Infrastructure Development Bill [B49B-2013]: briefing

NCOP Economic and Business Development

03 March 2014
Chairperson: Mr F Adams (ANC; Western Cape)
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Meeting Summary

The Minister of Economic Development introduced the Infrastructure Development Bill to the Committee, taking Members through a long presentation that set out the aims, objectives and detail of the Bill, but concentrating on certain slides only. The overarching theme was that this Bill would require spheres of government to talk to and work and coordinate with each other. The Bill largely aimed to address inefficiencies that had been shown with infrastructure build in the past. The Minister emphasised that integrated planning and building was key to the success of infrastructure projects, and stressed the need to unlock development to assist rural areas, particularly with roads, electricity and sanitation. He noted that although there were not always concurrent functions for every project, the three spheres of government would need to work together, to ensure, for instance, that two schools were not built right next to each other, and that every building must be supported with road, sanitation and electricity connections. He elaborated that there was already a Presidential Infrastructure Coordinating Commission, but its structures and functions were being further defined, and elaborated on how the existing Strategic Infrastructure Projects (SIPs) would benefit the country. South Africa had demonstrated, during the World Cup, its ability to run large infrastructure projects successfully, and the lessons learned were incorporated in the Bill. This Bill did not create new structures, but rather provided new forms and responsibilities.

The Minister was at pains to explain some of the concerns that had been expressed to and by the Portfolio Committee when it was dealing with the Bill, and spoke on issues around sustainability, environmental concerns and financial implications. He explained also the role of the Steering Committees, headed by a Minister, and explained that they would ensure coordination, and would report quarterly to Parliament. Many of the detailed matters were deliberately not included in the Bill but would be incorporated in the quarterly reports. The Bill set far more stringent deadlines for applications and ensured that they would run concurrently to avoid long delays and he cited how tenders would be organised to avoid one aspect of a project running without others being brought in line, with far more efficient tracking systems.

Members were pleased to hear of job creation initiatives and youth involvement, but asked for clarification on whether the Bill addressed disabled people, and asked for clarity about local content and markets, and what might happen should local government, for instance, not comply. They asked if the Schedule timelines could be used to stall issues and projects. A DA member raised several points that had been raised while the NA was considering the Bill, including a suggestion that the name of the Bill be changed, accountability to Parliament, sustainable development, and more stringent consequences for non-compliance. Other Members questioned if the Bill prescribed penalties for poor work quality or work delays, and asked how slowness of applications could be addressed. During the Minister’s response, he touched upon labour difficulties at Medupi construction sites, skills transfer, and elaborated in depth on accountability and environmental requirements. Members confirmed that they were ready to take the Bill to their provinces.

Minutes

Meeting report

Chairperson’s opening remarks
The Chairperson thanked the Committee members for going to their provinces and doing work there, noting that officials had been assigned to accompany them to each of the provinces.

Infrastructure Development Bill: Minister and Department Economic Development briefing
Mr Ebrahim Patel, Minister of Economic Development, stated that the Infrastructure Development Bill (the Bill) was the first piece of legislation that the Department of Economic Development (EDD or the Department) had presented to this Committee. He stated that infrastructure was an area on which every political party had the same view – agreeing on its necessity and desirability for bettering society. He stated that he would not elaborate on every slide (see attached presentation) and apologised for the late delivery to Members of the Powerpoint presentation, which he had just signed off on the previous day.

The Minister read the “Background” slide (see attached presentation) with no elaboration.

The Minister elaborated on the “Context” slide, stating that even though there had been twenty years of democracy in South Africa, some apartheid-related issues persisted. He stated that local enterprises needed support. This Bill sought to close entities with low coordination. He noted that implementation and project completion was not always cause of problems in specific entities, and said that, for instance, litigation could also slow down or hinder work.

The Minister read out the slide emphasizing what the Bill sought to achieve. He then elaborated on the slide entitled “Land: Example of the challenge experienced in gaining access to land for infrastructure build today”. This chart showed the problems faced by a company which wanted to erect a tower for energy flow. He stated that it took twelve years, with appeals and expropriations processes alone taking six and a half years. He then moved on to the slide elaborating on the need for support to cooperatives.

