Minister on Public Works Strategic Plan & Budget 2010

Meeting report

The delegation led by Minister Geoff Doidge and Deputy Minister Hendrietta Bogopane-Zulu included Mr Sam Vukela (Acting DG), Mr Adam Mthombeni (CD: Inter Governmental Relations), Ms Cathy Motsisi (CFO), Ms Lydia Bici (DDG: Policy), Mr Lucky Mochalibane (Acting DDG: Corporate Services), Mr Stanley Henderson (Acting DDG: EPWP), Mr Peter Chiapasco (Acting DDG: Inner City Project Management and Professional Services), Mr Mandla Mabwza (DDG: Special Projects), Ms Sasa Subban (Acting DDG: Asset Investment Management), Ms Florence Rabada (Asset Investment Management), Ms Juanita Prinsloo (CD: Trading Accounts), and Ms Mandisa Mandela Zinzi (CD: Strategic Management).

Minister’s Overview
Minister Doidge thanked the Chairperson for the opportunity to interact with the Committee; the department viewed that as a very important part of its role. The Committee had in the past played a constructive role in guiding the department, alerting it to areas where it needed to improve and sharpen its focus.

The department, led by the Minister and Deputy Minister, found very often the department was the custodians of very good policy but that the policy was gathering dust and there was a need to revisit and find out where the department had gone wrong so that it could achieve objectives and move with the times. The department came up with the phrase that it needed to “review, reshape and rejuvenate” the department.

The department had become an administrative wing rather than a technical one. Its core mandates were very technical and dealt with the fundamentals of the State, which were assets and procurement. The department needed to look at a structure that could support service delivery. The department had recently returned from an interesting visit to India and the Department of Public Works in India and Urban Planning had between 6000 and 7000 professionals employed in public works – registered professionals, engineers, civil engineers, structural engineers, and that spoke to the kind of department that Public Works needed to work towards. It would take many years but clearly with the kind of mandate Public Works had, it had to raise the bar in terms of the kinds of skills the department was able to attract and to retain, because people with those skills were taken up by the private sector and it was very difficult to retain them. DPW wanted a structure that would be able to respond to the core functions. Its client departments were not happy and the DPW was looking at why that unhappiness existed and how it could respond to those issues. Was the department’s business model correct and was it structured to respond to that business model to ensure it could deliver on service? The department had to try and attract better skilled people into the team so that it was able to respond with professionals in relevant portfolios to ensure it moved from an informed basis, which would reduce the department’s dependency on consultants.

There was the issue of the use of IT in Public Works; one of the problems with the Auditor General year after year was that of asset management.  The department was currently looking at systems and best practice in other countries to see where it could take IT to assist the department in going forward so that it could have a system of logging into the website, and that would assist with accountability to Parliament.

The department had made extensive progress since 2008; it was not something that could be resolved quickly and the shortcomings in the financial system could lead to serious problems in how the department spent taxpayers’ money. The Public Finance Management Act (PFMA) was there, the department had to comply, but it needed to ensure that the systems talked to it. An IT system needed to be built. Those were fundamentals in a department that did procurement on a daily basis and looked after State assets.

The DPW would be having interactions with Council for Built Environment (CBE), Independent Development Trust (IDT), Agrément South Africa (ASA) and the Construction Industry Development Board (CIDB), entities that accounted to it, because it also wanted them to adopt the outcomes based thinking and performance based agreements in government, so that the department could begin to take them forward. It was all very well to say it had registered a certain number of emerging contractors on Grade 1. However, what happened to them and why were they being parked on Grade 1? What was the plan for them, because by registering them, one had created an expectation? Did the department’s contractor development programmes and the property incubator programmes speak to the people parked there, because it had created hope and then suddenly fell away. DPW had to look at those entities and how it could empower them to ensure that some of their expectations were addressed.

Pillars of new growth path: The DPW was not doing very well in BEE. The number of black professional companies, architects and quantity surveyors, that tried to register on the Public Works’ roster and sat there for five or six years without getting a single job, indicated that there was a problem.  DPW had to provide the broad national policy framework within which provincial departments of Public Works could function. The National DPW needed to provide an IT system that could assist provinces too. An IT system to address assets was not only for the National DPW, but also an asset system that could be emulated by the provinces. The same applied to the roster systems, were the provinces could be aware of who could offer professional services.

The department’s “Rea Patala” [We are Paying] programme was working well, although it picked up problems from provinces and even through the Presidential hotline; DPW had its own hotline in terms of payments and that was working well. DPW tried to bring down the number of days of payment outstanding to contractors. It would like to see an ideal situation where it was able to pay 30 days from date of invoice to ensure that contractors were not put out of business because of DPW paying late.

Skills development required new leadership in terms of DPW and its entities, it had the professional councils, but the department needed to provide more strategic leadership to see more people going to schools and to tertiary institutions studying the built environment professions. Minister Doidge had recently been invited to a gathering of South African Women in Engineering, a group of young dynamic women engineers. It needed new dynamic leadership to bring in a new wave of interest into the built environment. In terms of the CIDB and CBE, the department had to look at external partnerships with big companies and how to take the Extended Public Works Programme (EPWP) and skills development into the construction sites. If a structure was built for government one could always see how many apprentices were enrolled, how many women were involved. Those were the specifics the department looked at when the EPWP was involved at building sites which assisted the department to empower young women and men in the vulnerable groups.

The registration of professionals had improved dramatically. There had been challenges in the professional councils and DPW had been working very closely with them. He suggested that the professional councils appear before the Committee to speak about transformation and the registration of professionals. It would assist the department tremendously to have the Committee’s support in that. It was now happening at a faster rate but not fast enough. They needed to partner with the Department of Higher Education and other departments to see how they could assist in the process to ensure skills were provded for ongoing sustainability of the built environment.

The DPW needed to look at the uptake of young people. The department had the National Youth Service it wished to resuscitate, as it was not doing as well as it should. They wanted to turn it into a flagship directorate because there was a lot of work to be done for the young people of this country. The Deputy Minister had the responsibility for restructuring that branch and to link with the National Youth Development Agency and work with them.

The IDT played a role in the new and urgent priority of government of rural development, poverty eradication, education and health infrastructure and job creation. DPW had applied for recapitalisation. It had submitted a request to Treasury and hoped for a positive response. The department had to look at how it could engage in Basic Education in terms of the school infrastructure challenge. DPW needed to provide the leadership, together with Basic Education, talk to the DBSA, talk to funding agencies to have a programme to get rid of mud schools. The IDT had spent millions of their own resources to eradicate some of the mud schools, but the department and other funding institutions needed to come to the party so that more progress could take place. The uptake in provinces was very good but those numbers of mud schools had to come down.

