Infrastructure Development Bill [B49-2013]: Minister & Department of Economic Development responses to public submissions

Economic Development

28 January 2014
Chairperson: Ms E Coleman (ANC)
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Meeting Summary

The Minister of Economic Development presented an overview of the intention behind the Infrastructure Development Bill (the Bill) and the comments on, and, where applicable, proposals for new wording following public submissions. He noted that over the past four years, when infrastructure was identified as a major jobs driver, infrastructure planning had been more effective. However, there were major challenges around implementation and maintenance of infrastructure, which the Bill sought to address. The Minister summarised the ideal stages of project pipelines and where the entities covered by the Bill would become involved.

He noted the process until tabling of the Bill to Parliament and said that the Department of Economic Development (EDD) had received about 30 written inputs. Almost all agreed on need to improve infrastructure delivery and in particular to institutionalise the PICC to enhance planning and coordination. Many of the submissions expressed concern on the existing mechanisms and how projects would be tested for priority, some commented on areas of ambiguity and suggested wording changes, some raised Constitutional issues, and others questioned, for instance, the application of the Bill to private projects, the need to clarify the schedules and the need to ensure cooperation and collaboration between existing government mechanisms, without interfering with constitutional mandates. The Minister briefly described some of the main areas of concern and then presented the Department’s response and new suggestions. The Department had given careful consideration to concerns around constitutionality and was proposing that the Bill should explicitly provide that Ministerial and Commission powers must be exercised in accordance with the Constitution, and the functional competencies of all three spheres recognised. A new clause 2(2) would address concerns on clauses 8, 17 and 22 in particular. To address the confusion around the role of the Presidential Infrastructure Coordinating Commission, the leading structure would be referred to as the “Council” instead of the “Commission”. To address the position of private sector infrastructure, it was proposed that projects not classed as “public infrastructure” should fall under SIPs only with the consent of the owner. In regard to tenders, it was explained that the Bill only empowered a Minister designated by the PICC to “request” the relevant accounting authority to go out to tender, in order to support greater efficiency and coordination around tendering. In answer to concerns around timelines, EDD recognised the possibility of extending timelines where there were valid reasons, which would ensure that Constitutional requirements were met. The Minister assured the Committee that due weight was being given to environmental considerations. Further amendments would be proposed to address concerns around public consultations. Expropriation on behalf of an organ of state would be in accordance with the 1975 legislation and with concurrence. In regard to regulations, the Minister would be empowered to set targets and guidelines. Certain changes were proposed to Schedule 1, both in the heading, which would clarify that SIPs would be selected from the list, and to clarify terms around waste management, electricity, and sewage projects, and a reference to public transport would be added. The EDD thought that proposals to specifically name social infrastructure were not necessary, as they were already covered under other terms. Schedule 2 would be clarified by identifying clearly at what stage timeframes would be triggered. A new Schedule 3 would list and describe the existing 18 SIPs, for purposes of the transition.

Members appreciated the presentation and the Chairperson noted that the revised Bill including the proposals of the EDD would be circulated and discussed in the following week. Members raised queries on the oversight process, avoiding conflict, particularly in relation to the interface between this Bill and the National Environmental Management Act. They noted the importance of getting buy-in, and questioned how the Bill would be properly implemented at all stages of planning, implementation and maintenance. The involvement of the educational sector, particularly the Further Education and Training College students and graduates was questioned. One Member cautioned against over-bureaucratisation and sought and received confirmation that deadlock-breaking mechanisms would be employed. Members questioned the emphasis on Metro mayors’ involvement, but it was explained that this followed the provision of budget, and rapid response teams would be deployed to do monitoring.  Finally, questions were raised about the budget for implementation of the Bill.

Meeting report

Infrastructure Development Bill: Minister Economic Development responses to issues raised at public hearings
Mr Ebrahim Patel, Minister of Economic Development, in introducing the responses to the public submissions on the Infrastructure Development Bill (the Bill) explained what had happened with economic development in the past four years. In October 2010, infrastructure was identified as the key jobs driver whose development could support other jobs drivers. In July 2011, Cabinet established the Presidential Infrastructure Coordinating Commission (PICC) which immediately started identifying obstacles for faster and more integrated delivery. In February 2012, the President announced the National Infrastructure Plan in his State of the Nation Address, and essentially this plan was intended to speed up infrastructure developments. In April 2012, Strategic Integrated Projects (SIPs) were launched across the country. In February 2013, the lessons learned from the first phase of implementation were set out in a draft Bill which was published for public comment. The current Bill was tabled in Parliament in November 2013.

