Department Budget and Strategic Plan 2007/8: briefing
Public Works and Infrastructure
14 March 2007
Meeting Summary
A summary of this committee meeting is not yet available.
Meeting report
PUBLIC WORKS PORTFOLIO COMMITTEE
14 March 2007
DEPARTMENT BUDGET AND STRATEGIC PLAN 2007/8: BRIEFING
Chairperson: Mr. F
Bhengu (ANC)
Documents handed out:
Strategic
Planning and Budget Preview Presentation to the Portfolio Committee on Public
Works
SUMMARY
The meeting comprised of an opening presentation by the Minister of Public
Works, Ms. AT Didiza and a collective presentation by the Department of Public
Works. The Minister’s presentation emphasised the alignment of Public Works to
the national goal of reducing unemployment, poverty, and underdevelopment. His
opening address focused also on the mandate of Public Works as a fundamental
handyman and asset manager of the state, a sentiment congruent to the
subsequent presentation by the Department. She also briefly focused on issues
surrounding the construction industry, national asset management, and building
state capacity. The presentation by the Department of Public Works covered
several areas considered as pillars of the Department and focused on a
clarification of their mandate in providing an overview of their strategic plan
and a preview of their budget. The strategic plan covered maintenance, the
leadership of the Expanded Public Works Program, their regulatory function, and
asset management. Key issues raised by the subsequent discussion included,
concerns around the establishment of the state asset registry, the import of
Cuban skill assistance in construction, state owned property and private
property leasing by the state, and the budget expenditure of skills development
and capacity building.
MINUTES
Department Presentation
The Chairperson thanked the delegation from the Department of Public Works
for their attendance and gave special attention to the attendance of the Minister
of Public Works, Ms A Didiza, and invited her to present an opening
presentation as a prelude to the engagement with the departmental delegation.
Ms Didiza thanked the chairperson for his invitation. She said that her ten
months in office had allowed her to become acquainted with the challenges faced
by the Department. In working with the strategic plan for the Department, she
maintained that the pursuit of their mandate was taken into account as well as
the experience gained from the previous government in better understanding
their mandate and the key components of the department. She said that there was
also an attempt to align with the Department’s agencies to ensure that the plan
presented to the Portfolio Committee had had input from all those agencies and
components.
Ms Didiza argued that the focus of the strategic plan was based on the
challenges that had been set in place by government in 2004 on the three main
challenges facing the nations. The three challenges were poverty, unemployment,
and underdevelopment. The Minister said that the strategic plan also focused on
issues highlighted by the President in his state of the nation address, regarding
the reduction of poverty. Further more, she claimed that the strategic plan has
also taken into consideration the budget proposal and working closer with the
provinces to find a collective solution to these challenges. She said the
pillars within the Department provided an opportunity to do its best as a
facilitating department. For this purpose she argued that the focus on
maintenance and the development of a maintenance plan for all departments would
be established in collaboration with Treasury. She said that a further component
of the Department of Public Work’s mandate has been the building of state
assets. Here she said the Department looked at the constraints of rendering
this service and admitted that during the planning phase it sometimes takes
longer hindering the delivery of infrastructure. The funding model also makes
full delivery difficult because some funding spanned three to four years. The
minister said that work was being done with treasury and the provinces to
establish an infrastructure delivery cycle in order to coordinate planning,
funding, and implementation.
Regarding the development of the construction industry, the Minister maintained
that the register of contractors had been challenging but necessary to improve
the quality of the contractors and highlight the areas of difficulty for contractors.
She said that the Department had come up with a national construction
development program which would be housed by the Construction Industry
Development Board (CIDB). The Minister highlighted the fact that the Department
would be working more closely with the provinces regarding construction
development centers providing support services to contractors. Working at a
provincial level, she argued will help reduce costs to meet the requirements
expressed. She alluded to the fact that the Department has also appointed a new
CEO. Regarding asset management, she said that the concern regarding the asset
register would be addressed by the plan to enhance the asset register. She said
also that an amnesty initiative would be pursued to reclaim assets un-accounted
for.