The EPWP remained the department’s main intervention in responding to the economic crisis, poverty alleviation and income inequality through work opportunities. DPW would soon have the figures for the end of the financial year and would share those with the Committee. The targets for this financial year were more or less the same as last year but would jump substantially in the next financial year. DPW was looking at other labour intensive projects in other countries and learn from those best practices because it was not going to be enough to look at the current EPWP model. DPW had to see how it could improve on its model and the EPWP team was working on a road show that would be visiting provinces to see how provinces were moving with that process. Coordination was going well and in a review done by the Presidency, it was agreed to bring in a new structure, convened by the Minister, with the help of the Cabinet Secretariat. All the line function ministries would be brought in to get buy in and see how the number of work opportunities could be raised and created. There were a lot of opportunities out there; it was a matter of available budgets.

The DPW was looking at a Green strategy, working with the Department of Energy in a joint memorandum that would soon be going to Cabinet, involving energy efficiency and looking at developing codes for green buildings. Minister Doidge requested an opportunity to share some ideas with the Committee; it could enrich the department’s thinking on some of those issues.

DPW’s core mandate was supporting the developmental state objectives and use its immovable asset footprint. Public Works had a wonderful opportunity to turnaround the government accommodation portfolio. There was enormous potential for the department to access and rehabilitate state buildings and ensure government utilised all its vacant properties. Was it necessary to sit with so many properties or to rather have half as many well managed leased properties? The department was not geared for a rental-housing scheme. It should take that money and invest it elsewhere.

The asset portfolio had to be looked at. DPW could not sit with old assets, pay rates on them and maintain them forever. Some of them should be disposed of and new assets bought. Government’s demands were growing; it had new departments. DPW battled to find accommodation for them. It was paying too much for leased accommodation and yet they were sitting with empty buildings. DPW also had to look at how to bring previously disadvantaged role players into the property lease portfolio and Public Works was certainly the department to do that, but had to make sure it came in at the right price. The department would be coming back to the Committee on the immovable asset footprint.

Linked to the immovable asset footprint was the department’s disposal policy. There was no disposal policy as yet, a draft was on the table and the Minister suggested the department share that with the Committee. It was a policy the department wanted approved and implemented in this financial year. In terms of movable assets, the DPW was sitting with dozens of storerooms of furniture that came out of Acacia Park and elsewhere and had to be taken stock of annually. Was that the best use of taxpayers’ money? A decision should be taken if the furniture could be used or not, and have a disposal policy to guide the department in a transparent manner to ensure that those assets could be disposed of and the money could go to the fiscus. That disposal policy would help to deal with both immovable and movable assets.

The refurbishment of Land Ports of Entry and dolomite projects were crucial, agreements had been entered into with countries to improve the border posts, and some were lagging behind because of difficulties such as land mines. In one case, the bilateral agreement was actually not signed, and that had to be rectified.
DPW would continue with accessibility of public buildings for disabled people, and generally reviewing its service delivery models.

On the property aspect one of the biggest criticisms Public Works had from client departments was what Public Works should and should not do. DPW moved from the premise that it needed to improve service delivery to its clients such as Correctional Services and Home Affairs. It was no use saying it wanted to get the mandate back but was not providing the service. Customer service level agreements had to be expedited. There was also a need to expedite improving the operational efficiencies of DPW’s debtor’s book and revenue management. The CFO was able to bring that amount down substantially; the IT system was needed for better management systems. DPW was moving from a cash basis to an accrual system in terms of the accounting model as required by the Auditor General. DPW wanted to finalise the new business models as a matter of urgency within this financial year in order to bring Public Works back to the professional entity it was supposed to be, both on property, construction, and other delivery areas. Efficient risk management was lacking in DPW’s system. DPW had taken a decision on zero tolerance of corruption, the SIU was involved and the Acting DG chaired the steering committee.

The Cabinet Lekgotla put together an inter ministerial committee consisting of the Minister, the Minister of Finance and the Minister of Rural Development and Land Reform, the Auditor General and the Accountant General, to look at the assets and asset registers of government at all three spheres from a deeds registry and asset register point of view and cut across all three departments, together with the Ministry of Finance. Once the technical report from the Accountant General was received, it would meet with provinces as well as local government. That would assist in the implementation of GIAMA and some of the challenges there.

Strategic context: MTEF priorities were the issues that would inform the department’s planning going ahead.
Government had made it very clear that the DPW had to speed up economic growth and to look at further transforming the economy to create decent work and sustainable livelihoods. DPW served on the Economic Cluster in Cabinet and reported there on the work that EPWP was doing. The Minister was also responsible for reporting to NEDLAC on those issues.

DPW was using its resources to contribute to the building of social and economic infrastructure and was assisting extensively with rural development strategy and in land and agrarian reform. The two custodian departments for land were Rural Development and Land Reform and Public Works, and audits were being done as to who owned what agricultural land, what it was being used for and if it could be used better. A preliminary report had been sent to the ministers concerned, and their feedback was awaited.

DPW was strengthening its skills and resource base; and intensified its fight against crime and corruption.
DPW pursued African advancement and enhanced international cooperation. It had requests from several African countries to come and share the experiences of the EPWP, and also had a request to head a trade delegation to India of contractors. The Minister of Public Works in India suggested that contractors from South Africa visit India to explore the opportunities that existed in construction, especially highway road construction and other construction as the country wanted to achieve an extensive build programme.
Building a developmental state, including improvement of public services and strengthening democratic institutions was a priority. Property facilities had to be provided to support all of government.
 
Strategic context: DPW strategic goals. The six goals of the department were:
▪ to provide strategic leadership in terms of immovable asset management and delivery of infrastructure;
▪ to promote an enabling environment for the creation of both short and sustainable work opportunities so as to contribute to the national goal of job creation and poverty alleviation;
▪ to contribute to the building of a developmental state and a comprehensive rural development framework through state assets;
▪ to ensure transformation and regulation of the construction and property industries to ensure economic growth and development;
▪ to ensure cooperative governance and sound resource management; and
▪ to ensure improved service delivery in all departmental programmes to meet client expectations.

Strategic context: Outcomes. The four out of twelve outcomes that Cabinet took a decision on that related to DPW, were:
▪ the creation of decent employment through inclusive economic growth;
▪ creation of efficient, competitive and responsive infrastructure network;
▪ efficient and effective development oriented Public Service and an empowered inclusive citizenship; and
▪ a skilled and capable workforce to support an inclusive growth path.

Discussion
The Chairperson thanked the Minister, the details were important. It was refreshing to get that type of perspective, and it was also refreshing to have both the Minister and Deputy Minister and a large delegation with all the expertise from the Department of Public Works. He had five questions.

▪ The Minister had not touched on legislation; there was a need for that capacity to be strengthened.