The Minister emphasised that integrated planning and building was key to the success of infrastructure projects and elaborated that, for instance, all roads need to be linked to the national system. He emphasised the need to provide roads to rural people, and said they still also needed water and sanitation and electricity connections. Although the main responsibility for this lay with one sphere of government, all three spheres had to work together to ensure that this was done. The conversion of mud schools into proper structures did not involve concurrent functions, but there needed to be local and provincial cooperation, so that several schools were not built right next to each other. These schools also needed sanitation, water and electricity. He stressed again that these examples showed the need for integration.

The Minister noted the slide headed “Experience with the Presidential Infrastructure Coordinating Commission (PICC)” slide, and elaborated on how the strategic integrated projects (SIPs) would benefit the country. SIP 3 would address unlocking of economic opportunity for migrant labour. Getting water to those who needed it would allow subsistence farmers to start showing, initially, a small profit because their farms would be more yielding. Construction of roads would make trade easier but it would also require the N2 to be re-routed to connect rural communities and allow trade to happen. He stated that fencing airports had prevented cattle straying on to runways and causing accidents. However, all these initiatives needed a supply of electricity. The Bill would allow for better integration of the PICC and SIPs. There was a good example that South Africa could run large infrastructure projects successfully, as shown by the World Cup in 2010,  would make the integration of the PICC possible. He stated that they have had a good compilation of experience, the largest one being the World Cup in 2010, and the lessons learned were incorporated in the Bill. He stressed that this Bill did not create new structures, but that the Bill would provide new forms and responsibilities.

The Minister referred the Committee to the slides dealing with “Experience with the PICC”. He added that City Press had run a competition in which journalists compared traveling times against each other, respectively by private car, bus and taxi and concluded that not only was the bus time the same as the car time, but its carbon emissions were lower and the journalists were able to continue using their phones, and this was a prime example of an infrastructure initiative that would better lives for those in Africa. he noted that buses had been purchased initially from Brazil by South Africa, but were now being produced locally. He noted that in the 104 years between 1892 and 1996, only 5.2 million households were connected to electricity. In the 20 years since democracy, South Africa had connected 7 million more households. This Bill would lay down the circumstances for infrastructure initiatives to be done more easily by the next Presidency.

The Minister then said that the Bill sought to align time frames for necessary processes for infrastructure build, so that if twenty applications were needed, all twenty should be run at the same time. The Bill envisaged the setting up of steering committees to ensure that there was coordination on all necessary aspects such as internet connections, sanitation, electricity and building materials, and in advance of the project starting, there would be awareness of the needs, including hiring of the right people.

He emphasised that the Bill did not change the responsibilities of accounting officers or authorities or the route for fiscal flows, and that line departments and public entities would receive money for specific infrastructure projects and continue to be accountable to Parliament for the spending of that money.

He took Members through the core aims of the legislation and objects of the Bill, with no further elaboration. He read out the definitions, and also read, verbatim, the slide setting out what the Bill did not do (see attached presentation).

He noted that the PICC Council would effectively allow for the bureaucracy to work better and with more alignment across the sectors involved in each SIP. The project pipeline was set out.

The Minister noted the content of clause 2(2), which said that any person exercising a power in terms of this Act must do so in a manner that was consistent with the Constitution and, in particular, with the functional competences of the different spheres of government. The structures of the PICC process would emphasise the integrated work to be done by the three spheres of government. The functions of the Council ere explained.

Under the slide headed “Coordination of planning”, the Minister said that (a) meant that organs of state must integrate their work and talk with each other to ensure that any of their future planning or implementation of infrastructure or future spatial planning or land use would not be in conflict with any strategic integrated project implemented in terms of this Act.

The Minister noted that the expropriation process in terms of the current Expropriation Act was weak and that an amendment Bill was currently being prepared to respond to the weaknesses.

