Medium Term Budget Policy Statement Hearings: Public Works

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Meeting report

JOINT BUDGET COMMITTEE WORKING GROUP

JOINT BUDGET COMMITTEE
4 November 2002
MEDIUM TERM BUDGET POLICY STATEMENT HEARINGS: PUBLIC WORKS

Chairpersons
: Mr N Nene (ANC) [NA]; Mr T Ralane (ANC) [NCOP]

Document handed out
Presentation by Department of Public Works (see Appendix)
Medium Term Budget Policy Statements

SUMMARY
The presentation by the Department focused on the key challenges facing the Department of Public Works, its key strategic policy developments and the key focal areas for the previous and upcoming budget cycle.

The discussion on the presentation focused on the reason for the Department's lack of sufficient funds and its consequent inability to meet its contractual obligations, its plans to create employment and ensure transformation and the extent of co-ordination between the various spheres of government with regard to the Multi-Purpose Community Centres. Concern was raised at the Department's uncertainty regarding State assets and the unnecessary expenditure on leasing and maintenance portfolios, and it was proposed that the Department instead compile an asset register and renovate existing buildings rather than build new ones.

The impact of the lack of uniform guidelines was discussed, as well as the problems with maintenance, how it is planned and budgeted for and how the Department plans to addresses these problems. The use of MPCCs as a tool to effect economic and social transformation was discussed, as well as other means that could be employed to alleviate poverty and ensure sustainable development and employment. Members raised concern with the problem with the skills shortage, the large number of consultants employed by the Department and its plans to address this matter.

MINUTES
Presentation by Department of Public Works
Ms Lydia Bici, Acting Director-General from the Department of Public Works, conducted the presentation (see document attached) which focused on the key challenges facing the Department, its key strategic policy developments and the key focal areas for the previous and upcoming budget cycle.

Discussion
Mr D Hanekom (ANC) [NA] expressed his concern with the overall budgeting process and the manner in which funds are used, and clarity is needed regarding the precise reason for the Department's statement that it was not allocated sufficient funds to meet its contractual obligations. What plans has the Department devised to meet these obligations?

Ms Bici replied that this is a historical issue and the Department has never before been able to spend its entire budget but it has been working on its capacity to deliver as a department, and another important factor here is the fact that the Department has never before had the sort of accurate information it has now. The Department has thus been engaged in capacitating itself with regard to appropriate planning at the right time, especially for big projects and contractual obligations such as leases.

The Department has also commissioned the services of consultants to assist in "cleaning up its leasing portfolio", because the Department was not even certain as to the assets that it is using. The Department has since cleaned up this portfolio and is now clear as to what property it is required to pay for, and has even renegotiated some of its leases.

Secondly, Mr Hanekom contended that the budget has to be viewed as an instrument to bring about change and transformation, and has to be used to achieve these obligations. The Department is asked to explain, should it be granted an additional R1b for example, whether it would have the necessary capacity to use these funds, and significantly expand the Community Based Public Works Programmes (CBPWP) and would the Department be able to create a significant number of jobs in the process.

Ms Bici responded that the under-expenditure dealt with here is in relation to a budget cut of R100m, and in the first year more than R600m was spent on CBPWP which are spread throughout the country. This was due primarily to roll-overs incurred from previous years. A few years ago the Department spent R374m and, if the Department is now facing a budget cut, it feels confident that it has demonstrated the necessary capacity to spend its funds. The Department thus has monetary management and monitoring system that assists it to monitor the jobs and assets that are created, and the Department does therefore maximise the creation of jobs.

Ms R Taljaard (DP) [NA] referred to the adjustments estimate and the uncertainty with regard to the evaluation done by the respective municipalities is due to the fact that it is not a closed process as there are municipalities that are still going through a property evaluation and re-evaluation process, and this is both the reason for the small allocation received by the Department and its inability to meet its legal obligations. Has the Department considered any attempts to rationalisation or compile an asset register of this property, as this would allow the municipalities to better manage the property and thus minimise the expenditure incurred here.