The Minister replied that one of the Bills the department had in the pipeline was the Expropriation Bill. It was timed for tabling in Parliament in the first quarter of 2011. That Bill was receiving extensive attention in terms of the Department of Rural Development and Land Reform. Technical and legal teams had been set up to address the previous round of public hearings and a progress report was expected soon. The two ministers chaired the task team and were hoping that there was sufficient progress so that the Bill could be finalised and taken through the normal process of public comment before going to Parliament. Work was being done on the Agrément SA Bill. However there was a rethink within Cabinet about looking into the research and development entities that government presided over. There was a need for discussions with the Minister of Science and Technology because Agrément was housed at CSIR but accounted to Public Works. The department wanted to discuss that with the Minister of Science and Technology to see where the best place would be for Agrément, given that it was a quality assurance entity. This component already existed in some of the entities that accounted to the Minister of Science and Technology. There needed to be a review of the State Land Disposal Act as early as next year together with the Expropriation Bill. Work was continuing on the White Paper and DPW would like to get that finalised as a matter of urgency.

▪ He asked the Director General whether the Auditor General was happy with the department’s progress towards a clean audit?
▪ He was concerned about the ‘Rea Patala’ matter, for example GCIS would have a rollover because the money belonged to Public Works and GCIS was still waiting their invoices. What was done or not done by DPW, impacted on other departments. If Public Works did asset registration properly, then the affected department would also get a qualified report.
▪ The Committee had had an outstanding appointment with the professional councils and were encouraged by the Minister saying that their registration was improving. That was what the Committee wanted to hear.
▪ In terms of recapitalisation of the IDT, it was striking that with such a strategic portfolio: public works and  poverty eradication, opportunities in municipalities were not exploited to their maximum. Looking at the reports of the last quarter in terms of the uptake of incentives, the Committee was not happy with that.

Mr C Kekana (ANC) asked if the Minister meant immovable property or movable property. Land, farms, buildings, and furniture. In communities, people saw all those things go to rot. People who wanted to start income generating projects, saw those properties being neglected. They were vandalised and the properties became criminal hide-outs, The people needed them. He was aware of properties like that in Soweto for the past ten or fifteen years. How did the department intend to deal with that? Johannesburg had an agency called Johannesburg Property Development that appointed a special agency to assess, sell or lease on behalf of Johannesburg. Did DPW have the capacity to do that nationally or was it considering outsourcing?

The Minister responded that DPW had done a quick review of what was on its records in terms of farms and what some of the land was being used for. That had been submitted to Agriculture and Rural Development and DPW was awaiting a response from them as to what they would like to collaborate on. In terms of properties, DPW received a lot of queries. The Department had a ‘Talk to the Minister’ email address that was inundated with about property queries from different provinces. It also received calls and letters. Those properties were investigated. It was something that even local government had addressed. At the Local Government Summit held by the Minister of COGTA, the department addressed that and asked municipalities and mayors to get in touch with the department if there were properties that they could put to better use. A number of municipalities were beginning to respond. Those were investigated but sometimes they were not held by the National Department of Public Works, they were sometimes held by the provinces, and in some instances by client departments. DPW would be willing to assist in verifying where those properties were held in custody. Where DPW had been able to free up properties for housing or other municipal functions, it had gladly transferred the land. There was no specific unit within Public Works that would look at it such as the Johannesburg Property example, but it was something that should be encouraged through MinMec. There was a lot of work to be done in that field. On movable assets, the disposal policy that would come to the Committee needed to address unused furniture held in storerooms. It was costing a lot of money to do so and the department spent more than the furniture was worth.

Mr Kekana said that JIPSA, ASGISA and even the Polokwane resolution had said that the country needed skills, especially professional skills because without such skills the economy would never grow and jobs could not be created because those were strategic people who were responsible for running companies, government institutions, and for construction. ASGISA and JIPSA were producing 500 but needed to produce 1000 per year. The plan in the interim, while preparing our own youth, was to get such skills from India because they were more reasonable compared to Europe, Cuba and so on. ASGISA said we could produce up to 2000 to meet the demands of the country. In terms of that specification the presentation did not give a sense of whether the target was being met.

The Minister responded that DPW would work closely with other departments. It was the mandate of DHE and the Minister of Higher Education, but Public Works would play a supportive role in terms of skills. He was not sure whether JIPSA and ASGISA would fall into the mandate of that new ministry. The department could assist by looking at its interns and whether it should be looking at those jobless graduates with the relevant qualifications that could be brought into the department. This was why the department’s organogram and the structure of the business model became important, to give openings to such people. There were already a number in the department that were benefiting from such processes.

Mr S Masango (DA) agreed with everything the Minister said, but could not understand why the department did not have professional technical people. Why was the department still talking about it? DPW should be taking the lead in takeing up the students. In terms of regenerating and reshaping the department, he was concerned that it was still headless. How would they get that right if there was no leadership? Any organisation needed a healthy, vibrant relationship in order to go forward; if that was not there then things fell apart. He had read in the media last year that the Minister was fighting with his staff. He asked the Minister to respond to that. The Minister had spoken to the media about a forensic audit. Was that being implemented yet?

The Minister responded that the fight last year was after an agreement with the then Acting DG who sat in on the presentation with a company called Cliffe Decker Hofmeyr and Comperio Forensics. After agreeing that that company would be appointed to do the required forensic investigation, he changed his mind and went to the media. That was his role as Acting DG. It was simply that the Minister wanted to satisfy himself as Minister that that was the direction the department wanted to take to guide that process because it had to be a forensic audit into the procurement processes. It would straddle a number of areas that were known to have problems, that was where the disagreement came about. It was not the Minister’s call as to who got appointed, it was the call of the then Acting DG. What had since happened was the SIU was appointed to do that work. That work was already underway and they were working with department’s senior management. The work done by the SIU would also strengthen the department’s senior management in identifying areas where there had been weaknesses because the whole of Public Works was about procurement. When those results were out they would be brought to the Committee. The SIU had given progress reports indicating it was heading in the right direction and progress would be seen very soon.

The Chairperson asked for clarification on whether the SIU was busy with investigations or with the initial proclamation.

The Minister said that before they could get into the in-depth investigations, they would need a presidential proclamation. So preliminary work had to be done that was almost like a preliminary investigation. That was submitted to the President who would then issue a proclamation and then the serious investigation work would start. The department was hoping that there would be a proclamation in the near future so that the serious investigation could start. It was a very legal technical process.

Mr L Gaehler (UDM) asked what type of guidance was given to provinces because most of the service providers in the provinces were paid between 90 or 120 days. Was there any assistance the department could give to those service providers who were mostly emerging contractors, which was why there were thousands of them lying in Grade 1 because they were not paid in time.

