Department Budget: briefing

Meeting report

PUBLIC WORKS PORTFOLIO COMMITTEE
9 March 2005
DEPARTMENT BUDGET: BRIEFING

Chairperson Mr F Bhengu (ANC)

Documents handed out:
Department Director-General’s budget briefing
Department budget

SUMMARY

The meeting focused primarily on the outstanding maintenance requirements for government buildings. The Department of Public Works stated it required about R12 billion to complete all the maintenance projects for these buildings and asked the Committee to assist in lobbying Treasury for this amount. The Department’s strategy of disposing of unused or under-utilised buildings was also raised, with some Members arguing against the strategy of leasing the buildings for commercial gain.

MINUTES

Department briefing
The Department listed the outstanding maintenance requirements as one of their key challenges. Many buildings were in a dismal state of disrepair and some departments could be evicted from leased offices if urgent steps were not taken. The Department listed a range of actions aimed at enhancing the efficiency of Department employees including instituting disciplinary steps against inefficient employees.

Discussion
Ms C Ramotsamai (ANC) asked what role the Department had played in the construction of new school buildings and whether the funding allocated for the maintenance of state property included leased property.

Mr J Maseko, Director-General, said the National Treasury generally allocated funding for infrastructure to the various provinces; however with regard to the building of new schools the Treasury allocated funding directly to the Education Department. The Department then engaged the provincial departments to construct new schools. The national Department thus had no mandate to build schools. The problem appeared to be a lack of adequate co-operation between the relevant regional Departments. The Department was in the process of arranging a meeting with all the various role players to facilitate a meeting aimed at enhancing co-operation in this regard. He said the leasing and maintenance of buildings were two separate entries in the budget and referred to slide 24 of the presentation to substantiate his statement.

Mr S Opperman (DA) asked whether the corporate sector could be involved in the maintenance of Government buildings through the expansion of Public / Private Partnerships (PPPs).

Mr Maseko said in the United Kingdom, PPPs were used to facilitate the maintenance and refurbishment of government buildings. He added that the Department could consider a similar approach. He cautioned however that the PPPs were not a cost-free solution as private enterprises still had to be compensated for the work. He added that PPPs in principle could cost more in the long term than more conventional funding methods.

Ms T Nwamitwa Shilubana (ANC) related that local communities were not involved in public works projects to the extent envisaged in the Expanded Public Works Programme (EPWP).

Mr D Ntsabula, Deputy Director-General of Finance, said the Department imposed certain conditions, including employment strategies, on their implementing agents as part of their contractual obligations.

Mr Maseko said the Department had made ample provision to ensure that contractors, communities and consultants were informed of the implementation guidelines of labour intensive approaches in Public Works Programs. He said the Department published guidelines on the implementation of the EPWP through various media outlets, including the Department website.

Mr J Blanche (DA) said in light of the R300 million owed to various municipalities in outstanding rates and taxes, the government was setting a poor example to ordinary rates and tax payers. He suggested that the State President sell his aircraft to assist in covering the abovementioned debt.

Mr Maseko said the rates problem was being addressed in the spirit of co-operative government. R600 million had recently been allocated towards the repayment of outstanding municipal rates and taxes. He added that pending Cabinet approval of the preferred candidate, a Deputy Director General could be appointed within ten days.

Mr F Benghu (ANC) requested that Committee Members not make unpalatable statements, and rather focus on the issues at hand. He emphasised that he was not censoring the free speech of Members but requested that statements not be made against people who were not present to respond to them.

Mr V Mahlangu, National Treasury, said the rates and tax accounts were not always accurate and the Treasury was working with municipalities to gain a more accurate reflection of these outstanding monies. He added that the Treasury was committed to fulfil its financial obligations.

Mr Blanche said he was concerned about certain Committee recommendations made after a recent visit to Stinkwater. He said politicians were not knowledgeable in technical matters and as such they should not presume to instruct those who were technically oriented in their fields.

Mr Maseko said he noted the concerns of the Members relating to the Stinkwater project but emphasised the need to extend the positive consequences of the EPWP. He referred to KwaZulu-Natal where individuals and families had been charged with maintaining designated segments of roads as evidence of the successes of the EPWP.

Ms Ramotsamai said the current infrastractural deficit in the country should be appreciated in light of the political and historical experiences of South Africa. She suggested that the labour intensive EPWP process be employed in the maintenance of government buildings.

Mr Maseko said that in the short-term, the Department would initiate a strategy of disposing of under and unutilised buildings to ensure the optimum usage of buildings. He added that this referred not only to sale of disused buildings, but also their reallocation to other state Departments.

In the long-term, the Department would introduce a legislative framework that would compel all government Departments to develop an annual property management strategy. This, he argued, would force Departments to enhance their stewardship role over state infrastructure.

