Deputy Minister & Department of Public Works: Expropriation Bill 2013, Strategic & Annual Performance Plan 2013; Independent Development Trust Strategic & Annual Performance Plan 2013

Meeting report

Deputy Minister of Public Works on 2013 Expropriation Bill
Mr Jeremy Cronin, Deputy Minister of Public Works introduced the Expropriation Bill, 2013 and stated that the Bill provided for the expropriation of properties either for public purpose or public interest. Public purpose included acquisition of property for freeways, railway lines, and dams, while public interest included, but was not limited to land reform and land restitution in order to promote equitable and just access to natural resources for all South Africans. The Bill also provided for the determination of a just and equitable compensation on expropriation. With the Bill, it would be unconstitutional to prevent an individual from going to court after having exhausted all the processes of determining a just and equitable compensation due to him or her. The court and or expropriating authority would however be governed by the requirements of the Bill of Rights.

The Deputy Minister emphasised that there would be five different criteria, which would be used for determining just and equitable compensation. Criteria for determining just and equitable compensation would hence not be limited to the market value but included the other four factors.

He noted that the Bill described the processes that would be followed in a case of expropriation. Currently, at least ten national departments and municipalities had expropriating powers. The Bill would not take away these powers but would set guidelines on the processes required for expropriation.

Department of Public Works briefing on 2013 Expropriation Bill
Ms Jessica Moodley, Head of Legislative Drafting, Department of Public Works stated that the review of Expropriation Act  (No. 63 of 1975) was necessary in order to ensure consistency with the provisions of the Constitution. It was also necessary in order to ensure provisions on issues relating to the scope of expropriation, factors to be considered during expropriation and issues to be considered regarding holders of rights to whom compensation is due.

Ms Moodley highlighted the concerns raised on the withdrawn Expropriation Bill 2008 to include the objection to the definition of public interest, which was regarded as too wide, hence open to abuse by authorities. Definitions of a juristic person and property were critiqued as being too wide and limited respectively. Issues bordering on compensation determination, urgent expropriations and the court’s role in expropriation were also raised.

Ms Moodley expounded on the provisions of the Expropriation Bill 2013 and indicated that the Bill provided for the expropriation of property for a public purpose or in the public interest subject to compensation; the determination of just and equitable compensation through the consideration of all relevant factors; procedural framework to be followed by all expropriating authorities when expropriating as well as compensation of unregistered rights in property that are extinguished by expropriation.

Ms Moodley stated that the Bill was applicable to all expropriating authorities and the existing powers of these authorities were to remain intact as long as it was in consonance with the provisions of the Bill. The Bill empowered the Minister of Public Works to expropriate property for a public purpose or in the public interest as well as on behalf of a juristic person who required the property for a public purpose or in the public interest. A juristic person would however transfer the property back to the state if he did not act on the expropriation or failed to use the property for the purpose for which it was expropriated. The Bill provided for the compensation of the juristic person on the eventuality of the property being transferred or disposed by the state.  

Ms Moodley indicated that the Bill also included a pre-expropriation process which would be an investigation of the suitability of the property for the purposes, for which it was sought, the impact of the expropriation on infrastructure, services, housing and town planning as well as the existence of registered and/or unregistered rights in the property. Requisite information would be sought by an expropriating authority, Departments of Mineral Resources (DMR) and Rural Development and Land Reform (DRDLR) as well as relevant municipalities.

She highlighted the steps that would be taken before an expropriation was done. She noted that a notice of intention to expropriate would first be published, delivered to DLDLR as well as served on all known affected persons. This would be followed by an invitation to comment or make submissions, the consideration of such comments, decision on whether or not to expropriate and the notification of that decision in that order. The final notice of expropriation would be served to both the owner and known holders of registered and unregistered rights in the property. It would also be delivered to the Deeds Registrar, Directors-General, DPW, DRDLR, DMR as well as other relevant parties. Contents of the notice would include the date and purpose of expropriation, compensation to be paid and details regarding how the compensation was arrived at. She further discussed the verifying process provided for by the Bill, through which claims by persons to have held unregistered rights in property before the date of expropriation and for which they had not been compensated would be ascertained.

