Appropriation Bill: DPWI briefing; with Minister

Standing Committee on Appropriations

17 May 2022
Chairperson: Mr S Buthelezi (ANC)
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Meeting Summary


In a virtual meeting, the Standing Committee on Appropriations (hereafter referred to as the Committee) was briefed on the 2022 Appropriation Bill by the Department of Public Works and Infrastructure (DPWI).

The Department presented its proposed allocation of R26.1 billion, the allocation of R9.4 billion for the Expanded Public Works Programme (EPWP), programme coordination support provided to 69 public bodies, DWP renting vs owning buildings and progress on the transfer of the devolution of infrastructure maintenance functions from DPWI to the Department of Defence. The Department also presented its capacity to execute its mandate, current status of the asset register and insourcing of maintenance functions.

The Committee asked about monitoring, maintenance functions, compliance with paying invoices in 30 days, the parliamentary villages, contracts defaulted on and the Department’s role in assisting with infrastructure damaged by the recent floods. Members also probed the Department on leasing vs renting, municipal debt and asset management. Concerns were expressed about the EPWP grant and funding provided to public bodies.

The Department was committed to finalising and sending all relevant reports to the Committee by Friday 20 May 2022. The Committee would then follow up with any remaining concerns. 

Meeting report

Briefing by the Department of Public Works and Infrastructure on the 2022 Appropriation Bill

The Committee invited the DPWI to present a briefing on the 2022 Appropriation Bill. The DPWI was explicitly requested to deliver on:

1. Any possible service delivery implications of the proposed allocation of R26.1 billion over the 2022 Medium Term Expenditure Framework (MTEF) relative to the 2021 budget estimates;

2. The extent to which the Department plans to use the proposed allocation of R9.4 billion over the MTEF towards the Expanded Public Works Employment Programme;

3. The selection criteria of the 69 public bodies that will be provided with programme coordination support and the 290 public bodies that are to be provided with technical support at a proposed cost of R1.2 billion;

4. The DPWI position on the rentals of offices;

5. A progress report on the transfer of the devolution of the infrastructure;

6. Maintenance functions from the DPWI to the Department of Defence;

7. An overview of the capacity of the DPWI to execute its mandate;

8. An overview of the current status of the asset register;

9. The DPWI’s position on the insourcing of the maintenance functions by respective departments;

Various officials of the DPWI presented the briefing.

Mr Imtiaz Fazel, Deputy Director-General: GRC, DPWI, presented an overview of its programmes and objectives. These included integrated planning and coordination, productive assets, transformed built environment, optimised job opportunities, dignified client experience, sustainable infrastructure investment, and a resilient, ethical, and capable department.

Ms CJ Abrahams, DDG: Expanded Public Works Programme, presented the under-expenditure cases, the impact of service delivery allocation, and the criteria for providing technical support and receiving grants. She also offered an assessment of the EPWP.  

The Chief Financial Officer, Mr Mandla Sithole, presented a spending overview to the Committee. He addressed issues of underspending and renting offices instead of owning office buildings. The rest of the presentation addressed issues around maintenance and facilities, asset registers, construction project management, the Department’s contribution to South Africa’s reconstruction and recovery, broad-based black economic empowerment, the localization of goods and services, and legal impediments to achieving economic recovery.

(For more detailed information, please consult the presentation)


Mr O Mathafa (ANC) referred to slide 15 of the report on the EPWP integrated grant and asked: ‘Was there an actual monitoring report on the performance of the Department that could be shared with the Committee’? He wanted to see the impact of the spending on various aspects. ‘Would the Department see value for money in their contributions’? Still concerned with the EPWP integrated grant, he inquired ‘how much of the money was allocated to rural areas about urban areas. Was there a criterion that guided this allocation? ‘Did the budget impact unemployment? What were the salaries of the beneficiaries, and did they comply with the minimum wage’? He referred to slide 13, which stated that public bodies are still required to use additional funding. ‘How did these impact municipalities that lacked funding’?

His last question was on the issue of the Department’s maintenance function. Some departments claimed that they could not implement their maintenance. ‘Was it possible that the Committee could have the names of the departments that were unable to activate the maintenance function’?  ‘Which departments wanted the maintenance function delegated to them’? There was a significant time delay in departments requesting maintenance due to the cumbersome approval processes. ‘How speedily could the maintenance function be transferred to ready departments’?