Ms Gugu Mazibuko, Chief Director: State Property Holdings and Asset Management, replied that it is true that it is very difficult to budget for municipal rates with precision because the municipality reviews its rates periodically, with the result that different municipalities conduct this review at different times. The situation which then arises is that the rates could be reviewed after the budget has already been submitted. The municipalities do levy interest if the rate payer does not pay within 21 days.

The Department is currently looking strategically at the issue of rationalisation with a view to increase State-owned property instead of "perpetually paying rent to private landlords". This is however a historical problem with regard to maintenance budgets and these properties are not in a good state of repair, and this pushes departments to look at private buildings that are habitable. This is therefore linked to maintenance in that funds are needed to rehabilitate State-owned properties to make them habitable for occupation, and then the Department can look to reduce the leased accommodation.

Secondly, Ms Taljaard referred to the Cabinet lekgotla decision to perhaps use the instruments of the Department's programmes more extensively, has a review or an audit been conducted on the success rate of the existing CBPWP. Furthermore, should such a further intervention occur, would it take the same form of the CBPWP template or model, and would there be any scope for such a project to be feasible given the Department's current budgetary constraints.

Ms Bici replied that the National Treasury is currently conducting a review of all the poverty alleviation programmes of the Department and the Department will take a learning lesson from it. The Department itself conducts a quarterly review and also compiles one big annual evaluation so that it might have an idea of the performance of the programme "on the ground", and the Department did conduct an extensive evaluation of the CBPWP during 2001. There is a justification for the implementation of community development programmes before that review is done, because there are a number of programmes that government has implemented here and these programmes have achieved their agreed objectives. Yet there remains a need for an intervention in, for example, job creation, poverty alleviation, and the result of that review does not remove the need for a specific intervention.

Ms N Mtsweni (ANC) [NA] asked the Department to explain the level of co-ordination that takes place between the national, provincial and local government departments, because problems are created when the project takes a long time to be handed over to either the provincial or local government structure. The result is that members of the community then abuses the facility because they cannot utilise it, because it will take a number of months before it can be used by the community. How the Department would ensure that these projects are sustained and ensure that the community itself takes ownership of the property.

Ms Bici responded by stating that at the beginning of the financial year the municipality must submit a business plan which has to be supported by a sustainability plan, and this includes issues of ownership of the completed asset and its transfer to the intended beneficiary.

Mr R Mohlala (ANC) [NA] contended that property is quite an issue here, and stated that he is aware of several State-owned buildings that are not currently occupied or in use. Some of these buildings were abandoned when there was a move out of the city, and the State departments moved out of these buildings into new ones. Is it not therefore important to look at this situation because if those buildings merely lacking maintenance were simply to be upgraded and then occupied by departments, surely this would save the Department significant funds instead of leasing additional buildings.

Ms Bici replied that it is true that at some point government departments and private businesses themselves began to move away from the CBDs, and the Department has begun a drive to return the departments to the CDB. There may be one or two departments that the Department has accommodated outside the CDB in recent years, especially in Pretoria, but there is now a move to secure all the accommodation required by government in the CBD. There is also a joint programme that has not yet properly kicked-off in which the Department is consulting the metropolitan councils in an attempt to move businesses generally to the CBD. Most departments needing accommodation will be located in the CBD.

Secondly, Mr Mohlala referred to the development of the asset management policy framework which is linked to his first question, because part of the initiatives related to the restructuring of State-assets it to come up with PROPNET. He is aware that PROPNET is also looking to actually coordinate State-owned property which is not currently being utilised by the State and use it for another purpose. Is the Department consulting PROPNET n the development of the asset management policy framework, or is this yet another case of too many initiatives performing a duplication of functions in the absence of proper co-ordination?

Ms Bici responded that the Department is presently consulting PROPNET which is a property company of Transnet. There were discussions at some point regarding the consolidation of the property portfolios of the various parastatals, but this process has not properly begun yet.

