Immovable Asset Register Business Plan: briefing by Department of Public Works

Meeting report

The Chairperson opened the meeting by stating she had “serious problems” with the presentation which was about to be delivered.  The Department of Public Works (DPW) had instructed Ernst & Young to produce an asset register, and she had expected that it would be a continuation of the work started by the Department.  However, from the report about to be presented, it appeared Ernst & Young were starting from scratch.

She then quoted extracts from five DPW annual reports, dating back to 2005-06. The first report had stated that the Department was in the process of starting a three-year strategy to improve the quality and completeness of the immovable asset register (IAR). The project would be completed by the end of 2008. The 2006/07 Annual Report had stated that the first phase of the project was 94% complete, but the following year, the focus had moved to capturing “flawed areas” not included in the Property Management Information System (PMIS), and a consultant had been brought in to assist with the verification process. By 2008-09, the DPW was reporting progress on capturing and verifying information, and an asset disposal policy had been finalised, but the Auditor-General was advising that not all properties owned by the DPW were included in the IAR. In the 2009/10 Annual Report, the DPW said it would have achieved approval of its vesting plan, and would start to align its strategies with those of the Department of Rural Development and Land Affairs. During all of this period, it was believed that the Department was on track to complete the process, but now one had to question whether it had been a complete waste of money, as Ernst & Young appeared to be starting from the beginning. An assurance had been given that the IAR would be completed by March 2014. She asked whether Members felt it was worth continuing with the DPW’s presentation.

Several Members expressed agreement with the Chairperson’s concerns, but suggested that the presentation should go ahead as it might shed new light on developments.

Ms A Dreyer (DA) also agreed, but complained that there had been too many “false starts” with the programme, and suggested that the Minister should be fully informed about the situation so that he could be held to account and get the DPW working urgently on the matter.

Mr P Mnguni (COPE) said a former Minister had forecast that the IAR would soon be available “at the push of a button.” He asked what the repercussions would be if the Committee continued to be misled.

Ms Sasa Subban, Deputy Director General, Asset Investment Management, DPW, said she wanted to put some of the issues raised into context. Prior to 1994, there had been no computer-based asset register, and from 1995 to 1999, the DPW had appointed service providers to commence on a computer-based inventory of state assets for both national and provincial custodians.  The information gathered had formed the basis of the PMIS. In 2005, the National Treasury had highlighted information it required from the DPW for the asset register, and in 2007/08 the Accountant-General indicated that further information was required.

At this stage, the Chairperson interrupted to say that the Committee was interested in hearing what findings had been derived from Ernst & Young’s desktop information, rather than the information itself, which was too technical.

Ms Subban said that in 2008, the Asset Register Enhancement Programme had identified 33 555 assets and there had been a project to link the land parcels and buildings, as well as the occupants. Consultants had been appointed to verify the essential information field for the DPW at both national and provincial level, but this programme had been a dismal failure. The consultants had submitted a bill for R100 million, but had been paid only R16 million. The DPW did not have a dedicated unit dealing with the asset register at that stage, but in 2009, the Asset Register Management unit had been established. It had faced a number of challenges, because it had to deal with several different dependencies, such as the Department of Rural Development and Land Affairs, and the various provinces.

The Chairperson asked why there should be challenges, when the DPW had reported that it had reached “finalisation” in all nine provinces, at a cost of R189,9 million. What did “finalise” mean?

Mr L Gaehler (UDM) recalled that in 2010, the Committee had urged the DPW to get the provinces and municipalities, as well as the Deeds Office and Surveyor-General, involved and this had been agreed. Why were there now problems?

Ms Subban said she was unable to respond at this stage, as she could not recall the details surrounding these issues.

