ATC240408: Report of the Portfolio Committee on Public Works and Infrastructure on Budget Vote 13: Public Works and Infrastructure, Dated 27 February 2024

Public Works and Infrastructure

Report of the Portfolio Committee on Public Works and Infrastructure on Budget Vote 13: Public Works and Infrastructure, Dated 27 February 2024

The Portfolio Committee on Public Works and Infrastructure, having met on 13, 19 and 20 February 2024; and having deliberated on the Annual Performance Plans (APPs) of the Department of Public Works and Infrastructure (DPWI, the department), the Property Management Trading Entity (PMTE), and the public works and infrastructure entities; reports as follows:

1. INTRODUCTION

The Public Finance Management Act (1999) defines the Minister of Public Works and Infrastructure as the executive authority of the department. The Act further defines the Director-General (DG)as the accounting officer of the department; he or she must comply with the provisions of the Constitution and the PFMA and ensure sound financial management of the allocated budget and the business of the department. The Minister provides policy (political) leadership to the DG and the senior management team regarding how the department and the public works and infrastructure entities[1], should use the allocated budgetary and human resources to translate policy ideals into implementable programmes.

The policy and monitoring role of the Minister over the DG and Senior Management Team

The Office of the Minister plays a policy leadership and monitoring role. A healthy distance must be maintained between the administrative management and financial management duties of the DG and senior management on the one hand, and the Minister and her political office on the other. The Minister as the policy leader and executive authority leads by monitoring whether and how the budget is used as a tool to implement policy ideals. This is done through the in-year monthly and quarterly expenditure and performance reports that the Director-General[2], Deputy Directors-General (DDGs), and senior management service personnel must timeously submit to her office and the National Treasury.

The Minister uses the information on the performance of each branch and sub-branches of the department per month and quarter, to report to the Portfolio Committee. The annual performance plan and budgetary allocation, with the performance areas and indicators, are important projection tools to drive towards predetermined objectives. Inside the department, the DG and senior management keep the Minister informed on a monthly, quarterly, and annual basis. Similarly, the Minister and the DG must keep the national legislature fully informed(by engaging this Committee) on predetermined policy and programmatic targets stated in the five budget votes, and annual reports during theadministrative term. This leads us to the methodology through which the Committee performs its oversight work.

The method of oversight work

The Portfolio Committee of Public Works and Infrastructure, in turn, does oversight over how the Minister performs in the role of executive authority of the department. To do its oversight, the Committee interacts with and receives monitoring reports from the Minister, Deputy Minister and the senior management teams of the DPWI, its Property Management and Trading Entity (PMTE), and boards of the public works and infrastructure entities. During the year, the Committee performs visits to key project sites that might have been identified as challenging in performance and annual reports, but also from petitions on relevant matters, including media and other stakeholder sources. Individual members further ask questions for written and oral replies (on a rotational basis) that the Minister must reply to.

The Committee uses issues that emerge from these meetings, deliberations, and responses to questions, to analyse, assess and monitor the work of the Minister, the department, and public works and infrastructure entities. It makes recommendations to the Minister to address specific oversight issues that might have emerged at stated deadlines. These are contained in the Committee’s reports that are published in parliament’s Announcements, Tablings, and Committee reports (ATCs) throughout the year.

Since the first year of this administrative term, the Minister, Deputy Minister, DG, senior management team, Boards and Chairpersons of entities cooperated fully in this process. This greatly assisted in dealing with delivery blockages. Despite certain matters remaining stubbornly incomplete, the Committee appreciates this cooperation as it forms the fibre of a healthy democracy that enables the growth of state capacity to improve service delivery to the nation.

The Committee further receives and interacts with the auditing analysis and opinions performed annually by the Office of the Auditor-General (OAG) on the operations of the department and entities. Due to the devastating blaze that destroyed parliamentary buildings in 2022, at the time of writing, the venues of parliament remain inaccessible. To deal with the reports on the Annual Performance Plans (APPs) and Strategic Plans (SPs) and the budget vote for this financial year, meetings were held in virtual mode and took place on 13, 19, and 20 February 2024.

1.1. The mandate

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

1.2. Shift to DPWI Policy and Regulatory Function

During the 2015/16 financial year, the policy leader initiated a shift in the department's focus. This resulted in a division between the policymaking, regulating, and monitoring arms on the one hand, and the practical implementation of the department’s mandate on the other; the department would play the policymaking, regulating, and monitoring functions while the implementation functions shifted to the PMTE.

This shift means that the department renews 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 providing accommodation and public employment programmes, and expert professional built environment services to user/client departments.
importantly, the department and PMTE have an oversight role over the standards and regulations that the Minister of Public Works and Infrastructure makes as leader of the functions that Schedule 4 of the Constitution confers to national, and provincial departments of public works and infrastructure, and municipalities that also perform public works and infrastructure implementation roles.

The broad policy of the government and planning documents of the department and its entities are instruments that aid the monitoring of how policy ideals are translated into implementable programmes. The APPs show 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 the government. These APPs provide the performance targets, performance indicators, and timeframes within which the predetermined objectives should be achieved.

In this report, before dealing with the APP and budgetary resource analysis, the Committee first assesses whether the policy 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) 2019/20 to 2024/25, and the policy imperatives set out by the President in the State of the Nation Address (Sona).

