Challenges with White Papers on Public Works review, with Deputy Minister

Public Works and Infrastructure

31 January 2017
Chairperson: Mr B Martins (ANC)
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Meeting Summary

The Department of Public Works (DPW) took Members of the Portfolio Committee through a review of the 1997 and 1999 Public Works White Papers and the development of a new one. A brief background was given on the development of the 1997 White Paper, with the focus on the motivation for its development, which was to ensure the functionality of the DPW as a department, as well as ensure the implementation of national and community-based public works programmes. One area still in need of attention in the 1997 White Paper had been the revitalisation of workshops in regional offices. The Department had built a relationship with the Department of Higher Education through its technical and vocational education and training (TVET) programme, with the aim of resuscitating the workshops. The Government Immovable Asset Management Act, 2007(GIAMA) was a result of the 1997 White Paper, and its purposes were outlined in the presentation.

The 1999 White Paper, on the other hand, had focused on the construction industry. The development of this White Paper had been aimed at highlighting the role of Public Works in the construction industry. It was also developed to reflect government’s vision for an enabling strategy aimed at enhanced delivery, greater stability, improved industry performance, value for money and growth of the emerging sector in the construction industry. Other attributes and importance of the 1999 White Paper were dealt with extensively.

The White Paper proposed the establishment of a Construction Industry Development Board (CIDB) to advise on policy and existing/proposed legislation; to implement programmes to address the volatility of demand; to improve construction industry performance; to develop the capacity of the emerging sector; to promote a streamlined regulatory framework; to enhance the government’s capacity to manage delivery; and to support and champion enabling environmental programmes.

The review of both White Papers was necessary for assessing progress and achievements; identifying gaps and challenges encountered during implementation, and providing recommendations in addressing the challenges; reviewing the 1997 and 1999 policy objectives, and assessing their continued relevance in realising government’s national priorities; aligning public works functions with the national development plan (NDP); developing policy objectives to address current developments in the local and global environment in which the DPW operates; determining how the construction and property industries could be better regulated to promote growth, transformation and competition; clarifying the national Department’s mandate and oversight of the provincial DPW, particularly because of the concurrent nature of the public works function, reflected in Schedule 4, Part A of the Constitution.

Regarding the milestones achieved on the White Paper, the Department’s legislative programme was progressing according to plan. The research emanating from various legislative projects would be fed into the White Paper project. Major milestones in the White Paper process, culminating in the proposed Public Works Bill, were highlighted.

Questions and comments from MPs focused on the need to finalise the White Paper process in the current term; ensuring an even spread of infrastructural development throughout the provinces; factoring an enabling environment before construction was carried out by the Department on behalf of user departments; whether or not the Department was getting value for money through various boards; reasons for stopping the workshops; the process to be undertaken in resuscitating the expanded public works programme(EPWP); the impossibility of GIAMA to provide a uniform immovable asset management framework that would promote accountability and transparency within government; how the issue of concurrence would be overcome by the Department; and the capacitation of the policy research and regulation branch within the Department.

Meeting report

Department of Public Works 1997 and 1999 White Papers: Review

Ms Mandisa Fatyela-Lindie, Deputy Director General (DDG): Construction and Property Policy Regulation, Department of Public Works (DPW) said that the decision to review the White Paper was motivated by a number of issues, with the main issue being the notion of concurrence. There was an Act for the DPW, which should be implemented within the principles of cooperative governance and within the intergovernmental relations system. This necessitated the development of a new Public Works White Paper.

The DPW had two White Papers – namely, the 1999 Construction White Paper and the 1997 White Paper. The 1997 White Paper covered the essential features of the Department, while the 1999 White Paper focused on the construction industry. During the submission of the 1997 White Paper to Cabinet, the intention had been to ensure that the DPW functioned as a department, impacted directly on issues relating to job creation in South Africa, as well as responded to the socio-economic objectives of the country. The plan was to ensure that the implementation of the national public works programme and the community-based public works programme would lead to issues of poverty being dealt with and also ensure that the rural areas were not ignored.

However, there were quite a number of aspects of the 1997 White Paper that still needed to be addressed. The DPW had worked hard to establish a durable strategy that would not only set out key departmental programmes, but also deliver on socio-economic objectives through expanded investments in public works and dynamic changes in the Department’s approach to public works programmes (which was aimed at creating jobs for the communities); property investments; property and facilities management; and project management. The DPW had conducted workshops in all its regional offices in the past and was currently at the stage of revitalizing such workshops.

