Minister of Public Works Budget speech & response by IFP

Minister of Public Works , Mr Thulas Nxesi, gave his Budget Vote Speech on the 06 May 2015.

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Honourable Chairperson
Members of Cabinet and MECs
The Chair and members of the Portfolio Committee
Honourable Members of Parliament

Let me also recognise in the gallery the presence of:

• Chairpersons and CEOs of our Public Entities and Professional Councils;
• The Representatives of the Auditor-General’s Office
• Members of the Audit Committee;
• The Director-General and senior management of the Department of Public Works, as well as HoDs of provincial departments;
• Representatives of SALGA (SA Local Government Association)
• Representatives of labour
• Representatives of women’s organisations (SA Women in Construction and Women with Disabilities)
• Beneficiaries of DPW’s school support, bursary, and Young Professionals training programmes
• Participants from EPWP programmes. I would like to acknowledge our young heroes from the Working on Fire programme who         played a prominent role in combatting the recent Cape Town fires.
• Members of my family, and particularly my wife;
• Distinguished guests, ladies and gentlemen

You are all welcome. I will:

• present policy proposals for the budget vote and commitments for 2015/2016;
• account for what we have done as a Department over the last year; and
• provide a progress report to this House on the turnaround strategy for Public Works, and the five priority areas I announced in my 2014 Budget Vote.

Turnaround Strategy: From stabilisation to efficiency enhancement
Our Seven Year Plan to Rebuild the Department of Public Works, developed in 2012 with the support of National Treasury, envisages 3 overlapping phases:
Phase 1: Stabilisation
Phase 2: Efficiency enhancement, and
Phase 3: Sustainable development

Phase 1 of the Turnaround Strategy: Stabilisation was necessitated by the lack of adequate management and financial controls culminating in adverse audit findings and highly publicised levels of fraud and corruption. To quote an old African saying: “A falling tree makes more noise than a growing forest.” 
 
Three years into the Seven Year Plan, I can report that we have stabilised core business areas: lease management, the Immovable Asset Register and finances - as well as making significant headway in combatting corruption.
In relation to lease management – 1,455 out of 1,576 leases were renewed through the National Treasury special dispensation – with projected annual savings of R33 million.

In relation to the Immovable Asset Register –Public Works has produced a reliable register of state properties under its custodianship. 99.1% of properties were physically verified. This has already resulted in significant improvements in audit outcomes.
Public Works is now able to:

• Determine its property portfolio – comprising 108,657 buildings on 32,509 land parcels;
• Confirm the existence and high level condition assessment of its properties, and
• Confirm the User Departments occupying those properties.

The existence of a reliable Immovable Asset Register, and the establishment of a Real Estate Information Registry Services Division, enhances Public Works’ ability to leverage this portfolio for socio-economic development, black economic empowerment, support for small businesses and job creation - as well as to generate revenue to maintain state assets.
 
Part of the Immovable Asset Register project has been to assign fair values to assets. Applying municipal values to 60% of the assets has increased the disclosed value from R49 million in 2012/13 to R59.5 billion in 2014/15.  The disclosed value of immovable assets will increase significantly as the Register is finalised – thus more appropriately reflecting on the national balance sheet.
The clean audit project – has stabilised the finance and supply chain management environment and addressed negative audit outcomes:
The Main Vote improved from a disclaimer to a qualified audit opinion in 2012/13 and an unqualified audit opinion in 2013/14.

The PMTE improved from a disclaimer in 2012/13 to a qualified audit opinion in 2013/14 with significantly less areas as the basis for qualification. Due to the complexity and sheer volume of transactions, the PMTE remains a concern for the 2014/15 audit. We are, however, encouraged by PMTE’s steady migration from a simple cash basis of accounting to an accrual (GRAP) basis of accounting.

In relation to irregular expenditure, 1.5 million transactions were revisited for the period 2009/10 to 2012/13. The result was that the Department identified R35 billion of irregular expenditure – some of it originating as far back as 2001. All irregular expenditure identified is being systematically investigated for further action.
 
Meanwhile, the Department – working with National Treasury - has reviewed SCM processes and put in place control measures to prevent the recurrence of irregular expenditure.
The President has stressed the need to pay creditors within 30 days of receipt of invoices – as crucial to the financial health of small and emerging businesses. I have to report a mixed picture in this regard.
 