The core infrastructure challenges were the inability to deliver on time and within budget. Experience since 2011 had shown the importance of the PICC by improving planning, coordination and monitoring to ensure better delivery of infrastructure priorities. The Bill aimed to empower the state to deliver to the needs of citizens; strengthen coordination and alignment across the state, avoid unnecessary grounds for litigation and legal review, and speed up delivery. However, the Minister specifically stressed that all of policy goals should not be regarded as encompassed into this one piece of legislation and there was also an attempt not to try to superimpose new obligations when there was existing legislation that adequately covered a matter. The Bill established the PICC in law with structures to ensure capacity to plan for national priorities through the National Infrastructure Plan. It would ensure that SIPs included in the Plan were supported consistently across the State, with no unnecessary regulatory delays, would provide a platform to ensure the greatest possible developmental impact from public investment, but did not seek to duplicate other laws, impose other standards or specific programmes. The Bill established an effective state planning and delivery system, but would not be regulating the private sector’s own projects. Overall, the main areas of debate centred around how to enforce national priorities and how to reduce delays in regulatory decisions.

Minister Patel explained that the stages of the PICC’s project pipeline were envisaged as follows:
1) Project conception
- SIP designation/National Infrastructure Plan
- Involvement of Council
2) Pre-feasibility, feasibility studies and decision-making
 -SIP planning
- Steering Committee involvement
 -SIP Chairs
- Executive Forum
3) Regulatory approvals
- Timeframes
 - Involvement of Steering Committee
4) Procurement – technical specifications and tenders
- Coordination of procurement
- Steering Committee involvement
5) Procurement of equipment
- Coordination of procurement
- Steering Committee involvement
6) Construction
- Coordination of procurement
- Steering Committee involvement
- Monitoring and evaluation
7) Completion
- Monitoring and evaluation

About 30 written inputs had been received by 13 January 2014, from various parties. Almost all agreed on the need to improve infrastructure delivery and in particular to institutionalise the PICC so as to enhance planning and coordination.

He summarised that the main basis of comment related to the following:

- Well-founded constitutional concerns
- The suggestion for changes that improved the capacity of all three spheres of the state to implement in a coordinated manner, expeditiously and with the required developmental impact
- Technical amendments that improved the Bill
- Language improvements to make provisions clearer to the ordinary reader
- Suggested changes that addressed ambiguity or lack of clarity on provisions which, if not corrected, could contribute to grounds for disputes, legal action or project uncertainty
- The need to add more objectives and instruments for evaluating projects. However, there were concerns that some of the proposals ran the risk of diluting the core aim of the Bill, which was to empower the State to implement priority infrastructure projects
- There were also concerns that the proposals to formalise structures and procedures more could add rigidities and grounds for continual challenges on the process.
- The suggestions to add more consultation processes and stakeholders to structures was made. However, the Minister pointed out that whilst consultation was provided for in respect of regulatory issues the focus of the Bill was to improve the speed and impact of implementation
- There were concerns on the suggestions for open-ended and potentially unnecessarily lengthy periods for environmental impact assessment (EIA)processes. The Bill did recognise the importance of EIAs and the framework of the National Environmental Management Act (NEMA) and provided for a timeframe within which the necessary environmental considerations needed to be completed
- It was suggested that alignment across the State was inherently unconstitutional. However, the Minister pointed out that all spheres were involved at national PICC and SIP levels; the Bill simply required coordination of decisions, and did not take away decisions of any sphere.

He then addressed some of the submissions in more detail, under topic.

In regard to constitutional issues, he assured the Committee that careful consideration had been given to ensuring that the Bill passed Constitutional muster. However, some amendments would be proposed by the Department of Economic Development (EDD) to the Bill to further strengthen the constitutionality of the Bill and to take account of valid concerns.

He noted that the PICC worked primarily by setting up forums to facilitate engagement and alignment across the State. The potential for regulating or constraining provinces or municipalities inappropriately was offset by a proposed new requirement that any powers in the Bill be exercised in accordance with the Constitution, particularly taking into account the functional competencies of different spheres.

