ATC210525: Report of the Select Committee on Transport, Public Service and Administration, Public Works And Infrastructure on The 2021/2022 Budget Vote 13: Public Works and Infrastructure, Dated 25 May 2021

NCOP Transport, Public Service and Administration, Public Works and Infrastructure

REPORT OF THE SElect Committeeon TRANSPORT, PUBLIC SERVICE AND ADMINISTRATION, Public Works and Infrastructureon the 2021/2022 budget vote 13: PUBLIC WORKS AND INFRASTRUCTURE, dated 25 MAY 2021

 

The Select Committee on Transport, Public Service and Administration, Public Works and Infrastructure (the select committee),having met on 12 May 2021, and having deliberated on the Annual Performance Plans (APPs) of the Department of Public Works and Infrastructure (DPWI), the Property Management Trading Entity (PMTE), and the Public Works and Infrastructure entities reports as follows:

 

1. Introduction

ThePublic Finance Management Act (1999) describes the Minister of Public Works and Infrastructure as the executive authority of the department. In this role, the Minister has the responsibility to provide leadership overhow the DPWI and the public works and infrastructure entities[1], use the allocated budgetary and human resources to translate policy ideals into implementable programmes.

                                                                

1.1. The mandate of the DPWI

The Constitution of the Republic of South Africa, 1996, and the Government Immovable Asset Management Act (No. 19 of 2007) (hereafter, GIAMA) outlines the mandate of the DPWI and describes it as the custodian and portfolio manager of government’s immovable assets.

 

In the 2015/16 financial year thepolicy leader initiated a shift in the focus of the department so that it could remain the policy making and regulatingarms, while the practical implementation of the department’s mandate shifted to the PMTE. This shift allowed the department to renew its focus on:

• policy formulation;
• setting uniform standards for the coordination, collection, and validation of employment creation at national, provincial and municipal government and other public bodies;
• setting uniform standards for the management, leasing, contracting,and maintenance of immovable assets;
• maintaining intergovernmental relationships with user/client departments;
• managing the coordination, standardisation, and regulation relating to the provision of accommodation, and public employment programmes, and expert professional built environment services to user/client departments; and
• the department and PMTE has an oversight role over the standards and regulation that the Minister of Public Works and Infrastructure makes as a leader of the functions that Schedule 4 of the Constitution confers to national, provincial departments of public works and infrastructure, and municipalities that also perform public works and infrastructure implementation roles.

 

Thebroad policy of government, and planning documents of the department and its entities are instruments that aidsthe monitoring of how policy ideals are translated into implementable programmes. The APPsshow the department’s stated policy objectives, programmes and sub-programmes, human and financial resources, and budget that will be applied to implement the broad policies of government. These APPs as planningdocuments specifically provide the performance targets, performance indicators, and timeframes within which the aims will be achieved.

In this report, before dealing with the APP and budgetary resource analysis, the select committee first assesses whether thepolicy and programmatic objectives are aligned with the broad policy of government, the transformative trajectory of the NDP, Economic Recovery and Reconstruction Plan (ERRP), Medium Term Strategic Framework (MTSF) 2019 to 2024, and the policy imperatives set out by the President in the State of the Nation Address (SoNA).

 

2. Alignment of the DPWI Strategic Outcomes with the policy priorities of the NDP,the ERRPand the SONA

The President listed seven priorities aligned to the NDP namely:

1. Economic transformation and jobcreation.
2. Education, skills andhealth.
3. Consolidating the social wage through reliable and quality basicservices.
4. Spatial integration, human settlements and localgovernment.
5. Social cohesion and safecommunities.
6. A capable, ethical and developmental state.
7. A better Africa andWorld.

In line with the broad policy objectives, the2021SONA[2]emphasised public works and infrastructure responsibilities of jobcreation,theimplementationoflarge-scaleinfrastructure projects and maintenance. Apart from these, the departmenthad to ensure that it used the budgetary and human resources to implement thefollowing:

1. DefeatingtheCoronaViruspandemic.
2. Acceleratingeconomicrecovery.
3. Implementingeconomicreformstocreatesustainablejobsanddriveinclusivegrowth.
4. FightingcorruptionandstrengtheningtheState.
5. Overcomingpoverty andhunger,joblessnessandinequality.
6. RebuildingtechnicalskillswithinGovernmenttoprepareandmanagelarge-scaleinfrastructureprojects.
7. OverseeingthemanagementofthefullyoperationalisedR100billionInfrastructureFundbytheDevelopmentBank ofSouthern Africa(DBSA)[3].
8. Revivingtheconstructionindustryandcreatingjobsthroughtheinfrastructureprojects.

 

3. Analytic comments - the DPWI, PMTE APPs and its links with enablers for priority policyinterventions

The ERRP provides a list of key enablers (in line with the NDP and the MTSF) that enables the select committee to check on how the DPWI, PMTE and public works entities are faring in its APPs and outputs to put these in place.

The programmes of the DPWI, PMTE and public works entities, as infrastructure developers, property managers, accommodators, and maintainers of government assets, play a key role in the economic recovery and reconstruction of the country. The DPWI, PMTE and public works and infrastructure entities must in its APPs and budgetary allocation for this financial year show that its programmes are going to implement these as enablers to ensure recovery and reconstruction. Of course, the recovery and reconstruction described in the ERRP is aligned with the NDP, Vision 2030 and the SONA, and whose objectives will be implemented in the 2021/22 financial year.

The APP therefore must be strongly aligned with the South African ERRP. It is reasonable to expect the followinginterventions to feature in its programmes:

• Aggressiveinfrastructure investment.
• Employmentorientatedstrategiclocalization,reindustrializationandexportpromotion.
• Gender equalityandeconomicinclusionofwomenandyouth.
• Greeneconomyinterventions – across the portfolio, but especially through the work of the Agrément South Africa; and
• Masspublicemploymentinterventions – through the coordination of EPWP projects through Programme 3 of the DPWI.

 

DPWI and PMTE misalignments with ERRP enablers

After each enabler, we make analytic comments[4] on the misalignments that require attention:

• Resourcemobilisation:

• in spite of claiming the opposite, the department consistently underspends the allocation to compensation of employees. The analysis in the budgetary analysis section will show that there has not been clear evidence of the full mobilization of resources to programmes and sub-programmes.
• There is no visionary HR plan to ensure that the DPWI and especially PMTE is an institution of choice for the best strategists, technical built environment professionals, economists; property managers; chartered accountants; property lawyers andproperty valuers. The lack of these specialist skills, leaves the government’s property trading entity at a significant disadvantage, particularly when signing lease agreementswithlandlordsinthe privatesector.
• Symbolic statements and reasonable sounding explanations are often given for reasons why experienced personnel are not retained rather than concrete proof that every one of its five programmes are well resourced in terms of capacitated staff, their tools of trade, information and communication technology (the long outstanding Enterprise Resource Plan (ERP)) the latter is dealt with in more detail in the rest of the report.

• Regulatory changes, a supportive policy environment and enabling conditions for easeofdoingbusiness:

• The department has the policy regime in place for many years (White Papers 1997 and 1999) but failed in translating this into an enforceable legal mandate.
• This failure of putting its own enabling conditions in place, makes client departments distrust it.
• In spite of it being the government’s legally mandated property manager, and regulator of the construction and professional built environment, the DPWI and PMTE does not have the necessary cooperation of the private property sector and professional built environment sector - much work is required to turn this situation around.
• The work of the CIDB with contractors (electronic registration, and some changes to the contractors register) has in some ways assisted, but challenges related to transforming the industry remain an element that slows down economic recovery.
• The regulatory effect of the CBE on the built environment professional councils (BEPCs) is marginal; many councils operate with more gravitas than the CBE, and the latter does not have much influence over these professions.
• There has been little progress in using small harbours to unlock the business potential in rural areas where they are situated (in part because experienced, visionary managers had contracts lapsed and the project to involve and make profitable gains in cooperation with businesses is largely stagnant).
• Unlocking the value of the immovable asset portfolio to show a profit in the PMTE remains outstanding – the APP shows no plan to unlock the value and use it to trade.
• The PMTE is in dire need of a turnaround to a fully-fledged government property management agency as it is notfunction fully as a trading entity.

