Expropriation Bill: briefing by Minister & Deputy Minister; Public Works 2015/16 Strategic & Annual Performance Plan

Public Works and Infrastructure

24 March 2015
Chairperson: Mr B Martins (ANC)
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Meeting Summary

With the Minister of Public Works in attendance, the Deputy Minister gave a briefing on the Expropriation Bill (B4-2015). He said that expropriation is an essential mechanism for the state to acquire property in certain instances. Section 25 of the Constitution provides that property may be expropriated only in terms of general application and to that no law may permit arbitrary deprivation of property. The Constitution states that expropriation may occur only for a public purpose or in the public interest and subject to payment of compensation. Public interest includes the nation’s commitment to land reform, reforms to bring about equitable access to all South Africa’s natural resources and other reforms to redress the results of past racial discriminatory laws or practices. The Expropriation Act of 1975 was reviewed to ensure its consistency with Section 9, 25 and 33 of the Constitution as well as the extension of the purpose of expropriation to include public interest. Compensation in terms of the Expropriation Act 1975 was determined primarily on the market value of the expropriated property, but Section 25(3) of the Constitution requires "just and equitable" compensation be determined by having regard of all circumstances without placing undue weight on any single or particular factor. National, provincial and local government were empowered to expropriate property to varying degrees through several pieces of legislation and the Expropriation Bill seeks to ensure consistency with the Constitution and uniformity of procedure of all expropriation without interfering with the powers of expropriating authorities.

▪ Clause 1 and 2 contain definitions and deal with the application of the proposed legislation, determining that an expropriating authority may not expropriate property arbitrarily or for a purpose other than a public purpose or public interest.
▪ Clause 3 and 4 grant a general power to the Minister of Public Works for purposes connected with the execution of his or her mandate or upon request by an organ of state
▪ Clause 5 and 5 deal with the pre-expropriation phase and details various procedures to be followed by an expropriating authority prior to expropriation. These procedures were used to ascertain the suitability of the property for the purpose for which it is required and gather information on the existence of registered and unregistered rights in such property and the impact of such rights on the intended use thereof.
▪ Clause 7 to 11 deal with post investigation for which the expropriating authority after gathering information, consulted with other parties affected by expropriation must serve affected parties with notice of intention to expropriate.
▪ Clauses 12 to 20 deal with determination and payment of compensation to persons whose property or rights were expropriated.
▪ Clause 21 provides that in the absence of agreement on compensation, the court must determine the dispute on compensation between the expropriating authority and the expropriated owner/holder of a right to property.
▪ Clause 22 deals with urgent expropriations and the expropriating authority was exempted from certain provisions of the envisaged Act.
▪ Clause 23 authorizes an expropriating authority to withdraw an expropriation if the withdrawal was in the public interest and the reason for which the property was expropriated was no longer applicable.
▪ Clause 24 to 31 deal with delivery and publication of documents, extension of time allowed for certain actions, a register of all expropriations, offences and other related matters, power of the Minister of Public Works to make regulations, impact on existing regulations, repeal of laws, transitional arrangements and savings.

Questions were asked on why the Bill has come forth and back from Parliament before; what will happen should the expropriated property belong to a person who accessed a loan from a bank; the determination of market value; the meaning of public interest and public purpose; why was government compensating for land taken mercilessly during the colonial era.

The Department of Public Works presented its strategic goals for the next five years:
▪ Sound legislative and policy prescripts to accelerate service delivery
▪ Oversight, leadership and support to provincial public works’
▪ Coordination of Expanded Public Works Program Phase two for the creation of decent employment through inclusive growth
▪ Strategic leadership and regulation of the construction and property sectors to promote economic empowerment and skills development; and ‘
▪ Good corporate governance to support effective and efficient service delivery

The DPW policy priorities for 2015/16 were derived from the policy statement of the Minister of Public Works and the Seven Year Turnaround Plan. The key priorities include:
▪ The creation of six million work opportunities for poor and unemployed people through the labour intensive delivery of public services and infrastructure
▪ The operationalisation of the Property Management Entity and the transformation of the core property business
▪ The operationalisation of the governance, risk and compliance branch to drive anti-corruption and to spearhead the second phase of the turnaround strategy
▪ A policy review to culminate the in the Public Works Act and
▪ A renewed and sustained program of action to transform the built environment and construction and property sectors as part of the second more radical transition to democracy.

Challenges in the current service delivery environment include deficiencies in the internal control environment, inadequate internal performance management operating procedures, lack of integration of performance information structures and systems within existing management processes and systems and inability to retain and attract required skilled personnel. The budget allocation for DPW in 2015/16 is R6.41 billion. An amount of R541 million was reduced from DPW’s allocation in line with the fiscal framework approved by Cabinet on 01 October 2014.