The government-wide asset management framework governs the management of all the property portfolios, whether it falls within the Department as the custodian regarding national, provincial or parastatal property. This framework introduces good governance in the management of the State portfolio in the same way that the Public Finance Management Act governs the use and management of public funds. Ms Bici agreed that there may be some duplications between the functions here of the Department and PROPNET, but this will be addressed via consultation. It has to be remembered that the Department is currently providing accommodation to all departments, whereas PROPNET is merely seeing to its own accommodation needs. Yet the asset management framework will govern even those properties owned by the public entities.

Dr R Davies (ANC) [NA] asked the Department to explain the extent to which it expects the CBPWP to create employment, because the presentation states that it employed 10 302 persons during the 2002/2003 financial year. Should the Department be allocated R274m in the 2003/2004 financial year, how many people would be employed in the CBPWP. How many would the CBPWP be able to employ should the Department be allocated R374m, as it requested?

Secondly, Dr Davies referred to the generic public works programmes that cover programmes of other departments, and asked the Department to provide a general indication of the number of persons currently employed in public works programmes both inside the Department and outside.

Thirdly, Dr Davies asked the Department to provide a general indication of the sort of increase would be needed in the public works programme to make an impact on employment so that the targets mentioned can be reached. This is not the sole responsibility of the Department, but it does seem that at least a ten-fold increase on ten thousand is needed.

Ms Bici replied to these questions by stating that the majority of the 10 302 jobs are temporary posts which were created during the construction of the asset, and by design this programme seeks to create temporary jobs and thus alleviates poverty. Although it does create temporary jobs, the programme also has to create a sizable amount of sustainable jobs. The programme was originally based on requests received from various individual communities but, because the Department is now not able to create sustainable jobs, there has been a move to a cluster of projects that are income generating over a long period of time and are productive in nature. These include the establishment of market halls for members of the community to sell their wares and agricultural projects that are income generating. The Department is therefore implementing projects that not only create assets but also ensure the sustainable generation of income in a cluster format.

It would be difficult to accurately project the number of jobs created here because the different projects create different kinds and numbers of jobs, and this is the reason that the Department is calling for a specific intervention here. The cluster project by its nature calls for proper co-ordination throughout government in both small and large projects, and an important element here for sustainability is that there is a shortage of skills in a number of areas generally. The Department has requested Stats SA to conduct a study on job creation here, and it is therefore difficult to provide Members with precise figures before the results of this study have been made available.

Ms B Thompson (ANC) [NCOP] informed Members that she is aware of a number of Multi-Purpose Community Centres (MPCCs) that are being vandalised, and asked the Department to explain whether the national or provincial structures would responsible for addressing this issue.

Ms Bici responded that there is a distinction to be made between the projects involved here, because at the construction stage of the social infrastructure projects, such as the CBPWP, these projects would be the responsibility of the Department. Once they have been completed and are officially handed over to the relevant authority, usually the district municipality, this municipality then accepts the responsibility of utilising the asset and ensuring that it is properly maintained.

Secondly, Ms Thompson asked whether there are any other measures aimed at ensuring sustainable means of alleviating poverty, because the current projects are not sustainable. These jobs seem to be "casual" in nature because they only last as long as it takes to complete the project, and are thus not truly sustainable.

Ms Bici replied that this is related to the questions raised earlier by Dr Davies by stating that a key area of the community development policy framework programme is skills development, whether this relates to internship programmes, life-skills courses that assist them to pursue more income generating opportunities or the better management of their small businesses. This is therefore an all-encompassing programme that addresses all these issues related by Members. It is important that the sustainable plan ensures co-ordination so that the economic spin-offs are larger, and the programme thus aims to address all these concerns.

During the planning process the Department will be consulting the indicators that are being compiled by Stats SA and the Department will then be able to identify government's targets with regard to poverty alleviation, and the projections till 2014. It would therefore be difficult to now identify the precise number of jobs to be created because it is not only the programmes runs by the Department that are relevant here, but also those run by other departments, such as the Department of Water Affairs and Forestry. The other projects such as the building of national roads and large dams will be done in a consolidated manner with the relevant departments, and each programme will be aimed at maximising job creation.