Most of the work delivered by the DPW in the past was delivered by the Department with the assistance of internal capacity. The introduction of the project management approach was aimed at professionalising the delivery of social services, but not necessarily to downgrade the importance of the workshops. In resuscitating the workshops, the DPW had built a relationship with the Department of Higher Education (DHE) through its technical and vocational education and training (TVET) programme.

South Africa had evolved as a country and this evolution had resulted in the establishment of new departments. Some of the new departments carried out functions similar to those of the DPW, particularly in regard to rural development.

The Government Immovable Asset Management Act, 2007(GIAMA) was a result of the 1997 White Paper. It was therefore important to read GIAMA in conjunction with the 1997 White Paper for proper understanding. The purpose of GIAMA was highlighted (see slide 5 of the attached document).

With regard to the 1999 White Paper, which focused on the construction industry, it was pointed out that the construction industry was a dynamic one that had driven the economy of South Africa. It was therefore imperative for the DPW to develop a White Paper that would highlight the role of Public Works in the construction industry. The White Paper was also developed to reflect government’s vision for an enabling strategy aimed at enhanced delivery, greater stability, improved industry performance, value for money and growth of the emerging sector in the construction industry. The 1999 White Paper also reflected Government’s commitment to the objectives of development, growth and democratisation of society; the vision of a construction policy; and strategies that promoted stability, fostered economic growth and competitiveness, created sustainable employment and addressed historic imbalance while generating new capacity for industrial development.

The White Paper said that there was no recognised national agency capable of coordinating the development and implementation of measures to promote best practice in the construction sector. It also recognised that measures to enforce compliance with minimum standards in the sector were inadequate. The White Paper therefore proposed that a Construction Industry Development Board (CIDB) be established to advise on policy and existing/proposed legislation; implement programmes to address the volatility of demand; improve construction industry performance; develop the capacity of the emerging sector; promote a streamlined regulatory framework; enhance government’s capacity to manage delivery; as well as support and champion enabling environment programmes.

The White Paper also recognised the need for a coordinated interaction of government, professional bodies and the contracting sector in order to ensure appropriate development of all built environment professionals; and also to achieve greater synergy in the training of such professionals to meet public sector objectives, industry needs and the promotion of existing and new professionals. The White Paper then called for the establishment of an overarching Council for the Built Environment Professions (BEP) to address this need.

During the collusion, the consensus in the country was that DPW was not paying attention to the role of built environment professionals in the collusion. Meetings had also been held with some professionals who complained about the marginalisation and sustainability of the BEP, particularly the engineers.

Going through the 1997 and 1999 White Paper, along with the Council for the Built Environment (CBE) Act 2007, it would be noticed that the DPW had been established to deliver all built environment professionals through the CBE. It was therefore necessary to put in place regulations for built environment professionals. The Competition Commission had already identified a duplication of work between the Commission and CBE. The CBE had already made a submission on the adjudication of this matter through the CBE Act. The DPW was currently considering a revision of both the CBE Act and the CIDB Act. However, the Competition Commission refused to endorse the implementation of the CBE Act, based on reasons that would be discussed during further engagements with the Portfolio Committee. The Competition Commission was of the opinion that DPW should reflect on the inclusion of the Indentification of Work (IDOW) in the CBE Act. The Commission also said that IDOW could be perceived as anti-competitive. DPW then carried out desktop research on the existence of parallel situations around the world in order to compare such findings with the approach to be adopted in implementing IDOW in South Africa. The findings of the research showed that each selected country had its own regime but the proposal being made with IDOW was unparalleled. This formed the main basis upon which the Competition Commission had rejected IDOW

The 1999 White Paper had led to the establishment of the CIDB Act; the CBE Act; as well as six Acts governing the BEP (already listed in slide 9 of the attached document).

Reviewing the CBE Act would mean developing an institutional form that would respond to the needs of the Republic. One of the challenges being faced was the misalignment between the Acts governing these professions and the CBE. The implication of this was that some of the professions received their directive from the CBE Act instead of the Act governing such profession.  The new White Paper would put into consideration some of these issues, including the means by which a new CBE would relate to the BEP.

The DPW had alluded to its intention to review the White Papers over the medium term expenditure framework (MTEF) period. In the Minister of Public Works’ five year policy statement and vision for 2014-2019, he had stated that “we have to embark on a thorough policy review. We have to go through the White Paper process culminating in a Public Works Act by the end of this Administration… to refresh and clarify our mandate and to establish a platform for sustainable development.”