 

• Buildinga capablestate:

• In the PMTE this matter is serious – the entity has not been able to operate as a going concern.
• Over the last three years of this administration and the five years of the previous administration, there has been  no improvement in  addressing the inability to collect debt and lease out government buildings at a profitable rate.

• Skillsdevelopment:

• It has also not shown the strategic vision and ability to, with the CBE, design programmes and use its projects to draw young qualified built environment graduates into large construction projects through which they can gain professional registration.
• Similarly, it has not shown the strategic vision and ability to, with the CIDB, design programmes and use its projects to draw young people from technical high schools, Further Education and Training (FET) institutions, and technical universities, into large construction projects through which they can gain construction experience and registration.
• There has been no evidence in the APPs that the department and its entities had resourced plans in place to use its infrastructure muscle and develop a cross departmental plan to draw young people, women, and people living with physical challenges into a well-structured construction-focused small business development pipeline.

 

4. The budget allocation for 2021/2022[5]

Programme	Budget				NominalRandchange	Real Randchange	Nominal %change	Real%change
Rmillion	2020/21	2021/22	2022/23	2023/24	2020/21-2021/22		2020/21-2021/22 Per cent
1.Administration	476,4	511,2	515,7	525,4	34,8	14,2	7,30	2,98
2.Intergovernmental Coordination	58,3	63,6	64,2	65,4	5,3	2,7	9,09	4,69
3.Expanded PublicWorksProgramme(EPWP)	2468,8	2969,3	3041,3	3061,1	500,5	380,8	20,27	15,43
4.PropertyandConstructionIndustryPolicy	4656,7	4704,6	4825,5	4844,4	47,9	-141,7	1,03	-3,04
5.PrestigePolicy	64,1	94,5	99,5	82,7	30,4	26,6	47,43	41,48
TOTAL	7724,3	8343,2	8546,2	8579,0	618,9	282,6	8,01	3,66

Source:National Treasury(2021)andowncalculations

Thedepartmentreceivesa votedallocation ofR8.34 billionfor 2021/22with which toaccomplish the priorities listed above. This represents an increase of 8.0 per cent in nominalterms,and3.7percentinrealterms(calculatingtheimpactofinflation)fromthe2020/21adjustedappropriationofR7.72billion.Thedepartment’sbudgetrepresentsapproximately0.1per centofthenationalappropriationbyvote,excludingdirectcharges.

Intermsofeconomicclassification,thedepartmentalbudgetincludesTransfersandSubsidies totalling 87.1 per cent of the budget, with a total monetary value of R7.27 billion(compared to R6.79 billion in the adjustment period). This constitutes a 7.0 per cent nominalincrease, and a decline of 2.7 per cent in real terms since the growth in the allocation isbelowthe projectedaverage inflationrateof4.2per centfor2021/22.

R1.59 billion of the Transfers and Subsidies is in the form of conditional grants to provincesand Municipalities, while a total of R4.52 billion is allocated to Departmental Agencies andAccounts. For 2021/22, Current Payments amount to 11.9 per cent (i.e. R1.05 billion) andCapitalpaymentsto0.2percentofthe budget(i.e.R24.5million).

Compensation of Employees increases by R13.0 million (from R558.7 million in the 2020/21adjustedperiod)to R571.7millionin 2021/22

GoodsandServicesincreasesbyR114.2million(fromR366.2millioninthe2020/21adjusted period) to R480.4 million, of which the following line items are subcategorised in the table below:

Goods and Services

Programme	Budget		NominalIncrease /Decrease in 2021/22	RealIncrease /Decrease in 2021/22	NominalPercentchangein 2021/22	Real Percentchange in2021/22
Rmillion	2020/21	2021/22
1.AdministrativeFees	52,5	53,6	1,1	-1,1	2,10	-2,02
2.Computer Services	36,9	39,9	3,0	1,4	8,13	3,77
3.Consultants:BusinessandAdvisoryService	29,1	38,4	9,3	7,8	31,96	26,64
4.AgencyandSupport/OutsourceServices	54,1	116,8	62,7	58,0	115,90	107,19
5.OperatingLeases	35,9	40,3	4,4	2,8	12,26	7,73
6.TravelandSubsistence	32,4	47,9	15,5	13,6	47,84	41,88
7.InterestandRentonLand	0,0	0,0	0,0	0,0	Na	na

 

Revenue generated

The department generates revenue through the PMTE, by letting properties and officialquarters, and the sale of land and buildings. It is projected, that the department will collectrevenue to the total value of R2.22 million for 2021/22[6]. This is an exact amount of R2.22million as reported in 2020/21. The Department sub-categorises the sale of Goods andServices it produces according to Sales generated through market establishments and Other Sales.

R280000isexpectedtobegeneratedthroughtheSaleofGoodsandServices producedbythe department,ofwhich R120000Marketestablishment(coveredandopenrentalparking)

• R160000Other Sales:Tender documents.

Thedepartmentalsogeneratesrevenuethroughthefollowing:

• R40000 Sales:Waste.
• R600000Interest,dividends andrentonland.
• R600000Transactionsinfinancialassetsandliabilities[7].

 

4.1. Budgetary allocations per programme

Programme 1: Administration

 

Programme 1 provides strategic leadership, management and support services to the Department.

This programme plays an important role in giving effect to first priority of the National Development Plan (NDP) and Vision 30; that is, to build a capable, ethical and developmental state. This priority is also expressed in the Medium Term Strategic Framework (MTSF) for the five-year term 2019-2024, as a crucial mode that is required to achieve Vision 2030.

The department translated priority one of the NDP and Vision 2030 into a predetermined outcome that states the policy intent to reorganise the DPWI into a resilient, ethical and capable department.The department started this process during the fourth parliament that continued in the previous five-year term, as part of a Turnaround Programme in the 2011/2012 financial year. During this first phase of the programme, the department identified the need to remain consistently compliant with financial legislation and National Treasury regulations so that it could improve its operations and audit outcomes. Even more important, it wanted to eradicate corruption and malpractice in its ranks. Within Programme 1, it established a Governance, Risk and Compliance unit that continues to assist with investigations with the Special Investigations Unit (SIU) into alleged malpractice and corruption.

The department is in the initial stages of including various functions that come with its new infrastructure mandate.  Accordingly, some funds that were allocated as above to the various sub-programmes of Programme 1, will be used to achieve the aim to organise it into a “streamlined andoutcomes-based”[8] department that is “focused on implementation”[9]. The Strategic Plan of the Department therefore states that it wants to be agile, ethical, compliant and capable, “where everyone wants to work, with improved efficiencies achieved through seamless automated processes and a robust support infrastructure to enable effective servicedelivery.”[10]

Sub-programmes:

The Administration programme receives a total allocation of R511.2million that is allocated to sub-programmes as follows:

• Ministry receives R 39.7 million;
• Management receives R 109.1 million;
• Corporate Services receives R 257.1 million;
• Finance and Supply Chain Management (SCM) receives R 54.7 million; and
• Office Accommodation receives R 50.7 million.

NOTE: SCM, Corporate Services, Management, and Office accommodation are shared services that funds the functions of the DPWI and the Property Management and Trading Entity (PMTE).

A total of R14.8 million is allocated towards Capital expenditure. This constitutes an increase of R8.7 million (or 142.6 per cent in nominal terms and 132.8 per cent in real terms), from the R6.1 million of the previous year. The above-allocation is for Machinery and Equipment.

 

As noted above, a large portion of the Administration budget is allocated towards Compensation of Employees and Goods and Services.

