The Committee continued with the second day of public hearings on the Infrastructure Development Amendment Bill, hearing submissions from eight entities. Committee Members were appreciative of suggestions, but called upon several presenters to make further written recommendations on possible amendments to clauses, as well responding to outstanding questions in writing.
Transnet expressed broad support for the Bill and its intentions, noting that it was already participating in several infrastructure projects that incorporated aspects similar to what the Bill was proposing. It was concerned that not enough focus was placed in the Bill on infrastructure plan management and institutional responsibility, suggesting that this should be a function of the Secretariat. It was concerned about the apparent duplication and contradiction on the roles of the Chairperson and Secretariat, as outlined in clauses 7(b) and 10(b). It suggested that more clarity was needed on how Strategic Infrastructure Projects (SIPs) would be identified and procured, emphasised that interested parties should be allowed to make proposals, and sought clarity also on the role of the Presidential Infrastructure Coordinating Commission (PICC) in identifying strategic partners, and its role in expropriation of land. Similar to commentators on the previous day, Transnet was concerned with timelines in the Schedules and suggested that “expeditious” rather than “simultaneous” applications for approval of licences were desirable, although it would support a single engagement process. Members asked for more comment on what timelines it would regard as realistic, questioned the intention behind some proposals, questioned what balance was needed to ensure consideration of the private sector interests and suggested that some of the proposals should be incorporated into regulations rather than the Bill. The Department of Economic Development (EDD) was asked to give clarity on roles and reporting lines of the SIP Coordinator, Secretariat and Chairperson of the Steering Committee.
The Congress of South African Trade Unions hoped that the Bill, which it supported, would indeed assist government to unblock projects and achieve the aims of a developmental state. It would like to see labour-intensive projects that supported industrialisation, and suggested that ideally fewer projects should be outsourced to the private sector. It cautioned against the creation and of overly top-heavy structures. It suggested that “job opportunities”, particularly at local government, could not be made into permanent posts. The Bill should make explicit reference to sustainable development, as well as incorporate references to creation of decent work, and it was suggested that the wording on procurements could be tightened to emphasise compliance with the Public Finance Management Act, as well as inclusion of references to strategic and environmental assessments. COSATU suggested that organised labour could be included in steering committees. Like other presenters, it was concerned about possible conflicts with other legislation, and also suggested that sanctions not be limited in the Bill. The public consultation processes could be more clearly spelt out, as well as the broad principles underpinning infrastructure development. It was also not comfortable with the timeframes in Schedule 2, particularly on public participation, which it suggested could be extended. The lists in Schedule 1 could also be refined to ensure that they were not exclusionary. Members questioned if COSATU was still pursuing its concerns on the Nedlac process, asked for clarity on some of the concepts, as well as the desirability of extending timeframes, and asked for further comment on localisation concerns and creation of permanent jobs.
Telkom affirmed its commitment to transformation and ongoing investment in network infrastructure, supported the Bill, but wanted to make some specific recommendations that the Bill take into account the special and competitive environment in which Telkom operated, with both private and state investors. The Bill should specify the need for effective management processes and non-duplication. It felt that the Bill should apply only to projects funded by the state, but pleaded that more onerous requirements should not apply to state owed enterprises (SOEs) than to the private sector. It recommended robust and transparent mechanisms to resolve conflicts with local government over rights of way and easements, better coordination of spending on telecoms infrastructure, and better monitoring of and elimination of impediments to projects. The Bill should also set out clearly the need for coordination across spheres of government. Members asked if Telkom might be retrenching staff, emphasised the links between job creation and infrastructure development, and asked if it had considered models in other countries. Clarity was requested on the suggestions for SOEs and the public-funded projects. The Chairperson emphasised, both in relation to this and other submissions, that the Bill was not aiming to disregard or override other legislation, but to support it in an extra-ordinary manner.
Ground Work, an environmental justice action group, outlined how it assisting marginalised groups, such as waste-pickers and those affected strongly by environmental challenges. It too felt that the Bill should be explicit in emphasising the need for sustainable development, otherwise it could be seen as failing to address section 24 of the Constitution. Some examples were cited of the unintended consequences of industrialisation without due consideration of the harmful effects, and it was suggested that many of the ongoing problems at Medupi and Kusile power stations could have been avoided had there been better consultative processes. Ground Work suggested that the Schedules to the Bill were confusing and contradictory, particularly in relation to the determinants and timeframes, and cited conflicts with other legislation that must be addressed. It pleaded for active consideration of the needs of the most marginalised groups before applying legislation that would determine development by a top-down approach. Members asked for clarity whether Ground Work believed that the Bill was necessary and could achieve what was intended, for further comment on fair consultation and possible alternative suggestions on timeframes, and the presenter was asked to come up with some specific written proposals for amendments.
South African Women in Construction broadly supported the Bill, particularly the aim to boost infrastructure development, and the Steering Committees. However it noted its concern that women were still marginalised, particularly in the construction industry, with only very few having become empowered. Most projects in recent years had been large undertakings outside the reach of SAWIC members. The entity thus suggested, firstly, the breakdown of large SIP projects into smaller components that could be accessed by its members, and secondly that the Bill should specify that 30% of all SIP budgets be allocated to designated groups of women and youth. Assets and natural resources should also be owned by South Africa after the SIPs. It called for inclusion of the private sector in stakeholder groups, and specific demographic requirements. Concerns were expressed about the deleterious unintended consequences of some past policies, which should be avoided in this Bill. Members asked if further empowerment policies and laws were needed, pointed out that the existing policies applied to SIPs also, and felt that several of the issues would most likely be clarified in regulations.
Mr David Livaart, a private engineering professional, suggested that the Bill should deal, in terms, with principles of lifecycle management and continued use of infrastructure, and outlined some core features of sustainability, reliability and cost effectiveness in relation to infrastructure projects. He recommended that operation by future generations should be costed, and that the “triple bottom line” of financial, delivery and environmental and cultural aspects must be taken into consideration. The need to undertake lifecyle analyses should be specified in the Bill. Members were not in agreement with him that this should necessarily be included in the Bill, although they felt that he had useful suggestions to make to the technical teams. He was invited to revise his submission and make more specific suggestions if he wished.