2. ALIGNMENT OF STRATEGIC OUTCOMES WITH NATIONAL POLICY

This is an analysis of whether the department is aligned with the National Development Plan (NDP);the Medium Term Strategic Framework (MTSF) - 2019/20 to 2024/25; the Economic Recovery and Reconstruction Plan (ERRP); and the 2024 State of the Nation Address (Sona).

The seven priorities of the NDP are:

Economic transformation and job creation.
Education, skills and health.
Consolidating the social wage through reliable and quality basic services.
Spatial integration, human settlements and local government.
Social cohesion and safe communities.
A capable, ethical and developmental state; and
A better Africa and world.

The five-year strategic plan and the APP of the DPWI and PMTE are aligned with the broad policy objectives, the public works and infrastructure responsibilities of job creation, and the implementation of large-scale infrastructure projects and maintenance that the President mentioned in the Sona. The department also ensured that it used the budgetary and human resources to implement the following priorities that the government identified over the MTSF:

Massify job creation and infrastructure.
Structural reforms to ease doing business.
Better leveraging public procurement.
Digitisation and modernisation.
Food security and household income.
Basic services, electricity water and sanitation.
Eradicate title deeds backlogs.
Vaccinations.
Corruption prosecutions.
Reduce violent crimes.

The Department emphasised the following matters aligned with the ERRP in its priority policy list:

Better leveraging public procurement:The Department is committed to improving and strengthening public procurement. It emphasises the development of Small, Micro, and Medium Enterprises (SMMEs) and local supplier industries so that localised economies are developed and included in the larger economy, and more employment opportunities are created.

Massify job creation and infrastructure: The governmentidentified infrastructuredevelopment as the catalytic drive that would stimulate economic activity. The inclusion ofInfrastructure South Africa (ISA) within the DPWI is a strategic policy initiative to implement investment through blended funding mechanisms. The Memorandum of agreement with the Development Bank of South Africa and the National Treasury spelt out the different functions of each to roll out a pipeline of blended financed infrastructure projects throughout the MTSF. The pipeline is to be funded by the Infrastructure Fund which will be leveraged to get the private sector to invest and participate in increased infrastructure investment. Several projects have been approved by the Cabinet as part of the National Infrastructure Plan (NIP) 2050, to be implemented in a Single Infrastructure Project Pipeline gazetted as Strategic Integrated Projects: (SIPs). Of these, five SIP programs are implemented by the department including:

SIP 21:SmallHarbours Development.

SIP 25:Rural Bridges "Welisizwe" Programme.

SIP 28:PV and Water Savings Government Buildings Programme.

SIP 29: Comprehensive Urban Management Programme.

SIP 36:Salvokop Precinct.

In its meetings with the Committee, the department conceded that it faces significant backlogs due to property and infrastructure not being properly maintained. It is committed to improving the condition of and preserving the existing property portfolio. It wants to address maintenance inefficiencies by undertaking less unscheduled maintenance. Unfortunately, this matter has been raised several times in the past as a programmatic weakness. The department refers to the involvement of the private sector in improving this identified challenge. It further states the involvement of ISA in a newly designed Refurbishment Operate and Transfer (ROT) and Build Operate and Transferprogramme in a public-private partnership arrangement with property businesses. This stated intention is new; the Committee needed detailed information on the three facilities referred to as part of the pilot; this should include budgeted and resourced items linked to stated performance targets and scheduled indicators regarding this initiative in the APP.

Intentions to improve key areas of business:

The Department identified the following as initiatives to improve how it performs its business:

A Change ManagementProgramme that seeks tobring about a Capable and Ethical DPWI located in the Constitutional Values and Principles of Public Administration and Batho Pele.
A Service Delivery Improvement Programme (SDIP) that is underpinned by Service Standards andCharters with service beneficiaries that are characterised by customer responsiveness andorientationthroughout thevaluechain(BathoPele).
A Business Process Management Programme including the implementation of the Infrastructure DeliveryManagementSystem(IDMS) and the Sustainable Infrastructure DevelopmentSystem(SIDS)methodologytoaddressamong others, the lack of coordination in the property management and infrastructure delivery business.
Implement the Enterprise Resource Planning (ERP) Fast Track Programme (aligned to the aforementioned business process management programme) to advance automation and the replacement of manualsystems andprocesses.
Review theMacro Business andDelivery Modelof the DPWI, and associated revision of the Structural Model of the department (and consequentlythe Regional Office and Head Office Models), and associated governance and accountability arrangements.
Establish the Ethics & Compliance, InfrastructureandConsequence Management Departmentto guide andexpected standardsbehaviour.
Radically improve Contract ManagementandMonitoring capabilities to mitigate contract delivery risk throughout the Department.
Implement an OrganisationWideSkillsAssessment to determinethecurrentskillsmixandthe interventions, including an expedited capacitation drive, required to optimise service delivery.
Organisation-wide maturity within Strategic Planning (the ability to plan for results),PerformanceMonitoring(monitorand deliverresults)andRiskManagement (anticipate and avoid/mitigateuncertainties before they occur) in partnership with the National School of Government
Sustaining a Clean Audit for DPWI and PMTE - The successful implementation of the above interventions is intended to move the department towards a clean audit in both the Main Vote and the Property Management Trading entity (PMTE).

