DEVELOPMENT BANK OF
COMMENTS ON GOVERNMENT
IMMOVABLE ASSETS BILL
Thank you for your invitation to comment on the
abovementioned bill. Below are our written comments. We would be willing to
attend the hearings if you so wish.
General Comments
A.
The
bill is to be welcomed. Service delivery in
B.
Having
said that, and bearing in mind the enormous range of assets (eg land,
buildings, airfields, dams, pipes, treatment works, roads etc), and range of
capabilities of state entities, we would caution that the requirements should
be introduced with care in order to encourage their adoption out of conviction
rather than under compulsion. We acknowledge that this is implied in the
accompanying memorandum on the objects of the bill where Clause 1.4 refers to
lessons learned from the incremental implementation of the CIDB Act. We trust
that this will happen.
C.
In
particular, when the Minister promulgates guidelines (Cl.19.(1)(b)), issues
standards (Cl.19.(1)(c)), and prescribes minimum standards (Cl.19.(2)) we urge
the Minister to begin with simple approaches where appropriate. These can and
should vary according to the type, size and capacity of custodians and users,
and the complexity and value of the assets concerned, and could be modified
over time. We note that making regulations (Cl.20) will be subject to a
consultation process. While not a legal requirement, we hope that other key
items such as guidelines and standards will also be compiled in consultation
with stakeholders and industry players, especially since such guidelines are
given considerable weight in Cl. 10.(b).
D.
We
would point out that a similar process would be desirable to guide
municipalities in the management of their assets, including municipal infrastructure.
It is important that the current bill, and publications authorized by it, do
not create a precedent that is inappropriate for the municipal sphere. Detailed
consultations with Treasury, dplg and DWAF would be desirable in this regard. If
it is intended that a similar approach be used for other state entities (eg
SANRAL, ACSA etc) at some point in the future, then the same point applies –
exercise care and increase consultation to avoid inappropriate precedents.
E.
We
note that the Minister may implement programmes to give effect to this. We
would commend this and suggest a substantial budget for the Department of
Public Works to assist custodians and users, starting with those responsible
for our most critical assets.
Detailed comments
The following comments have been
generated from an understanding of asset management but with somewhat less
understanding of the dynamics between different state entities vis á vis custodian and user.
1.
Cl.
2 – we note that the bill applies to national and provincial departments but
excludes public entities. Presumably this means that provincial roads are in, and
national roads administered by SANRAL (South African National Roads Agency
Limited) are out, unless the Dept of Transport is the custodian and SANRAL the
user. If that is so, then should there be more clarity on this? Or is SANRAL
not seen as a user in terms of the definition in line 45? The same argument
could apply to ACSA (Airports Company of
2.
Cl.
4.(2)(c) and 4.(3)(a) – should there be a requirement for users and custodians
to enter into an agreement, whether it be a Service Level Agreement (for
delivering a service one to another), or a simple delineation of
responsibilities? It seems odd to make the custodian “liable for any action”
with no apparent recourse or delegation of responsibility to the user.
3.
Cl.
5.(1)(f)(iii) – is it wise to put matters of policy (government’s socio-economic
objectives), which might change over time, in legislation? In particular one
can foresee the term “distribution of wealth” being subject to abuse.
4.
The
central features of the bill, Clauses 6 to 13, appear to raise a number of
questions, particularly in terms of who does what, between the custodian and
the user. It is suggested that in most instances it is the user of the asset
who is best situated to understand the maintenance requirements and costs, and
yet the custodian appears to have that responsibility and must take the lead in
determining requirements. Most of the following comments derive from this
point.
5.
Cl.
6.(1)(b) – “a user must prepare or cause to be prepared”. Why is the underlined
clause included in 6.(b) and not in 6.(a)? We suggest it can be in both, or
omitted in both as it can be regarded as implied.
6.
Cl.