The review of both 1997 and 1999 White Papers was necessary for:

  • assessing progress and achievements;
  • identifying gaps and challenges encountered during implementation, and providing recommendations in addressing the challenges;
  • reviewing the 1997 and 1999 policy objectives, and assessing their continued relevance in realising government’s national priorities;
  • aligning public works functions with the national development plan (NDP);
  • developing policy objectives to address current developments in the local and global environment in which the DPW operates;
  • determining a better mode of regulation and transformation for the BEP;
  • determining how the construction and property industries could be better regulated to promote growth, transformation and competition;
  • determining the role of the DPW in making sure construction and property industries represented the demographics of the country and were more inclusive of marginalised groups, which included women, youth, and persons with disabilities;
  • determining how enterprise development initiatives could be implemented by the DPW in order to deepen transformation in the construction and property sectors;
  • considering mechanisms to address conflict resolution in the construction industry;
  • considering ways to maximize the impact of DPW programmes to alleviate poverty and create sustainable employment; and
  • clarifying the national department’s mandate and oversight of the provincial DPW, particularly because of the concurrent nature of the public works function reflected in Schedule 4, Part A of the Constitution, 1996.

The Department had received legal opinions in times past. The last legal opinion had been received from Advocate Kekana in 2014. These legal opinions dwelt on the need to either amend the Government Immovable Asset Management Act (GIAMA) in order to ensure greater enforceability than was currently obtainable at the moment, or ensure that the Public Works Act could regulate the public works function. The legal opinions received by the Department agreed on a salient issue, which was that the Minister of Public Works had no power to preside over provincial public works.

As far as clarifying the national department’s oversight function on provincial departments of public works was concerned, it should be said that the Constitution did not assign public works functions to either national or provincial governments. GIAMA assigned functional responsibility to DPW in relation to its role as the custodian of certain immovable assets within the national sphere of government, while the functional responsibility of provinces was in relation to their role as the custodian of immovable assets within the provincial sphere of government. No express requirement was placed by GIAMA on provincial executives, who served as custodians of immovable assets vested in provinces, to account to the Minister of Public Works. Other provisions of GIAMA relating to the powers of the Minister were highlighted (see slides 13 and 14 of the attached document).

Regarding the actions that had been taken by the Department for the White Paper process, it was pointed out that an executive committee (EXCO) White Paper task team had been established by the Department’s executive committee. The task team was chaired by the Director General (DG), and was comprised of heads of various branches. The task team adopted a comprehensive framework to affirm the scope of the White Paper process, and define essential linkages to facilitate participation by all stakeholders.

Thematic areas identified as fundamental to the White Paper process included construction design and project management; project management; immovable asset management; public employment and skills development programmes; construction and property sectors’ regulatory environment; and constitutional law. A brief description of each thematic area was highlighted.

In 2016, regional offices were engaged through road shows to kindle participation in the White Paper process and solicit comments on the achievements, challenges and continued relevance of the key interventions identified in the 1997 and 1999 White Papers. An inter-governmental White Paper task team was also established, consisting of branches of the DPW and the Property Management Trading Entity (PMTE); public entities reporting to the Department; provincial departments of Public Works; and selected national custodian/user departments. The responsibilities of the inter-governmental task team were outlined.

In terms of the milestones achieved on the White Paper, it was said that the Department’s legislative programme was progressing according to plan. The research emanating from various legislative projects would be fed into the White Paper project. The projects included the review of the CIDB Act, which was aimed at addressing challenges of governance, the slow pace of transformation in the construction industry and BEPs, and legislative compliance in the area of competition law. It also included the review of the CBE Act and the six laws governing BEPs, which were premised on the need to achieve an appropriate balance between independent interests of the self-governing authorities for built environment professionals; accountability to the public served by these professions; as well as accountability to government for the performance of statutory functions.

Major milestones in the White Paper process, culminating in the proposed Public Works Bill, were highlighted (see slide 19 of the attached document).

Mr Jeremy Cronin, Deputy Minister, said that he had gone through both White Papers carefully. He said that it was the first time in many years that a single Minister would be in charge of Public Works. In the Minister’s forward to the White Paper, he had said that the DPW had functioned as a ‘Cinderella department’ and also battled with an “identity crisis,” especially in relation to the critical property management function. The 1997 White Paper had identified this challenge, and the effective management of the portfolio. This led the Cabinet to decide that there should be some form of property management within the entities. However, the decision of Cabinet was never implemented for various complex reasons until the Portfolio Committee of this administration.