It was noted that there were currently 18 SIPs which would be headed by their respective ministers. It was explained that if the SIP required tenders, then the publication of that tender would be done by the respective Minister. This would, for instance, prevent the approval of a tender for a dam, without simultaneously ensuring that any tenders for roads to the dam site were also approved, so that delay of the one facet would not adversely affect the other. The Bill did not envisage that all tenders would be taken over nationally, but that they must be properly coordinated when being advertised to avoid the situation where one part of the project may be completed without the necessary supporting structures, such as roads.

The structure of the PICC Secretariat was set out and Members’ attention was drawn to it, without further elaboration. In relation to the SIP structures, the Minister stated that the SIPs Steering Committees would have to meet together rather than make decisions independently using a silo-approach, which was the prevailing situation at the moment. All information that was needed would be concentrated at a single point of the Steering Committee. There were measures inserted in the Bill to prevent conflict of interest and corruption in relation to the SIP Steering Committees. There were also processes written into the Bill to reduce delays.

The Minister elaborated that initially, the Portfolio Committee for Economic Development had raised its concerns that the Bill did not contain sufficient provisions around environmental regulation or protection and had made certain revisions. The clauses on environmental management now addressed the need to comply with the National Environmental Management Act (NEMA) and he confirmed that that there was no way that any SIP projects under this Bill could infringe against, or not comply with that legislation.

The Bill included clauses on monitoring and guidance of SIPs, as set out in the presentation. The transitional provisions were also included. Slides were also included covering the scope, time frames and maintenance of current SIPs, and he noted that Schedule 2 to the Bill provided for Executive authority to extend time lines or deadlines for public consultations only.

Some “frequently asked questions” were posed and answered, and there was a further slide setting out the importance of this Bill for provinces (see attached presentation). He concluded his presentation by stating that the Bill would meet the needs of the provinces by requiring coordination.

Discussion
The Chairperson stated that the NCOP had a great advantage in seeing how the SIPs would be used.

Ms B Mncube (ANC, Gauteng) agreed with the Minister that this Bill would enhance job creation, specifically youth employment, and that it would meet the needs of the nation and its nine provinces. She asked for clarification on the local content and markets and how this tied in with remarks about using local markets in the latest State of the Nation Address. She asked if this Bill may stop people from preferring to look for international outlets. She asked about the risk of entities or municipalities not complying with the Bill.

Mr B Mnguni (ANC, Free State) asked if the Schedules could be used to stall issues and projects.

Ms E van Lingen (DA, Eastern Cape) stated that the Minister treated this Committee in a better manner than other Ministers, but she said she was not happy with the performance of the Department. She thought that the gaps in infrastructure across all the provinces were largely due to the Department not properly enforcing delivery. She stated her fear that incompetencies may be covered up by putting other people in the middle, for processes between decision and action. She was concerned about lack of accountability to Parliament in this Bill. She was concerned that the Minister had glossed over many of clauses during this presentation. The Portfolio Committee, when deliberating on this Bill, had raised concerns about sustainable development, and she noted that those had been largely ignored at the time, but it was now being mentioned in this presentation. She was pleased to note the time periods for public consultation. She would like to see something in the Bill that dealt more specifically with consequences for shortcomings in any province or locale.

Ms van Lingen repeated a suggestion made in the Portfolio Committee for a change of name of this Bill to “Strategic Infrastructure Coordinating Bill”. She re-emphasised the need for accountability to Parliament accountability and the President.

Ms van Lingen suggested that clause 8(1), should replace the “may” with “ must”, in relation to the Commission’s publication in the Gazette, which she said would allow for better tracking. She said that if the Bill was to be constitutionally sound, it must not interfere with local government.

Ms B Abrahams (DA, Gauteng) asked if those who had been employed would remain employed. She asked how persons with disability were considered in the Bill.

Ms K Kekesi (ANC, North West) claimed that what exactly the Bill sought to achieve was not presented. She said that the Bill did not address penalties for poor work quality or work delays. She also wanted to know what would be done about slow applications.

The Chairperson introduced Mr Pakati, a special delegate from the Eastern Cape Provincial Legislature.

