Department of Infrastructure 2023/24 focus points; with MEC

Meeting report

The Chairperson thought it was important for the Department to brief the Committee in order to gain clarity on the focus points of the huge portfolio in the Department. It would help to do justice to the oversight responsibility during engagements throughout the year on the Annual Performance Plan (APP) with the Department. The transition from the Department of Human Settlements to the Department of Infrastructure was not a smooth process. The Committee was thrown into the deep end and therefore needed a reset button to familiarise Members with the workings of the new department.

Minister’s opening remarks
Mr Tertuis Simmers, MEC, Department of Infrastructure, stated that it was the fifth month of the newly formed Department of Infrastructure. During the initial phase of the merger and in the process of phase two of the Refresh Programme, the Department has been working on outlining the strategic goals as set out in the 2015 Western Cape Infrastructure Framework. The new Department was introduced when the first budget vote was delivered. In addition to the inaugural Infrastructure Summit, the Department has been engaging all role players. He compared the transition process to changing the tyres while driving the bus. Given the multi-year nature of infrastructure and public transport projects, there are pull-throughs of commitments from the previous departments of Transport and Public Works (TPW), and Roads and Human Settlements into the new department. He acknowledged the multiple socioeconomic challenges that residents are facing when interacting with the services being offered by the Department. Stuck with the special legacy of apartheid, continued degradation and separation, most citizens experience poverty, unemployment, inequality and pervasive violence, e.g. the recent taxi violence. Direct hindrances to spatial transformation lie in challenges in the integrated human settlement approach, i.e. the availability of reallocated land and public transport. The NDP suggests four key interventions to address spatial transformation, i.e. gentrification, better-located human settlement land and improved public transport, efficient location of jobs and people improved spatial development frameworks, and a diverse range of housing options. The starting point of this discussion is to note that infrastructure is a public good and the government plays a positive role in providing electricity, water, roads, housing, education, waste management and telecommunication. Infrastructure has positive spin-offs for all, including households, communities, businesses, industries, and tourism, and fosters economic growth and employment opportunities. The maintenance and planning of infrastructure and the financing thereof are presenting challenges in the current climate of rising unemployment in the country. The breakdown in overall logistics between non-functioning state-owned enterprises further stifles the economy and public administration. In recent years, the integrity of road infrastructure across the province had to bear the brunt of this misfortune. The bedrock document, i.e. the Western Cape Infrastructure Framework, drives the actions to address the challenges and accelerate development to unlock the economic potential of the province. Although it is not a silver bullet, it prescribes a partnership-based approach because the government does not have the financial capacity and cannot deal with the challenges by itself. However, the framework will guide in achieving the objectives of infrastructure development, maximising the economic and social benefits of infrastructure projects for all citizens and the sectors in the portfolio. Certain communities do not feel part of the changes in the province. Given the massive fiscal challenges, the co-sourcing from the private sector needs to be considered, which forms part of the focus of the framework. The Department needed to align with existing plans and strategies in the public and private sectors to foster and expand partnerships. However, the Department needed to demonstrate innovation through future planning, which the Department of Public Works is known for, and an integrated approach to infrastructure growth. By placing people at the centre of operations, the Department is incubating a system-centric approach for a more nuanced measurement of the impact on communities in terms of the effect that the programmes will have on the lives of the people and the intended beneficiaries. The following outcomes are envisaged, i.e. an infrastructure foundation and capabilities for development, sustained delivery for maximum impact, leveraging infrastructure to deliver fundamental spatial transformation, and private sector development. The Department offers a great deal in terms of both tangible and intangible infrastructure to secure the future of the citizens.

DOI Presentation
Ms Jacqueline Gooch, Head of Department (HOD), presented the following broad objectives identified for implementation in the 2023/24 financial period:

An infrastructure foundation and capacity development;

Sustained delivery for maximum impact;

Leveraging infrastructure to deliver fundamental spatial transformation; and

Catalysing innovation, private sector development and climate-sensitive infrastructure.