Rand Water noted that it was already engaged in infrastructure projects, either as implementing agent or in partnership with municipalities, and broadly supported the objectives of the Bill. Clause 7 seemed to cover many projects already ongoing by Rand Water, but it questioned whether they would be considered as SIPs, and said more clarity was needed whether the Bill applied to organs of state, and ongoing SOE projects in particular. Conflict was noted between clause 8(2) of the Bill and section 80 of the Municipal Systems Act, and clarity was needed as to which would prevail. Rand Water was concerned that clause 8(4) seemed to give undue precedence to SIPs, perhaps at the expense of other part-completed projects, and suggested that every entity must be fully apprised of ongoing or planned infrastructure development by others. Rand Water called for reintroduction of clause 9 of the draft Bill. Instead of the multi-disciplinary committee, it suggested that a standing committee be appointed to resolve any bottlenecks that any SIPs might encounter. Members called for clarity on the suggestion that Rand Water be represented on the PICC, and were concerned that Rand Water may not fully appreciate that the Bill was not attempting to override municipal roles and functions.
The South African Institution of Civil Engineering (SAICE) supported the objectives of the Bill. Suggestions included in the written submission, from individual engineers, would be correlated and further submissions and proposals would be made as to possible amendments to the Bill. SAICE outlined research undertaken in the areas of professional demographics, the nature of construction spend in South Africa and success rates for projects. These clearly identified the need to build appropriate skills, and SAICE recommended that the Bill should specifically require skill-building to be an integral requirement in every SIP project. It wanted more clarity on the roles of stakeholders, and noted that SAICE members were trying to improve their cooperation with and assistance to government. Members noted the importance of this profession in infrastructure development, urged it to propose specific changes, asked whether training and counter-cyclic project management principles could be incorporated into the Bill, and emphasised the need for greater concentration on rural development.
A representative of the Bizana Development Forum started to outline this Forum’s concerns about eco-tourism opportunities and infrastructure challenges in its area. The Chairperson, however, ruled that whilst the Committee was sympathetic to the requests, this was not an appropriate forum, since there was no direct reference to the Bill. She made suggestions as to a more appropriate forum to approach, and the EDD was also asked to assist in identifying relevant platforms.
Chairperson's opening remarks
The Chairperson summarised that the functions of Parliament included the passing of laws, in which public participation would be fundamental. This Committee thought it prudent to conduct public hearings around the Infrastructure Development Bill, in order to obtain as much external input as possible, and to ensure that Parliament passed a high-quality law that would be most effective. All substantive issues coming out of the hearings would be considered by the Committee when it engaged with the Department of Economic Development (EDD) and in its report to Parliament. She noted that this Bill was tagged as a section 76 bill, although it was originally introduced as a proposed section 75 bill.
She outlined that the process today, assuring all presenters that their written submissions had been thoroughly studied and their input today would be appreciated. She urged presenters to use their time to present effectively and particularly to propose recommendations and solutions, rather than merely a broad critique. The Bill was vital to all in the country.
Infrastructure Development Bill Day 2 public hearings
Mr Irvindra Naidoo, General Manager: Corporate Strategy, Transnet, noted that Transnet was fully supportive of the Bill and its intention and some of the mechanisms aimed at facilitating infrastructure rollout. Transnet was already participating in a number of existing Strategic Infrastructure Projects (SIPs) and had experience and understanding of the coordination challenges. He noted that its work in the corridors were aimed to accelerate programmes. It had a steering committee and a government structure led by the Minister of Public Enterprises, supported by the Minister of Transport. Over 20 different departments and entities required to be coordinated and aligned as part of the process.
The first key concern with the Bill related to the management of the infrastructure plan. It was an important part of the Bill and whilst he understood that the Presidential Infrastructure Coordinating Commission (PICC) was responsible for amendments, there was little in the Bill speaking to institutional responsibility around the plan. Transnet suggested that this was a role that the Secretariat could take on. Several aspects of the plan appeared to have no “institutional home” at present.
The second concern related to the roles and responsibilities of the Chairperson and the Secretariat, and the apparent contradiction, in the Bill, between clauses 7(b) and 10(b), where both were given responsibility for coordination. There was potential for confusion around governance and reporting lines. Transnet recommended that some responsibilities currently with the Secretariat could move to the Chairperson.
The third concern related to the SIP identification and procurement processes. The Bill did not clearly articulate how SIPs would be identified, nor the processes required to have a SIP registered. Communication of the plans was very important, to allow interested parties to register their interest and make proposals. In relation to procurement, Transnet wanted clarity on the role of the PICC in identifying strategic partners.
He then expanded on the concerns about the identification and procurement processes, citing clause 4(f) and 4(i) and clause 8. Transnet was not sure whether the decision of the PICC related to the procurement strategy, or an identification of specific entities with whom to contract. Clause 4(i) could be interpreted to mean that every proposal for infrastructure development and maintenance must be tabled to the PICC. It suggested that this could be clarified by adding the phrase “that may qualify for designation”. Clarity was needed on the meaning of “capacity” when determining whether an organ of state could implement a project. There were major differences between financial and technical capacity, and he believed that there should be consultation, particularly if the proposals for a SIP originated from an organ of state.
The Chairperson asked whom Mr Naidoo meant by “an organ of state”.
Mr Naidoo clarified that he was mainly referring to State Owned Enterprises (SOEs).
Mr Naidoo then briefly commented on concerns around expropriation to the land, and timelines. The role of the PICC was unclear. It seemed that the PICC could not expropriate land on behalf of a public entity. In relation to timelines, it was proposed that the word“simultaneous” be changed to “expeditiously”. Transnet was worried about the potential for delay. He noted that the Bill was intended to allow for rationalisation and consolidation of approvals, in cases where more than one licence may be required. Transnet suggested a single engagement process that would cover all aspects.
His final comment was that the regulations must be aligned. The timelines in Schedule 2 appeared unrealistic.
