Department of Public Works, and Deputy Minister: 3rd Quarter 2012/13 Performance Report

Public Works and Infrastructure

13 February 2013
Chairperson: Ms M Mabuza (ANC)
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Meeting Summary

The Department of Public Works (DPW), together with the Deputy Minister, presented the performance report for the 3rd quarter of 2012/13, as well as detailing the progress of the Turnaround Programme, and of individual programmes in the Department.

The report on turnaround considered the progress in compiling the Immovable Asset Register (IAR), lease management, supply chain management (SCM), skills building, workshops, internal audit, human resource management and intergovernmental relations. DPW had been engaging with provinces on the IAR, and claimed that it was now 80% completed. It was looking into fair valuations, rates and taxes and was working with the Chief Surveyor General and Department of Defence to build the data. There remained backlogs in lease management, but a Lease Advisory Committee was being established, and the function was to be centralised, although officers throughout the provinces were being used to reduce the backlog. New supply chain management policies had been drafted, and the Supplier Register Directive revised, and training was being provided to regional SCM coordinators. DPW had assessed that it needed 220 professionals to meet its skills needs. National Treasury (NT) had provided funding to fill 40% of posts. DPW was intended to formalise recruitment of 100 technicians to the DPW water plants, from those currently working on the Expanded Public Works Programme (EPWP). DPW was intending to re-open and upgrade its workshops, and R500 million was allocated to open workshops in Pretoria and Cape Town. However, NT had reduced the DPW budget over the next Medium Term Expenditure Framework. The Internal Audit unit was strengthened by secondment of a National Treasury director, and R10 million of the Turnaround Project budget was allocated for investigations. However, retention of staff was a problem. In relation to human resources, the current vacancy rate was at around 15%. The female representation at senior management was at 44.6%. DPW was encouraging employees not to leave during the Turnaround, and was upgrading its retention policy, and reviewing the human resources and employment equity plans. More staff were to be employed in certain key posts. Regular MinMEC and Head of Department forums were held. 

The DPW outlined some key points in relation to the third quarter performance. DPW was working with the Chief Surveyor General and had completed desktop studies. It had not achieved revenue targets. Inner City Regeneration projects were proceeding at the City of Tshwane, with funding available for infrastructure projects. The Expanded Public Works Programme, National Youth Service had not met its targets for the third quarter, with only 1 366 learners participating, as against the target of 2 500, although 202 municipalities had reported. 74% (slightly short of the 75% target) of incentive grants were disbursed to municipalities. An explanation was given by the Deputy Minister for the delays in bringing the Expropriation Bill, the Built Environment Professions Bill and the Agrèment SA Bill to Parliament, although it was hoped that this would be done in the second half of 2013, to allow the bills to be processed during the Fourth Parliament.

A financial overview of the third quarter was then presented, measuring expenditure per line item and programme against the 75% benchmark. Explanations were given for over- and underexpenditure. Administration costs incurred were below expectation at only 46%, while the Immovable Asset Register (73%) and EPWP (77%) had both spent in line with expectation. There was a considerable overspend in the budget line of Auxiliary and Associated Services, which was due to unplanned and unforeseen state functions. There was an overspend on compensation of employees (78%) due to delays in recruitment of permanent staff. Infrastructure spending (38%) was significantly below expectation due to departmental inefficiencies that the Turnaround project was expected to address, but was projected to increase in the fourth quarter. Revenue collection through the Property Management Trading Entity was low, leading to a bank account overdraft. State tenants had paid only 60% of the annual invoiced amount, and 46% of unpaid bills were outstanding for more than 120 days, largely due to DPW’s inability to provide itemised invoices, as well as disputes over tenancies and lack of signed leases. Private tenants had paid 64% of invoiced amounts, with 73% of outstanding invoices being less than 90 days. 1.8% of invoices, amounting to R33 million, were unpaid due to disputes over either occupation or the rental amount.

