ATC240722: Report of the Select Committee on Public Infrastructure and Minister in the Presidency on Budget Vote 13: Public Works and Infrastructure, and the Annual Performance Plan of the Department of Public Works and Infrastructure, Dated 19 July 2024

NCOP Public Infrastructure & Minister in the Presidency

Report of the Select Committee on Public Infrastructure and Minister in the Presidency on Budget Vote 13: Public Works and Infrastructure, and the Annual Performance Plan of the Department of Public Works and Infrastructure, Dated 19 July 2024.

 

The Select Committee on Public Infrastructure and Minister in the Presidency (“the Select Committee”), having considered the Annual Performance Plan and Budget (Vote 13) of the Department of Public Works and Infrastructure, reports as follows:

 

1. INTRODUCTION

 

The Select Committee considered the 2024/25 Annual Performance Plan (APP) of the Department of Public Works and Infrastructure (“the Department”) on 17 July 2024.  In preparation for this report, the Department briefed the Committee on its 2024/25 APP and 2024/25 Estimates of National Expenditure as well as that of the Property Management Trading Entity (PMTE).

 

Amongst the key mandates of the Department is the coordination of the shared competency between National and Provincial Governments in respect of the immovable asset register, construction and property management and the implementation of the Government Immovable Asset Management Act 19 of 2007.  The core business of property management is ring-fenced under the PMTE and amongst its key mandates is to plan for project delivery through project implementation planning, procurement of professionals, design development and appointment of contractors and project management of the delivery of construction projects.

 

Infrastructure South Africa (ISA) serves as the central coordinating body for national priority infrastructure projects and oversees the implementation of officially announced Strategic Integrated Projects (SIPs). ISA has been allocated R600 million over the Medium - Term Expenditure Framework (MTEF) to assist in the preparation of projects to ensure their financial viability and feasibility. Current SIP projects related to the portfolio of the Select Committee include, amongst other:

 

1. Salvokop Precinct Project in the Gauteng Province: The project has a government precinct at its core and is located in the Pretoria inner city. The project is to be integrated into community infrastructure as part of the Tshwane Inner City Regeneration Programme.
2. Redevelopment of Ports of Entry Project: The project aims to reduce delays experienced by passengers and vehicles at six inland borders that South Africa shares with its neighbouring countries.

 

In the Minister’s opening remarks, emphasis was placed on the imperative to optimise the use of public assets and social infrastructure, to increase the performance of the construction industry and for the cash generating capacity of the Department to increase. These imperatives were translated into the intention of turning South Africa into a construction site. The intention of turning South Africa into a construction site was subsequently also included the Opening of Parliament address by the President, where it was stated that infrastructure investment will be increased to encourage and enable the involvement of businesses and deliver social infrastructure. The Select Committee fully lends its support to the vision as set out by the Minister and the President. 

 

2. Alligning the 2024/25 Budget Allocations to the Annual performance Plan Indicators  

 

1. 1. The Department reported that it will reduce its transfers and subsidies budget by R4.8 billion; its goods and services budget by R176.7 million; and its payments for capital assets budget by R3.8 million, to accommodate Cabinet-approved reductions of R5 billion over the MTEF period.  To absorb the reductions, the Department has stopped, suspended or delayed certain projects.

 

1. 2. In terms of economic classification, 81.8 % (R19.8 billion) of the departmental budget is allocated to transfers, subsidies and the Expanded Public Works Programme (EPWP) transfers. This reflects the fact that the various Public Entities reporting to the Minister of Public Works and Infrastructure and Provincial and Local Government, play a key role in the attainment of the strategic outcomes of the Department.

 

1. 3. The Department generates revenue through the PMTE, by letting properties and official quarters, and the sale of land and buildings. It is projected that the Department will collect revenue to the total value of R17.6 billion for 2024/25.  

 

1. 4. The PTME’s focus over the MTEF period will be on developing precincts to support efficient and integrated government planning by grouping departments that provide similar services and refurbishing and maintaining government buildings in its portfolio. Precinct development in the following precincts have been prioritised in the 2024/25 APP:

 

1. Pietermaritzburg (Umsunduzi Local Municipality, KZN)
2. Stanger Precinct (KwaDukuza Local Municipality, KZN)
3. Kunye Precinct (City of Johannesburg, GP)
4. Kokstad Justice Precinct (Greater Kokstad Municipality, KZN)
5. Polokwane Precinct (City of Polokwane Municipality, LP)
6. Carolina Precinct (Chief Albert Luthuli Municipality, MP)
7. Howick Precinct (Umngeni Municipality, KZN)
8. King Williams Town / Qonce (Buffalo City Municipality, EC).