Goodsand Services:Programme1

Programme	Budget		NominalIncrease /Decreasein 2021/22	RealIncrease /Decreasein 2021/22	NominalPercentchangein 2021/22	Real Percentchangein2021/22
Rmillion	2020/21	2021/22
1.ComputerServices	36,9	39,9	3,0	1,4	8,13	3,77
2. Consultants: BusinessandAdvisory Service	11,7	14,2	2,5	1,9	21,37	16,48
3.LegalServices	16,5	17,9	1,4	0,7	8,48	4,11
4.OperatingLeases	31,9	36,3	4,4	2,9	13,79	9,21
5.Property Payments	21,6	21,3	-0,3	-1,2	-1,39	-5,36
6.TravelandSubsistence	11,7	15,0	3,3	2,7	28,21	23,04
7.InterestandResidualonLand	0,0	0,0	0,0	0,0	na	na

Source:National Treasury(2021)andowncalculations

A total of R14.8 million is allocated towards Capital expenditure. This constitutes an increase of R8.7 million (or 142.6 per cent in nominal terms and 132.8 per cent in real terms), from the R6.1 million of the previous year. The above-allocation is for Machinery and Equipment.

As noted above, a large portion of the Administration budget is allocated towards Compensation of Employees and Goods and Services. The Department indicates that the key role is to align people to processes and systems to drive organisational performance.

Asnotedabove,alargeportionoftheAdministrationbudgetisallocatedtowardsCompensation of Employees and Goods and Services. The department indicates that thekeyroleis toalignpeopletoprocessesandsystemstodriveorganisationalperformance.

 

 

 

Programme 2: Intergovernmental Coordination

 

DPW is a coordinating department that must manage sound relations and strategic partnership with all client/user departments if it is to reach policy goals set out in the SoNA and the NDP. Programme 2 seeks to promote sound intergovernmental relations and strategic partnerships. It coordinates with provinces and municipalities on Immovable Asset Registers; construction and property management; the implementation of the Government Immovable Asset Management Act (No. 19 of 2007); and the reporting on performance information within the Public Works Sector.

The budget allocation is R63.6 million, which is an increase of R5.3 million. This is a nominal increase of 9.1 per cent (and 4.7 per cent in real terms) from the R58.3 millionallocatedin the2020/21financialyear.

Sub-programmes

The allocation will fund these sub-programmes:

• Monitoring, Evaluation and Reporting receives an allocation of R6.2 million. This is an increase of R3.4 million from the R27.5 million received in 2020/21, which constitutes a nominal increase of 12.4 per cent (and 7.8 per cent in real terms) from the previous year.
• Intergovernmental Relations and Coordination receives an allocation of R26.6 million, an increase of the R3.8 million from the R22.8 million received in 2020/21, whichconstitutes a nominal increase of 16.7 per cent (and 12 per cent in real terms) from theprevious year.
• Professional Services is allocated R30.9 million, an increase of R3.4 millionfrom the R27.5 million received in 2020/21, which constitutes a nominal increase of 12.4per cent (and7.8percentinreal terms)fromthepreviousyear.

 

 

 

In terms of economic classification, R55.6 million is allocated to Current payments. Thisconstitutes an increase of R3.2 million or 6.1 per cent in nominal terms (1.8 per cent in realterms)fromtheR52.4million ofthepreviousyear.Ofthisamount:

• Compensationofemployeesconsists of R40.2million(anincreaseofR1.8million).
• GoodsandServicesisallocatedR15.4million(anincreaseofR1.4millionfromR14.0million in 2020/21).

 

In terms of assisting to build a capable State and placing the economy on the path torecovery,theProfessionalServicesBranch(PSB)contributestothedevelopment of competent, skilled and motivated Built Environment professionals throughsupportedlearninginterventions andfocusedexperientiallearningprocesses.

The Professional Services Branch (PSB) of Programme 2 is aligned with the policy objectives of the NDP to “build a capable State” and “placing the economy on the path to recovery”. Note that it states its functions as oversight, coordination, and providing guidance and advice on successful capacity building programmes/initiatives towards contribution of transformation objectives in the built environment. The DPWI states its intention that the PSB will coordinate and manage the supply of built environment skills to support the State infrastructure delivery.

 

Programme 3: Expanded Public Works Programme (EPWP):

The EPWP gives effect to the policy goals to create work opportunities for marginal people. It works on the coordination of the implementation of the Expanded Public Works Programme (EPWP) in public bodies, non-profit organisations, the non-state sector, across national, provincial and local government levels to create work opportunities; it also works on the provision of training for unskilled, marginalised and unemployed people in South Africa.

 

 

Theallocations arereportedunderthefollowingfiveEPWPsub-programmes:

• EPWP: Monitoring and Evaluation receive R62.5 million. In real terms this sub- programme allocation increases by 29.6 per cent from the previous year.
• EPWP: Infrastructure receives R1.29 billion. In real terms, this sub-programme
• allocation decreases by 2.2 per cent from the previous year.
• EPWP: Operations receives R1.52 billion. In real terms, this sub-programme allocation increases by 36.2 per cent from the previous year.
• EPWP: Partnership Support receives R86.3 million. This sub-programme allocation increases by 11.9 per cent in nominal terms and 7.4 per cent in real terms in the from the previous financial year.
• EPWP: Public Employment Coordinating Committee receives R8.0 million. In real terms, this sub-programme allocation increases by 21.9 per cent from the previous year.

In terms of economic classification, Programme 3’s budget includes Current Payments to the value of R351.8 million, of which R183.4 million is allocated to Compensation of Employees. Compensation of Employees increases with R300 000 from the R183.1 million of the previous year.

Expenditure on Goods and Services amounts to R168.5 million and increase of R45.1 million (which translates into a real increase of 31.4 per cent from the previous year).

The bulk of the expenditure under Programme 3 constitute Transfers and Subsidies amounting to R2.62 billion, (from the R2.16 billion in 2020/21) representing a nominal increase of R455.1 million or 21.1 per cent and (16.2 per cent in real terms). Of this amount, R1.59 billion is assigned to Provinces and Municipalities and is allocated as follows:

• R1 billion is allocated to Non-profit institutions.
• R758.7 million towards the Integrated Grant for Municipalities.
• R422.5 million towards the Integrated Grant for Provinces.
• R414.4 million towards the Social Sector Incentive Grant for Provinces.

 

Programme 4: Property and Construction Industry Policy and Research[11]

 

Programme 4 promotes the growth and transformation of the construction and property industries, as well as a standardised approach and best practice in construction and immovable asset management in the public sector.

The programme transfers a large portion of the R4.65 billion across eight sub-programmes[12]. Of this total allocation, the Property Management Trading Entity (PMTE) receives the bulk totalling R4.36 billion. This budget allocation is dealt with in detail with a focus on the PMTE as the implementation agency of the DPWI later in this report. The rest of its funding are transferred to public works entities that report to the Minister.

Programme 4 has the specific task to research and develop[13] policies and legislative prescripts for the construction and property sectors. This is strongly tied to the implementation work that the PMTE performs to concretise the policies that are stated in the NDP, MTSF, SONA, and the five-year Strategic Plan 2020-2025.

While a comparably small amount of the total budget of Programme 4 is allocated to this policy development and coordination role, it plays a core function in strengthening the mandate of the department and the transformation of respectively the professional built environment, and the construction industry.

The budget allocation for this programme nominally increases from an allocation of R4.66 billion in 2020/21 to R4.70 billion in 2021/22, which proportionally represents 56.4 per cent of the overall departmental budget. This allocation constitutes an increase of 1 per cent in nominal termsanda decline of3 percentinrealterms.

The programme is organized into 9 sub-programmes, including the Property Management TradingEntity (PMTE), which receives the bulk of the allocation, with R4.35 billion for 2021/22 fromtheR4.24billion ofthe previousyear.

The PMTE was established in April 2006, as part of a longer-term reform programme toprovideimprovedpropertymanagementservicestoClientDepartments.Withitsestablishmentallaccommodation-relatedcostsweredevolvedtoClientDepartments. In this regard, it has been issuing invoices and collecting user charges fromClients on a quarterly basis, based on amounts devolved to them. In March 2015, theDepartment operationalised the PMTE, which resulted in it being shifted (along with itsfunctions),toProgramme 4.

