The Department of Public Works and the Property Management Trading Entity (PMTE) briefed the Committee on their 2018/19 Annual Performance Plans. The Minister and Deputy Minister were in attendance.
In his preliminary remarks, the Minister pointed out that when the Department of Public Works had concluded its turnaround strategy in 2012 the decision was made to have zero tolerance for fraud and corruption. He admitted that the Department had many unutilised buildings that could be put to better use. The core mandate of the Department was to regulate and transform the build environment. There was a need to give full effect to the Government Immovable Asset Management Act and to provide policy leadership to the construction industry. There was an additional need to open up a pipeline for skills development in the build environment. The Expanded Public Works Programme (EPWP) also had to be reprioritised as it was important for creation of job opportunities and for training.
In its presentation, the Department reported that it had continuously improved the quality of its accountability documents, particularly in performance information, to align planning, budgeting, implementation, monitoring and evaluation, and reporting in line with the Government Wide Monitoring and Evaluation Framework. The APP had also been developed with a clear understanding and acknowledgement of the state of the economy globally and in SA. The priorities that have informed the 2018/19 APP included providing work opportunities and income support to the poor and unemployed, transforming the construction and property sectors, skills development, improving the governance of public entities and professional councils, combating fraud and corruption as well as implementing cost saving initiatives. The Committee was given a breakdown of the Department’s planned targets for 2018/19 across its five Programmes ie Administration, Intergovernmental Coordination, Expanded Public Works Programme, Property and Construction Industry Policy and Research and lastly Prestige Policy.
On the financials of the Department for 2018/19 the total budget allocation sat at R7.45bn.
The Committee was given an overview of the PMTE’s portfolio. Land parcels were around 29 000 in number covering 5.4m hectares. Structures numbered 93 000 covering 36.8m square metres of floor space. The Gross deemed cost of the aforementioned was R139bn. Properties were also being leased from the private sector. There were 2700 leases occupying 6.3m square metres of space at an annual cost of R4.2m.The Committee was given a breakdown of the PMTE’s planned targets for 2018/19 across its six Programmes ie Administration, Real Estate Investment Services, Construction Management Services, Real Estate Management Services, Real Estate Information and Registry Services and lastly Facilities Management Services.
The Chairperson was pleased that the recruitment guidelines for the Expanded Public Works Programme (EPWP) had been dealt with. The EFF noted that EPWP recruitments should not only be for ANC cadres. The EPWP recruitment guidelines should be fair. Members raised concerns about government properties being left unoccupied and in a dilapidated state. Huge amounts of taxes were being paid on these properties so essentially losses were being made by government. Why could these properties not be sold off so that the monies could be put to better use? Members also asked why the Department was leasing properties from the private sector when it had its own properties that it could use. The Department was asked whether its property asset register was complete. Did the Department have an idea of what assets it had and what its monetary value was? Members were also concerned about Department officials who were tasked with renegotiating leases being prone to fraud and corruption. Members felt that officials should be properly vetted. Periodical life audits should be considered. The Department was asked what the timelines for the establishment of the Public Works Academy were. Members asked whether the Department had worked out how Agrément South Africa was to cooperate with the South African Bureau of Standards (SABS). Members felt that the Department needed to have more than fifteen intergovernmental relations initiatives. Members pointed out that having three spheres of government made it difficult to pin point who were responsible for deserted properties. Members asked to be put into contact with a specific Department official who could assist members with the verification of deserted properties that members came across. The Department was asked whether the 2% target set for persons with disabilities were to be increased in the future. Members asked whether the rollout of incubators by the Department were separate from those rolled out by the Department of Trade and Industry (DTI). Why was there duplication? Members urged the Department to develop its Information Technology System for the coming of the Fourth Industrial Revolution. Members observed that many of the targets set were transformationary in nature but cautioned that if they were not done within two years that they became invalid. The Department was asked which of the provinces were problematic in the unfolding of its programmes. Members asked why some of the targets set were low. If targets were low then performance was low. Members observed that on some of the targets there seemed to be underperformance as years progressed. The Chairperson on the figures presented observed a trend that the PMTE seemed to always have a surplus. Why could the PMTE not be self sustainable?
The Committee adopted its Report on Budget Vote 11: Public Works APP 2018/19.
