Government Immovable Asset Management Bill: Department response to submissions

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PUBLIC WORKS PORTFOLIO COMMITTEE

PUBLIC WORKS PORTFOLIO COMMITTEE
13 March 2007
GOVERNMENT IMMOVABLE ASSET MANAGEMENT BILL: DEPARTMENT RESPONSE TO SUBMISSIONS 

Chairperson:
Mr F Bhengu (ANC)

Documents handed out:
Government Immovable Asset Management Bill [B1-2006]
Department's response to public submissions on Government Immovable Asset Management Bill: Part1, Part2 & Part3

SUMMARY
The Department briefed the Committee on its response to the public hearings on the Government Immovable Asset Management Bill. The Department had prepared a schedule setting out the submissions received and its response to these, indicating why it accepted or rejected the proposed amendment.

Members did not discuss the clauses in depth. They raised queries in relation to the phasing in process, the public/private partnerships and the way in which public entities would be dealt with. A further meeting would be held the following week to clarify these issues and to give a more in-depth study on the Bill.


MINUTES
Government Immovable Asset Management Bill (the Bill) [B1-2006]: Briefing by the Department of Public Works

The Chairperson reminded the Committee that they would be required to engage in discussion of the Bill clause by clause.

Mr ZingiNtsaluba, Acting Director General and CFO: Department of Public Works (DPW) stated that the Department of Public Works (DPW) had noted the concerns of the committee on the scope of the Bill. As a means of finding a practical approach to responding to the submissions made on the Bill the Department had therefore prepared a summary or audit trail, which would clarify the concerns and responses. He noted further that DPW noted the concerns around the need to work with the municipalities and local government and had engaged with the Department of Provincial and Local Government (DPLG) to look into the matter.

The Chairperson commented that he was very pleased that the Department had addressed the issue of the scope of the bill because the Systems Act was never looked at previously and the committee was worried as to what the DPLG might do. He asked when this process would take place.

Ms Lydia Bici, Deputy Director General, National Public Works Programme & Policy, answered  that it would happen in a month’s time. All comments received had been incorporated.

Clause by Clause clarification
Clause 1: Definitions

”Acquire” and “Immovable Asset”:
Mr Buks Annandale, Director: Legal Services, DPW, presented the comments on the definitions of "acquire" and "immovable asset" There had been a proposal from Gauteng Provincial Department that the definition be amended to distinguish immovable assets under the control of the state and immovable property that was outside the control of the state. The Council for the Built Environment,  the Doyle/Rivett Carnac Partnership and Lamacs Solutions had also commented on the terms. Mr Annandale said that a new definition of "custodianship" was now included to meet the concerns of the Gauteng Department.

The Chairperson asked the Department why there was no uniformity with the definitions. Some of the comments indicated that some of the concepts appeared to be interchangeable.

Mr Andre Meyering, Director: Property Owner Activities, DPW, stated that certain concepts of acquisition were not captured in the old laws that governed national government. Some functions had been performed by common law. In later legislation the acquisitions were specifically detailed, and hence there were differences in terminology. The implementation remained the same.

Mr Annandale added that Samuels Consulting had said that it considered that “immovable asset” was incorrectly defined and there should be changes. The DPW set out that immovable assets included all building used by a department, including specific functional buidings and infrastructure, land, with or without structures, and rights such as servitugddes and other intangible rights. The Department did not wish to further define the rights, as there was a danger of erroneous exclusion..

Mr Meyering stated that as a means of informing the reader, the Department would include a more detailed explanation in the guidelines, but this did not necessarily have to be included in the legislation.

Ms C Ramotsamai (ANC) sought clarity on the infrastructure and non- infrastructure assets and their classifications.

Mr Meyering said that they would be classified together. The principles of drafting required the law to be concise but to ensure that something would not be excluded because it had not been mentioned in a list. The Department had therefore decided to opt for general classification, and this would be explained in more detail in the guidelines.