Mr F Beukman (ANC) asked what Transnet would suggest would be realistic timelines.
Mr S Mohai (ANC) was pleased to hear of areas on which further technical engagement was needed. He asked if the Bill was likely to facilitate stronger relationships between SOEs, particularly where bulk infrastructure was being put in place. The impression had sometimes been created of competition between them, which was not particularly useful.
Mr S Motau (DA) questioned how strongly Transnet felt about considerations being added into the Bill and questioned whether the suggested use of “may” was correct.
Ms M Mohorosi (ANC) noted the comment that more clarity was needed on reporting lines, and identification of SIP projects. She wondered if more objectives and instruments for evaluating projects were being suggested, for in her view this would be diluting the aims and objectives as they currently stood, which were to empower the State and implement priority projects.
Mr N Kwankwa (UDM) said that on the previous day, the private sector bodies expressed concerns around capacity to implement, and he asked what balance might be sought to ensure private sector interests were also considered.
Mr X Mabasa (ANC) suggested that Transnet was ideally placed to appreciate the value of the Bill. He asked what challenges it had met that would be addressed by the Bill, and what it still required to be addressed, through revisions to the Bill.
Mr Mabasa asked for further explanation on procurement concerns.
Mr Z Ntuli (ANC) believed that if too much was added to the Bill, particularly in relation to the technical aspects, it might cause problems, and he suggested that perhaps the Bill should merely make reference to other technical aspects that would be covered in regulations.
The Chairperson thought Transnet's concerns perhaps related more to what was happening now than what the Bill proposed as the way forward, and she questioned if Transnet thus fully understood what the Bill was trying to achieve. She thus asked if Transnet saw the Bill as trying to foster synergy and cooperation between the private and public sector, including the SOEs. She reminded the meeting that this Bill was essentially an intervention by the State into its own operations, to address areas where infrastructure development was taking too long. However, she was not sure that the SOEs fully understood those aspects.
The Chairperson asked what recommendations Transnet would make on procurement processes. The Bill stated that before something went to tender, the State must assess the capacity of its entities. Transnet had suggested that this might cause confusion but she felt it was clear and asked for more specific recommendations on this point.
Mr Naidoo responded that Transnet had been participating in the SIP processes actively for around eighteen months and it saw that process operating as if the Bill were already in place, because there were attempts to bring stakeholders together and promote integrated planning. The experiences under SIP 2 had seen South African National Roads Agency Limited (SANRAL), Eskom and Transnet participating in the Steering Committee, and Memorandums of Understanding were in place. By formalising similar arrangements, the Bill would help to bridge the gaps. Transnet agreed that there was a need to bring parties together under some legitimate authority, so it was not suggesting that the current status quo remain, but fully supported the Bill. However, there was a need to understand whether the reporting lines were to the SIP coordinator (Minister) or Secretariat.
The Chairperson asked who the SIP coordinator would be.
Mr Naidoo said that Transnet understood this as a SOE or coordinating department.
The Chairperson then pointed out that in fact it must be the Minister, not the company, who had the authority.
Mr Naidoo thought that the SIP coordinator was the technical support to the SIP Chairperson. The Chairperson would generally be the Minister.
The Chairperson did not think that there would then be any confusion.
Mr Naidoo said that the confusion related to the roles and reporting lines to the Chairperson or the Secretariat. He reiterated the apparent contradiction between clauses 7(4)(b) and 10(b). Clause 7 referred to the Chairperson coordinating implementation, but clause 10 said that the Secretariat must coordinate implementation of the project. In addition, the Secretariat must appoint the Steering Committee. Transnet thought that the SIP Chairperson should establish and ensure effective functioning of the Steering Committee, and the Secretariat should monitor and impose standards.
The Chairperson said that she would depart from the normal procedure, and call upon the Department of Economic Development (EDD) to clarify this aspect.
Ms Jenny Schreiner, Director General, EDD, explained that there was a distinction between the public entity reporting to its Minister, and reporting to the SIP Chairperson, who had political responsibility to oversee the whole process. She thought that a reading of clauses 7(4)(b) and (c) together would clarify the issues. The SIP Chairperson, as a Ministerial appointment, had the responsibility to ensure that implementation of a particular SIP took place, but there was also a relationship between a particular SIP and the PICC overall.
The Chairperson asked to whom the identified public entities would report.
Ms Schreiner said that the SIP coordinator reported to, and was accountable to the SIP Chairperson, but s/he had to provide information to the PICC Secretariat, for it was in that forum that processes were set up to ensure coordination of all SIPs. The process of information sharing could be two-pronged.
The Chairperson noted that both reported to the Secretariat. She asked if Transnet thought it necessary to craft this differently.
Ms Indira Reddy, General Manager, Compliance, Telkom, said this could possibly be drafted differently. Perhaps a distinction could be drawn between reporting and providing information, and simply reporting.
The Chairperson asked her to craft a formal recommendation.
Mr Naidoo did not want to belabour the point, but said there were some functions accorded to the Secretariat under clause 10, such as appointment of members with the necessary skills, and driving and directing the work of the Steering Committee, which he believed should be done on behalf of the SIP chairperson, not independently. The Secretariat should therefore be seen as providing support to the SIP Chairperson.
The Chairperson asked again that specific drafting proposals be submitted to help with refining this point.
Mr Naidoo said, in relation to comment on infrastructure and maintenance, that he agreed with Mr Motau that perhaps the wording proposed should be changed and this too would be done and submitted to the Committee.
He clarified the issue of consultation, and said that there were multiple applications for a particular project. Transnet hoped this might be collapsed into one process serving multiple purposes, and believed this would be possible if all stakeholders were brought to the table in a single process. At present, this was an aspect that caused delays.
In answer to the question how the private sector would be catered for, Mr Naidoo confirmed that this was a problematic area. However, if there was a proper framework for the plans in place, the private sector could bring proposals to government that may be of assistance in implementing the plan. It was important to understand who would be the custodian of the plan, how proposals from the private sector would be evaluated, and whether the state needed to procure someone to deliver, in which case there should be consultations with the SOEs, because there might be an impact on their operations.
