ATC110531: Report Strategic Plans of the Department and its entities
Public Works and Infrastructure
Report of the Portfolio Committee on Public Works on Budget Vote 7: Public Works and on the Strategic Plans of the Department and its entities, dated 31 May 2011
The Portfolio Committee on Public Works, having considered the budget vote of the Department of Public Works and the strategic plans of the department and its entities, wishes to report as follows:
1. Introduction
The budget vote of the Department of Public Works was tabled in Parliament on 9 March 2011. The Department’s strategic plan for 2011-2014 was tabled in Parliament on 8 April 2011. The Committee considered the Department’s strategic plan on 19 April 2011. The strategic plans of the four entities reporting to the Department, namely the Independent Development Trust (IDT), the Construction Industry Development Board (CIDB), the Council for the Built Environment (CBE) and Agrèment South Africa (ASA), were tabled as late as 26 May 2011. Public hearings were held with the four entities on their strategic plans and budgets on 27 May 2011.
2. Department of Public Works
The mandate of the Department is provided for in the Government Immovable Asset Management Act (GIAMA), 2007. The objective of the Act is to ensure efficient and effective planning of immovable asset management within government, as well as to improve service delivery. The Department is responsible for the provision of official accommodation to all national departments and all members of Parliament, and for providing construction and property management services to client departments at national level. The Department is also responsible for providing leadership for and co-ordinating the Expanded Public Works Programme (EPWP).
2.1 Key policy priorities guiding medium-term planning of the Department
The Department’s key policy priorities were as follows:
· Speeding up growth and transforming the economy to create decent work and sustainable livelihoods (strategic priority 1);
· Developing massive programme to build social and economic infrastructure (strategic priority 2);
· Initiating a comprehensive Rural Development Strategy linked to land and agrarian reform and food security (strategic priority 3);
· Strengthening of skills and human resource base (strategic priority 4);
· Intensifying the fight against crime and corruption (strategic priority 6);
· Pursuing African advancement and enhanced international cooperation (strategic priority 8);
· Creating a sustainable resource management and use (strategic priority 9); and
· Building a developmental state, including the improvement of public services and strengthening democratic institutions (strategic priority 10).
2.2 Departmental strategic goals aligned to the Medium Term Strategic Framework
The strategic goals of the Department comprised the following:
· To provide strategic leadership in effective and efficient immovable asset management and in the delivery of infrastructure programmes;
· To promote an enabling environment for the creation of both short and sustainable work opportunities to contribute to the national goal of job creation and poverty alleviation;
· To contribute to the building of a developmental state and a comprehensive rural development framework through state assets;
· To ensure transformation and regulation of the construction and property industries to ensure economic growth and development;
· To ensure effective corporate governance and sound resource management; and
· To ensure improved service delivery in all departmental programmes to meet clients’ expectations and leverage stakeholder relations.
2.3 Measurable outcomes in the Department’s strategic plan
The five outcomes from the Department’s strategic plan were as follows:
· The creation of decent employment through inclusive economic growth;
· The creation of efficient, competitive and responsive infrastructure networks;
· An efficient and effective development-oriented Public Service and an empowered, fair and inclusive citizenship;
· A skilled and capable workforce to support an inclusive growth path; and
· Sustainable human settlements and an improved quality of household life.
2.4 Minister’s performance agreement and service delivery agreements
The Minister’s performance agreement and service delivery agreements signed with the departments were central to the Department’s planning. These agreements covered three sector outcomes as follows:
· Focus areas of Outcome 4: The Department was required to reduce youth unemployment, analyse the cost structure of South African economy and expand the Expanded Public Works Programme. Department of Public Works implementation/building programmes and input costs in the construction sector should be enhanced.
· Focus area of Outcome 8: The Department was required to contribute land for low-income housing to the Department of Human Settlements.
· Focus area of Outcome 12: The Department was expected to provide quality and accessible office accommodation that facilitated service delivery for all citizens.
All branches in the Department had used the priorities and outcomes of the Medium Term Strategic Framework in their business plans.
2.5 Key medium-term priorities of the Department
The Department aimed to create a balance between the change and sustainable
agenda by placing more emphasis on:
· Job creation and poverty eradication, empowerment, skills development in the built environment and property management, service delivery improvement to client departments, enhancement of the asset register, cost effective infrastructure delivery and rural development.
The Department would place emphasis of its strategy for the next three years on the following:
· Improved service delivery in the provision of official accommodation for all national departments and all members of Parliament;
· Promote intergovernmental co-operation to improve service delivery (Schedule 4 provisions);
· Provide construction and property management services to client departments at national level;
· Lead the Expanded Public Works Programme (EPWP): the custodian of the largest state immovable asset footprint would expedite the investment in infrastructure to promote social cohesion, local economic development and job creation.
· New growth Path directives:
- Poverty alleviation;
- Labour intensive methodology – Division of Revenue Act (DORA) procurement guidelines;
- Incentive grants and providing technical support to municipalities;
- Improve monitoring and evaluation.
· Land disposal policy as the basis for development and cluster of government services.
2.5.1 Immoveable asset register enhancement
· Amnesty Call campaign – properties recovered to enhance the department’s disposal strategy and contribute to the inner city regeneration;
· Complete essential information for the asset register to align it with generally recognised accounting practice;
· Use of the immovable asset footprint to support government programmes.
2.5.2 Reclaiming the mandate
· The Department should still be responsible for the Repair and Maintenance Programme (RAMP) in the military basis of the Department of Defence and Military Veterans.
· The Minister requested the Committee to assist the Department in reclaiming the Department’s mandate of building for client departments to enable client departments to focus on their specific and dedicated mandates.
2.5.3 Skills Development and Capacity Building
· The scarcity of skills in the construction and built environment sectors required targeted, ongoing human capital development initiatives by the Department.
· The Department was facing major challenges around operational resources and obtaining strategic, professional and technical skills in areas like project management, financial management and business analysis.
· The department extended an Invitation to the broader public, calling for artisans and engineers to partner in the interest of service delivery;
· A bursary programme was being rolled out to build a skills base.