Addressing the issue raised regarding the strengthening of inventory capacity,
the Minister said that the Department was currently involved in bar-coding
state assets. Secondly, regarding the maintenance of assets, she said that
there were possibilities for job creation such as the maintenance of Robben
Island. She said that the National Youth Service was consulted with regard to
this to establish job creation for around 5000 of people on building and
maintenance. Regarding the disposal of state assets, the Minister said it was
important to adopt a policy guiding with the disposal of commercial assets and
assets not central to the needs of the state. This policy was being considered.
She said the challenge of building infrastructure using labour intensive work
as a way of creating employment was the mandate of the Department. Here she
maintained that they had considered ways of accelerating and expanding the
implementation of the Expanded Public Works Program (EPWP). She said that with
regard to the CBE (Council for the Built Environment) close work was being done
with Universities and bilateral support in order to deal with the skills gap in
this sector. Regarding the building of human settlement she said the Department
would be working with other departments such as the Department of Housing. The
minister emphasised the employment of youth, women, and the disabled but argued
that the reason for the shortfall in employment of the disabled was due to the
nature of the labour created by the Public Works. However, efforts to improve
access for disabled persons in state buildings had been made. Finally the
Minister pointed out that regarding the construction charter the Department was
eager to find ways to assist in this implementation of the charter and building
state capacity.
Following a short break, the Chairperson invited the Department of Public Works
to begin their presentation.
Mr B Zulu, Acting
CEO, presented the strategic plan and budget preview, which was largely
congruent with the opening presentation by the Minister. His presentation
provided a brief context for the strategic plan (see documents). The
presentation highlighted the Department’s interpretation of its mandate as
being the “handyman” of the state, providing leadership for the EPWP, being the
regulator of the industries and professions under its jurisdiction, and finally
the asset management on behalf of the state. Regarding their status of the
states “handyman” the presentation alluded to the development of the National
Infrastructure Maintenance Strategy (NIMS) where efforts were made to combine
the goals of ASGISA and the EPWP.
As the leader of EPWP their mandate focused on the eradication of poverty,
unemployment and underdevelopment. Here they had planned a strategy including
the three spheres of government, SOE’s and the private sector. A notable
component of this plan was the commitment to employing 5000 young people in
their building maintenance program in the 2007/08 financial year. The
presentation also pointed to the implementation of the Department’s building
program which amounted to R2.9 million in identified projects for 2007/08.
Regarding the Department as a regulator, the Department notably alluded to the
implementation of the national contractor development program through and in
line with the CIDB and the CIDB Act. The presentation also highlighted plans
for ensuring a constant supply of adequate built environment resources (see
documents). Other factors of regulation such as the focus on the transformation
of the property sector to deal with deracialisation, and the extension of Government-wide
Immovable Asset Management (GIAMA) where assistance would be provided to
provincial and national departments in understanding their role were
highlighted. Regarding the DPW as asset managers, Mr. Zulu’s presentation
understood asset management as the ensuring that immovable property owned
and/or utilised by the State for delivering various government services yielded
functional, economic and social benefits to the State. The presentation
highlighted its plans to assist the state in this regard (see documents). Apart
from these basic pillars the presentation highlighted the Department’s
commitment to establish skills development through internships, leaderships and
external bursary programs focusing on the built environment, and reducing the
vacancy rate in the department. The presentation then looked at the projected
budget (see document for tables) and pointed out key developments affecting the
budget. These developments included: refinement of budget devolution and the introduction
of accommodation charges that commenced in 2006/07 financial year GIAMA where
there was a focus on more systematic planning and prioritisation of the building program
budgeting; implementation of the National
Infrastructure Maintenance Strategy; and the delaying of envisaged devolution
of property municipal rates to the
provinces. It was however, envisaged that the latter process would be finalised
in the 2008/09 financial year. Finally the presentation reflected on the budget
allocation and emphasised that over the next financial year, there had been a
notable improvement in the baseline allocation on the following items, details
of which were set out in the vote (see documents).
Discussion
The Chairperson thanked the presenter and opened the floor for
discussion.