Ms Ramotsamai noted that generalisations might be too wide and not have a focal point. 

”This Act”:
On the definition of "this Act" Mr Annandale reported that the State Law Advisors had advised DPW to narrow the definition to regulations and standards only. They believed that it should not be wider and could not include management guidelines that did not have the power of legislation. Therefore the definition was now limited to "any regulation or standard".

”User”:
The definition of "user" had been amended following comment from the Gauteng Provincial Department, in order to align the definition with the wording of Clause 6 (1)(ii). The words” hich it uses or intendes to use in support of its own service delivery objectives” was inserted.

”Performance”
Mr Annandale stated that the Council for the Built Environment had suggested that a definition of performance must be included. The Department did not agree. The ordinary dictionary definition sould apply, and where the word appeared in a specific context, that context was made clear by the surrounding words.

”Best Use”
Doyle/Rivett-Carnac Partnership had suggested that there must be a definition of “best use”. The Department felt that the principles set out in Clause 5 already comprehensively dealt with the strategic approach, and there was therefore no need to include a definition.

Clause 2: Application of Act and Clause 3: Objects of Act
Mr Annandale stated that the Council for the Built Environment had made a comment that the Bill was read as excluding public entities and local spheres of government, who were charged with service delivery. They suggested that if immovable property management at this sphere were included, it would enhance service delivery.

The DPW noted that in terms of Batho Pele all sphere of government were responsible for service delivery, not only local government. Whilst it was true that the scope of the Bill was limited to national and provincial government, Cabinet had instructed that the prcinciples of sound immovable asset management should be extended to all spheres of government in a phased approach. There was not seen to be a need for an amendment.

Ms Ramotsamai agreed with the statement that all spheres of government were involved in the service delivery, but stated that there was a perception that this was not so on the ground. This was the reason for the concern.

Mr B Radebe (ANC) noted that the Council for Built Environment was a statutory body. The issue of the Cabinet approval of the scope to national and provincial government was important. The main question related to who would be ensuring that service delivery took place. He agreed that there was a social need but there was no link between the government and State-owned Enterprises (SOE). He enquired how SOEs would make use of assets for the distribution of wealth or development. He suggested that there should be a Clause that ensured that this issue was referred to the local government. A clear line of responsibility should be drawn so that it could be maintained.

Mr Ramotsamai agreed with Mr Radebe and argued that this was a means of ensuring safety. She further suggested that there must be time frames put in place.

The Chairperson stated that the Committee also had a responsibility because they would have to come up with the recommendations.

Mr Ntsaluba stated that the Department recognised the concerns of the Committee on this matter. Earlier on the DPW had held a meeting with the DPLG. The Departments had proposed that it could be possible to include wording along the lines of: ” the Minister may, after due consultation, and by notice in the Government Gazette, make certain or all of the provisions applicable to all spheres of government.”.

Mr Annandale stated that since the Department had only come up with this idea on that morning, as a possible means of addressing the concerns, the State Law Advisors would still have to work on the clause and formulate a proper wording, and also consider the practicality of the clause.

Clause 2: “public entities”
Mr Annandale stated that a comment had been raised by the Gauteng Provincial Department that for the sake of clarity, the “public entities” referred to in this section should be defined, by referring to the definition in the Public Finance Management Act (PFMA). DPW was in agreement and had therefore drawn up a new definition.

Mr Annandale stated that the Development Bank of South Africa had commented that they believed there should be clarity in the Bill on the roads administered by the National Roads Association, the airports administered by the Airports Company and the dams to be transferred to the National Water Resource Agency. The Department noted that these types of assets were not directly owned or leased by the national or provincial government, and therefore the Bill did not apply to them.

Mr N Gogotya (ANC) asked whether there was a specific reason why ACSA was excluded from the Bill, and, if so, how the Bill would be framed in regard to similar entities.

Mr Annandale replied that all the public entities were currently excluded from the application of the Bill due to various reasons. Proper investigations would be done on the pieces of legislation that applied to those institutions.