· Internship and learnership programmes were in place for experiential training, and to assist qualified young professionals in the employ of the Department to obtain professional registration.
2.5.4 Expanded Public Works Programme (EPWP) in support of the New Growth Path
· Poverty alleviation would utilise the existing budgets in the procurement of
goods and services, using labour intensive methods to create jobs, deliver services and build decent communities.
· Support provinces and municipalities to invest in job creation in return for
cash incentives which can be (and must be) re-invested in further job creation opportunities and improve its monitoring and evaluation.
2.5.5 Contribution to rural development
· Recent roll-out of community, roads and bridges construction and the
construction of rural schools as fundamental children’s right to education, health and safety;
· Inner city regeneration and contribution to rural development and student
accommodation.
2.5.6 Building, maintenance and capital works programmes
· Upgrading of facilities for disabled people;
· Upgrading and construction of Department of Public Works’ offices;
· Development of national government precincts;
· Redevelopment of infrastructure-related border post centres; and
· Dolomite risk management.
2.5.7 Transformation and regulation of property and construction industries
· The extension of the principles in the Government Immovable Asset Management Act (GIAMA), 2007, to local government
· Review of White Papers; and
· Implementation of the Property Incubator Programme (PIP) and Construction Incubator Programme (CIP).
3. Public entities
Four public entities report to the Department. These entities have identified, inter alia, the following key strategic programmes for the MTEF period:
· The Construction Industry Development Board (CIDB): training and contractor development, procurement reform and research and development.
· The Council for the Built Environment (CBE): compliance with policies, regulations and standards within the built environment and building and monitoring skills development.
· Agrèment South Africa (ASA): to provide assurance of fitness of purpose for non-standardised construction technology.
· The Independent Development Trust (IDT): to prioritise poverty reduction and to deliver social infrastructure as an implementing agent of government programmes.
4. Budget Allocation
Budget Allocations Public Works[1]
|
Budget |
NominalRandchange |
RealRandchange |
Nominal % change |
Real % change |
||||
|
R million |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2010/11-2011/12 |
2010/11-2011/12 |
||
|
Administration |
629.3 |
751.0 |
852.7 |
909.9 |
121.7 |
87.3 |
19,34 |
13,87 |
|
Immovable Asset Management |
5 199.4 |
5 424.9 |
5 408.3 |
5 919.7 |
225.5 |
- 23.0 |
4,34 |
-0,44 |
|
Expanded Public Works Programme |
1 479.1 |
1 575.2 |
1 729.4 |
1 996.6 |
96.1 |
24.0 |
6,50 |
1,62 |
|
Property and Construction Industry Policy Regulations |
30.0 |
34.9 |
36.4 |
38.2 |
4.9 |
3.3 |
16,33 |
11,01 |
|
Auxiliary and Associated Services |
26.9 |
33.2 |
34.3 |
35.7 |
6.3 |
4.8 |
23,42 |
17,77 |
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
7 364.7 |
7 819.2 |
8 061.1 |
8 900.1 |
454.5 |
96.4 |
6,17 |
1,31 |
Source: National Treasury (2011) and own calculations
Budget per Economic Classification by the Department of Public Works
|
|
2011/12 R’000 |
2012/13 R’000 |
2013/14 R’000 |
TOTAL |
|
Compensation of employees |
1 242 062 |
1 241 158 |
1 305 054 |
3 788 274 |
|
Goods and services |
1 008 019 |
1 065 598 |
1 134 059 |
3 207 676 |
|
Interest on rent |
15 342 |
17 752 |
17 633 |
50 727 |
|
Transfers and subsidies |
4 010 265 |
4 164 530 |
4 611 536 |
12 786 331 |
|
Infrastructure |
1 443 945 |
1 474 742 |
1 724 653 |
4 643 340 |
|
Machinery and equipment |
99 623 |
97 442 |
107 146 |
304 211 |
|
TOTAL |
7 819 256 |
8 061 222 |
8 900 081 |
24 780 559 |
Transfers to Public Entities over the MTEF period[2]
|
Name of public entity |
Main purpose of public entity |
Transfers from the departmental budget (R thousand) |
||||
|
|
|
2009/10 MTEF |
2010/11 MTEF |
2011/12 MTEF |
2012/13 MTEF |
2013/14 MTEF |
|
Agrément Board |
Provide assurance through technical approvals of fitness for purpose of non-standardised construction products. |
8 554 |
8 982 |
9 431 |
9 903 |
10 398 |
|
CBE |
Regulate built environment profession. |
24 155 |
25 527 |
27 059 |
27 438 |
28 947 |
|
CIDB |
Develop construction industry. |
59 269 |
63 665 |
65 959 |
66 882 |
70 561 |
|
IDT |
Provide development management service to Government. |
0 |
0 |
150 000 |
0 |
0 |
|
Total |
|
91 978 |
98 174 |
252 449 |
104 223 |
109 906 |
(Source: 2011-2014 DPW Strategic Plan (2011))
The Department received a budget allocation of R7.8 billion for 2011/12. This represented an increase of 6,2% in nominal terms and 1,3% in real terms from the 2010/11 adjusted appropriation of R7.4 billion. The Department’s budget represented approximately 1,5% of the national appropriation by vote, excluding direct charges.
In terms of economic classification, the departmental budget included transfers totalling 51,3% of the budget, with a total monetary value of R4 billion. Of the R4 billion, R3 billion was in the form of conditional grants to provinces and municipalities, while a total of R733.1 million was allocated to departmental agencies and accounts. During 2011/12, the Department would spend R1.4 billion on infrastructure-related projects. Moreover, current payments amounted to 29% of the budget (R2.3 billion) and capital payments amounted to 19,7% of the budget (R1.5 billion).