Members questioned whether the Turnaround project was actually having an impact and when these improvements were likely to be realised. They asked a number of questions around recruitment and staffing, including questions about the impact of employing the 100 water technicians, how the remaining 120 posts would be filled, the retention policy, the number of disabled employees, whether there was good female equity at all levels, and whether the supply chain management training was adequate. Members also questioned the anti-fraud and anti-corruption measures and the investigations, commenting that there were still numerous suspensions of staff with long investigations. Members asked if the Immovable Asset Management project was on track and commented that if many of the concerns were not addressed, the DPW would again receive a poor audit result. They wondered if the DPW Policy Unit was actually capable of meeting the requirements of the DPW, and when the expected Bills would eventually be processed.
In relation to the programmes, they wanted more details on the low numbers of participants in the National Youth Service, enquired how work opportunities on the EPWP were measured, asked why municipalities were not reporting data on the EPWP, and why there was such great underspend on infrastructure projects and the purchase of machinery. In relation to the finances, questions were directed to the overspending on
state functions and the criteria used for managing this expenditure, and reports were called for also on the spending on Ministers’ houses and the policies behind this. The high number of government departments refusing to pay rent on DPW properties was of concern, as well as revenue deficits on rental and the reasons why NT had not been approached prior to overspending occurring. On a number of issues, the DPW undertook to furnish further reports to the Committee, within the next two weeks. The Chairperson also reminded DPW officials to check requests from previous meetings to ensure that all questions had been fully answered, and to prepare the necessary reports for further discussion.

Meeting report

 

The Chairperson welcomed Mr Jeremy Cronin, Deputy Minister of Public Works, and noted the apologies of the Minister, Mr Thulas Nxesi.

Department of Public Works Third Quarter 2012/13 Performance Report, including report on turnaround and programmes
Ms Mandisa Fatyela-Lindie, formerly Acting Director General, presently Chief Director: Strategic Management Unit, Department of Public Works, introduced new officials. Mr Mziwonke Dlabantu was now the Director General of the Department of Public Works (DPW). Mr Cox Mokgoro was the new Chief Financial Officer. Mr Mfezeko Gwazube was the Acting Chief Operations Officer.

Mr Mziwonke Dlabantu advised that this presentation would highlight critical areas of financial and non-financial progress of the DPW in the third quarter of the 2012/13 financial year. This Department continued to try to strike a balance between delivery of services and realignment in order to tackle performance issues.

Ms Fatyela-Lindie said her presentation would focus on the progress of the turnaround interventions.

Immovable Asset Register
She noted that the DPW had been engaging with provinces on the development of the Immovable Asset Register (IAR) and this was now 80% completed. There was a focus on confirmation of the properties devolved to provinces and those belonging to the DPW. The Department also paid attention to the devolvement of rates and taxes, for which a MinMEC was held, and this report could be made available to the Committee. The DPW also defined a process for fair value for the IAR, in collaboration with the Office of the Accountant-General. The DPW had made progress in obtaining a state land audit from the Chief Surveyor General. The DPW had also obtained User Asset Management Plans (UAMP) from the Department of Defence, to upload to the IAR.

Lease Management
The DPW had been tackling the backlog in leases, but there had been delays because of the links between leases and the turnaround programme, and delays in obtaining money from National Treasury (NT). The Lease Advisory Committee was being established. The lease function had been centralised to the Head Office. However, DPW had also deployed additional officers across the country to manage the backlog.

Supply Chain Management (SCM)
Major strides had been made in this area. Revisions of the Supplier Register Directive and a draft SCM Policy had been prepared, and regional SCM co-ordinators and officials had been trained.

Building of Skills in DPW
The DPW identified that it required 220 professionals to meet the skills needs within the Department. It had subsequently received approval from NT to fund 40% (around 100) of these. The Council for Built Environment (CBE) had been engaged to support the recruitment process within this fiscal year. The DPW was responsible for national water plants, linked to the Expanded Public Works Programme (EPWP), and had identified more than 100 additional technicians who would be absorbed into the Department.

Re-Opening of Workshops
The DPW would use the R500 million budget to prioritise reopening of workshops in Pretoria and Cape Town in Phase 1, which would increase the establishment by 40%.

Ms Fatyela-Lindie advised that NT had reduced the Departmental budget by nearly R1 billion for the next Medium Term Expenditure Framework (MTEF) period, and that it would be reduced by around R250 million in the next year.

Ms Fatyela-Lindie then presented the programme analysis, as follows:
Internal Audit and Investigations
NT had seconded a Director to the internal audit unit and R10 million had been allocated from the Turnaround project for investigations. This money was only made available in October 2012, delaying the process of recruitment and procuring external companies to support audits. Many investigations had taken place, but staff retention had been difficult. An independent review of management action plans had also been carried out, to ensure improvements. The anti-fraud and corruption campaign, related to internal audits, had been funded by the Turnaround project.

