Small Town Revitalisation Programme (Inner City Regeneration): Department of Public Works report

Meeting report

Planning and Precinct Development: briefing by Department of Public Works
Ms Sasa Subban, Deputy Director-General (DDG): Inner City Regeneration; indicated that the since 2014, Planning and Precinct Development (previously known as the Inner City Regeneration Programme that focused exclusively on Tshwane) – has expanded its mandate to include other urban metros and rural areas - supporting integrated development and the creation of government precincts in collaboration with provincial and municipal counterparts in order to facilitate accessible service delivery to the public/communities. The Department has committed to the development of rural areas through the establishment of the Rural Precinct Development Programme to address spatial imbalances of the past as outlined in the National Development Plan (NDP).
           
Ms Subban stated that the programme seeks to achieve a number of goals and these included:
• To support the creation of Government accommodation solutions within identified precincts in collaboration with municipalities and sector departments to ensure efficiencies for the State
           
• To guide the location of government infrastructure development and solutions as a catalyst for government and private sector investments supporting mixed-used development to advance economic stimulus
• Through Precinct Plans, ensure effective management of precincts that promotes safe, accessible, and environmentally sustainable government facilities
• To reduce lease costs, encourage shared services and generate revenue for the Property Management Trading Entity (PMTE)
• Integrate development in collaboration with provincial and municipal spheres to improve quality and improved access to government services whilst contributing to rural town socioeconomic development.

Municipalities, including the Spatial Development Framework (SDF) and Integrated Development Plan (IDP), are aimed at supporting government development with budget commitment which should be reserved for water, sewer, roads, electricity, and Information and Communication Technology (ICT). The Master Plans/Sector Plans are to direct the future development of the municipality. The infrastructure plans would assist in guarding and directing the investment of bulk infrastructure within the municipality. The projects would be undertaken in number of areas and these include Idutywa, Secunda, Mount Fletcher, Carolina, Mandeni and Howick.

The Department had noted a number of challenges in the execution of the projects and these were mainly to do with current capacity (this has been addressed in the approved PMTE structure), difficulty in obtaining of user needs assessments and budget from users (submission of user assessment management plans).

Ms Subban indentified a number of challenges to do with the alignment with sector departments: Department of Human Settlements, Department of Rural Development and Land Reform, Department of Public Service and Administration and engaging with Cooperative Governance and Traditional Affairs (COGTA) to become the lead department in soliciting support from municipalities and communities. There was also a limit in time frames associated with town planning processes which include site legalisation, site acquisition & bulk services.

The DPW has recently approved the PMTE structure; capacity has been increased for the Property Policy Deployment (PPD) Unit to intensify delivery across prioritised municipalities. There had been a direct engagement with user departments on the User Immovable Asset Register Plan (UAMP) prioritisation linked to development priorities of identified municipalities. There is a concerted effort to intensify PPD collaboration and institutionalisation with sector departments. A total of 20 rural precincts have been planned for development by 2020.

Discussion
Dr C Madlopha (ANC) appreciated that the Small Town Revitalisation Programme had been extended to rural municipalities and not only cities as this was the concern of Members in the previous engagement. The Committee should be briefed on the timeframes for the commencement of Small Town Revitalisation Programme to which areas as this would assist Members when conducting oversight. It was a concern that the consortium used for this particular project of the Small Town Revitalisation Programme is WBHO as this was one of the 15 companies that had been fined R311 million by the Competition Commission for collusion. It was shocking to hear that DPW had given a 25 year contract to the Bafokeng Company to do the work of Statistics South Africa. What would be the cost of this contract to government? The Department should indicate each role that would be played by particular departments in these projects as this was missing from the presentation. DPW should also furnish the Committee with target dates for the projects to be completed.

Ms S Kopane (DA) complained that the bulk of information presented was not contained in the presentation document. The presentation lacked timeframes for the projects undertaken as this was good for doing oversight work. It was good to have this kind of programme but the Committee should also be briefed on the costs involved for each project. She requested that DPW should identify the challenges that are experienced in a particular municipality where a project would be undertaken. The presentation failed to highlight the possible challenges in regard to capacity to execute these projects.

Ms D Kohler-Barnard (DA) also expressed disappointment that the presentation lacked the timeframes for the commencement and completion of each of these projects as this was important information. It was unclear if the Department had enough highly skilled people who would be able to ensure that the programme was a success. It was indeed absurd to see that the consortium used for this particular project of the Small Town Revitalisation Programme is WBHO, as this was one of the 15 companies that had been fined by the Competition Commission for collusion. It would be interesting to know who was on the board of the entities involved in the consortium as those are supposed to account for doing business with WBHO. The Department should also provide an explanation for the 25 year contract given to the Bafokeng Company. She wanted to know if there were any plans in ensuring that the government services like clinics, roads and schools are located closer to the people.