The Minister responded that timely payment was an issue. Rea Patala went in two ways: whilst contractors that did the work must be paid on time, Public Works also had to ensure it received its money from departments, but that was more on the collection side. When the department spoke about guidance to provinces it had a legislative framework, GIAMA was one, but the MinMec forum was a forum for Public Works to provide leadership within those frameworks, sometimes there were no policies and they were guided by the Constitution. The DDG on Special Projects was saying if the department could get money it should put up a government precinct in Mthatha. The land and assets were there, but it was about providing guidance so that the inner city of Mthatha could be regenerated.

Mr Gaehler referred to skills and asked if there was a database or did the department work with the DHE, because there were thousands out there with certificates that were unable to get jobs. Was there any cooperation with those institutions of higher learning?

The Minister responded that he had also thought of the idea of a database. He did not know what the unintended consequences could be, and whether it would be creating unfair expectations, but unless there was a database where people could register how would the department know who and where they were? That was something that could be considered.

The Chairperson cautioned about the sale of immovable property, they were still bemoaning the sale of the Waterfront and would not want that situation again. By all means dispose where people were occupying state houses and so on, particularly at local government level. Was GIAMA going to be extended, what was happening there? He again asked why there were so many people in acting positions in the department, what was the problem? The Committee was worried about such uncertainties because if it went on too long, it would become a problem.

Minister Doidge responded that the department had twice last year advertised for the position of DG and had a total of 54 applicants. Given some of the challenges the department was facing at that stage, it was decided not to rush finalising the position, which in hindsight was a wise move because there had been further developments since. On 26 April it would be interviewing candidates for the DG position.  The department had also in the interim run adverts for Chief Operations Officer. They hoped to fill the position in May and that of three DDGs, and by then they should also have finalised the DG. Although it might seem that everybody was acting, the incumbents in those acting positions had really played a significant leadership role and he was pleased that they were able to assist at a time when the department really needed them.

Mr Masango asked what was the procedure for promotion in the department?

The Minister responded that the department had to conform to the Public Service Act in terms of promotion.
 
Programme Structure Administration
Mr Mochalibane briefed the Committee on the key department branches. According to questions raised, the Public Service Act no longer provided for promotion, it provided appointment, which meant that any position in the department had to be advertised and contested. The department had eight branches located under the five programmes of Asset Investment Management, Operations Management, Special Projects, Inner City Regeneration Project Managements and Professional Services, Expanded Public Works Programme, Construction and Property Policy Regulation, Finance and Supply Chain Management, and Corporate Services.

Key Branch initiatives:
Asset Investment Branch: Out of those branches of the department were activities or functions that each branch implemented in line with the funding assigned by National Treasury. These were enhancement of the asset register, compilation of service level agreements with the client department; facilitation of implementation of the User Asset Management Plans for user departments; compilation of Custodian Asset Management Plans; implementation of programmes for planned maintenance, capital works and leasing portfolio; implemented GIAMA property performance standards; energy and water efficiency; rehabilitation of unused or under utilised buildings; a programme of accessibility for people with disabilities to public buildings; valuations and NIMS.

Operations Management funded the acquisition, construction and maintenance of infrastructure for DPW and client departments. The distribution of funds was governed by the compensation and administration of the unit. Eleven regional branches fell under this sub-programme.

Inner City Regeneration was a government decision to revive inner cities and various projects were identified.

The Special Projects Branch focused on Land Ports of Entry: Golela, Skilpadnek, Vioolsdrift and Lebombo/Ressano; the Pan-African Parliament, DPW was working on an alternative funding formula for PAP; and 2010 FIFA World Cup redevelopment of border posts infrastructure.

The Expanded Public Works Programme was one of the branches in the department that focused on ensuring that the mandate of government was implemented. EPWP Targets per Sector had the biggest MTEF allocation from National Treasury of R846bn and opportunities for the EPWP to upscale further. The EPWP Targets per Sphere of Government per financial year from 2009/10 to 2013/14 financial year per sphere meant each area had its own target. Targets were per work opportunities.

The Construction and Property Policy Regulation Branch focused on property and construction policy regulation; implementation of construction and property charters; the National Contractor Development Programme (NCDP) and Contractor Incubator Programme; the Property Incubator Programme; extension of GIAMA principles to local government; policy development and asset management; the Expropriation Act; and State land under DPW’s custodianship and the Land Affairs Board. The department worked very closely with the Department of Rural Development and Land Affairs.

The Finance and Supply Chain Branch was the area wherein the funding of the department was managed under the procurement discipline of the department. It needed to comply with GAAP and to ensure improved revenue collection and debtors management, improved internal controls in terms of payment of invoices (30 days), improved supply chain management, and improved management of movable assets.

The Corporate Services Branch supported the department’s programmes and resourcing in terms of IT systems, HR resource management plan, and the skills development plan was managed under this branch.

The Strategic Planning Unit was intended to strengthen the department to respond to the mandate of government and country at large.

Intergovernmental Relations ensured that the department related well with all its partners, and the entities that reported to Public Works were the Independent Development Trust (IDT); the Construction Industry Development Board (CIDB); the Council for Built Environment (CBE); and Agrément South Africa (ASA).

Discussion
Mr Masango had been looking at Agrément South Africa’s strategic plan and budgets and did not understand why it was with DPW and what was their role. He asked what CIDB was doing. People registered with CIDB but nothing happened. Was it necessary to have a CIDB?

Mr Gaehler was concerned that established contractors were represented on the CIDB board but not the emerging contractors, so emerging contractors remained emerging. He was involved when CIDB was set up. Its aim was to improve the emerging contractors, but they were not being improved.

Mr Mnguni referred to the key branch initiative of Construction and Property Policy Regulation Branch. He did not understand the property incubation programme.

Ms Bici responded that in terms of the property incubator, perhaps the issue was the name. The programme sought to bring black people into the property market which was very difficult for black people to penetrate. It sought not only to give opportunities as sometimes they found it difficult to manage those opportunities. It was thus finalising discussions with Wits University to develop a three-year programme for them. When one was approved into that programme, one would not only have received an opportunity in a competitive environment but also a certificate. Over and above that the department was mobilising banks to support the programme. After the three years, people should be sustainable and be able to participate in the property market independently.

The Chairperson said that that created the impression that for black people to participate in the property market they must go to university for three years to get a qualification.

Ms Bici hoped that that was not the impression. The department was trying to get even those people who had not yet been in the property market. Sometimes people in the property market would have qualified themselves in a specific area, such as valuation or broking services. The department was saying they would come out of the programme complete and able to run their own company. The programme included property economics, property law, and property management. If the person already had qualifications and was capable of standing on their own that was well and good, but the programme was for those that needed training altogether. The department wanted to avoid the situation of fronting. When people were confronted with transactions and did not know how to proceed, the next thing they would do was to sell that tender. The programme would enable them to manage the business technically and financially.

