GOVERNMENT IMMOVABLE ASSET MANAGEMENT BILL [B1-2006]

National Assembly

This is a report of the Portfolio Committee on Public Works on the Government Immovable Asset Management Bill [B1-2006].

Background

On 6 February 2006 the National Assembly referred the Government Immovable Asset Management Bill [B 1-2006] to the Portfolio Committee on Public Works. Having been briefed by the Department of Public Works on 30 August 2006, the Committee proposed that the National Assembly reject the Bill as it excluded a clause on local government and called on the Department to research and report thereof during October 2007. The Committee reconsidered its initial position and decided to recall the Bill during October 2007. It now reports as follows:

· The Bill was reinstated on 8 November 2006 and rescheduled in the Committee programme

· The Committee was briefed by the Department on 28 February 2007

· The Committee re-advertised on 23 February 2007 for public comments and submissions on the Bill

· Submissions on the Bill were received and public hearings were held on 6 and 7 March 2007

· The Committee considered the Bill on 13 and 20 March 2007 and adopted it with amendments

Introduction

The Bill aims to:

· Provide for a uniform framework for the management of an immovable asset that is held or used by a national or provincial department

· Ensure the coordination of the use of an immovable asset with the service delivery objectives of a national or provincial department

· Provide for issuing of guidelines and minimum standards in respect of immovable assets management by a national or provincial department, and

· Provide for matters incidental thereto

Submissions Received

All the submissions received and presentations made to the Committee were in support of the Bill in principle

1. Doyle/Rivett-Carnac Partnership

Mr M Doyle and Professor K Cattell made the following comments and recommendations on the Bill:

· That key public assets should be developed with a view to the State retaining ownership on a partnership or joint venture basis with the private sector. Thus the State could reap maximum benefit from cash flows by entering into long leases and retains the benefit of reversions and not merely sell its assets for one-off capital profit.

· That the term capital management be used instead of asset management.

· That there need to be medium and long term maintenance plans.

· That the State develops its own experts and avoids outsourcing.

2. BuiltCare Immovable Asset and Maintenance Management Consultation

Dr J McDuling made the following comments and recommendations on the Bill:

· That the International Council for Research and Innovation in Building and Construction (CIB) define life-cycle as successive periods of a building component, starting with the design, the construction, the use, the maintenance, the demolition and reuse.

· That following the formulation of Agenda 21 for global sustainable development at the UN Conference on Environment and Development held in Brazil in 1992, the international focus on research in built environment shifted to durability and sustainability issues, particularly service life prediction (SLP).

· Constructing the two, i.e. CIB and Agenda 21, he recommended that the current definition of life-cycle be replaced with CIB definitions to bring the GIAM Bill in line with international standards and best practice.

· That while 'maintenance' can be defined as all interventions intended to retain an asset in a good condition or state in which it can perform its required function. The emphasis is on prevention of degradation or deterioration in order to retain or maintain the asset in a desirable condition. ‘Preservation' can be defined as all actions intended to retain an asset in, or restore it to, a state in which it can perform its required function and comprises of the following actions, planned and unplanned maintenance, repairs and rehabilitation and replacements.

· Based on the above he recommended that the term 'maintenance be replaced with the term 'preservation.

· That very little, if any, planned preventative maintenance is done.

· On condition assessment and performance evaluation concern was regarding a proposed five (5) years maintenance cycle and proposed three (3) years, quoting from and making reference to international best practices, such as Queensland, in Austria and also the PFMA, MTEF and JIPSA.

3. Keith Ross (CA)

Mr Keith Ross made the following comments and recommendations on the Bill:

· Whilst appreciating the introduction of the Bill, he raised concerned regarding the Department's capacity and challenges to implement the objectives of the Bill.

· Based on annual reports of various departments, he noted that in each case the Statement of Financial Position' does not reflect any 'Fixed Assets' which would include immovable assets.

· That the accounting systems are flawed and need to be drastic improved.

· An exercise be undertaken that ensure that all state assets appear in the Asset Register, inclusive of those assets that were written off previously.

4. Lamacs Land Asset Management Solution

Mr A Croote made the following comments and recommendations on the Bill:

· That the term immovable property be expanded.

· That the Bill does not address the critical and fundamental areas of appropriate immovable asset administration.

· That government owned property portfolios lies in the fact that very little or no real administration takes place and GIAM Bill should enforce a single standard of administration much the same way that PFMA and MFMA enforce a single standard of accounting, i.e. Generally Recognised Accounting Principle (GRAP).

· Such an administration standard is mission critical to creating the accurate and integrated data bases required for the extensive information required for appropriate management of the portfolios.

· Was concerned about the Department's capacity to delivery the objective of the Bill.