A large portion of the budget for 2021/22 is allocated to Transfers and Subsidies, whichamount to R4.63 billion and accounts for 98.5 per cent of the programme budget. Thisconstitutes an increase of R22.5 million (but a decrease of 3.6 per cent in real terms) fromthetotal allocationofR4.61billion in 2020/21.

DepartmentalAgenciesandAccounts(non-businessentities)receivesR4.52billion,whichisanincreaseR124.2million fromtheR4.39billion receivedin2021/22.

Thesub-programmesbelowreceivedthefollowingallocations for2021/22:

• Construction Policy Development Programme is allocated R44.5 million, a realincreaseof6.0per centin realtermsfromthepreviousyear.
• Property Policy Development Programme is allocated R12.9 million, (a nominaldecrease ofR400 000 from the R13.3 million)and a realdecrease of 6.9percent.
• Construction Industry Development Board (CIDB) is allocated R78.2 million (anominalincreaseofR5.8millionfromR72.4million),anincreaseof3.7percentinreal termsfromthe previousyear.
• Council for the Built Environment (CBE) receive an allocation of R53.5 million (anincrease of R4.7 million from R48.8 million), and a 5.2 per cent increase in realterms.
• Construction, Education and Training Authority (CETA) receive an allocation ofR600 000, (an increase of R0 from the R600 000 in 2020/21), which constitutes adecreaseof4percentin real terms.
• ThePMTE(asnotedabove)receivesanallocationofR4.35billion,adecreaseof

1.6percent inrealterms.

The new sub-programme InfrastructureDevelopmentCoordinationthat was initiated in 2020/21, provides supportto the Presidential Infrastructure Coordinating Commission, in line with the InfrastructureDevelopmentAct(No.23 of 2014)receivesanallocationofR136.6 million,(anincreaseofR52.7million,fromtheR83.9millionfor2020/21),anincreaseof56.3per centinrealterms.

Thedepartmentalsomadetransferstothe:

• ForeignGovernmentsandInternationalOrganisations,tothevalueofR28.7million,adecreaseofR300000(5percentinrealterms)fromtheR29millionallocatedin 2020/21.Thisismainlytoaddressthefluctuationsintheexchangeratewhentransferring the funds. Theunpredictableweakening ofthe Randagainstthe majorforeign currencies may result in the Department requiring an increase in its allocationfrom NationalTreasury.
• AgrémentSouthAfricaisallocatedR33.1million,(anincreaseofR4.1million)fromthe R29millionallocationof2020/21.
• The Independent DevelopmentTrust (IDT), receivesno allocation for 2021/22, fromthe R128.5 million allocation of 2020/21. The IDT is listed in the Public Finance Management Act (1999) as a Schedule 2 entity, that should strictly speaking, be self-sustainingandnotreceiveanallocationfromtheDepartment,asisthecaseforSchedule3entities.The department explained past transfers to this entity as assisting in the continuedoperational functioning of the entity, in the context of the IDT being aresponsive social infrastructure development agency with a well-established presence across the country.The IDT’s total revenue for 2021/22 is R236.5 million, a decline of R156.7 million fromtheR393.2milliontotalrevised revenueof2020/21.

CurrentPayments totals R72.4 million,which is an increase of R25.2 million(or 47.2 percent in real terms) from the R47.2 million adjusted allocation in 2020/21. Compensation ofemployeesreceivesanallocationofR33.7million,whichisanincreaseofR8.0million(or25.8 per cent in real terms) from the R25.7 million adjusted allocation in 2020/21. Goods andServicestotalsR38.7millionfor2021/22.ThisconstitutesanincreaseofR17.2million(or72.7per centinrealterms)fromtheR21.5millionallocationofthepreviousyear.

 

Programme 5: Prestige Policy[14]

 

Programme 5 seeks to provide norms and standards for the Prestige Accommodation Portfolio and meeting the protocol responsibilities.

ThebudgetforProgramme5equalsR94.5millionin2021/22andproportionallyrepresents1.1 per cent of the overall departmental budget. The allocation increased by R30.4 millionfrom the R64.1 million in the previous year and represents a nominal increase of 47.4 percentand41.5percentinrealterms.

A large portion of the budget is allocated to Current Payments, which amount to R76.8million.A total of R27.9millionis allocated towardsCompensationofEmployees. TheTransfers and Subsidies budget of R11.6 million includes an allocation of R11.4 million toDepartmentalAgenciesandAccounts(i.e.ParliamentaryVillagesManagementBoard);R200 000 to Households and R6.1 million to Payment for Capital Assets (i.e. Machinery andEquipment).

 

4.2. The Property Management Trading Entity (PMTE)

The PMTE was operationalised in the 2015/16 financial year, when the department transferred property management functions, (including those related to immovable assets, liabilities and staff), to the PMTE to align the expenses and revenue to the underlying assets.”[15]

The DPWI describes the purpose and functions of the PMTE as a government component that has been created to manage properties under the custodianship of the Department.

The operationalisation of the PMTE in 2015 shifted the operational or implementation focus from the DPWI to the PMTE. Its focus is to execute all property management related functions for national government. The PMTE thus implements all public works related functions such as the maintenance of properties, the leasing, and the payments of property rates on behalf of client departments of the DPWI. All accommodation-related costs were devolved to client departments when the PMTE was operationalised. This means that the department issues invoices and collect user charges from clients on a quarterly basis.

This function of leasing, collecting the accommodation-related, and maintenance costs from clients requires legislation that enforces client departments to pay user-charges, project management, professional property management, and construction costs to the PMTE. This legislation unfortunately remains outstanding. This requires Programme 4Property and Construction Industry Policy and Researchto complete the review of the White Papers 1997 and 1999 as the precursor to the draft Public Works Bill and amendments to some of the entities that would give enforcement powers to collect such fees and charges.

In addition to collecting user-charges and providing specialist property and construction management services to government departments, the PMTE is correctly placed to unlock the value of the large property portfolio of government that is contained in the immovable asset register (IAR). The full operationalisation of the PMTE should lead to full cost recovery through the application of business principles in the management of government’s property portfolio. Together with the collection of user-charges, the PMTE should generate funds with which government could undertake maintenance as well as other crucial tasks in the public works sector. This remains a challenge that the DPW and PMTE is working to put into action in the medium to long term.

The Government Immovable Asset Act (GIAMA) amongst others, stipulates that for each government building, User, and Custodian Immovable Asset Maintenance Plans (UIAMPs and CIAMPS) had to be developedas tools with which to keep track of the conditions of properties, and the different duties that the custodian and the user had to play. This is crucial if the PMTE is to concretise its stated vision of providing “Convenient access to dignified public services.” The South African public must feel secure and safe while they access services. In addition, the public administration that work inside government properties also need to be secure and well catered for in terms of work conditions.

The PMTE Registry Services branch that should manage the Immovable Asset Register (IAR) and coordinate UIAMPs and CIAMPs also struggled to attract and retain qualified and experienced property specialists. The department consistently reported that these positions were being filled, yet the vacancy rate remains high from one financial year to the next. Because these specialist skills make it a very competitive terrain so that properly qualified and experienced personnel easily move from the PMTE to private property companies, the PMTE and the DPWI will have to undertake a property specialist retention strategy. The challenge is to fill and retainsuch personnel in positions in the PMTE. Failure to do this means that the DPWI and PMTE continue to operate at a disadvantage.

TheReal Estate Investment Services (REIS) of the PMTE focuses on achieving an efficient and competitive Real Estate Portfolio for the State. It states that it does this through effective planning, analysis and informed investments. Five years since the PMTE has been operationalised, the programme continues to struggle to have an authoritative grasp of the value that is contained in the IAR and struggles to invest the property portfolio in manners that benefit the state and its beneficiaries. It has thus far not been able to implement strategies with which to unlock the value of government’s immovable asset portfolio. The current five-year strategic plan and this year’s performance plan also do not show evidence of a focused strategy to progress in that direction. The assessment, verification, and progressive completion of the state property portfolio remains in progress.