Ms N Ntlangwini (EFF) inquired about the EPWP programme and its objective of getting youth and women into the programme. ‘How was the Department tracking the progress? ‘Were the jobs considered long-term and sustainable or just over a limited period? Was the R5 million only for this quarter? Was the Department targeting the right individuals? The Department was known for employing party representatives and paying ghost employees.

She asked about the Department’s 30-day payment of invoices compliances. There was still a long list of payments that needed to be made. ‘Why have the payments not been made’? ‘How can the Department ensure that invoices get paid on time’? It was very concerning that payments had not been made, mainly because the black-owned businesses were struggling.  This had been a long-standing issue that requires more extensive leadership capacity within the Department.

Mr A Surapen (DA) wanted to hone in on service compliance with other departments.  ‘How could the Department improve facility management services? Which departments should be running their own facilities’?

He inquired about the Department’s response to energy calls to fix facilities when the facilities were dilapidated. For example, a police station in KwaZulu-Natal was declared unfit by the labour inspectors. Police officers had to work without electricity to provide services. As a result, crime increased. ‘Why did maintenance take so long under such severe conditions’?

Mr A Shaik Emam (NFP) addressed the issue of parliamentary villages. ‘What was the cost of maintaining one house for one Member every month’? ‘Was there any research done on precisely who occupied these houses and if it was Members of Parliament living there’?

He recalled an oversight visit to houses some years ago. The infrastructure of these houses was the responsibility of the DPWI and needed constant maintenance and upkeep. He recommended that the Department make an industry out of this especially because the unemployment rate was so high. However, nothing came of the recommendations. The employed contractors did not have the resources to bring in the necessary goods.

He referred to the EPWP and asked whether it was a front for political parties to employ people associated with their parties. ‘What measures were in place to ensure credible processes that all people on the ground get an equal opportunity to be employed’? The programme emphasises job creation. ‘How many employed people warrant permanent jobs that would eventually be converted from temporary to permanent employment’?

He asked the Department for a comprehensive list of all the contractors that have defaulted in one way or another so that they can be removed from the system. The Department needed to appoint credible contractors.

Mr X Qayiso (ANC) thanked the Department for the presentation.  He asked about the number of state-owned buildings being taken care of by the Department in former homeland areas. ‘What were the intentions of the buildings that were no longer being utilised’? He asked if the Department had the sufficient capacity to deal with the current infrastructure destroyed by the floods. ‘What was the role of the Department’? He wondered how the Department decided whether to rent or lease office space and buildings. ‘Could the Department provide a breakdown of the cost-benefit analysis of renting instead of buying homes’? Lastly, he asked about the Department’s plan to pay local municipalities the debt owed to them by various departments.

Ms D Peters (ANC) wished to reiterate the issues of renting instead of owning homes and office space. Choosing to rent instead of owning seemed very problematic. She also addressed the issue of maintenance. ‘What was the capacity of the Department to monitor and supervise contractors that maintained precincts’? She stated that it was clear the Department was not serious about the maintenance of buildings by the state of the parliamentary villages.

She asked that the Department disclose its plans to deal with issues of rates and services. provinces owe municipalities a lot of money. This money can help municipalities deliver some services that they were struggling with.

Her next question addressed the EPWP. ‘Why were the supervisors located far away from their designated working spaces’? In the Northern Cape, the employees had never even met their supervisors or heard from them. That influenced their productivity. She asked about the stipend paid to the workers. ‘How had it grown over the last five years? Was it a livable wage’?

She also brought up the issue of poor management and the refurbishment of buildings. ‘Why was the Department not engaging small businesses or state-owned companies who could refurbish and renovate the building for nominal fees’? The Department needed to hire relevant small companies as part of the revitalisation of the inner city in Tshwane. Different departments owned many former buildings. If the departments worked together with the municipalities, they could utilise job creation and save money by owning homes instead of renting. Facilities needed to be refurbished and used by different entities.