Mr Gogotya asked whether the amnesty moratorium would apply to public entities under the terms of disposal in the meantime.

Mr Annandale replied that they would not.

Mr Mandala (Ministry) stated that institutions had their individual legislative frameworks. They might use disposal for purposes of improving their balance sheets, rather than for the purposes envisaged in the Bill.

A National Treasury representative needed clarity on the inclusion or exclusion of Chapter 9 Institutions in the Bill, as she noted that there was no specific reference to them.

Ms L Bici stated that Chapter 9 institutions were national government assets and the provisions of this legislation should also apply to them. The normal measures of management and application of the legislation to all would apply.

The Treasury representative also asked about the custodianship of foreign assets, stating that this function seemed to reside with the Department of Foreign Affairs, although the DPW was the Department which would influence and work with this Bill. She asked who would take responsibility if the Department of Foreign Affairs was not able to comply with the provisions of the Bill. 

Mr Meyering replied that the Minister of Public Works, in consultation with the Ministers of Finance and Public Service and Administration, would assign custodianship. The issue of Foreign Affairs taking custodianship of foreign assets abroad would be dealt with in similar terms. He also mentioned that currently the Department of Safety and Security took limited custodianship of certain assets, and the same principles would apply to this Department.

Mr Ntsaluba added that DPW would find a way of incorporating this into the Bill.

The Chairperson commented that it seemed that this was still a grey area and the Department should look further into the matter and come up with a clear answer when it met with the Committee again the following Tuesday.

A member asked about specific assets. He enquired if they were not state assets and if so, why they were not included.

Mr Meyering stated that the examples given were state assets. They were effectively assigned to the South African Police Services (SAPS) but SAPS could not dispose of those properties because they belonged to the Department.

Mr Blanche (DA) asked if this meant that SAPS were also responsible for houses that their staff occupied.

Mr Ntsaluba stated that the Department was concerned with the functional buildings, and houses were not functional buildings. The Department was in the process of correcting or rectifying the problem raised.

Mr Radebe asked who was maintaining properties outside the country, and asked where the Department of Foreign Affairs (DFA) would fit into the whole picture.

Mr Ntsaluba stated that DFA were asset managers and the DPW were the project managers. However, this situation was in the process of being reversed.

Mr Maduma (ANC) asked about the issue of traditional assets, which had been raised at a previous meeting. The Department had not replied how the process would unfold and he asked for clarity now.

Mr Ntsaluba responded that there was a Communal Land Act already in place. The Department would have to ensure that the various sets of legislation did complement each other.

Clause 4
Mr Annandale stated that the Gauteng Provincial Department had said that it seemed anomalous that a provincial department could acquire and dispose of land but not manage it. The DPW felt that this was a valid comment and included the word “manage” after the word “acquire”

The Provincial Department had also commented that the language used might be inconsistent with the definition of “immovable asset”. This concern had already been addressed under the revised definitions.

The Development Bank had suggested that there should perhaps be a requirement for users and custodians to enter into an agreement for setting out the responsibilities. The DPW indicated that this was intended, but it would be dealt with under the Regulations. .

Clause 5: Principles of Immovable Asset Management
Mr Annandale said that the Gauteng Provincial Department had suggested that principles should be developed in consultation with provincial governments, and that the Minister should be required to consult with them. DPW agreed that this was a sound comment. There was a consultation process already provided for, but other relevant clauses would be amended to refer specifically to the consultative process.

Comments had also been made by the Construction Education and Training Authority, and by the Development Bank but DPW was of the view that their suggestions should not be incorporated in the legislation. The reasons were fully set out in the tabled document.

Clause 6: Immovable asset Management Plan
Mr Annandale pointed out that the Council for the Built Environment had expressed concern that there did not seem to be a need for two plans. It had also commented that there was no provision in the Bill for dispute resolution.

Mr Annandale said that there was a reason for the two plans, and the Minister would be able to prescribe the minimum requirements. In regard to the dispute resolution, he pointed out that this would be covered in the Intergovernmental Relations Framework Act.