Human Resource Management (HRM)
The vacancy rate in the DPW was around 15%. DPW was doing well in terms of gender balance, as it had 44.6% female employees in the Senior Management Structure (SMS). The retention policy was reviewed, and in order to maintain capacity, counter-offers were being made to encourage employees not to leave during the Turnaround project. The Human Resources (HR) plan and the Employment Equity (EE) policy were also being reviewed.

The DPW had embarked on a structural review process to address the issue of structural misalignment, and would appoint a Deputy Director General for Internal Audit and Risk Management. To reduce the pressure on the Chief Financial Officer, the DPW had appointed a Deputy Chief Financial Officer to oversee the Property Management Trading Entity (PMTE), and the process for defining the make-up of this trading entity was ongoing. DPW also sought to appoint a Deputy Director General for SCM, as the Department was substantially a tendering agency and needed to focus on this activity, as highlighted by the Auditor General. The DPW also sought to appoint a Deputy Director General for Property Management, as this was a core part of the business of the Department and would be essential in assisting the management of leases.

Slide 10 disclosed the level of grievances, misconduct and disputes that had been resolved over the reporting period.

Intergovernmental Relations
The DPW conducted regular MinMECs and Head of Department forums, in recognition of the concurrent functions of Public Works across two levels of government.

Programme 2: Immovable Asset Investment Management: Asset Investment Analysis
Ms Fatyela-Lindie explained that in fact the DPW had reconciled the deeds, not reviewed them as suggested in the presentation. The DPW was working with the Chief Surveyor General and had completed a desktop review. The Committee was asked to pay particular attention to the statistics on the issue of land parcels and the progress on the Custodian Asset Management Plan (C-AMP), which was at 54%, as detailed on slide 13.

Revenue amounted to R35 481 million, and this was disclosed for reasons of transparency, although it was considerably lower than the annual R1.6 billion target and R410 million Quarter 3 target. The DPW was working hard to collect rental revenue from partners.

The Inner City Regeneration programme had previously been presented to the Committee. Feasibility studies had been conducted. The DPW was working closely with the City of Tshwane, which was auditing land availability in order to meet the requirement to retain government departments there. Salvokop was one of the targeted areas of Pretoria for government department locations. Funding for the infrastructure projects was now available within the DPW.

Programme 3: Expanded Public Works Programme (EPWP)
Slide 16 provided performance outcomes for the EPWP. Only 1 366 learners participated, as against the target for the 3rd quarter of 2 500 participants, in the National Youth Service (NYS). 202 municipalities, exceeding the target of 200, had reported on EPWP targets. The data for the 3rd quarter for work opportunities was not available, due to a time lag in collating this from the various levels of government. The number of work opportunities created under the provincial roads target, given as 107 714, was subject to verification and change. 74% of incentive grants had been disbursed to municipalities and 96% of incentive grants had been disbursed to provincial departments. This must be compared to the targets of 65% for each in this quarter.

Programme 4: Construction and Property Policy Regulation
Three critical issues were highlighted in relation to programme 4. The Expropriation Bill was in the process of being tabled in Parliament. The drafting of the Built Environment Professions (BEP) Policy was taking longer than hoped. The tabling of the Agrèment SA Bill had been expedited. There were also thirteen policy frameworks being developed, but these were taking longer than anticipated. The DPW had not done very well in the policy area, but that the Minister and Deputy Minister were leading processes to ensure turnaround on these.

Mr Jeremy Cronin, Deputy Minister of Public Works, noted that the Department clearly had not met the quarterly policy targets of tabling the Bills, but assured the Committee that some progress had been made. The Minister had signed the Expropriation Bill, and support had been raised from all of the MECs including Mr Robert Carlisle, MEC for Western Cape. The Expropriation Bill would be referred to the Cabinet committee within the next two weeks, and, after being signed, would be published in the Government Gazette for public consultation, and also go through the National Economic Development and Labour Council (NEDLAC) process. The Minister wanted the Bill, if the Chairperson agreed, to be tabled for information only at this stage, and not for processing or hearing, in the second half of the year. The existing Expropriation Act dated back to the 1970s and was out of line with the Constitution. The new Expropriation Bill had been kept simple and uncontroversial, and would align with the property clause in the Bill of Rights

He further advised that the DPW had been under pressure from Treasury to set up Agrèment SA as an independent entity, to clarify the funding flow, but Cabinet was not generally in favour of multiplicity of public entities. The former Deputy Minister had agreed to review this suggestion, which had caused the delay. The review, however, had confirmed the need to regularise the entity, so that the Agrèment SA Bill was now being drafted and was expected to be tabled in the second half of the year. It would go for public comment, but no NEDLAC process was required.

