Asset Register & Rollout of the Government Immovable Asset Management Act: Department of Public Works report

Public Works and Infrastructure

22 August 2011
Chairperson: Ms M Mabuza (ANC)
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Meeting Summary

The Department of Public Works (DPW) briefed the Committee on the progress, status and challenges around the Asset Register. The presentation focused on the background to the asset register, the status report, the vesting plans and interventions made by the DPW. The DPW experienced challenges with the asset register due to the magnitude of the portfolio, problems with the Asset Management and Property Management System, the data input at regional and provincial level and capacity constraints. The meeting also focused on the status of the implementation of the Government Immovable Asset Management Act (GIAMA) in provinces. The DPW stated that provinces had started engaging municipalities on aligned infrastructure plans that took GIAMA into consideration. The implementation of GIAMA had experienced generic challenges from all provinces in terms of lack of capacity and resources, lack of required funding, lack of commitment from user departments, and the slow issuing of item 28(1) certificates by the Department of Rural Development and Land Reform.

Members noted that they had once been told that a lot of progress had been made with extending GIAMA to the local government level, but when they visited the provinces, they received a different version. Members wanted to know how often the DPW engaged with provinces on the GIAMA, if a breakdown, per province, could be given of the 17 778 land parcels that had been vested, if DPW could meet its target for vesting all state land by 31 March 2014, and whether the DPW had the capacity to carry out all its intervention measures. The DPW mentioned the challenges with the asset register, but the presentation did not speak to the plans that were put in place to address the matter. The Committee was concerned about extending GIAMA to local government level at this time. They were concerned that the report highlighted a number of issues around capacity and the ability of provincial departments to engage with the requirements of the Act, and were especially worried about rural areas being able to engage with requirements of the Act, and whether they would receive national assistance. The Chairperson noted that the DPW did not appear to be particularly up to date on the situation, and the asset register issue was not progressing. Members said that they were tired of listening to the same excuses over and over again. They particularly challenged what the managers at the DPW were doing to address continuing problems, apparent lack of discipline, and suggested that independent bodies be appointed to manage the assets. Members decided there was no point in continuing the meeting.

Members were also concerned that the audit report of the Auditor-General for the year ended 31 March 2010 said that the DPW’s qualified audit opinion was based mainly on the failure of systems within the department, particularly in regard to the audit procedure to be followed on government assets, irregular expenditure, unclear indicators and measures, and non-adherence to regulations. A concern was raised about immovable tangible assets, as the Auditor-General said that DPW was unable to obtain sufficient and appropriate evidence on completeness of their immovable tangible capital assets. The Committee asked the DPW to return with a proper report on the asset register on implementation of GIAMA.

Meeting report

Progress on Asset Register and GIAMA: Briefing by the Department of Public Works:
Ms Lydia Bici, Deputy Director-General: Policy, Department of Public Works, said the purpose of the meeting was to discuss the Asset Register in more detail, including providing the status, progress and challenges to achieving an accurate asset register. It would provide a progress report on the implementation of the Government Immovable Asset Management Act (GIAMA) at the provincial level, and to talk to the development of the Immovable Asset Management Cycle Guidelines.

Ms Sasa Subban, Deputy Director-General: Asset Management Investment, Department of Public Works, gave Members a brief background on the matter of the asset register. She said that prior to 1994 there was not a computer-based register of state-owned immovable assets. Between 1995 and 1999, the DPW started compiling a comprehensive computer-based inventory of immovable assets under the control of both national and provincial governments. The DPW completed the Asset Register Enhancement Programme (AREP) in March 2008. The scope of the programme focused on 33 555 immovable assets. The Immovable Asset Register was an accounting tool that served as a database containing all the physical, financial and legal information regarding the properties and their tenants. The Asset Register informed the Asset and Property management decisions, and recorded the resultant transactions within the various departments of public works.

