Department of Public Works 2019/20 Annual Performance Plan, with the Minister

Meeting report

The Chairperson welcomed Members of the Committee, the Minister of Public Works and Infrastructure, the Deputy Minister, the Director-General and officials from the Department of Public Works. The purpose of the meeting was for the Department of Public Works (DPW) to brief the Committee on it’s 2019/20 Annual Performance Plan. The mandate and the role of this Committee are derived from the Constitution of the Republic of South Africa, which provides that Parliament has a duty to hold the Executive to account.

Ms Patricia De Lille, Minister of Public Works and Infrastructure agreed with the Chairperson that the mandate of the Committee is to hold the Executive to account in terms of the Constitution of the Republic of South Africa. And certainly, as part of the Executive she will play her part in accounting to Parliament and the Committee. It is a difficult time because they came in to finish off the work of the 5th Administration and what they will be presented with is the last financial year for the Fifth term. They will have opportunities in the next five years going forward to develop their own strategic framework and the way forward, taking into consideration the new seven priorities set by the President and the State of the Nation Address (SONA). They are still in the transition between the 5th Administration and 6th Administration and therefore will beg the indulgence of the Committee in this regard because it is a massive task for them and the Portfolio Committee going forward.

But what is important for her is that the public spaces like government buildings, schools, clinics, etcetera which are the custodians of the DPW must be inviting to the people that are using them because they hold government to account for the bad experience they received from those public places. So, the feature of the presentation will be more on how these building and public land is more accessible to the people of South Africa and how the public should enjoy the experience.

And lastly the Minister said, public land and public buildings must be used for the public good and certainly as they build from the Department they should hope to improve those conditions.

Ms Noxolo Kiviet, Deputy Minister of Public Works and Infrastructure thanked the Chairperson and the Committee for the opportunity to come and present the 2019/29 APP of the DPW. The Minister has already highlighted what they will be presenting as a team to the Committee. During the election process as different political parties they have listened to what the people of South Africa wanted and therefore they had to respond to what the people wanted in a collective manner in terms of their (electorate) expectations and how they did their work.

Mr Sam Vukela, Director-General (DG): Department of Public Works and Infrastructure thanked the Chairperson and the Committee for inviting them. He said the presentation outline will be carried out by Mr Imtiaz Fazel.

Briefing of the 2019/20 Annual Performance Plan of the Department of Public Works and Infrastructure

Mr Imtiaz Fazel, Deputy Director-General (DDG): Department of Public Works (DPW) said that in terms of the Strategic Overview of the 2019/20 Annual Performance Plan (APP) the Department is committed to the attainment of a transformed built environment sector, which includes the following: - Providing strategic leadership to the South African Construction and Property industries;  Establishing and ensuring compliance to Policy and Legislative prescripts for the management of State-owned and leased-in immovable assets and South African Construction and Property sectors; Providing strategic direction on the integration of Public Works priorities; and Contributing to the National goals of job creation and poverty alleviation through Public Works Programmes.

Mr Fazel said the Part A of the report looks at the situational analysis, which deals with the summary of the 2019/20 Annual Performance Plan (APP) for the DPW that is linked to government-wide plans as follows:

1. No changes to the MTSF (and NDP targets)

NDP Chapter and MTSF National Outcome – NDP Chapter 3: Economy and employment. New Growth Path: Jobs Driver 4: Investing in social capital. MTSF Outcome 4: Decent employment through inclusive economic growth.

The summary of the 2019/20 APP for the PMTE which links to government-wide plans include:

1. SONA Commitments
2. Drive employment to reduce poverty and inequality through the Expanded Public Works Programme: As part of expanding the EPWP, the Department is identifying new opportunities to expand on jobs created in the EPWP.  To further improve the governance of the EPWP, the Department is developing an EPWP Policy that will clearly define the roles and responsibilities of implementers and coordinators of EPWP.
3. Improving workplace performance and access to job opportunities through in-service training and implementation of skills development programmes:  The Department has structured Capacity Building Programmes in place including the Candidacy Programme, Internships, Artisan training and placements as well as Technical Learner-ships which offer structured skills transfer and mentoring opportunities.
4. Transformation of the property and construction sectors: The Department is undertaking a policy review to facilitate socio economic transformation within the built environment which includes Policy Reviews of White Papers, CBE and CIDB Acts.  The Department continues to support the Construction Sector Charter Council to ensure that parameters for transformation in the construction industry are set and measured to determine progress.