Mr J Blanche (DA), regarding the Property Management Trading
Entity (PMTE) estimates and the leasing of land
used by the departments, asked how much longer was government going to continue
leasing these buildings from the private sector and asked if it should rather
build its own buildings to save on leasing expenditure. Secondly he asked why the
department was sourcing skills from Cuba. Finally regarding the employment of
5000 young people, he asked if it was manual labour or the transfer of skills
that was being created.
Mr Maduma (ANC), regarding skills development, asked for further clarification
on the process. Regarding reducing the vacancy rate, he asked if there was
assurance of the Department’s ability to fill these vacancies in order to build
capacity, and if the 5000 youth job creation was linked to this. If the latter
was linked to the 5000 job creation, Mr Maduma asked if there was an incubation
program.
Mr Radebe concerning the leasing of private sector building asked if the
committee could provide the list of the private sector members the government
was leasing from. Specifically he asked how many previously disadvantages
private sector members were benefiting from this. Regarding the property
industry, Mr. Radebe asked if the Department was serious about transforming the
property sector why the investments in this area was so low, a mere R9.8
million, and how the money would be distributed. Regarding EPWP, he asked why,
of the R267 million from the national budget allocated to this program, only R71
million was indicated in the presentation’s budget.
An ANC committee member asked how long the EPWP enhancement process was going
to take. She also pointed out that there was no mention of the property sector
charter. She said that the national department asset register was not being
improved adequately. Finally she said that DPW needed to be involved in piloting
in each province to increase the trust in other departments to utilise the
DPW.
Mr Molefe (ANC) asked how the Department was going to develop a strategy
including the three spheres of government, the SOE’s and the private sector to
eradicate poverty. On increasing staff for capacitating their leadership role,
he asked how this was going to be done, bearing in mind the differing staffing
capacities across the spheres of government. On external bursary programs, he
asked who would benefit from this process and whether it addressed the shortage
of skills in the built environment. Lastly, regarding military bases, Mr Molefe
asked if the maintenance program covered the electricity usage on the bases
which was on all the time.
Mr Zulu, concerning the management of the Department’s debtors, argued that the
Department did rent out state facilities but their management of the recovery
of that debt was a challenge. Regarding leases he argued that it may not make
sense for government to build every facility it needed but rather the cost had
to be optimized via the private sector; but regarding capital works budget he
argued that R126 million was set aside to build infrastructure such as the
government boulevard in Pretoria. However, he said determining the optimum
balance was difficult. On Expanded Public Works Program, he said the national
budget of R265 million was dedicated over three years not one year, which
translated to the discrepancy identified by Mr Radebe.
Mr Blanche said that, regardless of the optimum balance, if a department settled
in a building for too long it should consider building its own infrastructure,
and that the situation of the building
should be considered using the example of congestion and high prices in the
city center.
Ms Mbine (National Treasury) argued that the EPWP was a flagship program and
thus could only be supported to the extent of building capacity within the Department;
recommendations were based on limited information. She said it was thus
difficult to adopt commitments if there was no long term plan in place.
Regarding border control co-ordination activities she argued that role of EPWP
was capitalisation of border posts. She said that what was reported by the DPW
to the committee was different to that reported to Treasury regarding this. She
argued that while funds were dedicated to public works on this matter it was
for the purpose of the border posts. She said she was confused by the fact that
some of those funds were put into other projects. Ms Mbine was concerned about
the accountability of the R1.3 billion dedicated to border control, especially
with the World Cup in mind.
Thirdly, she argued that increased funding to CBE was to fund goods and
services. She could not understand why there was an increase from a requirement
of R9 million to R18 million. Regarding buildings she said it would be better
to have government departments in the city center and should the department
build their own or lease was the important question. Regarding prestige
building, Ms Mbine said that public works had the funds to accomplish this but
the example of the union buildings and the retraction on security building
freed up some money, and she wanted to know where this money was going to.
Finally, regarding PMTE, she said that section 19 of the treasury regulation a PMTE
needs an identifiable head that reports to the accounting officers of public
works, and she complained that it did not exist in the Department.
The Chairperson made a proposal that the issues raised by the Treasury be noted
but that it was the wrong forum for these issues to be addressed. He said that
an interaction between the two departments needed to be made outside this
platform and requested that it be dealt with in this manner.