 

3. OBSERVATIONS AND KEY FINDINGS

 

1. 1. The Minister introduced the initiative to declare war on pit latrines in schools. The initiative will be led jointly with the Minister of Basic Education and will be undertaken in cooperation of Provincial Departments.

 

1. 2. The PMTE has budgeted an expenditure of R56.3 billion over the medium term, which includes R5.6 billion allocated for ad hoc building maintenance. At a further cost of R12.7 billion over the MTE period, the entity will carry out refurbishment, repair and capital projects for 24 departments, including correctional centers, police

stations, courts and office buildings. Due to the nature of the services and mandates of departments such as correctional services and the national defense force, the maintenance and refurbishment of such facilities cannot be undertaken in partnership with the private sector.

 

1. 3. The Department reported that it has a R23 billion maintenance backlog. Given the constrained budget, the Department is making a policy shift towards attracting capacity and skills from the private sector to work in partnership with Government to improve the condition of specific facilities through the Renovate Operate and Transfer Programme (ROTP) and Build Operate and Transfer Programme (BOTP).

 

1. 4. In its assessment of the 2022/23 Annual Report, the Auditor General questioned the credibility of EPWP performance information. The Select Committee thus enquired which measures the Department will put in place to address this concern. In addition, concern was also raised about potential corruption and abuse of the programme and that limited skills transfers take place. The Deputy Minister indicated that relevant measures include transparency in recruitment, co-ordination in implementation and an exit strategy for participants which is aimed at upskilling participants.  

 

1. 5. The delay on the part of Organs of State in paying outstanding debts and service charges to the PMTE affects the financial viability of the entity and is a risk to its revenue optimisation strategy. The Committee and the Department shared the assessment that there is a need to improve the payment rates to the PMTE. The Department was requested to give an indication of the amounts owed to the PMTE. It was informed that Government Departments owe the PMTE in the region of R13 billion, with Department of Correctional Services and the Department of Defence in the region of R4 billion in arrears each.

 

 

1. 6. The Department was requested to indicate to which extent the appointment of contractors is monitored to ensure that the same enterprises do not continually benefit from the award of contracts. The Deputy Minister referred to the legislative reforms that will be introduced through the Public Procurement Bill, including a focus on localisation in the award of contracts.

 

1. 7.The Select Committee and Department agreed on the need for co-ordinated social infrastructure planning.  An example was made of a school constructed in the Coffee Bay area in the Eastern Cape where children cannot attend during times of heavy rains as there is no bridge to allow them to cross the river en route to school. In response, the Minister stated that there is a need for a nationally co-ordinated infrastructure planning across all spheres of government including local government because often municipalities do not plan to extend the capacity of its bulk infrastructure.

 

4. recommendations

 

The Committee recommends that the Minister should ensure that the Department:

 

1. 1. Take concerted steps towards improving low payment rates, including engaging with the Auditor General to include payment of PMTE arrears as an audit focus for Organs of State.   

 

1. 2. Provide an update report on the provision of suitable provincial accommodation to the Public Service Commission.  This is a legacy issue which the PSC had raised during the 6^th administration.  
2. 3. Provide an update report on Telkom Towers which was purchased at the cost of
   R694 million in 2016 whereas in early 2024 only one of the nine buildings forming part of the complex had been occupied. The Department previously reported that the project involved collapsing 15 South African Police Service (SAPS) leases and in the process challenges outside the control of the Department had arisen.

 

1. 4. Design a programme with a focus on township infrastructure development, with a strong linkage to economic infrastructure.

 

1. 5. In the investigation into fraud, corruption and maladministration that would be undertaken in the Department, that it should not limit its focus to the award of infrastructure contracts. It is recommended that it should be extended to collusion in the prices of material (such as cement and steel) used in the construction industry.

 

1. 6. Provide a progress report on the status of the Independent Development Trust (IDT) Business Plan which was to be aimed at ensuring the IDT becomes self-sufficient. In 2024 the Department reported that it had transferred R70.3 million to the IDT as a Schedule 2 entity that is an implementing agency of the Department.

 

1. 7. Provide a report on the occupancy rate of state-owned buildings over the past three years, for the Select Committee to determine the level of progress in this regard.

 

1. 8. Provide a progress report on the finalisation of the Land Audit.

 

1. 9. Provide a progress report on its engagements with the Department of Agriculture and Rural Development’s Deeds Office. This was aimed at ensuring that the Deeds Office’s records could be reconciled with the Asset Register timeously.

 

The Committee recommends that the Council approves the Budget of the Department of Public Works and Infrastructure.

 

Report to be considered.