1. Re-industrialise / stimulate manufacturing:  The SCM Policy and internal directives are designed to ensure local beneficiation and enforce mandatory sub-contracting to people within designated groups.  Further the Consolidated Procurement Plan (CPP) of the Department is being used to leverage the procurement spend to advance the designated groups through targeted procurement/prequalification and mandatory sub-contracting.
2. Supporting black industrialist to build new generation of black and women producers that are able to build enterprises of significant scale and capability: The intervention measures identified by Department to support this priority relate to the full implementation of the Preferential. Procurement Regulations (PPR) 2017 largely to effect targeted procurement from designated groups and/or mandatory subcontracting to designated groups in bids that are above a prescribed threshold
3. Investment in SMME incubation: Small Business, Co-Operatives, and Township Enterprises: The intervention by the Department has been specifically to set aside 30% of all procurement to the groups as designated i.e. small business, co-operatives, township and rural enterprises.
4. Entities and Professional Councils as agents for advancing economic and social transformation: The Department will give greater attention to improving the governance of its Entities to ensure their alignment to departmental priorities as well as ongoing monitoring and evaluation of performance.

Mr Fazel said in terms of the summary of the 2019/20 APP for the DPW which links to government-wide plans includes:

External Environment (Section 7.1):

1. Economic overview: The low growth, coupled with unchanged government revenue projections poses a huge constraint to the already compromised fiscal base. Given the various spending pressures resulting from wage agreements, policy priorities and various funding needs required by State-owned entities (SOE’s); government is likely to exceed its expenditure ceiling. These dynamics are expected to continue increasing government debt.
2. Labour market overview: Although employment increased, the unemployment rate measured 27.1% as at the end of the fourth quarter of 2018, which is below the rate of 27.5% seen in the fourth quarter of prior year. This shows that the increase in employment over the year was not enough to cater for the overall increase in the economically active. This increase can lead to an understatement in the unemployment rate as the discouraged job seekers are regarded as not being economically active whilst they would work given a job but have given up from looking mostly due to a prolonged period of searching.

1. Construction sector: South Africa’s overall Gross Fixed capital formation (GFCF) has been about 20% of GDP over the past 5 years, which is low given the growth targets desired in the National Development Plan (NDP).

External factors influencing service delivery (Section 7.2):

1. Raising employment levels by providing a supporting environment for growth and development, while promoting a more labour-absorptive economy: The lack of strong growth as severely limited the capacity of the South African economy to create the jobs needed to address the needs of an increasing working-age population and the backlog reflected in the unemployment rate. In the above socio-economic context, the EPWP contributes to both short-term social protection and longer-term socio-economic development.  The programme is therefore a form of non-contributory social assistance focused on providing employment to the under- or unemployed poor.  The income transfers alleviate poverty and limit its spread.  Through the work, infrastructure is also developed in and services are also delivered to poor communities.
2. Transformation within the property and construction sectors: The Department drives its transformation agenda through various interventions including advocacy and awareness programmes, monitoring the implementation of empowerment programmes, as well as initiating training and capacity building programmes for designated groups. The Department must formulate and oversee the implementation of policy instruments that promote the transformation, growth and effective regulation of the construction and property industries. 
3. Skills development in the built environment: A key strategy in addressing the skills shortage is to restore the skills pipeline through the consolidating and managing the implementation of the BE Skills Pipeline Strategy throughout the sector. The availability of professionalised skills within the State will minimise over-reliance on consultants and decrease expenditure in this regard.
4. Promoting good governance within the public works sector: In proposing ways in which accountability might be improved, the Department recognizes that extensive accountability already exists in the sector.  As the Department considers ways of improving accountability, it will also need to look at strengthening capacity to support existing and new demands within the sector.