Ms E Masehela (ANC) was pleased that the Small Town Revitalisation Programme would also be focused on rural areas. The Committee should be briefed on the budget allocated for all the projects undertaken and how this budget would be used in municipalities. It is also important for DPW to prioritise deep rural municipalities to benefit from these projects. The prioritisation of rural municipalities in these projects would benefit the people in terms of bringing government services closer to where they are located. It was shocking to hear that DPW had given the Bafokeng Company a 25 year contract as this was too long and there are so many contractors or service providers out there that are looking to benefit from these projects.

Mr M Filtane (UDM) expressed disappointment that the job creation element was not mentioned in the presentation. The Committee should be briefed on the number of jobs to be created in these projects, including those that would be involved in the maintenance of infrastructure. It is clear from the presentation that the majority of these projects for the revitalisation of small towns would take place in the inner cities but it would be important to know the location in which these projects would be undertaken. The focus of DPW also seemed to be on the typically rural-urban towns instead of deep rural areas. The Department should be incentivising the private sector to be involved in these projects especially in bringing government services closer to the people, as already pointed out by previous Members. Who is going to carry the cost of these projects? He asked if the existing programmes of DPW would be impacted positively or negatively by the revitalisation of small towns project.

Ms P Adams (ANC) indicated that DPW was the custodian of the Expanded Public Works Programme (EPWP) and therefore it would be interesting to know the number of EPWP jobs that would be created in the projects. What would be the total cost of the projects as this information was not contained in the presentation? The lack of timeframes for the projects was particularly concerning as this was indeed imperative to know when Members are doing oversight work. The issuing of a contract for a period of 25 years was totally unacceptable as it denied opportunity for other service providers.

Mr M Dlamini (EFF) also requested DPW to provide detailed information about the 25 year contract awarded to the Bafokeng Company and the cost that is likely to be incurred by Government. DPW should provide the Committee with information as to who the owner of the company was that was given a contract for 25 years.

Mr F Adams (ANC) commented that there were many government departments that owed huge amounts of monies to municipalities and this needed to be addressed. It would be interesting to hear if these projects would assist in dealing with those debts by national departments. It was unclear as to how DPW would benefit from the existing programmes like the Operation Phakisa, Industrial Development Zones (IDZs) and Special Economic Zones (SEZs).

Mr Mziwonke Dlabantu, Director-General: DPW, welcomed the questions and comments made by Members as they assist DPW in ensuring that these projects become a success. The Committee would be provided with timeframes for the commencement and completion of the various projects as this was indeed important. There is a lot of work that is still to be done in terms of analysing and planning for the work to be done and this needed to be taken into consideration. The programme was looked at in the context of the Turnaround Plan, Strategic Plan and Annual Performance Plan (APP) of the Department, which were presented to the Committee. One of the items highlighted in the APP and the Turnaround Plan of DPW was on rebalancing development that is undertaken in rural and urban areas and this was exactly what the programme aimed to achieve. DPW was acutely aware that there are other government departments such as the Department of Human Settlements (DHS) intensively involved in these projects undertaken in different municipalities especially in the development of residential areas. It was still early to come up with relevant major players that would be involved in these projects and this could be done in the future.

Ms Subban responded that DPW took note of the complaints of Members about missing information on the timeframes for these projects, the location of the municipalities where the projects would be happening and this would be taken into consideration. DPW was busy with a government precinct in the Durban area and the focus in the region is on inner city regeneration and the matter of the upgrading of the residential areas in this municipality is also part and parcel of the plan. DPW is required to conduct a feasibility study to determine the budget needed for a particular project and this study includes the benefits of the project to be undertaken. DPW was also involved in many areas in Limpopo and these included Polokwane and Giyani where the main focus is on inner city regeneration. DPW would ensure that the job creation component was addressed in the projects. It was difficult at the moment to come up with the exact number of jobs likely to be created.

Ms Subban replied that DPW had already looked at existing programmes like the IDZs and SEZs and there are plans in place for these programmes, especially since these projects would be mainly based on infrastructure development. The aim of DPW is to increase the revenue of the municipalities where these projects would be taking place. There was a workshop with government departments that would be involved in Small Town Revitalisation Programme and this was aimed at improving realignment between the relevant stakeholders.

Mr Peter Chiapasco, DDG: Asset Investment Management, DPW, clarified that the bulk of the work done by DPW was still at conceptual level and was primarily based on conceptual planning and the availability of the funds. The budget allocation for the budget would be informed by the feasibility study that is to be undertaken. The budget to be allocated would come from a number of stakeholders and some would be a direct capital investment from DPW and each of the projects would have a specific funding approach. In relation to the location of the projects, this would be guided by the local authorities, particularly by the IDP and Social Development Strategy (SDS). It must be stated that DPW had the power to influence the decision to be taken by the local authorities on the location of a project and indicate why it would be preferable to have a project in a particular location. The option of a 25 year contract was introduced by National Treasury and DPW could renew part of the deal for the maintenance of infrastructure.