Mr Pakati stated that he was comfortable with the Bill and was pleased to see it.

The Minster answered the questions in general. He fully agreed that the NCOP committees played a vital role in the country's democracy structure and was thankful for kind remarks addressed to him. He said it was his responsibility to be available to the Committee at any time.

The Minister firstly addressed questions around sanctions and consequences. The Bill did try to recognise and emphasise the importance of all three spheres of government, but he noted that the Constitution had not listed these spheres as equal. If there was any disagreement at local level, the PICC would work through the matter. He said the Bill created a legal tool which could mandate someone to do something. He used the example of building buses locally, saying that a law would require this and the buses could be built in either Johannesburg or  Cape Town. The law would be the basis for ensuring that things would be done. The Constitution also set out methods of resolving deputes.

The Minister emphasised that this Bill was essentially to do with ensuring that public infrastructure was built. If an official did not perform in line with what was expected, then disciplinary action would be taken, and the explicit restriction against something being done was in the case where this may cause conflict of interest.

The Minister noted that time frames were “a double-edged sword”. He quoted clause 17(2), reading “Notwithstanding any other law, the processes set out in Schedule 2 provide a framework and guide for the implementation of any strategic integrated project, but the time-frames in Schedule 2 may not be exceeded.” He stated that this Schedule was addressing the maximum amount of time allowed. He said that currently the processes were in practice taking much longer than thirty days to be resolved, and this Bill would greatly improve on this. However, he stated that having a law in place could only achieve so much and that in addition to this, there needed to be a mechanism that would ensure that people would do their work and change attitudes.

The Minister said that the Bill had gone through an extensive process and that it would achieve the needs of every province.

The Minister referred to the two issues of concern on the Medupi power station. He noted that firstly, contractors must meet specific qualifications, and two foreign companies, one Swedish and one Japanese, were examples of companies not doing their jobs. Medupi essentially involved a contract for building the country’s largest coal-fired station, by private contractor who were being lax. Public interventions were now required to compensate for the lack of maintenance and management. He stated that it was unfortunate that the media was not far more critical of these companies, and added that there needed to be penalties imposed. The second issue of concern was the loss of production time, particularly through strikes, which arose because of issues between contractors and employees, not government or public enterprises and employees.  The country had a system of collective bargaining, and the right to strike was a constitutional right. There had to be talks between trade unions and contractors; people should not assume that the strikes were the fault of government or the Department.

The Minister fully conceded that people were imperfect and not all of them would act correctly, but he likened this Bill to a traffic robot which would attempt to coordinate everything in the best possible way, although that was perhaps an over-simplification. He cited the example of a school he had recently visited, which was built with government money, yet had no running water, and that was now subject to a court case. Prior to this Bill, there would have been a problem in getting a different contractor, but once this Bill came into operation, issues like this would no longer arise. Some of the strikes in Medupi were caused by workers losing jobs after the contract terminated, but this Bill would still allow for skills to transfer after projects were completed. In the case of the school, effective planning, such as using wider pipes for water-lines, would prevent a future need for water-line repairs.

The Minister said that every single project that was an SIP was using public money and therefore must be voted by Parliament. Every project had an accounting officer, who would have to account and report to a portfolio committee for the National Assembly, and the same principle would apply to projects that were overseen by the Select Committees and the NCOP. A dam project, for instance, would not fall under the Presidency, but under the Department of Water Affairs, which was accountable to Parliament. The money flowing to each department would have to be accounted for to the respective parliamentary committees. This did not affect the constitutionality aspects. Every SIP would be chaired by a Minister. He also quoted section 92(2) of the Constitution, which stated that “Members of the Cabinet are accountable collectively and individually to Parliament for the exercise of their powers and the performance of their functions.” He then read clauses 92(3) and (6), emphasising that the Cabinet members must act in accordance with the Constitution, and must provide Parliament with full and regular reports concerning matters under their control.” The Minister stated that he himself would be chairing SIP 5, and on this he would thus assume the important role of reporting to Parliament.