Gauteng Provincial Department had also made some comments, but as these were based on a mistaken interpretation of the two plans, it was not necessary to make any amendments.

The Provincial Department had also asked that guidelines be drawn to distinguish more clearly between the plans and to avoid duplication. DPW indicated that they would provide comprehensive guidelines but no specific amendments would be made to the wording of the Bill.

Mr Meyering indicated that the Gauteng Provincial Department had further commented on planning provision and said that there had ben no provision for user plans in public/private partnerships (PPPs). He stated that there had been interaction between the Department and National Treasury on that issue. The Department would deal with the PPPs separately. Custodians and users would be required to reflect the contractual provisions. A further report would be made to the Committee on the following Tuesday on this issue.

Mr Radebe stated that sometimes contracts are not uniform. He suggested that even PPPs must meet a certain standard. He requested the Department to engage with Treasury further.

Mr Meyering stated that the concern from Treasury is that PPPs should not have too many role players. There would be an additional role player now, which was the Department,  to play these roles.

The Chairperson asked the Members to come back with comments on the PPPs and also to comment on Clause 19(1)(a).

The Treasury representative enquired what would happen after 25 years, and specifically if the property reverted back to the State.

Mr Annandale replied that after that period the property would revert back to the State and the Bill would be applicable to the custodians.

The representative said that she would like clarity also on prestige buildings.

Clause 5 and following: disposal
The Chairperson asked the Department if it was not necessary to have a definition for disposal of assets.

Mr Annandale agreed that it might be good to make cross references.

Mr Radebe expressed the view that disposal and transfer meant the same. However, he agreed that it would be useful to provide a definition.

Clause 6: references to strategic plan
Ms Mariam stated that a strategic plan could not cover only an annual period. She pointed out that a proper strategic plan would be geared over a number of years.

Ms Bici stated that there may be certain aspects which might not change. Others would change for purposes of budget.

The Chairperson asked the Department also to engage on this issue and revert back to the Committee.

Vesting of properties
The National Treasury representative needed clarity on the issue of vesting properties and wondered which Department was responsible, querying whether it would fall under the Department of Land Affairs. She also enquired who would take ownership under this Bill.

Mr Meyering answered that vesting was a transitional arrangement. He also mentioned that there were a few properties that could not be concluded, as there was still uncertainty as to who owned them. That was an issue between provincial and local government.

The Treasury representative mentioned that the Western Cape disputed that half of the properties allegedly owned by them were in fact so owned. She asked what would happen in these cases.

Ms Bici stated that this problem did not run across all provinces. Gauteng and some other provinces were ready for implementation of this system and the functions seemed to be more clearly delineated.

The Treasury representative stated that there seemed to be a problem of communication because there were properties falling into disrepair, and apparently not owned either by provincial or national government. She mentioned that the greatest problem was the lack of an Asset Register.

Ms Bici stated that vesting was an administrative issue and could be dealt with at a later stage. It did not change the essence of the Bill.

The Chairperson stated that the question of uncertainty as to ownership was a concern to the Committee and the Department must ensure that it was not taken by surprise. He noted that later in the year the Committee would require an update from the Department on this matter.

Mr Radebe agreed that the issue of an Asset Register was important and would be dealt with.

Clause 22
Mr Gogotya noted that the Gauteng Provincial Department had believed that until the certification process, which would confirm ownership of vested assets, the Bill could not be implemented. It was suggested that the Bill be introduced in phases. He asked how this would apply.

Mr Annandale pointed out that Clause 22 had envisaged that there would be a phased approach, since the Minister would have the power to suspend requirements for a transitional period in order to facilitate implementation of the legislation.

The Chairperson stated that the Committee would be studying the Bill in far more detail the following Tuesday. He asked that Members be prepared to submit their proposed amendments to the Department for consideration by no later than Thursday.

The meeting was adjourned.

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