The budget of R9.8 billion is allocated for the following programmes:

Administration                           R319 million

Public Works Infrastructure        R 2 296 billion

Transport Infrastructure             R4 589 billion

Human Settlements                   R2 613 billion

Community-Based Programmes R68 million

The 2050 Western Cape Infrastructure Framework includes the following key focus areas:

Prioritise infrastructure for maximum impact;

Municipal infrastructure interventions;

Private sector partnerships;

Innovation and future planning; and

Climate change

(See Presentation)


Discussion
Ms C Murray (DA) enquired about the concerns of the administration with the amalgamation of the two departments. She asked if there would be job losses and whether trade unions have been engaged. She sought clarity on whether the Department could intervene when municipalities do not deliver. The Empower Impact Assessment (EIA) ties in with the idea of holding municipalities accountable for infrastructure delivery. She wanted to understand the budget and programme or innovation related to the 2050 Infrastructure Thrust and why the private sector did not have the capacity for such large infrastructure projects.

Mr I Sileku (DA) asked if the Department was anticipating problems with the dissolution of the interim management arrangement at the end of October 2023. He noted the volume of Programme Four with many subprogrammes related to human settlements. He wanted to understand if the challenges and risks that were highlighted in the last briefing with the Department of Human Settlements, would affect the performance of the programme. He sought clarity about the role of the Department on the municipal level in the Expanded Public Works Programme (EPWP). The programme is located in the office of the Mayor and in most cases, it is being abused by politicians who participate in the appointment process. Vacancies are not advertised and individuals are notified about appointments via SMS. The same individuals are held to ransom and required to raise membership for the organisation as compensation. The programme was not achieving its goals in terms of skills development because of a lack of an exit strategy. He asked how vulnerable people could be protected against this type of exploitation.

Ms Murray raised a concern on behalf of members in her constituency about the allocation of waste management services as part of the EPWP to workers who do not come from the area. She enquired about the vetting process performed to confirm that the people employed provided the correct address.

The Chairperson replied that the Department has a coordination role and that municipalities are the implementing agencies where EPWP is concerned. The question should rather focus on the due diligence performed by the Department to hold municipalities accountable in terms of EPWP allocation.

Mr M Kama (ANC) found the presentation helpful. He had noted the Minister raising the risks posed by the construction mafia on multiple occasions. Communities are being misled and exploited by forums that pretend to represent their interest. He enquired about a solution to bring sense to the community that the infrastructure belongs to them and to ensure appreciation for the development.

Mr Sileku asked the Minister if he had a discussion with the National Minister about the construction mafia. The problem was having an impact on the delivery of infrastructure programmes countrywide and not only in the Western Cape.

The Chairperson enquired how the Department goes about setting EPWP targets and how it quantifies the allocation for EPWP projects. She sought clarity about the alignment and intergovernmental relations between the Department and municipalities in terms of sharing skills to manage infrastructure projects given the financial climate. She wanted to know if the Department would take responsibility for the implementation of projects if the municipality in the Sederberg, for example, does not have the funds. She asked how the Department quantifies the achievement of social benefits within communities through private partnerships.

MEC Simmers said the EPWP issue is raised repetitively as a matter of concern during his visits to communities. Although the abuse of the programme has been discussed over the years, nothing has been done to hold people accountable. The programme has inherent structural flaws and the system is not fully integrated, therefore no province has accurate figures. He had noticed the programme being used as a political tool when people were recruited on the day of a by-election. He replied to Mr Sileku that he did engage the National Minister and was planning to write a letter to the National Minister to request an audit of all municipalities. The programme is supposed to have an exit strategy, hence the link to the Department of Labour. Instead, individuals are trapped in three-month employment cycles. The plan is to verify data in the Western Cape to identify areas of abuse because it was opening the market for the construction mafia. Provincial teams should not use their mandate of being the coordinator as an excuse not to monitor the programme. Intervention at the municipal level is ineffective if the local government is not functional. He acknowledged that accountability should be taken seriously but it is not easy when key role players do not play their role.