The Minister then moved on to answer questions relating to environmental concerns, and read out clause 2(2) of the Bill, which stated that “Any person exercising a power in terms of this Act must do so in a manner that is consistent with the Constitution and, in particular, with the functional competences of the different spheres of government.” Clause 18 of the Bill required that “Whenever an environmental assessment is required in respect of a strategic integration project, such assessment must be done in terms of the National Environmental Management Act, 1998 (Act No. 107 of 1998), with specific reference to Chapter 5.” He said that this Bill was fully aligned to, and respected the NEMA and the Expropriations Act, and that is was also concerned with the green economy. He stated that when environmental concerns were highlighted before the Portfolio Committee, they were perhaps not taken in the context of the whole Bill, and it was clear that some submissions did not consider the Bill as a whole. 

The Minister also welcomed the requirements for public consultation, and said that if a project was unable to proceed, then there should be a shared conclusion reached to that effect. A core aspect of the Bill related to the necessity for regular project status updates.

The Minister then dealt with the suggestions for the change of title of the Bill, and stated that a name change would not do much. He quipped that a name change to the “Strategic Infrastructure Coordination Bill” would no doubt result in the acronym “the SIC Act” which he did not think was very appropriate. He believed that the current name was appropriate, as the Bill did deal with infrastructure development.

In response to the suggestion to change clause 8 from “may” to “must”, he noted that the drafters had advised that if this was done, it would necessarily require designation even when this was not necessary and that the “may” was an empowering provision that gave the commission the power to do something if needed. This was taken a step further in Schedule 3.

The Minister assured Members that the Bill did address the autonomy of local, provincial and national spheres, saying that this was covered in clause 2(2) which was unambiguous, and, furthermore, used the pejorative “must”. This Bill could not be used to undermine the autonomy of any of the three spheres of government and was to do with integration and working together.

He commented that only one of the political parties had issues with understanding the Bill, and the Department had already taken time to address all concerns that had been raised, even when the legal drafters had advised that the changes were in fact not consequential.

The Minister confirmed that there were not financial implications with the Bill, as there would be no new staff members or new budgets required to implement the Bill, and what it effectively would do would be to use provincial budgets more effectively. The SIP committees would meet in the normal course.

The Minister also added that the legal advisers had been satisfied that because the Bill did not affect culture, customs or customary laws, it was not necessary to consult with traditional leaders.

The Minister then addressed the concerns around the sustainability and said that most jobs created would be in the construction field, and these jobs were, by their very nature, project-specific. However, the requirement to have infrastructure plans would address job requirements. Building of infrastructure and development would lead to migration, more cities would be required, and the Department of Economic Development had looked far into the future, with this Bill. Although the individuals attending to the construction work may change from project to project, the number of people hired overall would rise.

The Minister thanked Members for reminding him to speak of disability issue, and read out clause 21(1)(b)(vi), which stated that “The Minister may, in consultation with the Council, make regulations regarding … (b) the criteria that must be applied in the implementation of a strategic integrated project, relating to … (vi) Broad-Based Black Economic Empowerment, in particular in relation to women and persons with disabilities.”

The Minister concluded that it was in the interests of all provinces that this Bill be passed by the NCOP as soon as possible. The Bill was trying to implement what had been learned from the experiences of the past years. Amendments could always be added on the basis of any future lessons. In many cases, the Bill did not go into specific details, but he reminded Members that this was deliberate because quarterly reports on all projects would be required, for which he would be responsible.

The Chairperson stated that it was the Committee Members' responsibility to bring this Bill to their provinces, and emphasised that in doing so, they must describe what took place at this meeting, not those of the Portfolio Committee.

Mr A Nyambi (ANC, Mpumalanga) said that he was more than ready to brief his province.

Ms van Lingen wanted to raise another question, also asking for an electronic copy of the presentation, but the Chairperson noted that she would receive it and moved on.

Other Members confirmed that they had no further questions.

The Minister concluded with the hope that infrastructure would show improvements in the next five years.

The open part of the meeting was closed.

 

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