 

4.3. The PMTE Budget[16]:

Programme	Budget				NominalRand change	Real Randchange	Nominal%change	Real%change
Rmillion	2020/21	2021/22	20222/23	2023/24	2020/21-2021/22		2020/21-2021/22 Per cent
1Administration	812,6	897,7	916,5	1186,2	85,1	48,9	10,47	6,02
2.RealEstateInvestment Services	218,1	219,6	231,9	244,4	1,5	-7,4	0,69	-3,37
3.Construction ManagementServices	489,3	5089,4	5307,6	5333,7	4600,1	4395,0	940,14	898,21
4.RealEstateManagement Services	13388,0	11217,3	8384,7	8879,0	-2170,7	-2622,8	-16,21	-19,59
5.RealEstateRegistry Services	116,2	61,8	65,4	68,8	-54,4	-56,9	-46,82	-48,96
6.FacilitiesManagement Services	4002,0	3862,8	3868,8	4046,8	-139,2	-294,9	-3,48	-7,37
TOTAL	19026,2	21348,6	18774,9	19758,9	2322,4	1461,9	12,21	7,68

 

The PMTE receives an allocation of R21.35 billion for the 2021/22 financial year, which is anincrease of R2.32 billion.This constitutes a nominal increase of 12.2 per cent (or 7.7 percent in real terms) from the revised appropriation of R19.03 billion for 2020/21. Table belowshows thebudgetallocation perprogramme.

In terms of economic classification, the PMTE budget includes revenue with a total monetaryvalueofR16.99billion,adecreaseofR2.53billionfromtheR19.53billionadjustedallocation in 2020/21.The PMTE generates revenue mainly through charging rental fees toUser Departmentsforaccommodation.

Compensation of employees decreases by R103.8 million (from R2.14 billion in the 2020/21adjustedperiod)to R2.04 billion in 2021/22.

 

Programme 1: Administration:

This programmeprovides strategic management, governance and administrative support to thePMTE.

The total allocation for Programme 1 equals R897.7 million for the 2021/22 financial year,whichisanincreaseofR85.1million.Thisconstitutesanominalincreaseof10.5percent(or6.0percentinrealterms)fromtherevisedappropriationofR812.6millionin 2020/21.

Programme 1 reports on one target for2021/22:which is to ensure 100 per cent expenditure of its allocatedbudget.

 

Programme 2:Real Estate Investment Services (REIS):

This programme works to achieve an efficient and competitive Real Estate Portfolio for the State through effective planning, analysis and informed investments.

The total allocation for Programme 2 isR219.6 million for the 2021/22 financial year,which is an increase of R1.5 million. This constitutes a nominal increase of0.69 per cent(and a decrease of 3.4 per cent in real terms) from the revised appropriation ofR218.1millionforthe 2020/21.

The following targets have been set for the 20221/22 financial year:

• EstablishfoursitesforPrecinctdevelopment.
• Complete90percent valuations withinscheduledtimeframes.
• Release21132hectaresfromtheDepartment’sportfoliofordevelopmentofinfrastructureand socio-economicobjectives.9
• ApproveoneCustodianAssetManagementPlan(CAMP)submittedtoNationalTreasury.
• IdentifyaGovernmentPrecinct DevelopmentPlanfor Salvokop.

 

Programme 3:Construction Project Management (CPM):

This programme focuses on providing effective and efficient delivery of accommodation needs for the Department of Public Works and User Departments through construction and other infrastructure improvement programmes.

The total allocation for Programme 3 equals R5.09 billion for the 2021/22 financial year,which is an increase of R4.60 billion. This constitutes a nominal increase of 940.1 per cent(or898.2percentinreal terms)fromtherevisedappropriationofR489.3million in2020/21.

The following targets are reported for the 2021/22 financial year:

• Completeonedesignsolutionfor identifiedUserDepartment.
• Complete85infrastructureprojectswithinagreedconstructionperiod.
• Complete85infrastructureprojectswithinagreedbudget.
• Handover90infrastructure sitesforconstruction.
• Complete95infrastructureprojects.
• Create9020EPWPworkopportunitiesthroughconstructionprojects

 

Programme 4:Real Estate Management Services (REMS):

This programme provides and manages government’s real estate portfolio in support of stated social, economic, and political objectives that we stated in the first section of this report.

The total allocation for Programme 4 equals R11.22billionforthe2021/22financialyear,which isadecreaseofR2.17billion.Thisconstitutesanominaldecreaseof16.2percent (or19.6per centinrealterms)fromtherevisedappropriationof R13.39billionin2020/21.

The following targets have been set for this financial year (2021/22):

• Reduceprivateleases withintheSecurity Clusterby6.
• RealiseR100millionsavingonidentifiedfunctionspecificprivateleases.
• Increaserevenuegenerationby8percentthroughthelettingofState-ownedproperties(excludingharbour-related properties).
• Let out 70un-utilisedvacant State-ownedproperties.
• Award35percentofnewleasestoBlack-ownedcompanies(e.g.empoweringdesignatedgroupsofwomen,youthandpeoplewith disabilities).
• Letout4percent ofleasestocompanieswith B-BBEE[17]of 4andabove.
• Procure100percentofnew privateleasescontractswithmaintenanceplan.
• Create10BusinessOpportunitiesthatcreateactualjobs(SmallHarbourandStatecoastalproperties).
• Increaserevenueby10percentthroughtherentalsofState-ownedsmallharboursandcoastalproperties.

 

Programme 5: Real Estate Information and Registry Services(REIRS):

The programme develops and manages a complete, accurate and compliant Immovable Asset Register (IAR) to meet service delivery objectives for the State, Department and PMTE business requirements.

The total allocation for Programme 5 equals R61.8 million for the 2021/22 financial year,which is a decrease of R54.4 million.This constitutes a nominaldecrease of46.8 percent(or49per centinrealterms)fromtheadjustedappropriationofR116.2millionin2020/21.

The following target is reported for the 2021/22 financial year:

• AssessnineProvincialImmovableAssetRegistersforcompliance.
• Physicallyverifytovalidatetheexistenceandassesstheconditionof21000immovableassets.
• Vesting(confirmationofownership) of1000landparcels.

 

Programme 6:Facilities Management:

This programme seeks to ensure that immovable assets used by Government Departments and the public, are optimally utilised and maintained in a safe, secure healthy and ergonomic environment while contributing to job creation, skills development and poverty alleviation.

The total allocation for Programme 6 equalsR3.86billionforthe2021/22financialyear,whichisa decreaseofR139.2million.Thisisadecreaseof3.5per cent innominalterms(or7.4per cent inrealterms)fromtherevisedappropriationofR4.00billionin2020/21. The following target is reported for the 2021/22 financial year:

• 200Conditionassessmentsconductedonidentified/prioritisedproperties.
• Assesscriticalcomponentstodeterminetheconditionof400components(lifts,boilers, HVAC[18]andGensets[19]andWatersystems).
• 165preventativemaintenancecontracts inplacetoreducereactivemaintenance.

 

6. The Budgetary Allocations and programmes of each of the Public Works and Infrastructure Entities:

6.1. The Construction Industry Development Board (CIDB)

The entity is mandated to:

• Providestrategicleadershiptoconstructionindustrystakeholders developingeffectivepartnershipsfor growth, reformandimprovementof theconstruction sector.
• Promotethesustainablegrowthof the constructionindustryandtheparticipationoftheemergingsectorintheindustry.
• Determine, establish and promote improved performance and best practiceof publicand private sector clients, contractors and other participants in the constructiondeliveryprocess.
• Promotetheuniformapplicationofpolicythroughoutall spheresof governmentandpromote uniform and ethical standards, construction procurement reform, andimprovedprocurement anddeliverymanagement–includingacodeof conduct.
• Developsystematicmethodsformonitoringandregulatingtheperformanceof theindustry anditsstakeholders,includingtheregistrationofprojects andcontractors.