Opening remarks by Minister of Public Works
Minister Thulas Nxesi said that he took the oversight role of Parliament seriously. He pointed out that when the Department of Public Works had concluded its turnaround strategy in 2012 the decision was made to have zero tolerance for fraud and corruption. The full operationalisation of the Property Management Trading Entity (PMTE) had been ring-fenced. He wished members to appreciate the magnitude of the job that the Department and the PMTE had. There were 90 000 buildings and 30 000 parcels of land to deal with. If one went into dorpies and came across dilapidated buildings then it most probably would be the Department’s. These types of buildings became a liability. The Department did lease out some of its buildings. However the Department also leased premises from the private sector even though it had its own properties. He emphasised that it was important for the PMTE to identify land for social housing and also for student accommodation. For instance Nelson Mandela University could only house 3000 students in 2017. The Department had many unutilised buildings that could be put to better use. Skills needed to be created and developed. Officials had to be turned into property experts. Special skills were needed to deal with property. There was also a need for financial institutions to come to the party to assist people to open up their own businesses.
The 2018 State of the Nation Address (SONA) had ring-fenced the PMTE. The PMTE had to be operationalised as soon as possible. President Cyril Ramaphosa had instructed the Department to drive the PMTE. The Department was a highly specialised department. The core mandate of the Department was to regulate and transform the build environment. There was a need to give full effect to the Government Immovable Asset Management Act (GIAMA) and to provide policy leadership to the construction industry. There was an additional need to open up a pipeline for skills development in the build environment. The Expanded Public Works Programme (EPWP) also had to be reprioritised as it was important for the creation of job opportunities and for training. Coordination within government was important. Sometimes what a department did at national level differed from what it did at provincial level.
The Minister said that the Department’s policy branch had to review policy white papers for this year. On having zero tolerance to corruption, the Department would make announcements of successes and on what its future plans were. The Department worked with the Special Investigations Unit (SIU).
He admitted that the Department had a huge problem with collusion and corruption. The Department did its best to prosecute wrongdoers. Court cases however dragged on. On Prestige villages of Members of Parliament (MPs) and Ministerial houses, he had instructed the PMTE to prioritise Prestige. Infrastructure was already in place. The current one size fits all public service model did not work. On the three parliamentary villages WiFi was being rolled out. The data provided was however not unlimited. Security was also being improved. There was a phased approach to refurbish MPs units. Long term plans were under discussion with Parliament. All efforts would be reflected in the operational plans of branches.
Briefing by Department of Public Works (DPW) on its Annual Performance Plan
Mr Imtiaz Fazel Deputy Director General: Governance Risk Compliance, DPW, spoke to the highlights of the 2018/19 Annual Performance Plan (APP).
The Department reported that it had continuously improved the quality of its accountability documents, particularly in performance information, to align planning, budgeting, implementation, monitoring and evaluation, and reporting in line with the Government Wide Monitoring and Evaluation Framework. The APP had also been developed with a clear understanding and acknowledgement of the state of the economy globally and in SA. The priorities that have informed the 2018/19 APP included providing work opportunities and income support to the poor and unemployed, transforming the construction and property sectors, skills development, improving the governance of public entities and professional councils, combating fraud and corruption as well as implementing cost saving initiatives.
Mr Takalani Moila, Acting Director, DPW, gave the Committee a breakdown of the Department’s planned targets for 2018/19 across its five Programmes ie Administration, Intergovernmental Coordination, Expanded Public Works Programme, Property and Construction Industry Policy and Research and lastly Prestige Policy.
Programme 1: Administration
On the number of initiatives undertaken to accelerate the transformation agenda of the Department the planned target for 2018/19 was 36. The planned target on the percentage of investigations initiated within 30 days in respect of validated allegations was set at 100%. The intention was also to have two interventions recommended resulting from fraud risk management.
Programme 2: Intergovernmental Coordination
The planned target on agreements signed for joint service delivery with Intergovernmental Relations (IGR) partners was set at fifteen. A single review was planned on intergovernmental governance structures for 2018/19. The planned target for 2018/19 was to have the concept document approved for the establishment of the national Department of Public Works Academy.