Discussion
Ms A Dreyer (DA) asked whether recruiting one hundred water technicians from water plants into the workshops, as suggested in slide 6, did not simply amount to moving the staffing shortfall without actually addressing it.

Ms P Ngwenya-Mabila (ANC) asked what plans were in place to ensure that the one hundred posts, for which NT had provided funding, would be filled by the end of the financial year.

Mr M Swathe (DA) asked when the remaining 120 vacancies would be filled, and asked if the fact that they were not yet filled would serve to prevent any improvement in the DPW.

Mr Gwazube replied that the DPW managed water treatment plants that were off the national grid, such as military bases, correctional services facilities and communities around such sites. Recruitment of the one hundred water technicians would actually be a formalisation of the previous short-term contracting status of employees who were engaged in the EPWP, as they would now become permanently recruited. These employees would otherwise have been lost. This would enable the Department to achieve 40% filling of the 220 empty posts in the approved structure for which NT had allocated funding. The remaining posts were not yet funded.  The recruitment for those 100 positions would be achieved by the end of the financial year, through the support of the CBE (Council for the Built Environment).

Ms Dreyer asked how the ‘work opportunities’ achieved through the EPWP (as described on slide 16) were defined, and asked about their duration, and how many people were involved.

Deputy Minister Jeremy Cronin replied that the DPW was aware that the current measures might be inadequate, as often the ‘work opportunities’ were of short duration, and there was no sense of the quality of outcome. The National Development Plan (NDP) indicated that the EPWP would need to be a long-term intervention in order to address structural problems of unemployment. This required an increased focus on measuring full-time equivalent opportunities, as also an assessment of whether participants were gaining skills or career progression. In addition, this was a very large programme, when compared with similar schemes globally, and so there was a need to measure what impact the EPWP had on Gross Domestic Product (GDP). In addition to this, there were also other measures, such as the environmental benefits of clearing alien plants and species out of rivers.

Ms N Ngcengwane (ANC) asked whether the Government Immovable Asset Management Act (GIAMA) of 2007 was understood and implemented at a local level.

Ms C Madlopha (ANC) asked whether the desktop research for the Asset Investment Analysis was really reliable and reflective of the actual situation.

Ms Fatyela-Lindie replied that desktop research was achieved not only through driving the analysis at the Head of Department (HOD) and MinMEC forums, but also through the GIAMA forum, which was constituted by the provincial and national Departments of Public Works. This ensured better synergy between the two levels of government. Ernst and Young had been appointed to procure a system for data verification and a tender had been issued to procure a service provider. Although this had been delayed, the DPW expected to be able to report positively on progress in the fourth quarter.

Ms Madlopha highlighted concerns by the Auditor General that there were not appropriate policy systems in place within the DPW. She asked what the Policy Unit was doing. She also pointed out that the bills now mentioned should have been presented in 2011, so she wondered if that unit was providing sufficient support to the Department in processing the Expropriation Bill and the CBE legislation.

Ms N Madlala (ANC) also expressed concern that the Bills would not be completed before the 2014 elections and asked that the Minister seek to fast track them if possible.

Deputy Minister Cronin replied that the Policy Unit had indeed some weaknesses and challenges, and said that the turnover in the Ministry had disrupted progress by the Policy Unit. New Ministers often wanted to review policy work when they started, which caused delays. He himself had requested a review of the Agrèment SA Bill. He added that the Minister had requested the legislation on the CBE be halted pending a review of whether a similar council existed elsewhere in the world. The proposed legislation would cover a broad range of professions, which could perhaps be better understood through the engineering and architecture councils. These were the main reasons for delay. However, the Ministry wanted both the Expropriation and Agrèment SA Bills to be taken to Parliament within the year, although it was not possible to short-circuit or expedite the NEDLAC process.

Ms Madlopha asked whether the achievement of 44.59% of female employees was reflective of all management levels.

Ms Fatyela-Lindie replied that the DPW would send a full breakdown.

Ms Ngwenya-Mabila noted the progress made on employment of women in the SMS, but was concerned that the disability target of 2% had not been met across government. She also asked whether the Employment Equity and Human Resources plans were completely new policies, or the former ones that had been reviewed.

