Expanded Public Works Programme: Progress Report by Eastern Cape, Mpumalanga and Kwazulu Natal

Meeting report

PUBLIC WORKS PORTFOLIO COMMITTEE
14 September 2004
EXPANDED PUBLIC WORKS PROGRAMME: PROGRESS REPORT BY EASTERN CAPE, MPUMALANGA AND KWAZULU NATAL

Chairperson: Mr F Bhengu (ANC)

Documents handed out
Presentation by the Eastern Cape MEC
Presentation by the Mpumalanga MEC
Presentation by the KwaZulu-Natal MEC
KwaZulu-Natal Draft Asisebenze Plan

SUMMARY
Members of the Executive Council (MECs) from three provinces made presentations on progress of the Expanded Public Works Programme (EPWP) in their provinces. They outlined how the programme had been launched, the budgets for different projects and their challenges.

The Committee heard that the registration of State-owned properties remained a major challenge across provinces. Some properties were still registered under the Union of South Africa. Mpumalanga province was trying to build houses for Members of the Executive Council and members of the provincial legislature. A number of government properties were being used by people who were not even civil servants. The development of emerging contractors was still a problem. They lacked proper tendering and financial management skills. Fronting also still took place in the tender process.

MINUTES
The Chairperson explained that the MECs for Public Works from Mpumalanga, Eastern Cape and Kwa-Zulu Natal would brief the Committee on the Expanded Public Works Program (EPWP) in their respective provinces. He explained further that the Committee had really been non-functional in the past. It was therefore important that they start anew. They had had a workshop with the Minister the previous week in an effort to understand the department and its strategic plans. The problem existed that there was one national department with very little coordination with the provinces. It was therefore important to hear from the provinces how the EPWP was working and how they were working together with other departments. Coordination was important since the department owned many properties and had the EPWP that they had to coordinate. It was also important to have an asset register since there were many properties belonging to the department which were not being used. He then asked the MEC from the Eastern Cape to address the Committee.

Eastern Cape
Mr S Kwelita, the MEC for Public Works in the Eastern Cape, thanked the Committee for the invitation and said that they hoped to learn from other provinces as well. His full comments are in the attached document. He explained that the presentation would focus on the EPWP. He outlined the socio-economic plight of the province and their challenges. The western part of the province was more developed than the eastern part because of the way the province had been divided in the past. A provincial steering committee for the EPWP was set up but it was still struggling to bring all the role players on board such as organised business and the municipalities. Communication of the programme was very important as it was not understood by all. It was also necessary to have a unit in the department that could look after the programme. This unit would also monitor the different projects. He emphasised that it was important that the projects involved in the EPWP did not become "soft targets" that would suffer when there was monetary constraints.

The Chairperson asked the MEC from Eastern Cape to address the Committee on the provincial property portfolio and on corruption.

Mr S Kwelita (MEC: Eastern Cape) said that the province has unfolded a process that would audit all leases held by the provincial government. Since 1994 various departments entered into lease agreements with different private sector companiess. The process was not co-ordinated or regulated. In some cases there would be a lease in respect of a building that would not be used at all. He cited a case of a hotel in Queenstown leased by the provincial Department of Education. The building was never used and the province continued to pay monthly rental. The province currently has 195 lease agreements with private people and only ten of them were properly signed. In some cases, some have expired long ago but they are still in the system. The province had been charged for none-existent space in 30 leases. Some people charged the province value added tax (VAT) whereas they were not registered as VAT vendors. The maintenance of leased properties was also problematic. There were also cases where representatives of departments have signed lease agreements on behalf on the Department in respect of their own properties. The province was also over-charged in some of the agreements. Consequently the province has embarked on a process of drafting new lease agreements. There would be valuators who would check that the agreements and properties they related to matched.

The MEC said that the province does not know all the properties it owns. There are unconsolidated lists of properties owned by the government.