Thirdly, Ms Thompson contended that the Department had previously stated that it is experiencing a problem with a shortage of skills, and it seems that this matter has not been addressed. The problem here is in attracting new skills. What are the problems being experienced by the Department here.

Ms Bici responded that approximately two years ago the Department was addressing the problem of skills shortages within the Department which resulted in the occupation of certain "acting" positions over the period of a year since 1999, and the Department has been able to fill the senior and critical positions. The Department is especially vulnerable here because, as it is involved in the commercial environment, it is competing with the private sector. The Department is able, to the extent that it can, attract the requisite skills, but it is experiencing difficulty in retaining these personnel because the construction and property industry is experiencing skills shortages. The young entrants into the department are fully trained yet leave for the private sector within a year, and this thus continues to be a problem. The Department is working with the industry to address this problem.


Fourthly, Ms Thompson stated that she is beginning to doubt whether the Department knows the exact number of buildings currently on its books, because the old buildings could be used instead of building new ones.

Ms Bici replied that the Department has compiled a complete list of all the public assets that are owned by the Department. The ownership of provincial departments vest in the provincial premiers.

Ms Thompson also contended that it is a waste of funds for the Department to pay rates for unused buildings.

Ms Mazibuko responded that because the property of the State is there to support service delivery, which property would become vacant is determined by the needs of government. Should various departments indicate that they no longer require a certain property, it would then be managed centrally for re-allocation to another department or disposed of to the private sector. There is in fact very little excess with regard to accommodation requirements, and the amount being paid by the Department for vacant or unutilised properties in terms of the Property Rates Bill does not even amount to 2% of the total expenditure. It is therefore very difficult to state for certain that the State will not require the use of a particular property in future, because there are properties that are in the portfolio for strategic security reasons, and it might therefore be necessary to retain State ownership of that property. These could include heritage reasons or even for posterity, and is therefore determined in accordance with government needs.

Mr N Nene (ANC) [NA] asked whether the CBPWP and the Community Development Programme (CDP) are one and the same, or whether they are in fact separate programmes.

Ms Bici responded that these are two separate yet related programmes. The CBPWP is a poverty alleviation programme currently run by the Department, whereas the CDP remains at a conceptual stage. The CDP originated as a recognition by the Department of the magnitude that needs to be done by government to intervene in addressing poverty alleviation, and thus acknowledges the need for a "massive public works programme" called War on Poverty which called for a substantial capital injection by government.

Discussions by the economic cluster at the lekgotla resulted in the realisation that this drive extends beyond the Department alone, and is therefore a bigger programme which is aimed at maximising jobs.

Secondly, Mr Nene asked for clarity regarding the precise meaning of "labour-based technology" with regard to the CDPs.

Ms Bici replied that this is related to the first question posed by Mr Nene and stated that this refers to the use of more labour than machines as much as is practical to maximise job creation, whether it be a small or large project. The norm is that people look to the small programmes for labour-based technologies, but these can also be applied elsewhere via a combination of technology and labour. Once this is approved every government department would have to implement this with regard to its ability to introduce income generating opportunities.

A Member (ANC) asked whether there is in fact any co-ordination between the different government departments regarding the poverty alleviation projects and the MPCCs in particular. Furthermore, it was stated by Ms Thompson that building are currently unoccupied, and this questions whether in fact there was any consultation at the stage in which those buildings were constructed, and whether the Department will continue to construct such buildings.

Ms Bici responded that government has done a lot to attempt to co-ordinate its functioning generally, for example under the previous dispensation the various departments had no idea of the work being done by the other departments. Yet under the present dispensation and the clusters of Director-Generals there is a significant amount of co-ordination at the strategic level.

Much has been achieved with regard to poverty alleviation programmes through both the Integrated Sustainable Rural Development Programme (ISRDP) and Urban Renewal Programme (URP) which is co-ordinated by the Department of Provincial and Local Government. All these programmes, when implemented at the district municipality level, would be informed by the Integrated Development Plans (IDPs) and, although much has been achieved here, there is room for improvement.