The Property Management Trading Entity (PMTE) strategic goals include: to effectively and efficiently manage the life cycle of immovable assets under the custodianship of public works, good corporate governance to support effectual service delivery, to promote economic growth through integrated infrastructure development in urban and rural areas, to create employment opportunities and develop skills in the provision of construction, property and facilities management services to the state and to leverage the state’s property portfolio to contribute towards government’s broader transformation, empowerment and economic development. The budget for PMTE in 2015/16 is R11,67 billion.

Members were concerned with the PMTE suggestion that it pays its service providers after 30 days, why stemming corruption remains a strategic goal every year, what projects are earmarked for development and requested clarity on the compilation of provincial and local asset registers; the implications of the amendment of the Basic Conditions of Employment Act for EPWP. In response to questions about the length of work opportunities in the Expanded Public Works Programme, DPW explained that work opportunities can go on for as long as two years but only working two days a week and that the EPWP should be seen within the context of social protection to improve the quality of life of poor households.

Meeting report

The Chairperson welcomed the Minister and Deputy Minister of Public Works, officials from the department, Members and visitors.

Mr Thulas Nxesi, Minister of Public Works, greeted Members and visitors and handed over to his deputy for the briefing on the Bill.

Expropriation Bill [B4-2015] briefing by Deputy Minister of Public Works
Mr Jeremy Cronin, Deputy Minister of Public Works, gave a briefing on the Expropriation Bill (B4-2015). He said that expropriation is an essential mechanism for the state to acquire property in certain instances. Section 25 of the Constitution provides that property may be expropriated only in terms of general application and to that no law may permit arbitrary deprivation of property. The Constitution states that expropriation may occur only for a public purpose or in the public interest and subject to payment of compensation. Public interest includes the nation’s commitment to land reform, reforms to bring about equitable access to all South Africa’s natural resources and other reforms to redress the results of past racial discriminatory laws or practices. The Expropriation Act of 1975 was reviewed to ensure its consistency with Section 9, 25 and 33 of the Constitution as well as the extension of the purpose of expropriation to include public interest. Compensation in terms of the Expropriation Act 1975 was determined primarily on the market value of the expropriated property, but Section 25(3) of the Constitution requires "just and equitable" compensation be determined by having regard of all circumstances without placing undue weight on any single or particular factor. National, provincial and local government were empowered to expropriate property to varying degrees through several pieces of legislation and the Expropriation Bill seeks to ensure consistency with the Constitution and uniformity of procedure of all expropriation without interfering with the powers of expropriating authorities.

▪ Clause 1 and 2 contain definitions and deal with the application of the proposed legislation, determining that an expropriating authority may not expropriate property arbitrarily or for a purpose other than a public purpose or public interest.
▪ Clause 3 and 4 grant a general power to the Minister of Public Works for purposes connected with the execution of his or her mandate or upon request by an organ of state
▪ Clause 5 and 5 deal with the pre-expropriation phase and details various procedures to be followed by an expropriating authority prior to expropriation. These procedures were used to ascertain the suitability of the property for the purpose for which it is required and gather information on the existence of registered and unregistered rights in such property and the impact of such rights on the intended use thereof.
▪ Clause 7 to 11 deal with post investigation for which the expropriating authority after gathering information, consulted with other parties affected by expropriation must serve affected parties with notice of intention to expropriate.
▪ Clauses 12 to 20 deal with determination and payment of compensation to persons whose property or rights were expropriated.
▪ Clause 21 provides that in the absence of agreement on compensation, the court must determine the dispute on compensation between the expropriating authority and the expropriated owner/holder of a right to property.
▪ Clause 22 deals with urgent expropriations and the expropriating authority was exempted from certain provisions of the envisaged Act.
▪ Clause 23 authorizes an expropriating authority to withdraw an expropriation if the withdrawal was in the public interest and the reason for which the property was expropriated was no longer applicable.
▪ Clause 24 to 31 deal with delivery and publication of documents, extension of time allowed for certain actions, a register of all expropriations, offences and other related matters, power of the Minister of Public Works to make regulations, impact on existing regulations, repeal of laws, transitional arrangements and savings.

