All of this means that we can now focus on our key focus areas and strategic responsibilities, with perhaps the most important surely being our core strategic function, which is the multibillion rand property portfolio that lies within the Department of Public Works.
According to the SA Property Owners Association, Sapoa, the property market is worth some R4,9 trillion. Most of that is in the private residential area, but R188 billion, according to Sapoa, is owned by national government departments and public entities. Of course, not all of this lies within Public Works, but a substantial amount is within our portfolio, and we are certainly the largest single private or public property owner in South Africa. Unfortunately, and we admit this readily, we have not managed this multibillion rand asset with the necessary public-sector professionalism. I underline public-sector professionalism.
Minister, we often say that we have good policies, but we just fail to implement them. I am sure that that is often the case. However, this too easily excuses the policies and too easily exempts us from critically examining some of the policies in the light of our experience. Back in 1997, the Department of Public Works issued a White Paper and identified structural and operational weaknesses that were impeding the department's property management performance, amongst other things. The White Paper championed budgetary reforms that would introduce quasi-market mechanisms into the relationship between the department and what are now called client departments, using state-owned accommodation.
Capital expenditure, rental and rates costs for state-owned accommodation should, as was said in the White Paper, be devolved out of the budget of the Department of Public Works and transferred to the budgets of national departments and later also to provincial departments. In the words of the White Paper:
Client departments will then be required to pay a fee comprised of a capital charge, a notional rent and management fee, for the accommodation and related services which the Department of Public Works will provide. This will entail the Department of Public Works developing mechanisms for service-level agreements with clients ...
... other public entities -
... thus ...
... and it uses an awkward word -
... contractorising ...
... it's a nice neoliberal word -
... its most important set of external relationships.
This "marketisation" of the relationship between the Department of Public Works and its so-called client departments was not necessarily entirely misguided. I don't want to be misunderstood saying that, notwithstanding the fact that I also learned from Jack Simons. However, in keeping with the times, it was unfortunately encased in a set of neoliberal and related new public management assumptions and priorities.
The first of these was that introducing a market mechanism into the relationship between the department and other departments would result in transparency and budgetary cost-cutting, and dealing with what was assumed to be a bloated public sector at the time. What this assumption neglected was that for the new contractorising - to use their awful word - relationships to be set up, considerable initial and indeed sustained expenditure would be required, particularly on professional skills, to capacitate the Department of Public Works to run a Property Management Trading Entity, PMTE, not least given the vast size of this portfolio. The second problem is that the policy then got stuck between its budget reduction ambitions and its equally neoliberal ambitions to set up a new property state-owned enterprise, spun out of the department and modelled on private property companies, like Growthpoint, for instance, and no doubt being fattened up for the eventual privatisation of the portfolio.
Again, I don't want to be misunderstood. There are things that we can learn as the Department of Public Works from private-sector property entities and so on, but we have different responsibilities. Our buildings are public buildings and need to provide access to all citizens. This Parliament, which is a client of the Department of Public Works, is not the corporate headquarters of some auditing firm or some multinational in Sandton or Century City. Therefore, managing this particular portfolio needs to be done with public intent and purpose in mind. So, we can learn things from private property companies, but we cannot just apply the same lessons. [Interjections.]
Indeed, it needs to be opened to the public. Not all, but many of them; obviously not the Premier of the Western Cape's private residence, which obviously needs to be protected and needs to be a national security point. [Interjections.]
We also need to integrate the management of our public portfolio with turning around and building integrated urban centres, as well as turning around the decay of many of our central business districts. We need to much more fully integrate the maintenance of our buildings with the Expanded Public Works Programme, for instance, and we need to green our buildings and make them retrofitting. In short, the public sector property portfolio should be a trendsetter in all of these important developmental and social objectives, rather than a laggard, which is currently the case.
As a result of this White Paper, but because of conflicting objectives within this rather neoliberal White Paper, Minister, it took nearly 10 years for the Department of Public Works finally in 2006 to devolve the maintenance, property rates, municipal services and leasing budgets to its national so-called user or client departments, and introduce accommodation charges.
At the same time, under the influence of Treasury, it was said that we would need to set up a dedicated property management trading entity within the department. This was said in 2006. A business case was developed in 2006, but it was never implemented, and primarily, I would argue, because of the conflicting problems in the policy itself. It was not just a question of the policies are good, implement them. The policies themselves needed interrogation and transformation in many sectors. [Interjections.]
Added to that was the further problem that arose, which was that in addition to that we were also mandated to pursue, too often, narrow black economic empowerment, BEE, objectives in this process of contractual arrangements. What happened was that these new contractual arrangements were manipulated and gained by corrupt officials within our department, but also by established as well as aspirant property developers. That further muddied the waters. It started out as a policy which was designed to achieve greater transparency and cost-saving - and, by the way, I stress, gained and manipulated also by existing property developers, which are the white guys. It is something you failed to mention when you talked about corruption, hon Dreyer. You had a lot to say about corruption, but the Competition Commission's investigation around the massive multibillion rand collusion in the construction industry is a lesson. [Interjections.]