1. Value for money: Given insufficient economic growth and socio-economic transformation, tight alignment of the NDP and the Budget is required. This means ensuring that priorities in the plan are adequately funded, funds are reallocated from non-core and non-performing programmes and that the funding is used appropriately for more urgent interventions. The expenditure has been reviewed as per technical guidelines and all the items were already adjusted in compliance to the cost containment measures, and proposed budget reductions.

Internal Environment (Section 7.3):

Business Improvement (Section 7.3.1):

1. Young Professionals Programme: The Department was granted funding to expand the Young Professionals Programme.  The SAPOA programme aimed at professionalization of the PMTE and subsequent introduction of the Public Works Academy project aims to rebuild the technical and professional capacity of the State.
2. Prevention, detection and investigation of fraud and corruption: Over the years, the focus of the Department has also been on preventing incidents of fraud and corruption through pro-active management of vulnerable areas in this regard. As such investigations conducted focus on identifying internal control deficiencies and recommending appropriate mitigating factors to prevent a reoccurrence of fraud and mismanagement on areas identified.
3. Service Delivery Improvement: The SDIP aims to provide a focused approach to continuous improvement of key services and products in line with the Batho Pele Principles, which serve to ensure effective and efficient service delivery. The next critical step in the project is the development of a Service Delivery Model of how the Department will deliver on the services and products that are identified in the five year Strategic Plan.

Internal Environment (Section 7.3)

Internal Policies, processes and systems (Section 7.3.2):

1. The Department will introduce the National Framework for Technical Capacity Building of the State which aims to facilitate, coordinate and monitor capacity building activities within the Built Environment focusing on the State.
2. The skills pipeline for the built environment needs a unique but integrated platform.  A Professional Services system will be developed to support the Department with knowledge and expertise transfer across the State for the built environment. 
3. The Integrity Management Framework (IMF) has been developed in response to the Department’s position on zero tolerance towards fraud and corruption and a commitment to public service delivery.  The purpose of the IMF is to drive ethics as a key consideration of the Turnaround Strategy
4. Following the approval of the revised Public Service Regulations of 2016, the Department has commenced with the review of all HR policies affected by the new Regulations
5. The Department is exploring the development of an Enterprise Resource Planning (ERP) system for the broader Public Works sector to create a single view of the Immovable Asset Register
6. SAS has been adopted as the Business Intelligence tool. The Strategic Management Module has been developed and the APP loaded on the SAS tool and the Single Asset Register views have also been developed.
7. The lack of a Disaster Recovery Plan (DRP) has been a recurring audit finding. In this regard the Department has finalised and signed off the DRP and is in the process of implementation.
8. The Department is currently undertaking an SCM review of standard operating procedures that are aimed at improving efficiencies and turnaround times over and above accommodating changes in the in the SCM landscape.
9. A draft EPWP policy will be developed by the end of 2018/19 for Cabinet approval in 2019/20.
10. The current EPWP Reporting system will be enhanced into EPWP-RS Version 2 to accommodate the capacity of offline capabilities.  In addition to the system enhancements, the EPWP is currently engaging with the Department of Home Affairs to request for the automatic downloading of the original ID copy
11. The Draft CBE Amendment Bill; 6 BEPCs Draft Amendment Acts and Draft CIDB Amendment Bill do not address all policy related matters hence the Department has commenced a process to undertake further research and review of these legislations.
12. The Department has prioritised the development of the IDT Business Case, IDT Act and Plan to ensure financial sustainability, improve client base and overall performance.

Internal Environment (Section 7.3)

Internal Policies, processes and systems (Section 7.3.2):

1. As part of its five year Strategic Plan the Department commenced a policy review directed on reviewing the 1997 & 1999 Public Works White Papers.  The Purpose of Public Works Policy Review exercise is to clarify and refresh mandate and determine whether new legislation and/or amendments or regulations are required; strengthen regulatory and developmental role of the Department and the public works sector in its entirety and identify and close policy gaps, realign policy objectives and ensure policy coherence

Performance Environment (Section 7.4):