3. ANALYTIC COMMENTS ON THE APPS AND LINKS WITH ENABLERS FOR PRIORITY POLICY INTERVENTIONS

During this sixth administration, the Committee provided input on a list of key enablers (in line with the NDP and the MTSF) within the ERRP that enables it to check on how the DPWI, PMTE and public works entities are faring in its APPs and outputs to put these in place. We stated this in the budget vote reports from 2021/22,and 2023/24; it deserves repeating as some stubborn inadequacies identified in previous years continue to hamper the DPWI and PMTE performance.

3.1. DPWI’s APP alignment with the ERRP, NDP and Vision 2030

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 their APPs and budgetary allocation for this financial year show that theirprogrammes are going to implement these as enablers that ensure recovery and reconstruction.

The objectives of the department and the PMTE for this year mirror the job creation, infrastructure development, and economic recovery and reconstruction described in the ERRP, the NDP Vision 2030 and the 2024 Sona.Due to this alignment, it is reasonable to expect the following interventions to feature in its programmes:

Aggressive infrastructure investment.
Employment-orientated strategiclocalization,reindustrialisationandexportpromotion.
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.

We now turn to how programmes, human resources and budgetary allocations have been applied to ensure that these policy interventions can be achieved in this financial year.

4. THE DPWI BUDGET 2024/5

Note: Figures and analysis in this section accessed fromNationalTreasury(2024).

Programme	NominalRandchange		RealRandchange	Nominal%change			Real%change
Rmillion	2023/24	2024/25			2023/24-2024/25		2023/24-2024/25
1.Administration	542,1	559,1			17,0	-8,1	3,14percent	-1,49percent
2.IntergovernmentalCoordination	59,8	60,8			1,0	-1,7	1,67percent	-2,89percent
3.ExpandedPublicWorksProgramme	2958,1	2254,5			-703,6	-804,8	-23,79percent	-27,21percent
4.PropertyandConstructionIndustryPolicyand Research	4777,7	4673,9			-103,8	-313,6	-2,17percent	-6,56percent
5.Prestige Policy	68,3	63,8			-4,5	-7,4	-6,59percent	-10,78percent
TOTAL	8406,0	7612,1			-793,9	-1 135,6	-9,44percent	-13,51percent

The Department receives a voted allocation of R7.61 billion for 2024/25 with which to accomplish the priorities listed above. This represents a decrease of 9.4 per cent in nominal terms, and 13.5 per cent in real terms (calculating the impact of inflation) from the 2023/24 adjusted appropriation of R8.41 billion. The budget represents approximately 0.1 percentofthenationalappropriationbyVote,excludingdirectcharges.

Intermsofeconomicclassification,thedepartmentalbudgetincludesTransfersandsubsidies totalling83.4percentofthebudget,withatotalmonetaryvalueofR6.35billion(comparedto R7.20 billion in the adjustment period). This constitutes an 11.9 per cent nominal decrease, and 15.8 per cent in real terms, since the growth in the allocation is below the projected average inflation rate of 4.7 per cent for 2024/25.

R1.78 billion of the Transfers and subsidies is in the form of conditional grants to Provinces and Municipalities, while a total of R4.33 billion is allocated to Departmental Agencies and accounts.

For 2024/25, Current payments amount to 14.6 per cent (i.e. R1.28 billion) and Capital payments to 0.1 per cent of the budget (i.e. R9.9 million).

Compensation of employees increases by R59.8 million (from R562.6 million in the 2023/24 adjusted period) to R622.4 million in 2024/25.

Goodsandservices increased byR14.4million (fromR620.1million in the2023/24adjusted period) to R634.5 million.

The total above differs from that in the 2024 Estimated National Expenditure (ENE) received from the Treasury, which included a select number of lineitems underGoods and Services. Theactual Goods and ServiceslineitemsequalR490.4millionfor the 2023/24 financial year, and R536.3 million for the 2024/25 financial year respectively.

Revenue

The Department generates revenue through the PMTE, by letting properties and official quarters, and the sale of land and buildings. It is projected, that the Department will collectrevenuetothetotalvalueof R1.79millionfor 2024/25.This is a decreaseof R30000from theR1.82millionreportedin an adjustedperiodof2023/24.TheDepartmentsub-categoriesthe sale of Goods and services it produces according to Sales generated through market establishments and Other Sales.

R320000 is expectedtobe generatedthroughthe Sale of Goods andservices produced by the Department, of which:

R135 000 is generated through Market establishment (covered and open rental parking).
R5000isgeneratedthroughAdministrationfees(Servituderights).
R180000isgeneratedthroughOtherSales:Tenderdocuments.

TheDepartmentalsogeneratesrevenuethroughinterest,dividendsandrentalon land to the amount of R800 000; and R459000intransactionsinfinancialassetsandliabilities.

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 the priority of the National Development Plan (NDP) and Vision 30; stated in the Medium-Term Strategic Framework,as the aim to build a capable, ethical and developmental state.