The Chairperson noted that there was no further time, and asked that any questions remaining be answered in writing. She asked that Transnet should also consider the role of National Treasury, particularly in the public and private partnerships.
Congress of SA Trade Unions (COSATU) submission
Mr Matthew Parks, Deputy Parliamentary Coordinator, COSATU, said that COSATU strongly supported this Bill, and hoped it would help government to unblock challenges impeding infrastructure development in the country. Over the last year, about R80 billion had not been spent because of blockages and it hoped this Bill would kick-start the process. COSATU strongly believed in the developmental state. It had participated in National Development and Labour Council, but would have liked more in-depth engagement, because not all debates could be held at Nedlac.
COSATU noted that in South Africa, both infrastructure development and employment were needed. Infrastructure projects should be labour-intensive, and aimed at supporting industrialisation of the country, a view shared by the EDD and Department of Trade and Industry (dti). It would like to move away from outsourcing projects to the private sector.
COSATU welcomed the inclusion of political leadership and inter-governmental coordination. However, there was the risk of creating too top-heavy structures and that would need to be managed over the longer term. In relation to the functions of the PICC, COSATU welcomed the impact that this would have on job creation. Based on past experiences, COSATU was, however, concerned that some public works programmes had been seen as cheap labour for municipalities, rather than having sufficient focus on creating permanent and more secure jobs. COSATU shared concerns about not being bound to too many technical issues, but felt that the problems around water infrastructure must be addressed. It believed that sustainable development should be specifically included, as not all departments were on the same page on developmental issues.
COSATU agreed with the expropriation of land by the PICC.
COSATU supported the provisions around requirements for SIPs, but suggested that wording should be included in the Bill about creation of decent jobs. All government projects should aim to address unemployment as far as possible. COSATU also felt that the wording on tender and procurements could be tightened to ensure that there was a close correlation with the Public Finance Management Act (PFMA) since tenders were a massive problem to be managed. In relation to appointment of Steering Committees, it noted the inclusion of the Construction Industry Development Board but thought that it might also be useful to include organised labour in the steering committees. Eskom’s Medupi project had been beset with labour delays and so it would help to ease blockages were organised labour to be included at some level. COSATU felt that the clauses around the disqualification of members from Steering Committee were well drafted and recommended that perhaps consideration be given to including this wording elsewhere in other legislation.
The limitation of sanctions up to five years might be contradictory to other legislation, and COSATU also recommended that no limits be placed on this clause.
Commenting on Schedule 2, COSATU felt that the public consultation processes should be more clearly spelt out. It was not desirable, for instance, to claim that this was done merely because something had been published in the Government Gazette and Mr Parks suggested that perhaps local newspaper and radio stations be used to inform the public, and clear and plain language should be used. COSATU was not entirely comfortable with the time frames for public participation and believed that they could be expanded, perhaps to 45 and 60 days, without interfering with attempts to fast-track processes.
Mr Parks noted that it was good that there was reference to the National Environmental Management Act (NEMA) but said it might also be useful to include references to strategic and environmental assessments. It may be useful to repeat some of the comments, such as commitments to entrenching decent work, and public participation, also in the regulations.
COSATU was largely happy with the wording of Schedule 1 but perhaps additional terms could be included, to ensure that the lists were not seen as exhaustive and exclusionary if further functions were added later. Overall, however, Mr Parks reaffirmed approval of the Bill.
Mr Motau noted that two documents had been submitted in relation to the Nedlac process by COSATU and he asked if the latest document implied that COSATU was now happy with that process and wanted to withdraw its original objections on that point.
Mr Mabasa quipped that strange things happened during election time.
Mr Mabasa asked for clarity on the comment that capital works should no longer to be dominated by the elite, on page 3. He also wanted comment on the statement that public infrastructure should be designed to serve the needs of the poor, not the wealthy.
Mr Mabasa pointed out that the aim of the Bill was to speed up delivery, because one of the historic weaknesses was that whilst the principles might be good, it was unfortunately the case that often implementation was ineffective. Consultation was part of the communication process, and he wondered if it would be of use to lengthen that period, instead of trying to keep to very strict time frames in the interest of speedy delivery.
Mr Mohai agreed that the Bill emphasised delivery of infrastructure, which should be sustained, but that should also not undermine other principles of economic activity. He suggested that it should not be seen as replacing existing legislation but sought rather to accelerate delivery of infrastructure, which was an important pillar for economic growth and development in the country.
Ms Mohorosi agreed with COSATU's statements on the positive aspects of the Bill, set out in the written submission. However, she noted the comment that legal and administrative amendments were needed, and said that there may be places where the phrasing may need to be refined. The ANC’s election manifesto said that this party would remain true to values of the past, and she assured COSATU that infrastructure would indeed be rolled out.
Mr Kwankwa noted that there had been emphasis on localisation of projects, in the written submission. However, whilst this was important, he pointed out that capacity constraints could result from attempts to coordinate matters from the top down.
Mr Ntuli commented, in relation to the work opportunities, that an infrastructure programme was not, by its very nature, permanent, and he asked what suggestions COSATU was making in regard to permanent work. Once a project had been completed, further work on that could not be arranged.
The Chairperson also wanted to follow up on the question of decent jobs, especially at local authority level. There were many jobs of a very temporary nature, which were sorely needed. She did not believe that references to the types of jobs could be put in the Bill itself, but it might be possible to insert something in regulations. She noted the concerns around procurement but said that she thought clause 8(2) was quite clear, but asked if COSATU had any other recommendations for changes of wording.
