DPWI & PMTE 2020/21 Annual Performance Plans with Deputy Minister

Meeting report

Opening Remarks

Chairperson Ntobongwana informed Members of the three-minute rule for each Member to speak. She made apologies on behalf of Ms L Mjobo (ANC) as she was hospitalised. The Committee Secretary from the Portfolio Committee reported that Ms S Kopane (DA) had given her apology. The Committee Secretary from the Select Committee reported the apology made by Ms S Boshoff (DA, Mpumalanga). Mr E Mathebula (ANC, Mpumalanga) offered an apology for not having attended the last meeting because of the loss of his son.

The Deputy Minister’s opening remarks

Ms Noxolo Kiviet, the Deputy Minister of Public Works & Infrastructure, thanked everyone present. She offered an apology on behalf of the Minister and said that the Minister would join the meeting later because she was attending a meeting now.

She asked Members to be mindful of the COVID-19 pandemic and the economic depression the country was facing under which the Department drafted this Annual Performance Plan. Due to COVID-19 some of the Department’s programmes may have to be postponed as both March and April were lost due to the lockdown. As a result, the Department will have to adjust its APP accordingly.

She emphasised the important role of infrastructure as the backbone of the economy and it being particularly relevant under the economic depression and high unemployment which the country currently faced.

Department of Public Works and Infrastructure (DPWI) 2020/21Annual Performance Plan presentation

Advocate Sam Vukela, Director-General of the Department of Public Works and Infrastructure (DPWI), outlined the structure of the presentation and allocated presenters to each part of the presentation.

Mr Imtiaz Fazel, DDG: Governance and Risk Compliance (GRC), DPWI, presented the Department’s Annual Performance Plan and budget. He asked Members to be mindful of the unemployment rate at 30% and the economic recession the country currently faces.

There are seven priorities according to the DPWI’s mandates. These seven priorities translate into seven outcomes. The seven priorities are:

• Priority 1: Economic transformation and job creation
• Priority 2: Education, skills and health
• Priority 3: Consolidating the social wage through reliable and quality basic services
• Priority 4: Spatial integration, human settlements and local government
• Priority 5: Social cohesion and safe communities
• Priority 6: Building a capable, ethical and developmental state
• Priority 7: A better Africa and world.

For the DPWI’s revised framework, it focuses on the result-based methodology, planning for women, children and people with disabilities, stakeholder consultation and monitoring and evaluation.

The DG emphasised the logic and linkages between the Department’s Strategic Plan, APP and Operational Plan.

The DG provided the policies and strategies supporting outcomes. These are:

• A resilient, ethical and capable Department;
• Integrated planning and coordination;
• Sustainable infrastructure investment;
• Productive assets;
• Transformed built environment;
• Optimised job opportunities; and
• Dignified client experience.

Mr Lwazi Mahlangu, Chief Director: Monitoring and Evaluation, briefed Members on the DPWI’s operational plan.

The Chief Director briefed members on the DPWI’s projections on unemployment, growth, inequality, poverty and investment. He also informed Members of the budget trends, capacity for employment, IT architecture, and implementation of the Infrastructure Delivery Management System (IDMS), governance structures and performance trends of the Department.

The Chief Director asked Members to be mindful that when this planning was done, the DPWI did not know that there would be the COVID-19 so now some plans would have to be adjusted. He also explained that the N/As will be reflected in the DPWI’s Operational Plan.

Chairperson Mmoiemang  raised concern about time constraints. He asked Mr Mahlangu to wrap up his presentation. Mr Mahlangu said that he took longer to explain because he wanted Members to understand the logic behind the DPWI’s model.

Ms Juanita Prinsloo, Chief Director: Financial Planning, Property Management Trading Entity (PMTE), briefed Members on the structure of the budget which included the PMTE’s revenue allocation and budget allocation for each programme as well as for per economic classification.

She informed Members to expect some changes as a result of COVID-19, and that National Treasury would also instruct the Department on how to adjust its budget.