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 stated aim to organise the department into a “streamlined andoutcomes-based”[3] department that is “focused on implementation”[4]. 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.”[5]

The department lists the following as performance targets for this financial year:

Programme	Budget		Nominal Increase/ Decreasein 2024/25	Real Increase /Decreasein2024/25	NominalPercent changein 2024/25 %	RealPercentChangein 2024/25 %
Rmillion	2023/24	2024/25	Nominal Increase/ Decreasein 2024/25	Real Increase /Decreasein2024/25	NominalPercent changein 2024/25 %	RealPercentChangein 2024/25 %
1.Ministry	42,9	45,8	2,9	0,8	6,76	1,97
2.Management	107,9	122,4	14,5	9,0	13,44	8,35
3.CorporateServices	256,7	259,6	2,9	-8,8	1,13	-3,41
4.FinanceandSupplyChainManagement	45,4	49,9	4,5	2,3	9,91	4,98
5.OfficeAccommodation	89,2	81,4	-7,8	-11,5	-8,74	-12,84
TOTAL	542,1	559,1	17,0	-8,1	3,1	-1,49

The allocation increases by R17.0 million and constitutes (a nominal rate increaseof 3.1 per cent andadecreaseof 1.5percent inrealterms)fromtheR542.1millionadjustedallocation of 2023/24.

In terms of economic classification, the Administration programme budget includes Current payments to the value of R551.8 million, (of which R318.9 million is to be spent on Compensation of employees) in 2024/25. The budget for the Compensation of employees underProgramme1increasesbyR34.8millionor 12.2percentinnominaltermsand7.2per cent in real terms, from R284.1 million in 2023/24.

As mentioned earlier, the2024ENEonlyincludesaselectnumberoflineitemsunderProgramme1:Goods and Services. The totals provided above may differ and not add up. The actual line items equal R181.6millionforthe2023/24financialyear,andR189.0millionforthe2024/25financialyear respectively.

Further, under administration, the Department allocates R232.8 million to Goods and services. This constitutes a decrease of R9.7 million (or 4.0 per cent in nominal terms) and a decline of 8.3 per cent in real terms fromthe R242.5 million adjusted allocation in 2023/24.

Programme 2: Intergovernmental Coordination

DPWI is a coordinating department that must manage sound relations and strategic partnerships 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.

Performance targets for this year are:

Coordinate the updating of the Immovable Asset Registers, the construction and management of State infrastructure, the implementation of the Government Immovable AssetManagementAct(No.19of2007),andperformanceinformationreportingwithinthe Public Works Sector by holding regular meetings and engagements with Provinces over the medium term.
EnsurecoordinationinthePublicWorksSectorthroughthedevelopment,implementation and monitoring of the approved Sector Plan by holding regular meetings with strategic partners over the medium term.
Coordinate and manage the supply of Built Environment Skills to support State infrastructure delivery by increasing the number of Built Environment graduates in the Department’s Skills Pipeline Strategy to 3 800 over the medium term.

The allocation for this year is R60.8million, which constitutesanincreaseof R1.0million. Thisrepresents anincreasefrom theR59.8 million that was allocated in the 2023/24 financial year.

ExpenditureforProgramme2forthe2024/25financialyearcurrentlyconsistsofthefollowing three sub-programmes:

Monitoring, Evaluation and Reporting receive an allocation of R5.6 million.17 This is a declineofR100000fromtheR5.7millionreceivedin2023/24,whichconstitutesanominal decrease of 1.8 per cent (and 6.2 per cent in real terms) from the previous year.
IntergovernmentalRelationsandCoordinationreceivesanallocationofR26.6million.This is an increase of the R1.0 million from the R25.6 million received in 2023/24, which constitutes a nominal increase of 3.9 per cent (and a decline of 0.8 per cent in real terms) from the previous year.
Professional Services18 is allocated R28.6 million. This is an increase of R100 000 from theR28.5millionreceivedin2023/24,whichconstitutesanominalincreaseof0.4percent (and a decline of 4.2 per cent in real terms) from the previous year.

In terms of economic classification, R54.4 million is allocated to Current payments. This is an increase of R1.5 million from the R52.9 million of the previous year. This is used as follows:

CompensationofemployeesconsistsofR42.4million(adecreaseofR2.2million).
GoodsandservicesareallocatedR12.0million(adecreaseofR800000fromthe adjusted allocation of R12.8 million in 2023/24).

Intermsofassistingin buildingacapableStateandplacingtheeconomyonthepathtorecovery, Programme 2’s Professional Services Branch (PSB) contributes to the development of competent,skilledandmotivatedBuiltEnvironmentprofessionalsthroughsupportedlearning interventions and focused experiential learning processes.

R6.0million is allocated forNon-Employees Bursaries:Infrastructure-related Studies, a decrease of R400 000, from the adjusted allocation of R6.4 million in 2023/24.

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, and 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.

The objectives of this programme are to monitor and evaluate the implementation of Public Employment Programmes within the Expanded Public Works Programme (EPWP) over the medium term as follows:

Support 200 Public Bodies in implementing Public Employment Programmes within the EPWP in the Infrastructure; Social; Environment and Culture Sectors.
PreparequarterlyreportsonworkopportunitiesintheEPWPReportingSystem.
Prepare 4 integrated reports on the Work Opportunities by Public Bodies in the EPWP.

For this year, EPWP gets 29.6 percentoftheoveralldepartmentalbudget which is R2.25billion. ExpenditureunderProgramme3 decreasesata nominal rate of 23.8 per cent (which translates into a real decrease of 27.2 per cent).

This amount is used mainly for the Integrated Grant for Provinces and Municipalities and the Performance-Based Incentive Allocations.

