Expropriation Bill [B4D-2015]: President's referral to Parliament; Public Works & PMTE on 2017/18 Annual Performance Plan, with Minister & Deputy present

Meeting report

Introductory Comments by the Minister of the Department of Public Works

Mr Thulas Nxesi, Minister of the Department of Public Works, noted that the Annual Performance Plan (APP) of the Department continued to improve yearly. This improvement was evident in the audit committee’s ability to identify the need for qualitative improvement in the Department. Additionally, the APP was subjected to peer review to ensure that it was of a high standard DPW set progressively high targets so as to improve service delivery. He assured the Committee that the Department moved sizably in the implementation and delivery of its services.

Department of Public Works Annual Performance Plan 2017/18

Mr Imtiaz Fazel, DDG: Governance Risk Compliance, DPW, began the presentation by noting that the DPW budget structure was now divided into two – previously a single budget was prepared. The budget now consisted of DPW programmes and the PMTE, including regulations. After looking at the constitutional, legislative and policy mandates of the Department, the presentation looked at planned policy initiatives for review and/or development in 2017/18, namely:

• Expropriation Bill [B4D2015] that was passed by Parliament in 2016, which had been returned by the President, citing a lack of proper consultation. The legislation will ultimately replace the Expropriation Act of 1975 which was in consistent with the spirit and provisions of the Constitution. The Department was processing the draft Public Works General Laws Amendment and Repeal Bill that had been developed to repeal or amend legislation or provisions in legislation assigned to the Department that were in consistent with the Constitution or are redundant or obsolete.
• DPW planned to review some of Acts such as the Department’s White Papers on “Public Works towards the 21st Century” (1997) and “Creating an Enabling Environment for Reconstruction, Growth and Development in the Construction Industry” (1999) towards development of a new Public Works White Paper and, ultimately, enabling legislation
• Review of the Construction Industry Development Board (CIDB) and Council for the Built Environment (CBE)
• DPW also planned to develop legislation to establish the Independent Development Trust (IDT) to support in the delivery of social infrastructure

Looking at the summary of the 2018/18 APP for the Department, specifically strategic priorities for the internal environment of the Department, one of the priorities included leading and coordinating the Public Sector Wide Expanded Public Works Programme (EPWP) toward the creation of six million work opportunities – the key approach for Phase III of the EPWP was to drive Public Employment Programmes through community participation to ensure that communities became actively involved in government programmes. DPW would continue to assist public bodies to institutionalise the EPWP. The six million work opportunities were equal to 2.5 million Full Time Equivalents (FTE’s) between the 2014/15 and 2018/19 financial years. Enterprise development was one of many implementation models used by the EPWP whereby small businesses, that were owned and created by the poor and unemployed, provided goods and services under the program. The EPW planned to increase the potential of participants to earn income by providing work experience, training and information related to local work opportunities and further education.

In terms of transformation in the construction and property sectors, the Council for the Built Environment (CBE) had a number of partnerships and projects that were designed to contribute towards the transformation of the built environment with six Built Environment Professional Councils BEPCs) being integral to the transformation agenda. The Department had also put measures in place to reduce the occurrence of fraud and to reduce spending on non-essential services.

Mr Fazel noted that the internal strategic priorities for the Department targeted for 2017/18 included:

• strengthening the governance, risk and compliance functions
• re-launch of Operation Bring Back to reclaim misappropriate and unlawfully occupied state properties
• managing integrity and promoting ethical conduct in the Department
• strengthening the oversight of the public works sector in terms of the concurrent mandate
• operationalisation of dedicated a Professional Services function
• strengthening the Department’s research and policy development
• improving the delivery of services to Prestige clients

In terms of the performance environment, departmental priorities for 2017/18 included:

• enhancing the technical capacity of public bodies to implement the EPWP
• improve reporting by public bodies as required by the EPWP Reporting System
• non-reporting of EPWP projects by implementing public bodies resulting in lower numbers of work opportunities
• ensure attainment of EPWP targets for youth and FTE
• implementation of EPWP Standard Recruitment Guidelines to ensure uniformity across all sectors in the process of recruiting EPWP participants
• coordination of EPWP through the Public Employment Programmes-Inter-Ministerial Committee (PEP-IMC)
• managing intergovernmental relations in an effective and efficient manner
• improvements in management practices
• integration of Risk Management into planning processes
• continuous improvement to high-end legal services 
• improving business efficiency through ICT enhancements
• reduction of irregular expenditure
• payment of suppliers within 30 days
• improvements in Supply Chain Management

Mr Fazel then took the Committee through the DPW budget allocation per programme. The average growth in the allocation to the Department over the MTEF period was 6.7%. The budget reduction in 2017/18 amounted to R183 million (2.5% of the baseline amount), R168 million in 2018/19 (reducing the baseline amount by 2.2%) and R163 million in 2019/20 (resulting in a 2% reduction). The bulk of the reductions over the MTEF period were against transfers and subsidies. An average of 86.4% of the total budget over the medium term was allocated to transfers and subsidies for the operations of the Department’s entities – this included the Property Management Trading Entity, which performed the immovable asset management functions on behalf of DPW, the Construction Industry Development Board, which provided strategic leadership to the construction industry and the Council for the Built Environment, which promoted and protected the interests of the public in the built environment. The Department also made transfer payments in the form of conditional grants to provinces and municipalities for the implementation of the EPWP.