Mpumalanga
Ms K Mashego-Dlamini, MEC in Mpumalanga, noted that the Department of Public Works' core function was to provide infrastructure to the different departments. The detail of her presentation can be seen in the attached document. She added that there were service agreements with all the different departments.

Referring to the properties owned by the Department, she said that these included offices, houses, land and monuments. There was a property register, but it had to be reviewed as it was not user friendly. There was a need to identify all the properties since some from the former homelands had not yet been declared. To date, it was known that there was 11 000 properties belonging to the Department. Some of these properties were registered in the name of the Union of South Africa and some as the Republic of South Africa. The tracking of all these properties was progressing. These properties had now to be registered in the name of the province. They then had to decide what to do with them. Many of these properties were being rented out at present to managers at prices which were not market related. The Mpumalanga Cabinet had decided that all managers who were renting houses had to pay market related prices. The Department also had land across the province that had not been verified. They were issuing tenders to get people to verify these properties. They had applied to the Department of Land Affairs to obtain the title deeds of these properties and would then possibly dispose of or develop them.

Concerning the EPWP, she said that the province had done presentations to all officials and Cabinet concerning the programme. Presentations were also made to the provincial legislature members and to municipalities about the programme. A provincial steering committee had now been established. All municipalities would be reporting to South African Local Government Association (SALGA) who was represented on the steering committee. The launch of the programme had taken place on 30 August 2004.

The project that was used to launch the EPWP was one which was in the environmental sector on agriculture. This was a labour-intensive programme that involved a number of community members. The projects had been started by the Department of Agriculture and involved volunteers who were unemployed. It was now part of the EPWP and these volunteers were part of the programme and were being paid. Permission had been granted by the Minister to include these volunteers. In future, people who were unemployed would be used in new projects.

In road construction, the Department had identified learnerships and training would be done by the relevant Sector Education and Training Authorities (SETAs). In this area, 45 learnerships had been identified and tenders were about to be issued. The tender process had been relaxed and the tenders would be offered to these people who had been identified for the learnerships.

In the province, 1001 projects had been identified. These were across different departments. The budget for the EPWP in the present year would be R377, 6 million which would create 10 000 jobs. This amount represented 25% of the total budget. It was hoped that 50% of the following year's infrastructural budget would be allocated to the EPWP. The province had requested municipalities to declare what they would be spending as part of the EPWP. The municipalities had been encouraged to use people in the immediate community to be involved in the different projects.

The challenge was to structure the organogram in the province so that the programme could be managed. It was proposed that this would fall under the Chief Director and three other directors. One director would do the coordination; the other, impact assessment and the third one would deal with the emerging contractors and training associated with them. There was a need to have consultants at provincial level as the consultants that had helped to identify projects had come from the national department.

To encourage the learner contractors, the province had decided that all projects up to R5 million needed no collateral. The risk for this had been taken by ABSA Bank that had entered into an agreement with the national department to accommodate these learner contractors either by giving them an overdraft or opening an account for them. The Department of Labour had set the rates of payment for workers and Mpumalanga had decided to pay workers a rate of R30 to R35 a day.

Ms K Masego-Dlamini continued that the province has service level agreements signed by the provincial Department of Public Works and other departments. They related to co-operation on building infrastructure capacity and the use of consultants. The province recently discovered that consultants have been over-charging it for work done. Normally, the province uses the same specifications for building schools. So when a new school had to be built the very same specifications used to build school A would be used to build school B. The province would then give the plan to the consultants and ask them to find out if they could fit the plan in a particular site. It was discovered that the consultants did not do their own designs and plans but just fit in the plan on the site. However, when they claimed payment they included charges for planning and designing the school. This has been corrected. When a contractor claims for work done the consultant would have to sign the claim and send it to the Department. Upon receiving the claim, the Department of Public Works verifies the claim before payment is effected. This is aimed at ensuring that there is no payment for work incorrectly done or not done at all.