She also noted that the Bill provided for the payment of compensation that was equitable and just and which were based on but not limited to the current use of the property, the history of the acquisition and use of the property, the market value of the property, the extent of direct state investment and subsidy in the acquisition and beneficial capital improvement of the property as well as the purpose of the expropriation. The process to be followed in negotiating compensation between expropriated owners and expropriating authority included the offer of compensation and the communication of acceptance or rejection of the offer. If the offer was rejected, the expropriated owners and right holders would submit a claim and if this was rejected by the expropriating authority, the expropriating authority would make a revised offer. If all these however proved abortive, then any party to an expropriation would approach a court for the resolution of the dispute and determination of the compensation payable.

Ms Moodley stated that the Bill permitted for urgent expropriations in the event of a disaster as defined in the Disaster Management Act (No. 58 of 2002) or where a court granted an order then an expropriation authority was entitled to use the provisions relating to urgent expropriation.

She also indicated that the Bill allowed for the withdrawal of expropriation by the Minister if the withdrawal was expedient or in the public interest. Under this situation, notices of withdrawal would be served to those who received expropriation and would take effect from the date mentioned in the notice. However, withdrawal would not be permitted if the property had been transferred to the State or juristic person or three months after the date of expropriation, except if withdrawn by consent of the parties or order of the court. It would also not be permitted if the compensation had already being paid, except if withdrawn by consent of the parties. (See presentation document)

Discussion
Ms C Madlopha (ANC) referred to the Ingoyama Trust where the Title Deed was within the Ingoyama but the holder and user was different and asked who would be compensated in such case. She requested further clarifications on other criteria apart from the market value which would be used to determine a just and equitable compensation payable on expropriation. She asked what the compensation of cemeteries would cover, and whether this would include the cost of exhumation. She also wanted to know what would happen if the compensation was less than the market value, especially since the criteria was not going to be solely based on market value.

Ms Moodley replied that the Bill provided for the compensation of every registered and unregistered right to the property.

Mr Andrew Meiring, Director: Property Policy, DPW added that the cost of exhumation and re-burial was a common cost that was normally considered during compensation.

Ms Madlopha replied it must not be assumed as a common cost but there should be provisions for it in the Bill.

Ms P Ngwenya-Mabila (ANC) asked how the expropriating authorities intended to reach the rural farm dwellers who did not have access to newspapers and gazettes which contained information on intention to expropriate. She inquired if there would be financial implication of the expropriation on the budget. She also asked the Department to amplify on the powers of expropriation, especially the provision for the compensation of the jurisitic person on the eventuality of the property being transferred or disposed by the state.

The Deputy Minister replied that the process of expropriation was not at the cost of the Department as it was not the only entity involved.

Ms Moodley remarked that the intention through the Bill was to identify and reach every holder of rights to the property and the Bill provided an obligation on the owner to inform holders of unregistered rights. She clarified that the provision for compensation included the compensation to be paid to the right holder which was the value of the right to the property less the cost of determining the value by the valuer.

Ms A Dreyer (DA) remarked that there was no notice of the presentation of the Bill to the Committee Members and asked what the status of the proceeding was, whether they were deliberating on the Bill or not, and if it was an entirely different meeting from the one Members were informed about.

The Chairperson responded that the meeting was not a separate meeting but was still part of the meeting with the Department. The Chairperson also noted that there would still be public hearings and consultation on the Bill

The Deputy Minister noted that they were not deliberating on the Bill but the deliberation would still take place and if there was a need to effect some changes, it would be done.

Ms Dreyer remarked that the success of any policy depended on its implementation and asked who would implement the Bill. She questioned the capacity of the Department to implement the Bill if it was the implementing authority. She requested for further clarification on what property entailed.

The Deputy Minister replied that there would be expropriating authorities and all provinces and municipalities had expropriating powers. However, any expropriation would be in line with the provisions of the Bill. Any province or municipality that wanted to expropriate would initially issue an intention to expropriate and inform all the relevant departments and authorities. He also noted that the Bill had an element of public participation in the expropriation process.

Ms Dreyer hoped the rationale behind the Bill was not based on the failure of the State to implement land reform.

The Deputy Minister replied that the problem land reform was not the inability to expropriate but that land restitution was linked with diverse phenomena such as the productivity and capacity of people. He further commented that the Bill was not about empowering the state go out and expropriate, but was needed to ensure that expropriation was done in ways that were equitable and just and would comply with the Constitution.