With regard to projects such as MPCCs, these are by their nature co-ordinated, because the MPCC is created as a space for a specific department to provide services. Yet before this building can be constructed the specific department first has to agree that its services are in fact needed in that area. Much can still be done to improve co-ordination.


Secondly, the Member asked for the actual cost of the lack of uniform guidelines and whether the sum of R20,6m where facilities did not comply with occupational health requirements. These guidelines clearly cost the State a significant amount of money and when will these guidelines be introduced?

Ms Mazibuko responded that the costs in "Rands and cents" are really difficult to quantify, but illustrated the other costs pertaining to the lack of uniform guidelines. When planning for immovable assets and infrastructure, the fact that there are no uniform guidelines requiring government to plan together is problematic because this could result, for instance, in the planning for several facilities within the same community by different government departments. All this will then be due tot he fact that organs of government are not talking to each other, and they thus do not know what the other is planning or where the other's project will be located, simply because there are no uniform guidelines that require departments to consult other department or spheres of government when planning. There are also no uniform guidelines with regard to maintenance either, dealing with the maintenance planning and asset register especially.

When an asset is disposed of at the end of its lifespan, the provincial authority will dispose of the asset when it no longer requires the property without first consulting the national structures which in fact still need the property. Nor will a parastatal inform government that it has property that was acquired by public funds which it no longer needs, or ask whether government perhaps requires it for another government purpose. Thus the framework planned for here will ensure that these uniform guidelines are put in place that would direct all those responsible for immovable assets in all spheres of government, and is thus really a good governance guideline. This is so because the costs uniformity cannot be quantified in Rands and cents, but is duplication of effort, inefficiencies and social costs.

Mr L Kgwele (ANC) [NA] requested further documentation on the CDPs, and drew Members attention to one of the key recommendations made by the Black Economic Empowerment Commission report involving prescribed assets as a major means of addressing social infrastructure development. Has this recommendation been into account, and what is the attitude of the Department to these proposals.

Ms Bici replied that the Department has not been interacting with the Black Economic Empowerment Commission directly, but it would probably do so during 2003. The Department is looking at comprehensive transformation of the framework of both the property and construction industries, and the Department will be consulting a range of stakeholders in which that Commission would probably be included. There are a number of transformation initiatives occurring in both those industries, but they have to be consolidated into a single strategy.

The CDP policy documents are still at the conceptual stage and will be made available to Members at a later stage.

Secondly, Mr Kgwele stated that he is pleased that community participation is being regarded as an important aspect of the CDP. Would the Department would consider innovative means of addressing poverty alleviation, such as a request by the community for assistance from the Department in creating a community owned enterprise to assist it to address its needs.

Ms Bici replied that this is related to the question posed earlier by the Member regarding the co-ordination of the MPCCs, in fact it is the district municipality or community that determine what has to be done because it is the community that informs the Department of its needs, and these are informed by the IDPs. All the Department does is allocate equitably in relation to the needs of the district municipalities, and once the programme has been completed the Department then transfers the asset to the relevant authority for utilisation. There is thus a significant amount of co-ordination here. Since 1999 the Department does not have any currently unused buildings.

There are several Community Production Centres (CPCs) that are actually community enterprises that are run by trustees that are representatives of the community for income generation and security. There might not be community enterprises on a large scale, but the Department is assisting community-based enterprises. Should a project be suggested that assists in this regard, it will be considered and channelled through the proper processes.

Ms N Tsheole (ANC) [NA] asked whether there are any follow-up mechanisms to ensure that women are also empowered in the development processes without merely amounting to "window-dressing", because if this is not ensured it would merely dilute the main objective of these initiatives. Furthermore, public works is predominantly a male-dominated domain and this has to be addressed.

Ms Bici replied that the "fronting" of women as holding senior positions in the construction industry is problematic and is a reality, and the Department's system is not water-tight. The Department does check documentation for compliance, and is being addressed by the Department in an effort to improve the situation on a regular basis.

Secondly, Ms Tsheole referred to the planning processes and asked whether the Department has considered other items than can integrate women into development processes, such as the introduction of bursaries for women interested in the engineering field. This would allow women to be more represented in the industry ten years down the line.