5. Development Bank of Southern Africa

Mr B Jackson made the following comments and recommendations on the Bill:

· That a similar process is desirable to guide municipalities in the management of their assets, including municipality infrastructure.

· That the Bill, when it becomes an Act, should be implemented in phases.

· In the formulation of the guidelines, the Minister should consult widely and inclusively.

· That the Bill should also be applied to public entities.

· Most of the technical comments by DBSA have been noted and taken into consideration.

6. Construction Education and Training Authority

Mr T Thejane made the following comments and recommendations on the Bill:

· Noted that the Bill covers the major important aspect in relation to responsible use and maintenance of state assets which reflect very good sustainability principle. Thus all state assets should be accounted for and all asset registers be completed.

· That the Bill should not be limited to national and provincial departments.

7. Council for Built Environment

A written submission was received from the Council for Built Environment. The following comments and recommendations on the Bill were raised:

· Concerns about the appropriate use of the term 'immovable assets' in the Bill.

· That the term 'performance' be defined as it is used frequent in the Bill.

· That the Bill excludes the local sphere of government in its application notwithstanding the fact that this sphere is charged with service delivery in the first instance.

· That both the user management plan and custodian management plan be reviewed to ensure correlation between the plans.

8. Gauteng Department of Public Transport. Road and Works

A written submission was received from the Gauteng Department of Public Transport, Road and Works. The following comments and recommendations on the Bill were raised:

· Concerns about the certification of vested assets, the process and conflict of intention of the Bill with the provincial interests.

· That guidelines be issued on the certification process to give powers to provincial government to issue a blanket certification in respect of asset registers that qualified the verification process.

· That the Bill, when it becomes an Act, should be implemented in transition and phases to circumvent any conflict regarding vesting of assets as provided for in the Constitution.

· Comprehensive and technical comments regarding, amongst others, the definition of 'user' and 'immovable asset'.

9. Samuels Consulting

A written submission was received from Samuels Consulting. The following comment on the Bill was raised:

· Concern regarding the definition of the term 'immovable asset'

10. COSATU

A written submission was received from Congress of South African Trade Unions (COSATU). The two concerns by COSATU were recorded;

1. The lack of consultation by the Department on the proposed Bill.

2. The limitation of the Bill to National and Provincial Governance, and the exclusion of Local Government from its provisions. This, despite the fact that extensive assets are held by local government

Amendments

The following amendments were considered and effected in the original Bill:

1. Definitions

The following definitions were amended and added;

· "Acquire" and "Custodianship" in sub(a) & (b) and Sec 4(2)

· ''Public entity" will apply as defined in Sec 1 of the PFMA .

· "Strategic Plan"

· "this act"

· ''user''

2. Application of Act

Page 3 Section 2

3. Relationship between and responsibility of Custodian and User

Page 4 Section 4

4. Principles of Immovable Asset Management

Page 5 Section 2 and 3

5. Immovable Asset Management Plan

Page 5 Section 6

6. Minimum Contents of User Immovable Asset Management Plan

Page 5 Section 8

7. Submission of User Immovable Asset Management Plan

Page 6 Section 9

8. Revision and Amendment of Immovable Asset Management Plan

Page 6 Section 12

9. Functions of Accounting Officer of Custodian

Page 6 Section 13

10. Function of Accounting Officer of User

Page 7 Section 14

11. Exemptions

Page 7 Section 15

12. Assignment

Page 7 Section 18

13. Powers and Duties of Minister

Page 8 Section 19

Recommendations

Section 2 of the Bill

· The Committee fully supports Clause 2, as it sets out a process that seeks to extend the application of the provisions of the Bill to local sphere of government. The Committee recommends that this process should be implemented within 12 months after the Bill has been promulgated.

On Capacity

· Noting that the Department has already put in place measures to address the capacity challenges through its recruitment strategy, the Committee, however, recommends that a retention strategy also be developed.

On Disposals

Noting that the Bill makes reference to:

− the disposal of state assets

− the State Land Disposal Act of 1961 as amended (Act 48 of 1961), and

− the provincial land administration Acts,

And further noting that they are not informed by an established common policy, the Committee recommends that a uniform immovable assets disposal policy be developed within six months after this Bill comes into operation.

Moratorium on Disposal

As recommended by the Committee and adopted by the National Assembly (see ATC dated 28 March 2006) the Committee strongly reiterates that a moratorium on the disposal of state owned assets is put in place.

For the purposes of emphasis on the moratorium and compelled by the requirements of the:

PFMA and also

To have the asset register finalised,

the Committee calls upon the Department to comply and expedite the implementation thereof.

Conclusion

The Committee has noted and considered all submissions received and expresses its appreciation to all the presenters as their contributions would assist in enhancing the objectives of the Bill, when it becomes an Act.

Report to be considered