Property Management Trading Entity (PMTE) Annual Performance Plan 2017/18

Mr Paul Serote, Head of PMTE, presented the APP of the PMTE for the 2017/18 financial year. PMTE was able to respond to the following external influences:

• effectively managing state properties to ensure functional, economic and social benefits for (a) availing land for social economic development (b) total facilities revamp (c) development of government precincts in small and rural area (d) urban precinct development 
• revenue regeneration and cost saving initiatives for (a) management of revenue and debt (b) identification and incubation of revenue sources (c) built environment digital strategy (d) implementation of the PMTE finance model (e) reducing maintenance, refurbishment and construction costs (f) containing costs associated with leased accommodation (g) implementation of the green building programme
• implementing the directives of the State of the Nation Address (SONA) namely, (A) resource savings (energy efficiency, water efficiency and waste management) (b) transformation of the property sector (c) job creation (d) promoting the development of Small, Medium and Micro Enterprises (SMMEs) (e) Operation Phakisa aimed at growing the ocean economy and other sectors (f) promoting social and economic development through the Small Harbour Programme (g) cost containment measures and reduction in spending on non-essential services

The operationalisation of PMTE would be made possible, internally, through:

• enhancement of the organisational capacity within the PMTE through the development of the structure, processes and systems by (a) professionalising and enhancing the organisational capacity (b) PMTE business process review (c) institutionalisation of the Infrastructure Delivery Management System (IDMS) (d) PTME policy framework (e) establishment of a research unit to enhance decision making on investments (f) integrated technology platform
• reduce under spending on infrastructure budgets by improving systems and processes 
• reviewing the property business, across the immovable asset lifecycle, to ensure long term efficiencies as well as short and medium term deliverables through (a) implementation of a new supply chain management leasing dispensation (b) implementation of a new supply chain management infrastructure dispensation (c) maintenance of the GRAP compliant Immovable Asset Register (d) development of a Strategic Spatial Development Framework

Mr Serote then went onto to outline areas for internal business improvement for the PMTE including:

• PMTE Business Improvement Programme
• Water Management Programme
• Rural Precinct Development
• Improvement in the management of leased accommodation
• Vesting of immovable assets and endorsement of title deeds

The Committee was then taken through the budget allocation per programme of the PMTE. Strategic risks for PMTE included:

• weakening financial viability and sustainability of DPW entities with an emphasis on PMTE
• loss of state resources through fraud and corruption
• breach of key legislation prescripts, acts, regulations and policies (such as the Public Finance Management Act, Treasury regulations, health and safety, GIAMA etc.)
• failure to provide quality accommodation within time and cost i.e. building new, maintaining or refurbishing existing properties)
• deterioration in the value of the state’s portfolio of immovable assets
• non-integration of spatial planning activities with national, provincial and local spheres of government
• failure to integrate business information for cross-cutting functions that informed proper planning

Discussion:

Ms D Kohler-Barnard (DA) wanted to know when the Department intended to present the implementation of its turnaround strategy to the Committee along with a detailed report of the leasing of state owned buildings – currently the state was paid R212 million for leasing.  How did the Department intend reconciling the fact that the state paid a huge amount for leases when there were several empty state owned buildings? She then requested the number of untraceable, empty or leased state owned buildings. She also asked if the Department was able to provide answers to questions on what was happening at provincial level as it was expected given inter-governmental coordination. Did municipalities have the right to rework national legislation to suit itself? Was it legal for all EPWP participants to pull to the ANC quarters in Durban to insist that their contracts be converted to be on a fulltime basis even though they knew the jobs were temporal to begin with? She then questioned when the Prevention Asset Register would be linked to the National Register and why the Department hired Cubans to fill various vacant positions when there were nine million unemployed South Africans.

Mr M Filtane (UDM) asked if the Department was getting value for money from the board of the various entities because maladministration seemed rife along with poor handling of finances. How did the Department verify figures received from various departments on the EPWP? The Department of Agriculture, Forestry and Fisheries reported that the provinces were not able to verify the EPWP information. He observed that the APP presentation referred to the Committee’s involvement in the EPWP – this implementation was given a bad name at municipal level because there had been reports in some municipalities that only ANC card carrying members were being recruited for the EPWP – what was the Department doing about this? He then questioned the percentage of the Department’s budget dedicated to research because it had become a common thing for government departments to not pay serious attention, by way of healthy budget allocation, to research. What was the Department’s plan to provide small trading spaces for people to start their own businesses as a means of encouraging entrepreneurship? How did the Department intend on working with the private sector? The proposed 100% elimination of default judgement and the payment tracking system were welcome developments in the Department. There was a great need to fence the border area in Mpumalanga so that people and animals did not continue to cross from Swaziland into SA. He reasoned that a part of the R30 million deficits can be savaged if border porosity was reduced and SA could also avoid disease transmission through animal roving.