The White Paper also dealt extensively with the public works programme. It considered what became of the Expanded Public Works Programme (EPWP) in 2004, and critiqued it based on the infrastructure sector; as well as the job of Public Works in regulating and intersecting with the construction sector. This necessitated a push for labour-intensive programmes to address the massive unemployment crisis.

Other issues included the regulatory function of BEP, with the struggle for transformation, projects and project management.

Complicated political issues that may arise during the White Paper process included critical tasks identified by back then for the department to have a critical regulatory role in terms of the BEPs and the construction sector, although a major focus had been placed on Black Economic Empowerment (BEE)

The first political challenge concerned whether the institutions established as a result of the 2000 Act were appropriate; how to strike a balance between the state with its critical public interest role and the role of the professions, as well as presenting this in legislation.

On the issue of concurrence, there was a problem confronting the DPW regarding enforcement of the GIAMA, as it managed a massive portfolio of over R112 billion. This had been flagged as an issue. Then there was the Independent Development Trust (IDT) – how did the DPW want to use it for project management? It was important for the Department to clarify the function of the workshops organized and the reason for resuscitating those workshops. In terms of the process, the CIDB Act, CBE Act and the other Acts relating to the six professional councils would be carefully considered.

The presentation already showed that the timeline set for submission of the Public Works Bill to Parliament would be in 2019/2020. The implication of this was that it would be impossible to finalise the Bill during the term of the current Portfolio Committee. Members of the Portfolio Committee would agree that it usually took a long time to find one’s feet and get on top of things. It would be proper to realistically fast-forward a bit and avoid turning the White Paper into a voluminous 500-page document, so the timeline should be revisited.

Discussion

Mr M Filtane (UDM) said that he agreed with the Deputy Minister on the issue of the timeline. It was important for the Department to try its utmost best to finalise the Bill during the current term. A new Committee set up after the elections in 2019 might be occupied with other issues. South Africa was at a stage where the issue of transformation was central to every aspect and every portfolio.

He asked how an evenly spread infrastructure development would be ensured throughout the provinces in order to enhance balanced socio-economic development. Such balance could be built into the Act. He wanted to know if the Department had factored having an enabling environment before construction was carried out, whenever such construction was requested by a user department; and if the department would consult with local governments during the White Paper process. Would the Department engage with the Department of Education to ensure a creation of synergy between proposed infrastructure development and curricula at schools, especially since it was important to link the education system with infrastructure development?

The Department was asked if it would become necessary to have a re-look at the Constitution, since it appeared that the Minister had no constitutional powers to begin with.

He also wanted to know if the Department was getting value for money through the various boards. It was suggested that the need for so many boards should be reconsidered, especially if the existence of numerous boards would not be helpful to the broader developmental programme of the country.

Ms E Masehela (ANC) expressed her support for the finalisation of the White Paper process before the end of term of the current Portfolio Committee. She asked the Department for the reasons behind stopping the workshops in times past, and how the EPWP training programmes could be resuscitated.

Ms D Mathebe (ANC) was of the opinion that the Department could not account for all immovable assets. It was therefore impossible for GIAMA to provide a uniform immovable asset management framework that would promote accountability and transparency within government. Reference was made to point 10 on slide 10 of the presentation. She opined that there were quite a number of marginalised professionals.

It was suggested that the powers and functions of provincial and national departments should be concurrent.

Ms P Adams (ANC) said that the issue of concurrence was provided for within the Constitution. Section 4, however, provided for a number of functions that were attributed, for instance, for departments like Tourism and Education. The question that arose from this issue was how such departments would overcome the issue of concurrence. There should be a uniform approach so that the issue of concurrency would not hamper the work of the national departments. She wanted to know if there was a platform in place to overcome the issue of concurrency.

It was assumed that the branch overseeing policy research and regulation was the same branch that carried out the regional road shows. She asked if this branch was capacitated in terms of human resources, especially since in her opinion, the branch should coordinate the writing of the White Paper.

