Government-Wide Immovable Asset Management Bill: Department briefing

Meeting report

PUBLIC WORKS PORTFOLIO COMMITTEE
3 May 2006
GOVERNMENT-WIDE IMMOVABLE ASSET MANAGEMENT BILL: DEPARTMENT BRIEFING

Acting Chairperson: Mr F Bhengu (ANC)

Documents handed out:
National Department of Public Works Presentation of Government-wide Immovable Asset Management Bill (GIAMA) to the Portfolio Committee on Public Works
Government-wide Immovable Asset Management Bill [B1-2006]

SUMMARY
The Department of Public Works gave a presentation on the Government-wide Immovable Asset Management Bill. It argued that immovable assets should be used to support the service delivery objectives of Government. The Bill aimed to minimise the costs of new immovable assets and increase maintenance of existing assets. It intended placing custodians and users of immovable assets in an interactive relationship.

Members were very concerned that the Bill would apply to national and provincial government only and not local government. They sought a detailed explanation from the Department for this omission. The Department undertook to provide the explanation by Monday, 8 May 2006.

MINUTES
Presentation on the Government-wide Immovable Asset Management Bill (GIAMA)
Dr S Philips (Acting Director-General: Public Works) stated that the GIAMA Bill is relatively straightforward. The aim of the presentation was to point out the objectives of the Bill and its principles. The Department of Public Works (DPW) had determined that it should be more efficient and effective with the limited available resources to address South Africa’s enormous delivery needs. Government has an extensive immovable asset portfolio, which has potential for further impact on the overall macro-economic socio-political and physical landscape. Dr Philips added that immovable assets are very substantial investments and decisions related to immovable assets have very long term implications for current and future generations. Decision making therefore require uniformity and rigor. The Constitution mandates the Government to pass legislation in all spheres of government if the focus is to establish uniformity and to set minimum norms and standards with regard to service delivery. The Cabinet mandated the Minister of Public Works to develop a policy framework to govern the management of immovable assets. The Cabinet decided "there needs to be new legislation and regulations that govern the maintenance, handling and disposal of immovable assets".

Dr Philips presented the objectives of and principles behind GIAMA as given in the document. The Bill seeks to elevate the planning for immovable assets to the same level that planning of other corporate utilities takes place in Government. Immovable Asset Management Plans (IAMPs) lie at the heart of GIAMA, which will form part of the annual strategic planning and budgeting processes of Government. Departments responsible for custodial functions, such as the Department of Public Works, will compile a custodian Immovable Asset Management Plan, whereas users of immovable assets will compile a user Immovable Asset Management Plan. The Bill promotes cooperative planning between the custodians and users and custodians must assist users to make informed decisions by providing information. Dr Philips presented the responsibilities of users and custodians respectively. The Bill as it stands is solely applicable to national and provincial departments; however, it is their intention to extend GIAMA throughout Government. More extensive consultation is needed before legislation is applicable to local government and state-owned enterprises. A pilot project has been developed for the Department of Home Affairs, with the intention of producing a thorough IAMP for one department to consult the National Treasury about its contents and format to ensure optimal effectiveness. Thereby the one IAMP is a prototype that will assist other departments to formulate their plans relating to immovable assets. Lastly, Dr Philips pointed out that the GIAMA Bill is in line with the Accelerated Shared Growth Initiative of South Africa (ASGISA) strategy to improve the maintenance of the country’s infrastructure.

Discussion

The Chairperson emphasised that Members should gain clarity from the presentation and should as such aim to gain information needed for the upcoming public hearings on the Bill.

Ms T Nwamitwa-Shilubana (ANC) highlighted that the Bill was only applicable to national and provincial government and asked how the immovable assets of local government would be dealt with.

Mr B Radebe (ANC) also asked about the applicability of the Bill to local government; specifically questioning how the Bill can argue to be "government-wide" when it only pertains to two spheres of government. Related to this is the issue of proper management of immovable assets within local government and the need to address misuse of assets by certain municipalities. Mr Radebe asked what "complexity" in local government law prevents the Bill from being applied to this sphere of government, and added that it is the responsibility of government to ensure that this complexity was addressed in order to ensure that the Bill can be applied in this sphere as well. In this regard, the manner in which immovable assets are acquired and disposed of should take place in a uniform and procedural way. Furthermore, he asked that the Bill be clear on the socio-economic impact of the disposal of immovable assets; specifically in how it would empower historically disadvantaged people in order to change the property ownership in South Africa.