The Department has established a database in which all businesses that seek to do business with the government would have to be registered. The database would allow the checking of various things like the registration and shareholding of the businesses. A business that is not in the database would not be able to do business with the government. If a Head of Department wants caterers, for instance, he or she would be able to select three companies from the database and request them to send quotations. There had been problems regarding quotations for various services.

The MEC said that the province was struggling to retain professional staff. It had written a letter to the National Department of Public Service and Administration to help address this problem. This problem seems to prevail in all Public Works Departments across provinces. The Department of Public Service and Administration would give guidelines on how to retain professional staff.

Mrs Masego-Dlamini said that the province was taking forward the process of informing stakeholders on the Expanded Public Works Programme (EPWP). It is currently addressing all business people who are members of NAFCOC.

The provincial Department of Public Works is charged with the implementation of the Ministerial Handbook. It has to provide free houses to Premiers, MECs and members of the provincial legislature. She said that members of provincial legislatures do not have parliamentary villages like Members of Parliament. The provincial Department has requested different departments to rent out houses in their possession to those that qualify for free houses in terms of the Ministerial Handbook.

The presenter said the province had improperly or corruptly bought land earmarked for the "parliamentary" village. The province was negotiating with the seller so that he could buy the land back. The problem is that the contract is binding and the province cannot just walk away. However, should the seller refuse or fail to buy the land back the province would be forced to take the matter to court. The province is facing serious problems of unprocedural and corrupt tenders. Every effort is being made to ensure that all monies incorrectly paid out are recovered. All companies engaged in corrupt activities would be removed from the provincial level for a period of five years.

KwaZulu-Natal
Mr B Gwala (MEC: Kwazulu-Natal) and Mr B Khanyile (Manager: Public Works Programme) briefed the Committee on developments in the Kwazulu-Natal province.

Mr Gwala said that the issue of the State assets register was receiving attention in the province. There are houses that are occupied illegally across the province. The problem is that sometimes houses are allocated to an official, but when they leave they do not notify Public Works. The movement of the capital from Ulundi and Pietermaritzburg also saw houses formerly occupied by MECs and members of the legislature being deserted and invaded by ordinary people. The Department is trying to formulate a strategy and policy on housing.

Mr Khanyile focused on the province's Asisebenze Plan: Kugug'ifosholo and public works programme as it unfolded in the province. The programme was launched in Kwazulu-Natal by the Deputy President on 28 August 2004 and is coordinated by the Department of Transport. The projects would target the unemployed and marginalised and would include largely unskilled people who are not receiving social grants. The provincial Department of Public Works would provide the necessary infrastructure to provincial client departments to enable them to deliver in terms of their mandates. The value of projects to be executed in this financial year totals approximately R960 million.

Discussion
Mr Bhengu said the Committee should invite the Kwazulu-Natal provincial Department of Transport to come and brief it since they monitor the implementation of the EPWP.

Ms P Majodina (ANC) said that the State assets register was a common problem to provinces. The national register was also questionable. Provinces should mostly concentrate on rural roads as they implement the projects. There is a need to integrate community-based programmes with the EPWP.

Ms M Ntuli (ANC) was surprised that the Kwazulu-Natal programme was coordinated by the Department of Transport but headed by a person from the Department of Public Works.

Ms C Ramotsamai (ANC) directed her questions to the MEC from Mpumalanga. She asked what criteria the Mpumalanga provincial government used for disposing of property in its possession. She said the issue whether parliamentary villages are necessary is under discussion nationally. She asked what criteria would be used in allocating the houses. This is important because there are people who stay close to where they work and therefore do not need "parliamentary" villages. She understood the need to blacklist companies involved in corrupt activities. She asked how the province would manage this process given the fact that a company could simply change its name and the managers and shareholders remain the same. On the EPWP she said that the national Department has developed an incubator programme aimed at ensuring that emerging contractors develop into medium or big contractors. She asked how the province plans to ensure that emerging contractors grow into bigger businesses.