Mr Parks said it was correct that there were originally unhappiness around consultation processes, but this had followed a slightly different process from the normal. Today's submission should be seen as replacing the original comment. He clarified that overall, COSATU was hoping that the Bill would capacitate a developmental state. In the past, a few large companies had been able to “rob the country” of large amounts. Infrastructure should be geared to the poor and most disadvantaged and he cited the example that several new bus routes had been unveiled in the cities, whereas there was still massive shortage of buses in the poorer areas. He did not agree that the public consultation processes should not be shortened too much, for this Bill was aimed at assisting poorer and more isolated communities. He suggested that it was possible to regard localisation and creation of decent jobs as going hand in hand; COSATU may support a factory that was more labour intensive rather than spending on machinery, for the wider benefits were greater. There would always be constraints, but it was necessary to try to go the extra mile to try to use local capacity. He stressed that whilst policies were good, implementation still needed to be addressed. He accepted that it was not always possible to make work opportunities permanent, but pointed out the Department of Public Works was supposed to be a driving force. At Nedlac, the Employment Conditions Commission sat to try to determine criteria for types of work, and conditions, but the concerns were that there were many jobs, such as road maintenance and cleaning jobs, which could in fact be made permanent jobs with benefits rather than mere work opportunities. He would look again at the wording of clause 8, but felt quite strongly about links to the PFMA being included.
The Chairperson said that COSATU may send through further written comments.
Black Business Council
The Chairperson noted that the Black Business Council in the built environment had tendered an apology as the presenter was engaged in an emergency meeting and could not attend.
Mr Sipho Maseko, Group Chief Executive Officer, Telkom, noted that this Bill aimed to improve coordination of all infrastructure in South Africa. He noted that Telkom was committed to transformation and looked forward to partnering government in this objective. He outlined some of the indicators of Telkom’s present efforts to build the South African economy. It was committed to ongoing investment in network infrastructure, having invested about R5 billion annually in capital infrastructure over the past decade. It was the single biggest employer in telecoms, had national reach and connectivity and had full network capability, linking within and outside South Africa. It had three major satellite service stations and transmitted data at high speeds. It was also the lifeblood of the banking sector.
Telkom noted that the Bill set out an overarching regulatory framework for investment in key sectors, including telecommunications. Telkom's specific interests in regard to the Bill related to SOE activities. Unlike the sectors of roads, water and electricity, Telkom’s communications environment was highly regulated, and it faced stiff competition in terms of cost-recovery and use of services. The Bill needed to take this into account and complement the sector, rather than being in divergence from it. Communication companies must be responsive to rapidly evolving technology, coverage and customer demand. Shareholders demanded returns before technology became obsolescent. Any telecommunications investment must take into account that in this sector there were also private sector investors and players who expected a reasonable return. There was quite a lot of duplicated investment in telecoms, with Telkom, municipalities and cell phone companies all deploying fibre, so there could be more coordination.
Telkom had a number of specific recommendations on the Bill, which were summarised as follows:
- The Bill should specify the requirement for effective management processes to ensure that SIP 15 projects did not duplicate private sector investment.
- It should not create more onerous requirements for SOEs than for private sector firms.
- The proposals in the Bill should apply only to projects funded by the State.
- SIP committees should have robust, transparent mechanisms to resolve conflicts between local government and private sectors, for instance rights of way and statutory easements.
- Better coordination was needed for public sector spending on telecoms infrastructure, and the onus should be put on public agencies to demonstrate that proposed projects did not duplicate other investments, and that they would result in best use of the public purse
- Impediments to rapid deployment of private and public sector projects should be eliminated.
- The principles of the Bill must promote streamlined and timeous decision making to resolve conflict and expedite projects.
Telkom felt that the Bill should be more specific about harmonisation and coordination across the spheres of government in implementing infrastructure projects. Several SOEs may be required to cooperate. Interpretation issues may need to be resolved speedily, on issues such as rights of way. Compliance with regulation must be incorporated in the SIP Charter, to prevent different conditions by unregistered players.
Mr Maseko summarised that Telkom was also recommending that the Bill should make it clear that SIP referred to state funded projects only. It should prioritise the activation of SOEs in implementing SIPs. It should strengthen the commitment to improving the complementarities of public sector investment and reduce duplication. Greater coordination of state expenditure and planning would require attention to public financing, the public private mix and the design of interventions.
Mr Mabasa wondered if Telkom was fully committed to and understood the correlation between job creation and infrastructure. He had heard that Telkom was intending to retrench a number of employees. He wondered whether it was possible to build anything into this Bill to resolve problems such as cable theft, or other identified problems in the sector. He hoped that Telkom would support the Bill.
Mr Beukman called for comment on Schedule 2 on the Bill, specifically asking for Telkom’s view whether the time lines set out there should be further refined.
Mr Motau noted the request for clarity as to what would be regarded as a SIP. This point had been made also by others from the private sector, on the previous day, and he understood their concern that they may be required to account to government bureaucracy. He asked why Telkom held this view.
Mr Ntuli also said that there was a clause saying that projects could be put out on tender when the state did not have the capacity to run the project. He asked for clarity on the point.
Mr Mohai said the SOEs were created to maximise expertise and responsiveness and the level of expertise within Telkom made it a competitor in the field. He asked for more comment on the statement that the Bill should not create more onerous conditions for SOEs. The Bill emphasised coordination and mobilisation of all players in a far more disciplined way. Given its competitive operating environment, he asked whether Telkom thought that other models in other countries might be adapted.
Mr A van der Westhuizen (DA) referred to paragraph 26 of the written submission, and noted that Telkom was suggesting that this might create further delays.
The Chairperson stressed that the Bill did not disregard other legislation, but actually supported it. She noted Telkom’s view that private sector infrastructure should not be covered under state-funded projects. Arguments had been advanced previously on this point. However, she wanted to know, if the state was to cover all projects, what the main challenges would be, and how the State should deal with those projects. The Bill was intended to deal with the current bureaucratic challenges, and foster support and cooperation, which was a need also emphasised by Telkom. She asked if Telkom felt that there were some matters presently not specifically indicated or emphasised but which should be included. She noted recommendations made on clause 8.
Mr Maseko commented on Mr Mabasa’s remarks about the role of infrastructure investment in the creation of jobs, linked to comment on Telkom retrenchments. He said that Telkom was 130 years old, and for 110 years it had been the sole provider of communications services. It had had to comply with certain obligations that were not imposed on the new market players such as mobile companies, and make payments to them to assist them to build their infrastructure. The consequence was that Telkom’s subsidisation allowed these new players to invest in new technology, whilst Telkom was stuck with old technology but still expected to compete. Telkom had thus found itself unable to afford its own survival, given declining revenues and use of services. It was thus trying to deal with its own inefficiencies and regain competitiveness. Telkom was indeed discussing possible job losses, but this was not final, and it was also looking at other models.