 

The entity identified two key themes to drive its outcomes.The budgetary allocation for 2021/22 will be used to work on outcomes under each of these. They are as follows:

1. A transformed and developed construction industry.

1.1. Increased black ownership and participation.

1.2. Increased women and youth ownership and participation.

1.3. Contractor Development.

2. An ethical and performance driven construction industry.

2.1. Performance driven clients.

2.2. Reduced non-compliance and fraud.

2.3. An ethical and performance driven CIDB.

 

Targets to ensure mandatedIndicators to reach outcomes:

• The transformation targets to increase youth ownership and participation - 35% over five years against a 29% baseline target.
• The target to increase black ownership grades 7 to 9 on the contractor register is stated as 75% over five years against a 67% baseline.
• The target for women owned registered contractors in grades 2 to 9 is stated as 40% over five years against a 30% baseline.
• The target to increase the percentage access to work for women-owned contractors is stated as 35% against the baseline of 24%.
• Monitoring the number of upgrades of women-owned contractors is stated to move to 50% from the baseline of 40% over the next five years.
• Monitoring black owned contractors is stated as moving to 60% from the baseline of 50% over the next five years.
• Under developing performance driven clients, to drive increased spending on infrastructure budgets, it set a five-year target of 90 from a baseline of 82%.
• Under the objective to drive reduce non-compliance and corruption in the construction sector - it states an indicator of average number of non-compliance cases reported per year, to move from the baseline of 72 to 36 over five years. 
• For the stated target to drive towards good governance, it wants to achieve a clean audit for the year 2021/22.

 

 

Interventions	Progress
Ensuringthecidbregistrationcriteriaspeakstotransformingtheindustry	Thereviewoftheregistrationcriteriaisinprogress.
Businessadvisoryservicestosmallandmediumcontractors	89.3%wasrecordedforprovincialbusinessadvisoryservicesprovided to contractors at grades 2 to 6 index against a target of75%. The development needs analysis has been conducted. Thedraftingoftheframeworkisunderway.
Capacitation of clients to drivetransformation in infrastructureprocurement,includingawarenessofprocurementreforms	Target on track and revised due to the Covid-19 pandemic,CapacitationsessionswerescheduledandhadtobecancelledduetotheCOVID-19Pandemic.Onlinecapacitationunderway.
Review and revision of the NationalContractorDevelopmentProgrammeframeworktoenabletransformation	Improvementinthegaps ofthecurrent NCDPframeworkhasbeenidentified.

 

To achieve the stated targets to drive transformation, infrastructure development, and clean governance the following new interventions are also notable:

• Developasystemtoexpand andaligntheRegisterofContractorsto the Registerof Projects:
  • Herecontractors’trackrecordwouldautomaticallybe updatedthroughtheprojectsregisteredby ClientDepartments.
• CIDB systems upgrade for integration with Central SupplierDatabase.
• Implementation of industry best practices (CIDB B.U.I.L.D.Programme[20]).

 

To monitor the drive towards increased municipal expenditure of infrastructure budgets the following comparative information was provided:

Indicator	2017/18	2018/19	2019/20
Budgetedcapital expenditure(Rm)	71381	73563	68808
Actualcapitalexpenditure (Rm)	58756	54887	41254
Actualcapitalexpenditureasa%ofbudgetedcapitalexpenditure	82%	75%	60%
Number of metros, municipalities, and district	257	257	257

 

 

The intervention to ensure increased infrastructure expenditure in municipalities are as follows:

Interventions	Progress
Consult with all organs of state to identify construction-related budgets and the application thereof. Assessing theimpactofpublicexpenditureontheconstructionindustryandadvisingtheMinisteraccordingly.	CIDBtoconductthestudyin-house.DraftingtheProjectPlan.
Strengtheningtheexistingpublicsectorcapacitybuildinginitiativesandindustryresearch.	Capacitation building is ongoing, e.g. IDMSclient support. Causes of cancellation oftendersresearchunderway.Expandingtheresearch on the impact of Covid-19 on theindustry.
RollingouttheProjectAssessmentScheme-harnessingthebest-practicestandards(CIDBB.U.I.L.D.Programme).	MinistergazettedRegulationsinSeptember2020.
Implementing the cidb Competence Framework forProcurementandtheunderpinningtoolstoassessSCMofficials.	Plannedfor2021/22year.
AmendingCIDBActtoapplytheRegisterofContractorstotheprivatesector(todrivetransformationanddevelopment). DevelopaClientRecognitionScheme.	DPWIreviewofCIDBActunderway.

The intervention to regulate to compliance is as follows:

Interventions	Progress
RollingoutoftheOrganisationalDesign (OD)Process to capacitate theorganisation	ODprocessconcluded.Criticalpositionsbeingfilledwithinbudget provisions.
Promoting the use of SANS[21] 1734Specification for an Anti-BriberyManagement System (ABMS) for largecontractingenterprises	ABMS1734wasgazettedasaBestPractice.Cidb is consulting on theapplication of the ABMS against thecontractorregistration criteria.
CreatingawarenessofthecidbCodeofConduct	AwarenessandongoingclientcapacitationonIDMS,SFUandCodeofConducttakingplace.

 

 

6.1.3. The budgetary allocations to perform its mandate per programme for 2021/22 is as follows:

The budget consists of the allocation from the transfers from DPWI programme 4, registration fees from contractors, and investments.

Randthousand
Programmes	2019/20	2020/21	2021/22	2022/23	2023/24
Administration	82044	86556	92719	90737	91646
ResearchandDevelopment		7000	7350	13232	13973
ConstructionIndustryRegulation	71384	33343	35387	37156	39237
ConstructionIndustryPerformance	16039	16921	17685	18604	19646
ProcurementandDevelopment	14693	15501	15484	16309	17222
ProvincialOffices		35000	36750	38588	40748
Total Budget	184160	194321	205375	214626	222473

6.1.3. Action items to be performed with the R205.3 million budget:

• The CIDB shall revisit and ensure that the Contractor Register, as detailed in Chapter 3, Section 16 of the Act, is up-to-date in terms of all aspects for all contractors that are registered, and in particular in relation to empowerment and B-BBEE compliance. It is essential that this is actioned and completed within the next 6 months.
• The CIDB shall commence with the process of developing a database and Register of Professional Service Providers. This has not been compulsory up until now. The Minister, however, shall require that this will become compulsory as at the beginning of the 2021/22 financial year, especially for Special Infrastructure Projects, as determined by the Infrastructure Development Act, No 23 of 2014.
• The CIDB, in partnership with DPWI, to develop a programme and implementation manual of how to mainstream the Expanded Public Works Programme (EPWP) in all built environment departments across all spheres of government, as well as within other Public Employment Programmes.

 

 

6.2.The Council for the Built Environment (CBE):

The CBE is a schedule 3A entity established by the Council for the Built Environment Act (No. 43 of 2000). It is an entity of the National Department of Public Works and Infrastructure.

The CBE is responsible for regulating the following six built environment professional councils:

1. South African Council for Architectural Professions(SACAP).
2. Engineering Council of South Africa(ECSA).
3. South African Council for the Project and Construction Management Professions (SACPCMP).
4. South African Council for the Landscape Architectural Profession(SACLAP).
5. South African Council for the Quantity Surveying Profession(SACQSP).
6. South African Council for the Property Valuers Profession(SACPVP).

 

The CBEoversees and regulates the six professional councils responsible for regulating built environment professionals such as architects, engineers, quantity surveyors, landscape architects, property valuers, and project and construction managers.

 

In its planning documents for this financial year, the CBE shows an alignment with the broad policy objectives of the NDP, ERRP, and the SONA.

 

It states its mandate as follows:

“The scope of the CBE and councils for the professions in the Built Environment (BE) value chain is to regulate those Built Environment Professions (BEPs) which conceptualise, design, build, maintain and transfer social and economic infrastructure. The CBE executes its mandate from the Council for the Built Environment Act (No. 43 of 2000) (the CBE Act), while also being mindful of the following legislations, regulations, policies and best practice guidelines to exercise good governance, ethical leadership and corporate citizenship. The CBE adopted a Compliance Policy and implements a compliance action plan for identified compliance obligations with quarterlydisclosure.”