Compensation of employees remained practically unchanged from R1.20 billion in the 2010/11 adjusted period to R 1.24 billion in 2011/12. It has been noted in the past that the Department had experienced capacity constraints in general, but most especially in relation to the technical fields. The Department identified the following skills shortages in strategic, professional and technical skills in the areas of project management, financial management and business analysis.[3]
In 2008, the Department signed a bilateral agreement between South Africa and Cuba to address the shortage in technically skilled personnel. This agreement allowed for technical advisers in the built environment to be employed within the Department for a period of three years. During that time the technical advisers provided technical support as well as mentoring and skills transfer. A second three-year technical agreement had been entered into with the Cuban Ministry of Construction, which would allow the technical advisers to continue to address the skills shortages in the built environment, as well as in the Department.[4]
A broader effort to address the skills shortage in the Department and the country, especially engineering skills, was outlined in the strategic plan of the Department and the Engineering Council of South Africa (ECSA). The Department had introduced learnerships and internships in some professional councils such as the ECSA. In partnership with the Council for the Built Environment, the Department had initiated a bursary scheme for students, a young professionals programme, and adult basic education and training. The ECSA had launched a national initiative called ‘Engenius’ aimed at developing 30 000 engineers by 2014. The initiative aimed to develop engineers through centralising national programmes, materials, products, initiatives and a calendar of events for people with an interest in the field,[5] The annual Sci-Bono Week, an initiative of the Gauteng Department of Education, was aimed at creating awareness of the role of the engineering profession and to facilitate interaction with learners and industry.[6]
Given that the Department had experienced a high vacancy rate over the past few years, it was expected that these vacancies would be filled in the new financial year. By March 2011, the Department’s vacancy rate stood at 1 348 out of a total of 6 283 posts. Of these vacant positions, 641 were funded positions, while 707 positions were unfunded.[7] At the beginning of March 2011, the Department had provided the Committee with a plan to implement its recruitment drive. The plan included identifying funded and unfunded positions, as well critical vacant positions that needed to be filled; costing and confirming available funding for identified critical vacant positions; advertising all critical positions, as well positions in all Regional Offices and supply chain management positions at head office. The Department expected to conclude the selection and appointment stage by 31 May 2011.[8] This was in line with the pronouncement made by the President in his 2011 state-of-the-nation address, namely that all vacancies in public services must be filled within six months. The filling of vacant positions within the Department required close monitoring. The Department noted that its high number of vacancies had had a negative impact on the Department’s ability to fulfil its mandate and strategic goals, as well as hampering its ability to effectively meet client departments’ requirements.
4.1 Departmental receipts
The Department generated revenue through its property management entity by letting properties and official quarters and through the sale of land and buildings. It was projected that the Department would collect revenue to the value of R38.6 million for 2011/12. Of this amount, R33.9 million would be through the sale of goods and services produced by the Department, R1.4 million from the sale of capital assets and R2.4 million from financial transactions in assets and liabilities. The Department indicated that sold buildings included redundant military bases and buildings that were no longer cost-effective to maintain. It was uncertain how many redundant military bases or buildings were sold and where these are situated. In addition, there was no clear indication if the sale of these assets yielded a good return for the Department.
4.2 Programme analysis
The Department has five main programmes, which included sub-programmes. The information provided below consists of an expenditure analysis per departmental programme.
4.2.1 Programme 1: Administration
Programme 1 provided strategic leadership and support services, including the accommodation and overall management of the Department. For 2011/12, the programme received an allocation of R751 million. This constituted a nominal increase of R121.7 million from the previous year, which proportionally represented 9,6% of the overall departmental budget. The allocation for Programme 1 increased at a nominal rate of 19,3% and showed an increase of 13,9% in real terms from the previous allocation. As indicated by the 2011 Estimates of National Expenditure, the following savings and cost-effective measures were identified under Programme 1 and included a decrease in spending on communication, consultants and professional services, advertising, and agency and support outsource services.
In terms of economic classification, the programme budget included current payments to the value of R740.3 million (98,6% of the budget), of which R170.9 million would be spent on compensation of employees. The budget for the compensation of employees had decreased by 9,3% in real terms.
The Department had allocated R228.5 million to lease payments and R187.7 million to property payments. Taking into account allocations in the previous financial year, expenditure on lease payments had increased in real terms by 18,3% while that on property payments had increased by 23,4%. Further expenditure trends (in real terms) for 2011/12 included the following:
· Contractors had declined by 20,5%.
· Agency and support/outsourced services had increased by 69,1%.
· Machinery and equipment had declined by 54,2%.
· Software and other intangible assets had increased by 1,2%.
4.2.2 Programme 2: Immovable Asset Management
Programme 2 sought to provide and manage Government’s immovable property portfolio in support of Government’s social, economic, functional and political objectives. This
programme was one of the main programmes of the Department and proportionally represented 69,4% of the overall departmental budget allocation for 2011/12. Its 2011/12 allocation constituted R5.4 billion, which represented a nominal increase of 4,3% (and a real decrease of 0,4%) from the 2010/11 financial year. Programme 2 performed one of the core mandates of the Department and was where a significant proportion of resources and effort were invested, which required tangible results.
Expenditure under this programme was dominated by the following two sub-programmes:
· Property Management, which received the highest allocation of R1.8 billion or 33,2% of the programme budget. This constituted a nominal decrease of 3,3% (or a real decrease of 7,8%) from the previous year.
· Infrastructure (Public Works), which received the second highest allocation of R1.4 billion or 26,6% of the programme budget. This amount represented a nominal increase of 4,9% or a real increase of 0,1% from the previous year. Unlike the previous years, the Infrastructure sub-programme (Public Works) did not receive the largest portion of the budget under Programme 2.
Programme 2 was also responsible for the augmentation of the Property Management Trading Entity. This entity was established in April 2006 as part of a longer-term reform programme to provide improved property management services to client departments. With the establishment of the Property Management Trading Entity, all accommodation-related costs were devolved to client departments. In this regard, it has been issuing invoices and collecting user charges from clients on a quarterly basis, based on amounts that had been devolved to them. However, the Department reported that it had been compelled to request additional funding from National Treasury to accommodate the payment of arrears due to clients submitting invoices late.