Ms N November (ANC) asked for clarification of the HRM performance indicator (slide 9), which stated that the “Vacancy rate is reduced to 15% as at 31st March 2013”. She pointed out that this date had not yet been reached.

Ms Dreyer asked for the purpose of the consultations mentioned in slide 9, in relation to the HR and Employment Equity plans.

Ms Fatyela-Lindie replied that high turnover of staff had harmed the Department’s employment equity, and the policies had been in existence for some time. The DPW had consulted on them, to ensure that everyone had a say. The policies were not rewritten from scratch, but were reviewed to ensure that they continued to be suitable and relevant. Within government, there were HR plan templates, which were used across all departments, but these did not meet the specific needs of the DPW, and in particular its shortages of particular skills. DPW was also responsible, as custodian of the CBE, for meeting the needs of the national HR plan. The DPW was working with Department of Public Service and Administration (DPSA) to fast track the restructuring of the DPW.

Ms Ngwenya-Mabila asked for the composition, and a summary of terms of reference for the Lease Advisory Committee.

Mr Swathe asked when the Lease Advisory Committee would be established.

Ms Madlopha asked whether the Lease Advisory Committee would be a permanent committee, or whether it was a short-term intervention to assist with the backlog of lease work.

Ms Fatyela-Lindie advised that the Lease Advisory Committee was essential to develop lease management capacity for the R3 billion worth of leases that DPW oversaw. It would consist of property economists and property lawyers. Due to national skills shortages in these areas, the DPW took the decision to implement a provision by the DPSA, and would second members from companies such as Stanlib, Passenger Rail Agency of South Africa (PRASA) and Telkom. The Lease Advisory Committee would be established by 31 March 2013. Ms Fatyela-Lindie offered to forward a complete report of what had been done to date.

Ms Madlopha asked whether the SCM training had been carried out in all provinces and how many coordinators had been trained.

Ms Fatyela-Lindie replied that training had included 21 people in Port Elizabeth, 51 in Durban and 13 in Bloemfontein. The DPW would forward a full list to the Committee.

Ms Ngcengwane requested a report on the misconduct cases, including the outcomes of investigations.

Ms Ngwenya-Mabila noted that the SCM training programme was hindered by some skills challenges. She also noted that the presentation had not addressed the large problem of fraud and corruption within the supply chain management discipline, and wanted to know what plans the DPW had to tackle this.

Ms Madlopha asked whether the decline in number of investigations was due to staff or budgetary shortages, and whether the decline related to both internal and external investigations.

Ms Fatyela-Lindie replied that most cases had been dealt with by the Special Investigating Unit (SIU). The current National Commissioner of Police had been asked to provide feedback on the progress of reported incidents. The Department would provide an updated report on these cases to the Committee.

Ms Ngwenya-Mabila asked why it took so long for grievances to be finalised, especially in cases of financial mismanagement and in cases where people were suspended with full pay for long periods.

Ms Fatyela-Lindie replied that the DPW could understand the frustrations with the length of the procedures, but the people implicated had rights, and due process must be followed. Appeals went to the Director General and the Minister. The DPW could provide the Committee with statistics on the cases of misconduct and disputes.

Mr Swathe asked when the DPW Workshop programme would be expanded beyond Pretoria and Cape Town.

Mr Gwazube replied that the feasibility study for the opening of the DPW Workshops had been completed and was presently being reviewed and approved by management and the Ministry. DPSA would be approached for formal approval, and a full submission for funding would be made to NT in the next financial year, but there would be a request for reallocation of funds to start the project before the end of this financial year.

Mr Swathe asked why the participant numbers for the NYS were so low.

Mr Stanley Henderson, Deputy Director General: Expanded Public Works Programme, DPW, replied that the cause of the low achievement was that learners had to be employed on actual projects. Where there were project delays, this impacted upon recruitment. Regional offices had, however, assured the National DPW that sufficient projects were coming on stream to meet the targets for the next period.

Ms Ngwenya-Mabila noted that the Department had reported that data capture for the annual targets for the EPWP had improved, and requested that in future the report should also include data at a municipal level.

Mr Swathe asked why the remaining 58 municipalities had not reported on the EPWP, and what steps would be taken to enforce the reports.

Ms Madlala asked what strategy would be used to achieve the third quarter revenue targets, as detailed on slide 13, Asset Investment Analysis.

Mr Mokgoro replied that this was to be covered in the second half of the presentation.