6.2.1. CBE Budget for 2021/22:

SubProgramme	ApprovedBudget		Medium-TermEstimate
Rthousand	2020/21	2021/22	2022/23	2023/24
Programme1:Administration	52.0	49.0	49.5	51.6
Programme2:Transformation	2.1	1.8	1.7	1.8
Programme3:SkillsandCapacityDevelopment	2.8	2.7	2.7	2.8
Programme4:Research andAdvisory	0.6	0.5	0.5	0.6
Programme5:RegulationandPublicProtection	1.2	1.1	1.1	1.2
Total	58.7	55.1	55.5	58.0

All figures as per National Treasury ENE, p 217

 

The total revenue of the CBE equals R55.1 million, which is a decrease of R3.6 million from the R58.7 million in 2020/21.

Like the other Public Works and Infrastructure entities, the CBE receives part of its revenue as a transfer from the DPWI’s Programme 4, while the rest consists of sales of goods and services, and non-tax revenue.

 

6.3. The Independent Development Trust (IDT):

In the previous financial year, the Minister withdrew the formal submission of the Strategic Plan (2020-2025) and the APP of the IDT. In spite of,in the Budget Vote report of 2020/21, requesting the updated plans to transform, restructure, or dissolve the entity,the select committee did not receive information from the Minister or the DPWI.

6.3.1. Background:

The IDT evolved from a grant‐making organisation into a responsive development agency with a well‐established footprint across South Africa.

The IDT augments government’s capacity to achieve the objectives of the National Development Plan (NDP) and Vision 2030. A review and transformation process has been started during the 2014 to 2019 five-year administration to strengthen this role. This included a confirmation of the IDT’s mandate to deliver social infrastructure cost effectively.

The IDT is the public works and infrastructure entity that should use its resources in the initiation, planning and implementation of innovative and sustainable development projects, to positively address the challenges in which geo-spatial patterns of poverty, inequality, unemployment and underdevelopment occurs in the regions and provinces of the country.

 

This function of the entity was underpinned by the 1997 government resolution to reconstitute the IDT as a development agency and public entity to support all spheres of government. It followed Cabinet endorsement of a recommendation of a Cabinet Advisory Committee that, inter alia, “The IDT must be transformed into a government development agency that will implement projects which are commissioned by government departments. It must cease to be a civil society organisation, an independent agency or funding agency.”[22] Building on its effectiveness as a civil society body and redistributive mechanism, the IDT was integrated into the public service delivery system in 1999 with the promulgation of the Public Finance Management Act (PFMA) (Act 1 of 1999), as amended, and listed as a Schedule 2 Major Public Entity. The 1997 mandate of the IDT remains in place.

Over the last few years, the entity, and the Minister recognised the operational and financial challenges that it faced due to its inability to collect management fees owed to it. This resulted reduced trust between the entity, client departments, and a decline in its business portfolio caused its deficits to grow substantially. The entity had been undergoing a long drawn outtransformationprocess thatincludedarevisionofitsoperatingmodel and organisational redesign. It remained firmly focused on achieving business growth and achieving long-term sustainability. The Board and management approved a turnaround plan aimed at repositioning the entity to be financially viable and self-sustaining.

 

All development reviews conducted by government, i.e. 5, 10 and 20 years[23], as well as the NDP 2030 placed emphasis on the need to build the capacity of government as a prerequisite for the attainment of its development imperatives. Thus, rather than duplicate programmes, or possibly positioning the IDT as a super agency that could usurp the functions of the DPW, the PMTE, or other government departments, the review of the IDT’s mandate was important to enhance the objective of building a capable developmental state. The functions of the IDT is crucial for social infrastructure development across the urban and rural divide including redressing town and city geo-spatial planning that continued the inherited apartheid model. This role of the DPWI, PMTE and an entity such as the IDT is a key pillar on which future economic growth must take place. It is therefore strategically aligned to the policy objectives stated in the NDP, ERRP, and the tasks listed in the 2021/22 SONA.

 

Rmillion	Revisedestimate	Averagegrowthrate (%)	Average:Expenditure/Total (%)	Medium‐term expenditureestimate			Averagegrowthrate (%)	Ave:Expenditure/Total (%)
	2020/21	2017/18‐2020/21		2021/22	2022/23	2023/24	2020/21‐2023/24
Administration	136.6	2.7%	39.7%	94.6	139.6	147.1	2.5%	45.8%
Programmemanagement	135.3	‐22.8%	60.3%	141.8	161.0	168.5	7.6%	54.2%
Total	271.8	‐13.5%	100.0%	236.5	300.6	315.7	5.1%	100.0%

6.3.2. Budgetary Allocation per programme:

 

Over the medium term, the entity will continue to focus on implementing infrastructure projects aimed atempowering poor communities. To achieve this, the trust expects to spend R19.6 billion over the period ahead on its infrastructure portfolio, which is funded by client departments. These projects are expected to create 14 718 work opportunities through the expanded public works programme.

 

Expenditure is set to increase at an average annual rate of 5.1 per cent, from R271.8 million in 2020/21 toR315.7 million in 2023/24. Compensation of employees accounts for an estimated 63.7 per cent(R547.6 million) of total expenditure over the MTEF period.

 

The IDT expects to generate 83.9 per cent (R777.8 million) of its revenue over the medium term period throughmanagement fees for projects it implements on behalf of government departments, and will intensify itscollection of outstanding revenue owed by client departments.

 

Key matters to note on the budget indicated for theIDT:

 

• Theoutputofstrategyisnotfactoredintosubsequentyears.Thebudgetisconservativeand reflectsrestrainedrevenue increases due to challenges such as internal (Board inconsistencies that leads to insecurities experienced by staff) and external trust deficiencies (client departments eroding the IDT’s mandate, as well as refusing to honour contracts by paying outstanding debt).
• The entity needs confirmed business not less than the expected expenditure for thesubsequentyears of the medium-term expenditure framework period.
• The indicated surplus budgeted for the 2020/21 financial year is stated theoretically. It remains fully dependent on the entity receiving a grantallocation of R160 million. Note that theoretically, this surplus would be carried forward into thesubsequent years to fund the operating deficit.It is critical that additional new business begeneratedtofundthebudgeteddeficit.TheadditionalrequiredprogrammeexpenditureisR254 million forthe2021/22financialyear.

 

6.4. Agrément South Africa

This entity is mandated to certify non‐standardised or unconventional built environment construction products, materials and systems through technical assessments that verify whether such products, materials and systems are fit for purpose.

The increased focus on the DPWI as sector leader of infrastructure development, the long-term policy objective in the NDP[24] to increasingly provide human settlements where people can live in dignity, with social service infrastructure close to their homes, make the work of the ASA quite important.

The entity’s legal mandate is described in the ASAActNo.11of2015 as follows:

• Provide assurance to specifiers and users of the fitness-for-purpose of non-standardisedconstructionrelated productsorsystems.
• Support and promote the process of integrated socio-economic development in the republicas itrelatestotheconstruction industry.
• Support and promote the introduction and use of certified non-standardised constructionrelatedproductsorsystemsinthe localorinternationalmarket.
• Support policy makers to minimize the risk associated with the use of a non-standardisedconstructionrelated product orsystem;and
• Be an impartial and internationally acknowledged South African centre for the assessmentandconfirmationoffitness-for-purposeofnon-standardisedconstructionrelatedproductsorsystems.

 

6.4.1. Tasks that ASA must achieve:

In its planning documentation tabled to Parliament, the ASA notes that the NDP guides it to play an integral role as part of government, which would include[25]:

• Systematically responding to entrenched spatial patterns across all geographical scales that exacerbate social inequality and economicinefficiency.
• Takingaccountoftheuniqueneedsandpotentialofdifferentruralandurbanareasinthe context of emerging development corridors in the Southern African sub-region before making decisions ondevelopments.
• Reviewing State housing policies to better realise constitutional housing rights, ensuring that the delivery of housing is used to restructure towns and cities and strengthen the livelihood prospects ofhouseholds.
• Supporting active citizenry and developing incentives through a range of interventions, which includes the establishment of social compacts;and

 

6.4.2. Budgetary Allocation

ASA receivesanannualgovernmentgrantandgenerates its ownrevenues. Forthe2021/22financialyear,ASAhadtotalrevenuesofR36.6millioncomprisingR 31.1 million in the annual transfer from Programme 4 of the DPWI (85.0% of total income) and R 5.5 million revenue that it generates from its testing, registration and licencing services and investments. The latter comprised R 4.2 million for the rendering of services and a further R 1,3 millionfromreturnoninvestments.