Discussion
Mr S Masango (DA) said the Constitution talks of 'public interest', but the Bill seems to have added on to the definition of 'public interest' which may diverge from the Constitution. The Expropriation Bill has come back and forth from Parliament and he asked whether the reason it was rejected before was because it was unconstitutional. The Bill did not talk of alternative accommodation should a person’s house be expropriated. He asked how DPW will address a situation where the property to be expropriated belongs to a person with a bank bond and the valuations of the bank and DPW differ. Who will pay the difference and why does the DPW pay 80% at first and not the whole amount?

Ms C Madlopha (ANC) said that the Bill clears some mist from the previous bills. The media had been rubbishing the Bill, saying that it targets white commercial farmers. The Bill gives the state power to expropriate with only a notice to the property owner which may contradict with common law where a person was given two months if unhappy with the expropriation. She asked the Minister to assure the Committee that all the provisions that were problematic when the Bill was previously presented had been addressed. She asked what will happen with regards to alternative accommodation in case of urgent acquisition.

Deputy Minister Cronin replied that the 1975 Expropriation Act was unconstitutional as it gave draconian powers to the state. In 2007-8, the Bill was wisely withdrawn by DPW not because of unconstitutionality, but mainly to avoid a lot of compensation. It was again ready to roll in 2013, but ran out of time to pass the Bill before the 2014 elections. The unconstitutionality of the 2007-8 Bill was removed. This Bill explains the general process an expropriating authority has to follow in a just administrative way taking into account security of tenure also. In case of a bank having loaned money for a house, it was the bank that will be expropriated and not the individual. There had been some challenges with Eskom and Transnet wanting to construct power lines and get stopped on private property which therefore demands a balance between 'public interest' and taxpayers' money. The Bill was not a target against commercial farmers but everyone was affected should the state need to build a road or dam. The compensation was determined on market value and sustainability for example if a person lives in a shack and this was his only house, issues of sustainability have to be taken into consideration. The 1975 Act and the current Bill allow the state to expropriate before compensation because sometimes court processes delay completion of power line construction for example on private property as the owners go to court. Municipalities can expropriate DPW property and vice versa, but the same process and procedure outlined in the Bill has to be followed whether state against state or state against private property.

Minister Thulas Nxesi added there was a difference between 'public purpose' and 'public interest'. If there was need to put up electricity lines, it was for public purpose and there was no need to argue about that. However, expropriating property for 'public interest' needs has to pass a rigorous rationality test as stated in the Constitution. A big problem with the previous Bill was there was no recourse to the courts if people were unhappy. But now people are free to appeal to the courts if unhappy. The tendency has been to emphasise 25(3)(c) the market value of the property and not all the other aspects mentioned there.

Mr Masango said it was untrue that property will be expropriated from the bank and not the person as the agreement was between a person and the bank and not the state and the bank. He asked about the areas of disagreement discussed at NEDLAC. Going to court was very difficult for poor people when their house was being expropriated. How does one deal with that issue?

Ms E Masehela (ANC) asked how the market value was established. She asked if expropriation will continue should the holder of registered rights disagree with the market value. She knows of a municipality in the rural areas that was prevented from building a shopping mall since 2003 because the land was communal land held by chiefs.

Ms E Sonti (EFF) asked a question in her vernacular language. Redistribution of land was important and was a very critical programme of the Economic Freedom Fighters. It was well known that black people had their land taken from them by white people mercilessly and without paying for it. It was also true that the land redistribution programme was very slow. It seemed as though there were still a lot of problems with black people not having land ownership. How could government want to pay people for land that they took illegally and mercilessly? This was an important matter that united the nation in the call for government to take the land back without compensation. The Member said she would not support compensation.

Minister Nxesi replied that as government it cannot promote anarchy. Expropriation without compensation was unconstitutional. The government follows the Constitution. Expropriation without compensation was just a popular stance that cannot help us. It will just promote chaos in the country.

Deputy Minister Cronin commented that expropriation does not just affect white commercial farmers. In expropriation, the property clause in the Bill of Rights guides the process. Arguments can be made about "just and equitable" compensation but this does not remove consideration of colonial injustice. The Constitution requires pressing forward in determination of "justice and equitable" compensation including "restitution". The compensation will be done depending on how far the person had paid the bond. Going to court was costly but the Bill tries to shorten the longevity of the expropriation process. There was deliberate blocking by some wealthy people especially to do with Eskom power lines. Market value was one of the factors and not an exclusive factor in determining compensation.

Mr Andre Meiring, Director: Property Policy, DPW, replied that communal land was held by a tribe or by the Minister of Rural Development and Land Reform. The municipality experiencing difficulty in acquiring land can acquire it from the Ministry of Land Reform. Land to construct a mall for example should be acquired through negotiation. For instance Gauteng acquired state land for speedy execution of Gautrain railway line.