The Department of Public Works (DPW or the Department) reported 108 562 properties in the Annual Financial Statements for 2009/2010 instead of 239 594 properties reported in 1999. The variance between the numbers was a result of the devolution of properties to provinces in 2008, the exclusion of land under the custodianship of the Department of Rural Development and Land Reform (DRDLR), the alignment with accounting reporting requirements, and the fact that the information on state-owned buildings was extracted at tenancy level instead of property level. The DPW had 109 323 properties as at 30 June 2011, consisting of 35 834 land parcels and 73 489 improvements. The land parcels consisted of 10 935 vacant land parcels and 24 899 pieces of land with improvements. The 73 489 improvements consisted of 33 069 residential and 40 420 non residential improvements. The new approach to enhancing data was done per town and per property, focusing on all the information fields. This was done on a monthly basis. There were 35 746 land parcels in DPW’s Asset Register. The DPW’s vesting target for 2011/12 was to complete 70% of the land parcels. 12 873 land parcels were vested as at 26 May 2011. All provinces vested 17 778 land parcels as at 26 May 2011.

Operation Bring Back focused on a project called Amnesty Call, which was an operational call centre. However, no calls had been received from the public, as a result of lack of awareness of the campaign, which focused on the identification of state immovable assets that were presumed to be unaccounted for. The DPW had an engagement with the South African Local Government Association (SALGA) on how municipalities could assist in spreading the message to promote public participation. The DPW would extend the duration of the amnesty initiative for another six months to ensure that the message was spread widely to promote public participation.

The DPW had invited proposals from suitably qualified managers to manage the AREP. The programme manager would be required to reconcile DPW, DRDLR, and provincial asset registers, and to determine interim custodial responsibilities, pending vesting. The manager would also be required to reconcile national and provincial vesting statistics, and conduct a status quo and gap analysis to determine the level of completeness of the existing DPW immovable assets register to GIAMA, and the Public Finance Management Act (PFMA).

The DPW then noted that, as a further intervention, it wanted to fast track the vesting of land for completion by 31 March 2014, tensify collaboration with provincial and national custodians, strengthen the interaction with the Office of the Surveyor-General, and finalise the draft Sector Guide on Immovable Assets and Asset Register Requirements. DPW constantly interacted with provinces in various forums to ensure that there was uniformity and best practice in the management of immovable assets.

Some of the challenges facing the asset register were the magnitude of the portfolio, problems with the integrated asset management and property management system, the data input at regional and provincial level, compliance with Generally Recognised Accounting Practices (GRAP) and the PFMA as well as GIAMA, and capacity constraints.

The DPW wished to complete the surveying of state land by 31 March 2013, to complete the asset register information fields by 31 March 2014, to complete the condition assessments of all state properties by 31 March 2014, to successfully test the public on unaccounted for state immovable assets through the Amnesty initiative, to obtain a clean audit on 31 March 2014, and to have effective and efficient collaboration with all stakeholders.

Ms Bici gave the status report on the GIAMA implementation in each province:

Eastern Cape
Twelve User-Asset Management Plans (U-AMPs) were received out of thirteen departments. The DPW’s Custodial-Asset Management Plan (C-AMP) was 75% complete and was on track to meet the target date in August. The province was the largest holder of state land (37%) and as a result had large pockets of unsurveyed state land, and was hindered by slow issuing of item 28(1) certificates by the DRDLR, and unresolved land claims on provincial property.

Free State
Ten U-AMPs were received out of twelve departments. The DPW C-AMP was not yet compiled due to lack of capacity within the property management section. This province faced challenges such as lack of cooperation from other user departments, the constant change in the property management section, and lack of sufficient training to compile asset management plans.

Gauteng
Eleven U-AMPs were received from all eleven departments. The C-AMP was 50% complete and would be finalised by the target date. Gauteng faced challenges including lack of cooperation from the department of local government and housing when it came to the submission of the U-AMP, the slow process in aligning existing property-related legislations to GIAMA, and delays in paying service providers, which hampered implementation.