The allocated amount for the programme further is spent on the following sub-programmes:

EPWP:MonitoringandEvaluationreceiveR59.2million.Inrealterms,thissub-programme allocation increases by 7.3 per cent from the previous year.
EPWP:InfrastructurereceivesR979.2million.Inrealterms,thissub-programme allocation decreases by 24.7 per cent from the previous year.
EPWP: Operations receives R1.12 billion. In real terms, this sub-programme allocation decreases by 31.9 per cent from the previous year.
EPWP:PartnershipSupportreceivesR86.0million.Thissub-programmeallocation

increases by 3.1 per cent in nominal terms and decreases by 1.5 per cent in real terms from the previous financial year.

EPWP:PublicEmploymentCoordinatingCommissionreceivesR9.9million.Inrealterms,

thissub-programmeallocationincreasesby68.9percentfromthepreviousyear.

In terms of economicclassification, this allocation includes Current paymentstothe value of R386.6 million, of which R205.4 million is allocated to the Compensation of employees. Compensation of employees increases by R19.8 million from R185.6 million of the previous year.

Expenditure on Goods and services amounts to R181.2 million, an increase of R10.8 million (which translates into a real increase of 1.56 per cent from R170.4 million of the previous year).

Thebulkoftheexpenditure consists oftransfers and subsidiestotallingR1.87billion,(fromR2.60billionin2023/24). Of this, R1.18 billion is allocated to Provinces and Municipalities as follows:

R689.6millionisallocatedtonon-profitinstitutions.
R560.1milliontowardstheIntegratedGrantforMunicipalities.
R311.6milliontowardstheIntegratedGrantforProvinces.
R305.7milliontowardstheSocialSectorIncentiveGrantforProvinces.

Programme 4: Property and Construction Industry Policy and Research

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 research work of this branch aims to:

Promotegrowth,transformationandcompetitioninthePropertySector byconducting research and developing policies, legislation and best practices over the medium term.
Coordinate the Strategic Integrated Projects and Phase II of the National Infrastructure Plan over the medium term.

The budget decreases from an allocation of R4.78 billion in 2023/24 to R4.67 billion in 2024/25whichconstitutesadecreaseofR103.8million.

This programme consists of nine sub-programmes thatinclude the Property Management TradingEntity(PMTE)whichreceivesR4.17billionfor2024/25 from R4.20 billion in2023/24.

The PMTE was established in April 2006, as part of a longer-term reform programme to provide improved property management services to Client Departments. With the establishment of the PMTE, all accommodation-related costs were devolved to Client Departments. In this regard, it has been issuing invoices and collecting user charges from Clients every quarter, based on amounts devolved to them. In March 2015, the Department operationalised the PMTE, which resulted in it being shifted (along with its functions), to Programme 4.

Alargeportionofthebudget isallocatedtoTransfersandsubsidies,whichis R4.46 billion and account for 95.5 per cent of the programme budget. This is R119.8 million from the total adjusted allocation of R4.58 billion in 2023/24.

DepartmentalAgenciesandaccounts(non-businessentities)receiveR4.33billion,which is a decrease of R44.8 million from the R4.37 billion received in 2022/24.

Thesub-programmesbelowreceivedthefollowingallocationsfor2024/25:

The Construction Policy Development Programme is allocated R42.9 million, a real decrease of 6.5 per cent in real terms from the previous year.
Property Policy Development Programme is allocated R11.8 million, (a nominal decreaseofR100000fromtheR11.7million)andarealdecreaseof3.7percent.
Construction Industry Development Board (cidb) is allocated R75.2 million (a nominal decrease ofR5.1 million from R80.3million), a decrease of 10.6per cent in real terms from the previous year.
Council for the Built Environment (CBE) received an allocation of R51.2 million (a decrease of R3.5 million from R54.7 million), and a 10.6 per cent decrease in real terms.
Construction, Education and Training Authority (CETA) receive an allocation of R600000, (an increaseof R0from the R600000 in 2023/24), which constitutes a decrease of 4.5 per cent in real terms.
ThePMTE(asnotedabove)receivesanallocationof R4.17billion, a decreaseof
percentinrealterms.

The Presidential Infrastructure Coordinating Commission (PICC) is funded from here through a sub-programme that was included since 2020/21:

Infrastructure Development Coordination receives an allocation of R289.9million, (an increaseofR21.7million, fromtheR268.2million for 2023/24), anincrease of 3.2percentinrealterms.The aim of this subprogramme is the coordination and efficiency of the mandate to grow the economy through inclusive integrated planning and investment through the PICC.
Foreign Governments and International Organisations, to the value of R33.9 million, a decreaseof R300000(5.3percentdeclineinrealterms)fromtheR34.2millionadjusted allocationin2023/24.Thisismainlytoaddressthefluctuationsintheexchangeratewhen transferringfunds.TheunpredictableweakeningoftheRandagainstthemajorforeign currencies may result in the Department requiring an increase in its allocation from the National Treasury.
Agrément South Africa is allocated R31.9 million, (a decrease of R2.2 million) from the R34.1 million adjusted allocation of 2023/24.

TheIndependent Development Trust does notreceive an allocation for 2024/25:

IndependentDevelopmentTrust(IDT),whichreceivesnoallocationfor2024/25,fromthe R80.8 million adjusted allocation of 2023/24. The IDT is a Schedule 2 entity, it should be self-sustaining and not receive an allocation from the Department, as is the case for Schedule 3 entities.

