Department of Public Works 2012 Strategic Plan

NCOP Public Services

15 May 2012
Chairperson: Mr M Sibande ANC (Mpumalanga)
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Meeting Summary

The Department of Public Works (DPW) presented its Strategic Plan and Budget for 2012, and highlighted issues of importance in the current year. DPW was implementing a turnaround strategy, and was aware of the need to audit and improve leases, to formulate a proper asset registry, and to resolve the issues arising from the unfavourable audit outcomes. The DPW would be refurbishing vacant and under-utilised properties, would enter Phase 2 of the Expanded Public Works Programme (EPWP); accelerate efforts on the National Youth Services Programme (NYSP), build on its skills development programmes, develop a green building framework, pay attention to the devolution of client maintenance; as well as introduce the necessary IT infrastructure. Key policy priorities included achieving stability in the department, strengthening the immovable asset register, achieving transformation in the built environment through empowering emerging contractors, working towards efficient client relations management, improving supply chain management, and addressing the challenges of the Property Management Trading Entity (PTME). The State Land Disposals Act of 1961 had to be reviewed and a Facilities Management Policy and Strategy implemented. The five programmes of the DPW, and their key priorities, were outlined. A detailed budget breakdown was provided. Most of the budget was reserved for Programme 2: Immovable Asset Management, as R5.364 billion of the total R8 billion allocation. Other line item allocations were set out and compared to allocations for the following years, and the allocations for entities was also noted. The Independent Development Trust (IDT) was to receive R9.6 million. The  total infrastructure budget allocation for 2012/13 was R1.4 billion, with R1.7 billion in 2013/14  and R1.2 billion in 2014/15.

Members were critical of the fact that, once again, the documents were not forwarded timeously to the Committee, and were also displeased that this appeared to be the same presentation as was given to the Portfolio Committee. Members wanted specific timeframes for auditing of leases and review of lease management systems, as well as more specific indicators of the audit challenges and what was done to address them, as they thought the presentation had given insufficient detail on this. Detailed reports of properties in provinces were also required, and Members enquired whether the DPW had any responsibilities in regard to municipal properties. A Member enquired whether State funerals would be granted for Members of Parliament. Members expressed concerns that numerous departments presented numerous turnaround strategies, but stressed that real results had to be shown. They were concerned about the prevalence of acting posts, and wondered if those responsible for the previous problems were still holding office. They were frustrated at the recurring issues around the Asset Register, asked if the deadline to finalise it would be met, and wondered if the target of creating 4.5 million job opportunities by 2014  could be achieved. They were concerned that rural roads had to be attended to, whenever facilities were built. The Dolomite Risk Management Programme was questioned, as well as controls put in place over spending, the implementation of the White Paper insofar as the Property Management Trading Entity was concerned, and Members called for clarity on the Inner City Regeneration programme, which departments were not in Pretoria CBD, and stressed that risk management was a very important component of controls. The Committee could exercise its prerogative to conduct unannounced visits to the DPW.

Meeting report

Department of Public Works Strategic Plan and Budget for 2012/13
Ms Mandisa Fatyela-Lindie, Acting Director-General, Department of Public Works, presented the strategic plan of the Department of Public Works (DPW or the Department) for 2012/13. She noted that the Strategic Plan was informed by national priorities drawn from the Medium Term Strategic Framework and the ten policy priorities adopted by Government in 2009. The DPW was the single biggest player in the Property and Construction sector.

The DPW had adopted a turnaround strategy that was aimed at addressing poor performance and negative audit outcomes in the Department. She noted upfront that the Department had experienced problems in managing its asset registry, as well as leases. It had now entered into a joint venture with National Treasury to audit and review all leases, in order to identify irregular leases, and to strengthen lease management systems and capacitate the Property Management function.

Some of the particular initiatives of the DPW were described. It would be refurbishing vacant and under-utilised properties. It would enter into Phase 2 of the Expanded Public Works Programme (EPWP); accelerate efforts on the National Youth Services Programme (NYSP), build on its skills development programmes, develop a green building framework, pay attention to the devolution of client maintenance; as well as introduce the necessary IT infrastructure. Details of the Department’s mandate, as well as the Minister’s Performance Agreement, were outlined in slide 8 (see attached presentation).