1. Poor and underreporting of EPWP work opportunities by public bodies
2. Poor record keeping by public bodies
3. Non implementation of projects as per the business plans of public bodies
4. Implementation of Standard Operating Procedures to improve audit outcomes
5. Increasing the work opportunity targets
6. Enhancing the skills development programme
7. Improving intergovernmental coordination and coherence
8. Accelerating the finalisation of legislation with the Department
9. Improving service delivery to Prestige clients
10. Reducing fraud and corruption risks
11. Improvements in Management Practices (MPAT)
12. Improving turnaround times within Supply Chain Management
13. Paying suppliers within 30 days
14. Reduction in incidences of irregular expenditure
15. Reduction in the number of litigation cases within the Department

Demand for services (Section 7.5):

1. Demand for built environment skills: The National Scarce Skills List 2015 is of pivotal importance to Professional Services Programme as it captures all Built Environment occupations with a high vacancy rate in the sector. Of significance is that the chronic shortages experienced by the State are same throughout the built environment sector.  The National Infrastructure Plan has further added pressures on the demand of technical skills. This list therefore, enables the Department to make informed decision in conceptualising, strengthening and enhancing capacity building programmes especially the Young Professionals, and Artisan Development Programmes.
2. Demand for work opportunities: Despite numerous efforts undertaken by Government, unemployment in South Africa has remained stubbornly high.  The on-going global economic downturn has made this even worse and has increased the number of unemployed in South Africa even further.  This increases the need for the EPWP even further as it provides a unique policy instrument for Government to create work opportunities and alleviate unemployment.
3. Demand for Prestige accommodation: The Department has acquired additional office accommodation to assist with the accommodation shortage, as well as to reduce lease costs.  In order to offer a longer term solution to the Prestige accommodation requirements, the Department together with the secretariat of Parliament are in the process of assessing the increased needs of Parliament with a view to re-visit the plans to construct additional office accommodation.  This will also be integrated within the Inner City Precinct Development Plans to create further efficiencies and maximise the utilisation of Government land and buildings.

Organisational Environment (Section 7.6):

• Key issues relating to the Organisational Structure - Following the conclusion of the matching and placing exercise, the Department deactivated the unfunded positions on PERSAL in line with the approved Recruitment Plan.  All positions that became vacant subsequent to this process will either remain vacant on the new streamlined structure or be prioritised for advertisement and filling thereof.  This includes positions reserved through acting appointments and against which contract appointments are made. The recruitment process has been intensified, as outlined in the Human Resource Plan, in order to fill critical positions, address the high vacancy rate and ensure leadership stability within the Department.  Capacitation of functional areas will continue in line with the priority areas as identified in the Policy Statement.
• Factors within the organisational environment that have informed the Annual Performance Plan - The focal areas within the business model of the Department is – to provide policy leadership to the wider construction and property sectors; oversight of the Public Works Sector; working with the Entities, BEPCs, Charter Councils etc. to regulate and transform the Built Environment; working with CBE to open up the skills pipeline for scarce skills in the Built Environment – in a way which better reflects the demographics of the country as well as coordinating, providing implementation support, monitoring and evaluation, and reporting on the EPWP not only to provide work opportunities. A shared services model has been utilised which is the consolidation of specific business operations that are used by both the Department and the PMTE.

Mr Fazel said that the total budget allocation per programme is R7.8 million for 2019/20 financial year. The total budget allocation for economic classification will amount to R8.9 million in 2021/22 financial year.

Mr Fazel said that Part B of the presentation covers the programme performance information, which include: Programme 1, Administration; Programme 2, Intergovernmental Coordination; Programme 3, Expanded Public Works Programme (EPWP); Programme 4, Property and Construction Industry Policy and Research, and Programme 5, Prestige Policy.

The total budget allocation for Programme 1, Administration is R508 013 for 2019/20 financial year, R60 886 for Programme 2, Intergovernmental Coordination, R2 680 814 for Programme 3, Expanded Public Works Programme (EPWP), R4 443 848 for Programme 4, Property and Construction Industry Policy and Research, and R115 427 for Programme 5, Prestige Policy.

Mr Fazel concluded by noting that Part C of the report explains the approved Service Delivery Improved Programme (SDIP), the Strategic Risks for the DPW, the Conditional Grants and a list of Public Entities that report to the DPW.

Discussion

The Chairperson thanked the Minister and her delegation for the detailed presentation. She invited Members of the Portfolio Committee to engage with the presentation.