 Mr Shaik Emam had further questions about asset management. The previous government owned many local properties that were allegedly disposed of before the 1994 elections. It was said that all the documentation was destroyed. ‘Had the Department been able to identify any properties that the government still might own to update the register’? He also asked about the latest update on the South African Police Services (SAPS) headquarters in Pretoria. A lot of money was spent on upgrading the headquarters, but the building was not ready to be occupied yet.

Mr Qayiso asked about the extent of the damages caused to the Parliament building? ‘How much money was needed to repair the building, and where would this money come from’?

Ms Peters said Mr Z Mlenzana (ANC) had connectivity issues, but he asked for a detailed response to all questions asked by the Committee. She had questions about the international properties. ‘Did the Department keep track of these properties, and were they registered as assets’? She also asked about the 30-day payment tracking system. As far as she knew, the system ended in March 2021. The tracking system was not up to scratch as was evident from the long list of unpaid invoices

The Chairperson had a list of questions during the presentation:

-He noticed that many departing officials were Acting Director-General or Deputy Director-General. ‘Why were so many senior leaders not present? When will all the positions be filled’?

-What was the Department’s attitude towards delegating facility maintenance to respective departments?

- ‘How did the Department ensure that the public procurement’s objectives were met’?

-‘Why were all the indicators going in the wrong direction despite a bigger budget’?

-‘What type of training was given to workers in the EPWP? Were they able to develop skills’?

-‘How many houses were in need of maintenance and upgrade are under the Department’?

-‘What were the common problems related to the integrated grants’?

-He asked for clarity on the underspending.

-He asked about the call for amendment B; ‘what was the problem with the Bill? What were they trying to achieve’?

- ‘What was the progress on the devolution of facility maintenance to the Department of Defence? There was an issue of civilians going in and out of the military base’.

-He asked whether the Social Relief of Distress Grant could be involved in the EPWP.

Minister’s response

Ms Patricia de Lille, Minister of Public Works and Infastructure, responded to some of the questions from the Members of the Committee. The Committee asked for several detailed reports. The Department would provide the Committee with the reports by Friday, 20 May. This included a report on the evaluation and implementation of the EPWP.

She said that the beneficiaries of the EPWP received less than the minimum wage. The Department was looking at improving this. Cabinet had decided that Ministers should engage in an exercise to look at all grants that government was applying for and the impact of these grants. The Department cannot simply change its function in terms of the devolution of the maintenance and infrastructure function. However, the Department was currently delegating some projects to specific departments. They had done this with the Department of Home Affairs, the Department of Justice, and the Department of Arts and Culture.  The DPWI was not delegating its maintenance function to the Department of Defence. The DPWI had met with the Department of Defence and visited its bases. The DPWI met with the Generals and advised them to conduct an inspection and give the DPWI a list of work that needed to be done. The new Minister of the Department of Defence put the process of devolving the infrastructure and maintenance function on hold until she could conduct a proper assessment.  The DPWI offered technical assistance through Infrastructure South Africa and an advisory committee when functions were devolved.

She addressed the questions about the 30-day payment system. The Department did a weekly tracking system. The Chief Officer of Finance had weekly meetings with all the regional offices. She said that she received a printout of the 30-day payments and the latest update showed 32 invoices were outstanding to the value of R5 million. The Chief Financial Officer instilled a consequence management system, and guilty officials underwent consequence management.

The DPWI had spent R4.5 billion on letting space from the private sector. To address the problem, a refurbished operation system needed to be introduced. The Department had meetings with National Treasury to help implement jointly with the private sector. For instance, if the Department signed a long lease, the private sector would refurbish the private space. The private sector and landlords were overcharging the Department. They had tried to renegotiate. The Department would provide the Committee with an update on the progress. On June 2, 2021, the Department launched a project to move government departments out of the private sector.

The Department was engaging with the Judge President on all infrastructures of the courts. It was aware of the poor maintenance of the court and was working on it. The Department had a unique plan to deal with the upkeep and affairs of the courts. A progress report would be provided. The Department faced several problems with police buildings, but a progress report would be provided to the Committee.

The Department of International Relations and Cooperation disposed of all buildings. They had identified the buildings and were busy disposing of them. The report was available to the Committee. She said that the Department would provide a list of contractors that defaulted and recommend to National Treasury to block them.