Programme 3: Expanded Public Works Programme (EPWP)
On the percentage EPWP participation amongst designated groups reported on the EPWP Reporting System (RS) targets for 2018/19 were set at 55% - youth; 55% - women and 2% - persons with disabilities. For 2018/19 the target was set at having 290 public bodies provided with technical support. The plan was also to have a single framework approved on EPWP Policy.
Programme 4: Property and Construction Industry Policy and Research
For 2018/19 the planned target was to have the Draft Public Works Bill, the Developed Construction Industry Development Board (CIDB) Amendment Bill, the Developed Council for the Built Environment (CBE) Amendment Bill and the Developed Built Environment Professional Councils (BEPCs) Amendment Bills submitted to the Minister of Public Works for gazetting for public comment.
Programme 5: Prestige Policy
The planned target for 2018/19 was to have two Prestige Policies approved. There was also the intention to have eight planned state events supported with moveable assets. There was also to be 80% of moveable assets requests provided within 60 days after approval by prestige client. For 2018/19 the target was to have a single infrastructure worklist signed off for the Prestige Portfolio for 2019/20.
On the financials of the Department for 2018/19 the total budget allocation sat at R7.45bn.
Briefing on Property Management Trading Entity’s (PMTE’s) Annual Performance Plan
Mr Fazel spoke to the extent of the PMTE’s portfolio. Land parcels were around 29 000 in number covering 5.4m hectares. Structures numbered 93 000 covering 36.8m square metres of floor space. The Gross deemed cost of the aforementioned was R139bn. Properties were also being leased from the private sector. There were 2700 leases occupying 6.3m square metres of space at an annual cost of R4.2m. Ms Abigay Naicker Chief Director: Strategic Management gave the Committee a breakdown of the PMTE’s planned targets for 2018/19 across its six Programmes ie Administration, Real Estate Investment Services, Construction Management Services, Real Estate Management Services, Real Estate Information and Registry Services and lastly Facilities Management Services.
Programme 1: Administration
The planned target for 2018/19 was to have 100% of compliant invoices settled within 30 days. The intention was also to have an approved finance model and to have two new revenue generation sources incubated. The plan was also to have 77% of quotations awarded within 30 working days from the requisition date.
Programme 2: Real Estate Investment Services
For 2018/19 the target was set to have 42 user asset management plans received from user departments and to have ten signed off infrastructure worklists. The intention was to have a Customer Relationship Management Strategy approved. The planned target for 2018/19 was to also have three sites established for development.
Programme 3: Construction Management Services
The planned target for 2018/19 was to have 83 approved infrastructure project designs and to have 128 approved infrastructure projects ready for tender. A total of 105 infrastructure sites handed over for construction were also planned.
Programme 4: Real Estate Management Services
For 2018/19 a total of 600 lease agreements signed within scheduled timeframes were planned. The target was also to have savings realised on identified private leases to the tune of R200m. The intention was to have 30% of new leases awarded to Broad-Based Black Economic Empowerment (B-BBEE) companies.
Programme 5: Real Estate Information and Registry Services
The planned target for 2018/19 was to have 80% of disposals for socio-economic purposes approved in 2017/18 processed for transfer. The idea was also to have 800 land parcels vested. For 2018/19 the intention was to have 19 708 immovable assets physically verified to validate its existence.
Programme 6: Facilities Management Services
For 2018/19 the planned target was to have 500 facilities with maintenance contracts in place. The plan was also have 35% of term contracts awarded to B-BBEE companies. On power saving the planned target was to have 150 000 000 kilowatt hours reduction in consumption in identified buildings.
On the financials of the PMTE for 2018/19 the total budget allocation sat at R15.43bn.
The Chairperson was pleased that the recruitment guidelines for the EPWP had been dealt with. Was the guidelines posted on the Department’s website?
Mr W Faber (DA, Northern Cape) was concerned about properties of government that were just standing dilapidated and unoccupied. There was R12bn worth of land and properties that was unused. Rates, taxes and even electricity were being paid by government on those properties. Huge losses were being made on these properties. He pointed out that the Committee had asked for an audit of properties. The Department was now saying that there was an ongoing audit of properties. In his constituency, there were dilapidated police houses that were just standing empty for over four years. He suggested that if land and property was not being used and if it was costing government money then it should be sold off. The proceeds could be better invested. He said that on the EPWP the Department had set a target of 950 000 and had fallen short by 400 000.