Ms N Ngcengwane (ANC) commended the Bill for being in consonance with the Constitution. She however asked if the compensation would include farm workers and what the fate of rural areas without title deeds would be. She hoped the State would not end up compensating the wrong people.

Ms Moodley replied that property would be valued as a whole and every individual right would also be valued. Ownership and dwellers would be valued and compensation paid to them. She noted that compensation would go beyond property but would also include other financial losses that would be suffered by anyone as a result of expropriation.

Mr K Sithole (IFP) asked how the expropriating authorities intended to reach the deep rural areas and if the Department had the capacity to implement the Bill.

The Deputy Minister agreed that the Department needed to improve its capacity but the Office of the Valuer General, which would be a competent, independent entity and answerable to the Department of Rural Development and Land Reform, would be needed to advise on property evaluation matters.

Ms N Madlala (ANC) commended the basis for the Bill, noting that it would help curb the underutilisation of land.

Department of Public Works Strategic Plan
Mr Mziwonke Dlabantu, Director General, Department of Public Works, presented an overview of the Strategic Plan of the Department. He stated that the policy priorities of the Department were congruent with the National Development Plan (NDP), the Medium Term Expenditure Framework (MTEF) as well as the State of the Nation Address (SONA) by the President. The challenges faced by the Department included poor lease management, lack of appropriate accounting platform, inadequate movable asset register, an inefficient supply chain management as well as lack of built environment and property management skills. The Turnaround strategy however had focused on improving the efficiency of the Department.

Mr Dlabantu noted that the Strategic Integrated Projects (SIPs) encouraged convergence of projects to unlock benefits to specific provinces or districts. The Department played a significant role in the Presidential Infrastructure Coordinating Commission (PICC) and was accorded the responsibility for SIP 1. The Expanded Public Works Programme (EPWP) of the Department targeted 4.5 million work opportunities for the second phase and would benefit immensely from the implementation of the SIPs.

He noted that five outcomes formed the basis of the Department Strategic Plan. They were decent employment through inclusive economic growth, skilled and capable workforce to support an all inclusive economic growth path, creation of efficient competitive and responsive infrastructure network, sustainable human settlements and improved quality of household life as well as an efficient and effective development oriented public service and an empowered fair and inclusive citizenship.

He emphasised the focus areas of the Department that aligned with the NDP and SONA and these included the Phase 2 of the EPWP, transition to a low cost carbon economy, an all inclusive and integrated rural economy, and the fight against fraud and corruption through internal controls. The Department was implementing the Medium Term Turnaround Strategy and would renew its focus on stabilisation, efficiency enhancement as well as sustainability and growth through the Turnaround strategy. The Department was working with the National Treasury to reduce inefficiency and curb fraud in supply chain and procurement of goods and services. Projects were also receiving priority attention under the Turnaround strategy.

Mr Dlabantu indicated that four different public entities reporting to the Department had identified some key strategic programmes to implement for the MTEF period. These entities were the Construction Industry Development Board (CIDB), the Council for the Built Environment (CBE), Agrément South Africa and the Independent Development Trust (IDT).

Department of Public Works Annual Performance Plan
Ms Mandisa Fatyela-Lindie, Chief Director: Department of Public Works, presented the strategic objectives of the Department with emphasis on the Annual Performance Plan (APP) 2013/14 of the Department. She did this by focusing on each of the five programmes of the Department.

Administration Programme
Ms Fatyela-Lindie discussed the objectives of the programme. She noted that the programme would target improvements in finance, supply chain management and corporate services. She focused on the targets of the different units. The capacity building of the internal audit unit was ongoing, a new audit committee had been appointed and functioning and the unit would come up with an internal audit plan which would be endorsed by the audit committee. The Strategic Management Unit (SMU) would ensure that the strategic plan and APP were tabled before the Committee. It would also deepen training on strategic planning. The Risk Management Unit (RMU), which was under the SMU would ensure the development of strategic high level of risk. There was also a commitment to develop a knowledge management system.

Ms Fatyela-Lindie noted that support for monitoring and evaluation (M&E) was not forthcoming because of other commitments. The Department would however ensure that the M&E policy was properly institutionalised, that M&E reports were submitted when due and more people were recruited into the M&E unit to increase efficiency. There would be a corporate intergovernmental relations strategy to ensure good relations with every arm of government. She indicated, with respect to finance and supply chain, that KPMG was appointed to assist in the audit. There was going to be a supply chain management policy and development of frameworks for the institutionalisation of demand management, acquisition management and contract management this year.