Discussion

Chairperson Ntobongwana suggested that she would let all Members speak and those that did not wish to speak could indicate if their points were covered. She indicated that there would be a three-minute rule given to each member.

Mr W Thring (ACDP) enquired about Gross Fixed Capital Formation (GFCF) and wanted to know what percentage it translated into GDP.

He enquired about the Department’s progress on the completion of the asset register. He highlighted the importance for government to understand how to utilise its assets for the client’s government it serves.

He said that he understood that all departments would have to amend budgets to mitigate the effects of COVID-19, and asked if there was a clear understanding on which budgetary items are undergoing review in the Department. He wanted to know the effect of the current lockdown on the planning of this Department’s financial year.

Ms M Hicklin (DA) commented on dignified client experience because the Department had failed dismally in this respect.

She questioned the Department on how it planned its budget if there were any immovable assets. In the absence of the register, any planning or allocation of budgets will be fruitless. Her biggest concern was the inadequate maintenance of state assets.

She expressed confusion that the budget shows a decrease in the number of departmental employees but an increase in the Compensation of Employees. She asked how that was possible because it could only be possible if the Department employs additional sources such as consultants.

Ms S Graham (DA) asked how the IDT (Independent Development Trust) continues its operation and its mandate if it has not been allocated any funding.

She enquired about what has been allocated to the construction management programme. ‘Has the Department received the fund as promised by the President’?

She remarked that for the DPWI there was currently no legislative mandate for this Department to recoup the loss of funding from client departments. It is a concern.  

Ms A Siwisa (EFF) expressed her disappointment in the decreasing budget allocation for monitoring and evaluation. She remarked that as everyone knows there was a culture of corruption in the Department, so she needed to know why it was not provided with enough funds in the budget allocation.

Ms Siwisa asked further why the Department could not provide buildings to the government from its assets for the use of quarantine but instead had to rent from the private sector.

She highlighted the importance of promoting young black graduates and women. She asked about the skills shortage in the construction sector. She commented that graduates are unemployed in the sector despite there being bursaries allocated for them.

Mr M Rayi (ANC, Eastern Cape) needed an explanation for the lack of APP targets and quarterly targets on the reported incidents of corruption in the presentation. Similarly, he commented that there were no targets for the number of new Smart cities by 2024 either.

On EPWP, he asked whether there has been discussion in this government to shift the main responsible department from the DPWI to the Department of Employment and Labour.

He enquired about whether the budget allocated for the Presidential Coordinating Commission (PICC) had been transferred to the Department.

Mr Rayi asked how the Department planned to build a capable state which was stated as one of the priorities of the DPWI. He highlighted the multi-disciplinary process of this project and felt that it should involve other departments.

Mr T Brauteseth (DA, KwaZulu-Natal) commented on the Prestige Project in the presentation. He asked how many projects were the Department busy with now and what these projects were. ‘What is the total amount that the Department is going to spend on these projects’? With regard to the adjusted budget, he asked whether the Department will at least consider putting all these projects on hold given the pandemic.  Almost R92 million of the R102 million budget will be spent on prestige accommodation and state functions and just over R11 million on parliamentary villages. A total of R35.2 million is budgeted for parliamentary villages for the next three years. He commented that this should not happen at this time. “The citizens of our country, many of whom are going through starvation or poverty at the moment because of the Covid-19 crisis, would like to hear that we are spending every single available cent on assisting them, that we are not spending money on state functions, prestige projects for Cabinet Ministers and MPs – particularly the Parliamentary villages, which I know were due for many houses to be renovated, and MPs to be relocated”.

Mr M Tshwaku (EFF) criticised the Department’s introduction part in the presentation. He said it was a waste of time.

He asked for more information about the Airport Company South Africa (ACSA)’s request for more funding support.

He expressed confusion about the calculation of those GDP projection figures because currently South Africa’s economic growth was a negative figure. In relation to that, he wanted to understand how the department calculated the unemployment figure.

Mr Tshwaku asked whether the target vacancy of 10% falls within the norm.