She said the DPW had appointed Ernst & Young in October last year, and the project to analyse the deeds database had commenced the following month with a view to determining which properties were national or provincial, or belonged to other custodians. She described this as a vast project, with something new being learnt every day. The approach adopted had been to ensure that a baseline compliant IAR was produced, covering all the legal requirements. The gaps in information indicated that a significant amount of work would be needed to comply with National Treasury and audit requirements. The DPW’s head office and regional teams were completing the data analysis and cleansing that had arisen from deeds comparisons, and were expected to complete this process by the end of the year. The target was to have a substantially complete and compliant IAR by March 2013, with the required follow-up of remaining gaps to be completed by September 2013.

The proposed roadmap indicated that the DPW needed service providers to assist with the physical verification required in terms of the National Treasury and Government Immovable Asset Management Act (GIAMA) requirements. The intention was to start fieldwork in the six bigger regions so that some 60% to 70% of the assets would be verified by March 2012.

The Chairperson said this was Ernst & Young’s executive summary of what should be done. It was all quite simple, and she wanted to know why it was necessary to call in outsiders, at a financial cost, to do what the DPW could have done.

Ms Dreyer said that without wishing to politicise the issue, the Western Cape provincial government had been able to complete its asset verification process in two years, and it might be helpful to work with them in order to assist on a national basis.

Mr Gaehler said he agreed with the Chairperson that Ernst & Young was a service provider, and the Committee needed to know what the DPW itself was doing.

Ms C Madlopha (ANC) said that when the Committee had raised concerns about the asset register, the DPW had said it would ask Ernst & Young to assist them. The Committee should see what they had done since then, as it looked as if all the work that had been done before was fruitless.

Ms N Ngcengwane (ANC) said the Committee was becoming frustrated at the lack of progress reports, although the DPW had promised they would provide quarterly reports. She also queried how the physical verification would be achieved, as about 90% of the assets were at a local level.

The Chairperson said the Committee had been informed on February 14 that the DPW would release four foreign properties that had been identified for disposal. It was also releasing 37 properties for commercial purposes, 20 properties for land reform purposes, and 3 000 hectares for agriculture. She asked how this could be possible, as the DPW did not know what its properties were, nor did it have a disposal policy.

Mr K Sithole (IFP) proposed that the presentation should be terminated, so that the DPW could come back with a proper report on its implementation programme, rather than just a report from a service provider.

Ms Madlopha said what was needed was for the DPW to report on what it had done, and what Ernst & Young was doing to verify the information provided by the DPW, to ensure everything was in order. The disjointed information was causing confusion.

The Chairperson and Ms Subban then agreed on a ten-minute recess to consider this proposal. When the meeting resumed, the Chairperson said the DPW would in future provide a background which would make it easier for the Committee to understand the situation.

Ms Subban said the results of the analysis of the deeds conducted so far indicated there was a total of 182 345 state properties, of which 111 937had been identified as provincial, 25 258 as falling under the Department of Rural Development and Land Affairs, while 45 150 were deemed national DPW. Extensive engagement and confirmation with other custodians and stakeholders was required before finality could be reached. It was a complex process involving significant challenges in identifying ownership, taking into account the multitude of naming conventions and the fact that the vesting process was still under way. The national DPW had previously disclosed about 35 000 properties in its annual reports, and had to admit there had been gaps in its previous figures.  The analysis of provincial properties had thrown up anomalies regarding what was reflected in the IAR and the Deeds Office. A breakdown by province had indicated inconsistencies which required clarification, and the DPW had allocated a specific team to resolve these issues by March 2013.

The Department’s focus had been on laying the foundations to address all assertions required to produce a baseline compliant IAR. It was aware that progress on vesting was significantly behind target at all levels of government in order to meet the March 2014 deadline. However, there was a clear plan outlining what needed to be done to produce a baseline compliant IAR, and time spent on extensive analysis, research and consultation with relevant stakeholders had confirmed the complexity and extent of work required – an aspect which had not previously been addressed. 

Ms Subban assured the Committee that the DPW did not release state land unless it had received an approval from the Deeds Office that it was indeed state land. It was still experiencing challenges in working with key stakeholders to ensure that the right information and decisions were forthcoming to resolve state land issues, with the biggest challenge being the need to mobilise sufficient resources to meet time deadlines, as significantly more work was required than was originally anticipated.