The Department made weekly reports to Disaster Management on the floods in KwaZulu-Natal, Eastern Cape, Northern Cape, and the Free State. They identified 49 buildings that were damaged and had implemented a programme to fix this. The Department asked the President to identify land for relocation. They were busy with sustainability tests and engagement with the community on resettlement. The Department also established that KwaZulu-Natal needed 52 bridges. Weekly reports would be provided. The Department offered professional help to expedite assessments in KwaZulu-Natal.

She said that the Parliament Village Board was responsible for monitoring the progress of the buildings. The Department met every quarter to discuss issues around the maintenance and upgrade of the parliamentary village. Reports were available.

She acknowledged that some utility bills remained outstanding. However, the DPWI was owed more than R3 billion. The Department pays for projects but does not get reimbursed.

On 20 May 2022, a report on the extent of the damage to the Parliament building will be released. The Department would then be able to allocate the necessary funds to the maintenance and upkeep of the building. It was Parliament’s ultimate decision on how to spend the money.

She addressed issues on the immovable asset register. In 2019, an advisory committee made recommendations on land reforms in general. Government had accepted 85% of these recommendations. Provinces and municipalities had their registers. The DPWI released a lot of land from the municipalities for settlement. Some municipalities had used well-located land to either lease out or use the land themselves. Thus, the allocated land was not being used for its intended purposes. The DPWI had provided a list of state-owned entities, land, and properties. The DPWI needed to work with other departments to succeed in land reform.

She asked the Committee for help with regard to the issue of underspending. The DPWI wanted to reprioritise the money and put it into existing priorities. The Department had approached National Treasury for advice and would like advice from the Committee.

Mr Alec Moemi, Acting Director-General, DPWI, further addressed questions. He confirmed that there was a process underway to fill all the vacancies within the Department. There was an intervention meeting to address this issue. A report would be submitted by 20 May 2022, which included a detailed plan and the timeline by which the process would be finalized.

The Department was aware of the backlog in terms of maintenance. Processes were still being put in place to address these issues. The Department had extended the amount that departments could spend on simple maintenance issues from R100 to R1 million. This would be reviewed in the new financial year.

 He addressed the questions about public procurement. There were standardized features embedded in their policy around localization and the property sector. The more BBBEE compliant they were within the property sector, the longer the lease period the Department was able to negotiate when sourcing the building. The Department used these leverages to encourage transformation in the property and empowerment policy. The figure of R2.7 billion was leveraged and utilised to ensure that the Department can achieve empowerment objectives.

One of the critical issues raised was the anecdote of the Minister who stayed next to a rat-invested house. He provided the status of the latest reports. The policy had a total of about 68 places, including the 27 homes located inside Bryanston Estate, 38 houses around the Waterkloof Ridge area in Tshwane, and three more houses in Johannesburg; 11 houses were being utilised by the Presidency Support Staff, and seven houses that were being used by the VIP protection.

M Abrahams addressed questions about the EPWP. In terms of the monitoring of the integrated grant, the Division of Revenue Act required monitoring in terms of the conditions of the grant. It was monthly in-year monitoring (IYM) and quarterly non-performance data. In terms of the IYM, it had to be provided by the 20th of every month. The DPWI was responsible for the consolidation.

She confirmed an urban-rural bias because the public bodies may not have as much access to public funding. The rural bias was in terms of the allocation given to the public bodies. The Department used the community survey of data, provided by Statistics South Africa to establish how impoverished a community was. They looked at the access to services and the community’s unemployment rate. The more disadvantaged the area was, the higher the wages were to the public body.

In 2020, 253 municipalities had access to the grant or 245 if one included the Department’s definition of rural areas outside the metro. The national minimum wage was R102, and it was put out by the Minister of Labour every year. For the integrated grant, the average minimum wage was R136 per day, and at a municipal level, it was R133 per day. There were no public bodies that were paying less than the minimum wage.

There was an EPWP reporting system where the public bodies were required to capture their data monthly and quarterly. A report was then put out by the Department on the EPWP website. The number of work opportunities created and the participants were tracked through these reports. If there were concerns about the appointments, the Department could go into reports, identify patterns and engage the public accordingly. The EPWP was also linked to the Department of Home Affairs to ensure that they did not employ deceased people. The EPWP also linked up with the Department of Public Service and Administration to ensure that public servants drew a salary from the programme. There were various measures, such as public body visits and a monthly sample of all project-related data, to ensure that the data and processes were in order. The Department was visiting the project sites.