Mr Zulu said that the list of leasers would be made available to the committee.
Mr Mathobela said that R30 million had been given to the Department for the
asset register enhancement. This did not mean that there is no data register,
rather steps had been taken to improve and maintain the integrity of the data.
They were involved under the GIAMA Bill to provide a user asset management
plan. Even before the promulgation of the Bill the Department had been
proactive in producing about 80% of the planned user asset management plans. On
the issue of the National Infrastructure Maintenance Strategy, he said the Department
had drafted a prioritisation criterion for every project. Priorities included National
Youth Services, and compliances with security measures etc. On border control he
said there were 54 points of entry and funds were to be utilised for capital
works, acquisition, maintenance, and the renewal of ICT systems etc. Finally on
the National Infrastructure Strategy, he said the Department also leveraged the
other existing projects.
Mr Magubane, referring to the asset register, asked if the enhancements were
cutting across all departments. He was concerned about the R886 million
allocated for the building of state property, and asked how government would be
assured about the state assets if there was no registry.
Mr Mathobela reiterated that the enhancement process was 80% complete, however,
regarding the issue of the register, he said there was one challenge - the
incompatibility of systems across the spheres of government. The new software
program “E-works” was however going to enable inter-operability.
The chair asked how long the reconciliation process alluded to would take to
reach fruition.
Mr Mathobane said it should be completed by the end of the calendar year.
Mr. Zulu said that all aspects of the registry process cannot be addressed by
public works. He said that land affairs needed to address the vesting issue, and
only the capturing of data could be done by DPW.
Mr Gxilishe (Deputy Director-General, DPW) dealing with BEE leasing
beneficiaries said one of the roles of the Department was the eradication of
poverty which related to these beneficiaries. The Department would be able to provide
the facts regarding the leasers but the beneficiaries of these would most
likely not be composed of the previously disadvantaged due to the previous
government’s legacy and the subsequent ownership of land. He used the example
of BEE ownership of buildings in Bloemfontein, which was miniscule. He claimed
that the department and government in general was strongly in favour of the
transformation of the property market but it was a complex process. Mr Gxilishe
argued that the previously disadvantaged will not be able to partake in the
property market unless active state intervention is enabled. Regarding the
eradication of poverty he said the government benchmark for 2014 to halve
unemployment and poverty was an opportunity for the DPW because it was
strategically located to intervene in and disable the persistence of the schism
of the first and second economy by providing a platform for the previously
disadvantages to transcend the second economy. He argued that through the EPWP a
huge impact could be made on the eradication of poverty.
Mr Dlamini on private leasing argued that in Pretoria all property had been
identified. He said that 80% of the buildings were occupied by the private
sector. He argued that if a balance proposed was achieved it might lead to a
high property vacancy which could facilitate criminal activity for example via
porn shop and lone shark perpetuation. He said that empowerment on facilities
management in government owned buildings might lead to long term job occupation
for youth. Finally he said that Pretoria was currently involved in piloting the
program for state run of buildings and if all goes well it could be rolled out
in other provinces.
Mr Moroka, regarding the national youth service, argued that it was not a new
initiative and formed part of the Expanded Public Works Program, which included
building maintenance. He said the aim was to create artisans, and targeting
unemployed graduates in the built environment. He maintained that the intention
of the program was to absorb at least 500 of these 5000 youth. Regarding the
issue of the allocation to the EPWP, he could not understand the confusion
brought up by Treasury because the understanding was that there were two levels
of funding. This included capacity building of the unit coordinating and
providing leadership to the other spheres of government and the amount had
grown over the past two years. Furthermore additional funds were utilised for
work with the line departments, social development, and provinces. Regarding
EPWP at provincial level and coordination of structures across provinces he
argued that provinces also had the mandate of EPWP in their own provinces so
they had created their own capacities. He concluded that as the Department of
Public Works a conscious decision was taken to work closely with regional
offices thus he argued that part of capacity building was decentralising at a
national level. In terms of the support for the municipalities he claimed that
technical capacity had been created that will be provided to these
municipalities to be EPWP compliant.
The Chairperson then suggested a recess for lunch.
Following the recess the Chairperson invited the Department to respond to the
earlier questions.