He enquired about the perimeters used to define work opportunities and how the DPWI calculated work opportunities. He further enquired about which projects in the infrastructure are creating jobs.

He expressed dismay over the small budget allocated to the EPWP programme and asked if the Department will try to formalise those jobs.

Mr P Van Staden (FF+) wanted to know what the impact of this pandemic will be on the Performance Plan for this Department as well as for the Department’s budget. He made a suggestion for the department to start giving progress report on EPWP from now on.

Mr M Dangor (ANC, Gauteng) enquired about the Department’s plans regarding the assets that were located in one place while service was in the other place under apartheid’s spatial planning. ‘Could they be sold, reused and demolished’?

Mr Dangor asked whether the department had taken the initiative to start looking at a new city plan as part of the Smart New City Plan in the President’s speech.

Mr M Nxumalo (IFP) enquired about the Department’s plan to implement a district development model and its own departmental process to ensure that all three spheres of government were working in coordination.

He remarked on the exorbitant amount the Department spends on maintenance projects. He asked if the Department has a strategy to mitigate that in future budgets. Furthermore, he asked if the Department has deliberated on a system to deal with any future emergencies such as COVID-19.

Ms S van Schalkwyk (ANC) commented that there are many factors that are hampering the Department in producing its APP. One of the factors is the alignment of the finance administration’s supplier chain management to the DPWI Integrity Management Framework. She thus asked the Department how it plans to address that.

She expressed concern about the Department’s slow roll out of its Information Technology (IT) system as well as the lack of a functioning of ICT executive committee to oversee the project. She asked what the Department plans to do about that.

She enquired about the progress of the Expropriation Bill.

Mr T Mashele (ANC) questioned the accuracy of the information contained in the presentation. He remarked that it seemed like the Committee and the Department are just doing routine work that does not reflect the reality on the ground. The impact of COVID-19 is not included in the budget.

He commented on the huge number of Key Performance Indicators and asked how far the Department is on finalising its White Paper.

He suggested that with assistance and the improvement of the technology system, it will be able to update the asset register so that it could also help the Committee to perform its oversight role.  

Mr Mashele asked how the Department is going to empower young people and women in the Department.

Chairperson Mmoiemang urged the Department to use infrastructural programmes to improve people’s livelihoods. He highlighted the importance of infrastructure to the economy and asked the Department to re-position itself to economic development post-COVID-19 so that it could be a driver of employment.

He pointed out that small harbours could be used for driving employment and therefore if the Department had a plan in this regard.

Responses

Adv Sam Vukela, the DG, responded to Members’ questions.

With regard to the budget items that are under review, the DG confirmed that the National Treasury instructed the Department to undertake the process to identify areas that are affected as a result of COVID-19.

The DG assured Members that the Independent Development Trust is going through financial difficulties and the Department has resolved to dissolve the IDT in the short term. The matter will be presented before Cabinet. It is work in progress and the Department will inform the Department of Public Enterprise about IDT in due course.

For the small amount of infrastructure allocation in the Department, the DG explained that his Department does not only implement infrastructural activities within the Department, it also serves client’s department which is not reflected in the DPWI baseline in the budget.

For the Skills Development Programme, the DG believed that the Department was doing well. The Department has a programme which aims to attract people in building and environment professions from school to university levels as well as assist in their learnerships and internships. He said that some of those young graduates even end up being appointed by the Department when there are vacancies.

The Presidential Coordinating Commission (PICC) is part of the Department now.

With the prestige project, the Department has indicated to all clients that given the current pandemic, there is no funding to support any state functions. Nor have they received any indication for the Department to provide funding for state functions. The DG remarked that this is an indication that funding in this area would be re-directed to other key areas affected by COVID-19.

The DG asked Members to be mindful of the time when the presentation was drafted because at that time no one had anticipated the COVID-19 virus. There was a need to review the presentations due to its impact.

The DG said that the allocation for the Expanded Public Works Programme (EPWP) was small because the inherent nature of this programme was to give those unemployed and those who struggled to find work some form of small and temporary jobs as well as some kind of training. There is a debate around formalising EPWP jobs. However, he reminded Members to be mindful of the difference as this programme’s intention was to cushion the blow of poverty for the poor and unemployed people.