With respect to invoices paid within 30 days, the Main Vote’s performance improved from 86% in 2013/14 to 89.4% in 2014/15.
The PMTE performance has regressed slightly from 93.9% in 2013/14 to 92.3% in 2014/15. This was largely due to the implementation of new billing, accounting and verification systems which only stabilized during the latter part of 2014/15.
Measures to enhance compliance include:

• a central registry
• tracking of invoices
• a call centre, and
• ministerial roadshows to address staff and suppliers.

Furthermore, the Construction Industry Development Board (CIDB) – an entity of DPW – is publishing draft regulations for comment - compelling payment within 30 days throughout the industry.
 

Phase 2 of the Turnaround: Efficiency Enhancement
This is where we seek to improve the business model and processes of the Department – focusing on the five key priority areas that I presented to this House in the 2014 Budget Vote.

Priority One – the creation of 6 million work opportunities through the EPWP - Deputy Minister Jeremy Cronin will provide a full report.

Priority Two - Operationalisation of the PMTE (Property Management Trading Entity) to manage the core business of Public Works – custodianship of state immovable assets and provision of accommodation to government.
The vision for the PMTE is to ring-fence, professionally manage, secure, maintain and optimally utilise this massive state property portfolio to:
build value and bring savings to the state;
to promote job creation and empowerment; and
to improve service to client departments by better projecting demand and client needs.
 
The outputs of the PMTE and its sub-programmes over the last year include the following:
As part of the Accessibility Programme, 21 buildings were made accessible to people with disabilities, with a further 15 buildings in the final stages;
Two properties measuring 475 hectares, earmarked for sustainable human settlements, were approved for release in 2014/2015. Systemic issues in relation to disposal processes have been identified and will be addressed in 2015/16 to expedite the disposal of properties identified for human settlement and land reform.
160 capital projects representing expenditure of R349 million were completed during 2014/15 – representing expenditure of:

• 98% of the PMTE Capital Budget compared to 88% in 2013/14;
• 86% of the Client Capital Budget compared to 70% in 2013/14; and
• 99% of the Planned Maintenance Budget compared to 84% in 2013/14.

PMTE targets for 2015/16 include:

• to make available 100 vacant, unutilized free hold properties for re-development by black developers;
• to make available 600 surplus freehold properties to let out for revenue, utilising the services of black Real Estate Agents;
• In support of Operation Phakisa, the Department has established a special unit to facilitate the development and modernisation of small harbours. 

We will also audit all state coastal reserves falling under the custodianship of Public Works to promote development and job creation.

• Framework documents to operationalize the National Infrastructure Maintenance Strategy will be completed by 31 July 2015.  These tools, once approved, will ensure that public sector institutions improve their maintenance policies and practices in line with a holistic national strategy and standard.
• Since last year, the Inner City Regeneration Programme, which previously focused exclusively on Tshwane, has expanded its mandate to include other urban and rural areas – supporting integrated development and the creation of government precincts in collaboration with provincial and municipal counterparts to facilitate frontline service delivery to the public. Precincts in the planning phase include: Polokwane, Mahikeng, Christiana, Idutywa, Balfour, Mt Fletcher and Kwa Mahlanga. 

One of the eight new government head offices planned for Salvokop (Tshwane) is already under construction. The restoration of the Agrivaal Building – with green-design features - will be complete by August 2015 and will house the Head Office of the DPSA.
Looking forward, PMTE has set the following 5 year targets:

• 75,000 work  opportunities created through construction projects;
• 60% of construction projects allocated to BBBEE contractors;
• 25,000 job opportunities created through maintenance programmes;
• 65% of facilities management contracts allocated to BBBEE businesses.
• In response to the President’s SONA call to save energy, the following five year targets have been set for buildings falling under Public Works:

1,6 billion kilowatt-hours reduction in energy consumption; and
23,8 million kilo-litres reduction in water consumption.
 
To support delivery of construction projects, Public Works is collaborating closely with the Independent Development Trust (IDT). During 2015/16, the IDT, working with the Department, will finalise its business case and mandate – positioning itself as an implementing arm of Public Works for the social facilitation and delivery of social infrastructure.
Priority Three: the operationalisation of the Governance Risk and Compliance Branch
 
In 2012, I stated that the Turnaround Strategy rested on two pillars: improving the way that Public Works did business, and combatting fraud and corruption. Both are concretely addressed by the establishment of the Governance, Risk and Compliance Branch.
In relation to fighting fraud and corruption, achievements include the following:

• The establishment of an Anti-Corruption Unit focusing on investigations and fraud awareness to promote a culture of zero tolerance towards corruption. Investigations now commence within 30 days of receipt of information.
• The backlog of 289 allegations of fraud and corruption were investigated - resulting in 129 disciplinary actions and 18 criminal referrals to SAPS.
• The SIU (Special Investigation Unit)  has investigated 39 separate matters and recommended disciplinary action against 41 officials, of which: 3 resigned, 7 were dismissed (including DDGs and Directors), 7 received final written warnings, and the rest are still in process. 22 criminal referrals have been made to SAPS, and civil action undertaken for recovery of fraudulently obtained funds.
• Summons were issued against landlords and former officials to recover money paid for unoccupied buildings, whilst 8 criminal cases have been opened against service providers and an official.
• A comprehensive Fraud Risk Assessment was conducted to inform the introduction of control measures to prevent fraud and corruption before they occur; and
• The Department is re-launching Operation Bring Back to reclaim state properties that have been misappropriated or unlawfully occupied. Previous efforts relied exclusively on the goodwill of the public claiming amnesty. The current project is proactive: investigating and recovering misappropriated state properties – drawing on unusual land and property transfers identified in the process of compiling the Immovable Asset Register.

The Department has identified more than one thousand properties that have been illegally occupied. A panel of mainly black-owned investigation firms has been established to resolve these matters.
 
Operation Bring Back will utilize the National Anti-Corruption Hotline and launch a strong marketing campaign to encourage the public, and current and former government employees, to report unlawful transactions.

The first National Operation Bring Back Forum will convene next month with a clear message to wrong-doers: “You can run, but you can’t hide.”
The Governance, Risk and Compliance Branch also spearheads the Efficiency Enhancement Phase of the Turnaround - using the tools of strategic planning, Service Delivery Model processes and performance management.

A Service Delivery Model Framework has been developed as the basis for implementing a Service Delivery Improvement Programme. 
During 2015, Public Works focused on improving strategic planning. I invite honourable members to compare the quality of strategic plans and APPs for 2015/16 with those of last year. In this effort, we were supported by officials from DPSA, National Treasury, the Public Service Commission and Planning, Monitoring and Evaluation in the Presidency.

I would like to acknowledge the support and advice that I received from our dearly departed Minister Collins Chabane. We honour his legacy by striving to entrench continuous improvement in the planning, measurement and management of service delivery – a sentiment expressed yesterday by Minister Radebe.

Priority Four: the Policy Review
 
The Department will develop a new Public Works White Paper to review its mandate and role. This will form the basis of a Public Works Act which we intend to table in 2017/18.
A large part of the policy review will address the concurrent mandate of Public Works. On the ground, national and provincial public works are working closely through MinMec – addressing areas of concurrence, interdependency and best practice ranging from state accommodation, the Immovable Asset Register, IDMS training, the implementation of GIAMA, energy efficiency and the roll out of EPWP. We have also formalized the development of Provincial Customised Performance Indicators that help us to determine the performance and delivery mode across the Public Works family.
 
Priority Five: the Transformation of the Built Environment
 
I can report that the Construction Sector Charter Council and the Property Sector Charter Council are aligning their Sector Codes with the revised BBBEE Act 2013 (Act No 46 of 2013) – to promote black enterprise and supplier development and skills acquisition.
 
Working with stakeholders, my Department is developing a property management empowerment policy. I also need to flag developments on the ground. The operationalisation of the PMTE has provided major empowerment opportunities – which are reflected in the construction and property targets I have announced.
                                                             
The entities of Public Works have developed policies and programmes to concretise our mandate to transform the built environment:
 
CIDB (Construction Industry Development Board) seeks to support the emerging contractors as they graduate into sustainable businesses. This work includes the continuous roll-out of the National Contractor Development Programme, and the development of best practice Standards for public sector contracts which specify goals for black enterprise development and skills acquisition.
 
CIDB also has a role in combatting collusion in the sector. Fifteen contractors have been charged for contravention of the Code of Conduct. The point here is that collusion not only cheats the state and the taxpayer, it also shrinks the space available for black empowerment.
The CIDB is also developing standards for an Integrity Management System to eradicate fraud and corrupt practices in the industry.
 
CBE (Council for the Built Environment) – in a situation where only a quarter of registered professionals are black, CBE has made the following strides:
 

• It has implemented a Maths and Science programme to support learners in disadvantaged communities – achieving impressive results particularly in Limpopo (with the top 27 matric learners in Vhembe District achieving 90% and 89% averages in Maths and Physics respectively.)
• CBE has implemented a Workplace Training Model for the built environment professions - to unblock the skills pipeline whereby many black engineering graduates fail to find placements, and even those who do find positions do not receive the appropriate workplace training to lead to professional registration. Currently 53 graduate candidates are participating in a pilot programme. 66 University of Technology students have been placed with employers for workplace experience as part of their diploma qualifications.