Treasury and the DPWI explain that the previous allocations were merely to assist the continued operational functioning of the entity so that it was enabled to play its established role of being a responsivesocial infrastructure developmentagencywithawell-establishedpresenceacrossthecountry.The totalrevenue of the IDT has been expectedto decrease fromR471.9million in 2023/24, to R344.0millionin2026/27,due toananticipateddecreaseinManagementFees revenue charged to Client Departments.
Other Transfers are made to the Industrial Development Corporation (IDC), which coordinates sectoral planning for, and the implementation of development and investment in public infrastructure. The IDC receives an allocation of R102.8 million.
In terms of economic classification, Current payments total R209.3 million.
Compensation of employees getsan allocation of R23.4 million.
Goods and services get an allocation of R186.0 million.

Programme 5: Prestige Policy

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

Performance targets:

Support24plannedStateeventswithmovablestructures.
ProvidemovableassetstoPrestigeClientswithin120workingdays.

ThebudgetforPrestige

An allocation of R63.8millionthatproportionally is:

0.8 per cent of the overall departmental budget. The allocation declines by R4.5 million from R68.3million in 2023/24.
AlargeportionofthebudgetisallocatedtoCurrentpayments,whichamounttoR54.8million. A total of R32.3 million is allocated towards the Compensation of employees. The Transfers and subsidies budget of R6.7 million includes an allocation of R6.5 million to Departmental Agencies and accounts (i.e. Parliamentary Villages Management Board); R200000 to HouseholdsandR2.3milliontoPaymentforCapitalassets(i.e.Machineryandequipment).

Analytic comments on budgetary allocations

This year’s budget shows three features:

Budgetary constraints, which led to a R793.9million decrease in the DPWI allocation, and R3.69billionfromthat of thePMTE for the 2024/25 financial year.
A focus oninfrastructuredevelopment through large projects with morethanR943billionallocated topublicinfrastructure,therefurbishmentandmaintenance of existing assets, and the building of new infrastructure.
A focus on creating employment opportunities for the indigent and provision of accommodation to client departments. This is allocated through Transfers and subsidies in large portions towards the EPWP and thePMTE respectively. The rest goes totheentitiesreportingtotheMinister, with the exclusion of the IDT.

5. 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.”[6]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.”

As mentioned previously, 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 the 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 PMTE issues invoices and collects user charges from clients every quarter.

This function of leasing, and collecting the accommodation-related, and maintenance costs from clients requires legislation that forces 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 Research to complete the review of the White Papers 1997 and 1999 as the precursor to the draft Public Works and Infrastructure Bill and amendments to some of the entities that would give enforcement powers to collect such fees. The Committee heard that this work has progressed and that such legislation will be tabled in parliament during the seventh administration. It would, however, be important that such legislation includes clauses that empower the PMTE and the DPWI to collect fees owed to it.

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 the government that is contained in the immovable asset register (IAR). The full operationalisation of the PMTE should lead to full cost recovery by applying business principles in the management of the government’s property portfolio. Together with the collection of user charges, the PMTE should generate funds with which the government could undertake maintenance as well as other crucial tasks in the public works sector. This remains a challenge that the DPW and PMTE are working to put into action in the medium to long term.

In its meetings with the PMTE during this administration, this Committee found that it did not work efficiently. The entity faces challenges in attracting and retaining relevantly qualified and experienced property specialists in its Real Estate and Investment Services branch that should play a key role in unlocking the value of government immovable property.

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 works inside government properties also needs to be secure and well-catered in terms of work conditions.

The PMTE Registry Services branch thatmanages the Immovable Asset Register (IAR) and coordinates UIAMPs and CIAMPs has been struggling 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. These are specialist skills that are sought in a very competitive terrain. The best qualified and experienced personnel easily move from the PMTE to private property companies.The PMTE and the DPWI and PMTE will have to commit to a well-funded property specialist retention strategy. This would be difficult in the context of the cost-cutting measures that are in place. The challenge is to fill and retain such 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.Eight years after 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 the 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. The Committee is not unreasonable in this regard; it understands that by its very nature, the IAR will not be completed as older buildings may be removed when sold, while newly constructed and procured properties may be added on an annual basis. It is, however, fair to expect the IAR to be in a much better state with the Real Estate Registry branch having a measured control over all immovable assets and the condition, value, and debt associated with each. The information contained in the IAR is the foundation that the REIS branch requires to unlock the value of government property. A reasonably completed IAR means that the value of government property is regularly updated in compliance with the Generally Recognised Accounting Practice (GRAP) requirement, which enables the REIS to perform its function.

5.1. PMTE Programmatic Focus on Policy Priorities:

As mentioned above, the 2024 SONA focuses on job creation, the implementation of large-scale infrastructure projects and maintenance meant that the PMTE had to ensure that its programmes focused on those policy-directed objectives.

This includes a need to review the impact of the implementation of the National Strategic Plan on Gender-Based Violence in the provision of safe spaces and shelters to support the affected victims.