Ms M Siwisa (EFF) thanked the Department for the presentation. She asked what role the Department is playing with regard to skills development, increased permanent employment in the EPWP and in the development of SMMEs.

Ms Siwisa asked whether is there a proper procedure that is followed to make sure that each and every prestige client pays for the leased buildings of the Department because the budget only speaks of more spending but there is no revenue generation that is being reported in the presentation.

Mr W Thring (ACDP) thanked the Department for a detailed presentation. He asked in terms of the EPWP how the Department is managing the expectations of workers that they would be permanently employed in the municipalities, as this was something the Department cannot play down.

Mr Thring asked whether the Department is winning the battle of getting the irregular expenditure to zero percentage in the 2018/19 audit because of the 6 entities of the Department only one entity received a clean audit in 2017/18 financial year. Irregular expenditure amounted to R210 million in 2017/18, although there was improvement but they were looking at irregular expenditure which is quite high.

Mr Thring asked the Department to unpack the measures it has put in place to resolve the challenges at the IDT because it (the IDT) has been a concern for quite some time and even the Auditor-General (AG) has raised some concerns about it.

Mr Thring asked for the unpacking of the 2.4% average score given to management which has moved up to 3.6% in 2018, and whether it is measured out of 5 or out of 10.

Mr Thring asked in terms of the scale of decreasing fraud whether there have been any individuals who have been found guilty and prosecuted. If the answer was yes, how many were there?

Mr Thring asked what the latest progress is with the regard to the asset register of the Department, and what the asset register for infrastructure looked like.

Ms L Shabalala (ANC) said that she was calm when listening to the Minister and the Deputy Minister because this is the close of the 5th term and the beginning of the 6th Parliament. She hopes that the programme and the strategic plan of the Department will talk to the seven priorities of the Department, which were not covered clearly in the 5th Parliament.

Ms Shabalala asked for a detailed report on the material findings of the AG on the 6 entities of the Department. Also the Department must explain the turnaround strategy because it has explained the strategic risks of the Department.

Ms Shabalala asked the Department to explain the recruitment strategy of the EPWP and how does a person grow within the EPWP. Are there any skills transferred within that programme?

Mrs B Hicklin (DA) welcomed the presentation from the department. She noted that slide 41 spoke about the built environment profession and three provinces with state capacity building programmes in the built environment that have been signed already and 40 schools programmes. She asked where they were and in which provinces and for a list of schools where the programmes were taking place.  Similarly, the presenter talks about the Public Works Academy to be launched, the question is where that academy will be launched, and how one will get access to that?

Ms S Kopane (DA) congratulated both the Minister and the Deputy Minister for being appointed in their new positions and was looking forward to work with them because their goal is the same, which is that of serving the people of South Africa.

Ms Kopane said that according to the presentation the Department has identified its strategic risks. But in terms of the action plan the Department does not have the muscle, it just says what needs to be done and there is no timeframe or how it will be done and what the budget implications are. The Committee needs to be given a detailed report on this.

  Ms Kopane asked for the status quo on the fraud cases that are pending with the SIU because there are so many of them that have not been resolved.

She also asked for an update on the vacancies within the department because one of the challenges was to fill critical staff especially in environmental professionals, and what the succession plan is of the department.

Ms Kopane asked what the plan is with regard to the EPWP where huge transfers of money for this programme go to provinces and municipalities, but with no proper monitoring on how that money is used by municipalities for this important programme.

Minister De Lille said that tomorrow afternoon all entities of the Department will be presenting to the Committee and they will be dealing with the question raised with regard to the IDT. As Members knew that they had 2 votes, the DPW vote and the Property Management Training Entity (PMTE) vote, and because some of the questions overlap is it not possible to do both votes so that Members get a full picture so as to answer the questions together. But there are specific questions that came out of this presentation they could answer, and the overlap they can do it later on.

The Chairperson said the Committee will allow the Minister and her delegation to respond to the question that relates to PMTE tomorrow but for now to respond to the specific questions that are related to the DPW.