During a presentation by the Department to the Standing Committee on Appropriations, the Department reported that shortfalls had occurred due to the municipalities improved administration. This meant that the municipalities retrospectively billed and sometimes also charged interest on properties that were not previously billed. While the exercise had increased the revenue generated by municipalities, it did not take into account that the national and provincial Departments of Public Works had limited funds available to settle these invoices.[9]
Under current departmental agencies and accounts (non-business entities), the following sub-programmes received a total of R730.6 million, as follows:
· Property Management Trading Entity received R630.2 million (a real decrease of 1,9% from the previous year).
· Parliamentary Villages Management Board received R7.4 million (a real increase of 0,9% from the previous year).
· Construction Industry Development Board received R66 million (a real decrease of 1,1%).
· Council for the Built Environment received R27.1 million (a real increase of 1,4%).
The Parliamentary Villages Management Board (which provided for the transportation and related costs of parliamentarians and related officials) received a transfer of R7.4 million for 2011/12. This represented a nominal increase of 5,7% and a real increase of 0,9%. This sub-programme previously fell under Programme 5: Auxiliary and Associated Services, but was shifted to Programme 2 in the 2010/11 financial year.
As noted above, the Department was responsible for four entities that reported to the Minister of Public Works. Three of these entities had received transfers from the Department under Programme 2. The Department, however, only reported on funds allocated to two of these entities, namely the Construction Industry Development Board which received R66.0 million (representing a real decrease of 1,1% from the previous year) and the Council for the Built Environment which was allocated R27.1 million (representing an increase of 1,1% in real terms) for 2011/12. Between 2012/13 and 2013/14, transfers were set to increase to R66.9 million and R70.6 million for the Construction Industry Development Board and to R27.4 million and R28.9 million for the Council for the Built Environment.
The Independent Development Trust, as a Schedule 2 public entity, did not receive any funding from the Department as it was expected to fulfil its mandate from the R2 billion grant it had received when it was constituted in 1990. However, the IDT requested that it be recapitalised in the 2011/12 financial year due to the depletion of its capital base. It had, therefore, received a once-off allocation of R150 million. Agrèment South Africa received an allocation from the Department of approximately R9.4 million, representing an increase of 1,11% in real terms for 2011/12.[10]
In terms of economic classification, transfers and subsidies to the value of R2.7 billion included the Devolution of Property Rate Funds Grant to Provinces (R1.8 billion), Departmental Agencies and Accounts (R730.6 million), Public Corporations and Private Enterprises (R150 million) and Households (R3.3 million), as well as transfers to the trading entity as discussed above. The conditional grant allocated to all Public Works provincial departments was aimed at covering the cost of property rates charges of all provincial government buildings. Funds had been allocated per province based on the Department of Public Works’ calculations, which had been informed by the property list from its register of properties.
The Infrastructure sub-programme funded the acquisition of infrastructure for the Department, the prestige portfolio (which included Parliament, the Union Buildings and various embassies) and the infrastructure component of the mandate of the Border Control Operational Coordinating Committee. The funds were disbursed on the basis of priority as determined by the Department. For the 2011/12 financial year, funding had been allocated towards the redevelopment of three border posts. These included the allocation of R24.8 million towards the Skilpadhek Border Post (construction phase), R81 million for the Golela Border Post (tender phase) and R22.4 million for the Sani Pass Border Post (design phase).[11]
The Infrastructure sub-programme (Public Works) had also received funding to rehabilitate and upgrade existing buildings or construct new buildings. For the 2011/12 financial year, a total of R1 443.9 billion had been allocated (including the allocations for the above three border posts). This was an increase of R67.9 million from the previous allocation for 2010/11. The R1 443.9 billion was allocated for 2011/12, as follows:
· R115.2 million to upgrade and construct 45 departmental accommodation sites.
· R20.1 million to rehabilitate the Re Kgabisa Tshwane (Government’s inner city renewal programme) and the Pretoria Agrivaal Building (currently in the design phase).
· R120 million to manage 50 dolomite risk areas.
· R25 million to upgrade 110 facilities for people with disabilities.
· R362.3 million to redevelop 136 border post centres.
· R439.7 million to upgrade and construct 154 prestige accommodation sites.
· R119.9 million to develop 12 national government precincts.
· R4.8 million to construct of an office block for the Department’s Bloemfontein regional office.
· R108.7 million to refurbish Mahlamba Ndlovu residential building under the prestige sub-programme.
The above infrastructure projects were aimed at enhancing Government’s immovable property portfolio, as well as ensure safe and efficient passage through the border posts. The development of a government precinct would assist in reducing Government’s current large lease portfolio.
4.2.3 Programme 3: Expanded Public Works Programme
Programme 3 sought to ensure the creation of work opportunities and the provision of training for unskilled, marginalised and unemployed people in South Africa by co-ordinating the implementation of the Expanded Public Works Programme. For 2011/12, Programme 3 was allocated R1.6 billion, which was a nominal increase of R96.1 million compared to the R1.5 billion allocated the previous year.[12] Expenditure under this programme increased at a nominal rate of 6,5% for 2011/12 (which translated into a real increase of 1,6%). The allocations wee mainly for the Expanded Public Works Programme, conditional grants to both provinces and local government, as well as an allocation to other public and non-state sectors as indicated below.
In terms of economic classification, compensation of employees received R99.1 million. This amount represented an increase of 1,7% in real terms from the previous year. The increase was meant to enhance the implementation of Phase II of the Expanded Public Works Programme and provide technical support to departments, municipalities and the non-state sector to ensure that labour-intensive methods and skills training were being utilised in their programmes.
Goods and services received a total of R172.5 million, excluding lease payments and interest and rent on land, which translated into a real decrease of 14,8%. Of this total for 2011/12, contractors received R6.3 million and the agency and support/outsourced services received R83.1 million.
The bulk of the expenditure under this programme was allocated to transfers and subsidies amounting to R1.3 billion, which represented a nominal increase of 9,3% and a real increase of 4,3%. An amount of R1.1 billion or 88,1% of the transfer was allocated to provinces and municipalities as follows:
· R267.3 million for the incentive grant to provinces;
· R200.4 million towards the social sector incentive grant to provinces; and
· R679.6 million towards the incentive grant for municipalities.