Discussion
Ms Dreyer said the Defence Force owned huge areas of land all over the country, and asked where it fitted in to the land audit.

Ms Madlopha referred to 16 000 provincial properties on the current IAR which had not been vested by the provinces, and asked whether these excluded the Defence Force and other departments.

Mr N Magubane (ANC) said he doubted if the figure of 182 345 properties for total state land was correct, as in any one district one would find over 100 properties, many of which were under-used or vandalised.

Several Members mentioned apparent disparities in the statistics presented, with the Chairperson confirming that the discrepancies had been acknowledged by the Department. These were unacceptable and would have to be corrected.  The DPW had said it was still confirming the statistics, but it had been saying this for years.

When Ms Subban insisted that the DPW was still looking to complete the IAR programme by the target date of March 2014, the Chairperson responded that “your head is on the block – everything must be completed by then!”

Mr Gaehler said finalising the IAR was a process, so a timeframe was needed so that progress could be carefully monitored. He pointed out that by March 2014, Members’ minds would be on elections, rather than the completion of the IAR.

Ms Subban said she noted this suggestion.

Ms Dreyer said the total figure for state land should be broken down still further, to identify Defence Force land, foreign property and communal land.

Ms Subban said there were 101 foreign properties under the asset register of the Department of International Relations and Cooperation (DIRCO), which it shared with the DPW. These properties were in the process of being verified. If DIRCO wished to dispose of a property, it had to do so through the DPW, which verified it through its own asset register. Only the Minister of Public Works could sign off a disposal.

The Chairperson asked how the DPW could ask the Minister to sign off a disposal when it did not have a disposal policy.

Ms Subban said in the instance concerned, the properties were no longer required, and were costing a lot in terms of maintenance and security. The Minister had been asked to apply his mind to those considerations, but she acknowledged that there had been no policy to deal with the issue.

Ms Madlopha said that without a policy, disposals of property should stop. She asked why no policy had been adopted.

Ms Subban said she would refer the policy issue back to the Department.

The Chairperson said a policy existed, but it had not been implemented.

Ms Subban said she would come back to the Committee with time frames for the IAR programme, via the office of the Director General. The Defence Endowment properties and foreign affairs properties were included in the DPW’s asset register, but vesting did not include the former TBVC states and municipalities.

Ms Florence Rabada, Chief Director, Asset Register Management, referred to the Member’s suggestion that there were probably many more total state properties than the 182 345 indicated. She said the Deeds Office registered only land, and not improvements, so there could be many buildings on a single registered land parcel. She added that the figure excluded municipal properties.

Mr Gaehler asked whether the DPW would have collected all the data from the provinces and municipalities so that by 2014 there would be a single asset register.

Ms Subban said the DPW agreed there should be one consolidated asset register, and noted the concerns regarding extending through to municipalities. At the moment, it was concentrating on the national and provincial properties, but as soon as that had been completed and the policy go-ahead was received, the project would be extended to incorporate municipalities.

Mr Gaehler asked whether this meant there would be a consolidated asset register by March 2014.

Ms Subban said the deadline was only for national and provincial properties, but it was agreed that they would have to look at municipal properties as well.

Members sought clarification on issues such as timeframes, the impact of the programme on rural development, the correct identification of properties, custodianship by other departments, and discrepancies between the various provinces in the number of vesting certificates issued.

The Chairperson concluded the meeting by stating that the presentation had been based on a turnaround strategy, but the report had contained gaps. There were no clear timeframes, and there were concerns about the availability of other Ministers, who were part of the task team, to deal with the issues involved. The Committee had expected that the issues which had been raised, would have been addressed, and was still waiting for the DPW to present the final product of the turnaround strategy. It would give the Department two to three weeks to make such a presentation – without any gaps.

The meeting was adjourned.