She also noted that the human resources management unit was reviewing the organisational structure for the Department. The 2013/14 fiscal year would see improvements in the legal services unit, communications and management unit, asset management and international relations.

Immovable Asset Investment Management Programme
Ms Fatyela-Lindie indicated that there were four sub-programmes under this programme. She noted that 54 647 properties would be verified and 5 540 land parcels would be confirmed during the fiscal year under the Strategic Asset Investment Analysis programme. The Projects and Professional Services programme would ensure the completion of 300 construction projects and provision of 40 000 work opportunities. The programme would among others appoint 140 micro enterprises, 40 cooperatives and 70 contractors.

She noted that the third programme which was the Inner City Regeneration sough to deepen the Department’s engagement with the City of Tshwane for the proclamation of Salvokop as well as complete the precinct development plans for West Capital and Paul Kruger in the fiscal year. The Operation Management programme would review the lease functions in the Department and manage 2 778 leases annually. A verification exercise on state and lease properties for the payments of taxes, rates and municipal services would take place under programme. The Key Account Management programme would improve service delivery standards while the prestige strategy would develop a framework for domestic services and interior decoration and design by 31 March 2014.

Expanded Public Works Programme
Ms Fatyela-Lindie reported that the Department intended to have 255 municipalities reporting to it on the EPWP by 31 March 2014. The programme would create 1 230 000 work opportunities by March 2014. She also noted that 3 500 youths were expected to participate in the National Youth Service Programme while 140 000 work opportunities on provincial access roads would be created through the EPWP by end of March 2014.

Construction and Property Policy Regulation Programme
Ms Fatyela-Lindie stated that the Department would seek to become the adviser to the government on construction and property matters. She noted that the final legislation on Agrément South Africa would be table by 31 July 2013 while the final Built Environment Professions policy would also be submitted for approval by December 2013. The IDT Business Case had been submitted for approval and work was ongoing on the Property Management Trading Entity (PMTE) Business Case. She made reference to the Expropriation Bill that was presented.

Auxiliary and Associated Services Programme
Ms Fatyela-Lindie remarked that the programme provided compensation for losses in the state housing guarantee scheme when public servants fail to fulfil their obligations and had a total budget of R1.2 million. It provided assistance to organisations for preservation of national memorials through the provision of funds to the Commonwealth War Grave Commission and United Nations for maintaining national memorials and it had a total budget of R64.9 million. It also provided for the acquisition of logistical facilities for state functions and an allocation of R83.3 million was made to this programme. Finally, there would be a Sector Education and Training Authority, which aimed to influence training and skills throughout the construction industry. It had a budget of R8.7 million.

Department of Public Works budget
Mr Cox Mokgoro, Chief Finance Officer, Department of Public Works noted that there had been a reduction in the total budget. The total budget had reduced from R7.8 billion in 2012/13 to R6.2 billion in 2013/14. He remarked that departments had been requested to reprioritise and plan with a reduction. Hence, funds were shifted from low efficiency/priority expenditures towards areas of higher efficiency/priority expenditure. Underperforming programmes were identified and scrapped and funds were redirected towards performing programmes. An amount of R1.3 billion was reprioritised.

Mr Mokgoro indicated that the 2013/14 budget for the Department was broken down with respect to the five programmes of the Department. The Administration Programme was allocated R1.1 billion. The Immovable Asset Management Programme, Expanded Public Works Programme and the Construction and Property Policy Regulation Programme were allocated R3 billion, R1.9 billion and R39 million respectively. A sum of R51 million was allocated to the Auxiliary and Associated Service Programme.

(See attached presentation for more detailed graphs and tables on the budget).

Discussion
Ms Madlopha said she was not convinced that there were enough capacities to watch over the provinces as far as the lease was concerned. She asked for clarifications on the project listed for Inner City Regeneration in Limpopo. She also wanted to know if the awareness campaign had started or when they would be starting.
Ms Ngwenya-Mabila commended the presentation but asked how many plans were being considered, as there were two plans with the Committee Members.

Mr Dlabantu replied that there was a Five Year Strategic Plan and targets, which was converted into the MTEF. Each year, an APP was also prepared. The Department was presenting the 2013/14 APP but it also included targets for subsequent years.

