Public Works and Infrastructure Budget: Committee Report

Public Works and Infrastructure

05 July 2019
Chairperson: Ms N Ntobongwana (ANC)
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Meeting Summary

The Portfolio Committee on Public Works met to consider and deliberate on the Draft Budget Vote Report of the Committee. The Content Advisor  took the Committee through the proposed report that focused on policy priorities, the weakened mandate of the Department, the Annual Performance Plans (APPs), Sustainable Development Goals (SDGs), the Immovable Asset Register, the budget and more.

Referring to the public employment programme, namely the Expanded Public Works Programme(EPWP), the report states that where standardisation and regulation are concerned it is important that EPWP establishes  uniform standards according to which [people] come on board on municipal EPWP projects in order to allow for transparency in the EPWP processes as well as to avoid allegations of corruption. The importance of municipalities using a standard of reporting on their projects stems from the fact that in the past there was an EPWP audit finding that resulted in money being kept back from Mpumalanga and Limpopo, because the manner in which data on job opportunities was sent through had not followed a particular process and the incentive grant that these provinces had to receive was not paid out to them.

The report also speaks to the Department’s oversight role as a Property Management Trading Entity (PMTE) in terms of standards and regulations made by the Minister. PMTE implements the main budget of DPW, but just because the programme receives the bulk of the money does not mean that the money gets used inside the programme; instead the money is dispersed with majority of it going to the PMTE and while other portions of the money go to the Independent Development Trust (IDT), the Construction Industry Development Board, etc.

The Immovable Assets Registrar (IAR) is important because it records all of the Department’s immovable assets such as land as well as buildings but more importantly, it allows for the Department to track where these properties are located - whether at national, provincial or municipal level. Also, since both municipal and provinces have their own IARs it is important that they send their data to national in order to consolidate. Due to the massive overdraft that PMTE has the IAR has not been running properly, but also because investment and trading is not taking place.

The bulk of the money in Public Works’ budget go towards Facilities Management Services (R3.2 billion allocated for 2018-19 and R3.7 billion for 2019-20). The reason for these amounts is because this is where the bulk of PMTE happens.

The Committee talked to the infrastructural component lacking in the report; the lack of timeframes alongside recommendations; the need for frequent reporting to the Committee; and monies owed to and by the Department.

The report was adopted with proposed amendments.

Meeting report

The Chairperson opened the meeting and reminded Members that the aim of the meeting was to provide Members with an opportunity to consider the report presented by the Content Advisor. She also expressed that she was confident that the Members would manage to accomplish the task at hand in order to ensure that the Department of Public Works and Infrastructure delivers services they need to be delivering to the South African public.

The Content Advisor would present the report to the Members followed by the Committee Researcher and then Members would be allowed to deliberate on the report.

Draft Report

Referring to the public employment programme, namely the Expanded Public Works Programme(EPWP), the Content Advisor stated that where standardisation and regulation are concerned it is important that EPWP establishes  uniform standards according to which [people] come on board on municipal EPWP projects in order to allow for transparency in the EPWP processes as well as to avoid allegations of corruption in EPWP. Secondly, the manner in which municipalities report on how many work opportunities they create as well as how they validate these numbers according to a standard was also important. The importance of municipalities using a standard of reporting on their projects stems from the fact that in the past there was an EPWP audit finding that resulted in money being kept back from Mpumalanga and Limpopo, because the manner in which data on job opportunities was sent through had not followed a particular process and the incentive grant that these provinces had to receive was not paid out to them. In this instance, EPWP was not at fault however, the time lag then led to a negative audit.

The Content Advisor also referred to the Department’s oversight role as a Property Management Trading Entity (PMTE) in terms of standards and regulations made by the Minister. PMTE implements the main budget of DPW, but just because the programme receives the bulk of the money does not mean that the money gets used inside the programme; instead the money is dispersed with majority of it going to the PMTE and while other portions of the money go to the Independent Development Trust (IDT), the Construction Industry Development Board, as well as AgriMore SA.