The Department had identified some key policy priorities for the next five years. Firstly, there was a need to stabilise the Department. The State’s immovable asset register had to be strengthened, and there would be auditing of leases. There was a need to address the audit challenges. Transformation in the built environment was targeted through empowering emerging contractors, in line with Broad Based Black Economic Empowerment (BBBEE) principles, and the Department had to contribute to addressing the triple challenge of unemployment, poverty and inequality. It would be necessary to work towards efficient client relations management, to improve supply chain management, and to address the challenges of the Property Management Trading Entity (PTME), review the State Land Disposals Act of 1961 and DPW must implement a Facilities Management Policy and Strategy. It would be necessary to finalise draft legislation. Skills would be developed in the built environment, through various programmes (detailed in the attached presentation).

Ms Fatyela-Lindie then identified the four entities that reported to the Department of Public Works, and how they fell into this plan (see attached presentation for details).

The strategic objectives were spread across the five programmes of the DPW. Programme 1: Administration dealt with, the management of the Ministry, under the Office of the Director-General. Other key units incorporated in this office included the offices of the Chief Operating Officer, the Strategic Management Unit, Intergovernmental Relations and Parliamentary Services, Monitoring and Evaluation, Internal Audit and Investigation Services, Finance, Supply Chain Management and Corporate Services.

Programme 2: Immovable Asset Management, provided and managed government’s immovable property portfolio, in support of government’s social, economic, functional and political objectives. She noted that there were five sub-programmes: namely, Strategic Asset Investment Analysis, Projects and Professional Services  Inner City Regeneration Programme  Operations Management and Key Account Management and Prestige. The key priorities for each were listed.

Programme 3: Expanded Public Works Programme, was intended to create work opportunities and to provide training for unskilled, marginalised and unemployed people in South Africa, by coordinating the implementation of the EPWP. The commitment of the programme was to create 4.5 million work opportunities by 2014 (equivalent to 2 million Full-Time Equivalent jobs). She assured the Committee that the DPW was on target with the delivery of these job opportunities.

Programme 4: Property and Construction Industry Policy Regulation, aimed to promote growth and transformation in the construction and property industries, as well as to promote uniformity and best practices. Details were given (see attached presentation) of the initiatives.

Programme 5: Auxiliary and Associated Services programme, was tasked with a number of matters, including the management of State Funerals as well as Inaugurations.

Ms Sue Mosegomi, Acting Chief Financial Officer, DPW, outlined the presentation on the Department’s budget. The bulk of the budget allocations were reserved for Programme 2: Immovable Asset Management, and all its sub-programmes, comprising R5.364 billion of the total R8 billion allocation. For 2012/13, the allocation for compensation of employees was R1.2 billion, and in the following year this would rise to R1.3 billion. Goods and services were expected to rise from R596 million to R621 million, office accommodation from R469 million to R504 million, transfers and subsidies from R4 billion to R4.5 billion, buildings and other fixed structures from R1.4 billion to R1.7 billion, Machinery and Equipment from R91 million to R101 million, and software and other intangible assets from R5.6 million to R5.9 million.

The EPWP Non-state Sector allocation was expected to rise from R279 million in 2012/13 to R354 million in 2013/14. She set out the allocations for the current financial year, for the Construction Industry Development Board, the Council for the Built Environment, infrastructure budgets and the allocation for the Border Control Committee, and border post infrastructure (see attached presentation for full details). Details were also provided for augmentation of the PMTE, the Parliamentary Village Management Board, an the EPWP Incentive grants for municipalities (R599 million), provinces’ infrastructure grant (R292 million),  social sector EPWP (R217 million) and devolution of the Property Rates Fund to Provinces. The Independent Development Trust (IDT) was to receive R9.6 million.

The total infrastructure budget allocation for 2012/13 was R1.4 billion, rising to R1.7 billion in 2013/14  and R1.2 billion in 2014/15. Further details were provided on all allocations (see attached presentation).

The Chairperson requested that in the future, the Department should ensure that the documents arrived timeously. Some had arrived only on this morning. He also appealed to officials in the Ministry to ensure that requested documents arrived in the appropriate timeframe. He further asked that the use of acronyms in presentations should be limited, to ensure greater clarity.

Ms M Themba (Mpumalanga, ANC) voiced her dissatisfaction with the fact that this presentation had already been made to the National Assembly (NA) Portfolio Committee. She urged that different presentations should be made in the two different Houses.

Ms Themba sought timeframes for the auditing of leases and the reviewing of lease management systems, as well as an indication of what audit challenges were, and the measures to be implemented to address them..

Ms Themba wanted a detailed reporting from provinces as to what was happening with regard to the houses and the properties owned by the state in those provinces.