In relation to tenders, he explained that the Bill only empowered a Minister designated by the PICC to “request” the relevant accounting authority to go out to tender, in order to support greater efficiency and coordination around tendering.

In regard to consultation, he noted that there was the possibility of extending timelines where there were valid reasons, which would ensure that Constitutional requirements were met. He also noted that environmental considerations were being given due weight and further amendments would be proposed to address concerns around public consultation

Constitutional concerns
In order to address the Constitutional concerns relating to encroachment on the powers of different provinces and municipalities, EDD proposed that the Bill should explicitly provide that Ministerial and Commission powers must be exercised in accordance with the Constitution, and the functional competencies of all three spheres recognised.

A new clause 2(2) would be proposed to address concerns, in particular, around clauses 8, 17 and 21.

In order to address the confusion that was apparent from some submissions, around the leading structure of the Presidential Infrastructure Coordinating Commission (PICC) and the Commission as a body consisting of a hierarchy of structures, the EDD would now propose that the leading structure should be called the “Council of the PICC”, rather than “the Commission”. This would require that wherever the leading structure was referred to in the Bill, the word “Commission” would be substituted by a reference to “Council”.

Private sector application
To address concerns that private-sector infrastructure may, inappropriately, be included within the Bill and the SIPs, it was proposed that projects that were not “public infrastructure” should fall under SIPs only with the consent of the owner.

Expropriation issues
To address concerns regarding the implementation of the provisions on expropriation of land for infrastructure, EDD noted that it would support relying upon the 1975 Act, as several submissions had proposed, with appropriate modifications. It would be provided that expropriation on behalf of an organ of state should be with its concurrence.

Timeframes and public consultation
To address concerns regarding timeframes for public consultation, amendments would be proposed that provided the power to the relevant executive authority to agree to an extension of the timelines for consultation, and to inform the PICC of such extension.

Schedule 2
The wording of Schedule 2 would be improved for greater clarity.

To address concerns regarding the regulations to be issued in terms of the Act, the Minister should be empowered to set targets and guidelines, as well as to regulate to implement the Act.

Definition of SIPs
To address concerns about the definition of SIPs and provide clarity on the existing SIPs, the EDD proposed that a third schedule should be added, as well as a savings and transitional clause in order to maintain the 18 existing SIPs.

The Minister started to address the precise wording of the clauses, but the Chairperson stopped him at this point, saying that the content of the clauses would be considered in a separate meeting. She noted that the clause changes were summarised in the Powerpoint presentation and the latest version of the Bill (see attached presentation). The Committee was referred to the clause titles, and it was noted that the current clause 22 would be renumbered if the proposal to have a new clause 22 on transitional arrangements was adopted.

The Minister concluded by presenting the three schedules. He noted that Schedule 1 listed the universe of projects that constituted “infrastructure” as understood in the Bill. Since there was no commonly accepted definition of infrastructure in the sense used in economics, it was useful to better communicate what was covered in the Bill and the SIPs. It was possible to clarify, in the heading, that SIPs would be selected from this list but the list itself was not to be seen as constituting the contents of SIPs. The term “waste management infrastructure” would be substituted for “waste management”. The term “electricity transmission lines” would be changed to read “electricity transmission and distribution”, and “sewage works” would be substituted with “sewage works and sanitation”. A reference to public transport would be added. A proposal to add social infrastructure such as sports halls, cultural centres, police stations, and refugee centres was not supported by EDD, as it felt this was adequately covered already by the references to human settlements and related infrastructure.

Schedule 2 laid down timeframes for key steps in the regulatory process, with a total of around 250 days. The Minister proposed that the clarity of Schedule 2 could be improved by identifying more clearly what triggered each timeframe and what would bring each to a close.

The Minister reiterated that the new Schedule 3 would list and describe the existing 18 SIPs, for purposes of the transition.

Mr X Mabasa (ANC) thought it would be difficult to get all the parties to cooperate and agree on this Bill. He expressed his appreciation for Minister Patel’s initiative in providing the explanations for why the EDD had accepted or rejected submissions on certain clauses of the Bill. He shared the opinion that public and private sector relationships may prove difficult to “nurture” and that soon there might be no difference in the infrastructure and maintenance within both the public and private sector. He also wanted clarification on where the monitoring would take place, within or outside the Minister of Economic Development, whether there would be evaluations also by the Office of the Presidency, or whether both may be involved. He concluded by saying that good intentions of big projects and aspirations needed to be checked also by considering the consequences.