Ms Bici responded that when dealing with its bursary programmes the Department does, as a matter of course, look at the participation of historically disadvantaged groups and women specifically.

Thirdly, Ms Tsheole stated that there are national departments within the provincial departments and she is uncertain as to the actual working relationship between these, but one of the critical aspects that have to be clarified is that the national department sometimes initiates major projects within the provinces. What is the extent of the interaction between the provincial and national departments here because significant tendering is involved here, and how is the working relationship between these affected.

Ms Bici replied that the Department does have provincial offices and the Department does host regular head of Department meetings at the Director-General level that are aimed at information sharing, and also seeks to align departmental processes. Much improvement is needed in this area. The operations of the Department do run independently from those of the provincial department, and uniformity has to ensured in this area.

Mr L Zita (ANC) [NA] referred to the shortage of skills identified by the Department and contended that the practise in such situations is to employ the service of consultants, whose services "are not cheap by nature". How many consultants are currently being employed by the Department.

Ms Bici responded that this is one of the areas that the Minister is very concerned about and within the CBPWP, for example, "a lot of consultants" are being employed by the Department. This is due to the fact that the Department was unable to easily alter the structure and did not have sufficient funds, with the result that the Department had to seek funding from the EU and the Independent Development Trust (IDT) for the appointment and seconding of personnel on a contract basis in the Department. Internally, attempt have been made to capacitate the Department, and since 1999 personnel have been appointed on a full-time basis.

The nature of the construction work does, in terms of the governing legislation, require the use of consultants and registered professionals. Yet in this case the personnel tasked with running the day to day functioning of the Department is being referred to, and efforts are being made to reduce the number of consultants used here. There is a greater temptation for the employment of consultants when the Department is functioning under pressure of delivery, but the number has been reduced quite considerably.

Secondly, Mr Zita referred to the contention by the Department that it loses personnel to the private sector after it has invested in their training and development. Does the Department have training programmes with institutions of higher education where it has its own future staff developed by that institution and then employed under special contractual obligations, so that they can be retained. It is not suggested that the Department punish them via these conditions, but such conditions would require them to remain with the Department for longer than they are currently.

Ms Bici replied that the Department does have a Human Resource Development (HRD) programme which provides training opportunities for internal staff. The Department is currently developing a comprehensive HRD strategy which is aimed addressing the concern raised by Mr Zita, and provides that if personnel are trained for a year, for example, they need to commit to employment at the Department for a certain period. Yet this matter is still being researched, and the Department is working very closely with the Department of Public Service and Administration to assist it in dealing not only with retention, but also with attraction, management and development of skills within the Department.

The Department does have a bursary scheme for the built environment professions, and training and development plans as part of their contracts. This programme is implemented depending on the available budgetary resources, and they would then have to commit to employment with the Department over a certain period of time.

Thirdly, Mr Zita referred to the issue of the degree of sustainability and contended that when the programmes are handed over to the municipality it then becomes their responsibility, with the assumption that it is now sustainable. But when the programme is handed over to an institution or authority does not have capacity to sustain the project, then that project could collapse in one year. Clarity is therefore requested as to how precisely the Department defines the issue of sustainability.

Ms Bici replied that this is a problem and while the sustainability plan "may look right", and even the Department's own capacity to follow the programme and monitor its implementation and sustainability over a year is limited. The Department does however, over the period of a year, evaluate the impact of the project with regard to the utilisation and benefit of the project to the community. Yet the Department does not have the necessary capacity to monitor these programmes on a day to day basis. It is true that certain municipalities do not have the necessary capacity to sustain these programmes, but the Department is addressing this issue.

Ms C Botha (DP) [NCOP] asked the Department to explain the manner in which it determines the maintenance needs of various departments. Does each department approach the Department for funds or does the Department allocate these funds to them. Furthermore, what are the projections for the maintenance budget in the MTEF because the Department's maintenance budget does not seem to be increasing. Yet especially as numerous schools are being built, and the Department would have been expected to request additional funds for these even though it might not be receiving additional funds.

