Public Works Department Budget: briefing

NCOP Public Services

25 May 2004
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Meeting Summary

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Meeting report


25 May 2004

Acting Chairperson Mr R Tau [Northern Cape, ANC]

Documents handed out
National Public Works Department Budget Review presentation
National Public Works Department Budget Vote

The Department outlined its strategic goals and challenges for the 2004/5 Budget and explained the consequences of the budget shortfall of R718 million. In the discussion that followed, the following topics and points emerged:
- Overspending during the previous year
- The responsibility for proper maintenance and upgrading of infrastructure lay with the respective Departments and municipalites as the Public Works Department only acts as an implementing agency
- The lack of policy guiding officials on the management of the buildings under their supervision. Legislation dealing with Asset Management is expected.
- The status of national and provinicial Asset Registers
- More information needed on the Expanded Public Works Program and BEE in general.
- A 100 000 jobs would be created during the first year of the Expanded Public Works Program.
- The necessary staff to fulfil its new obligations.
- Each provincial treasury deals with the funding for its Expanded Public Works Program and the Public Works Department only acts as co-ordinator.
- The question of leasing or purchasing buildings to house government offices.
- The issue of 'fronting'

In the presentation by its Director General, the National Department of Public Works (DPW) requested the Committee's assistance in advocating the need for more funding for its Programme 2 (Provision of Land and Accommodation). This programme

required funds for leasing offices for government departments and for municipal services and rates on state property. The approved overall budgetary allocation for the year would run R 718 million shy of the requested amount. This shortfall could have serious implications for the effectiveness of various government functions throughout South Africa.

Ms B Dlulane (Eastern Cape ANC) asked why the Department had overspent during the last financial year.

Mr Maseko, Director General: Department of Public Works, said the Department's over expenditure is the result of the important nature of its obligations. For example, if the lease obligations were not paid timeously, this would result in Government being evicted from its offices. The overexpenditure usually becomes regularised after the Department proves to the Treasury that its spending was necessary.

Mr M Mzizi (Gauteng IFP) asked what the Department was doing to ensure proper maintenance and upgrading of buildings under its responsibility, especially police stations. Some hospitals were in a severe state of dilapidation and often ran short of even doctors and nurses, how would the Department respond to this.

Mr Maseko said with regard to the Hospital in Nelspruit that Mr Mzizi had referred to, the Department was responsible for hospitals managed by National Departments such as the South African National Defence Force. Hospitals run by provinces fall under the provincial legislature and the provincial offices of the DPW.
The Department only acted as an implementing agency. Police Stations and other infrastructure must be planned and budgeted for by the respective Departments before the DPW could ensure construction.

Mr J le Roux (Eastern Cape, DA) said the Department needed a proper problem-management policy to address the varied problems facing them. There was no law or policy guiding officials on the management of the buildings under their respective supervision. A proper Asset Register should also be implemented to ensure better management of resources.

Mr Maseko said there was currently no policy in place to guide the management of immovable assets, but hoped that the necessary legislation would be forthcoming soon. In the next few years every Department must submit an Asset Management Plan in order to motivate managers to view their buildings as assets.
There was a National Asset Register, admittedly though it could be improved. The bigger question was how this register would communicate with the various Provincial registers. All Provinces with the exception of Mpumalanga and Eastern Cape already had established registers.

Mr S Shiceka (Gauteng ANC Alt) requested a full briefing at a later date on the Expanded Public Works program as well as details of the planned construction and improvement of police stations. The Department should also inform Parliament of its state of readiness to build the diplomatic missions in African states recently referred to by the President.

Mr Maseko reiterated that the Department could only act as an implementing agent on behalf of other Departments. However they had recently completed a building in Kinshasa and could possibly be working on another one in Addis Ababa. He suggested the Committee and Department jointly draw up a schedule of presentations to ensure all Parliament's questions were adequately addressed.

Mr Shiceka asked for more information on parastatals.

Mr Maseko said the parastatals usually operate their own property division and did not fall within the Department's jurisdiction.

Mr Shiceka asked what was being done to ensure the maintenance and full utilisation of multi-purpose community centres.

Mr Maseko said the Treasury was currently arguing that municipalities should be allocated funding and made responsible for the maintenance of its infrastructure. The Department's objectives were the continued improvement of service delivery and enhanced customer service. He pointed out that approximately four years ago the Department had had a backlog of police stations, magistrates courts and other infrastructure amounting to R10 to 12 billion. The Department's regional offices had developed a very strong relationship with their municipal counterparts and so, although there were possibly still cases of arrears, these were much reduced from previous levels and he hoped for this trend to continue.

Rev P Moatshe (North West ANC) said the Department should start unpacking such important concepts such as the Expanded Public Works Program and Poverty Alleviation to ensure there was a common understanding of the fundamental terms. Training should be geared to ensure effective poverty alleviation.

Mr S Phillips, Chief Operating Officer: National Department of Public Works, replied that training was being provided to all emerging contractors who worked with the Department. Medium-range training - referred to as the Incubator Programme - was also being instituted to help more established emerging contractors.

Mr F Adams (Western Cape NNP) asked whether the Department had the necessary staff to fulfil its new obligations.

Mr Maseko said the Department employed 5 500 persons and they currently had to contend with 1000 vacancies. The Department required highly skilled personnel for which they were engaged in stiff competition from the private sector. Government was one of the biggest consumers in the property market and a decision to buy vast numbers of buildings would have a significant impact on the industry.

Kgoshi Mokoena (Limpopo ANC) noted that he would have liked to have seen a detailed breakdown of budget allocations per province. He asked what impact this budget would have for his Limpopo province.

Mr Phillips replied that no specific funds would be disbursed to the DPW for the Expanded Public Works Program, as they would only act as co-ordinators. Therefore the provincial treasury should have all the details of funding for its province.

Kgoshi Mokoena asked whether it was not more expensive to continue leasing properties than simply purchasing the required buildings. He also asked whether wealthy persons were not merely using previously disadvantaged persons as fronts when establishing Black Economic Empowerment (BEE) companies?

Mr Phillips said the question of buying or leasing property is best discussed on a case by case basis as there are both advantages and disadvantages with both these options. The Department was engaged in ongoing analysis to ensure the optimum solution to each particular case. In response to the fronting question, he said that it was often difficult to successfully investigate 'fronting' but the Department was doing so to the best of its ability. They were legally obliged to act severely against any company found guilty of this practice.

Mr D Worth (Free State ANC) asked whether the relative poverty of provinces was considered in job creation projects.

Mr Phillips replied that the relative poverty of provinces was indeed one of the important factors considered in job creation projects. It is expected that 100 000 jobs would be created during the first year of the Expanded Public Works Program.

Ms Dlulane asked if there was a timeframe for the establishment of Asset Registers in the two remaining provinces.

Mr Maseko said the Heads of Departments were constantly monitoring this. They would forward the status of implementation to the Committee. He assured them that all Departments viewed the asset registers as a priority.

Mr Tau said that the issue of leasing or purchasing properties was a political issue as it touched on different ideological stands. He thanked the Department for the presentation. He reiterated the need for more detailed discussions on the Expanded Public Works Program and BEE objectives in general.

The meeting adjourned.


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