The Immovable Assets Registrar (IAR) is important because it records all of the Department’s immovable assets such as land as well as buildings but more importantly, it allows for the Department to track where these properties are located - whether at national, provincial or municipal level. Also, since both municipal and provinces have their own IARs it is important that they send their data to national in order to consolidate. Due to the massive overdraft that PMTE has the IAR has not been running properly, but also because investment and trading is not taking place. If investment and trading was taking place in this IAR, PMTE would not have to take money from programme four as it is currently doing. The IAR includes property in foreign countries and gravesites of soldiers who died in war. Thus, this means that there is a relationship that the IAR has with the Department of International Relations and Cooperation (DIRCO). However, the issue here is that when the Department has to maintain its foreign property, the R100 000 allocated per incident does not cover the foreign monetary unit. The Department cannot have the same amount allocated to domestic incidences for foreign incidences.

Discussion

Ms S Graham (DA) asked for clarity on whether or not the paragraph on page 4 referring to DTI was meant to be IDT instead

The Content Advisor confirmed that DTI was meant to be IDT and he amended the report.

Expressing Policy

Drawing a comparison between the policy needs to be expressed by representatives who have made promises and have a duty to ensure that the things that they have promised are passed through the budge, the Content Advisor stated that some of the policies of PMTE have to do with the needs that exist in the country of vacant land for agricultural and economic development (essentially land reform and transformation), and integrated human settlement in all South African villages, towns and cities. Geographical and spatial separation is an important issue that the Department along with the Department of Human Settlement and Sanitation have to address. Social development lags behind in previously neglected townships and villages across the country and there are urgent security needs in underdeveloped areas where there exists a gap for people living and visiting the area to feel both unsafe and unwelcome. It is important to develop areas where visitors and those who live there feel safe and welcome and this is the task of the Department and a corrected and updated IAR.

 Weakened Mandate:

The Content Advisor pointed out that on of the issues on the weakened mandate is that of legislation. in the Public Works Act there is no power to force the DGs of client departments to pay back money owed. This is an issue because it means that PMTE’s audit will always be [over] because the money has been [wasted].  Another issues which the Content Advisor referred to is that or rentals and rates, which relates to the Public Works Act not having power to force DGs to pay money back. It is important that money owed to Public Works is paid back as this has an impact on the rural municipalities struggling to get their books in order. The weakened mandate should be addressed by the Department by ensuring that the review of the White Paper has been completed and the Department receives a copy of the bill. The Committee should also not be satisfied with only receiving a draft bill in 2024 as it is important that this bill goes to the NCOP and is passed within five years. The passing of the bill is an urgent matter and this was the first recommendation.

Policy Priorities

Content Advisor referred to the scourge of poverty in South Africa and the importance of narrowing the growing inequality as the situation of most South Africans was not getting better. The focus of EPWP was not to create jobs for qualified South Africans but rather it is to create jobs for people unable to find employment due to the fact that they are not qualified which is why training and obtaining a certificate showing that participants have gained a skill through participating in EPWP projects  is important. Under the section of policy priorities, eradicating poverty is the main priority.

National Planning Commission

The National Development Plan (NDP) and Vision 2030 still inform goals of the Department. Only 10 years remain to achieve Vision 2030 and most of those targets which have been set will not be reached by 2030. With only 10 years left, achieving the targets which have already been set has become more urgent – also noting that the Department has important and urgent to work to do address apartheid spatial division issues.

Annual Performance Plans (APPs) and Sustainable Development Goals (SDGs)

The Content Advisor noted briefly that the SDGs are listed in the report as policy that drive APPs and the budget of the next 5 years and explained that the Medium Term Strategic Framework (MTSF) have links to the outcomes of the NDP. Referring to the tasks which have been set by the President, Content Advisor explained to Members how Public Works’ mandate is informed by these tasks of the President. The deliberation process should remain focused on the Committee’s oversight task in order to ensure that over the next five years the budget allocated is properly aligned so that the programmes in the APP are able to improve the lives of South Africans

Budget

The Committee Researcher presented the budget to the Committee and alerted Members that the budget session was the same what was covered in Vote 11 of Public Works for Research Information. She explained that while nominal values may have increased, the effects of inflation mean that the value of the money allocated in the budget actually decreases. State funerals and war graves usually are issues in terms of policy because money allocated to war graves sometimes decreases but due to the fact that the money is allocated in pounds usually there will be an increase. Referring to the Prestige Policy the researcher noted that even though there might be a target of 24 state functions, in reality funerals cannot really be planned. The previous Committee had suggested that the Department considers what is the minimum that can be done for State funerals. The Researcher alerted Members that the targets for the different programmes are still incomplete due to the fact that they were taken from the estimates of national expenditure before the Department received all the APPs.