 
I should also mention that the DPW itself has active schools, bursary, candidacy, work placement and artisan programmes with some 1,297 participants.
 
Honourable Members will be interested in the expansion of our Water Management Programme. Last year the Department appointed 120 youth in KZN and Mpumalanga in a pilot training programme to operate water services – under supervision. Currently a further 320 unemployed chemical engineering graduates are receiving training and will be appointed to 97 water facilities across the country.
 
Concluding remarks
In my 2012 Budget Vote, I likened the Department of Public Works to a patient in ICU. In 2013, with some improvements, I said that we had now stopped the bleeding. In 2014, I informed honourable members that the patient was fully stabilised. Today, I can inform this House that the patient has been discharged… but is still subject to a strict medicinal and therapeutic regimen.
 
I thank you.

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Department of Public Works Budget Speech by Deputy Minister Jeremy Cronin

The Department of Public Works plays a critical lead role in one of government’s flag-ship programmes – the Expanded Public Works Programme. Now in its third, five-year phase, this is a globally innovative programme that is multi-sectoral and in which all spheres of government are actively participating.

There are four national lead departments - DPW (for the infrastructure sector), the Department of Environmental Affairs (for the environmental and cultural sectors), the Department of Social Development (for the social sector), and the Department of Cooperative Governance (which takes the lead role for the Community Work Programme).

However, it is the Department of Public Works that, over the past 11 years, has had the overall responsibility for monitoring the performance of this wide array of public employment programmes. The DPW has also convened annual EPWP Summits drawing together thousands of EPWP practitioners from different sectors and from all spheres of government to share experiences, to learn lessons and to facilitate and encourage an integrated approach.

We work closely with local NGOs. We also work collaboratively with the International Labour Organisation in order to share experiences of government-led Public Employment Programmes across countries and continents. There is considerable international interest in South Africa’s EPW programme and we regularly host international delegations. 

Last year, cabinet affirmed DPW’s central coordinating role when it established a Public Employment Inter-Ministerial Committee, chaired by the Deputy President, Cyril Ramaphosa, and with DPW coordinating the technical secretariat for this IMC.

The current administration has committed to ensuring 6 million public employment work opportunities by 2019. This target is in line with that set in the National Development Plan.

So where are we now after the completion of Year One of Phase 3?

By the end of March 1,24 million work opportunities had been created – against a target of 1,04 million, in other words, a 119% achievement. In short, we are well on track to meeting the 6 million work opportunity target by 2019.

While the DPW will continue to measure and take seriously work opportunity targets, we are also increasingly placing emphasis on monitoring and evaluating other qualitative and developmental impacts. For instance…

What happens to participants in these programmes?

Last month StatsSA released data from its 2014 Labour Market Dynamics survey. It found that:

“In 2014, seven out of ten of those who participated in the EPWP and other government job creation programmes were employed.”  This was up from 56,9% in 2011. The survey also found that 4 out of every 5 participants who were employed had a formal sector job.

These are statistics independent of our own DPW monitoring and evaluation. To be quite honest, I find them surprising on the up-side. We will be engaging with StatsSA next week to get a better understanding of these very encouraging indicators at a time when pathways into formal employment are exceedingly difficult.

Measuring the outputs of our PEPs

As DPW we are also committed to monitoring and evaluating what the work in these programmes actually produces. Are participants just digging holes and filling them again? DPW has now started to record outputs more systematically, and for the first three quarters of the past financial year we have seen some interesting output indicators:

•      By the end of December in the Infrastructure sector – 33 070 km fencing had been erected; 109 923 km pipelines laid down;  450 km storm water drains constructed;  64 632 kms, roads maintained 

•      In the Environment and culture sector 1 366 ha had been treated for invasive alien vegetation; 92 677 households had been serviced through waste collection; 20 045 trees planted; nearly 4000 square metres of dumping sites cleaned; and 6860 cemeteries cleaned.

•      In the Social sector  – nearly 20,000 Home Based Care practitioners were deployed and trained; 1 542 830 learners were benefiting from the National School Nutrition Programme which employed significant numbers of EPWP participants; and 184 321 learners were supported through the Teacher Assistant EPWP Programme.

Building community cohesion

But what is the developmental impact of these programmes on poor communities? Do they result in greater stability and social cohesion in communities ravaged by unemployment and poverty? This is a critical question to ask and yet it’s not easy to answer. What we do know is that there are some inspiring examples.