 Mr Kekana asked for clarity on the issue of promotion that was discussed, was it only senior posts that had to be advertised or all posts? In the past people inside the department were considered before going outside. Did it apply across the board or was it only for top management and people on contract?

Mr Mochalibane responded that the Public Service Act applied to everybody across all levels, including contract workers. In cases of vacancies the post would be publicly advertised internally or externally; the principle being to promote fairness and transparency.

The Chairperson asked whether that meant advertise internally or externally or both?

The Deputy Minister responded that the department could do either or both. The Employment Equity Act also allowed departments not to advertise where they needed to allocate specific posts, in terms of ring fencing, for women, or black men, or disabled people, in the public service so as to meet targets in terms of the Employment Equity Plan

The Chairperson said he had raised that question because generally there were a lot of vacancies in the public sector, and also the Committee needed to know what the hold-up was.

Ms Madlala asked for clarity on the property policy regulations because it said the extension of GIAMA principles would be extended to local government. She asked the department to brief the Committee on the property that was international and what was going to happen about it?
 
The Chairperson asked the department about the protocol for property that was outside of the country. If they were building an embassy in Nigeria what were the protocols in terms of that situation? Did they know what we had?

Ms Subban responded that in 1999 the custodian responsibility, which included Planning, Construction, Maintenance and Management, was devolved to the Department of International Relations. DPW was still responsible as the overall custodians but the function was devolved to Foreign Affairs. An asset register was managed by International Relations and shared with DPW. The asset register had been circulated recently and could also be circulated to the Committee.

For the construction of new works and maintenance, it was a similar process. The Department of International Relations was required to work within the MTEF and prioritise their requirements across the various countries. Requirements were prioritised based on funding received. The specifications and costing were drafted by the embassies and submitted to the Department of International Relations. There was a tender process that happened in the relevant country and the contractors were appointed from that country. If there were problems and contractors that were not available, for example in the DRC, and in the case of war, then contractors were flown in from South Africa.

The Chairperson noted that the asset register would be circulated. He was not sure about the security of those assets if such a register was in the public domain. In the event that South Africa “misbehaved”, those properties might be attached.

Ms Subban added that there was a tender process relevant to the disposal of what DPW managed.

The Chairperson was concerned that the Department of International Relations was looking after the assets in terms of “whatever protocol it still wanted to engage” because when the Committee had met with them, this matter was still about what they should be doing. The matter was not as cut and dried as was presented and they had to engage to get a clearer picture. He cautioned not to focus too much on disposal.

He was concerned that Agrément South Africa had been looked after by CSIR. He referred to Agrément South Africa, CSIR and South African Bureau of Standards as spoke of fragmentation.

The Committee had met with CIDB and raised concern that it was unhappy with the way it dealt with certain issues. The Committee had met with the IDT who had shown professionalism and needed to be supported. In particular their financials had made Parliament proud. The IDT must go to the CIDB and the CBE and all those “misbehaving” and show them how to do it as a model. Parliament wanted to support these entities. Parliament also wanted to support the department so if it submitted a strategic plan with loopholes, the department should take it back and work on it. What was brought before the Committee today, made the  Committee proud of the DPW, they must keep it up. The Committee still had to meet Agrément South Africa and CBE.

The Chairperson asked, when speaking of “extension of GIAMA principles” to local government, what did that mean, because there was legislation, did that imply amending the legislation or what was the position?

Ms Bici responded that when government, driven by National Treasury, developed the PFMA, it was almost impossible to include local government at the time because the structure of local government was totally different. When National Treasury was confronted with that challenge it developed the Municipal Financial Management Act, thereby extending the principles to local government. It was using the existing framework. She used the example of immovable asset management at national and at local level. At national level there was clear delineation of the custodian and a clear delineation of a user. Local government was different altogether, the user and the custodian were the same, so it was difficult to set a framework across the sphere. All the principles used in GIAMA such as life cycle management, acquisition, those same guidelines would be used. Rolling out to each and every municipality was not the responsibility of the Minister; it was the responsibility of the Minister of Cooperative Government. The same principle applied even though the Acts governing those principles were different.

The Chairperson said the Committee did not agree with that. Even if it was difficult at local government level, there was serious discomfort as to how government property at local government was under utilised, looted and so on.

The Deputy Minister reminded Members that when the GIAMA Act was passed, DPW was fully aware that Parliament was unhappy that local government had not been included then. The department noted the Committee’s concerns and would work very hard to address them.

The Chairperson asked the Deputy Director General to address the Committee on the CIDB.

The DDG clarified “gate keeping”. It was important that when contractors registered with the CIDB they registered within a particular grade to ensure that the matter of quality in the construction industry was addressed. About 22 schools were decommissioned in Limpopo last year because the contractor could not perform the actual work. However, in terms of the CIDB regulations, the contractor had to have in his employ a qualified and professionally registered person, which meant there had to be an artisan, a project manager and so forth or the contractor would automatically be excluded. A contractor seeking job opportunities from the State might, prior to a contract, be unable to pay those professionals in his company but without them he was unable to access job opportunities from the State. The thinking was that  there was a need to review that particular regulation to state that the person at the time of contesting for job opportunities did not have to have the professionally registered person employed but at the time when the tender was awarded and before execution, that contractor had to procure the services of a professionally registered person. In that way an emerging contractor would not be penalised for not yet having the professionally registered person in his employ. That was one regulation that would be pushed through by the Department of Public Works so as to create space for the participation of emerging contractors in the construction industry.

Another CIDB regulation was that one needed to have a certain percentage of annual turnover to justify contesting for a particular tender. If the tender being contested was in excess of R10 million, one would need ten percent as a turnover to justify that. The emerging contractor that had not had a job opportunity for three to four years would not have accumulated enough capital to sustain himself as a contractor. To what extent should one maintain or decrease the threshold currently required in order to contest for tender? These were some of the regulations that the Department of Public Works proposed must be amended so as to open up space for the participation of black contractors in the construction industry.

The Chairperson said that was useful because the Committee had not understood why people were kept outside the industry; it had not been informed of some of the regulations that were an impediment.

DPW Budget over the MTEF period 2010/11 to 2012/13
Ms Cathy Motsisi (CFO)explained the DPW budget allocation (see document).