Prior reports on Public Works show the highest number in terms of compensation employees is indicated in the main vote. The current report shows that the unbundling of the PMTE led Public Works to allocate both the money for function as well as the compensation of employees to the PMTE. The funds allocated for administration also filtered down to compensation of staff. The bulk of the money go towards Facilities Management Services (R3.2 billion allocated for 2018/19 and R3.7 billion for 2019/20), because this is where the bulk of PMTE happens.

The Content Advisor alerted Members that the problem of unlocking the value of property lies in programme 5 where the IAR should be located and where correct information about property provided to national by municipalities and provinces to then allow the Department to plan for the maintenance of properties well in advance. This will allow for the value of the properties under Public Works to go up due to the fact that they are maintained.

Report and APPs from Minister and Deputy Minister of Public Works

The report and APPs from the Minister and Deputy Minister of Public Works cover the budget reallocation of the final year of the previous five year. Therefore it must be noted that the budget reallocation was made prior to elections and is linked to the State of the Nation Address (SONA) delivered in February 2019. The Department is transitioning strategically and operationally from the 5th to the 6th Parliament and it is thus reshaping itself into the programmatic machinery that must deliver on policy for Public Works and Infrastructure as set out in the SONA.

Points Members Requested Be Covered in the Report

Content Advisor spoke of the need to strengthen the trading and investment aspect of PMTE which has also been recognised by the Department. Noting that the point must go to recommendations, he told Members that the Committee needs a full updated report on announcements by DPWI and PMTE to set up a Public Works Academy with South African Property Owners Association (SAPOA) in order to capacitate the PMTE specifically around training. Entities such as SAPOA are private entities working with the State. The Department must get a report on the Young Professionals Programme to address the need to capacitate the professionally registered for the built environment professions. People graduate with degrees but find that they cannot be registered as professionals and there is a need for a pipeline that the Minister says must exist. The Young Professionals Programme must have a tangible outcome and in order to establish this type of programme. The target must be set and a timeframe in which to achieve this must be established. This is not only the responsibility of Public Works but rather a shared responsibility between the Department, the Council for Built Environments (CBE), etc.

As part of implementing the 7th policy priority in SONA, i.e. improving the capacity of the state, the Minister along with the governance and compliance branch must provide a progress report on fighting corruption. There is a need for Social Impact Studies to be shared across the country on whether or not EPWP is assisting marginalised economically viable workers in the country, and if it is how is it doing it.

The Public Immovable Assets are in an undesirable state across the country and this is something that needs to be looked into. It is important that the Committee engages in collaborative oversight with their sister committees such as Basic Education, Justice and Correctional Services and Social Development. PMTE must present to Committee on the important matter of the cost of leasing property from private agencies and rental and legal costs must be looked into as they may be costing the Department a lot of money. PMTE must report on a quarterly basis to the Finance Minster and to Public Works on how it is going to improve its bank overdraft as this will inform how it is going to fix its audit issues.

Deliberations on CBE AND CIDB

Matters that emerged from the deliberations of the CIDB and CBE show that the Committee wants a spreadsheet of candidates that participate in the SBE candidacy programme.

Spreadsheet should also show information per profession in built environment category- race, gender, province and region. Vulnerable groups should also be covered in these categories.

Speaking to the department’s oversight role, Content Advisor noted that knowing the provinces and regions in which projects are taking place so that after receiving reports on projects committee members are able to go and check that the have indeed be completed.

- 30-day receipt of invoices must also count for them.

- Staff vacancies would also be filled with female members and people with disabilities

-Material bought for projects must also be sourced locally

The conduit pricing during the 2010 World Cup speaks to how companies colluded to pushing up their prices but a group of these companies later came forward and offered to pay a certain percentage of their annual profits back to the Department as a fine and those company which did not do so were sanctioned by CIDB.

- CIDD incubator programme with Small Enterprises Development Agency (SEDA) in four provinces is still in the pilot stage but after that stage the programme will be run in all 9 provinces and will be fully advertised with vacancies to be filled

Recommendations

Before starting with the recommendations, the Committee Secretary noted a correction on page 36 of the report regarding the SETAs.

