Department Budget: briefing

PUBLIC WORKS PORTFOLIO COMMITTEE
12 March 2003
DEPARTMENT BUDGET: BRIEFING

Documents handed out:
Budget Review Presentation (Appendix)

Chairperson: Chief M E Hlengwa (ANC)

SUMMARY
The Committee heard that the Department was prepared to tender a comprehensive presentation to the committee on the projects it had helped to develop so far to demonstrate that it had encroached on the deepest rural outposts of the country. The Department was seriously considering the President's challenge to ensure it expanded its services to the poorest of the poor and not concentrate resources on past beneficiaries. The Committee expressed its displeasure at the wastage of state assets and noted that there was an urgent need to instil a sense of responsibility in those under whose custody these assets fell. The Committee was informed that the Department was developing a framework to guide it on how to dispose of obsolete assets.

MINUTES
Briefing by the Director General Mr James Maseko
Mr. Maseko, the new director general, outlined the vision of the Department stating that it was to be a leader in Africa and the developing world in the provision and management of state property and the implementation of public works programmes. The objectives of the Department were outlined noting that the overreaching strategic priority was the intensification of the drive towards establishing a performance-based organisation. He identified key challenges the Department was faced with and noted that lack of uniform guidelines regarding various aspects of public immovable asset management in all organs of state was one area where legislation was seriously being contemplated.

Mr. Maseko referred to key strategic policy developments, which entailed a transformation of the Department by refocusing its policy, regulatory and operational functions for effective service delivery. The other area was the formulation of good governance guidelines for the management of public immovable assets through the development of government-wide immovable Asset Management Policy Framework that would culminate into an Act. It was also necessary, he contended, to formulate comprehensive government-wide programmes directed at poverty alleviation, job creation, skills development and the enhancement of infrastructure delivery through the Expanded Public Works Programme.

Touching on issues for the next budget, Mr. Maseko pointed out that the Department had demonstrated capacity to spend its allocated budget as evidenced by the R34 million over-expenditure in the 2001/02 financial year as well as the current expenditure trends that indicate a potential over-expenditure of R40 million. He expressed concern on the serious negative implications of under-funding which he blamed for stalled programmes and the slowed pace of performance and service delivery. The Department had been under-funded to the tune of 592 million and that this huge deficit impacted negatively on state leases, rates & taxes, maintenance and transfer payments.

Mr. Maseko highlighted the positive impact and achievements which its programmes continued to contribute to the government's overall objectives and priorities in areas of job creation, black empowerment, infrastructure investment, land reform initiatives and poverty alleviation. He appealed to the Committee to assist the Department in its endeavours to solicit additional funding in future appropriations to forestall a situation where service deliver was severely compromised due to inadequate funding.

DISCUSSION
The Chair said that the Committee would be interested to know why the Department is under-funded by such a huge margin.

Mr. Moonsamy (ANC) welcomed the new Director General and assured him that members looked forward to a positive interaction on matters of mutual concern. He inquired whether the Department was directing resources to where they were most needed and not concentrating development projects in already privileged urban centres.

Mr. Maseko replied that the Department was prepared to tender a comprehensive presentation to the committee on the projects it had help to develop so far. He assured the Committee that the Department had encroached on the deepest rural outposts noting that the only failure on the part of the Department was a failure to publicise these important activities. Developments in urban centres were a responsibility of local municipalities and that the Department had no hand in these. The Department was seriously taking aboard the President's challenge to ensure it expanded its services to the poorest of the poor and not concentrate resources on past beneficiaries.

Mr. Moonsamy noted that the skills shortages still appeared every fiscal year and wondered whether the Department had strategic plans to deal with this.

Mr. Maseko acknowledged that a shortage of skills was indeed an important challenge not only for the Department but also equally for the entire governmental structure noting that the high unemployment in the face of scarce skills was a daunting challenge for the government. The Department was faced with the problem of retention of skilled personnel due mainly to low wage levels. One way the Department was addressing the problem was the introduction of learnership programs to develop skills from within.

Mr. Moonsamy suggested that the Department could easily and cheaply tap into the skills pool from the frontline states instead of opting for expatriates who do not come cheap.

Mr. Opperman (DP) asked if it was true that some Departments were using state property as surety for acquisition of loans.

Mr. Maseko replied that it was up to the treasury to assess and make a determination whether or not state property should be used as security to secure a loan but that this was only a measure of last resort since it is not considered prudent a all.

Mr. Opperman wanted clarification to the allegation that funds meant for poverty alleviation had been diverted to maintain state property.

Mr. Maseko replied in the negative - noting that funds that were set aside for poverty alleviation programs were applied for that purpose only and that such could only be re-deployed to maintain state property if such an intervention had the direct effect of achieving the poverty alleviation mandate.

Mr. Opperman wondered why state maintenance programmes were not used as a veritable vehicle to create jobs.

Mr. Maseko explained that all programs the Department was involved in had the direct or incidental effect of creating job opportunities and that this was essentially achieved by involving the communities in rural areas.

Mr. Chikane (ANC) pointed out that there were incidences where the national and provincial Departments were involved in a tag of war as to who owns a particular property and therefore who should take responsibility for its maintenance. He asked if there was a plan to clearly demarcate who owned what between the two spheres of government.

Mr. Maseko admitted that the link between the national and provincial./local government was blurred and pointed out that it was one of the challenges the Department would grapple with to ensure it offered the critical leadership role. The Department was developing a concept of public works that would create a positive image and one that would move towards strengthening the local arm of government.

Mr. Chikane (ANC) asked the Department to develop and prepare an asset register which would clearly delineate which assets needed to be disposed of to address the costly problem of wastage.

Mr. Maseko said that the asset register was already complete but that there was an ongoing exercise to update the information that was trickling in. He revealed that the Department was developing a framework to guide it on how to dispose of obsolete assets.
Mr Chikane suggested that the Committee be briefed on the updated asset register noting that there was an urgent need to instil a sense of responsibility in those under whose custody state assets fall. It would be important for the Committee to receive a yearly update on the register of state assets and that the relevant Departments should inform on their management of State assets.

Mr. Maseko concurred with Mr. Chikane's suggestion noting that in future it would be mandatory for all stakeholders to maintain state assets in their custody.

Mr. Opperman asked if the Department had capacity to monitor and evaluate projects in view of the under-funding on its budget vote.

Mr. Maseko pointed out that the exercise of monitoring and evaluation was conducted internally although it was not as effective as one might have liked.

The Chair asked if indeed the projects the Department had so far undertaken were succeeding in the black economic empowerment drive.

Mr. Maseko replied that there was a perception that the black economic empowerment program was not reaching far enough but clarified that this was an extensive program that involved billions of rands and that it was not true that a small segment of the population was benefiting. The Department normally engaged the private sector in consultation and execution of projects and that due to the imbalance of the past only 20% of the blacks were able to bid for projects hence they have 100% chances of succeeding in their bid. He added that 100% tenders went to equity ownership and that 47% of tenders went to affirmative section but that there was clearly room for improvement.

The Chair asked if the Department had made any transfers to IDT for the current financial year.

Mr. Maseko replied in the negative explaining that IDT fell under a different category of a parastatal and that it reported directly to the Minister. He noted that IDT still subsisted from the R2 billion budget it was allocated when it commenced operations and that it had not received any additional funds. The Department utilises the IDT as a project manager and the Department's representative sits on the board of directors to monitors its operations.

The Chair noted that there was an indication that the IDT would make a presentation to the committee and asked members to take up the matter then.

The meeting was adjourned.