An amount of R154.4 million or 11,9% was allocated to non-profit institutions.
Expenditure on the programme was expected to increase over the MTEF period and would reach R2 billion by 2013/14, mainly due to additional allocations to fund the performance-based incentives of the Expanded Public Works Programme. However, the uptake of the performance-based incentives had been slow. The Department reported in March 2011 that some provinces and municipalities had difficulty in accessing the incentive grants due to poor reporting or in some instances non-reporting of projects. In an effort to increase reporting, the Department employed 90 data capturers to assist with compliance in this regard.[13] A report by the Department on the disbursement of incentive grants to provinces and municipalities indicated that the Buffalo City Municipality in the Eastern Cape, for example, did not access any of the R1.4 million grant allocation for Quarters 1 to 3.[14]
A number of objectives were outlined, including increasing the Departments’ participation in the implementation of the Expanded Public Works Programme by:
· Training 6 000 youth in the artisan trades of the built environment by 2014;
· Ensuring that 15% of the youth trained through the National Youth Service programme were annually placed in employment opportunities;
· Ensuring that at least 200 municipalities would report on the implementation of the Expanded Public Works Programme by March 2014;
· Increasing the number of participating organisations in the non-state sector (from 58 in 2009/10 to 140 by March 2013) by increasing funding to R57 million in 2012/13 to R66 million in 2013/14.[15]
In addition, the Department intended to provide support to public bodies in the different sectors to ensure that they reached the set targets in terms of work opportunities and full-time equivalents by 2014. The table below provides an outline of the set targets in the different sectors and the number of work opportunities and full-time equivalents.
|
Sector |
Number of work opportunities |
Full-time equivalents |
|
Infrastructure |
2 374 000 |
903 478 |
|
Environment |
1 156 000 |
325 652 |
|
Social |
750 000 |
513 043 |
|
Non-State |
640 000 |
278 261 |
The above targets set by the Department should be closely monitored, especially the target as it related to youth as this aspect and the creation of decent work were emphasised in the 2011 state-of-the-nation address.
4.2.4 Programme 4: Property and Construction Industry Policy Regulations
Programme 4 promoted the growth and transformation of the construction and property industries, as well as uniformity and best practice in construction and immovable asset management in the public sector. This programme consisted of two sub-programmes, namely Construction Industry Development and Property Industry Development, that fell under Programme 3 in 2009/10. Programme 4’s budget had increased from R30 million in 2010/11 to R34.9 million in 2011/12, which constitutes a nominal increase of 16,3% and a real increase of 11%.
The economic classification of the Property and Construction Industry Policy Regulations programme consisted of current payments and payments for capital assets, but no transfers and subsidies. Compensation for employees was allocated R12 million or 34,5% for 2011/12, which constituted a nominal increase of 12,15% and a real increase of 7%. The two programmes had a staff complement of six and eight personnel respectively. Goods and Services received R22.7 million or 65,4%, which represented a nominal increase of 18,9% and a real increase of 13,4%. The Goods and Services budget included R8.6 million or a 37,9% budget for agency and support/outsourced services, which constituted a real increase of 12,4%.
The Construction Industry Development Programme received R23.2 million or 66,5% of the programme budget. This amount constituted a real increase of 12,4%. The Property Industry Development Programme received R11.7 million or 33,5% of the programme budget. This represented an increase of 7,4% in real terms.
The Department intended to revise existing policy and draft the following pieces of legislation:
· Reviewing the 1997 and 1999 White Papers (Public Works Towards the 21st Century and Creating an Enabling Environment for Reconstruction, Growth and Development in the Construction Industry) respectively. The reviews over the MTEF were aimed at informing policy development in the construction and property industries.
· Drafting the Expropriation Bill to align it with the Constitution by providing a common framework to guide procedures for the expropriation of property by all organs of state. The Expropriation Act would be promulgated in the 2011/12 financial year.
· Constitute Agrèment South Africa as a juristic person through a legislative process. A draft Agrèment South Africa Bill would be presented to Parliament in the 2011/12 financial year and would be promulgated in 2012/13, with the establishment of Agrèment South Africa in 2013/14.
· A review of the Built Environment Professions would be completed and presented to the Minister in 2011/12 with the monitoring and evaluation of the report set for 2012/13 and 2013/14 respectively.[16]
· Develop guidelines on immovable assets related to planning, acquisition, management, maintenance and disposal for national and provincial users and custodians by 2011/12. In 2012/13 and 2013/14, compliance with these guidelines would be monitored.[17]
· In 2011/12, a regulatory framework would be developed to assist the Department of Cooperative Governance and Traditional Affairs with the extension of the principles of the Government Immovable Asset Management Act (No. 19 of 2007) to the local government sphere. By 2012/13, the legislation would be tabled in Parliament and the extension approved by 2013/14.
The above two pieces of legislation, namely the Expropriation Bill and the Agrèment South Africa Bill, had been mentioned in the Department’s 2009/10 programme, but had not been presented to Parliament at the time. It was unclear how the Department intended to meet its set target for the 2011/12 financial year, especially when the Department had reported to the Committee in March 2011 that the process of drafting legislation was time consuming. In addition, the public participation process required in the revision and drafting of legislation was not a simple process and also required time. The revision of policies related to the property and construction industries should be monitored over the MTEF period.
4.2.5 Programme 5: Auxiliary and Associated Services
Programme 5 sought to fund various services, including compensation for losses on the government-assisted housing scheme, assistance to organisations for the preservation of national memorials, and meeting protocol responsibilities for State functions. The budget for Programme 5 increased from R26.9 million in 2010/11 to R33.2 million in 2011/12, which represented a nominal increase of 23,4% and a real increase of 17,8% from the previous year. The bulk of the budget was allocated to transfers and subsidies, which amounted to R21 million and accounted for 63,3% of the budget. The remaining 36,7% went towards current payments in the form of goods and services. The transfer budget included an allocation of R2.5 million or 11,8% to departmental agencies and accounted and R18.5 million or 88,2% to foreign governments and international organisations.