Kwazulu-Natal
Twelve U-AMPs were received out of sixteen departments. The C-AMP was being developed and should be completed in October. KZN’s challenges included that the fact that the budget and delivery cycles still had to be agreed upon with relevant stakeholders, and a commitment was needed from the National Treasury on the asset management plan.

Limpopo
Valuation rolls were collected from municipalities and the process of capturing values had commenced. No U-AMPs had been received from the thirteen user departments. The process of compiling the C-AMP had not yet commenced. No specific unit had been assigned to manage GIAMA related matters and no provincial user forums were conducted.

Mpumalanga
Five U-AMPs had been received out of twelve departments. A process of compiling a C-AMP had not yet started. Mpumalanga was faced with lack of cooperation from user departments in submitting required U-AMPs, the slow issuing of item 28(1) certificates, and a great deal of unsurveyed land.

Northern Cape
Four U-AMPs had been received out of twelve departments. The process of compiling a C-AMP had not yet started. The province’s challenges included lack of cooperation from user departments in submitting required U-AMPs, the lack of management support, and a lack of sufficient capacity and resources to implement the Act successfully in the province.

North-West
Three U-AMPs were received out of eleven departments. The compilation of the C-AMP was 15% complete. The province experienced lack of cooperation from user departments in submitting required U-AMPS, the electronic vesting format was not functioning as anticipated, and there was a delay in the approval of the vesting model by the National Treasury.

Western Cape
Thirteen U-AMPS were received out of fourteen departments. The compilation of the C-AMP was 25% complete. The province aligned its current property management structure to accommodate GIAMA functions, and appointed a service provider to assist with the enhancement of the immovable asset register.

In extending GIAMA to local government, an analysis of the Municipal Systems Act, the Municipal Structures Act, and the Municipal Finance Management Act (MFMA) was finalised. Discussions were under way with internal stakeholders on the extension of GIAMA to local government. Provinces had stated engaging with municipalities on the aligned infrastructure plans that took GIAMA into consideration. The plans had been utilised by provincial departments responsible for public works, education, health and transport, to request funding for the 2012/13 financial year. Amendment proposals were being drafted to take into account the analysed legislation impacting on local government. A Cabinet Memorandum then had to be prepared and approved, and consultations would be held with the National Treasury, specific units within Department of Cooperative Governance and Traditional Affairs (COGTA), and local government structures.

The DPW started developing a guideline to assist with decision making when it came to the management of immovable assets. GIAMA enforced an additional step in the immovable asset life cycle that was neglected before, which was that of management. The new life cycle would consist of planning acquisition, management, maintenance, and disposals.

The implementation of GIAMA had experienced generic challenges from all provinces. These were lack of capacity and resources, lack of required funding, lack of commitment from user departments, and the slow issuing of item 28(1) certificates by the DRDLR.

Discussion
Mr M Rabotapi (DA) said that he found the GIAMA Report confusing. The Deputy Minister had previously told the Committee that significant progress was being made with GIAMA. However, when Members visited the provinces, they saw something very different. He asked how often the DPW engaged with provinces on the GIAMA.

Mr K Sithole (IFP) noted that this was not the first time that the Committee had received this kind of presentation, which made him wonder if it was a “cut and paste” report. The presentation said that the provinces vested 17 778 land parcels as at 26 May 2011. He asked for a breakdown of the figure by province. He noted that one of the DPW’s interventions was to fast track the vesting of state land for completion by 31 March 2014 and asked if this target would be met. The DPW said that the GIAMA Implementation Technical Committee was convened on a monthly basis. He asked for a progress report on these meetings. The DPW said that one of its challenges was data input at regional and provincial level. The Committee wanted to see this database of information.