Ms November was concerned that the Immovable Asset Register was not progressing.

Mr Dlabantu advised that sufficient progress had been made so far towards tackling the concerns of the Auditor General. He suggested that all questions on the Immovable Asset Register be deferred to another meetings that had already been scheduled, specifically on this topic.

Ms Ngwenya-Mabila requested that future presentations contain footnotes explaining acronyms.

Financial Performance Report for the 3rd Quarter, 2012/13
Mr Cox Mokgoro, Chief Financial Officer, DPW, provided a brief context for the financial report. This noted that the DPW had now managed to achieve greater stability of the leadership, improved efficiency through the realignment of the senior management. It was realising positive impacts of the Turnaround implementation and the three key stabilisation projects – namely, the compilation of the Immovable Assets Register, the Lease Review and the Clean Audit Project – and was enhancing the technical capacity within the DPW, through the recruitment of appropriate professionals.

Mr Mokgoro advised that at the end of the third quarter, it was generally expected that a department should have spent a linear benchmark of 75% of the annual budget. Slide 21 showed the expenditure, to 31 December 2012, broken down into the various programmes. Programme 1: Administration, which accounted for 12.5% of the total departmental budget, had spent well below expectation at only 46%. Programme 2: Immovable Asset Register had spent 73%. The high expenditure in Programme 3: EPWP, at 77%, was in line with the schedule of transfers and subsidy payments. The Auxiliary and Associated Services programme had overspent at 136%, which was due to unplanned and unforeseen state functions that the DPW had to carry out. NT had been asked to reallocate the budgets to meet this overspend.

Slide 23 detailed the departmental financial position, by economic classification. Compensation of employees showed marginal overspending (78%), due to delays in recruitment of permanent staff, and here too a reallocation of funds had been requested from NT. Infrastructure spending (at only 38%) was a concern, but this had resulted from departmental inefficiencies that the Turnaround project was expected to address. The forecast underspending for Infrastructure by 31 March 2013 was only R162 million. Mr Mokgoro explained that, historically, expenditure in this area would spike in the final months of the year as suppliers submitted their invoices for payment prior to the year-end. Further detail was provided on slides 24 and 25 (see attached presentation).

Mr Mokgoro advised that the PMTE was a fully set-up entity. Revenue collection was low, leading to a bank account deficit or overdraft, when expenditure (at 75% of annual budget) exceeded income (at 73% of annual budget). Budget breakdowns for revenue and expenditure were detailed on slides 27 and 28. Slides 30, 31 and 32 provided further detail on the State and Private Accommodation revenue streams overseen by the PMTE. State tenants had paid only 60% of the annual invoiced amount, up to 31 December 2013. 46% of unpaid bills were outstanding for more than 120 days. This was primarily due to the Auditor General’s requirement that state departments reports must, in their financial reports, itemise accommodation expenditure as well as disputes over tenancies. The lack of the Immovable Asset Register prevented clarity over ownership and leases for public buildings, and the lack of an adequate accounting system prevented PMTE from issuing itemised accommodation invoices. Private tenants had paid 64% of invoiced amounts. 73% of invoices were outstanding for less than 90 days, and it was anticipated that these would be paid. Only 1.8% of invoices (R33 million) were unpaid, due to disputes over either occupation or the rental amount.

Discussion
Ms Dreyer asked, in light of the decline in year on year spending patterns in office accommodation, infrastructure and machinery, as shown on slide 23, when it was anticipated that the Turnaround project would show an impact.

Ms Ngwenya-Mabila asked whether the Turnaround project was tackling the faults in the billing system, and whether contracts and tenancy agreements were signed.

Mr Mokgoro replied that overall spending had actually increased, but DPW accepted there were declines in the areas of goods and services, office accommodation, infrastructure and machinery. He noted that the Turnaround project had focussed on SCM, but that procurement of a new billing system had started, which would be available early in the new year. He expected results of the Turnaround project to be seen in the new financial year.

Ms Dreyer asked where maintenance of buildings was accounted for in the budgets. She noted her concern about the dilapidated state of many public buildings, for which the Department continued to pay municipal rates, despite the buildings often being uninhabitable.

Ms Madlopha asked the DPW to unpack the 38% infrastructure expenditure, and compare it with the 77% claimed by provinces and municipalities for EPWP. She wondered how the latter figure was achieved on so little expenditure.