9.1 Recommendations:

9.1.1 that the Minister speeds up the review of the White Papers since the lack of these White Papers is the reason for the challenges the Department has been facing

9.1.2 that the Mandate of the Department is properly spelt out in order to remove blockages that prevent the Department from performing optimally and the Draft Public Works Bill is concluded and submitted to Parliament

9.1.3 that the legal Mandate of the Build Environment Profession entities, namely CIDB and CBE are amended to streamline and focus on transforming the built environment and construction sector. Transformation in the Built Environment is currently very slow and this is the reason for this recommendation, to try and regulate adherence to the mandate.

9.1.4 that the necessary steps are taken to escalate the transformation of the IDT into a properly resourced socially relevant entity that is enabled to project manage social restructuring programmes as well to collect the necessary fees from client departments in order to run its business in a financially sustainable manner.

9.2 [..] needs to report to the Committee on its draft contractor performance system and the incubator programme which is being piloted with the SEDA

9.3 The CBE needs to provide a detailed report that shows a spreadsheet of candidates that participate in the CBE candidacy programme with the SETAs to ensure that graduates are streamed into professionally registered built environment professions. The spreadsheet should also show information per profession in the professional built environment categories: race, gender, province and region. The recommendation is also based on what the CBE presented to the Committee.

9.4 Refers to the small harbours’ division, noting that PMTE failed to provide information of how to follow up with the Port St Johns matter. There needs to be a process to get the harbour at Port St Johns proclaimed because there is development plan in place

9.5 The PMTE as a part of the quarterly performance reports to the Committee must provide progress, on its road to a clean audit, that shows its costs incurred for the roll out of Acubus - the asset register system.

9.6 DPWI and the PMTE need to report on land available to transform the unequal and skewed social infrastructure in villages, cities and towns in South Africa.

9.7 A full update on progress the planned Public Works Academy that is planned to be set up with the SAPOA must be provided to the Committee to capacitate the PMTE as a part of the capacitating attempt to unlock the value of the Immovable Assets Portfolio.

9.8 The Committee must receive reports on leases that show costs incurred to the private sector, client departments that do not pay on time, legal costs to recover outstanding debt from client departments and government’s debt to municipalities for rates and services.

9.10.IDT needs to report on a quarterly basis on its efforts to recover outstanding debt, return the status of a running concern and the consequence plan to get an improved audit opinion from the auditor-general.

The Committee Secretary concluded by saying that it is from these recommendations that the Committee will derive the agenda items of programmes to ensure that the Department is implementing the Committee’s recommendations. The Committee Secretary also alerted the Members that this report would also be going to the House for considerations as well.

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Ms Graham commenting on recommendation 9.3. There are municipalities training people under SETAs and applying for funding at a municipal level and the Committee should be receiving more informationfrom municipalities on what training is being done at grassroot level so that the Committee can also start playing an oversight role over that and ensure that those people who receive training are being utilised in local government. In addition, she asked for a report on the IDT projects they are involved in at a provincial level in order to see what social infrastructure is being built currently as well as what programmes are also in the pipelines. A list of social infrastructure projects other departments are involved in that should actually fall under IDT. If IDT is going to be reconstructed into a self-sustaining entity it should be the implementing agent for all social infrastructure projects.

The Committee Secretary asked Ms Graham for clarity on whether she would like regulations on municipalities to be crafted in such a way that the Department reports to the Committee on what is happening in the municipalities.

Ms Graham confirmed that this was correct.

The Committee Secretary said IDT is already captured on the deliberations. So, it would just be moved to the recommendations section.

Ms Graham raised the point that the deliberation was not captured in the recommendations.

Committee Secretary noted the point and promised to get the issue sorted out.

Chairperson attempted to provide clarity on Ms Graham’s point, stating that municipalities are currently running programmes and when these projects are in session, it is important that the people that were trained by SETA must be utilised. The Department must work with municipalities to ensure that people who have received training are utilised in municipal projects.

Ms Graham agreed with the Chairperson.

Mr E Mathebula (ANC) raised the point that some Members in the Committee, like himself, might be experiencing some trouble in trying to read from the screen of the overhead projector. He raised the point that infrastructure had not been included in the report and asked if it is not included in the Department’s report where it should be included.

The Committee Secretary responded that recommendation 9.6 speaks to the infrastructural component of the Department.