Ms P Ngwenya-Mabila (ANC) asked that when the DPW used acronyms in its presentation, it should include footnotes explaining these acronyms. In particular, she questioned what C-AMP was. She noted that although the DPW had mentioned the challenges it was having with the asset register, it did not speak to the plans that were put in place to address the matter. She said that the Committee also wanted to know if the DPW had the capacity to carry out the planned interventions, stressing that proper implementation was key.  She asked if the appointment of data capturers had improved the functioning of the DPW. The DPW also made mention of hiring a secondary service provider, and she wanted to know if a primary service provider had already been appointed. She noted that whilst the DPW was talking about outsourcing, the government was talking about job creation. She asked how the DPW intended to align these two concepts. She also asked if the monthly targets had been met.

Ms Bici explained that C-AMP stood for Custodian – Asset Management Plan. The plan was supposed to be submitted annually with the strategic plans. The first trial plan had to be submitted soon to the DPW, and the final plan has to be submitted next year. This was a first for the provinces and the DPW was taking a hands-on approach to assist provinces with their plans. The provincial Dpartments of Public Works were coordinating and capacitating themselves. They should all submit their plans, but the DPW would continue to monitor their progress and report to the Committee.

Mr J Steenhuizen (DA) asked how confident the DPW was that it would meet the targets set out in the presentation, and if those targets would be revised, pointing out that GIAMA required an annual review of the asset management plans of provinces. He asked if the DPW was still awaiting reviews from some departments in the provinces. He was concerned about extending GIAMA to local government level at this time. The report highlighted a number of issues around capacity and the ability of provincial departments to engage with the requirements of the Act. He was worried, in particular, whether rural areas would be able to engage with requirements of the Act, and if they would receive national assistance.

Ms Bici replied that the DPW could not present a list, at the meeting, of which provinces had not submitted their reports. The DPW would submit the list to the Committee as soon as possible.

Ms Bici addressed the question on the extension of GIAMA to local government. She said the DPW started looking at existing legislation that could assist it. The DPW was aware of its own problems and limitations in regard to the asset register and its readiness to implement the GIAMA. The DPW expected to have substantial challenges in implementing GIAMA at local government level, but noted that the fact that this Act was in operation was positive for the national government, and it believed that it would also be of assistance to local government as well. Even though the DPW was still discussing the mechanisms that would be used to extend GIAMA, it had started working with local government to start applying the principles of the Act. According to the Municipal Finance Management Act (MFMA), local government entities were supposed to submit a strategic plan. The principles of GIAMA would be included in the strategic plans, such as planning for immovable assets. The DPW had not yet started to look at issues around the asset register itself but it had started to introduce the basic principles.

The Chairperson noted that there were three million hectares of land in the Eastern Cape that had not been surveyed. She asked if DPW was likely to meet its target of surveying all state land by 31 March 2013. She also pointed out that the Committee had been told that in the Eastern Cape there were four custodians of state land, which consisted of the DPW, the province, the Housing Board and the Department of Rural Development and Land Reform. She asked if all four entities were cooperating with each other, and, if not, asked what the DPW was doing about it. She noted that the Committee had been told that the Deeds Office in East London had burnt down, and also wanted to know how the DPW would be able to meet targets if it was unable to get information from that Deeds Office.

Ms C Madlopha (ANC) addressed the matter whether minimal rental was in line with the Public Finance Management Act (PFMA). It was discovered that some people that were paying minimal rental were also sub-letting at a higher rate. She asked what the DPW was doing to correct this situation. The Committee had requested a report on the areas where people were still paying minimal rental.

The Chairperson asked if it was true that there were 800 leases in the Eastern Cape, and if this was reflected in the DPW’s records. She noted that lost deeds would normally be advertised, but she herself had never seen such advertisements, so queried how this was being handled.

The Chairperson then commented that it was clear, from the current and previous presentations by the DPW, that it had not adopted a very hands-on approach, and she had the impression that the DPW simply wanted to present what it had and bring the meeting to an end. The issue of the asset register was not going anywhere. She suggested that the Deparmtent must be brutally honest and admit that matters were not proceeding. She had warned Ms Subban, when the Committee visited Eastern Cape, that the next time the DPW came before Parliament, the Committee would be asking searching questions. She said that the Committee was not impressed with the DPW.