This Programme did not have a capital budget and did not provide for compensation of employees, as the major portion of the expenditure was in the form of transfer payments to departmental agencies, foreign governments and international organisations as noted above. Transfer payments would be disbursed in the following manner:
· R18.5 million to the Commonwealth War Graves Commission and to the United Nations for the maintenance of national memorials. This amount represented a real increase of 0,9%.
· R10.1 million towards State functions, which provided for the acquisition of logistical facilities for such functions. The amount represented a real increase of 89%.
· R2.5 million to the sector education and training authorities aimed at influencing training and skills development throughout the construction industry. This amount constituted an increase of 3,7% in real terms.
· R2.1 million for compensation for losses, which provides compensation for losses in the State housing guarantee scheme when public servants failed to fulfil their obligations. The amount represented an increase of 5,5% in real terms.
The budget allocation to the Department attempted to give effect to the priorities set out in the 2011 state-of-the-nation address. Central to these priorities was the increased participation in Phase II of the Expanded Public Works Programme, with an emphasis of providing skills and creating job opportunities for communities, especially the youth, as one of the measures to alleviate poverty. The effective implementation of the programme, especially in terms of timeous reporting, was crucial to access the incentive grant, which allowed for the creation of more work opportunities at provincial and municipal levels.
The Department had reported on efforts to address its high vacancy rate by May 2011 as a measure to ensure effective and efficient service delivery. This had been a challenge for the Department over a number of years, in particular the struggle to gain and retain the required technically skilled staff. In addition, the Department had prioritised large infrastructure programmes over the MTEF period.
5. Key issues for consideration by Parliament and the Portfolio Committee on Public Works
The following issues had been identified as priorities that Parliament and the Portfolio Committee on Public Works should consider in assisting the Department to fulfil its assigned mandate:
· The Portfolio Committee on Public Works should monitor the progress on the Department’s plan to fill its vacancies, especially given the pronouncement in the 2011 state-of-the-nation address that all vacancies in the public service must be filled within six months.
· The Portfolio Committee on Public Works should receive progress reports on the large infrastructure projects planned by the Department, especially when considering the cost escalations incurred in the past on large infrastructure projects due to delays in tender processes, appointment of contractors, or changes made to the scope of work once the project had begun.
· The Portfolio Committee on Public Works should monitor the implementation of the Energy Efficient Programme and the Department should provide quarterly progress reports to it on the effectiveness of the programme in reducing energy consumption in public buildings.
· The Portfolio Committee on Public Works should monitor the effective implementation of the Expanded Public Works Programme, especially in relation to progress on meeting the designated targets in the different sectors.
· The Portfolio Committee on Public Works should receive quarterly reports on the Department’s plans to train and recruit artisans through the National Youth Service.
· The Portfolio Committee on Public Works should receive a report on the effectiveness of the Cuban Technical Advisers Programme over the past three years. The report should indicate the number of people mentored and trained during that period. In addition, the strategy for the upcoming three years should be outlined, especially in terms of planned outcomes by 2014.
· The Portfolio Committee on Public Works should receive progress reports on the number of women, youth and people with disabilities taking part in the different sectors of the Expanded Public Works Programme, and which measures have been taken to ensure that the 2% target is reached for the participation in the programme of people with disabilities.
· the Portfolio Committee on Public Works should be kept informed of progress on the drafting of the pieces of legislation that the Department intends to present in the 2011/12 and 2012/13 financial periods.
6. Construction Industry Development Board (CIDB)
The CIDB is a schedule 3A public entity and its main objective is to provide leadership to stakeholders and to stimulate sustainable growth in, and reform and improvement of the construction sector for effective delivery. It sought to enhance the construction industry’s role in the country’s economy.[18]
The revenue of the CIDB was mainly generated from Government transfers. The CIDB received a transfer of R65.96 million in 2011/12, R66.88 million in 2011/13 and R70.56 million in 2013/14, due to the fact that the CIDB had to ensure the sustainable participation of the emerging contractor sector.[19] The CIDB was further tasked with the responsibility to promote improved performance and best practice in the public and private sectors.
The CIDB had identified the following areas of focus for the 2011/12 period which included infrastructure, procurement and national construction register services.
6.1 Growth and Contractor Development
This programme sought to promote enterprise development, investment and spending as the basis for a stable, developing industry. It also focused on the participation of the emerging sector through provincial outreach of the nine provincial Construction Contact Centres. An amount of R23.3 million has been budgeted for this programme for 2011/12.
6.2 Construction Industry Performance
This programme sought to provide research and development support to the construction industry to improve performance and facilitate best practice for the industry. The programme has been allocated R10.8 million for the 2011/12 financial year.
6.3 Procurement and Delivery Management
This programme sought to enhance public sector construction procurement and infrastructure delivery management capability. This was aimed at enabling the efficient and effective delivery of quality infrastructure to the public sector. The programme would fulfil its aim by building capacity and ensuring compliance to the Construction Industry Development Board regulations. At present, compliance was undertaken by bodies responsible for infrastructure development, namely nine national departments, 27 provincial departments and 284 municipalities. The programme received an allocation of R12.3 million for 2011/12.[20]
6.4 Construction register services
The programme is responsible for maintaining the national Register of Professional Service Providers and the registration of projects for both public and private sector projects. For the MTEF period, 150 000 registrations have been projected. An amount of R24.1 million has been allocated to this programme for the 2011/12 financial year..[21]
The CIDB reported on the following select performance indicators:
· The National Register of Professional Service Providers (which the entity must establish as per its mandate) would be piloted in 2012/13.
· The entity had established the Employment Skills Development Agency aimed at supporting skills development for the youth in the construction industry.
· Compliance with the Construction Industry Development Board requirements and code of conduct were being enforced with the support of two forensic investigation companies in an effort to address fraud and corruption in the industry.
· The entity projected that revenue totalling R43.9 million would be generated through the Registers of Contracts for 2011/12 and would increase to R47.4 million in 2012/13 and R50.5 million in 2013/14, respectively.