The Chairperson noted that there was not sufficient time to address all questions and asked Mr Maseko to summarise other answers briefly and then send through written responses.
Mr Maseko confirmed that there were substantial skills and expertise in Telkom and it needed to find a way in which the 40% government shareholding and 60% private investments could be satisfied. Telkom wanted to play a role in evolution of infrastructure, which could be achieved with good coordination. Government investment would be made in broadband, which government would own, but it would be ideal if Telkom were to manage the network. It had a role to play in digital transformation and facilitating investment in innovation around infrastructure.
Ground Work submission
Mr Rico Euripidou, Representative, Ground Work, explained that this organisation was an environmental justice action group. Environmental justice was about working with communities who did not have as strong a voice in society as others. In the environmental sector, this might, for instance, include the waste pickers who operated in order to earn a livelihood for their families. Ground Work had helped to establish the Waste Pickers Association to allow them to negotiate with municipalities and become more integrated into waste management policies and practices and have a right to work. It also assisted those who, for instance, lived under transmission lines but had no access to electricity.
Environmental justice was often viewed negatively, in the sense that it attempted to deal with the negative consequences and suffering of those who were exposed to chemicals, burning of coal, the unintended consequences of acid mine drainage, but on the positive side it was attempting to establish more equitable relationships and ensure that everyone had equal lobbying opportunities. Many people were not heard when decisions were taken on what development was needed in the context of economic growth. The question was who would ultimately benefit from infrastructure development. In principle, Ground Work supported streamlining and integrated processes of decision making and authorisations, but it did believe that these should be underpinned by sustainable development. It was concerned that the principles of sustainable development were not expressly stated in the Bill. Section 24 of the Constitution was not being adequately addressed by this Bill.
Mr Euripidou tabled pictures of Sasolburg, which was conceived as a town to achieve industrial needs, but which ended up with toxic waste, oil sludge, and 40% of residents suffered respiratory disease. Air quality standards were breached every day, but without significant consequences, and Sasol and Eskom were applying for exemptions from air quality standards. He stressed that section 24 of the Constitution referred to securing ecologically sustainable development while promoting justifiable economic and social development, but there were differing interpretations of “while”. Ground Work believed that the Bill did not comply with these principles, and that the ordinary meaning of “while” should be applied, so that any policies should not be justifiable without reference to environmental considerations, which should be fundamental to the planning of all projects. The Bill seemed to regard environmental planning as an impediment to the rollout of projects. He noted that the delays in Eskom’s projects were not in fact due to pre-phase environmental and decision making phase, but were a result of post-assessment factors. If there had been better consultation, there would not be the current problems in compliance with air pollution standards at Medupi and Kusile, as well as a realisation only at a late stage that there was insufficient water.
Ground Work believed that the schedules were confusing and open to abuse and had made submissions on them in its written submission. It believed that more clarity was needed on the determinants in Schedule 1. Schedule 2 was problematic in that timeframes were not well defined and were in conflict with the environmental legislation. He tabled examples that small-scale farmers may be affected by ports, mining activities, and pollution. The needs of the people needed to be debated before putting in place legislation dictating, top-down, what development should look like.
Mr Motau said that the issue of sustainable development had also been raised on the previous day. He asked how Ground Work believed that the Bill could remedy these problems.
Mr Beukman asked for more specific comments on the Bill. There was provision in clause 12 that the Steering Committee may also include representatives from environmental and water departments, so there was a vehicle to assist with that. He asked where Ground Work would propose that they could be used.
Mr Mabasa noted the comment that marginalised people, such as recyclers, would need to be considered. He wondered how the Bill could assist them in formalising their activities into job-creation opportunities.
The Chairperson asked what Ground Work would regard as fair consultation in regard to Environmental Impact Assessments (EIAs), and how it would view the EIA’s role in broad planning of projects and SIPs, under the NEMA and related legislation, which did specify timeframes. She asked if there were alternative proposals on reasonable timeframes.
Mr Euripidou responded, to Mr Mabasa, that marginalised people should be recognised within the context of the places where they lived. For instance, in towns where service delivery for waste collection was poor, consideration should be given to how these people could be integrated into waste-management plans of municipalities and be given jobs, and how they might assist with separation of waste and beneficiation. Once the challenges were correctly identified as being waste, service delivery and the need for jobs, a unified solution could be found. Sustainable development principles were well formulated. However, the SIP approach was top-down, and might, for instance, envisage the building of a huge waste incinerator, instead of using people skills, which was completely opposite to the sustainable societal-needs approach.
In regard to fair consultation, he noted that the current regulatory environment had been established over years, and this referred to making the right choices, looking at alternatives, considering the desirability of projects, and NEMA and the Constitution should not be disregarded. He conceded that rollout to date had not been perfect, but there had been improvements and definition of fair consultation, and it made sense to build on this. In relation to clause 12, he noted that Ground Work believed that people should be part of the decision-making process, not constrained by already being within the system that had to make the decision. For instance, had the right bodies been consulted, it would have become apparent that there would not be adequate water for Medupi. This power station, once operating, would cause increased air pollution because of decisions already taken. He asked if this was an unintended consequence of development, or whether there had been a failure to consider the external costs of treating people with health problems. Ground Work was concerned that this Bill was seeking to circumnavigate what ideally needed to be done.
The Chairperson asked if he would recommend that the Bill could be amended to incorporate his suggestions, or if the existing legislation could be used to deal with the issues.
Mr Euripidou responded that the country needed to streamline. If the Bill could be aligned with NEMA and the Constitution, in a way that sought sustainable and justifiable economic development that would benefit the people, then he thought that it would be an improvement.