The contribution to Public Works and Infrastructure is evident in the following overarching priorities:

ExpandingthescopeoftheDistrictDevelopmentModeltoallspheresofGovernment and key stakeholders to continue providing an effective instrument for enhanced cooperative governance that addresses service delivery challenges in communities.
Eradicate corruption through the introduction of measures strengthening anti-corruption institutions, protecting whistle-blowers, regulating lobbying and preventing the undue influence of public representatives in procurement.
The Infrastructure Programme is yielding results due to the implementation of economic reforms and a large-scale investment campaign.
Growthe economy and provide concrete opportunities for the employment of women and youth in the job market through the Presidential Employment Stimulus.
Addressthenegative effectsofStateCaptureand corruption onplannedservicedelivery in Government Departments.
Address the effects of climate change (i.e. frequent floods, fires and draughts in the provinces), in a coordinated response by all spheres of Government and the private sector with the creation of a Climate Change Fund.
Improved novel and innovative funding mechanisms will be used to increase the construction of the required bulk water projects, bridges and rail infrastructure and unlock stalled legacy construction programmes.
The plannedachievementof30percentof farmlandownedbyblackSouthAfricansby2030 is closer to being realised with 25 per cent being redistributed to date.
Professionalise the Public Service, strengthen the Government and ensure accountability of public officials.

5.2. PMTE Budget

The PMTE receives an allocation of R14.47 billion for the 2024/25 financial year, which is a decrease of R3.69 billion. This constitutes a nominal decrease of 20.3 per cent (and a decrease of 23.9 per cent in real terms) from the revised appropriation of R18.16 billion for 2023/24.

Programme	Allocation
R million	2023/24	2024/25
1.Administration	851,6	937,9
2.RealEstateInvestmentServices	195,7	181,1
3.ConstructionManagementServices	474,0	446,4
4.RealEstateManagement Services	12768,0	8910,2
5.RealEstateRegistryServices	87,5	71,8
6.FacilitiesManagementServices	3783,8	3922,3
TOTAL	18160,5	14469,6

Allocations to PMTE Programmes

The allocation to the PMTEincludesrevenueto thevalueofR17.65billion which isadecreaseofR3.79billionfromtheR21.44billionadjustedallocation in 2023/24.TherevenueofR17.65billionfallsintotwocategories,namelyTransfersReceived which amount to R4.17billion; Non-Tax Revenue.Non-taxRevenue of R13.48billion comprises of:

R13.39billion–SaleofGoodsandServicesotherthanCapitalAssets.
R5.94billion–OtherSales.
R88.5million–OtherNon-TaxRevenue.

ThePMTEgeneratesrevenuemainlythroughchargingrentalfeestoUser/ClientDepartments for accommodation.CurrentExpensesequalsR12.38billionfor2024/25,whichisadecreaseofR3.75billionfrom theR16.13 billion for the adjusted period of 2023/24.ItcomprisesofCompensationofEmployees,whichincreasesbyR32.5millionfrom R2.17 billion in the 2023/24 adjustedperiodtoR2.19billionin2024/25.GoodsandServicesdecreased by R3.79 billion from R13.97 billion in the 2023/24 adjusted period to R10.18 billion in 2024/25.

The PMTE reported that its staff complement was 5 034 for this financial year which is an increase of 33 personnel from the 5 001 reported in the 2023/24 financial year.TransfersandSubsidiesfor2024/25equalsR2.09billion,whichisanincreaseofR62.3million from the R2.03 billion adjusted amount of 2023/24.

6. THE PUBLIC WORKS AND INFRASTRUCTURE ENTITIES:

6.1. THE CONSTRUCTION INDUSTRY DEVELOPMENT BOARD (CIDB)

The entity is mandated to:

Providestrategicleadershiptoconstructionindustrystakeholderstostimulatesustainable growth.
OverseethetransformationoftheConstructionSectorbyencouragingandfacilitatingthe participation of historically disadvantaged groups.
EstablishandpromotebestpracticesamongPublicandPrivateSectorroleplayersinthe construction delivery process.
EnsuretheuniformapplicationofpolicyacrossallspheresofGovernment.
Setandupholdethicalstandardsacrosstheindustry.
Ensureimprovedprocurementanddeliverymanagementandmoreequitableprocurement practices.
Developsystematicmethodsformonitoringandregulatingtheindustry's and its stakeholders' performance, including the Registration of Projects and Contractors.

The cidb states that its APP for 2022/23 is anchored to the following key pillars linked to action plans to assist the government in achieving NDP outcomes:

Targets to ensure mandated Indicators to reach outcomes:

The selected targets are under the Procurement and Development, and Provincial Offices Programmes.

The targets under ProcurementDevelopmentare:

TwoConstructionIndustryDevelopmentGuidelinesDevelopedannually remain as for 2023/24.
100percentofBestPracticeProjectAssessmentSchemeFundsspentperyear. This is a 60 per cent increase from the 2023/24 target.

ThefollowingtargetissetunderProvincialOffices:

120 Client Departments’ capacity for the Infrastructure Delivery Management System (IDMS)improvedperyear. Anincreaseof30ClientDepartmentsfromthe2023/24target of 90.

The budgetary allocations:

Programme	Budget
Rmillion	2023/24	2024/25
Administration	126,2	122,4
ConstructionIndustryRegulation	29,7	31,3
ConstructionIndustryPerformance	44,1	70,5
ProcurementandDevelopment	10,3	10,9
ProvincialOffices	35,9	37,0
ResearchandDevelopment	5,8	6,1
TOTAL	252,0	278,2

The cidb receives an allocation of R278.2 million for the 2024/25 financial year. This constitutesanincreaseofR26.2millionfrom the R252.0 million adjusted budget of 2023/24.