The table below summarises the MTEF budget allocation for ASA. A key challenge evident in the medium termisthereducedbudgetallocationwhichwillrequireASAtobemorecostefficientandseektoincreaseits ownrevenuesgoing forward.

ASA Budgetary allocation for 2021/22

Rmillion	Revisedestimate	Medium term estimate
	2020/21	2021/22	2022/23	2023/24
Administration	35.5	35.8	36.3	37.9
Total	35.5	35.8	36.3	37.9

 

 

 

Statement of financial performance:

Statementoffinancial performance	Budget estimate	Approved budget	Approvedbudget	MediumTermEstimate
Rthousand	2019/20		2020/21	2021/22	2022/23	2023/24
Revenue
Taxrevenue	–	–	–	–	–
Non-taxrevenue	3,972	3,972	4,300	4,570	4,666	4,899
Sale of goods andservicesotherthan capital assets ofwhich:	2,634	2,634	2,966	3,154	3,349	3,516
Administrativefees	1,160	1,160	1,418	1,529	1,643	1725
Sales bymarket establishment	1,474	1,474	1,548	1,625	1,706	1791
Other non-taxrevenue	1,338	1,338	1,335	1,416	1,317	1,383
Transfersreceived	31,062	31,062	31,164	32,564	33,413	35,084
Totalrevenue	35,034	35,034	35,464	37,134	38,079	39,983
Expenses
Currentexpenses	35,034	35,034	35,464	37,134	38,079	39,983
Compensationof employees	20,810	20,810	21,175	22,510	23,455	24,628
Goodsandservices	13,974	13,974	9,916	14,178	14,178	14,887
Depreciation	250	250	0	446	446	468
Solidarity Fund	–	–	3,578	–	–	-
COVID-19Expenses	–	–	795	–	–	-
Totalexpenses	35,034	35,034	35,464	37,134	38,079	39,983
Surplus/(Deficit)	–	–	–	–	–

 

 

 

 

 

7. Recommendations:

Having considered the planning documents and budgetary allocations for this financial year, the select committee recommends that the Minister of Public Works and Infrastructureshould ensure that:

1. The department maintains a functioning administrative, financial management, accounting, and reporting system to regularly report to the Minister. This will focus on matters that may weaken the achievement of the policy outcome to change the DPWI into a resilient, ethical, and capable government department and a performing organisation.
2. The department gives proper attention to the weaknesses of coordination, regulation, and enforcement. This includes the departmental mandate as a leader and regulator of the construction, built environment professional, and infrastructure sector.
3. The department strengthens its oversight function in the construction, built environment professional, and infrastructure sector of the country to appropriately transform it for the benefit of the country and the economy.
4. The department works on solutions to address the high vacancy rate and the equitable representation of women in the senior management positions.
5. The department implements its skills planin order to reduce our national skills deficit.
6. The department continuously monitors and evaluates the impact of the Covid-19 pandemic on service delivery.
7. The departmentworkson the uniform lease agreements across all the provinces.
8. The department provides proper oversight on the transfers and subsidies for the operations of its entities, and all conditional grants to provinces.
9. The department fast-tracks the proclamation of the remaining fishing harbours.
10. The department looks at the socio-economic impact on job creation, skills development, as well as maritime intellectual property for Small Harbours. This should include, Maritime Industry Development, in terms of manufacturing/processing industries, supply management and localisation for small harbours.
11. The department fast-tracks the process to reconfigure the Independent Development Trust (IDT), its viability, given the operational and financial challenges over the last few years.
12. The department fast-tracks the release of numerous parcels of land for human settlement development, land redistribution and restitution.
13. The Office of the Minister as Executive Authority works with the Department of Defence and Military Veterans to address the issue of the office space of the Defence Intelligence Division.
14. The department provides a report by end of May 2022 on progress made by the task team that had to include the National Treasury, DPWI, the IDT, Department of Public Service and Administration and other key role players to restructure the IDT into a more technically proficient social infrastructure delivery agency.

 

The Committee recommends that the National Council of Provinces (Council) approves Budget Vote 13: Public Works and Infrastructure. 

[The Democratic Alliance reserved its position on the Report and abstained.]

 

Report to be considered.

 

 

 

 

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[1] These are the Council for the Built Environment (CBE), the Construction Industry Development Board (CIDB), Agrément South Africa (ASA), and the Independent Development Trust (IDT).

[2]Ramaphosa,C.(2021),pp.3 -11.

[3] The ISA, National Treasury, and the DBSA play a collaborative role, through a Service Level Agreement (SLA) in this regard. The challenge is that even though ISA is a structure within the DPWI, it does not have a personnel structure, organogram, and specific funding for how it performs its functions. Later in this report (see pp.21 and 40), and its recommendations.

[4]Note that all enablers are not related to this portfolio. Also, the analytic comments are not intended to cover every single misalignment related to the listed enabler as the rest of the analysis is in the body of this report.

[5] All figures in the analyses are from NationalTreasury(2021),p.201.

[6] NationalTreasury (2021),p.203.

[7] Ibid.

[8] DPWI Strategic Plan 2020-2025, p.9

[9] Ibid.

[10] Ibid.

[11] This programme was known as Property and Construction Industry Policy Regulation that promoted the growth and transformation of the construction and property industries, and uniformity and best practice in construction, and immovable asset management in the public sector.

[12]Up until 2009/10 the two programmes: Construction Industry Development Programme and the Property Industry Development Programme) fell under Programme 3 but since the 2014/15 financial year has been renamed as Property and Construction Industry Policy and Research.

[13] National Treasury (2021), p. 208.

[14] This programme was known as Auxiliary and Associated Services in previous years. It used to fund various services, including compensation for losses on the Government-assisted housing scheme; assistance to organisations for the preservation of national memorials; and meeting protocol responsibilities for State functions. Currently, it focuses on meeting protocol responsibilities for State functions with an additional function to provide norms and standards for the Prestige Accommodation Portfolio.

[15] Department of Public Works (2016), p. 325.

[16]All amounts in the following tables as provided in the Estimates of National Expenditure (ENE) for the Department of Public Works and Infrastructure, Budget Vote 13, National Treasury, 2021/22.

[17]This is as per the Broad-Based Black Economic Empowerment (B-BBEE) Act of 2013 that establishes a legislative framework for the promotion of black economic empowerment.

[18] Heating, Ventilation, and Air conditioning

[19] Gensets refer to any combination of diesel engine and electric generators used to generate electricity. These are critical components especially in areas of untrustworthy/intermittent power supply.

[20] The CIDB Act 38 of 2000 mandates the entity to lead efforts to optimize the construction sector’s contribution to social and development goals. It developed the Best Practice Project Assessment Scheme, simply known as the CIDB B.U.I.L.D. Programme.

[21] South African national Standards.

[22] “Structural Relationships between Government and Civil Society Organisations”, Report prepared for the Deputy President, Thabo Mbeki, South Africa. p. 3

[23] Government’s 10, 15, and 20 Year Review was done by the Presidency, in collaboration with all Ministers and departments, and printed and disseminated by the Government Communication and Information Services (GCIS).

[24]The NDP stresses the need to fundamentally reshape the apartheid geo-spatial form. It acknowledges that it may take many decades butdirectsthatall government departments and entities shouldstriveformeaningfulprogressincreatingurbansettlementsthatare functionally integrated, balanced and vibrant, including the revival of rural areas.

[25]ASA, APP, pp. 31 and 32, Annual Performance Plan 2020/21.