Ms N Ngcengwane (ANC) said she too was disappointed with the DPW. She agreed with what the Chairperson had said, and thought that the DPW was achieving nothing. There were assets lying around in the country that were being abused by other people.  When she was in the Eastern Cape, she enquired about the buildings that were used by the former Transkei government, but nobody would give her a straight answer. These were huge buildings that had to be utilised. She did not think the DPW had the will to do anything. The Committee and DPW discussed the same issues over and over again, but these discussions did not reach any conclusion. She asked if the DPW could get an independent body to monitor the assets in each province. It was a problem that GIAMA was not implemented and that the DPW was not giving the Committee any feedback on the matter. She was tired of listening to the same issues several times.

Mr Steenhuizen noted that the Committee had heard a lot from the DPW about the lack of cooperation from other government departments. He asked what the sanction there was for non-cooperation, and whether the DPW could do anything to incentivise or coerce other departments to cooperate with it.

Ms Madlopha said that GIAMA came into existence in 2007. It was a challenge in itself if DPW was still claiming that the provinces still did not have the capacity to implement that Act. Local government had to be included in the implementation of GIAMA, as most of the country’s assets were at local level. The fact that the DPW was given a qualified audit spoke to the failure of systems within the DPW, and challenges around the government’s assets. The Committee was told that the matter of the asset register was almost 60% complete. She doubted this was true, having visited the Eastern Cape and having witnessed the challenges the province was experiencing. She suggested that the provinces should be called in, with the National DPW, to talk about these challenges. The DPW could not keep complaining about the lack of cooperation from other departments on GIAMA. It was highly problematic that the asset register still did not exist.

Ms N November (ANC) said that lack of capacity was a well-known issue. She too expressed the view that the DPW could not continue in this way. The intergovernmental forums were not operating properly. The Committee had been reiterating the same points for many years without any results. She pointed out that each unit or department had managers. She wondered what the managers at the DPW were doing, given that they still seemed to have the same problems that they had had for several years, which seemed to indicate that they were not managing their unit in line with their job descriptions, and not maintaining any discipline. She asked when the immovable asset management guideline would be ready.

The Chairperson noted that the audit report of the Auditor-General (AG) on the performance of the DPW for the year ended 31 March 2010 indicated that the qualified audit opinion was based mainly on the failure of systems within the department. This pertained particularly to the audit procedure to be followed on government assets, irregular expenditures, unclear indicators and measures, and non-adherence to regulations. A concern was raised on immovable tangible assets. The AG had been unable to perform alternative procedures to confirm the existence, valuation and completeness of immovable tangible capital assets disclosed in the financial statements. The DPW, in conjunction with the Department of Rural Development and Land Reform, all provincial departments and custodians must lead a government-wide initiative to complete the vesting of state-owned land by 2014. The AG said that this target would not be met. He had said that the DPW was unable to obtain sufficient and appropriate audit evidence to determine the existence, valuation and completeness of their immovable tangible capital assets. The Chairperson pointed out that DPW must take heed of what the AG had outlined, and insisted that the DPW should return to the Committee with a proper report, as Members were not satisfied with the current presentation.

Other Matters
The Chairperson informed the Committee that the Minister for Public Works wanted to meet with the Committee, and suggested that this should be done on 5 September 2011.

Ms Madlopha asked the Chairperson if the Committee could receive an update on the oversight visit to the Northern Cape.

Ms Akhona Busakwe, Committee Secretary, said that she would send a revised programme to Members by that afternoon, and the meeting originally scheduled for 5 September would now take place on Sunday 4 September.

Ms Novembe explined that this visit was moved because of the  The meetings scheduled for the visit would no longer take place on Monday, 5 September 2011; it would now take place on Sunday, 4 September 2011 at 6pm because of the times Members would arrive in Kimberly. They meeting might last until 10pm.

Ms November said that the visit was moved to 4 September because there were so many municipalities to visit, and to allow the Committee to visit the Namaqualand region.

The meeting was adjourned.

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