Budget per economic classification: Totals were for 2009/10: R6 billion, 2010/11: R6.4 billion, made up of R1.1 billion for compensation of employees, goods and services R570 million, office accommodation R351 million, transfers and subsidies R3 billion. The key drivers of the R3 billion, EPWP accounted for R1,01 billion and property rates for R1,09 billion. Capital infrastructure R1.3 billion, payments for capital assets R69.9 million, giving a total of R6.4 billion for the financial year 2010/11. The current Compensation budget as percentage of total budget was 17%, the norm in the industry was around 25%, and the current budget should not exceed 30%. The percentage reduced in the outer years. There were no funds for the implementation of an Occupation Specific Dispensation (OSD), which would create a lot of unhappiness.
The Goods and Services budget had also been decreasing significantly throughout the years and was the budget needed to manage the projects to ensure there were sufficient funds to get the expertise needed.

Conditional Grants & Specifically & Exclusive Appropriation: Specifically and exclusively appropriated was a new term used by National Treasury where it wanted to emphasise the point that the department could not do anything with that money and it could not be spent or reprioritised elsewhere. It related to the conditional grants and the energy and efficiency and transfer to IDT.

Breakdown of the Infrastructure Budget: Breakdown was Department R93 million, Accessibility R15 million, Dolomite and Risk Management R160 000 million, Land Ports of Entry R551 million, Prestige Unit R283 million, and Inner City Regeneration R200 million, giving a total of RR1.3 billion.

Breakdown of the “Land Ports of Entry”: Allocations were Skilpadsnek R278 million, Golela R43.7 million, Lebombo R42.5 million, Vioolsdrift R3 million, RAMP projects R94.8 million, and other Land Ports of Entry R88 million; total R551 million.

Breakdown of the “Dolomite Risk Management”: Allocations were Correctional Services R4.6 million; Defence R66.7 million; Justice R6.6 million, and Police R82 million; total R160 million.

Property Management Trading Entity (PMTE) Revenue and Budget: Ms Motsisi explained that the R5.3 billion was revenue recovered from work done for client departments. Those were the entities that the Minister spoke about in his overview. The department expected revenue for 2010/11 and budgeted for revenue amounting to R5.9 billion, which would be made up of accommodation charges from buildings leased out to client departments, projected revenue was R2.9 billion. Private leases were leases entered into on behalf of clients with private landlords amounting to R2.3 billion, which made up of about 40% of the total fund of R9 billion. The augmentation, that is, money received from National Treasury, that was aimed at assisting with the PMTE, but the bulk of it went to rehabilitation of the department’s buildings. Management fees of R98 million were monies received from managing the municipal service charges for client departments. Cleaning and gardening was for the Department of Justice R155 million, day to day maintenance of buildings was allocated R602 million. Property rates was for the buildings that Public Works was custodian of and to assist provinces where they had arrears on their property rates prior to 2007, R592 million; Repair, Renovation and Upgrading R2.3 billion put aside to ensure rehabilitation of the department’s buildings. If clients could be put into those State buildings, it would reduce those on the ‘private’ list.

Breakdown of Client Infrastructure Budget: was the breakdown of budget allocated to the Client department, which was administered in the sense that the department did work on behalf of the clients. The total was R2.4 billion, which the clients had already signed in relation to projects managed on their behalf.

The total budget of the department was R6.4 billion, but it actually managed R8 billion with the R2.4 billion sitting with clients but managed by the department. When worked out, the Compensation line of 17% did not talk to the R2.4 billion, which were some of the gaps that became conspicuous. One could see the shortage of professional skills and expertise and the systems that must be implemented in the department in order to become efficient and provide the service delivery that was so critical.

Discussion
The Chairperson asked for clarification on the Compensation for Employees. The norm was 25% and DPW’s was at 17%, what was the reason for that?

Ms Motsisi replied that the department had not been receiving any additional funding despite the requests submitted to Treasury for additional allocation for recruitment. The department had been reprioritising, taking money away from Goods and Services through the cost saving mechanisms and then increasing Compensation for Employees that way.

The Chairperson said so there was a reduction in Goods and Services and also budgeted for savings in goods and services? The department was saying the money was not enough and yet was saving from it.
The Goods and Services, looking into the coming year, was actually increasing, he did not understand.

Ms Motsisi explained that goods and services for 2010/11 was R570 million and increased only in 2011/12. As budgets were reviewed annually that R724 million would also be cut. The previous slide showed the reduction of R59 million.

The Chairperson said the department was calling it efficiency savings, but Ms Motsisi said actually used the money and then there was a reduction.

Ms Motsisi said that was done by National Treasury who called it efficiency savings. National Treasury reduced the Goods and Services budgets to force departments to become even more efficient. Earmarked funds were monies that could not be used for any other purpose without permission from National Treasury. R63 million was transferred to CIDB annually, CBE had R25 million and the Energy Efficiency programme had R75 million, which was not adequate in terms of the energy efficiency that had to be done to all the department’s buildings throughout the country.

The Chairperson referred to Programme 3, EPWP, and R1.4 billion but on the previous slide it stated R1.1 billion. He asked about the discrepancy.

Ms Motsisi replied that the R1.4 billion included the unit itself, which was the total amount the programme had, including its own current budget. The total budget for EPWP was R1.4 billion.

The Chairperson quested clarity on management fees the department charged local government.

Ms Motsisi replied that the management fee was for municipal services for the client departments which the national department serviced, at five percent.

The Chairperson asked was that management fees to the client departments for municipal services?

Ms Motsisi explained that with the devolution of the budget, some clients opted not to devolve the budget. They requested Public Works to continue managing those bills on their behalf. DPW would receive a bill on behalf of a client department, pay it and then invoice the client department, including the five percent for administering that service on their behalf.

Mr Kekana asked how much was spent on training scarce skills. He emphasised skills development because he was surprised that black people were not allowed to be engineers. Africa was a laughing stock, it was seen to be backward, so it was very important to develop its own engineers and own capacity and that would not happen until it invested in the area of skills development.

Ms Motsisi responded that when she presented on Compensation of Employees, one of the things not mentioned was that because of the inadequate funding under Compensation, the department did not advertise bursaries. There was an amount for skills but it was not very large, it was for bursaries for students that were continuing within the department. Those constraints limited the intake of more professionals.

The Chairperson said there was no money for skills development yet.

Mr Masango emphasised the CIDB issue. He was concerned about people registered with the CIDB not performing quality work such as the contactor for that schools contract. His concern also was what about those that were outside the CIDB, working on bridges and roads, such as Malema’s engineering company that was not in the CIDB. Those who were out, they did not worry about quality; those who were in, they did not worry about quality. There had to be uniformity in standards. He was also concerned about the quality of workmanship. Supposedly if the finances were available, if a contractor had earned so much money then a contractor could go up to a certain group. He did not think that greater finances indicated quality.

After a question posed to Mr Henderson (Acting DDG: EPWP) by Mr Masango on how the job opportunity targets were arrived at for local, provincial and national government and the non-profit sector, the Chairperson said Mr Henderson would be called specifically to discuss EPWP as it was a subject on its own.