Mr Mathebula commented that he had taken note on recommendation 9.6 and noted that infrastructure is only reflected in that recommendation despite infrastructure being the most important component of the Department since it deals with issues of service delivery and it being referred to in a short paragraph is not sufficient considering its importance. He suggested that in the future perhaps the Committee will have to expand on this component.

The Chairperson took the opportunity to remind Members that this issue had been previously raised when the Minister of Public Works informed the Committee that they were still trying to grapple with the new mandate. The Chairperson recommended that the Committee allude to this in the first paragraph of the recommendations.

The Content Advisor told the infrastructure portion is not only in the recommendation but it is also clearly in the legislation. He referred to the Draft Public Works Bill and told Members that the first task of the Bill is that the mandate is properly spelt out so that blockages in performing optimally are removed.

Mr Mathebula also asked that the Committee include in the report that it is important that Members are provided with information of how many properties the Department owns outside of the country as well as what type of property this is. Further, Mr Mathebula asked about the issue of empowerment and demographics because he does not see anything thing relating to that in the report. He said in his understandingt EPWP is also meant to cater for people without skills but wish to acquire skills, knowledge and experience.

Mrs S Kopane (DA) highlighted the importance of proposing timeframes alongside the recommendations to ensure that things get achieved. She referred to recommendation 9.8, stating that the Committee proposes how often the Committee should receive a report on how much money is owed to government as well as how much money government owes the municipality. Ms Kopane raised this point in light of what was said by the Financial and Fiscal Commission that nationally the Department owed R2.7 billion and provincially R2.5 billion. She suggested that it be included in the quarterly report how the Department make use of consultant services and whether during the periods in which consultants are used there are any skills transferred.

The Chairperson noted that timeframes not being included in the report was a weakness. The Committee’s discussion on vulnerable groups had explicitly been defined to included women, youth and disabled people but the report does not explicitly mention disabled people. Further emphasising Ms Kopane’s point, the Chairperson stated that the Committee must receive quarterly reports on whether municipalities has been paid by government.

Ms A Siwisa (EFF) referring to recommendation 9.8 and said she felt that there was something missing in the recommendation. She requested that the Committee be presented with a list of the 3 000 buildings that the Registrar has.

Content Advisor responded to the issue of timeframes stating that it is a bit difficult to put in timeframes as indicators due to the fact that the Department does not abide by these timeframes when running their programmes. In addition, the Committee does not have the programme of Parliament at hand. It is better to stick to the quarterly reports as they are enforced by the Public Financial Management Act (PFMA).

Mr T Mashele (ANC) remarked that the Committee should not be afraid to put a timeframe on programmes. He also commented on the general nature of the APPs, stating that this is done deliberately and it does make it difficult for the Committee to conduct oversight. In future before the Committee is able to approve APPs, they should have specific targets since people are expecting tangible results and also it is money being approved by the Committee.

Mr Mathebula asked for clarity on why the moveable assets are not indicated in this particular report.

The Content Advisor explained that the barcodes placed on furniture and in offices in Parliament account for the moveable assets inside the buildings. Every department does this as a part of their financial accounting every year. The reason moveable assets were not mentioned in the report is because Public Works’ focus is mainly on the immovable assets.

Adoption of the Report

Ms L Mjobo (ANC) proposed that the report be adopted with corrections and amendments.

Mr Mathebula seconded the motion.

The Committee Secretary explains that Tuesday’s meeting was planned for a case in which the report was not adopted, but since Members have adopted the report with amendments the Committee Secretary and Content Advisors will go back to effect the changes in the report and send them back to Members for input and respond via email.

The Content Advisor said the changes in the report have already been made while the meeting was in procession and the report will be sent to the Committee Secretary.

Ms Siwisa request that inputs are not made via email and suggested that the Committee meets again on Tuesday if there are any further inputs.

Ms Graham expressed her reservations on adopting something she has not seen the final product of. Instead she suggested that the Committee decides Monday after seeing the final product of the report whether or not they would meet on the Tuesday.

The Chairperson explained that the report has been was presented to the Members and they deliberated on it and then adopted it with all the amendments. Therefore when the amended report is sent to the Members it is not for Members to deliberate on it again. Tuesday’s meeting will deal with minutes and not the report.

The Chairperson thanked the Members of the Committee and the Support staff and adjourned the meeting.

 

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