Department’s Response

Deputy Minister Cronin responded to the question of how to ensure a strategic spread of infrastructure at the national level. He said that the department played a major role along with other entities, private sector, departments and provinces. It was for this reason that an infrastructure Act was established in the previous administration, which in turn established the Presidential Infrastructure Coordinating Commission (PICC). This brought about strategic integrated projects. Apart of the issue of collusion in 2010, the lesson learnt was that the State had the capacity to drive a massive infrastructure programme under a tight deadline. This resulted in a huge surge of building in 2010, leading to the collapse of the pipeline after a while. It was impossible for the Department to narrowly sustain the pipeline but DPW was a key role player in ensuring this sustenance on a coordinated basis. Getting coordinated actions at the national level was very important. The PICC should attempt to get better to attain better strategic coordination, and seek to ensure its presence in every Province.

In terms of DPW’s programme, the most specific area was the location of schools. The Department would engage further with the Committee on this issue, but it was in this aspect that the DPW was trying to get a rational approach to addressing the issue. It would be done in collaboration with other departments, and more particularly with municipalities and the IDT. This was about improving the capacity of municipalities to develop sustainable and integrated development plans; and also to differentiate national role players from provincial role players. The DPW worked closely with both the Departments of Basic Education and Higher Education. The infrastructure budget for those sectors rested with those departments and not the DPW.

Mr Filtane clarified his question, noting that he was asking about the influence of the professionals that would drive infrastructure development.

Mr Cronin said that it was exactly the same discussion the DPW had held with the Departments of Basic and Higher Education. The Engineering Council could project the engineering requirements for infrastructure based on particular infrastructure pipelines.

The 2010 collusion issue tackled by the PICC involved massive collusion, and the Competition Commission and Tribunal played a role, and quite a significant price was being paid by major construction companies in the private sector out of the. It was still necessary to work towards achieving transformation within the programme. A number of entities or metros were contemplating taking up civil action. The PICC engaged with those entities and pointed out several issues. The first issue was that civil action would normally take a long time. The other issue would be how to prove an actual financial loss. The Department also pointed out to the city of Cape Town that where a civil award was made by a court for damages, the amount would not be paid into the account of City of Cape Town. Instead, it would be paid into the National Revenue Account. The DPW therefore came up with a different approach that was led by the PICC.

The DPW agreed on the need to get value for money from the boards. It was important to look into having regulatory entities when considering the CIDB and CBE Acts.

The suggestion to have the Constitution amended was a possibility, and there were some elements of federalism. However, he felt that the capacity of the Minister should be strengthened in terms of GIAMA as opposed to anticipating an amendment to the Constitution.

DDG Fatyela-Lindie spoke on the issue of delivery of infrastructure. The DPW recognised that one of the issues needing attention in the White Paper process was the town planning function within the Department, as well as making sure there were enough town planners in the country capable of serving Public Works. The process was necessary in order to avoid legal challenges after acquiring a site. The town planning profession and two other professions did not fall within the ambit of the CBE. The DPW looked forward to correcting this error in the new White Paper.

It was assumed that the reason for stopping the workshops in times past was because of a change in the business model to emphasise project management. However, the Department would have to accept the need to take more graduates from the Technical and Vocational Education and Training (TVET) colleges.

The issue of engineers not trained in labour in terms of methodology had been addressed. The EPWP officials came up with an interim measure that would also refer back to the training, and influence the curricula.

Regarding other departments not knowing the exact amount of their immoveable assets, the DPW should be fine, and GIAMA should also kick in. The DPW had worked closely with National Treasury on the recognition of GIAMA. Departments should work together to ensure that they complied with GIAMA, especially since it would become necessary to disclose assets for budget applications. In the implementation of GIAMA, it had been noticed that clients battled with the challenge of understanding the GIAMA principles. The department was paying attention to making sure its clients understood the imperatives and requirements of GIAMA at national level.

The notion of marginalised professionals and the shortage of professionals was debatable. Nevertheless, it seemed that the current numbers of professionals were not used effectively. The question arising from this issue was how willing the professionals were to work for government, which culminated into a key area to be addressed in the White Paper.

The department would deliberate on the issue of concurrent functions. It was an area that needed greater improvement, especially since it affected service delivery.

In terms of the capacity of the research and policy branch of department, the DPW had previously been waiting for the organogram to be completed. However, the organogram had been completed and the focus had been shifted to building the capacity of the branch. There was a need to anchor policy thinking and policy conceptualization, as well as, build the research capacity of policy and research in government.

Mr Cronin said the Department’s situation was slightly complicated in the sense that many provincial Members of Executive Council (MEC) had joint functions. It was a collaborative phase, but he thought it had been functioning particularly well.

The meeting was adjourned.        

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