The Committee had a workshop on the Infrastructure Development Act (IDA). The Committee’s Content Advisor briefed Members on the Act and on the infrastructure component which had been added to the Department of Public Works and Infrastructure (DPWI). The workshop dealt with the impact of the 2014 IDA on the Department and its impact on the oversight mandate of the Committee.
The Committee was told that the DPWI was the lead coordinating Department for vast infrastructure projects across national, provincial and local government levels. The IDA enabled the Presidential Infrastructure Coordinating Commission (PICC) to coordinate the implementation of multi-level government projects. It also enabled the PICC to address fragmentation between national, provincial, and municipal legal frameworks that slowed down projects. Most importantly, it had to ensure that local employment creation and industrialisation were maximised in the construction phase of projects. Additionally, that locally-manufactured components were procured.
The Committee considered how the IDA impacted on the DPWI and on the oversight role of the Committee. Members heard that the Department’s mandate now made it responsible for coordinating all public infrastructure development. It was also responsible for the PICC Secretariat and for the Infrastructure Development Management System (IDMS).
The Committee heard that R100 billion had been made available over ten years for an Infrastructure Fund that would provide gap funding for large-scale infrastructure investments. This excluded specific social infrastructure projects initiated and managed by the Independent Development Trust (IDT).
During discussions, Members raised concerns that the DPWI’s register of immovable assets had not been updated, making it virtually impossible for the Committee to perform its oversight function effectively. Poor communication from the Department was also highlighted as a major frustration. Other concerns were the legal implications of the IDA and a lack of clarity about the additional responsibilities of the department;
Members asked questions about the role and funding of steering committees in strategic infrastructure projects. They wanted to know if there would be penalties for those who failed to meet time frames for projects and whether provision was being made for maintenance of projects once they were completed.
The Chairperson welcomed all Members who were participating in the online meeting and told them that the reason for the workshop was the addition of the infrastructure function to the Department of Public Works and Infrastructure (DPWI). The Committee needed to determine its responsibilities in conducting its oversight.
Briefing by Content Advisor on the Infrastructure Development Act (IDA)
Mr Shuaib Denyssen, the Committee’s Content Advisor, briefed Members on the impact of the IDA and its expected strategic outcomes. The presentation was broken down into four parts dealing with policy, the IDA of 2014 as a solution, the impact of the IDA on the Department of Public Works and Infrastructure (DPWI) and, lastly, the impact of the IDA on the oversight mandate of the Committee.
Mr Denyssen outlined the role of the Presidential Infrastructure Coordinating Commission PICC in addressing the problem of slow economic growth, unemployment and poverty. He said infrastructure projects were not completed on time or within budget. When they were completed the development impact was not experienced; there was a significant lack of value of money. Some components of the problem included, but were not limited to:
A silo mentality among national departments;
A lack of integration between the professional built environment, construction, and infrastructure sectors;
A lack of engagement between public and private sectors in working together on large infrastructure projects;
A lack of localisation in terms of material procurement, manufacturing, and employment creation through projects; and
Non-compliance with Public Finance Management Act (PFMA) and financial and procurement regulations. Corruption in tenders resulted in cost increases and slowed down projects.
In order to meet the targets of the National Development Plan (NDP), particularly with job creation, more effort and funding needed to be channelled towards the National Infrastructure Plan (NIP). Government could institute large infrastructure projects through the NIP, which would result in employment, economic growth and development. However, it was important for Members to note that policy was cyclical, messy and predictive. It might not always be the ultimate solution.
Mr Denysson outlined the role of the DPWI in the PICC. He said the department was the lead coordinating department in vast infrastructure projects across national, provincial and local levels. It was also the policy maker and regulator in the areas of construction, the built environment and environmentally friendly building methods, among others.
Members should note that the IDA enabled the PICC to coordinate the implementation of multi-level government projects. It also enabled the PICC to address the usual fragmentation between national, provincial, and municipal legal frameworks that slowed down projects. It ensured that local employment creation and industrialisation were maximised in the construction phase through procurement of locally-manufactured components.
(For the breakdown of functions and structures, refer to the attached document - Impact of the Infrastructure Development Act (2014) on the Oversight Mandate of the PC PWI.)