Ms Gooch replied to Mr Sileku that the interim management arrangement was led by the Department of the Premier and involved a review of the organisational structure. The process involved the reorganisation of the Department of Human Settlement into the Department of Infrastructure and the Department of Transport and Public Works into the Department of Mobility. The administration of the two departments required a combination and split of the skill sets to support the new departments. The management arrangement was originally put in place for one year to assess the number of people in the different areas and to recruit and fill posts. There is no procedure to exit people and therefore no job losses were reported in terms of the Refresh Programme. Engagements with the unions were led by the Premier. Plans to provide for the two new departments were presented to the National Department and the President. She replied to the Chairperson that the organisational structure made provision for both departments with interim arrangements and an additional theoretical structure which will result in the placement of staff in the two departments. The interim management arrangements need to be completed by the end of October 2023. She explained that the Department cannot intervene when municipalities are not implementing their projects. The Provincial Road Authority is allowed to spend allocated money on provincial roads and not on municipal streets. However, the Department is exploring drafting an agreement for a future model of assistance to accommodate municipalities such as the Swellendam Municipality who are prepared to pay for the services. Rules are in place to request assistance from the province, for example, for maintenance of main roads running through towns such as Montague and Ashton.

Mr Sileku said it was difficult not to intervene because the roads form part of local government. He asked what remedy the Department could offer to assist the end-user where incompetent administrations and councils are at the helm of management at municipalities.

The Chairperson asked how the competencies at provincial departments and the lack of skills at municipalities could meet for the benefit of the citizens. Communication about what needs to be done should be clear and to the advantage of beneficiaries.

MEC Simmers said it becomes more difficult to deliver services given the tight fiscal environment and incompetencies at the municipal level. Councillors and municipal administrators regard the provincial government as Big Brother that should provide funds when they need it. He questioned whether the model of governance was responsive to the needs of the people. What some municipalities expect the Department to do is illegal and not in line with budgetary and legal prescripts.

Ms Gooch remarked that municipalities do not want help, but only want the Department to pay. The Department is using money from the equitable share for provincial government responsibility. Municipalities have their own revenue resources to fund municipal responsibilities. The Department is supporting capacity building at municipalities through a bursary collaboration project in a 50/50 partnership with the private sector. The extent to which municipalities are funding technical skills to maintain infrastructure is in question. Discussions amongst provincial departments have started to form a package of support that would enable municipalities to deliver services. An example of support to municipalities was during the 2017 drought when the Department of Transport and Public Works tendered for municipalities to sink boreholes in the Table Mountain Aquifer. It was not within the mandate of the Department but municipalities did not have the expertise to put out the tender. She explained that the Empowerment Impact Assessment is only for use by the Department and not for municipalities. She did not imply that the private sector does not have the capacity to bring large infrastructure projects, as envisaged in the Strategic Organisational Thrusts, to market. The private sector would, for example, not acquire a R1 million piece of equipment for trial and error which the government is sometimes required to do. She replied to Mr Sileku that the risks and challenges concerning land invasions and the construction mafia under the Department of Human Settlement are not different in the new department. The concerns about the EPWP selection process have been discussed with stakeholders. The National Department has yet to pass a recruitment and selection policy. Previously, the community participation policy became a requirement to limit influence on the selection for jobs. She replied to Ms Murray that it is the responsibility of the implementing agency and not the Department to audit where people reside if the address formed part of the request when the labour was sourced. Any complaints should be escalated to the municipality, or the different sectors or departments involved.

Ms Murray replied that the matter was escalated to the sub-council and although they did an investigation, she was still receiving similar complaints.

Ms Gooch said the Department has no authority to investigate the matter and advised Ms Murray to escalate the concerns through the structures within the City of Cape Town.

The Chairperson said the matter should be noted as an agenda point for the next local government meeting.

MEC Simmers stated that Mr Grant Twigg is the relevant Mayoral Committee member to contact.

Ms Gooch said the Department does not allocate funds nor set targets for municipalities. The targets are linked to grant allocation and prior-year performance.

The Chairperson asked if the National Department sets the targets and if it is linked to the numbers.

Ms Gooch confirmed that the National Department sets the targets. She said the construction mafia came to the fore in KwaZulu-Natal when national regulations stipulated that sub-contractors should be awarded a 30% share in construction projects. This created the perception of an entitlement to 30% of the project value which started to drive the mafia approach. She explained that while the Department is coordinating the EPWP, it also created work opportunities in Roads, Public Works and Infrastructure programmes.

The Chairperson asked how the Department accounts for benefits from private partnerships if there are no set targets.

Ms Gooch replied that the benefits of private partnership are measured in terms of housing opportunities and investment value per project but the targets are not set within a certain matrix.