The EPWP ran about 24 programmes. Each programme had to prove that it was not displacing government work. Different programmes had different needs and thus needed to look at it on a case-to-case basis. She then addressed the impact of the EPWP. The main objective was to provide work opportunities. According to Statistics South Africa, individuals employed by the EPWP were four times more likely to be permanently employed after the EPWP because of their work experience. At least 80% of the individuals who joined the EPWP had never worked before. The EPWP was engaging with the Department of Labour to address any abuse in terms of recruitment. There was also an EPWP policy on the way to look at the employment services of South Africa to link vacancies and work-seekers databases.

She asked for clarity on the case that Ms Peters mentioned on supervision.  The Minimum Wage Act determined the minimum wage, and there were adjustments where necessary. The calculation of transport costs was critical. After transport costs, many workers in the formal economy, as opposed to the EPWP, had almost no money left. The EPWP was supposed to employ people in the local areas and thus beneficiaries would save transport costs.

There were some problems in terms of the incentive grants. There were problems with implementation by public bodies, which could relate to procurement issues. There was also a lack of compliance in the Division of Revenue Act. They were working with the National Department of Education about training, and a skills programme would be provided to develop skills. The EPWP performance data was also available on the website.

Mr E Marais (DA) supported the increase of R100 000 to R1 million for the departments to be responsible for their own maintenance. He endorsed the money that was underspent in the Department for special projects. The Committee could put this idea forward for the budget meeting in October. He requested the Department look into the dry dock in Saldana Bay Harbour. Job creation was one of their priorities. There were a lot of repairs and maintenance that needed to be done before it could create a lot of employment opportunities in that area.

Mr Moemi indicated that they had profiled the entire prestige portfolio regarding the houses and the repairs necessary. They looked at which houses to switch from the prestige portfolio to the rental market and looked at a recovery plan. The Department was also doing a forecasting exercise to attempt to determine the size of the portfolio.

He addressed questions concerning the leasing of property. He confirmed that the Department had been overpaying the private sector. He elaborated on the criteria they applied for making decisions. They looked at the Department’s portfolio and the user requirements of the various departments. If properties were unable to accommodate departments, either by the conditions or how it has been configured, the Department then looked at the private sector to see if they could source appropriate properties. They benchmarked the rates they were supposed to be playing against a quarterly report that determined rental rates in the market. It was an independent market. Many landlords had believed that the rates were too low. The Department had begun renegotiating all of the contracts and considering a fresh mandate. The Department sought various mechanisms to leverage the private sector resources to complete objectives such as the proof of concept of some buildings. The Department worked on 5-10 buildings in the current financial year.

The police had required additional requirements for the headquarters. The Department was currently addressing those requirements and correcting challenges to the building. The Department was working together with the police and suggested moving some police officers from the existing buildings into one of the Department’s buildings. He addressed the concerns o the police station in Kwa-Thema. The land did not belong to the DPWI but to the city of Ekurhuleni. There had been talks about the transfer of the land to the DPWI so that the Department could invest in the upkeep of the police station legally. The Department had been getting better outcomes of audits due to all the work they had put in. The Department had just completed the asset register; now, they had to profile the asset register to see who was inhibiting these properties. The vesting process would help the Department to make a thorough investigation. There had been a contestation around the ownership of properties.

Mr Sithole confirmed that they did have a tracking system on the 30-day payment system and had weekly meetings around these issues. The Department had made considerable strides in this regard. The latest report from March indicated that in Cape Town, only three invoices were not paid. In April, no invoices remained unpaid outside of 30 days. The Department was trying its best to hold people accountable. However, there was a need for an integrated system to track all invoices where the services were provided.

Mr Moemi concluded that the Department wanted to extend the register of contractors from the private sector to increase employment opportunities and aid in the transformation agenda.

The Chairperson thanked the entire team from the DPWI for their comprehensive presentation. There were still many matters to discuss, but the Committee would follow up on these issues.

Draft minutes of the Standing Committee on Appropriations 10 May 2021

The minutes were adopted.

The meeting was adjourned.


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