical clinics were revamped and new ones were built – from Bisho to Kagiso.

It was very different before 2019.  It's difficult to imagine – now that we have an efficient, people friendly department of public works – but seventeen years ago, in 2013, over 200 million rand of public money was used to enrich one person.  Huge construction projects, including 31 new buildings, were undertaken at his palace, Nkandla.

Furthermore, during that time in 2013, public works spent twice as much on presidential parties and functions than was allocated in the budget.

Following the example of the then president, public works massively increased spending on ministerial mansions.  In 2013, 532 million rand was allocated over the medium term, to the prestige portfolio, to add luxuries such as swimming pools, braai areas, guest cottages and spas, for ministers.  It was clear that ministers' own comfort was far more important than service delivery to the people; they felt nothing for the voters. 

While there was unlimited spending on the ruling class, the department underspent by 212 million rand on social infrastructure like schools, police stations and clinics.  

The message then, was clear: To hell with the other 50 million South Africans!

This corrupt self-enrichment was a key reason why, in 2019, voters elected a new government   – a DA coalition government.

Die vierde faktor vir openbare werke se sukses vandag in 2030, is die bateregister. Minister Nxesi, veels geluk!  Ons het uiteindelik 'n betroubare bateregister.  Elke stukkie staatseiendom is aangeteken en die departement weet presies wát wáár geleë is, wat die toestand daarvan is en watter department dit vir watter doel gebruik.

Maybe you will remember that during 2013, after the ANC had been in government for nearly 20 years, the department of Public Works did not have a working, complete and reliable immovable asset register of public property. Today, in 2030, we can hardly believe that such level of maladministration was even possible!
 
Destyds, in 2013, het die staat ongeveer 180 000 stukke grond besit en was dit een van die grootste grondeienaars in die suidelike halfrond.  Die departement het egter nie geweet waar in Limpopo, of die Oos-Kaap, van die grond lê nie.  Sommige grond was onder die beheer van tradisionele leiers en ander was in die buiteland.  Daarom kon die departement ook nie die Onteieningswet toepas nie.

Maar nou, in 2030, is dit heel anders.  Die DA-regering het die Ontwikkelingsplan dadelik begin uitvoer nadat die DA in 2019 die nuwe regering gevorm het.

In conclusion: Today, 8 May 2030 – congratulations to minister Thulas Nxesi
firstly, that you have been implementing the public works priorities of the National Development Plan
secondly, that only the most efficient officials have been appointed in the department
thirdly, that public works deliver services not to the elite, but to ordinary citizens
and fourthly, that the asset register is complete.

Today, in 2030, you have made a stunning success of public works – since you joined the DA when it came to power in 2019.

Congratulations!  Veels geluk!  Giabonga!

Vote 7 - Public Works Budget Vote Debate  Hon. KP Sithole, MP

Honourable Speaker,   The department of Public Works, the custodian and manager of the state's immovable assets, has truly failed to do what it has promised to do - provide strong leadership in order to ensure that the department truly is turned around. The department is still characterised by corruption and mismanagement on all levels, evidenced by the eight years of qualified audits.   For the past three to four years the department has received disclaimers from the Auditor-General for being a department with no credibility whatsoever. This basically means the budget given to the department should be considered wasteful expenditure in its entirety, because there is no system of identifying legitimate spending in the department.   It is clear that the systematic flaws identified by the Minister himself in his last budget speech have not been resolved; in fact, in some cases things have gotten worse. The Minister had said that the department is like a business, which was in great need of transformation; yet if it was a business, the company would be bankrupt, the CEO would be on the verge of going to jail and no bank would be willing to loan them any money. Yet in our government, failure seems to be rewarded more than success, while our people suffer the consequences of these failures.   Staff retention has been a difficult challenge for the department to resolve, with many employees choosing to find work elsewhere in large numbers. This can be an indicative sign of the lack of change in attitude of the leadership and working environment. How are people expected to work for a department that overspends millions on renovations of ministerial homes?   Ministers are public representatives and it is unacceptable for them to have extravagant housing upgrades - more suitable accommodation could have been bought at half the prices of some of those amounts spent on renovations.   Yet the department's biggest failure is in Kwanxamalala, where it has not only shown that reckless expenditure is rampant within the department, but also that there has barely been any turnaround. The blatant lack of disclosure has solidified the department's "don't care" attitude towards those who they are responsible to.   Inkomo ziyabhokola kusemahlangeni, ngubani lo odlayo kulomnyango   Or was the department created as an expense account for presidential and ministerial extravagance?   If one is to build something, you would expect to know where you can get proper material at affordable prices and not expose yourself to corruption, especially with other people's money - clearly the Prestige has failed in the proper implementation and in the monitoring of service providers.   The Immovable Assets Register (IAR) needs to be brought up to date because there is no reason for the department not to know the extent of its assets here and abroad because that should be its basic function. The Expanded Public Works Programme (EPWP) is not the great success as the department claims, because it is not functioning in all areas - some of these areas do not even know what it is or how to implement it.   We were promised "strong and determined leadership" - what we received instead was a lukewarm performance and no accountability from the Minister and his department. With municipalities owed millions by different Public Works provincial departments, it seems the other branches of leadership in the department are also lacking.   It is clear though that the department leadership is there to obtain as much money as it can, because cases of corruption associated with high ranking officials, whose actions have bankrupted the department, have practically been ignored. The Minister does not seem to understand nor care that he is presiding over a department that is a cesspool of corruption.   We can no longer stand by while the Minister promises one thing and ends up doing something completely different and acting as if the officials are untouchable. The budget should be readjusted to reflect the poor performance from the department. We should not congratulate failure.   As the IFP, we reiterate the statements we have made when it comes to the Public Works Department - it must be completely disbanded and their functions must be channelled to other relevant departments for the benefit of our communities.