Ms Fatyela-Lindie responded that the lease review would be undertaken within twelve months and iterated the collaboration with the Ministry of Finance and National Treasury, to implement measures and apply fundamental principles. She then noted that the Asset Register was a robust and living document that needed constant updating. She conceded that there were various mistakes in the Asset Register, in terms of the way information was captured. She then noted that there was often a need for physical verification of physical assets. The DPW had a working relationship with the accounting firm of Ernst and Young for the correction of the mistakes in the Asset Register. She said she would be willing to return to the Committee at a later stage to report on progress.

Ms Themba noted that there was mention of funerals for Ministers, but asked about the policy for funerals of ordinary Members of Parliament.

Ms Fatyela-Lindie noted that the decision to accord an official funeral was one that was made by the President, and when Cabinet Ministers passed on, it was the obligation of the DPW to conduct a State Funeral.

Ms Themba noted that mention was only made of two regional offices in the Eastern Cape, and requested details of any other regional offices. She also asked where the 100 buildings mentioned in the presentation would be, and how far the construction had proceeded.

Ms Fatyela-Lindie said that there were two regional offices in the Eastern Cape, due to the rural nature of the province, whereas other provinces had one office each.

Mr H Groenewald (North West, DA) commented, with regard to the turnaround strategy, that there had been numerous departments presenting turnaround strategies. He said that the Department needed to be implementing and showing real results.

Mr Groenewald voiced his concern on the prevalence of acting officials, and the lack of permanent appointments in the Department, and stressed that permanent appointments were needed for key positions.

Mr Groenewald expressed his frustration with the recurring issue of the Asset Register. There had been promises to resolve this issue in the past, yet it was still not resolved. He also wanted to know if there was information as to the number of movable assets in the various provinces, and whether these were being managed accordingly. He also enquired if the Department had a deadline for the Asset Register to become effectively managed.

Ms Fatyela-Lindie gave a general response in regard to the Department’s turnaround strategy, lease management and posts. She conceded that the term “Turnaround Strategy” had become a buzz word of late, but there were definite projects identified for the DPW’s attention, which included the Immovable Asset Register and addressing the audit outcomes. She agreed that the issue of leases needed attention and conceded that in the past, very expensive leases were negotiated by junior and not senior officials, which had perhaps resulted in leases being concluded on unfavourable terms. This Department did work of a technical nature, and in recent years had lost various essential technicians. Steps were taken to increase the Department’s internal capacity. There were so many Acting positions in the Department due to various suspensions of officials holding key positions. The permanent filling of these positions was certainly a priority, to eliminate a negative domino effect on other positions and functions.

Mr Groenewald noted the five year target for the creation of 4.5 million job opportunities in 2014, but was not confident that this target would be reached. Millions of rands were being allocated to provinces, but were not being used. He asked what controls were in place to manage the funds allocated, as any controls were not obvious to him.

Ms Themba asked which municipalities were being engaged in the various projects. She indicated that the Committee needed detailed information as to the employment opportunities created, in the categories of youth and women in particular.

Mr Stanley Henderson, Deputy Director General: EPWP, DPW, said that EPWP programmes had a component of 48%  for youth, 61% for women, and 0.2% for people with disabilities. The EPWP programmes were detailed in a quarterly report, which was placed on the Departmental website, and this contained the details of the projects. This report also made specific reference made to the controls used, as well as incentives given. The EPWP performance target was to create 868 000 work opportunities, and currently, the opportunities created were at 686 900, which was 80% of the target. He noted that once all the data had been consolidated, he was confident that the target would have been met. With regard to the provincial roads programme, he assured the Committee that a detailed report on this would be presented, to put to rest the questions raised.

Ms Fatyela-Lindie also answered the question on the 4.5 million work opportunities by 2014, noting that the specific figures as to the current position were not readily available, but, judging from the progress made, she was confident that the figure was going to be met and even exceeded. She noted and shared concerns on the issue of transfers and grants. In many cases, public bodies did not claim the allocation from the Department. There had been a concerted effort to assist municipalities in this regard.

Mr Groenewald asked if the DPW was aware of the actual costs incurred for hiring of buildings in the provinces. He asked how many schools were being built in each region, as well as details on the building of other state buildings, hospitals, and other premises. He then wanted to know what projects were in the various municipalities, where they were situated, and what was being done. He noted the need to ensure that roads were being built in rural areas to uplift those communities.

Ms Fatyela-Lindie noted that DPW was not responsible for immovable assets in municipalities, nor was it responsible for the building of hospitals and schools. However, there was an agreement for the refurbishment of hospitals and schools. The building of rural roads was the responsibility of the Department of Transport, but DPW had been involved in assisting municipalities in creating business plans.