On the impact of COVID-19 on Department’s performance and budget, the DG responded that the impact is going to be huge. The Department has already begun to identify areas which may be affected. The Department will only be able to tell how much of the budget will be re-directed once the adjustment programme is completed and finalised.

The DG commented that the new Department which focuses on building new cities is a multi-disciplinary programme chaired by the Deputy President. He explained to Members that this whole process is a coordination process with other departments involved as well so the DPWI does not have finality on the matter.

The DG confirmed that ‘his’ Department conformed to the District Development Model in ensuring that the Department’s role and responsibilities in each district are done accordingly. This is also coordinated by the Coordinating Unit within COGTA.

The Infrastructure and investment programme is in the Presidential Coordinating Commission (PICC). The Department is developing a model which will clarify the role of the Department as now the PICC is part of the Department. The infrastructure and investment Office within the presidency executes the oversight role with the executive authority vested in the Minister of Public Works. The Department coordinates all the infrastructural work at national, provincial and local levels.

At last, the DG assured Members that the Department does have an empowerment policy to ensure youth participation in its property portfolio.

Mr Mahlangu explained to Members that projections for 2024 and NDP for 2026 were used to calculate targets for the Department.

As of 2018 the World Bank statistics showed that the Gross Fixed Capital Formation accounted for 18.91% of GDP.

Responding to Members’ questions about the N/A blanks, the Chief Director explained the relations between the APP and Operational Plans to Members. The APP reflects the tangible outputs and the Department’s Operational Plan - which was under way - reflects the activities that the Department must do in order to achieve those outputs. Those marked N/A in the APP will be covered by the Operational Plans. However, he reminded Members, that because of the suddenness of COVID-19, some targets would probably be changed because some factors had not been considered during the drafting process.

Ms Prinsloo explained to Members that the decrease in the number of employees was influenced by the expired contract positions which happened in December and those positions have not been renewed.

She confirmed that public corporations and private enterprises constituted part of the transfers of the Department.

Ms Prinsloo responded to AGSA’s pleading for a bigger budget.  She said that so far, the Department had not received a request. Even when the request is received, there is a proper procedure to be followed. The Department will have to discuss the request with the National Treasury. It is up to the Treasury to determine if an entity is qualified for assistance or not.

Ms Prinsloo explained that the accommodation freehold mainly consisted of private leases where the Department leases private houses for client departments where the Department does not have state-owned facilities. The other accommodation freehold private means that the Department leases its properties to individuals or private companies which are called rental debtors.

Ms Prinsloo confirmed that there is an alignment between Supply Chain Management and finance in the Department. The requirement is that the procurement plan must always be aligned to the budget so that it does not exceed what is budgeted for.

On the decrease of the budget for Monitoring and Evaluation, Ms Prinsloo said that it is as a result of the Department’s cost containment measures. This budget decreased across all branches.

On the Asset Register, Ms Sasa Subban, DDG: Real Estate Investment Services, DPWI elaborated and explained to Members that for the past eight years, the Department has had an intensive focus on the enhancement of the Asset Register Programme. It includes a detailed analysis of land parcels against the deed’s records. So the enhancement of this programme has been audited and has been confirmed by the Auditor-General’s office as complete in the past five years. However, the Department continues with its annual verification of data given the magnitude of the Asset Register. For instance, there is a discrepancy between the data and the GIS mapping process as well as with some deeds registering records and the chief survey records. So creating alignment for excellent records is what the Department is busy doing this year.  

In addition, the Department is also looking at a project related to spatial development work. This project reviews state domestic facilities which are built on land which traditionally belonged to the former Bantustan states. Surveys will be conducted by the Department to ensure that all assets are correctly recorded in the deed’s office.

On the quarantine site for COVID-19, Ms Subban said that the Department had identified 33 quarantine sites from its Asset Register. She informed Members that the privately-owned sites are not recorded on the register.