On the impact of the IDA on the DPWI and the oversight work of the Committee, Mr Denysson said the Department was now responsible for coordinating all public infrastructure development. It was also responsible for the PICC Secretariat which was funded by R60.8 million, and for the Infrastructure Development Management System (IDMS)
The DPWI had to capacitate itself to perform these intergovernmental coordinating functions. To roll out and manage the IDMS, it had to rapidly enhance its capabilities in information technology, supply chain management and project management. There would be increased expenditure on compensation of employees in the Department’s Property Management Trading Entity.
A total of R100 billion would be made available over ten years for the Infrastructure Fund to provide gap funding for large-scale infrastructure investments. However, this excluded specific social infrastructure projects initiated and managed by the Independent Development Trust (IDT).
Ms M Hicklin (DA) registered her concerns about the immovable assets register. She was not going to accept glib statements that Members received from the DPWI every three months with the same figures and no changes. There had to be an accurate immovable assets register if the Members were to perform their oversight function effectively. If Members were not aware of the buildings and pieces of land that belonged to the state and where those were located, it made the oversight function a futile exercise. The Committee needed to apply pressure on the Department to get the register up to date. The Committee had been around a year and a half and there had been no change on that register.
Ms S Graham (DA) expressed her gratitude for the informative presentation. She said it raised a number of issues. Legislation might need to be amended in order for the full role and responsibility for infrastructure development to be handed over to the Department. The infrastructure component needed to be clearly spelled out in the documents that would be handed to Parliament.
She said an important issue was the establishment of steering committees for Strategic Integrated Projects (SIPs). Who is going to pay the costs relating to their functioning? Were there penalties for non-compliance with stipulated timeframes? Part of the soul of this project was cutting red tape and speeding up processes. How many projects of the 18 SIPs had been completed or implemented? She noticed that there was no mention of repairs and maintenance of the big infrastructure projects. Surely if R100 billion was to be spent in the next ten years on infrastructure there was a need to make sure that somewhere there was a contractual obligation for maintenance of projects? Municipalities were aware that a minimum of eight percent of the capital expenditure had to be allocated to maintenance but it was not being done, because municipalities did not have money.
The Committee was being told that the IDA was not about social infrastructure but large scale infrastructure projects. Which entity in the Department was going to be responsible for social infrastructure?
Ms Graham also raised concerns about the staffing and funding of a recently created entity within the DPWI, Infrastructure South Africa (ISA). Members had had to rely on media reports on ISA. They needed to demand direct information from the department on how ISA was functioning.
Ms S Van Schalkwyk (ANC) asked who would pay the cost of the SIP steering committees. Was the R60.8 million allocated to the PICC Secretariat sufficient for the work that needed to be done? What could the Committee do to ensure that funding challenges were addressed?
On the immovable assets register, Members were supposed to receive feedback on this. It needed to be prioritised in the next Committee programme.
On the need for legislative changes, there could be Bills in the pipeline, but this was a long drawn out process. In order for things to move with speed in the absence of a clear Act, could regulations be put in place in the interim, even if they were temporary?
Ms S Kopane (DA) said that in reviewing the legislation it would be important for Members to be furnished with the legal implications of changes brought about by the IDA. The additional responsibilities of the DPWI were also not clear. The Committee needed a guideline on how these additional responsibilities would impact on different functions such as human resources, as well as the funding that would be required. The Act needed to be amended because some of the definitions were not clear.
Ms A Siwisa (EFF) sought clarity on the large economic and social infrastructure projects. The former were said to have a multinational component. Did the Committee have a right to conduct oversight over those structures? The social infrastructure part was much clearer and the Committee had rights to conduct oversight. The Act needed to say who was going to be responsible for what exactly. .
She sought clarity on the role of the PMTE. Would it have more responsibilities and more funding channelled to it? What was going to happen with monitoring and evaluation? There were serious problems in the department regarding monitoring and accountability as well as communication. Members received information on the Department through the media and media statements. She was dissatisfied with the fact that the Committee had had to initiate a process to be informed about the Act. This was supposed to be done by the Department. It would take a long time to get the infrastructure projects kicking. Even the mandate of the DPWI’s infrastructure component remained unknown at this point by Members. They needed a way forward and a proper and clear plan.
Mr W Thring (ACDP) said that the issues raised by Members were all similar, particularly regarding the accuracy of the immovable asset register. He was looking forward to a meeting where accurate information would be provided to the Committee. The Committee needed to now take a stern approach on this matter and insist on it going forward. There was a lack of clarity on some entities, particularly the role of the IDT.