Minister Nxesi responded that the entities of DPW were working well although there were a few challenges. The only entity which had greater challenges was Independent Development Trust (IDT) and this was an inherited problem from the apartheid government. The Department was finalising the process of overhauling by restarting IDT from scratch. Municipalities did not have the authority to change tender specifications - issues often arose from situations where companies brought labourers from outside the location thereby taking over the job opportunities of the inhabitants of that particular location. This often caused agitation although there may be situations where agitations arose due to people’s greed for tenders. He suggested a uniform guideline which was informed by the law for all municipalities.  

Ms Kohler-Barnard said it cost a huge amount of money to win a tender and it was not acceptable for people to come around during implementation to make demands, sometimes at gunpoint.

Mr K Sithole (IFP) questioned how many acres had been transferred from the Department and if the Department had a programme to save electricity – some houses in rural areas were left unattended with electricity running for months. Did the Department have a capacity building programme for the different spheres of government especially the municipal sphere? If so, how many people had been capacitated?

Ms P Kopane (DA) observed that during last year’s APP presentation, the Operation Bring Back was mentioned – why was nothing said about it in today’s presentation? She asked the Department to specify the progress made so far on the provision of water, for example, boreholes. She observed that one of the key areas from last year’s APP was debt recovery and irregular and wasteful expenditure – did these still constitute key issues in the Department? Why had nothing been said on the progress made on these areas? She observed that seven points were mentioned on strategic risk, one of which was not having a proper IT system - when the Department intend to provide a solution to this?

Ms D Mathebe (ANC) observed the mention of elimination of fraud and corruption in the presentation but there was no reporting on the number of people arrested or convicted for the crime. Why did the Department have several vacancies despite the unemployment rate in the country? When did it intend to fill these vacant positions?

Minister Nxesi said making demands and any act of hooliganism were criminal acts and must be reported to the police.

The Chairperson added that although it was correct to say that locals should have first preference when filling vacancies, making unscrupulous demands was criminal. He had written to the police on this in the past because such action could hinder job creation.

Minister Nxesi said the Department had encouraged people to report this to the police. The issue had been raised with the KZN provincial government and some of the contractors were engaged thereon. Subcontractors had also been encouraged to employ locals where it possible. Reports received concerning ANC membership cards being a prerequisite for employment also happened in the Western Cape with DA membership cards. He suggested the Committee could ask for reports on any of the subjects discussed in the APP because the presentation was based on the plans and strategies of the Department.

Mr Filtane asked if a part of the national budget went to provinces.

Mr Stanley Henderson, Deputy DG: EPWP, DPW, explained the national department was not in control of funding the province. The only funds transferred from national to provinces was the conditional grant for EPWP. Other funds were received directly from National Treasury. DPW always verified the information sent from the provinces and only reported on the data that had gone through the validation process. In terms of EPWP recruitment, there were guidelines which needed to be followed. There were issues of underreporting such as where certain municipalities did not report on certain projects but there was technical support from the side of the national Department to help with complete reporting by municipalities.

Mr Cox Mokgoro, Chief Financial Officer, DPW, said the irregularity in budget was a result of the separation of budgets between DPW and PMTE as well as the result of the improvement projected by the Department. Research was a very important aspect of the work of the Department and all its functions such as, EPWP, monitoring and evaluation and quality. The Department had a functioning research section with adequate budget allocated to it. Debt recovery and irrelevant expenditure had been tackled and they were no longer issues big enough to be included in the APP. Investigations were still ongoing on fraudulent and corrupt practices but due to the magnitude of the number of transactions involved, they cannot be adequately reported in one year’s report.

Mr Fazel added that there had been 383 investigations – results of the investigations varied from a number of dismissals, suspension, verbal warnings and fund recovery. There were at least ten proceedings to recover state properties which were taken illegally. The Department was in need of leads from individuals because it had not been easy to identify these properties through research. DPW has full control over the planning of all its entities.

Mr Serote said the Department had a database of all water infrastructure that was available which showed there were 559 sites. There were 13 projects on water treatment plans in the Eastern Cape which were designed to ensure compliance with the blue drop requirement. There were 82 sites serviced on the green drop project and upgrading and drilling of new boreholes. DPW would also be ready to present a report on its turnaround strategy if invited by the Committee. Only maintenance work had been done on the border posts by DPW. Newly identified needs were being discussed between DPW and the Department of Home Affairs but it was important to clarify that the onus rested on Home Affairs to identify the needs and build new facilities.

Expropriation Bill

The Chairperson thanked the Department for the presentation and moved to the next item on the agenda – deliberation on the Expropriation Bill. Members would recall that the Bill was sent back to Parliament by the President. The President said the Bill lacked proper consultation.

The Chairperson asked Members if there was agreement that the Bill be sent to the National House of Traditional Leaders (NHTL) for comment in terms of section 18(1) of the Traditional Leadership and Governance Framework Act, 2003 (Act No. 41 of 2003). The NHTL would be given 30 days after which the Committee would proceed with the Bill.

The meeting was adjourned.