Ms Subban confirmed that the Department recognised the need to use the Asset Register to optimise the state portfolio. For instance, the 1168 facilities that are unoccupied which are recorded on the Asset Register informs the Department to review how to utilise these facilities which is part of the Department’s Operational Plan. She did acknowledge that the Department had to intensify that process.

Ms Subban commented on spatial planning and imbalances of the past. There is a programme in the Department that looks at how to contribute to integrated development where the Department is mandated to provide accommodation with a special focus on the social clusters SASSA, the Department of Labour and the Department of Home Affairs. The Department is aligned to all sectoral departments, mainly the Department of Human Settlement’s Priority Housing Development Areas (PHDA) to ensure that social service was being supported accordingly in the Department’s plan. She assured the Committees that the Department always plans around the National Infrastructure Development Plan in designing plans within the ambit of the Department’s work to ensure integration and coordination

Ms Florence Rabada Acting DDG: Property and Construction Industry Policy and Research, DPWI, responded to the enquiry on the progress of the Expropriation Bill and Public Works’ general laws repealing the Amendment Act.

On 5 December, when the Department presented the Expropriation Bill, the intention of the Department was to request approval from Cabinet to table the 2019 Expropriation Bill for parliamentary processes. Cabinet did deliberate on the content of the Cabinet Memorandum and came to resolutions around five key issues two of which she would explain to Members. Cabinet instructed the engagement to continue with NEDLAC and asked the DPWI to participate in public hearings on the review of the Section 25 of the Constitution during February and March. A Presentation was made on Clause 12(3) the compensation provision of the Expropriation Bill. After the presentation, NEDLAC formed a subcommittee that consisted of labour, government, business and communities to look at the Expropriation Bill. The pandemic affected the NEDLAC report. NEDLAC is now using MS Team to contact labour, business, government and communities to continue this engagement. She informed Members that the NEDLAC report will be handed to the Executive Authority then it will be sent to the Speaker of the National Assembly. She assured Members that the Department will finalise the remaining activities within three months after the executive receives the report. The Department is optimistic that the Bill would be ready for the committee in this financial year.

Ms Rabada confirmed that the repealing of the Amendment Bill was included in the 2020 programme but was on hold because of COVID-19. Currently the Department is continuing its discussion with the Department of Justice and with the South African Law Commission to work out a way to reduce the redundancy on repeals in the DPWI’s mandates. As soon as a plan is devised, the Department will inform the Committee about whether it will happen in this year or be postponed to next year.

Mr Clive Mtshisa, DDG: Corporate Services, DPWI, responded to Members about the vacancy. He explained that the national norms are set between 10-12% vacancies. Across the Department, Pretoria has a 15% vacancy which is the highest. It is followed by Port Elizabeth at 12%, Polokwane 9%, Head Office 17%, Bloemfontein 5%, Cape Town 10%, Durban 8%, Johannesburg 4%, Kimberly 12%, Mthatha 12%, and Nelspruit 8%. The Department of Public Services and Administration’s norm sets the vacancy requirement. These are monitored on a quarterly basis. The DPWI had received a directive issued by the DPSA before lockdown instructing the Department to refrain from refilling vacancies which explains why underspending is reflected in the budget. He recognised the need to activate the refilling of vacancies.

With regard to the Enterprise Resource Planning system’s (ERP) service provider, Mr Mtshisa explained that the contract for the current service provider expired. The Department hoped that the next appointment of a service provider could resume in June. Obviously the Department wants to explore more options in the market without having to stick to only one service provider. He mentioned that one of the main weaknesses within the Department was immature business processes. The Department’s IT team is working with the business unit to improve this matter and hopefully it’ll be concluded soon.

Mr Devan Pillay, Chief Director: Construction Policy Development, DPWI, explained to Members that work opportunity, regardless of it being short-term or long-term, temporary or permanent, was counted as one work opportunity.

Mr Pillay said that the Member’s question about taking the job creation initiative to the Department of Employment and Labour should be taken to a different platform because it involved the shifting of Department’s mandate.