Mr Mfezeko Gwazube, Acting Chief Operating Officer, DPW, said that the building of an extension to Parliament was still being discussed with Cabinet. He noted that in previous engagements, issues had been raised, and DPW was considering these issues.

Mr Groenewald wanted more clarity on the Dolomite Risk Management programme, and why huge sums of money were being allocated to this programme.

Mr Gwazube responded that the dolomite risk management was a process where the Department was tasked with identifying areas where there were possibly sinkholes. This was to ensure the safeguarding of state facilities and for the building of houses. He noted that most sinkholes had been identified in Gauteng. Where areas were found to be dolomitic, then people had to be removed from those areas.

Mr Groenewald enquired, in respect of the Devolution of Property Rates Fund, what control measures had been put in place, also for under spending and over spending.

Mr Gwazube added that there had been a Ministerial brief on the establishment of Strategic Initiative Projects (SIPs) where specific areas had been identified for development and intervention. One aspect was the eradication of unsuitable structures for schools, and another was to ensure that all schools had the requisite facilities to be able to conduct various functions. A draft document had been presented to deal with the eradication of such problems, as well as setting out the timelines that were appropriate for this purpose. This had warranted collaboration with the Department of Education.

The Chairperson raised questions on the Property Management Trading Entity. He made reference to the White Paper of 1996, and noted that the concerns that were outlined there were still present today, so he enquired how far the DPW had gone in implementing the White Paper.  

Mr Aaron Mazibuko, Director: Finance, DPW, said, in regard to the PMTE and the White Paper Recommendations of 1996, that the Department would like to acknowledge that it had deferred on implementation. He noted that the Department had, owing to the Constitutional implications, been slow in creating an agency within the DPW to manage property, and this infringed on the direct mandate of the DPW itself. He agreed that there had been defaulting on the targets set by the PMTE.

The Chairperson wanted clarity on the Inner City Regeneration programme and on the reference to the Cabinet decision to have various departments housed in the Pretoria CBD. He then wanted to know details as to the defaulters on this requirement and sought details as to how these defaulting departments were being handled.

Mr Mazibuko said that the motivation behind the Inner City Regeneration was to ensure that Pretoria CBD was developed so that it looked like a capital city. The only department that had been allowed to move out of the CBD, and “defaulted” was the Department of Science Technology, and this had been for functional and legitimate reasons.

The Chairperson echoed the concerns of other Members as to whether the 31 March 2014 deadline for correcting the Asset Registry would be met, and when the Register would be available.

The Chairperson noted that there were still problems with the financial statements and pointed to various  concerns reported by the Auditor-General.

Ms Mosegomi, said, in regard to the findings of the Auditor-General, that there was an issue with the limitation of scope. When the Special Investigating Unit (SIU) was conducting its investigations, its had seized “truckloads of documents” that the Department had not yet been able to get back. As a result, some original documents were not presented to the Auditor-General, which resulted in a majority of the findings being unfavourable. She also noted that various other findings could only be rectified over a period longer than a single financial year, but assured the Committee that work was being done to address these concerns.

Mr Mazibuko spoke on the devolution of budget, and noted that there was a framework being signed between the Department and the provinces. He noted that the provinces reported to the Department on their expenditure and utilisation of the allocation.

The Chairperson drew attention to section 39 of the Public Finance Management Act (PFMA) and warned that the NCOP would be having regard to this when it conducted its oversight visits. He was concerned as to why the recommendations of the Auditor-General were not being followed, and said that the responsibility fell on the Department to ensure that recommendations were being implemented. He voiced his concern on the fact that the Department had addressed spending irregularities only very briefly. He noted that there were people remaining in the Department who were possibly part of the problem, and this would lead to the situation persisting. Risk management was part and parcel of internal controls. He noted that the large rollover amounts had been a contentious issue, as there should not be a need for them. He then urged the Committee to conduct unannounced visits to the DPW, pointing out that this was well within the rights of the Committee.

Ms Themba commented that she had posed her questions to ensure that the Committee could respond to questions from the public about the work of the DPW. She also echoed the need for a clear distinction between presentations made to the Select Committee and the Portfolio Committee, saying that information had to be presented to both Houses of Parliament, and there should not be a preference to just one.

The Chairperson commended the steps taken by the Minister to resolve the various issues that had been identified, but noted that the DPW was responsible for effecting the relevant changes.

Other business
The Chairperson deferred the consideration and adoption of minutes of the Committee to another date when there were more Members present.

The meeting was adjourned.


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