Mr Jacob Maroga, Head: PMTE, on the asset register said that there was a need to identify custodians of properties and land.
Minister Nxesi said that the Department kept on getting information about deserted police stations and military bases. It was a huge problem. In Nigel in the Gauteng Province there was a deserted military base that was occupied by Rwandans. He did point out that some deserted properties belonged to parastatals like Eskom. He asked members to keep the Department informed on where they encountered deserted properties.
Mr L Magwebu (DA, Eastern Cape) noted that he had for many months been raising the issue of recruitment guidelines for the EPWP. He was under the impression that the recruitment guidelines were not yet completed. If it was not yet completed, he asked why it was so. The Department had committed to completing the recruitment guidelines months ago. It was unacceptable. On the PMTE he understood the compilation of its property asset register to be a complex matter. It was a tedious process. The Department had accepted the audit finding that it did not have a valid compliant asset register, yet it was committing R44bn for construction. The Department was also paying rental in the amount of R4.2bn. The Department was asked whether it should not firstly get its asset register in order. Was it true that the Department had no proper idea of what assets were out there and what there monetary value was? He asked what the Department’s timelines for the availing of land were. On leveraging its immovable asset portfolio by way of using the land as advertising space, he asked how the Department intended to do it. He felt that the land should be used to benefit previously disadvantaged persons. He was concerned officials who were tasked with renegotiating leases could be prone to fraud and corruption. He felt that these officials should be properly vetted. Periodical life audits could also be done. He pointed out that no timelines had been set for the establishment of a Public Works Academy.
Mr Stanley Henderson, Deputy Director General: EPWP, DPW, responded that the EPWP recruitment guidelines had been developed. It had been approved by the Minister of Labour in November 2017. The recruitment guidelines were being currently rolled out. The intention was to cut down on reputational risk. The guidelines outlined what needed to be done. It would be distributed to Members. The guidelines were as yet not posted on the Department’s website.
Mr Jeremy Cronin, Deputy Minister of Public Works, stated that the EPWP recruitment guidelines would be posted on the Department’s website. He emphasised that it was fraudulent and corrupt for recruitment to take place on the basis of political party affiliation, friendship etc. One of the key objectives of the EPWP was to deal with unemployment. These programmes built community cohesiveness so factional employment undermined this point. Factional employment etc had to be stamped out. One of the problems perhaps was that part of the incentive grant in municipalities was given out to ward councillors.
Minister Nxesi said that factional employment etc would have to be dealt with. There had to be adherence to the guidelines. He said that these types of issues arose across the political divide.
Mr Henderson asked members to inform the Department where factional employment on EPWP projects was taking place.
Mr Cox Mokgoro, Acting Chief Financial Officer, PMTE, responded that the asset register had been submitted to the Committee. The asset register was complete and there was no doubt about it. Actual items on the listing of assets did exist. The PMTE was reconciling the current custodial framework. One had to take into consideration SA’s historical past. Under Apartheid there had been four provinces with homelands etc. After 1994 things had changed. In 2017 the reconciliation of assets was completed. On the audit by the Auditor General the issue was around the application of value to assets. At present the adjusted cost was R136bn. There had been a mistake and the Auditor General allowed for it to be corrected in the 2017/18 financial year. The value had to be corrected. There were around 29 000 land parcels and 5.4m hectares of land. There were 92 000 buildings of which 7% were empty. The remaining 93% was occupied. The PMTE did have a list of assets that were vacant. The question that the PMTE posed was what the intention of the state on these vacant properties was. The process to deal with it was underway. The deemed cost of neglected properties was R7.4bn. Properties could be disposed of but there was a framework that needed to be followed. The Department’s asset portfolio was the largest in the Southern hemisphere. On unused properties the Department was well aware of what it spent on rates and taxes on these properties ie R267m. A great deal of thought was being given on how to deal with the asset register now that it was complete.
Mr Maroga, on the issue of staff being vetted, pointed out that the Department and the PMTE were both intensive procurement departments. Procurement was estimated to be around R20bn. He noted that the vetting for senior personnel was standard practise. Efforts were being made to stamp out fraud and corruption. The Minister of Labour had done lifestyle audits for senior managers.