· The entity planned to construct one permanent provincial Construction Contact Centre in 2011/12.[22]
· The entity planned to fill all vacancies before the end of 2011/12.[23]
7. Independent Development Trust (IDT)
The IDT is a schedule 2 public entity that had been established in 1990 with a grant of R2 billion to carry out its mandate. It evolved from a grant-making organisation into a development agency. In 2000, the IDT developed a model of developmental social infrastructure delivery that has contributed to the reduction in the backlog of infrastructure provided in rural areas of South Africa.[24] For the past 20 years, the entity has remained committed to reducing poverty in the most disadvantaged communities. The entity delivered social infrastructure that included the required measures, facilities and networks that prepared communities to receive, own, manage and sustain their own development.
The IDT has revised its mission statement to focus on enabling poor communities to recognise and unlock their own potential for sustainability. This strategic focus, known as Vision 2010/2030, was aimed at addressing chronic poverty by means of a targeted, integrated and comprehensive long-term strategy and programme. The strategic vision would be undertaken in different phases. Phase one would use the delivery of social infrastructure as a channel for building cohesive communities and sustainable development.[25]
The IDT has identified the following performance indicators for 2011/12:[26]
· An estimated R2.2 billion would be spent on social infrastructure for 2011/12. This would increase to R2.4 billion in 2012/13 and R2.5 billion in 2013/14.
· The entity intends to contribute 75 000 job opportunities to assist with poverty alleviation efforts in 2011/12. This number would increase to 83 000 in 2012/13 and 86 000 in 2013/14.
· An estimated 75 women contractors would have their skills developed in 2011/12 to aid the development of women contractors. This would increase by 90 women contractors in 2012/13 and by 110 in 2013/14.
· The number of households impacted in terms of skills development and poverty alleviation was estimated at 130 000 for 2011/12, 150 000 for 2012/13 and 170 000 for 2013/14.
· The entity has 390 positions, of which 380 are filled. The 10 vacant positions were between grades 4 to 12. The entity intends to fill urgent and priority positions.
8. Agrèment South Africa
Agrément South Africa is the national centre for the assessment and certification of non-standardised building and construction products and systems. It facilitated the introduction, application and innovation of technologically sound solutions for the construction industry by issuing a fitness for purpose certificates for non-standard products.[27] The departmental transfer to Agrèment South Africa for 2011/12 was R9.4 million and would increase to R9.9 million for 2012/13 and R10.4 million for 2013/14.
Agrèment South Africa has identified the following key programmes and outcomes for 2011/12:
· Disseminate correct, objective information to all concerned in respect of the technical, socio-economic, energy-related issues and regulatory aspects of innovative technology and non-standard construction technology. Increase awareness of the entity and the services it provided.
· Undertake the annual audit of quality management systems of all valid certificated products and systems.
· Increase the number of certificate reviews with regard to staff constraints in terms of its three-year validity.
· Continue working with the construction sector to facilitate the introduction of cost effective, innovative technology and non-standardised building systems within the context of Government’s new priorities and policies.
· Maintain international links with peer organisations, including attending the General Meeting of the World Federation of Technical Assessment Organisations (WFTAO).
The Department has planned to table the draft Agrèment South Africa Bill in Parliament in 2011/12. The Bill intends to establish Agrèment South Africa as a juristic person. The legislation promulgating the entity would be completed in 2012/13 and in 2013/14 Agrèment South Africa would be established as a juristic person.[28]
9. Council for the Built Environment (CBE)
The CBE is a schedule 3A public entity. One of its main roles is to oversee the six built environment professional councils that regulated the professions of Architects, Engineers, Landscape Architects, Quantity Surveyors, Project and Construction Managers, as well as Property Valuers. The CBE was responsible for the provision of strategic leadership to the six professional councils and had to also ensure that the various professional councils operated and adhered to the industries regulatory norms and standards.[29]
The revenue for the CBE is mainly generated from government transfers to the entity. The CBE received the following allocations over the MTEF period: R27.06 million in 2011/12, R27.44 million in 2012/13 and R28.91 million in 2013/14.[30]
The CBE has indicated that it would focus on the following areas over the MTEF period:[31]
· Improve stakeholder relations and create partnerships to improve service delivery through branding, as well as information, knowledge and quality management.
· Intervene in improving the performance of the skills delivery pipeline, by facilitating the reduction of waste in higher education systems, facilitating access to experiential training opportunities, and continuous professional development.
· Transform and consolidate the regulatory, institutional and structural framework regulating the functioning of the CBE and professional councils through institutional development and transformation.
· Ensure effective and efficient public protection regimes through improved and more efficient tribunal and appeal provisions.
· Ensure the alignment of the activities of the CBE and built environment professions councils with the national imperatives and initiatives.
· Provide leadership throughout the built environment and strengthen relations with equivalent bodies in the rest of Africa.
The CBE has organised itself into three key operational programmes so as to meet the objectives set out in its 2011 Business Plan:[32]
9.1 Policy and Research
This programme sought to provide research to inform policy response within the built environment. Over the MTEF period, the focus would be on the development of two policy frameworks, as well as to facilitate the process of policy alignment and implementation at professional council level. For the 2011/12 financial year, the programme would align nine professional council policies (two in 2012/13) with the CBE policy frameworks.
9.2 Regulations and Legal Services
This programme sought to provide legal services to the Council and co-ordinate the CBE appeals processes. The focus was to strengthen the appeals process. For the 2011/12 financial year, the programme intends to have two regulations promulgated, with an additional four scheduled for 2012/13.
9.3 Skills Development
This programme allows the Council to provide bursary support to students from previously disadvantaged backgrounds. The bursary support provided to students annually over the MTEF period includes 68 students in 2011/12; 102 students in 2012/13 and 153 students in 2013/14. The number of bursaries provided increased by 23 from 2010/11[33] The CBE reported that the following number of females receive support for the MTEF period (27 out of the 68 students, constituting 40% of the total; 51 out of the 102 students and 76 of the 153 students, each constituting 50% of the total number for the 2011/12 to 2012/14 period).
The CBE also reported that four stakeholder forums would be held annually in 2011/12, and two each for 2012/13 and 2013/14 respectively.