Ms Masibuko replied that the relevant government department, informed by their service delivery priorities, would indicate to the Department that it has planned a future use of a particular property and they would like it to be renovated or have maintenance work done on it. This is then costed and becomes part of the priority of that department's maintenance budget. The Department does not do maintenance "for its own sake", but rather looks at the service delivery requirements and utilisation of that building as communicated to the Department by that particular government department.

The schools, according to the Constitution, are a provincial function, and its maintenance is thus done by the provincial Public Works department.

Mr T Ralane (ANC) [NCOP] asked whether the Department plans to address the different pockets of poverty alleviation in the CDP by taking over all those programmes at the various departments, with the result that there will then be one huge project that seeks to address the issues of co-ordination and also sustainability.

Secondly, Mr Ralane asked whether the shifting in funds of the adjusted estimates are aimed at assisting in addressing the funding constraints raised by the Department.

Mr Zingisa Ntsaluba, the Department's Chief Financial Officer, replied that the Department is not suggesting any shifting of funds, because the Department really has "nothing to shift".

The Chair thanked the Department for its valuable input.

There were no further questions or comments and the meeting was adjourned.

Appendix:
National Department of Public Works
Presentation to the Joint Budget Committee of Parliament Monday, 4 November 2002

INTRODUCTION

AIM
The aim of the Department is to provide and manage, in accordance with prescribed standards and directives, the accommodation, housing, land and infrastructure needs of national departments, manage the poverty alleviation programme for the creation of jobs and social infrastructure as well as promote the transformation of the Construction and Property Industries.

KEY CHALLENGES
The Dept faces the following challenges:
* Lack of uniform guidelines regarding various aspects of public immovable asset management in all organs of the State.
* Inadequate maintenance budgets that negatively impact on the environments where various public services are delivered.
* Absence of an integrated information systems and appropriate skills to deliver on the department's mandate.
* Industry-wide challenges like:
- declining spending and investment on infrastructure by both the public and private sectors;
- shortage of skills:- inability to attract new skills;
- skewed ownership within the construction and property industries;
* Continued job losses despite economic growth.

KEY STRATEGIC POLICY DEVELOPMENTS
Transforming the NDPW by refocussing its its policy, regulatory and operational functions, for effective service delivery.
Key policy areas to be covered:
- Government-wide immovable asset management framework;
- Transformation of the construction and property industries;
- Poverty eradication for the creation of jobs, human resource development, enhancement of infrastructure delivery and community empowerment.

KEY STRATEGIC POLICY DEVELOPMENTS
Key operational areas:
- Optimise functional, economic & social returns from the State property portfolio;
- Redesign appropriate organisational structure, skills and systems;
- Focus on customer service.


KEY STRATEGIC POLICY DEVELOPMENTS
Formulating good governance guidelines for the management of public immovable assets, through:
- the development of Government-wide Immovable Asset Management Policy Framework to culminate into an Act;and
- the development of Immovable asset management plans.

KEY STRATEGIC POLICY DEVELOPMENTS
Development of a transformation framework for the Construction and Property Sectors, focusing on the following, among others:
- Intensification of BEE;
- Promotion of infrastructure investment;
- Productivity and excellence;
- Positioning the Construction industry as a National Asset for effective contribution to economic growth.

KEY STRATEGIC POLICY DEVELOPMENTS
Formulating comprehensive Government-wide Programme directed at poverty aleviation, job creation, skills development, enhancement of infrastructure delivery through the Community Development Programme (CDP).The CDP will encompass the following key principles:
- Use of labour based technologies;
- Basic wage (where appropriate);
- Community participation;
- Sustainability planning.

KEY FOCAL AREAS
ACHIEVEMENTS FOR THE PREVIOUS BUDGET CYCLE (2000/01; 2001/02;
2002/03)
1. Employment Creation and Black Economic Empowerment:
1.1 Construction:
- Currently R3 billion worth of RAMP projects under construction of which 55% awarded to Affirmable Contractors and Professional Service Providers/ Consultants;
- 22 Projects with a total value of R38, 8 million awarded to Contractors with women equity.

