In a virtual meeting, the Committee was taken through the Annual Report of the Department of Public Works and Infrastructure (DPWI) for the year 2019/20, the last year of the five-year cycle of the fifth administration.
The Deputy Minister said that the year had seen the rollout of the District Development Model, which had been announced in the previous financial year. Work on the Land Expropriation Bill was pushed through to Parliament for public participation and legislative purposes. The economic situation of the country had had a bearing on the performance of the department. It had been badly affected by the COVID-19 pandemic.
Members were told that the Department had failed to meet targets in key performance areas. On one key indicator - irregular expenditure - it recorded only a seven percent change in the irregular expenditure baseline against the target of 100 percent. Among the challenges were a high vacancy rate, the termination of appointment contracts and the fact that an investment analysis model was not implemented as planned. The Expanded Public Works Programme (EPWP) failed to meet its targets for participation of youth and people with disabilities due to insufficient engagement with them. The Department did not meet its targets of developing a Public Works Bill and an Expropriation Bill. This was due to a lack of capacity to drive the White Paper process and because consultations took longer than anticipated. It also did not meet its target of developing policies for managing prestige state accommodation and parliamentary housing.
Overall, the Department achieved 61.8 percent of its targets for 2019/20. Overall, 58.1% of targets were achieved for PMTE.
The Committee was given detailed breakdowns on the financial statements of the DPWI and the PMTE. The DPWI received an unqualified audit opinion, while that of the PMTE was qualified. The qualifications related to immovable assets and lease payments and lease revenue. Members were also informed of steps being taken to collect outstanding rentals owed to the PMTE by client departments.
Members raised concerns about irregular and unauthorised expenditure and about the status of the PMTE as a going concern due to its large overdraft. Other concerns were a large number of outstanding misconduct and criminal cases against employees, and a high number of vacancies which affected proper management of the Department. The Department was urged to make its job creation and training programmes more attractive to young people.
In opening remarks, the Deputy Minister of Public Works and Infrastructure, Ms Noxolo Kiviet, said that Annual Report made it seem that one was speaking in the past tense. Due to 2019/20 being a transitional year, some of the issues would have been overtaken by events. The year saw the rollout of the District Development Model, which had been announced in the previous financial year. This model helped to enhance oversight over provinces and municipalities. Work on the land Expropriation Bill had been pushed through to Parliament for public participation and legislative purposes. The economic situation of the country had had a bearing on the performance of the department. COVID-19 was the last nail in the coffin as it affected the Department badly.
DPWI 2019/20 Annual Report
Mr Imtiaz Fazel, Acting Director-General (DG), Department of Public Works and Infrastructure (DPWI), introduced the presentation, which was separated into two parts. Part one was about the mandate and the performance of the Department, including the performance indicators for both the main budget vote for the Department and that of its Property Management Trading Entity (PMTE). Part two dealt with the financial statements.
Members of the Committee were taken through the constitutional mandate, legislative mandate, policy mandates, vision, mission and values of the Department. Mr Fazel also explained how the Department functioned internally. The presentation was separated into seven thematic areas to create better understanding of the Department’s performance.
Mr Lwazi Mahlangu, Acting Deputy Director-General, DPWI, took the Committee through the non-financial performance of the Department. He outlined challenges faced in implementing some of the programmes in the main budget:
Programme one - corporate services and administration - achieved 73.3 percent of its targets. On one key performance indicator - irregular expenditure - it recorded only a seven percent change in the irregular expenditure baseline against the target of 100 percent. Among the challenges were a high vacancy rate, the termination of contracts and the fact that an investment analysis model was not implemented as planned.
Programme three - the Expanded Public Works Programme (EPWP) - saw an achievement of 60 percent of the targets. It failed to meet its targets for participation of youth and people with disabilities due to insufficient engagement with them.