Ms Ngwenya-Mabila noted that the underspend on infrastructure was preventing job creation, and thereby also preventing any reduction in the unemployment rate.

Mr Mokgoro advised that the DPW had full project details and would provide a report on these, for discussion.

Ms Ngwenya-Mabila asked what machinery and equipment had not been purchased, and what was causing the delays in purchasing.

Mr Mokgoro replied that information on this would be provided to the Committee.

Ms Ngwenya-Mabila noted that the DPW had expressed concern that NT was reducing the departmental budget. However, she thought this was understandable if the DPW failed to spend the allocated budgets.

Ms Ngwenya-Mabila asked what ‘other’ expenditure consisted of, as noted on slide 28.

Ms Ngwenya-Mabila expressed concern about the R33 million not claimed due to disputed properties.

Ms Madlala asked why the PMTE was not yet able to provide itemised invoices to those government departments who were refusing to pay. She wondered if this was linked to the figure of R33 million unpaid rents that were disputed.

Mr Mokgoro replied that the R33 million did relate to disputes, and the DPW was reviewing lease contracts and inspecting properties to determine occupancy. A fuller report would be provided.

Mr Swathe asked how there could be overspending on compensation to employees in slide 23, given that there was also a high vacancy rate.

Mr Mokgoro replied that the non-critical posts had been filled, but not the critical positions, and this had resulted in the overspend.

The Chairperson asked whether the deficit of R1.2 billion, as at 31 December 2012, had increased or decreased since. She also sought clarity on the PMTE overdraft of R2.9 billion.

Mr Mokgoro replied that the deficit would diminish by the end of the year, and that the bank overdraft was a consequence of the DPW’s inability to collect revenue. This in turn was dependent on both the itemised billing system and a request to NT to ask client departments to pay against non-itemised invoices.

The Chairperson asked why there was no budget allocation for the arrears, which were currently around R1 million, as shown on slide 28.

The Chairperson asked how many State clients were not paying, referring to slide 31, and what the DPW was doing to address this problem. She enquired if the lack of payment was caused by bad relationships with client departments as well as the lack of itemised billing.

Ms Dreyer asked what was done to penalise those tenants with bad debt, especially the 46% of debtors who had their debts outstanding for more than 120 days. She asked if services were cut or notices were served.

Mr Mokgoro replied that the client department list would be provided. Measures taken to encourage payment mainly focussed on engagement with client departments, and explanations of how totals had been calculated. However, there was also a need for NT to advise client departments that they must pay. The lack of contracts was also a contributory factor.

Ms Madlopha asked the DPW to explain why it was applying to NT to reallocate funding to clear the 136% overspend, after making the expenditure. She said that surely departments were supposed to request budget reallocations before overspending occurred.

Ms Ngwenya-Mabila asked for a breakdown of spending in programme 5: Auxiliary and Associated Services, in particular on state functions.

Ms Dreyer asked why the DPW overspent on state functions every year and why this showed an even greater increase in this year.

The Chairperson also asked which state functions, excluding funerals, caused the overspend of R13.2 million by 31 December 2012.

Mr Dlabantu replied that the DPW required a framework to define norms and standards for each of the services that DPW was required to undertake. Budgeting did not deal adequately with unforeseen events, but a contingency budget, based on predictable norms and standards, would allow for this. There were two or three high level funerals (declared by the President) in the 2012/13 year. However, DPW would provide a list of all the functions financed by DPW.

The Chairperson reminded the DPW that the issue of the high cost of table decorations had been raised previously, and the Department had committed to investigating this issue and reporting back to the Committee.

The Chairperson asked how family demands for funeral costs could be better managed.

The Chairperson highlighted that there were still a number of outstanding issues that would lead to the Auditor General continuing to impose disclaimers on the DPW, if not resolved

Ms Ngwenya-Mabila suggested that the Committee needed a detailed report of maintenance and renovation costs of Ministers’ houses, also citing the relevant approval processes, in order to understand the matter fully.

Ms Ngwenya-Mabila expressed concern that the HR function, which had caused the DPW’s problems because of appointment of unqualified staff, was now responsible for trying to solve these issues.

The Chairperson asked Ms Fatyela-Lindie, as former Acting Director General, to refer back to the notes from previous meetings and prepare all outstanding reports requested by the Committee, so that both oral and written responses were noted.

Mr Dlabantu advised that all outstanding information would be provided to the committee within the next two weeks.

The meeting was adjourned.


 

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