In the aftermath of the previous surge of xenophobic violence in 2008, SWOP institute at Wits University and the Centre for the Study of Violence and Reconciliation brought out an important publication, “The smoke that calls”. Based on field-work in seven communities, it remains extremely relevant as we seek collectively to come to grips with the underlying factors behind the recent resurgence of xenophobic violence.

The case-studies expose many common patterns in outbreaks of township violence, finding, for instance, that community protests and xenophobic attacks often overlap. Frustration with a lack of services and with local authorities often morphs into violence directed against foreign nationals.

However, one case-study was an exception. At the height of 2008 xenophobic violence, Bokfontein, a marginalised informal settlement near Brits, became an island of stability, and a refuge for fleeing foreign nationals. Why?

The origins of Bokfontein would have suggested very different outcomes. It had been plagued by chronic violence itself. The first arrivals in Bokfontein were families evicted in 2005 from farms in the Hartebeespoort Dam area. In 2006 a second traumatised group from Melodi was forcefully removed to Bokfontein by the municipality.

They were compelled to live together on a limited piece of land. The only water available was trucked in unreliably by the municipality. The 2005 evictees understandably saw the 2006 arrivals as outsiders competing for pathetically scarce resources. Tensions escalated, and there was soon chronic violence.

According to community members the turning point came when Bokfontein was selected as a pilot site for the Community Work Programme (CWP) in 2008. Seriti, a non-profit organisation, was appointed by government as the facilitating agency.

It’s an NGO inspired by the work of the Brazilian activist and popular educator, Paulo Freire who called for “a pedagogy of the oppressed”, a collective, participatory process in which the learners are not empty vessels to be filled with knowledge, but co-creators of knowledge. And this is exactly what Seriti set out to do in Bokfontein.

It began as a series of workshops, with community members sharing reflections on their individual traumas. This helped deal with anger and a sense of disempowerment. As the workshops progressed topics included delving into different ethnic identities, and learning to sing each other’s songs - some of the community members, for instance, were Shona-speakers from Zimbabwe.

Practical skills were also introduced, from community mapping to dealing with crime, alcoholism and domestic violence. Participants collaborated in envisioning a different and shared future for their community, which included renaming Bokfontein – Tshaba-di-Maketse (literally, The Nations are Amazed).

These workshops then laid the basis for the launch of the Bokfontein CWP site, as part of the wider Expanded Public Works Programme. 

In 2010 when the SWOP/CSVR study was conducted some 800 community members were participating in the Bokfontein CWP. They worked from 8am to 3pm twice a week, on Wednesdays and Saturdays. This left other days to do other things, including looking for formal work outside of Bokfontein.

The community itself decided which public work to undertake and different teams worked on road maintenance, communal gardening, home-based care, and after-school care. With government funding but without waiting for government delivery, the community dug its own bore-hole and installed water-pipes to homes.

They also surfaced the three kilometre access road to the settlement with a donation of gravel from the tailings of a local mine. At the time participants were paid R50 a day, a small but regular and welcome contribution to household incomes. Useful resources and services were collectively provided, community cohesion and self-esteem was built. Leadership qualities also emerged.

However, we all know how exemplary pilot projects often fail to sustain themselves. A facilitating NGO moves on. Local leaders quarrel. Early promises lose momentum. So it was with a degree of trepidation that I spoke this week with some of those involved back in 2008 and 2010.

King-George Mohlala was one of the community leaders who emerged out of the Seriti-led Bokfontein programme. He is still there. “For me CWP was life-changing.” “Did the recent xenophobic violence cause any ripples in Bokfontein?” I wonder. “No we just heard about it on TV.” “Is the CWP still functioning?” “Oh yes”, King-George tells me, “but now we’ve become even more self-sufficient - our own Bokfontein Development Forum is the implementing agency.” In fact, the Bokfontein project, has now inspired neighbouring communities in Madibeng Municipality and further afield. Back in 2010 relations with the municipality were strained, that too has changed.

“With our own hands we’ve provided government with a lesson in development”, another informant told me.

Of course, in real life not everything works out smoothly. There will be challenges, lessons to be learnt, and mistakes corrected as we continue to scale up our public employment programmes. There is one thing, however, of which we in DPW are convinced – over 11 years of EPW programmes, as South Africans we have shown there are grounds to believe, without undue modesty or arrogance, that Tshaba-di-Maketse (The Nations have reason to be Amazed).

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Inkatha Freedom Party (IFP) response