Deputy Minister Cronin replied that NEDLAC should be called to the Committee to present on the matters of differences. AgriSA should also be invited for public hearing as it was the most vulnerable with the 1975 Act. The NEDLAC report will be made available to the Committee.

Department of Public Works on Strategic Plan, Annual Performance Plan 2015/6
Mr Imtiaz Fazel, Deputy Director General: Risk and Compliance, DPW, presented the DPW Strategic Plan 2015-2020 and Annual Performance Plan 2015/16. Its strategic goals over the next five years were:
▪ Sound legislative and policy prescripts to accelerate service delivery
▪ Oversight, leadership and support to provincial public works’
▪ Coordination of Expanded Public Works Program Phase two for the creation of decent employment through inclusive growth
▪ Strategic leadership and regulation of the construction and property sectors to promote economic empowerment and skills development; and ‘
▪ Good corporate governance to support effective and efficient service delivery

Whilst the economy will benefit from the reduction in oil prices and the immediate lift that provides for the trade and current account balances, the energy deficit will remain a material constraint on economic performance. The DPW policy priorities were derived from the policy statement of the Minister of Public Works and the Seven Year Turnaround Plan. The key priorities include
▪ The creation of six million work opportunities for poor and unemployed people through the labour intensive delivery of public services and infrastructure
▪ The operationalisation of the Property Management Entity and the transformation of the core property business
▪ The operationalisation of the governance, risk and compliance branch to drive anti-corruption and to spearhead the second phase of the turnaround strategy
▪ A policy review to culminate the in the Public Works Act and
▪ A renewed and sustained program of action to transform the built environment and construction and property sectors as part of the second more radical transition to democracy.

Challenges in the current service delivery environment include deficiencies in the internal control environment, inadequate internal performance management operating procedures, lack of integration of performance information structures and systems within existing management processes and systems and inability to retain and attract required skilled personnel. The budget allocation for DPW in the 2015/16 financial year is R6.41 billion. An amount of R541 million was reduced from the department’s allocation in line with the fiscal framework approved by Cabinet on 01 October 2014.

Property Management Trading Entity (PMTE) 2015-2020 Strategic Plan and Annual Performance Plan
Mr Dhaya Govender, PMTE Head, DPW, said the PMTE strategic goals include:
▪ To effectively and efficiently manage the life cycle of immovable assets under the custodianship of Public Works
▪ Good corporate governance to support effectual service delivery
▪ To promote economic growth through integrated infrastructure development in urban and rural areas
▪ To create employment opportunities and develop skills in the provision of construction, property and facilities management services to the state
▪ To leverage the state’s property portfolio to contribute towards government’s broader transformation, empowerment and economic development
▪ The budget for PMTE in the 2015/16 financial year was R11,67 billion.

Discussion
Ms L Mjobo (ANC) asked why DPW has verified only 2 143 properties yet it owns properties in national, provincial and municipal governments. Thanks for adding R50 million to EPWP but it was too little. She pointed out that conditional grants for local government were repeated in the budget section.

Ms P Adams (ANC) said there were only two females in the DPW delegation against nearly ten men. She would like to see more women in management echelons since she was a feminist. She asked if DPW was going to use consultancies for the required skilled personnel. The Minister of Public Works said two thirds of the budget will go to PMTE yet from the total budget of R20 billion for the whole of DPW only R11 billion went to PMTE which does not translate into two thirds. She asked when the 300 vacancies will be filled. She asked why there was no amount budgeted for IDT in the 2016/17 financial year and beyond. What kinds of skills were given to the 1 067 beneficiaries of EPWP? Who owns school buildings between DPW and Basic Education and who was responsible for refurbishment? She asked where small harbour ports will be developed. She asked when all provincial and municipal governments will be incorporated into the asset register.

Mr Masango asked when fraudulent corruption will be over in DPW since it remains a goal every year. He asked how the Treasury reduction will affect DPW in salaries and EPWP. He asked why DPW was planning to pay service providers after 30 days. He asked why the number of property construction projects was decreasing from the 2016/17 financial year onwards.

Mr K Sithole (IFP) asked how much was spent on the turnaround strategy. He asked if municipalities have the capacity to implement EPWP. He asked which government buildings were earmarked for repair, modernization and refurbishment in Durban and maintenance of passenger and goods lifts. Which residencies were refurbished for parliamentary villages?

Ms C Madlopha (ANC) asked how much was spent and how many residencies for parliamentarians were refurbished. Performance objectives should be measurable and specific rather than just stating a target of 80 to 100%. She asked if EPWP was going to focus on quality jobs rather than one week jobs. If so, how was the amendment of the Basic Conditions of Employment Act was going to affect EPWP?