Ms Hicklin commented that her question was not answered. She had enquired why the number of employees in the Department decreased while the Compensation of Employees had increased.

She sought clarification on Ms Subban’s comment that the Asset Register had been completed. She commented that all the Committee had been hearing about was complaints about inaccurate data for the past 8 years, and it is impossible that the situation could be miraculously completed overnight. She requested clarification.

Ms Siwisa expressed her confusion that Members had been given a whole briefing about COVID-19 last week by the Department and now the Department explained that the impact of COVID-19 was not included in the report. She wanted to know when the revised budget will be provided and tabled.

She expressed disbelief that out of all budgetary items that the Department could implement like for example its cost containment measures, it was the monitoring and evaluation budget that they decided to cut despite it being the part that combats corruption – the Department having a history in this area.  

Mr Tshwaku commented on the Asset Register and agreed that this should have been finalised long ago. He commented that with the vast assets owned by this Department, it should make money for government and not take money from the government.

He asked about whether the Department considered expanding its budget spent on the EPWP programme.

Mr Tshwaku said that he did not get much clarity from the response on the IDT and needed more clarity.

He enquired about the occupancy of the Department’s buildings and demanded to know if the R1 lease agreements that were arranged in the past were still in effect, and what the Department has done to deal with those R1 leases.

Mr Mashele also asked about the Department’s plan with IDT and enquired about the Asset Register.

Mr Thring apologised to Members because had to leave for another meeting that was due to start now.

Mr Brauteseth said that the Department did not get his question. He wanted to know about the exact prestige projects: how many are planned, what those projects are, and what amount has been spent in the coming period?

Adv Vukela responded to Members that the Department would make a written submission on the prestige projects to the Committee on the next day.

The DG confirmed that the IDT was still in existence, though it is facing financial difficulties and the Department has made the decision to dissolve it. But there are processes to follow and this Department does not have the authority as it needs Cabinet approval. This Department has already informed the Department of Public Enterprises about the situation. In addition, the Department is also utilising the IDT whilst it is still operating for other department’s activities.

The DG explained that COVID-19 was not included because the presentation was drafted a while ago. However, what the Department is doing now is managing to redirect its budget to address the impact of COVID.

Ms Subban said that in terms of ownership, the reconciliation against the Deeds Office for the Asset Register was done and completed. She reported on a few figures from the Register which included 81573 buildings and 30496 land parcels. What the Department needed to do was to enhance the data such as the physical verification of the square meterage which was currently happening as well as the alignment with the GIS mapping process. The Department could identify the conditions of buildings, and could also inform strategies for the vacant buildings in the verification. Ms Subban provided the following few figures of the vacant assets from the Asset Register: 1168 vacant buildings, 1195 within a vacant facility as well as 10050 vacant land parcels. She informed Members that due to COVID-19, the site inspection has been stalled a bit.

Ms Prinsloo explained to Members that the increase for Compensation of Employment in the budget was as a result of the projected 6% salary which resulted in R37 million in total.

Mr Morris Mabinja, Acting Chief Director: Key Accounts Management, DPWI, confirmed that there are state-leased properties which were paying R1 rental. He remarked that this is against the Treasury’s Regulation 16.8.7 and these leases have been there before 1994. He pointed out that some of those buildings are in a poor condition and the Department is reviewing these arrangements and working closely with the branches that are assisting.

The Deputy Minister remarked about the impressive united front presented by government departments that are working so closely in collaboration in response to COVID-19. Covid-19 has afforded government the strength and the optimism. She believed that this collaboration will not be disappearing when COVID-19 is gone. She recognised the integration to create jobs for youth for the Department.

Chairperson Mmoiemang thanked the Department for the presentation and appreciated Members’ inputs. He highlighted the importance of changes being made to the budget, and emphasised that this move needed to be highlighted to reflect COVID-19 so that Members could be informed as a result of COVID-19.

In closing Chairperson Ntobongwana said that she appreciated all the contributions made by officials and Members.

The meeting was adjourned