Construction Charter: briefing by Department of Public Works

Meeting report

Department of Public Works (DPW) briefing
Ms Lydia Bici, DPW Deputy Director General: Construction & Property Policy Regulation, traced the development of the Construction Sector Charter Council from its initiation in 2003, to the present time. The process had started with the creation of a “transformation framework” involving the National Treasury, and the Departments of Trade and Industry, Housing, Water Affairs and Forestry, Transport and Provincial and Local Government. The following year, the government had entered into negotiations with all the stakeholders in the construction industry and the relevant unions. This had led to the gazetting of the Construction Sector Charter in terms of Section 12 of the Broad-Based Black Economic Empowerment (BBBEE) Act of 2003.

In this format, the Charter was not binding on the government, and amounted to a “gentlemen’s agreement” on the part of the industry to transform. In 2008, the Charter had been gazetted in terms of Section 9(5)(b) of the BBBEE Act, which allowed 60 days for comments to be submitted. These had been received and as a result, the Charter Code had been reworked and a final version submitted to the Minister of Trade and Industry. In May 2009, it had been approved and gazetted by the Minister. All 16 parties involved – government, industry and unions – became signatories to the Charter. The constitution had been approved in 2010 and the Charter Council established by the founding members. The Council had still to be officially launched by the Minister, and a chief executive officer appointed. In the meantime, the DPW was assisting in the running of the Council, but once a CEO had been appointed, it would run on its own. The Council was not a body of the DPW, but an industry body involving both the private and public sector. However, the DPW was the “lead” department in the process, as an independent body would have had to report to both the DPW and the Department of Trade and Industry (DTI).

The Council’s draft constitution stated that its three main functions were to be a representative structure, comprising members from all constituent bodies and stakeholders in the construction sector, to act in an executive capacity and be responsible for the sharing of information, and to be responsible for compiling reports on the status of BBBEE within the construction sector. The basic mandate of the Council, which was based on the BBBEE Act, was to oversee, evaluate, monitor and review the implementation of the Charter.

Ms Bici described the charter codes to the Committee (see Presentation), and explained that the indicators of compliance had been negotiated over the seven-year period since the process had started.

The next steps in the process were for the Minister of Public Works to appoint a chairperson of the Council, either from the stakeholders participating in the Council, or an external person. This would give the DPW, and specifically the Minister, an opportunity to provide strategic direction to the Council. The Minister was also required to launch the Council and publicise it to the public and private sector stakeholders. The Council was currently finalising its registration as a Section 21 company, to ensure it could receive funds from its stakeholders or any other source and could appoint the requisite staff to perform its functions.

The Council was currently run and managed by an acting CEO, who was not paid a salary but was retaining receipts for the reimbursement of his out-of-pocket expenses. He had offered his time until the appointment of a new CEO. As an advertisement for the position would be published soon, it was expected that the incumbent would be in office by October. An administrative officer would be appointed to assist in the running of the office. Since the Charter had been gazetted as a sector code, compliance was compulsory by both the public and private sectors. A training manual had been developed by the DPW, which would embark on a road show in October to train all spheres of government on the implementation and monitoring of transformation performance.

Discussion
The Chairperson referred to several aspects of the process of establishing the Council where action had been promised “soon,” with the final gazetting being envisaged for September 2010, and yet it was now 2012 and the matter had not been finalised. She wanted to know the reasons for the delay.

Ms P Ngwenya-Mabila (ANC) asked whether the establishment of the Council appeared on the DPW’s Annual Performance Plan (APP) so that the Committee could track its progress. She queried why important bodies such as Agrément SA and the National Home Builder Registration Council (NHRBC) were not among the founding members. She also asked for the causes of the delay to be explained, and wanted to know whether the proposed launch would be the responsibility of the DPW or the DTI.

Ms N November (ANC) asked who was currently responsible for implementing the Council’s mandate, and who was monitoring the implementation.

Mr M Swathe (DA) said the Charter provided for the Minister of the DPW to appoint a chairperson “from the constituency participating in the Council or an external person”. Did “external” mean he could appoint someone from the business sector, or from the government?

Ms N Ngcengwane (ANC) said a proper explanation of the delays was necessary. The DPW was not even sure if the advertisement for the position of CEO had gone out yet. No deadlines had been set.

The Chairperson surmised that if the Committee had not asked the DPW to brief it on the Construction Council, the issue would have been forgotten about, otherwise there would have been a sense of urgency and a need to implement policy decisions taken by the government.

Ms Bici said there were three types of gazetting involved in the charter process. The Section 12 process was not binding on the parties, and involved them only in committing themselves to transformation. It then took a long time for all the players to come on board, with some industry representatives saying a transformation charter was not necessary.

The Chairperson interrupted to say that the Committee had been briefed in 2010, and up until now there had been no movement. It did not seem as if the matter was being treated seriously, or in a businesslike manner, and this was unacceptable.

Ms Ngwenya-Mabila said the DPW had described itself has having a “lead” role in the process, and could not blame the industry participants for the delays.

She was supported by Ms Ngcengwane, who said the DPW’s inaction was resulting in emerging contractors suffering because of the absence of the Charter.

Mr Devan Pillay, Chief Director: Construction Policy Development, DPW, was called upon to explain the delays, and he said one of the problems had been the fact that the constitution had not been drafted properly, and that this had had to be re-drafted by the DPW over a period of eight months.

Ms Bici said the reason for the acting CEO receiving no payment was that the DPW could not release funds until the Council had been registered. This was now being driven in order to make the Council operational, and registration should be complete within the next two to three weeks. The timing of the launch would be in the hands of the Minister.

Ms Ngwenya-Mabila said there appeared to be no plan, and urged that a “SMART” plan – one that was Specific, Measureable, Accurate, Realistic and Time-bound – should be drawn up and presented to the Committee before the end of November.

The Chairperson said that the DPW had had four Ministers since 2009, and now it was saying the launch of the Council depended on the Minister. If there was no “push” from the DPW to ensure delivery, and if nothing happened, the Committee would not be satisfied. As politicians, they wanted the government’s policy to be implemented. She asked that a report be submitted to the Committee by the end of October or beginning of November, advising when the Council would be launched.