Mr Masango referred to Budget per Economic Classification, and said that he had been adding up the figures for 2010/11 and did not arrive at the same totals. On the PMTE Revenue and Budget, Revenue 2009/10 was all budgets, he would have liked some comparisons between budget and actual expenditure.

The Chairperson said that such reporting would come later.

In reply to Mr Masango asking if “private lease” was property being leased from private companies,
Ms Motsisi said that this was correct.

Mr Manana referred to Earmarked Funds and the EPWP incentive grants to provinces of R387 641 million. Yet on the next slide, EPWP Provincial Government R331 004 million, the figures were not the same.

Ms Motsisi explained that the R387 641 million included R56 million given as an additional amount for community works programme.

Ms Madlala referred to slides 33, 34, and 36. She saw big figures but was not sure of the size of the project. On the Land Ports of Entry, the Skilpadshek figure was so huge. She asked for a breakdown as to what was to be done there in terms of those huge amounts. What was to be done at the Land Ports of Entry?

Mr Mabuza explained that the allocation was determined by the scope of what had to be done. The Lebombo Border Gate between South Africa and Mozambique covered the construction of the office park, the pedestrian facility, the entrance for heavy vehicles, and bulk earthworks. After completion, the Lebombo Border Post would have three entrances instead of one: entrances for heavy vehicles, pedestrians, and light vehicles. The pedestrian facility was 90% complete, the heavy vehicles one was 80% complete. Expected completion for that border gate had to happen before the end of May in time for the 2010 FIFA World Cup. The same work being done on the Mozambican side was also being done on the South African side.
The Golela Border Gate between South Africa and Swaziland included the construction of the new border post facility. Work there was 80% complete and that border gate should be completed by end May 2010, ready for the 2010 World Cup. The execution of the Vioolsdrift Border Gate between South Africa and Namibia was in three separate phases: operational, residential and bulkhead services phases. That border gate was 95% complete and would be ready for delivery before the 2010 World Cup. The scope of the construction of the Skilpadshek Border Gate between South Africa and Botswana included operational facilities, the construction of the main border post, civil works for road, sewer and bulk water supply. There were challenges in terms of dolomite that escalated the construction value of the project to the extent that DPW was looking at the 2010 quantity and supply for purposes of the 2010 World Cup, without ignoring the future construction after the 2010 World Cup as a result of the dolomite activity. The Repairs and Maintenance Programme (RAMP) referred to regular maintenance of the border posts in all the key Land Ports of Entry between South Africa and other countries of the region.

Ms Madlala referred to the line item, Dolomite Risk Management. Within this budget item, the Police had been assigned a huge amount. How were those amounts allocated, why did they differ so much?

Mr Chiapasco responded that DPW had a dolomite programme that looked at rehabilitating dolomitic problematic ground. Defence was fairly large because DPW was rehabilitating the ground under the Waterkloof runways. It also depended on the scale of the client’s project. A runway was a very large infrastructural investment and hence the allocation reflected that.

Ms Madlala referred to the Client Infrastructure Budget. What kind of infrastructure was that because everywhere one went, things needed repair and Public Works was blamed?

Ms Madlala commented that the clarification, especially on the Land Ports of Entry, was very interesting. She asked if it was possible to get that in writing so that when the Committee did its oversight work, it could check on those things.

The Minister added that the total cost of the project should be included as well.

Mr Kekana was still not happy with the issue of skills. When the Minister presented he said the department was increasing its professional skills capacity at the level where resources must be allocated. There did not seem to be that fast increase of professional capacity as Members had been told there was no money, so the question was how then were Public Works professional skills to be increased? Engineers were very important because if there were no civil engineers in construction who would build the roads and design them. Even the creation of jobs, because the labourers had to work on what was designed by skilled engineers otherwise it would collapse, and they were the people who created jobs for this country. Development was about people, although there were programmes in other ministries, one should also see skills being developed in Public Works. If professional skills capacity was not increased, they would have to be imported from elsewhere, and that was very expensive.

The Chairperson said that that was a very important matter of skills not being taken up in practice.

Ms Motsisi responded that the budget was inadequate. The department was able to shift money through cost efficiency savings to try to deal with those initiatives. There was an intake of interns but not at the scale they would have preferred as a department.

The Chairperson stressed that this was a very serious matter and the department must see where it could find the money. The country needed skills development and the budget for it. The department and even the universities were not doing well in terms of skills production. What was produced in terms of scientists and engineers in the country was not enough. The country was failing in skills development.

Mr Gaehler referred to Earmarked Funds, saying the allocation for IDT for 2010/11 decreased and was again under Specifically and Exclusively appropriated. In terms of the IDT, contractors were upgraded according to the contracts they had done. He noted the issue of 10%. That was wrong, which was why he said the problem was at CIDB level. It should not be based on what the contractors had in their bank accounts, which established contractors had but emerging contractors did not. Emerging contractors would never get jobs unless the CIDB issues were sorted out. Established contractors were represented at CIDB level, not emerging contractors.

The Chairperson asked whether there was a concession on the part of the CIDB that they were trying to change that regulation because it was an impediment. This point had been made earlier.
 
Mr Mnguni said what was coming up about the CIDB was very interesting. When did they realise that that was an impediment? They should have done so long ago. After five years they had said they had been suppressing emerging contractors for so long, they must change. Yet this system had put the transformation agenda aside; it was still privileging those that were privileged previously. Stocks & Stocks and Murray & Roberts were still top, they qualified for projects worth hundreds of millions, while the emerging contractors were still down there; it did not make sense.

Mr Mabuza responded that in terms of the Act the board of CIDB was appointed for a period not exceeding three years. The current board was appointed in 2007, so its term of office expired this year in September. The board produced an annual review report in which this matter had come to the fore. It identified some of the factors that were interpreted to be the creation of standards for the participation of emerging contractors. DPW had also been having bilaterals with the South African Black Contractors Association and others to find how an amicable solution could be found about the identified challenges of the CIDB regulations which might be impeding the process. Generally there was a consensus on the basis of those bilaterals with the Black Contractors Association and the Emerging Contractors Association, that three of the regulations were seen to be impediments.

The first was the question of de-grading, which meant that for three years contractors were allowed to be on the CIDB. After three years, contractors would be reviewed. If they had not performed then they were de-graded. The point that the contractors raised was what if they did not get an opportunity during the past three years. Why could they not remain there as opposed to being de-graded? If that recommendation could be pushed through, space could be created for the participation of black contractors.

The second point where there was general consensus was that one of the regulations said the contractor must have in his employ a professionally registered person before he could actually bid for a tender in the public sector. The point raised was the expectation to keep a very expensive professional in their employ.
The third point was what would be the acceptable threshold in terms of their turnover based on the monetary value of the contract. Those were discussions had had and in its assessment those were the three most fundamental factors that were seen to be impeding the participation of black emerging contractors in the construction industry.