Ms Chantal Smith, Chief Financial Officer (CFO), DOI, said that private partnerships should not be compared to private-public partnerships (PPPs). She explained that the Department works with a group of contractors in terms of a maintenance framework. The contractors would at times identify things that need to be fixed while on the contracted job and would do the maintenance without charging for the expenses incurred. The benefit is also in terms of social investment.

The Chairperson drew attention to a case study of a project to build 48 houses which was expected to be completed a few years ago. A portion of the funds allocated to the municipality was rolled over but the project was still incomplete in June 2023. She asked how the monitoring and accountability in terms of the Empowerment Impact Assessment are being done.

MEC Simmers said the Department is engaging municipalities regularly but the concern lies with incompetent administrators at municipalities. He has been aware of the 48 houses since the beginning of his term. He suggested that at some stage, the rolled-over funds should be reallocated to another project.

Ms Gooch said Human Settlements appeared not to have implemented standard procedures. Planning and procurement should not happen in one year. Money should be retained if a procurement problem is identified. The general procedures for infrastructure development were not embedded in Human Settlements. The multi-year nature of infrastructure projects needs to be considered in terms of a ten-year horizon. Milestones should be evaluated before funds are allocated to municipalities. The underspending should be on the books of the Department which could ask for the rollover as a mechanism to streamline programmes in the Human Settlement space.

Ms Smith said in order to understand if a project is ready, requires at least a five-year view of the project. She suggested that an emergency framework was needed, which is relevant in local, provincial and municipal government.

The Chairperson asked if the Department was not running the risk, in terms the project implementation management system, of not allocating funds to municipalities which lack capacity.

Ms Smith replied that solutions should be specific to the challenges of each municipality.

Mr Sileku said the suggestions of the CFO would work in an ideal world. However, most municipalities are not financially viable and are chasing targets. The Department is limited to intervening and dictating to municipalities that appoint people without expertise to manage Human Settlements. Municipalities are not assisting the Department to achieve delivery of houses because they feel that Human Settlements is an unfunded mandate and have not been fully capacitated on the local government level. Mayors do not want to invest in unfunded mandates.

An official from the DOI said internal challenges experienced with the transition to the new department need to be addressed. Indicators in the Human Settlement areas were set quite high at the start of the five-year cycle and were not adjusted to account for Covid-19. The targets were set based on a hybrid model and the situation was compounded by resignations and capacity constraints. The system is not set up to deal with the historic backlogs. The structural problems require redress in the next five years.

The Chairperson replied that some of the aspects raised are doable. Her observation was specific to the project about the 48 houses that are being impacted by political challenges and community dynamics. The Department should take a resolution not to pay the municipality but to pay the supplier directly. Communication was identified as an area of concern in the municipality. She suggested that junior staff should be engaged because they stay on the job while senior management frequently moves on. All these challenges would be dealt with in discussions on the annual report.

Ms Gooch suggested that the Committee may want a briefing on particular aspects to deepen the knowledge of Members. The Department is willing and ready to assist the Committee.

MEC Simmers, said the central theme of the discussion is partnership and the competence level of each partner. A legal framework is required to assist local government. He wished the Committee well. He has a clear view of the future after five months in the new department.

Mr Kama thanked the Department, on behalf of the Committee, for doing their work on a daily basis. The questions from Members represent the communities from which they come.

Resolutions and actions
Mr Sileku suggested that the Committee request to be provided with the EPWP policy and ask for a briefing to deal with issues of the National Department.

The Chairperson said it was important to determine who is monitoring the concerns raised about the EPWP.

Mr Kama wanted to get an understanding of the policy environment and interventions before engaging the National Department.

Mr Sileku replied that no province is able to report accurately on the EPWP. He suggested that the Committee wait for a response to the letter that the MEC would be writing to the National Minister about the EPWP audit. The policy should be submitted in writing.

The Chairperson summarised the resolutions by Members. Firstly, a request for the EPWP policy framework and secondly, a diagnostic assessment tool for municipalities on the existing Human Settlement project implementation management system, i.e. the original template specific to municipalities.

The Committee adopted the minutes dated 11 August 2023 without amendments.
 
The meeting was adjourned.