Mr L Maduma (ANC) focused Members’ attention on the need for the Bill to provide clarity on who should be involved in the maintenance and monitoring of immovable assets. He elaborated by arguing that in some cases there is not a sense of community ownership of assets and as a result people vandalise these assets. In this sense he argued that some way should be found in which the community (and local government) can be involved in order to prevent vandalism. He also mentioned that persons with skills should be employed to improve the functioning of immovable assets – thereby creating an environment in which people feel that government takes care of them (leading to the prevention of vandalism of assets). Mr Maduma emphasised the need to align immovable assets and service delivery as another way in which an environment can be maintained which take the needs of communities and individuals into consideration. Lastly, the lack of a fixed asset register was highlighted as an issue which needed to take centre stage in the Bill.

Mr S Opperman (DA) asked what the financial implications of the Bill would be and whether an individual management plan would be formulated for each asset. He also enquired whether the Bill provides for increased employment opportunities.

Dr Philips responded that local government has a very large portfolio of immovable assets and the Department realises that there are problems relating to management of assets at this level. In this sense, the Bill was specifically drafted to be applicable to all spheres of government even though there are some legal complexities that arose when legislation was to be applied to municipalities. However, it is the intention of the Department to ensure that in the 2007/2008 financial year, the question of immovable assets at local government level would be incorporated into legislation. He asked Mr A B Annendale (Legal Services, DPW) to expand on the legal complexities relating to the application of this legislation to local government.

Mr Annendale responded that with the Department taking its direction from Treasury in developing municipal finance management legislation, it was seen that formulating legislation for municipalities are much more complex than for national government. This is, however, not the reason why the Department is delaying applicability to municipalities. The Department first wants to evaluate how the Bill worked at national and provincial level before it is rolled out to local government. When specifically asked to divulge these complexities, Mr Annendale responded that the Department has not dealt with these complexities but he would find out from the Treasury and report back on the findings.

Ms H Sangoni (State Law Advisor) interjected that the Bill could not be called "government-wide" when it effectively excluded municipalities. However, she could say that the Bill had intended to address financial management at municipal level but they had been unable to incorporate this into legislation. She admitted that there was an effort to incorporate local government but could not say, at present, what the problems were relating to this effort. However, Ms Sangoni said that Treasury was unable to cater for local government whilst catering for provincial and national government.

Ms C Ramotsamai (ANC) highlighted that when drafting legislation it was preferable that a Bill be as comprehensive as possible in order to address all relevant issues pertaining to it. In this sense, the Committee would appreciate a Bill which was inclusive and which also dealt with immovable asset management at local government level (because of the importance of this sphere of government).

Mr Radebe added that it would be more useful to go into the upcoming public hearings with all relevant information and also the ability to say whether local government will be included in the Bill or not. For this reason, he argued that the Department had to identify where the problems were in the Bill before the Committee went into the public hearings.

Mr Maduma said that he took note of the solution of the Department, namely to exclude local government until legal complexities and efficiency of management has been sorted out, but because local government is such a fundamental issue, it was imperative that this sphere’s inclusion in the Bill be addressed. He commented that it would be unacceptable to pass the Bill if it was not applicable to local government level. The reason being that the ability to abuse immovable assets at this level is a reality and that management of assets is urgently needed.

Mr Radebe argued that the specifics on which the Committee had been working on had not been included in the Bill and that it was a crucial intervention in the management of immovable assets. Furthermore, information from the Treasury and the Department was urgently needed to determine whether the Bill would cater for local government.

The Chairperson asked whether the public hearings should be rescheduled in order to be able to provide all relevant information. He enquired whether the above issues raised by Members had not been raised in the Department’s hearings. The Department was asked how soon they could provide Members with the information they required.

Dr Philips said they would be able to provide this information on Monday, 8 May 2006.

Dr Philips said the issue of disposals and the socio-economic impact were dealt with in the Bill empowering the Minister to issue guidelines and regulations governing the disposal of assets. The Department and the Department of Public Enterprises have been working together on a disposal strategy that would allow better disposal of assets than the existing Preferential Procurement Policy Framework Act. If this Bill were passed, it would reflect the new policy to address the socio-economic impact. Regarding the powers of the Minister, the Department would ensure that the guidelines also take into account consultation with communities.

Dr Philips conceded that it is important that government departments have people with the necessary skills. At present, all levels of government did not have the necessary skills to assist with management planning. Therefore, the Department has made it a priority to pro-actively address this skills-shortage as soon as the Bill is passed.

Dr Philips dealt with the financial implications of the Bill stating that Government bodies would need to acquire the necessary skills to implement the legislation. However, the costs associated with this will be small compared to the final outcome of improved asset management. The Bill would also contribute to the improvement of fixed asset registers. For instance, the Minister is empowered to issue regulations which would ensure uniformity of registers.

Lastly, Dr Philips said that the Bill requires that each department, which owns assets, would have to produce one custodial asset management plan. This will ensure that for each asset an individual management plan is not needed. Each custodial asset management plan will give an overview of the portfolio of assets which is owned by a department.

The meeting was adjourned.