7 and Cl. 8 – at first glance some of the sub-clauses appear misplaced. Much of
Cl. 7, apart from (a) and (f) relating to portfolio management, appear to be
better undertaken by the user, while Cl. 8 (b) and (d) relating to acquisition
and disposal, appear to be part of the custodian’s role in portfolio
management. (See also comment on Cl. 13.(2).)
7.
Cl.
11 – “A user must give effect…” draws attention to the user’s need for resources
to carry out the functions in the plan. This reinforces the desirability of an
incremental phasing-in with due regard to the capacity of the wide range of
users.
8.
Cl.
12.(1)(a) – this highlights another apparent mismatch on who does the costing.
It seems that a user is told of his budget allocation which has been determined
on the basis of activities and costs prepared by the custodian in Cl. 7.(e) and
Cl. 13.(d)(v)&(vi).
9.
Cl.
13.(2) – on the same point, it is suggested that in many instances the user of
an asset will have information on its maintenance needs and costs thereof, and
a vested interest in quality maintenance, and so the user may assist the
custodian rather than the other way round.
10.
Cl.
13.(3) – it seems odd that there is nothing in this clause on disposal of
assets about consulting with, or with the concurrence of, the user. How is a
“surplus immovable asset” defined? It appears that the custodian’s decision is
final, as implied in Cl. 14.(2) in which the user “must surrender” the asset
apparently without recourse to any procedure.
11.
Cl.
14.(1) – we suggest the first part should read: “The accounting officer of a
user or custodian who is also a user must, …” (Underlined words added.)
12.
Cl.
14.(1)(e) – we see that both users and custodians (Cl. 13(1)(e) is identical
wording) must establish performance measuring systems. Must they both do it? In
the event of a conflict whose takes precedence?
13.
Cl.
14.(2) – we commented above on the lack of rights of a user being required to
surrender an asset. We ask the question: what if the user has carefully
maintained an asset at his own expense and is then called upon to surrender it;
does he do so without compensation? Should there be a procedure for this?
14.
Cl.
15. – Since the Minister may grant exemptions, is there a process for
requesting them?
15.
Cl.
16 – our general D above applies; the Minister must exercise caution to avoid
precedents for the local sphere of government and state entities which are not
government departments.
16.
Cl.
17.(3)(b) – any authority to carry out sub-delegation should include a
requirement to inform the accounting officer.
17.
Cl.
17.(4) – should the power to revoke a decision by a sub-delegated authority be
constrained by a time period, or an administrative process? Any use of this
clause without due process might induce uncertainties about such delegated
decisions, eg the letting of contracts, with negative effects on service
delivery.
18.
Cl.
18.(1) – whereas Cl. 2 confines this bill to government departments, can the
Minister (etc), in terms of this clause, assign powers to a public entity such
as SANRAL or NWRA? If so, can the NWRA then sub-delegate powers to a Catchment
Management Agency set up by DWAF?
19.
Cl.
19.(1)(a) – “the Minister may … designate an organ of state as a custodian…” is
this a unilateral action? Could this be a means by which the DPW divests itself
of responsibility for many assets? It may be with the best of intentions –
devolving responsibility to those closest to the problem – but it can only be
done with adequate consultation, preparation and the possibility of extra
budgetary provision. We note that DWAF has been in the process of transferring
rural water schemes to municipalities for some time. This has been delayed by
municipalities’ reluctance to accept poorly maintained assets which require
massive ongoing subsidies to operate. In some instances DWAF has now agreed to
finance large amounts of refurbishment before transfer takes place. At the very
least, this sub-clause should include “in consultation with the designated organ
of state.”
20.
Cl.
19.(1)(c)(i) – “minimum requirements in relation to cost and space” may be
useful for buildings but not so for roads, dams and canals. Does this need a
broader more inclusive definition, such as “cost per unit of the relevant
asset”?
21.
Schedule
on page 10 – we can find no reference to this or the role of land in the text
of the bill although it appears to be an important type of asset which may need
specialized attention.
We trust that you find the above comments useful. If you
need further information, please contact
Yours sincerely,
B.M.
Principal Policy Analyst
Development Bank of