The Chairperson said that this Committee and government were already committed to pursuing the Bill. If Ground Work had strong feelings about the wording, it should put in some further suggestions. She reminded him that the Bill was concerned with SIPs, which were mostly very large projects. She understood the examples cited, which were also linked to world-wide environmental challenges, but also noted that South Africa was a signatory to international protocols and principles. The spirit of the Bill was to ensure compliance, but not everything could be included in this Bill. She asked that a further written submission be made within the next seven days, setting out very clearly how the Bill could be amended to cater for the specific concerns raised.
South African Women in Construction (SAWIC) submission
Ms Vuyiswa Ndzakana-Mabutyana, Exco member, South African Women in Construction, noted that this organisation represented the interests of women entrepreneurs in the construction industry and had a footprint in all nine provinces. It contributed to economic growth of women in the construction industry, and aimed to mainstream women in the economy through their construction businesses. SAWIC was supportive of the Bill. It welcomed its aim to boost infrastructure development, public private partnerships, as well as the continued existence of the PICC, and the development of a Steering Committee comprising all stakeholders in implementation of each project. SAWIC was particularly interested in the Bill as it appeared to have political support and would have wide-reaching impact on government and business. However, it wanted to comment on some particular shortcomings in the Bill.
Ms Ndzakana-Mabutyana said that women were still marginalised, particularly in construction, and only a few had become empowered. SAWIC believed that existing empowerment policies and MOUs assigned must be strengthened. In relation to the promotion of public-private partnerships, SAWIC had some negative experiences and had noted some unintended consequences arising from certain policies.
SAWIC was concerned that the SIPs were in the main very large projects, which would be unreachable for most of its membership base, who tended to occupy the lowest grades of the Construction Industry Development Board (CIDB) database. SAWIC suggested that perhaps SOEs and PICC should look at whether the SIPs could not be broken down into sizeable and manageable sub-projects and look out for possibilities of contractor development programmes in the SIPs. It appealed that the Council and task teams prioritise capacity-building programmes, with 30% of the budget to be allocated for designated groups of women and youth. It also recommended that there should be an integrated uniform approach and policy across all spheres of government to ensure that assets and natural resources remain owned by South Africa after the SIPs.
In relation to the development of the Steering Committee comprising all stakeholders, SAWIC recommended that the Secretariat should involve the private sector in the stakeholders groups, and demographics should be taken into account. The multi-disciplinary committee and advisory capacity could also be boosted from the private sector and SAWIC was interested in getting representation on the PICC.
She concluded that SAWIC recognised the intentions behind policies already implemented, but was particularly concerned about unintended consequences, with one example being the Preferential Procurement Policy Framework Act (PPPFA). There was not enough attention paid to women emancipation through transformational infrastructure projects. If departments could provide waivers for international companies, it was suggested that surely then Treasury could do the same with SOEs, to assist in achieving and fast-tracking transformation.
Mr van der Westhuizen said that there were already empowerment policies and laws, and asked if SAWIC was suggesting that they were not achieving enough. He also made the point that the same empowerment policies must surely apply to the SIPs.
Mr Beukman suggested that the regulations could clarify many of the issues. Perhaps in clause 21(1)(b), women could be included as one of the categories.
Mr Ntuli added that perhaps SAWIC should make specific suggestions on the wording of revised or new clauses into the Bill.
The Chairperson agreed that regulations would no doubt incorporate many of the issues raised. She asked if this would be sufficient, or if past experiences of SAWIC suggested that there were other problems that hindered empowerment of women.
Ms Ndzakana-Mabutyana noted that there had recently been a review of the Broad Based Black Economic Empowerment policies, which had not sufficiently emphasised the role of black women. The PPPFA was particularly problematic. One SOE, Eskom, had originally had a waiver from National Treasury and had given quite substantial assistance to women and youth, but when the waiver came to an end, those groups found themselves disempowered again. Some of the members of SAWIC in the construction industry had been hit hard by the fact that most money was being spent on major projects that did not give any opportunities to emerging contractors. Although there were more women contractors in the sector, they were not in a position to engage with huge companies at the same level. There were fears that the same situation would apply to the SIPs as had applied with the building of the stadiums. She confirmed that SAWIC would specify where it would like to see other issues addressed in the Bill. In particular, she emphasised that 30% of budget should be allocated to the designated groups of women and youth. The Bill did not currently speak specifically to women.
The Chairperson agreed that the point was well made that transformation must include participation of women in all aspects, and MPs would ensure that women, youth and disability issues would be taken forward in all legislation. She thanked SAWIC for stressing that point.
David Livaart submission
Mr David Livaart, Civil Engineer, made a submission in his private capacity. He was concerned that the Bill did not specifically deal with issues around life cycle management and use of infrastructure, once it had been installed. All public infrastructure should aim to provide sustainable services for the public. Expanding on this point, he outlined that “sustainability” in terms of public infrastructure implied that the infrastructure must be reliable, cost effective, affordable and have commitments for future generations. Reliability would involve a look at good asset management processes, which would need to be trusted by others, and in this regard he explained what standards were currently applied, to create investor confidence. Institutional skills and processes were in place. Cost effectiveness could be achieved by standardising unit costs, rates and performance and benchmarking. When infrastructure management was first introduced, this would usually result in a rise in costs as gaps were found and addressed, but the unit costs would then drop as greater efficiencies were achieved.
Delivery of infrastructure was a long-term commitment, and it must envisage operation by future generations. He cautioned that there was a need to be careful about that commitment. Planning must be costed, but the life-cycle elements must also be costed in order to project the long-term cash flows. The legacy and liability for future generations should be considered. This would involve consideration of the triple bottom line of finances, delivery and environmental and cultural aspects of the projects.
When speaking of goals of delivery and development, it was necessary to define objectively each one of the goals for each of the specific projects. He suggested that a generic goal should be broken down, with specific indicators that would need to be monitored. He quoted the adage “what gets measured gets done”. He emphasised that the general processes would involve planning, acquisition, operation, maintenance, renewal and decommissioning. The lifecycle was a whole process.
The Chairperson interjected to ask that Mr Lievaart focus specifically on the Bill. Having ascertained that he was making this presentation in his private capacity, she asked if it was correct that he should be presenting slides bearing the logo of his employer.