Programme four - Property and Industry Policy and Research - did not meet its targets of developing a Public Works Bill and an Expropriation Bill. This was due to a lack of capacity to drive the White Paper process and because consultations with the National Economic Development and Labour Council (NEDLAC) took longer than anticipated. However, the Expropriation Bill had been endorsed by the Cabinet subsequent to the finalisation of the annual report.
Programme five - Prestige Policy - did not meet the target of developing policies for managing prestige State accommodation and parliamentary housing. There was no policy approval owing to prolonged stake-holder consultation and engagement. However, there had been considerable progress since the end of the financial year.
Overall, the Department achieved 61.8 percent of its targets.
Mr Mahlangu said an analysis of the EPWP’s performance in 2019/2020 across all spheres of government opportunity targets showed that 994 699 work opportunities were reported in 2019/2020. The overall performance was 101 percent of the target. The average duration of the work opportunities was 98 days. Participants were paid a minimum of R143 per day on average. Over R12 billion was transferred as income support to 927 627 poor and unemployed persons through the delivery of 13 407 projects.
Municipal and provincial performance against the work opportunity targets was the following: Eastern Cape - 114 percent; Free State - 79 percent; Gauteng - 64 percent; KwaZulu-Natal - 126 percent; Limpopo - 98 percent; Mpumalanga - 77 percent; Northern Cape - 91percent; North West - 85 percent; Western Cape -121 percent.
Of the total work opportunities created, 68 percent were for women, 42 percent were for youth and one percent were for people with disabilities. The targets had been 60 percent for women, 55 percent for youth and two percent for people with disabilities.
The Performance of the PMTE was as follows:
Programme one - administration - achieved 50 percent of its targets. Challenges were experienced in meeting the key performance indicator for the percentage of bids awarded within 56 working days from closure of the tender advertisement. A business process review was being undertaken that would lead to revised turnaround times. Programme two achieved 80% of its targets.
Programme three - Construction Project Management - achieved 56 percent of its targets. Problems were experienced in the key performance area of completing projects within agreed construction periods. The problems included poor performance by contractors, capacity constraints on the part of service providers, strikes and delays in obtaining construction permits.
Programme four - Real Estate Management Services - achieved 33 percent of its targets. Only 49 percent of lease agreements were signed within the scheduled timeframes.
Programme five - Real Estate Information and Registry - achieved 50 percent of its targets. Challenges were experienced in physically verifying the existence of immovable assets. Some fieldworkers were not able to perform their duties in January 2020 due to contractual issues. In February 2020, a vehicle contract was not renewed which led to the fieldworkers not being able to go on site.
Programme six - Facilities Management - achieved 67 percent of the targets. Missed targets related to the percentage of unscheduled reported maintenance incidents resolved within agreed timeframes and to the number of kilowatt hours of renewable energy generated.
Overall, 58.1% of targets were achieved.
Mr Mahlangu told the Committee that the DPWI was in the process of implementing a repair and maintenance programme at proclaimed fishing harbours to the value of R500 million. He said that currently there were 12 proclaimed fishing harbours in the Western Cape. There was a skewed development of harbours lying exclusively in the Western Cape. To address this, the DPWI had committed to developing new harbours in the Northern Cape, Eastern Cape and Kwa-Zulu Natal. In the 2019/20 financial year, the letting out of small harbours and state coastal properties raised R21 million.
Going forward, the Department was changing its approach to performance planning to reflect the government’s policy priorities. These were: building a capable, ethical and developmental state; economic transformation and job creation; improving education and health; consolidating the social wage through reliable and quality basic services; spatial integration with regard to human settlements and local government; and social cohesion and safe communities.
With regard to human resources, the Committee was provided with statistics on the remuneration and employment of personnel in the various programmes. Statistics of the finalised misconduct and disciplinary hearings were also provided - there were 20 for the PMTE and 81 for the main department.
