Department of Public Works & PMTE 2017/18 Annual Reports; with Minister and Deputy Minister

Public Works and Infrastructure

16 October 2018
Chairperson: Mr H Mmemezi (ANC)
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Meeting Summary

Annual Reports 2017/18

The Committee was briefed by officials from the Department of Public Works (DPW) and the Property Management Trading Entity (PMTE) on their annual reports for the 2017/18 financial year. The officials presented the main challenges and asked that they be considered against the context of the turnaround plan.

Members raised concerns that the same concerns identified in previous years had not been adequately dealt with. They drew attention to the high unemployment rate, underspending of the budget by the Department, the lack of work opportunities, poor leadership at senior management level, and the bank overdraft of the PMTE. They asked that copies of the user asset management plans be provided to them in order to improve their monitoring capability. Other concerns were the extent of the irregular expenditure and the ability of the Department to recover money which was owed to them. Members also asserted that the transformation objective was not being adequately addressed.

Meeting report

Minister’s overview

Mr Thulas Nxesi, Minister of Public Works, said the Department had taken the annual report presentation seriously, as it was its commitment to account to Parliament. He said that the Auditor-General (AG) had assisted the officials to perform their oversight function. The Department was working with the AG to implement action plans. The audit findings had involved disclaimers, and the target was to eliminate unauthorised spending.

On the issue of management and service delivery, he said there were the following challenges:

  • Under-reporting of performance;
  • The status of the Independent Development Trust (IDT);
  • Compliance issues with the Property Management Trading Entity (PMTE);
  • Lack of construction projects; and
  • Incomplete investigations into irregular expenditure in certain projects.

He said the Department had put in plans to address the challenges. A high performance centre would be launched and a team of professionals would provide accountability to assist in problem areas. The biggest challenge was having better management in construction and improving professional relationships with contractors. He had been in consultation with the Minister of Public Enterprises and the Treasury to work within the budget.

Adv Sam Vukela, Director-General (DG): Department of Public Works (DPW), said the presentation showed both improvements and areas of regression.

Mr Imtiaz Fazel, Deputy DG: Governance, Risk Compliance, DPW, said the presentation must be seen against the context of the Department’s five-year plan. He described the different programmes and gave an overview of its achievements.

An official said there were challenges of capacity which had affected the targets achieved. The adverse audit findings had highlighted the disclaimers as a challenge. A lack of funds had also been a challenge in terms of performance in infrastructure projects. Under-reporting had impacted on the number of work opportunities created, and had also affected the targets achieved in the Operation Phakisa Ocean Economy. The time frame for the signing lease agreements had been a challenge. The Department had been unable to meet its targets for the recruitment of women and people with disabilities.

The Chief Financial Officer (CFO) explained that there had been a movement and shifting of funds, and the Department had faced the problem of eliminating existing irregular expenditure.

Mr Cox Mokgoro, CFO: PMTE, said the main reason for the entity’s bank overdraft was because the entity was owed funds by the government, and not the private sector. The money owed by the government had affected its financial performance. There had also been an issue of debtors, and of clients not receiving payouts.

An official said that there was a lack of consultation between the different spheres of government. There was a gap in funding the maintenance of buildings, and this affected the issue of accommodation charges and the use of its immovable assets. The report had to be seen against the context of the turnaround project. The high performance centre would deal with the gaps in the organisation and improve performance. The Department had introduced a compliance initiative to address wasteful expenditure, and a new organisational culture was being introduced to curb corruption.


A Member of the Committee said that the AG had raised concerns about the DPW’s leadership and the lack of adequate monitoring to address irregular expenditure, but the Department had not focused on this. How was it going to deal with the challenges? Some of the issues had existed in previous years -- what was the Department going to do differently to deal with them? There had been a finding where the AG had been unable to obtain sufficient audit evidence. How would the DPW know it had achieved something if there was no evidence that it had achieved? She said the biggest challenge was getting other institutions to adhere to what they must do.

She asked for clarity on the budget allocation for the PMTE. Why had they omitted a figure from the document? On the expenditure analysis, she sought clarity on the actual amount, pointing out that there were different figures. Which one was the actual amount they had received or estimated? What were the reasons for the moratorium? She asked for more clarity on the entity’s bank overdraft. On She asked that Members be provided with copies of user asset management plans to assist them when exercising their oversight function.

A Member said the objective must be to achieve a clean audit. The targets for filling vacancies were unacceptable. He wanted more information on the work opportunities figures, which he said were not accurate. The Department was not meeting its targets and there had been underspending of the budget. Regarding compliance with occupational health and safety standards, thousands of buildings were in a poor and unsatisfactory condition. What was the Department going to do about this? How much of the irregular expenditure had been recovered from the recoverable amounts? The reasons provided for the bank overdraft were unacceptable. Who was going to pay the overdraft? The money needed to be recovered by the PMTE. He highlighted that there needed to be a more concerted effort to recover the money.

Mr K Sithole (IFP) referred to the underspending in certain programmes and the failure to achieve targets. How were they going to deliver services? What had they spent on transfers with foreign countries? He asked for figures of the amounts which other departments owed the DPW. What were the actual challenges -- why were the other departments failing to pay? How were they going to eliminate the bank overdraft?

A Member referred to a media report which implied that the CFO was running a company where he was the sole proprietor, and its services were being used by the Department. Was this true? How did the Department’s officials explain their failure rate? He wanted to know more about the vacancies. He said the most common issue had been that there had been underreporting -- was this the only reason for low employment rate? Had they also looked at the reasons for the fraudulent activities? Regarding transformation of the construction industry, had the Department developed enough black constractors to benefit from the transformation programme? Had any political steps been taken to resolve the non-payment by other government departments? He asked if the DPW had proof that the provinces and local governments had spent all of their budgets.

Ms E Masehela (ANC) referred to the issue of bids awarded, and asked why the target achieved had been so low. The Committee needed more information on black-owned companies, and the unemployment rate had to be dealt with seriously. Why was there underspending on goods and services? The policy was the problem, and the situation had to be dealt with urgently.

A Member said that the DPW’s financial management had to be planned properly by professionals.

Mr D Ryder (DA) said that the presentation had not highlighted the key issues raised by the AG. These were the same issues from last year, and they had not been adequately addressed by the Department. He had noted that the asset register was stored on an excel spreadsheet, and this was a massive risk. The presentation should have reported on the baseline, the targets and the achieved targets. There was a problem internal control at the PMTE, and officials needed to provide comfort that senior leadership issues would be resolved. The matter of White Papers being reviewed had already arisen last year. Translating policy frameworks into White Papers was critical to the success of the Department. Not meeting this target was a bad reflection on the Department, and it needed to be prioritised going forward. He asked that the draft document be provided to Members so that it could be discussed, and the Committee and the Department could work together.

The Department needed to finalise Expanded Public Works Programme (EPWP) guidelines to force municipalities and provinces to perform. What was the recourse on the matter of bursaries, and staff being funded? There were inter-governmental steps to be followed in order to deal with the bank overdraft and avoid taking other departments to court. He asked that Members be provided with copies of the user asset management plans to assist with the budgeting process. He said that smart targets must be put in place. He also wanted an explanation for the over-payment on certain leases.

The Chairperson asked the officials to provide answers by close of business the next day. Service delivery had to be felt on the ground, and the Department had a duty to transform the imbalances of the past. There were many women and black contractors who could be used as clients. He added that there needed to be close monitoring of the PMTE.

He thanked the Minister and Deputy Minister for being in attendance, and adjourned the meeting.

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