Ms Ngwenya-Mabila responded that the strategic plans should not be discarded or changed if the years had not lapsed but if there were to be changes, then it should be reflected in an Annexure or Ammendment Reports.

Mr Dlabantu replied that this would be considered in future. He also noted that the National Treasury had given a directive that strategic plans must not be adjusted but must be adhered to in order to track progress.

Ms Fatyela-Lindie added that in 2011 the National Treasury introduced a new framework, which was a Five Year Strategic Plan. Hence, the APP had to be realigned to the strategic plan.

Ms Ngwenya-Mabila stated that a quarterly presentation would not allow the Committee to play its oversight role, noting that the operational plan was missing from the Department’s APP. She insisted that the APP did not have SMART [specific, measurable, attainable, realistic and timely] goals. The APP contained general statements that would be difficult to monitor. Most of the activities would be completed in March 2014, hence were long term goals. The EPWP gave no indication of the number of jobs that it would create quarterly. She also asked the rationale behind the completion of a signing of a lease agreement by March 2014.

Ms Madlala inquired about the organogram of the Department, stating that this was needed in order for the Committee to effectively perform its functions. She remarked that the plan lacked specifics and asked for clarification on the budget provision for compensation of employees.

Mr Dlabantu replied that there were quarterly analyses of targets in the strategic plan. They were in two parts in every case and were constant reminders of the targets needed to be achieved. He however agreed that “smartness” was a challenge for the Department but noted the Department was doing its best to limit vagueness and things that were immeasurable in the plan.

The Chairperson noted that there were lots of issues to be clarified in the Department’s APP.

The Director General replied that a meeting should take place between the National Treasury, the Department and the Committee, where the National Treasury would make clarifications on the rationale behind the format of the APP.

IDT Strategic and Annual Performance Plan (APP) 2013/14

Prof. Somadoda Fikeni, Chairperson: Independent Development Trust (IDT) thanked the Committee for complying with compliance and welcomed its wise counsel. As the Chairperson of the entity he would not do the presentation himself but would give the CEO the opportunity.

Ms Thembi Nwedamutswu, Chief Executive Officer (CEO): Independent Development Trust (IDT), said that the outline of the presentation consisted of the table of contents which included the Compliance Statement, Presentation of Strategic Plan, and Recommendations. The package of the presentation was supported by the Annual Performance Plan (APP) and the Budget.

The CEO said that in terms of the compliance statement Section 55 (2) (b) and Section 56 of the Constitution provided that, the National Assembly must provide mechanisms to maintain oversight of any organ of state and may summon/require any institution to report to it. The IDT, a Schedule 2 Public Entity, was thus presenting its 2013/14-2017/18 Strategic Plan and 2013/14 Annual Performance Plan (APP) to enable the Portfolio Committee to exercise oversight and to recommend the same to Parliament. The IDT also reported that the Strategic Plan and APP was lodged with the Executive Authority and National Treasury on 27 February 2013. It was also approved by the Minister on 8 March 2013, and it was tabled in Parliament on 13 March 2013.

The CEO said that the table of contents of the 2013/14 Strategic Plan would look at the Foreword: Executive Authority, Official Sign-off, the statement by the Board Chairperson. They would then revisit the vision, mission, and their approach in compiling the document, the values and operating principles as well as legislative and other mandates.

In part B of the strategy the IDT would give the Strategic Goals, Strategic Vision Implementation, Key Performance Measures & Indicators, and Governance Structures. In linking to other plans it would look at the Financial Plan, Risk Management Plan, Fraud Prevention Plan, Materiality and Significance framework, Environmental Plan, Communications Plan, Information Technology Management Plan, and as well as the Knowledge Management Plan. There were appendices that were included in the document that they’ve tabled to Parliament.

The Executive Authority foreword highlighted the need for alignment to 2009/14 Medium-Term Strategic Framework (MTSF), Programme of Action and National Development Plan. It recognised the IDT’s reach and effectiveness as a public sector programme management and development agency and, its distinctive developmental approach to social infrastructure delivery. It also said that 2013/14 was the Year of Delivery thus there was an expectation that the IDT would accelerate delivery. It was mindful of and committed to (together with the IDT Board) find a lasting solution to IDT’s financial sustainability and going concern challenges. The latter would include the transformation of the IDT with a revised legislative mandate, corporate form and business model to enhance its efficiency and effectiveness.