ACHIEVEMENTS FOR THE PREVIOUS BUDGET CYCLE (2002/03)
1.2 Disposal of properties

Total no of BEE

67%

Total monetary income to the State

R114 205 000


ACHIEVEMENTS FOR THE PREVIOUS BUDGET CYCLE (2002/03)
1.3 Community-Based Public Works Programme (CBPWP):

Total no of people employed

10302

No. of women employed

4608

No. of youth employed

4642

No. of disabled

268


ACHIEVEMENTS FOR THE PREVIOUS BUDGET CYCLE (2000/01; 2001/02;
2002/03)
2. Accelerated Land Reform and Restitution:
Department released the following parcels of land for land reform:

Year

No of Properties

Extent

Donated

Value

     

2000/1

29

13 932

R10,8m

2001/2

176

7997ha

R124,8m

2002/3
(to date)

797

60 000 ha

R12,9m



ACHIEVEMENTS FOR THE PREVIOUS BUDGET CYCLE (2002/03)
3. Poverty Relief and Human Capability Development:

Total no of assets created:

449

Project types

 

MPCCs

21

CPCs

13

HIV/AIDD

10KZN, 1MP, 1LIMP, 1FS,

Y4EA

6 Projects in KZN & 9 LIMP

WATER & SAINITATION

1 295 toilets, 30 springs

CLEAN & GREEN

21


The remainder of the projects include road upgrading, markets, workshops, taxi ranks, community gardens and various agricultural projects.

ISSUES FOR THE NEXT THE NEXT BUDGET CYCLE (2003/04; 2004/05; 2005/06)
* In general it is apparent that the Dept's baseline allocation is far inadequate to fund the Dept's critical programmes.
* The Dept has demonstrate capacity to spend its allocated budget, as evidenced by the R34mil over-expenditure in the 2001/02 financial year as well as the current expenditure trends indicate.
* The serious negative implications of under4unding in various in various programmes are in the next forthcoming slides.

Leasing Budget

MTEF Year

Dept Request

MTEC Rec.

Shortfall

 

R 000

R 000

R 000

2003/2004

1 041

966

75

2004/2005

1 145

1 028

117

2005/2006

1 260

1 094

166


Department is obliged to adhere to fixed commitments as per signed agreements of leases. The State will be taken to court if private lease agreements are not honoured.

Maintenance Budget

MTEF Year

Dept Request

MTEC Rec.

Shortfall

 

R 000

R 000

R 000

2003/2004

1 000

644

356

2004/2005

1000

730

270

2005/2006

679

742

63


Non-compliance with various Statutes i.e.Occupational Health and Safety and Environmental Impact Acts and National Building Regulations - hence unsafe working places and hampering of service delivery.

Rates and Taxes Budget:

MTEF Year

Dept Request

MTEC Rec.

Shortfall

 

R 000

R 000

R 000

2003/2004

1 507

964

93

2004/2005

1 543

1 096

447

2005/2006

1 684

1 166

518

Department is obliged to adhere to fixed commitments to municipalities. Municipalities will take legal action against the State it rates payments obligations are not honoured.

CBPWP Budget MTEF Year

MTEF Year

Dept Request

MTEC Rec.

Shortfall

 

R 000

R 000

R 000

2003/2004

374

274

100

2004/2005

374

-

274

2005/2006

374

-

374



Regarding the R100m underallocation, the dept is not able to honour commitments already made to district municipalities. This has had a negative effect, especially on the MPCCs.
Some of the CBPW objectives may be lost it the programme is collapsed into the Municipal Infrastructure grant.

CONCLUDING REMARKS
In conclusion, the dept wishes to highlight the positive impact and achievements that its programme continue to contribute to government overall objectives and priorities in areas of:
- Employment creation
- Black economic empowerment
- Infrastructure investment
- Land reform initiatives and
- Poverty alleviation. (as detailed in slides 9-13)

The dept requests the committee to focus on the implications of budget under-allocation on different programmes, as outlined in slides 15-18.

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