Mr Lievaart said that he would like to see lifecycle processes being treated as a long-term aspect, and this should be specifically included in the Bill. The Bill may change, so he had no specific recommendations what wording could be included in certain clauses. It would be useful to look more carefully at the roles of the project committees, and perhaps stress in this Bill that they should take account of these processes. For this reason, the Bill could be worded to include certain concepts, which had been outlined in other legislation. For instance, it should speak to how the SIPs would add to infrastructure portfolios to achieve the nation's objectives. Life Cycle analysis should be used throughout the SIPs and perhaps a directive could be issued to the Secretariat to ensure that triple bottom line assessments were done in the short and long term. It was necessary also to be cognisant that whatever standards were set for infrastructure today might be copied in future, so it was necessary to maintain high standards. These were the four aspects that should, in principle, be included in the Bill, although he would leave it up to the Committee to decide where they could be incorporated. The roles of the CIDB, Department of Public Works and professional bodies should also be taken into account.
The Chairperson expressed the opinion that these comments would be useful for the technical teams, who might wish to take these principles into consideration.
Mr Motau asked if life cycle analyses were currently being applied in Mr Lievaart's current projects.
Mr Lievaart noted that normal project planning took place in other units but he actually implemented asset management processes improving delivery and life cycle, driving down costs and raising efficiency so he did use these principles.
Mr Ntuli noted that the object of the Bill was to try to fast-track blocked projects. Although there was merit in what Mr Lievaart had said it did not really assist the Committee in working on the Bill. He agreed that it would be useful for Mr Lievaart to try to arrange for a presentation to the technical committee.
Mr Lievaart still felt that the sentiments he had expressed should be included in the Bill, to avoid mere fast-tracking that did not take all these aspects and liabilities into account. Fast-tracking would require proper planning, and generally, the longer the planning phase, the less likelihood of costly mistakes.
The Chairperson asked if Mr Lievaart believed that enough emphasis was placed on planning. She pointed out that there had been delivery on 2010 plans. National Treasury and the other two spheres were implementing certain models at present, in high-impact infrastructure projects. She was not suggesting that what he had presented was not relevant, but wanted more detail on how it might be incorporated into the Bill. If Mr Lievaart was not able to do this, then she would think that what he had suggested were essentially management or operational principles and perhaps he should speak to National Treasury to try to include them into its implementation notes.
Mr Lievaart said that he had misunderstood the request for comment, but he would look at revising his submission. There was a need to continue improving on planning, since infrastructure management was really about continuous improvement.
Rand Water (RW) submission
Ms M Moalusi , Legal Manager: Operations, Rand Water, noted that Rand Water (RW) engaged in infrastructure, sometimes in partnership with municipalities, sometimes as an implementing agent. It believed that the Bill must be used as an enabler of service delivery and whatever organs were capable of performing the service should be used.
She outlined the architecture of RW, and how it supported the Minister in achievement of Outcome 6. This entity supplied water to 2 million people, and had been involved in infrastructure projects through building of pumping stations. It was already engaged in SIPs. It suggested that all organs of state engaged in infrastructure development that was geared to service delivery providing for the rights of citizens, as envisaged in the National Infrastructure Development Plan (NIDP) should be considered for inclusion on the PICC.
Moving to more specific comment on the Bill, Ms Moalusi noted that clause 7 set out the requirements for SIPs, which included that the activity should be listed in Schedule 1 (which included water infrastructure projects such as those currently being undertaken by RW), that the projects should be of significant economic or social importance, that they contribute to the National Strategy, be above a certain value and be included in the National Infrastructure Development Plan, and be designated. Whilst this seemingly would apply to RW, RW was not sure whether the projects that were currently being handled by organs of state would be incorporated or whether PICC would come up with different projects. RW asked that it should be clarified whether the Bill applied to organs of state.
Ms Moalusi outlined an apparent conflict between clause 8(2) of the Bill and section 80 of the Municipal Systems Act, each of which set out different considerations whether projects must go out on tender. Clarity was needed as to which section would prevail. RW suggested that another clause must be inserted in the Bill to note that clause 8(2) take precedence in the event of conflict.
Clause 8(4) gave preference to SIPS, in that it stated that state organs must plan their projects to ensure that they were not in conflict with SIPs. Some projects undertaken by RW fell within the parameters for economic value, and were of social significance. However, clause 8(4) seemingly could result in the state giving precedence to SIPs but failing to fast-track other projects, which had already been the subject of extensive planning. She suggested that the Steering Committee and representatives of state organs must be fully acquainted with each other's projects to ensure that they were not conflicting.
RW questioned why the clause 9 of the draft Bill had been removed from the current version of the Bill, felt the clause was relevant and should be reinserted, as it enabled a person to apply to have a project declared as a SIP. The state organ should be allowed to proceed with the process and report to its executive authority.
Clause 11(2) related to appointment and composition of the multi-disciplinary committee. However, RW was concerned that it would be established only when a SIP was designated. There could be substantial delays, such as removal of encroachments. RW suggested that consideration be given to the appointment of a standing committee to look into any bottlenecks that SIPs might encounter.
The Chairperson was appreciative of the very direct and pertinent recommendations on changes.
Mr Mabasa asked for more motivation on the suggestions around clause 9, although his question was phrased as “the reintroduction of the Bill.
Ms Moalusi clarified the point.
Mr Mabasa asked if RW believed that the Bill would assist RW in hastening the provision of water in its areas. He asked if RW had any strategies to deal with pollution of water.
Ms Mohorosi noted the suggestions on clause 3, but said that Part II of the Bill was already clear on who should be incorporated into the PICC. She noted the references to RW as an implementing agent and acting in partnership with local government, and asked why it was so interested in representation
- Mbizana Development Forum written submission
- SAICE written submission
- Mr David Lievaart written submission
- Mr David Lievaart written presentation
- Rand Water electronic presentation
- Rand Water written submission
- Transnet Powerpoint presentation
- Transnet submission
- Ground Work presentation
- Ground Work written submission
- Telkom presentation
- Telkom second submission dated 15 January 2013
- COSATU written submission
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