The Board assumed office on 1 July 2012 and was comprised of a competent team of professionals with a diverse range of expertise and knowledge, who fully understood the development landscape as well as the Board’s fiduciary duties as the Accounting Authority. It appreciated that IDT was a national asset which had served the country for 23-years. It also assumed office at a difficult time: IDT was in the throes of a transformation process when its financial sustainability and going concern status was in jeopardy. Having been assured of Government’s support for the continued existence of the IDT, the Board aimed to bring stability and remove the uncertainty. The finalisation of the mandate and financial sustainability of the IDT, together with the Minister, was thus a critical deliverable for the Board. It was also concerned that IDT was only allocated R50m for 2013/14, and the same value for each of the outer years, an amount well below what the IDT needed to remain a going concern, deliver on its mandate and to meet the growing demand for its services.

The 1997 Cabinet mandate was still in place: “The IDT must be transformed into a government development agency that will implement projects which are commissioned by government departments.” The IDT was integrated into the public service delivery system in 1999 with the promulgation of the Public Finance Management Act (No. 1 of 1999) (PFMA) and listed as a Schedule 2 Major Public Entity. It reports to Parliament through the Minister of Public Works, the Shareholder Representative and Executive Authority. Thus the IDT sought to contribute towards the mandate, vision and strategic objectives of Department of Public Works (DPW). The IDT further sought to advance the National Development Plan (NDP) and the National Infrastructure Plan (NIP).

The policy mandates included the shareholder compact, relevant programmes of DPW like Programme 1: Administration and Programme 3: Expanded Public Works Programme (EPWP), and the National Strategic Outcomes. In advancing those outcome areas the IDT directly supported DPW in its Medium-Term Strategic Framework (MTSF) priorities for job creation, sector skills development and the green buildings initiatives.

The CEO said that the Strategic Goals articulated the IDT’s responsibility to promote sustainable development in poor and marginalised areas through delivery of integrated social infrastructure. The institution aimed to achieve these Strategic Goals by using resources in a prudent and efficient manner.

The strength of the IDT lay in strategic partnerships.  The results of the scan suggested that through the transformed IDT, more effective linkages could be made between government priorities and the IDT’s strategic goals of delivering social infrastructure and other programmes, developing communities, supporting institutions, sharing knowledge and building strategic partnerships

The CEO said that the key performance measures and indicators captured in Appendix 2 & 3, included the Corporate Business Plan and in the 2013/14 the APP. However, the IDT’s delivery of these pre-determined strategic objectives, indicators and targets hinged on a number of assumptions and dependencies. The value and delivery of business portfolio:- The IDT was required to generate its own business portfolio. However, the speed at which agreements were concluded as well as the frequency and values of funds transferred was not entirely within the control of the organisation and delays impact on delivery. Hence associated indicators and targets assumed that agreements were concluded before the start of and/or early in the financial year and that clients would transfer funds as stipulated in the agreements. The management fee was negotiated with clients and stipulated in agreements. In order to remain a going concern, the minimum average management fee which the IDT could consider was 4.0% and any amount lower than 4% would jeopardise the organisation’s going concern status. In addition, if clients didn’t make the funds available for the IDT to deliver, the organisation would not be able to collect its management fees.

Mr Ian Ellis, Chief Financial Officer (CFO): IDT said that the IDT had two sources of income – the management fees charged to client departments constituted the major source of its income. The level of fees averaged slightly more than 3 % during the 2012/13 financial year and management had implemented a process to increase the average level of fees to 4% over the budget year. The level of fees would be further increased over the outer years.

Secondly, IDT has an investment income which was earned from the investment fund. The fund was being depleted to fund the IDT’s operational costs. The reduction in the level of interest rates together with the decrease in the capital invested had resulted in the investment income being reduced significantly over the past few years. The investment income for 2011/12 was R 27 million and the income for the nine months ended 31 December 2012 was R 15 million. The investment fund closing balance was R170 million.

The CFO said that in terms of financial challenges and risks the greatest challenge facing the IDT was the uncertainty surrounding the financial sustainability of the organisation. Treasury had allocated R50m per year for the 2013/14 to 2015/16 financial years. The funds had been allocated on condition that “the Independent Development Trust will develop and submit a restructuring plan to the National Treasury by 30 June 2013”.