Mr Maseko said the money recouped from disposing of unused building could possibly be reinvested in the Department of Public Works, but this had to be discussed with the National Treasury.

Mr Mahlanghu said the Treasury was working with the Department to refine the R12.5 billion for outstanding maintenance projects. He added that the Treasury was currently prioritising ‘prestige’ buildings. The asset management problem was not restricted to a scarcity of resources, but the asset register itself was incomplete. He added that a detailed asset disposal strategy was also required from the Department of Public Works.

Mr N Gogotya (ANC) said that according to his understanding, the various departments budgeted for the maintenance of their own buildings. Why was the DPW burdened with the maintenance costs?

Mr Maseko agreed that there were exceptions, but said in general the Department of Public Works was responsible for the maintenance of all government buildings.

Mr Gogotya asked what percentage of government buildings was currently being leased from the private sector.

Mr Opperman reminded the Department that there were unused military bases going to ruin across the country.

Mr Maseko said the asset disposal strategy included disused military installations and added that military complexes were built for very specific functions and would therefore be more difficult to dispose of. He asked the Committee to ensure that any facilities they were concerned about were included in the asset disposal plan.

Mr Blanche supported the idea of selling unused government assets to generate funds for other important projects. He suggested a more specific definition of jobs be created, as jobs could refer to temporary or long-term sustainable employment.

Mr Maseko said the term ‘job’ was clearly defined within the Department’s policies. They created work opportunities or interventions intended to provide skills and opportunities to unemployed persons, but added that these were not permanent employment positions.

Mr Mahlangu said it was challenging for the Treasury to balance the different legitimate demands for funds, especially within the South African context. He suggested the Department provide a detailed asset disposal strategy to the Treasury for discussion.

Mr Mahlangu said the Department of Public Works was reluctant to devolve the building maintenance responsibility to the various Departments. However, he believed this would enhance their stewardship role over the buildings they occupied. He added that certain Departments had funds that could be channelled towards their own building maintenance.

Mr L Maduma (ANC) said the efficiency enhancing methods suggested by the Department presentation might require a more holistic multi-departmental approach to ensure its success. He asked whether the measures listed in the presentation were in accordance with the Labour Relations Act.

Mr Maseko agreed that the Department could not address issues of inefficiency on its own but insisted that proper business principles, such as punctuality and proper management activities, were not debatable. He added that the LRA did not prohibit employers from sanctioning poor work performance. Employees had to appreciate that poor performance on their part would be met with negative consequences.

Mr Maduma asked the Department to ensure that adequate protection of women in the construction industry formed part of the industry Charter.

Mr Maseko said the Charter would definitely ensure that the role of women in the construction industry was secured.

Mr Moonsamy (ANC) was opposed to the sale of unused and under-utilised buildings and recommended they be leased out instead. He referred to the initial sale of the Johannesburg Civic Centre, and the subsequent leasing of space by the government in the same building, as examples of the potential negative consequences of selling unused buildings. In Itekweni and Cape Town, certain beaches had already been designated private property, denying the general citizenry access to their oceans.

Mr Maseko said he noted Mr Moonsamy views but felt the disposal strategy was a policy decision.

Mr Moonsamy suggested that Government legislate to prevent landlords allowing property to remain idle while dire housing and economic needs existed within the community. He said technical consultants played a vital role in the construction industry but cautioned that they be consulted with prudence.

Mr Moonsamy asked when the asset register would be completed and suggested a special meeting be arranged with the Minister to discuss raising funds for building maintenance requirements.

Mr Ntsabula said the completion of the Asset Register required input from three different entities; the provincial governments, Department of Public Works and the Department of Land Affairs. The latter was still engaged in a vesting exercise, especially in the former TBVC states where buildings were often registered under different entities. The vesting exercise would be complete within three years.

Mr Maduma asked whether the Department was responsible for purchasing aircraft. The statements made by Mr Blanche were not relevant to the meeting with the Department of Public Works, but rather reflected an attempt to ‘undermine the National President’, who had the support of the majority of South Africans.

Mr H Maluleka (ANC) asked when the amount of R12.5 billion required for maintenance was established. He said this figure had been stagnant for a considerable period without any fluctuations as a result of additional decay or renovations being considered.

Mr Maseko said the maintenance backlog amounting to R12.5 billion was arrived at after the Treasury’s appeal for a quantification of the maintenance requirements. The study was completed in mid 2004. He added that the amount was subject to certain fluctuations but the Department was comfortable with the aforementioned amount as a accurate reflection of the maintenance needs.

Mr Maluleka said that although the government had focussed primarily on the construction of new infrastructure during the last ten years, he suggested that a more balanced approach between maintenance and construction of new buildings should be considered.

Mr Maseko agreed with the need to balance maintenance with the construction of new buildings.

Mr Mahlanghu said the Government was often forced into making difficult funding decisions, and therefore had to prioritise their spending.

The meeting was adjourned.