Mr Denyssen said that he did not have all the answers. The fact that the DPWI was not doing the presentation was the Committee’s choice. It had chosen to do this as a preparatory stage to have Members informed on some of the complexities and to enable them to further interrogate the IDA. The Committee was also part of the policy making process. Questions to the Minister, ISA, DPWI and the PICC would further inform policy and even legislation.
On the distinction between large infrastructure projects and social infrastructure projects, Members should note that social infrastructure projects could also be large infrastructure projects. The Committee had a right to conduct oversight over the projects regardless of whether the funding came from multinational development banks or the government.
South Africa was commencing projects that required large expenditure and huge capabilities and financial management across various levels of government. The IDA assisted the PICC, but the Act on its own was not the solution. There had to be strengthening of procurement regulations and monitoring and evaluation to ensure that there were no gaps left for mal-practice.
Another important fact was that the Act did not supplant any public finance management systems for accounting and monitoring but fed into what already existed.
The PMTE did not have a budget schedule and was an internal component of the DPWI.
Me Denyssen said Members should understand that the function of a steering committee related to a specific SIPP. When a project was being funded in a particular way with a business plan that had been assessed, the steering committee would then conduct some level of oversight over that project. There would not be a need for funding because the people that sat on the steering committee were doing their work and are getting paid on a monthly basis.
On the legislative issue of the IDA referring to the Minister of Economic Development as the lead Minister, there was no need for an amendment to the Act .The President could make a proclamation in terms of the Constitution to shift a function from one Minister to another. That proclamation could then be gazetted, and this took the place of a possible amendment.
Mr Denyssen said the Spatial Planning and Land Use Management Act (SPLUMA ) provided for a spatial development framework that joined people together and facilitated local development and business opportunities. The challenge was that some public works procurement regulations did not align with the SPLUMA, and that would affect how the district development was rolled out.
With regards to the Intergovernmental Relations Framework Act, the Constitution made it clear that all three levels of government were independent and interdependent but they dare not encroach on one another's powers. This independence and silo mentality was the reason why projects slowed down. Municipal, provincial and national administrative staff would come together in the PICC’s structures.
Mr Denyssen said that the issue of the Government Immovable Asset Management Act (GIAMA) made it important for the DPWI to report to the Committee on the status of its assets register. The state had many assets valued at a large amount of money that was not liquid because the trading aspect of the PMTE was not being operationalised. Very few people there were property specialists..
Members were told that the Act provided for a uniform framework for the management of an immovable asset held or used by a national or provincial department. Municipalities were not included. This had been raised during the process of developing the Act but the Minister of Cooperative Governance and Traditional affairs had said at the time that municipalities were covered by the Municipal Finance Management Act.
Mr M Tshwaku (EFF) said that he welcomed the input but he was adopting a wait and see approach. He was curious about where and when were the projects happening. Members needed to brace themselves to soon hear about corruption and looting of funds meant for these projects. The Beit Bridge border fence was a starter. These were big projects and a lot of looting would take place.
On expropriation of land, Section 25 of the Constitution needed to be amended because the willing buyer and willing seller concept did not work. Hopefully, the Committee would be able to assist in passing legislation that dealt with land that could be used for public interest. If government needed to make use of land and the owner could not be traced, it should be able to use that land.
Mr Thring said he felt that government was able to expropriate land using the current laws relating to public use or public interest. He concurred with Mr Tshwaku on the possible levels of corruption that could take place. The Committee should take proactive steps to ensure its oversight role over all these projects. There were 276 projects worth about R2.3 trillion.
Mr Tshwaku said that Parliament should expedite the process of amending Section 25 of the Constitution. Many land owners exploited the Government by charging ridiculously high prices.
Mr Denyssen said that the IDA made it possible for the Committee to do oversight over projects. There should be no fear that mayors and other provincial stakeholders would be doing the Committee’s oversight. The oversight function of the Committee was much more interrogative.
Due to load shedding in some areas where Members were based, the online meeting was cut short.
The meeting was adjourned.
- PCPWI - Overview of the Infrastructure Development Act
- Infrastructure Development Act No. 23 of 2014
- Summary - The South African National Infrastructure Plan
- Standard for Delivery and Maintenance of Infrastructure using a Gateway System
- Notes IDA 2014 and Workflow-Relationship ISA, DPWI, NT, & DBSA
- Treasury signs Infrastructure Fund Memorandum of Agreement
- Impact of the Infrastructure Development Act (2014) on the Oversight Mandate of the PC PWI
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