10. Committee recommendations
10.1 Recommendations to the Department of Public Works
10.1.1 The Chief Finance Officer of Public Works should improve the departmental procurement systems by the end of the financial year and avoid irregular and wasteful expenditure as these weaknesses had been identified by the Auditor-General in the 2010 Annual Report.
10.1.2 The Chief Finance Officer should ensure that the Department adheres to the Operation Reyapatala principles in meeting the 30-day payment period for service providers.
10.1.3 In the next financial year the Director-General should bring before the Committee a strategic plan document that has measurable objectives and that would be accompanied by the Annual Performance Plan as detailed in the National Treasury regulations. These documents should also be tabled on time in Parliament by the Department.
10.1.4 The Chief Director: Expanded Public Works Programme should find ways of assisting municipalities who were not performing well in the Expanded Public Works Programme. Technical support should be provided to the municipalities and good working relations should be developed that aimed to assist that the municipalities be prioritised in the current financial year.
10.1.5 The Chief Director: Human Resources should ensure that all vacant positions are filled by the end of the current financial year.
10.1.6 The Accounting Officer should put limitations on the disposal of state land until the Department had a complete asset register. The legal unit, responsible for conveyancing in the department should ensure that the properties belonging to Public Works are registered correctly.
10.1.7 The Chief Director: Asset Registration should ensure that the provinces have a disposal policy which could also be filtered down to local government level once the principles of GIAMA had been extended to local government.
10.1.8 The Chief Finance Officer should develop plans on how the Department would collect revenue from its client departments who are falling behind in rental payments.
10.1.9 The Chief Director: Policy should look into the amendment of the Parliamentary Villages Board Act as the malfunction of the board had direct consequences for members of Parliament who stay in the parliamentary villages.
10.1.10 The Chief Director: Policy should ensure that all other outstanding legislation, including the Built Environment Professions Bill and the extension of the Government Immovable Asset Management Act (GIAMA) to local government level, is introduced in Parliament before the end of the current financial year.
10.1.11 The Director-General, in conjunction with National Treasury, should formulate mechanisms of tracking performance of the entities reporting to the Department and should monitor the spending of these entities with regard to salaries and delivery on their specific mandates.
10.2 Recommendation to the Independent Development Trust (IDT)
10.2.1 The IDT should report to the Committee on 7 June 2011 on the vacancy rate and progress made in the eradication of mud schools.
10.3 Recommendation to the Council for the Built Environment (CBE)
10.3.1 The CBE, together with the Department of Public Works, should fast-track the re-
introduction of the Built Environment Professions Bill in Parliament.
10.4 Recommendation to Agrèment South Africa (ASA)
10.4.1 Agrèment South Africa and the Department of Public Works should report to the Committee on a date to be determined on governance issues in regard to the entity.
10.5 Recommendation to the Construction Industry Development Board (CIDB)
10.5.1 The CIDB should ensure that it corrects the discrepancies in the amounts allocated to its programmes as reflected in its tabled strategic plan as these amounts did not correspond with those that were presented to the Committee.
10.6 General recommendations
10.6.1 The Committee recommends that all other departments focus on their specific mandates and allow the Department of Public Works to do the construction and management of buildings according to its mandate.
10.6.2 The Committee further recommends that tertiary institutions which offer unaccredited programmes in the built environment obtain the necessary accreditation.
The Committee, having considered the budget vote and strategic plan of the Department of Public Works, as well as the strategic plans of its entities, accepts the budget vote and strategic plans as presented to it.
Report to be considered.
References
Department of Public Works. (2010) Department of Public Works Strategic Plan for 2010 to 2013.
Department of Public Works. (2011) Draft Department of Public Works Action Plan on the Filling of Vacancies, Presentation to the Portfolio Committee on Public Works, Cape Town: Parliament, 8 March.
Department of Public Works. (2011a) Presentation for Conditional Grant (Division of Revenue Act) to the Select Committee on Appropriations, Cape Town: Parliament, 23 March.
Department of Public Works. (2011b) Report on Incentive Grant to Date, Cape Town: Parliament, 22 March.
Department of Public Works. (2011c) Strategic Plan of the Department of Public Works for 2011 to 2014.
National Treasury. (2011) Estimates of National Expenditure for 2011.
National Treasury. (2011a) Budget Review 2011.
Smit, P. (2011) ‘Ecsa moves to support 2014 vision of 30 000 engineers a year’, Engineering News, 16 March.
Zuma, J.G. (2011) State of the Nation Address, Parliament: Cape Town, 10 February.
[1] National Treasury (2011).
[2] Department of Public Works (2009), p. 100.
[3] Department of Public Works (2011c), p. 11.
[4] Department of Public Works (2011c), p. 20.
[5] Smit, P. (2011), p. 1.
[6] Smit, P. (2011), p. 1.
[7] Department of Public Works (2011), p. 1.
[8] Department of Public Works (2011), pp. 3-5.
[9] Department of Public Works (2011a).
[10] Department of Public Works (2010).
[11] Nation Treasury (2011), p. 122.
[12] National Treasury (2011a), p. 47. According to the Budget Review for 2011, the overall expenditure for the EPWP over the next three years is budgeted at R73 billion.
[13] Department of Public Works (2011a).
[14] Department of Public Works (2011b).
[15] National Treasury (2011).
[16] Department of Public Works (2011c), p. 83.
[17] Department of Public Works (2011c), p. 84.
[18] National Treasury (2011), p. 21.
[19] National Treasury (2011), p. 21.
[20] National Treasury (2011), p. 22.
[21] National Treasury (2011), p. 22.
[22] National Treasury (2011), p. 21.
[23] National Treasury (2011), p. 23.
[24] National Treasury (2011), p. 26.
[25] National Treasury (2011), p. 26.
[26] National Treasury (2011), p. 27.
[27] Agément South Africa (2011), p. 1.
[28] Department of Public Works (2011), p. 83.
[29] Department of Public Works (2011), p. 32.
[30] Department of Public Works (2011), p. 36.
[31] National Treasury (2011), p. 23.
[32] National Treasury (2011), p. 24.
[33] National Treasury (2011), p. 24.
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