Mr Masango said they had received a long explanation about the extension of GIAMA to local government, but it did not make sense to him. The Act had to be applied at local government as well. There was no need to make any justification. He also asked the department to please put together a presentation on the progress of the contractor incubation programme. The Committee needed more on this.

The Chairperson agreed that the Committee would like a holistic presentation. He heard what Mr Masango was saying about GIAMA. He pointed out that Parliament had passed that legislation but without including local government. The Committee put conditions to that in that local government had to be addressed at a later stage. The Deputy Minister had also addressed that issue, saying that those conditions would have to be looked into. There was still the CIDB issue, why so late in the day?

Ms Madlala added it was unfortunate that there were those CIDB conditions and yet government funded most of the projects. The amount of money that went to well established contractors was disheartening because government had a mandate from the people on the ground, and yet government was looking after the already established contractors. Referring to the Bills in the pipeline, she said it was unfortunate that the CBE Bill was not in the pipeline. The Committee would have loved to see it being speeded up. The CBE was toothless without that Bill. The registration of professionals was haphazard and there were problems between the councils and CBE and nothing could be done without the Bill. There was a need to have our own black professionals but there were loopholes.

She asked when the extension of GIAMA to local government was expected to happen. Was it possible to have quarterly reports on the progress of women, youth, and people with disabilities in the EPWP. The department mentioned that it was going to be doing provincial visits. In order to work together, she would like those reports so when doing provincial oversight visits, she would be aware of what was going on in each and every province. EPWP was key for job creation. In some cases, the provincial departments hid some of the challenges and thought Members were like inspectors, but Members wanted to work with them so that at the end of the day, jobs would be created and poverty alleviated. She asked if that report could be in summary form.

Mr Henderson replied in the affirmative for both reports and provincial visits.

The Committee also needed a quarterly report on the BEE Property Incubator Programme, because some time ago it had been reported that all the departments in the Free State used just one person, and if they were really serious about the BEE what were they saying?

The Chairperson asked the department to note it was important that it shared its provincial reports.
There would be a separate discussion on the progress on GIAMA.

Mr Manana referred to private leases. He accepted the CFO’s submission that to reduce expenditure on private leases, the department would be renovating and upgrading some state property to house departments. Had DPW considered the option of building? In Mpumalanga the DPW had advertised for more than a year for office space and advertising was very costly. By building it would spend more now but it would have the structures for a long time. If it were spending R2 billion per financial year – how much would be spent over the next twenty years?

Mr Chiapasco thanked the Member for that initiative. With the Inner City Regeneration programme the department was looking to do just that. The department was running feasibility studies for government complexes.

The Chairperson asked whether that was just intention or was it tangible, were there examples of what was happening somewhere else that addressed the question?

Mr Chiapasco replied the department did have a programme, it was running feasibility studies for rental of Public Works regional offices because it had control of its own budget. The department also looked and worked with clients in terms of their permanency in a particular place, and working with them then developed a final solution. He could put on the table the Public Works Regional Programme for the current year. For those Public Works regional offices that were leased, the department was running a feasibility programme to look at developing new regional head offices, which were the department’s own buildings. Bloemfontein was currently at the end of constructing a regional office where prior to that, it had been leasing.

Ms Subban added the thinking was constantly there. Ninety per cent of the feasibility reports recommended construction so the department had requested an adequate budget from National Treasury but in the interim the solution would have to be leasing. The department looked at how long construction was expected to take and recommend leasing around that. Leasing could be from five to seven years, but construction was subject to an appropriate budget being given by National Treasury, or if it could use an alternative model of delivery like a Build-Operate-Transfer (BOT). The department was currently not building big office accommodation, except for Bloemfontein. It was mainly concentrating on upgrading and refurbishing. However, the department had acquired the Salvokop land where it wanted to build government precincts and put more client departments there. The department had appealed to National Treasury for budgets for that.

The Chairperson asked whether the private leases were open ended, was there termination, what was the maximum – ten, twenty years?

Ms Subban replied that leases were generally five to seven years; some leases were procured for ten years. That would be subject to the client requirement, some clients were in existing buildings and the options had just been concluded. The department wanted to own 70% and lease 30%.

In reply to the Chairperson asking what was the current situation, Ms Subban said that currently Public Works had about 6000 leases and the percentage of that against ownership, was over 30%.

The Chairperson said the Committee had been doing research. It started by looking at Parliament, the ownership of the Union Buildings and the SA embassies. The research showed that Public Works was leasing far more than it owned. That was not value for money. Government was building for posterity and was very serious about this country owning itself. The Committee was not happy with the situation as it stood. The Committee would work with the department on that.

Mr Vukela said the issues the Committee had raised had been noted would improve on those areas that needed improvement. The department would provide reports on those areas. They were confident that the Committee would assist them in areas such as skills development funding.

The Chairperson said to the Minister that the Strategic Plan 2012/13 was ten out of ten. He thanked the Acting DG for the hard work he had put in during the time he was acting. He would emerge a stronger person. He thanked the Minister for employing him.

The Minister concluded that he recognised the role that the Acting DG had played, and all of them, he was very appreciative of them. He thanked the Committee for the constructive manner in which they had engaged the department. The department needed Parliament, it needed the Committee, and the interaction had assisted the department to see things from a different perspective. A number of issues needed to be followed up. The department had taken notes, and some matters would need further discussion. It was good to have had the interaction and also sufficient time to do so. He thanked the Chairperson for the excellent manner in which he had chaired the meeting and all the contributions of the Members and their understanding of the very complex mandate of Public Works. One day when they went into the devolution of budgets and custodianship, the Committee would see how much more complex it was.

As Minister and Deputy Minister they had interacted in different public fora, had question and answer sessions, and were aware of some of the problems raised about CIDB. In fact they were the ones who alerted the board to a number of those problems which needed answers. He reminded the Committee that the CIDB was there by an Act of Parliament and must be guided by that Act until it was amended. Given the financial constraints in the country, the CFO and the Acting DG and their team had tried to come up with a balanced budget.

The Minister said that there should be a separate discussion on skills. DPW was as concerned as the Committee was. This issue straddled not only one department but the whole of government. The department had some ideas it would like to share with the Committee as to what it thought should happen. There was also a need to look at the shortcomings in the skills pipeline. Not all the universities that taught engineering subject were registered and whether they would be recognised by the Professional Council was another issue. So they had to be careful about some of the challenges that were there. They would how to put their heads and hands together to address those issues, and perhaps that should be a separate discussion. He thanked the Chairperson for a very constructive meeting.

The meeting was adjourned.