The Committee was given detailed breakdowns on the financial statements of the DPWI and the PMTE. The DPWI received an unqualified audit opinion, while that of the PMTE was qualified. The qualifications related to immovable assets and lease payments and lease revenue. Members were also informed of steps being taken to collect outstanding rentals owed to the PMTE by client departments. (See slide presentation attached)
Mr T Brauteseth (DA, KZN) said that the report was detailed and involved a massive amount of data, but the committee had only received it the previous day. The job of the committee was oversight, but departments deliberately provided documents late to diminish the level of scrutiny. He asked that going forward, the committee should adopt a resolution that reports should be provided at least a week prior to a meeting. Mr Brauteseth said that the presentation stated that 98 percent of funds were spent but, in the non-financial report, only 48 percent of the targets were achieved. He asked whether the spending was a tick box exercise to make the Auditor-General happy while only achieving half of the targets. He raised an issue of a Home Affairs office in Pinetown that was to have been moved to a safer spot. There were still no details about where it would be located and COVID-19 had been used as an excuse. He said that money was being spent but no results were being seen and asked the DG for comment on that.
Mr Brauteseth said the DG had previously complained about a lack of action on cases referred for disciplinary action or for investigation by the police and National Prosecuting Authority. He said he had written to the Department asking for a list of such cases so that the Committee could assist in obtaining action. However, he had not received a reply.
Mr Brauteseth said irregular expenditure was a big problem but it had been reduced by only seven percent. Tied to this was a massive vacancy problem which meant that the right people were not in place to curb irregular and wasteful expenditure. What was the Department going to do about it? Most of the irregular expenditure was on state funerals. What would the consequences be?
Mr M Dangor (ANC, Gauteng) said that irregular expenditure could be regularised but how should unauthorised expenditure be dealt with? If municipalities were suffering and unable to pay for services like water and electricity, this created a problem that needed to be dealt with differently, instead of taking it from minister to minister. He suggested that funds should be ring-fenced and used to pay municipalities' bills.
Ms S Boshoff (DA, Mpumalanga) reiterated Mr Brauteseth’s sentiments about the submission of reports. She said that the country was preparing for a second COVID-19 wave. Was the Department doing regular checks of quarantine sites and was any reconciliation being done with the Department of Health? She asked what the cost was of keeping quarantine sites up and running. Had some been closed and was the department considering re-opening them in preparation for the second wave?
Ms Boshoff said it was shocking that unemployment was highest among the youth. She asked why the Department did not make its employment programmes more attractive and advertise better. She noted that 190 appointment contracts were expiring. Were these renewable and would they be advertised or filled internally? When would vacancies in key positions be filled?
The Chairperson thanked the Department for the presentation. He said that he would like to get a sense of the impact of suspensions and dismissals on the ability of management to ensure that performance targets were met. He asked at what level of leadership the cancellation of contracts occurred. He said that the liquidity of the property management division was a cause for concern, especially its ability to sustain itself. It was important for there to be more focus in the next two quarters on progress around the issue of liquidity.
The Chairperson said that it was necessary to ensure that there was prudent management of the PMTE to ensure that it was not swallowed by its overdraft. He asked what the progress of the Independent Development Trust (IDT) was in provinces, given the Department’s intention to close it.
The Committee was told that the Department had achieved only a seven percent reduction in irregular expenditure because investigations were underestimated in terms of resources and time. When investigators’ contracts came to an end, the Department had to make other plans. Liquidity and the bank overdraft were a concern. Client departments had not been paying. As a result, the Department levied interest and asked the Auditor-General to reflect that interest as fruitless expenditure by client departments.
Mr Aaron Mazibuko, Chief Director: Financial Management, DPWI, said that unauthorised expenditure came from 2008 and involved compensation of employees and spending on goods and services. Appointments had been made without looking to the future. Poor controls led to unauthorised expenditure. Unauthorised expenditure also related to the construction of schools to eradicate mud schools although this had not been part of the mandate.