Mr S Motau (DA) expressed his concern for the need for a Bill that could truly deliver on its objectives. He said that the current shortcomings in Environmental Impact Assessments was due to the lack of proper environmental assessments, both of which were supported and recognised in the Bill.

Mr A Van der Westhuizen (DA) addressed his concern over this Bill’s relationship with NEMA, and whether one would have priority over the other. He also was concerned over the name of the Bill, which he felt was misleading. Essentially, the Bill was dealing with the Presidential Infrastructure Coordinating Commission (PICC).

An MP from outside the Committee expressed her concern on how stakeholders were accounted for. She said that the timeline for this Bill’s implementation is only for consolidation and is not based on regulation. She concluded her remarks by expressing concern over the influence and prevalence of bureaucracy and feared that the municipalities would be unable to use infrastructure plans. She thought there was a need for a deadlock-breaking mechanism implementation to ensure that the goals of the Bill were fulfilled in a timely manner.

Mr K Sinclair (COPE, Northern Cape, NCOP Member) pointed out that there was no reference to Public-Private Partnerships (PPPs) and their impact, and also wondered if there was sufficient correlation between this Bill and other proposed legislation.

Minister Patel gave an overview response. He noted the need for an effective instrument to ensure the “buy in,” and for the coordination between political powers. The PICC currently brought “everyone” together and provided the tools for monitoring. He clarified that this Bill was not intended to deal with all infrastructure, but it dealt with strategic infrastructure. He said the key was to find the balance between environmental sustainability and efficiency and infrastructure development and impact. NEMA remained the framework, emphasising that the environmental impact assessments must all be synchronised, but that the decision-making process was according to NEMA. He continued that the name of the Bill was a bold statement in that it emphasised that the Bill was focusing on strategic projects and regulations regarding infrastructure. The Bill did include provisions that stakeholders must be involved in decisions but not in structures, and he maintained that the already agreed upon 45 day consultation was an adequate timeframe. He concluded that there was a need, in the country, to acquire more engineers and said that the Bill could well provide the solution. Allowing projects to take on engineering students would solve the shortage of skilled workers, as well as provide a more efficient way of implementing national standards.

The Chairperson asked if there would be any issues involving the Department of Higher Education.

Minister Patel answered that there would be an expansion from the current 50 Further Education and Training (FET) Colleges by building 12 new campuses. He said that this plan would be implemented by creating contracts with construction companies for partnerships that would allow the FET College students to get real exposure rather than theoretical knowledge around infrastructure building.

Mr Mabasa addressed the challenge of monitoring. He said that there was a need to have tools for monitoring at both implementation stages and for maintenance.

Minister Patel answered that the rapid response teams would be dealing with matters on a quarterly basis, and suggested that their reports would be snapshots of what is going on in virtual real time.” In addition there would be monthly reports/assessment for issues that need to be addressed quickly. He said that clause 4(h) focused on maintenance. He also said that the deadlock-breaking mechanisms would be headed by senior leaders who would be best able to find a balance between the major issues.

The Chairperson noted that one of the suggestions the Minister made in his report was to have the majority of collaboration with the mayors of the Metros, but she was concerned that this might not pay sufficient attention to provincial leaders.

Minister Patel responded that in practice the Metro mayors were the ones through whom the infrastructure budgets were conveyed. Northern Cape had the largest infrastructure budget and had the highest per capita benefit from PPPs in South Africa.

Mr der Westhuizen wanted clarification on page 17 of the revised Bill with the new proposals, which read: “provide for the PICC Council to add to installations set out in Schedule 1”. He asked if it was intended that funding extend to bureaucracy and asked about the budget.

The Minister noted that government departments and components were being required to finance the PICC activities from within existing budgets, so there was no separate budget currently for PICC. Government was trying to achieve something different. It was intended to have those in existing institutions achieving more in a more effective way.

The Chairperson noted that the revised Bill would be forwarded to Members and that at the next meeting the Members would begin their clause-by-clause deliberations.

The meeting was adjourned.

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