The Business Case (the plan referred to by Treasury) was being prepared in conjunction with the Department of Public Works. The plan would address, inter alia, the issues of: The structure, form and resourcing required for the organisation in order for it to become self-sustainable over the MTEF period; The clearly identified target market for the organisation; The management fees structure required to provide for the funding of the organisation; It was crucial that the shareholder address the issue of the financial sustainability of the IDT in order to ensure that it continued to play a meaningful role in the delivery of infrastructure and community development.

The value of programme implementation agency agreements (PIA) or memoranda of agreements (MOA) signed for future implementation was currently in excess of R 20 billion (as reflected in a previous slide). Those programmes were to be implemented over the next three years. This would represent a significant risk to the relevant departments and service delivery to communities should the IDT not be able to implement its programmes.

The CEO concluded in terms of recommendations that the Portfolio Committee on Public Works recommend the IDT’s 2013/14-2017/18 Strategic Plan to Parliament. The Committee also sustained its support for the long-term sustainability of the IDT such that the organisation could maintain and accelerate its distinctive role in delivering social infrastructure in the most marginalised communities on behalf of Government.

Discussion

Ms Madlopa noted that what was important was that the APPs were really talking to the strategic plan. Another important observation was that in the situational analysis strategic planning there was performance and monitoring reporting that had a target. So the Committee could hold the IDT accountable. 

Ms Madlopa however said what was worrying was around the issue of the lack of financial viability which was a challenge to the IDT. She asked why the IDT did not negotiate in the first year for the following year so as to have enough time for planning. 

Ms Madlopa asked whether the IDT had capacity to fulfil its commitments to the Department of Public Works (DPW).

She asked that how the issue of source of funds would assist if DPW claimed its mandate back, for example, in its APPs it had said that it was going to deliver 200 schools.

Ms Ngwenya-Mabila asked how the IDT saw itself being supported by other government departments as an implementing agency.

She asked the IDT to clarify the strategic plans 2013/14 and 2017/18 financial years.

She asked for clarity on the over use of percentages in the presentation.

She asked for the breakdown of the number of job opportunities in the infrastructure development plan of the Expanded Public Works Programme (EPWP) that would be created by the IDT because it had been indicated in the report that in year one there would be 30 000 jobs but there was no analysis.

Ms Madlala asked that the IDT should provide a breakdown and information as to exactly where the 200 schools were going to be built by the Department.

She asked how the relationship was currently between IDT and the Department of Basic Education (DBE) since initially DBE intended to build schools on its own. Was the relationship improving or were there still challenges?

She asked what consultants used by IDT were specialising in, and when would the IDT stop using private consultants.

Ms Ngcengwane thanked the IDT for the presentation. She asked if in terms of financial sustainability the IDT intended to charge a fee from the DPW for its services. Was it happening, did the Department agree, and what was the situation?

She also asked whether IDT was planning with the different departments since the budgeting year was over and they would just dump money into the IDT.

She asked if the IDT did had relevant professionals like quantity surveyors, engineers beside the risk management team of IDT so as to avoid the hiring of private consultants who were eating away Government funds.

Ms Ngcwengane asked if the IDT had rectified the amount of money that had been spent in programme administration in terms of its restructuring plan to National Treasury.

Ms N November (ANC) asked for clarity on the organogram of the ITD.

Mr N Magubane (ANC) asked whether in terms of the R50m allocated to IDT instead of the R400m initially requested by the trust if the DBE did give money to the IDT when forwarding its business plan to build schools.

Ms Ngwenya-Mabila asked for clarification on the vacancy rate of IDT. How many posts were vacant and how many were filled in the current financial year?

She asked whether, in terms of the capital expenditure (CAPEX) funding of R600m that had been budgeted for the MTEF period, the IDT would be able to renovate its offices in the current financial year.

She asked to be clarified on the issue of the R30m for bonuses.

The CEO responded that the question of the R50m allocated to the IDT by National Treasury and the DBE process were not related. When the IDT went out and sold its services it went to the DBE and offered its services. So there was no way that the DBE could come to the IDT as it was almost reacting to the DBE’s capacity needs.

The CEO said that the establishment of public entities by its very nature was to assist the government departments to speed-up their delivery hence there were some expectations that public entities would be able to respond on time to complement the department not to duplicate what the department was doing.