Ms Subban added that DPW was involved in the deal in regard to the provision of land and this means the contract was based on a direct relationship between the National Treasury and Statistics South Africa.

Mr Dlabantu said that there is a concerted effort to ensure that government departments are aligned rather than separated especially in the projects that are to be completed. DPW would also need to deal with the User Immovable Asset Management Plan (UAMP) as this made it difficult for DPW to analyse all the properties. DPW had an important role to play in the coordination of other government departments in the delivery of services and this was one of the reasons for the introduction of the Intergovernmental Relations and Coordination Programme in the budget structure of DPW in 2014. The coordination was particularly important in the stimulation of economic activities and to enable sharing of scarce resources. DPW was involved in the precinct provision for a number of government services and there has been a demand for DPW to be involved in the terrain of Higher Education and Training.

Mr Dlabantu added that there is a plan in place to ensure that government services are brought closer to where people are located. It was unfortunate that the budgets for government services are not located in DPW but are decentralised and dispersed all over the place and DPW would need to start influencing the allocation of this budget to respond to the needs of the people on the ground. There should be joint meetings with other portfolio committees in order to discuss a way forward for these projects as this would be integrated in DPW’s plan going forward.

Mr Filtane said that there was a need to sensitise DPW on the very serious issue of development that is mainly focused on small cities rather than deep rural areas. The Minister of Land Reform and Rural Development was clear that there is a need to ruralise the economy. It was unclear if DPW was focused on ruralising or urbanising the economy of the country. DPW should be working closely with the private sector to ensure that the supporting services are brought closer to where people are located as this would save a lot of money for the poor. It would be important to hear from DPW on whether the chosen municipalities for these projects are typically urban or rural municipalities as this was not clear from the presentation.

Mr Dlamini asked DPW to provide clear and detailed information on the 25 year contract given to the Bafokeng Company. It was unacceptable for DPW to shift the responsibility to the National Treasury and Statistics South Africa without providing an explanation as to who took the decision to sign a contract that would last for 25 years and cost a staggering R22 billion.

Ms Kohler-Barnard asked if there was a strategy in place to deal with the challenge that DPW had in obtaining user needs assessments and budget from users including the submission of user assessment management plans. It was totally unacceptable for any government department to provide a service provider with a contract lasting 25 years and National Treasury would perhaps need to brief the Committee on this.

The Chairperson suggested that perhaps DPW should be given an adequate time to do an investigation on the 25 year contract and provide the Committee with a relevant written response.

Ms Masehela proposed that DPW should also provide the Committee with information on the budget and costs involved for these projects in the various municipalities.

Mr Filtane mentioned that it was still unclear how these projects would be financed especially in the utilisation of rental income. It would be important for DPW to provide the Committee with information on the annual rental income likely to be generated and how much DPW was proposing to build from the rental income generated. The concern was mainly that government departments are generally bad payers of rental income and this poor payment could impact negatively on the projects.

Mr Dlabantu explained that DPW had also included rural municipalities in these projects. It is true that the projects are based in towns in rural municipalities and not deep rural areas. DPW welcomed the suggestion by the Committee to furnish detailed information on the matter of the 25 year contract and the location and the financing for these projects and this would be done within the next 14 work days. It must be stated that DPW was allowed to do business with WBHO as the company had not been officially blacklisted. DPW would only take a decision not to do business with WBHO once the company had been officially blacklisted.

Mr Dlamini requested that DPW provide a detailed step-by-step written response on the 25 year contract.

Mr Dlabantu responded that the Committee would be provided with information on the 25 year contract including the information on annual rental income likely to be generated and how much DPW was proposing to build from the rental income generated.

Ms Masehela stated that it was unclear how many rural municipalities would be included in these projects. It seems like there is little difference between small urban and rural towns. The focus should be on those municipalities that are deeply rural.

Mr Dlabantu replied that there are rural areas that would be included as part and parcel of these projects. There are a number of rural municipalities that had been incorporated into the projects and these included Idutywa in the Eastern Cape and Kwamhlanga in KwaZulu-Natal.

Mr Filtane mentioned that Idutywa could be considered as a small town and there is a need to distinguish between small towns and typically rural areas. The way in which these projects were to be dispersed within the municipalities was perpetuating the problem of rural-urban migration. The conceptualisation of a particular project should take into cognisance the socio-economic benefits to be derived by communities and the risk factors involved.

Mr Dlabantu replied that DPW would take into consideration the points made by Members, particularly on the socio-economic benefits for communities and the risk factors in these projects.

The Chairperson reminded DPW to provide all the information that was requested by Members in a written response within the stipulated 14 days.

The meeting was adjourned.