Responding to concerns regarding the transformation of the property sector, the
respective delegation member expressed concern and admitted that the pace of
transformation was too slow. She said that government should at least address
its responsibility and role property transformation. Secondly, regarding the
youth foundation, she said that it was established in 2004, and that the
challenges of skills in the construction sector was attracting youth into this
sector. She said that an initiative targeting learners between 12 and 15 had
been initiated in 108 schools to attract them to careers in the built
environment. She pointed out that there was great support from the industry for
this initiative. A further sector skills development strategy was alluded to
based on the success of the school based program. She said the program was
still running and that 80 contractors were currently involved, and that a 50 projects
to the value of R100 million have been developed to incubate recruitment and
skills. Mentorship programs were also highlighted adding the incubator
programs.
Mr Maduma, regarding the budget increase of R19 million for internship programs
asked how long it took for the department to employ members in key positions
from these programs.
Mr Blanche expressed concern over the sourcing of skills from Cuba. He said
that the personnel would not be orientated to South African. Thus he asked if
it would not be better to send South Africans to Cuba for training. Mr Blanche
said that skills sourcing should bring knowledge into South Africa that could
be sustained and transferred to others. Secondly, regarding the EPWP, Mr
Blanche said that there were problems of getting the program off the ground. He
said that coordination at the provincial and local level was adequate, but he
highlighted that the program was intended to be located in the Presidency,
which allowed for a proper hierarchy of oversight and command.
A question was raised regarding the staff retention strategy of the DPW. The
respective member asked what strategies had been put in place to retain the
staff of the DPW. Secondly she asked what the plans were for the maintenance of
the transport system.
Mr Gogotya asked whether empirical studies had been conducted to determine if
the Cubans that were currently involved in the Western Cape government had been
successful and what problems or impediments were present.
Mr Zulu, in response to the question on public transport said that the
department was funding and planning part of the multi-model transport master
plan. Regarding the increase of R19 million in the budget for internships and
filling of key positions, Mr Zulu said a plan was in place but several
challenges still exists especially for the built environment. Finally regarding
Cuban skills, he said that there were just no built environment professionals
in the department. He argued that the Cuban exchange program was aimed at addressing
this shortage. On the retention of personal, he said that over and above
special remuneration programs, the department has also pursued the option of
uniform grading, because each province has its own unique grading systems and
some managers from differently depending on the province they originate from.
He admitted that staff retention was a problem because unique incentives could
not be established beyond those provided. However, he said that the advantage
of working in the department was the potential for resources to further ones
education through the various programs. Finally regarding the Cuban
participation in the Western Cape, outcomes were favorable.
Mr Blanche said there was increasing centralisation of local government, and
this could possible free up previously occupied building. He asked if the Department
had consulted these sources of property, before the private sector was tapped
into. He said that the city centre should be occupied by business and that
government should consider occupying more outlying areas such as Soweto for
public service.
Disagreement was expressed from the committee regarding the occupation of
property in the city center. The respective committee member argued that the
public services being situated in the city center allows for greater access.
She argued that some businesses are migrating from the city center and thus public
services should not be removed lest the city center be depreciated.
A member of the committee argued that the issue around the city center was too
complex for government and departments to deal with alone. He said a
combination of government and business was needed to provide a solution. He
said that something over and above what government could do was needed to
attract people to the city center.
The Department responded by pointing out the three critical development pillars
that needed to be consulted. These included the local Integrated Development
Plan to influence growth and development strategies, which had to influence the
national spatial development strategy. He said that unless there was
integration between the development paths in the country he said it was going
to be difficult to obtain a conclusion and consensus regarding the developmental
path being taken. Regarding the vacancy of Deputy Director-General, it was
pointed out that the Department would fill this vacancy in the next 14 days.
Regarding 2010, a decision had been made to carry forward the inter-ministerial
committee on 2010. It was pointed out that a particular sector in the DPW was
being developed to focus entirely on issues regarding the 2010 world cup.
The Chairperson thanked the respective delegations and requested that a report
back should be provided regarding issues raised between National Treasury and
the Department of Public Works.
The meeting was adjourned.
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