The R50m was really to assist the IDT in terms of its overhead costs and to pay the salaries of the people who were working at the IDT. The CFO had said that the IDT sold skills and those people should be paid. The R50m from Treasury was meant to transform the IDT.

The CEO said that in relation to the question of target for women they could convert it into a monetary value. But it would be important to say that the IDT's focus in social infrastructure on youth. There was very little interest among young people to go into construction. However, with the support of DPW the IDT could attract young people to get into the construction industry.

The IDT was also working with various groupings of young architects through their sister entities like CBE and looking into how could they attract them. The IDT was not hiding anything but it was the new targets that it was working on and it had set up a target by which it could be measured by the Committee in its oversight role. The reality was that it had been difficult for the IDT to attract young people into construction.

The CEO said that the IDT wanted to sit with departments at the planning stage so that it could be able to make those commitments. It was a weakness in the IDT's mode of operation that the IDT responded when departments’ plans were finished. It would be very good to have that opportunity but it was an opportunity that was outside its control at the moment.

The CEO could not say that the IDT had adequate capacity in terms of the risk management. Firstly, capacity was very expensive and therefore its approach was to create that flexibility whereby it could buy the capacity when needed and release it when no longer needed. Some of its capacities were on a contractual basis not by default but to make sure that IDT could be able to contain its overhead costs. 

The CEO said that the relationship between DBE and IDT was improving thanks to their competitor the Development Bank of Southern Africa (DBSA) which was not performing very well and, as a result, DBE had returned to the IDT. In the current financial year, although the IDT was appointed very late it had a very good portfolio from DBE and could confidently say that the relationship was improving.

The CEO said that the Minister had required that the IDT did an actual audit on incomplete health projects and she was very happy to report that none of the incomplete projects were implemented by the DPW or by IDT. The various provincial departments were implementing those projects on their own. There was one health facility with which IDT had been struggling - the Robert Verriera in Mpumalanga. The planning of the project itself was problematic because IDT had taken over that project. But the actual scoping of the project kept on increasing. To renovate an existing hospital that was accepting outpatients while doing renovations took longer than expected and there was some escalation. It was also important to mention that there were issues there with which the IDT was unhappy such as dismissing the Regional General Manager (RGM). The IDT thought that by dismissing the RGM it would have resolved the problem but now it had discovered that there were other officials involved in that process and the IDT had dismissed two more officials and the cases were with the Special Investigating Unit (SIU).

In Limpopo the IDT had a problem with few clinics where it had deployed Cuban professionals. Once more there were issues of performance but the IDT had cleared the entire backlog, and she could confidently say that there was no health facility that the IDT had not finished.

The CEO said that there were some schools in the Eastern Cape that had challenges and those were challenges of payments. The national Department of Basic Education took over the administration of Eastern Cape and had now cleared the whole backlog. It was not that those projects were incomplete but because of the payments problem contractors walked off site which meant that when they came back they had to re-establish sites; sometimes the IDT had to appoint new contractors, and sometimes it had to restart everything. Therefore, it took longer when those projects were idle. The Minister had lifted the administration of the Eastern Cape education department because that whole backlog had been completed which included some of the schools the IDT was alleged not to have completed.

The CEO said that there was a misunderstanding with the R20 bn portfolio. If anything was to happen to IDT as to sustainability it would mean that R20bn worth of projects would not be implemented. Those projects were multi-year projects not one-year projects. The IDT had already started to negotiate its turnovers to say to clients that they should sign three-year contracts. Therefore, the R20bn was this year looking at R7bn in terms of expenditure and the R20bn was what the IDT had signed for with the Department over three years.

Ms Edith Vries, Executive Director: IDT said that the breakdown of targets was explained in page 30 -31 of the presentation document. With regard to the human resources the IDT had put only the high-level structure organogram but did not put the whole IDT organogram. There was a reference to staff on page 23 of the document where the IDT had indicated that its staff establishment was 440 and that was the number for the planned occupancy rate. But because of the financial constraints and the proportions that the CFO presented in the financial and business plan the IDT did not think that it would be able to meet that target. It would only be able to afford 410 at least.

The Chairperson thanked the Chairperson of the IDT and his delegation for the presentation and the engagement. The Committee was looking forward to their next engagement on 07 May 2013.

The meeting was adjourned.