Ms Masehela said the PMTE targets were very low and need to be revised. She asked how leases expire before renewal. She asked how DPW was going to assist municipalities in compiling asset registers. The DPW problem of not paying service providers within 30 days affects small businesses as it affects their ability to grow and most of them are unable to continue their business when disconnected by Eskom. DPW must talk to Eskom not to close small businesses.

Mr Stanley Henderson, Deputy Director General: EPWP, DPW, replied that the increase in R50 million was for non government organizations that are used to help create work opportunities. The decrease was as a result of a tighter fiscal environment. The repetition of grants to local government in the presentation was an error that should have been written as local and the other "provincial" government. DPW continues to provide technical assistance to municipalities in the implementation of EPWP. Their ability to qualify for infrastructure grants was based on the ability of provinces to spend. Work opportunities can now go as far as two years to ensure a longer transfer of income to households, BUT working two days a week. The EPWP should be seen within the context of social protection to improve the quality of life of poor households. DPW has met the Department of Labour on the implications of the amendment of the Basic Conditions of Employment Act for EPWP.

Mr Nkosi Vilakazi, Acting Deputy Director General, Projects and Professional Services, DPW, replied that school beautification was just for painting and improving their standards. Capacity issues were a problem and it was contracting retired professionals as well as giving bursaries to students. It gets external mentors to come and assist DPW here and there.

Mr Vilakazi noted that the Durban High court was earmarked for refurbishment.

Mr Masango said it was irresponsible for the Committee to allow DPW to pay service providers after 30 days. People were crying especially entrepreneurs. The PMTE must go and revise the 30 day payment period.

Mr Govender replied that six provinces rely on DPW for their asset register, namely, Mpumalanga, Limpopo, North West, Northern Cape, Free State and Eastern Cape. The remainder have alternative systems for compiling asset registers. DPW takes the 30 days payment period seriously. Fraud and corruption remains a target because it was discovered daily. The other problem was that claims were made for services not rendered and it was implementing a system to help in ordering and payments. Other department assets could not be verified because the premises were locked or officials from DPW were denied entry and in such cases, the matter was referred to Special Investigating Unit. It has more than 80 000 properties and putting in a property management system was very expensive. If the number targeted per year was too little for Members, this will be revised. Leases expire because the clients were supposed to notify DPW for renewal 18 months before expiry and provide notice of procurement, but some do not notify. It was working with Treasury to avoid expiry of leases. Currently, it was dealing with 2 700 leases. Municipalities were usually slow to renew because it first needs a full council meeting before going forward to renew. He was aware that funds had been allocated for refurbishment of parliamentary villages, but will provide details and breakdown in writing. PwC, KPMG, Ernst and Young have helped DPW identify irregular expenditure and this was helping it in improving audit outcomes. DPW has a comprehensive human resource plan submitted to the Department of Public Service and Administration on an annual basis for recruitment, training and retention. DPW will prioritise filling critical posts only. DPW was offering opportunities to 143 interns, 29 trainees and artisans as well as 140 learners.

Mr Aaron Mazibuko, Chief Director Finance, DPW, replied that the R11.2 billion budget for PMTE was limited to personnel, goods and services and machinery and did not include maintenance costs.

Mr Govender (PMTE) added that the money was not sufficient. No new money was being given by National Treasury. DPW was busy developing a turnaround plan for efficiency enhancement.

Mr Fazel replied that there was no budget for IDT from the 2016/17 financial year because it should have become self sustainable over the years. DPW was only filling critical posts to use money effectively. DPW pays within 30 days and PMTE plan must also align with DPW. DPW has a very comprehensive fraud and corruption plan that helps it identify corruption every day.

Mr M Filtane (UDM) said at Umthatha High Court, the judges were not safe and there was no security so a person can walk in freely. He went there personally to hear and see the high court and was told that it had been lobbying DPW for five years in vain.

Mr Vilakazi said that the upgrades for the court were very expensive and the security upgrades were still in planning.

Ms Madlopha asked if there was going to be a new determination for EPWP since people were now working for 100 days.

Mr Henderson replied that the duration of the EPWP was based on the budget; type of project whether to be done in the social sector, infrastructure and community work programs. The 100 days per annum came from working an average of two days per week per year.

Ms N Sonti (EFF) asked if the EPWP did not involve any men at all since it only indicated 55% women, youths and people with disabilities.

Mr Henderson replied that it does not exclude men, but the greater percentage came from women, youth and people with disabilities.

Meeting adjourned.

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