Mr Vukela said they will respond to all the questions that relate to the DPW vote and when the time comes they would respond to the question on the PMTE. The majority of the questions other than the EPWP and the question of fraud within the PMTE he would suggest that they respond to them because they’ve been raised in the presentation. The question on SMMEs will also be responded to because it affects both the Department and the entity.

Mr Vukela said on the question of vacancies and whether they have an appointment strategy, they do have a strategy. The issue is that they are in a built environment profession, which is naturally a scarce field environment and the completion is too high because they compete both with the private sector and government. They have developed a strategy as it may be seen in the young graduate professionals wherein they have programmes to complement the employees of the Department, which is a parallel process. It is a skills development process wherein they take on board young professionals who are in the built environment profession. They build them into a contract in the Department and linked them to programmes to qualify as young professionals in their built environment profession.

These young graduates, the Department may be seen to have lot of vacancies in the area where they cannot recruit professionals in this built environment, but naturally they look at young graduates they have to bring on board to complement the area where they have vacancies because their appointment is linked to the vacancies they have as a Department. They also ensured that they deployed them in various work programmes. It is correct that it is not an area which is easy to recruit. They were doing their best because of various factors, like for instance, the salary bent of government which is limited and they cannot go beyond that.

Mr Fazel said that with respect to the seven priorities they have already commenced with their planning for next year and five years ahead. They’ve started the process and as he already had mentioned in the presentation that this is a transition and recapitalisation for the next administration and a new five year plan. They were currently unpacking the medium term statutory framework and also looking to unpack the seven priorities which form the core of their work for the next five years.

Mr Fazel said that with regard to the question of risk management they have identified these risks although they are the fact of life and they move and live with them. But what they have done is that they have identified those key risks that impeded their performance before they occurred. And the strategic risks are those risks that affect the Department in the sustainability and continuation of the organisation, which are issues that prevent the Department from achieving its goals and its objectives. But these risks provide them with an opportunity to look at the mitigation plans so that they could prevent those risks from occurring.

Mr Fazel said in terms of fraud and corruption in the Department they have identified that there is abuse on maintenance schedules. They have found themselves maintaining equipment that does not exist. In this regard there is collusion between their staff and service providers. There was a lot of inflation of prices, irregular contracts and irregular awarding of tenders, construction of contract mismanagement, duplication of payments and fronting and misrepresentation on tendering companies.

Mr Fazel said that on the question of SIU investigations in the last few years they have conducted several investigations in the Department. The SIU has implemented a number of proclamations including the Fifth proclamation. This Fifth proclamation has to do with emergency maintenance where the Department is incurring several billions a year because emergency maintenance has not been incurred in a productive manner and much of this is because of fraud and mismanagement, and the SIU is focussing on that. In the last four years the SIU has conducted more than 2 325 separate investigations, of which it has concluded 1 892. The Department has seen that 8 members of staff have either resigned or retired before sanctions were metered out. There are 3 final warnings, 12 verbal warnings, 19 written warnings and 15 suspensions without payment. They also have 8 cases where evidence was not sufficient to charge. There are a total of 79 cases resulting from the SIU investigations.

It is important to note that now there is also a civil action as a result of SIU work and R1.3 billion is being recovered by the Department as a result of SIU work.  The SIU has received a new proclamation from the President which will see the SIU having its own civil court with its own judges so that it does not wait for the high court with long periods for matters to appear before the roll.

The Department also has the anti-corruption unit which works very closely with the SIU. They have prosecuted a number of different cases and conducted more than 300 cases internally. They have actually charged more than 100 members of staff, which exceeded the number of disciplinary cases. They have a good record in terms of disciplinary cases and a good record with regard to recovery working with the SIU. The challenge is with the criminal cases where they have to wait for the National Prosecuting Authority (NPA) to make a decision to prosecute or not. But in that same area they were working with the NPA and the HAWKS to turn it around.

Minister De Lille said that if they looked at page 28 of the main document of the APP it provided full information around investigations and the Department is pursuing the R1.3bn for recovery.

The Chairperson thanked the Minister, the Deputy Minister and the officials from the department for the presentation and responses. The Committee is looking forward to working with the Minister and the Department in order to carry out its mandate of oversight over the Department so that service delivery is realised for the people of South Africa.

The meeting adjourned