Ms B Mathevula (EFF, Limpopo) said that EPWP recruitments should not only be for ANC cadres. The EPWP recruitment guidelines needed to be fair. In her area there were properties of the Department that were not being monitored or being taken responsibility of by anyone. She also raised the issue of security guards that needed to be absorbed into the Department.
Mr Maroga, on security personnel, said that a small number had been absorbed.
Mr E Makue (ANC, Gauteng) congratulated the Department on the successful separation of the PMTE from itself. The Department was asked whether it had worked out how Agrément South Africa was to cooperate with the South African Board of Standards (SABS). He asked whether there were only 15 intergovernmental relation initiatives. There should be more. The problem was who was responsible for properties when there were three spheres of government. In Johannesburg there were houses that were halfway built. Who should he speak to about it? The briefing had spoken about a 2% target being set for persons with disabilities. Would the figure increase? He asked on the verification of properties who could members speak to within the Department/PMTE. Members on occasion came across properties that they would like to verify.
Mr Henderson explained that there were jobs that could not be done by persons with disabilities. Efforts were made to give administrative jobs to persons with disabilities. All projects were being reviewed. For Phase 4 the Department would look at targets for disabled persons.
Mr Mokgoro replied that the Department official that should be contacted was Mr Daya Govender.
Mr Maroga, on the matter of the SABS and Agrément South Africa, said that a written response could be provided to the Committee. He said that there was collaboration.
Mr B Nthebe (ANC, North West) asked whether the rollout of incubators was separate from those rolled out by the Department of Trade and Industry. Why was there duplication?
Mr Maroga on incubators explained that the Department had its own incubators because the focus was more on property.
Dr Y Vawda (EFF, Mpumalanga) said that much was being heard about the Fourth Industrial Revolution. He felt that it was important for the Department to develop its Information Technology system so that its programmes could be unfolded. He pointed out that many of the targets presented were transformative in nature. If transformation was not done in two years then it became invalid. It had to be done in two years. The Department was asked which provinces were problematic in unfolding their programmes. What was being done in the town of Carolina in the Mpumalanga Province?
Mr Mokgoro, on the Fourth Industrial Revolution, said that when one looked at the Department’s portfolio it had a digital strategy on the back of its portfolio. The issue was how the Department could use its national presence to assist with telecommunications. The Department’s buildings could be turned into smart buildings. Assets also needed to be maintained. High powered Information Technology systems were needed to run things.
Mr Magwebu asked that the information that Mr Mokgoro had spoken about be submitted to the Committee in writing.
Mr Maroga on which provinces were problematic said that there was a Public Works Infrastructure Forum which monitored infrastructure delivery in provinces. He stated that at Carolina there was the development of rural precincts.
Minister Nxesi explained that in small dorpies there was a need to have government precincts where perhaps four government departments could be housed together.
Ms M Dikgale (ANC, Limpopo) asked the Department why it set some of its targets so low. In doing so the performance would be low too. As years progressed there seemed to be underperformance.
Mr Henderson explained that in 2014/15 targets were achieved but as the years progressed the gaps got bigger. One of the reasons was the strict requirements of the Auditor General’s Office on the portfolio of evidence that the Department needed to keep. All data needed to pass muster. The Department improved on its data capturing. Across the spectrum of five years there was underperformance in years 2, 3 and 4.
The Chairperson addressing Mr Mokgoro pointed out that for the current financial year total revenue was R19.9bn whilst expenses were R15.4bn. There was thus a surplus of R4.4bn. This seemed to be a trend for the PMTE. Could the PMTE not be self sustainable?
Mr Mokgoro responded that it was about an actual versus accounting cash issue. He noted that the opposite was in fact quite true from what the Chairperson had observed. The PMTE had financial difficulties. The fiscus was cutting down on allocations to the PMTE. There seems to be a funding gap.
The Committee adopted its Report on Budget Vote 11: Public Works APP 2018/19.
Minutes dated 24 April 2018 and 2 May 2018 was adopted as amended. Minutes dated 25 April 2018 was adopted unamended.
The meeting was adjourned.