Ms Masego-Dlamini replied that it was impossible to dispose of any property because the properties are registered with the Union of South Africa and not with provinces. The province has a plan of identifying all properties belong to it. There is a need to visit the Department of Land Affairs and make changes on land use and have the properties registered properly. Once the province has the title deeds it would be able to select properties that are not necessary and dispose of them. If a Department wants to make use a particular property then the property would be transferred to it.

On parliamentary villages, she said that the province has regions that are far from the provincial legislature. Preference would be given to people residing more than 50 kilometers away from the legislature.

The MEC agreed that companies could simply change their names. However, this would not assist them because the province would have identity numbers of managers and shareholders in its database.

On the incubator programme she replied that this is a national programme and was discussed with provinces. It cannot be implemented without a database of the clients. It requires provinces to categorise contractors in terms of capacity.

Mr Kwelita added that the incubator programme was on the agenda in the last MinMEC meeting. However, it was not discussed because not enough preparation was done for the discussion to take place.

Mr L Maduma (ANC) said that there was a lack of coordination between national and provincial departments. He asked how the provinces would ensure that the national Department of Public Works would receive reports on the EPWP on regular basis. He said that cross-boundary fixed assets are problematic. He asked if the province experience this problem and how they intended to solve the problem. He also asked how the province would deal with assets under the control of various departments so that the registration of State assets could be fast tracked.

With regard to cross boundary assets, the MEC replied that every province has a boundary. A province accounts for property within its boundaries. On assets under other departments, she said that the provincial Department holds leases of other departments. If a department wants to renew a lease, it would have to be established that there is no suitable property in the particular area. If there is such a property, the lease would not be renewed.

Mr Kwelita added that the problem has not yet arisen in Eastern Cape. As the province continues with the process of finalising the assets register the problem might arise. In some cases the government does not have title deeds of properties that it owns. There is still a long way to go before the process of registration is finalised.

Ms Ramotsamai said that the Eastern Cape should provide a plan on how it intends to complete the process of registering State assets. It is unacceptable to say that there is a long way to go given the fact that the present government has been in power for ten years.

Ms T Nwamitwa-Shilubana (ANC) noted that the Mpumalanga province intended to build a house for the Premier. She asked what happened to the Premier's residence.

Mrs Masego-Dlamini replied that the first house was a government house built by a parastatal on a government farm. The house did not belong to the Department of Public Works. The provincial department has no control over the property. The new Premier occupies the second house.

The Chairperson asked if the Select Committee was on board with all developments in the provinces.

Mrs Masego-Dlamini replied that there is a need for proper disclosure of everything that happens in the provinces. The Select Committee is briefed regularly on provincial developments.

Mr J Blanche (DA) said that there is a possibility that government property is changing hands without the government knowing it.

Mr Maduma said that the tender process itself is a bottleneck on the development of emerging contractors. Some people do not have the necessary skills to submit a proper tender. Consequently, they under-tender and run into financial difficulties.

Mr Kwelita agreed that the tender process was still problematic. There is a need to revise the language used in tender documents. The availability of tender documents is also a problem.

Ms Ramotsamai said that fronting remained a major problem. She asked how provinces were ensuring that companies that submitted tenders were truly previously disadvantaged companies. Sometimes a person from a previously disadvantaged group is awarded a tender. But because they do not have the necessary collateral to do the job they end up approaching big companies for financial assistance. The contractor ends up as a sub-contractor to a big company.

Mr Kwelita replied that there is a mechanism to help emerging contractors develop. The government helps them in various ways.

Mrs Masego-Dlamini agreed that remained a problem. She hoped that the database would help solve the problem. It would ensure that tenders are not awarded to the same people all the time.

Members thanked the presenters for highlighting some of the things they had always suspected. Mr Blanche felt that it would be preferable to transfer some of the properties to municipalities.

The meeting was adjourned.