Mr Clive Mtshisa, Deputy Director-General: Corporate Services, DPWI, said that recruitment drives in previous financial years had been driven by the previous political principal. Between March and June there was a transition from the fifth to the sixth administration and all activities were stopped. With the new political principal, the Department was able to share its plans, especially in relation to the vacancy rate. The new political principal had to be given time to settle in. The recruitment process went into the last quarter, after which the COVID-19 lockdown happened. The Department had a recruitment plan that had been endorsed by the Executive Committee and was currently filling positions in response to the recruitment plan. The appointment contracts that were not extended were the result of the Department of Public Service and Administration (DPSA) not approving further extensions which meant that appointments had to be covered by the recruitment plan.
Mr Molatelo Mohwasa, Deputy Director-General: Intergovernmental Coordination, said that there had been an intervention by a political task team chaired by the Deputy President to deal with municipal debt.
Ms CJ Abrahams, Deputy Director-General, EPWP, DPWI, said 440 000 youths were able to participate in the EPWP. The environment and culture sector had a number of programmes that were attractive for the youth. The infrastructure sector also had youth designed programmes and achieved 57 percent participation. She said that the Community Works Programme was facing a challenge of attracting only women, mainly older women, and its performance was very weak. The social sector programmes of home-based community care and early childhood development also only attract only older women.
She said that EPWP had called on all the bodies that contributed to the overall performance of the EPWP to redesign programmes, but continue to maintain high women participation. In this financial year, it had done well in that it had moved from 55 percent to 90 percent of youth participation, and had rolled out a programme to train 400 artisans.
Mr Morris Mabinja, Director: Asset Investment Management, DPWI, said that quarantine facilities were on a master database. People were no longer being put in them due to the National Coronavirus Command Council's decision that quarantine sites should be stopped for assessment and further decision making. Therefore there was no cost. The DPWI was not resourcing quarantine facilities as that was the responsibility of the Department of Health.
Mr Fazel said that he had no idea why the report had been provided late to the Committee. He apologised and said this would be followed up in the office. He said that he recalled receiving a complaint about Pinetown and he would follow up with the complainant outside of the meeting. Mr Fazel said that a response had been sent to Mr Brauteseth about disciplinary matters. There were a lot of referrals made to the police and NPA whenever there had been criminal activity. A number of cases were also dealt with internally. The Department would appreciate any support. He assured the Committee that disciplinary measures were being taken for irregular expenditure on state funerals. The Committee would be informed about the outcome. The Department was currently restricting a service provider from doing business with the government.
On the issue of the PMTE as a going concern, he acknowledged that the overdraft was unduly high. It was carrying a huge amount of overdue accounts. The matter had been raised to the political level. Were it not for the overdraft, the Department would not be able to cover expenditure.
The Department had had challenges with regards to its performance. A mid-term review was being conducted and would be presented to the Minister and Deputy Minister.
Mr Brauteseth asked for clarity on when responses were sent.
Mr Fazel said that they were recently sent and were on the way to Mr Brauteseth.
The Deputy Minister assured Members that there would be a follow-up on late submissions. The presentation had been approved a while ago, therefore someone must account for why it was late.
She said that one might think that new leadership was trying to assert itself but these were just the principles of good governance that could not be compromised. When people were employed on contract, they did not receive some benefits. Contracts could keep on being extended as this would be exploitation of labour. A line had to be drawn. People needed to be employed, not exploited. The deputy minister said she took responsibility for that and that young people could not continue being exploited.
The impact of EPWP in attracting older women was by design. This was how the programme was meant to work. The intention of the programme was poverty alleviation and women suffered the most poverty. Understanding that when young people were inactive, their minds became corrupted, the EPWP ended up attracting unemployed young people, although the programme had not been designed for them. She said that the Department required agile leadership to design programmes for the development and capacity building of young people.
The Chairperson gave a short summary of the presentation and thanked the Department and the Deputy Minister.
The meeting was adjourned.
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