Analysis

A large component of the cidb budget is funded by an annual government grant from the National Treasury through Programme 4 of the Department of Public Works and Infrastructure (as shown under the main vote above). It receives R75.2 million a decrease ofR5.1 million from R80.3million in 2023/24.

The cidbprogrammes are funded as follows:

Programme1:Administration receivesanallocationofR122.4millionforthe2024/25financial year. This is a decline in nominal terms of R3.8 million from the R126.2 million adjusted allocation for 2023/24.

Programme2:ConstructionIndustryRegulationreceivesanallocationofR31.3millionforthe 2024/25 financial year. This is an increase in nominal terms of R1.6 million from the R29.7 million adjusted allocation for 2023/24.

Programme 3: Construction Industry Performance receives an allocation of R70.5 million for the 2024/25 financial year. This is an increase in nominal terms of R26.4 million from the R44.1 million adjusted allocation for 2023/24.

Programme 4: Performance and Development receives an allocation of R10.9 million for the 2024/25financialyear.Thisisanincreaseinnominaltermsof R600000from the R10.3 million adjusted allocation for 2023/24.

Programme 5: Provincial Offices receive an allocation of R37.0 million for the 2024/25 financial year. This is an increase in nominal terms of R1.1 million fromtheR35.9millionadjustedallocationfor2023/24.

Programme 6: Research and Development receives an allocation of R6.1 million for the 2024/25financialyear.Thisisanincreaseinnominaltermsof R300000from the R5.8 million adjusted allocation for 2023/24.

In terms of economic classification in 2024/25 cidb’s Current Payments of R278.2 million comprise of:

R142.4millioninCompensationofEmployees,an increaseofR5.5millionfromtheprevious year.
R135.7millioninGoodsandServices,a decreaseofR20.6millionfromthepreviousyear.

The cidb reported a total of 226 approved positions on the establishment for the 2024/25 financial year. The cidb reports that there are 183 funded positions, constituting 43 positionslessthanthosereportedinthe2023/24financialyear.Itisunclearwhetherthesepositions are all filled, or if there are any vacancies.

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:

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

The stated mandate in its planning documents shows an alignment with the broad policy objectives of the NDP, ERRP, and the SONA:

“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 implemented a compliance action plan for identified compliance obligations with quarterlydisclosure.”

CBE Targets

Thefollowingtargets that remained as of 2023/24, aresetunderEmpowermentandDevelopmentfor2024/25:

One TransformationIndabaengagement heldin theBuilt Environment Sector annually.
FourSectorCollaborationForumsengagementheldintheBuiltEnvironmentSectorannually.

ThefollowingtargetsaresetunderProfessionalSkillsandCapacityDevelopmentfor2024/25:

50 Districts supported through monitoring of the implementation of the Built Environment Structured Candidacy Programme per year. The target remains unchanged from that of 2023/24.
100BuiltEnvironmentstudentsfrom7UniversitiesofTechnologywhoareplacedinwork-integrated learning annually. The target remains unchanged from that of 2023/24.

Budget:

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. The transferred amount through programme 4 of the main vote is R57.5 million. This is adeclineof R1.2million from the R58.7 million adjusted budget of 2023/24.

Programme R Million	2023/24	2024/25
1:Administration	50,8	53,0
2:EmpowermentandEconomicDevelopment	1,9	1,1
3:ProfessionalSkillsandCapacityDevelopment	2,9	1,1
4:ResearchandKnowledgeManagement	1,1	0,5
5:PublicProtection,PolicyandLegislation	2,0	1,9
TOTAL	58,7	57,5

As with all public works and infrastructure entities, the CBE also receive its allocated budget through programme 4 of the main vote. This amounts to R51.2 million a decrease of R3.5 million from the R54.7 million.

Programme1:AdministrationreceivesanallocationofR53.0millionforthe2024/25financial year. This is an increase in nominal terms of R2.2 million or 4.3 per cent, (and a decrease of 0.35 per cent in real terms), from the R50.8 million adjusted allocation for 2023/24.

Programme 2: Empowerment and Economic Development receives an allocation of R1.1 millionforthe2024/25financialyear.ThisisadecreaseofR800 000fromtheR1.9millionfor 2023/24.

Programme 3: Research Skills and Capacity Development receives an allocation of R1.1 millionforthe2024/25financialyear.Thisisadecrease ofR1.8million fromtheR2.9millionadjustedallocation for 2023/24.

Programme4:ResearchandKnowledgeManagementreceivesanallocationofR500000for the 2024/25financial year. This is a decrease of R600 000 fromtheR1.1millionadjustedallocationfor2023/24.

Programme 5: Public Protection,Policy and Legislation receives anallocation of R1.9 million forthe2024/25financialyear.ThisisadecreaseinnominaltermsofR100000or5.0percent (adeclineof 9.3percentinrealterms),fromtheR2.0millionadjustedallocationfor2023/24.

In terms of economic classification in 2024/25 CBEs Current Payments of R57.5 million comprise of:

R46.8millioninCompensationofEmployees, an increaseofR5.7millionfromtheprevious year.
R10.7millioninGoodsandServices, a decreaseofR6.9millionfromthepreviousyear.

The CBE’s reported a total of 72 approved positions on the establishment for the 2024/25 financialyear.Thereare48fundedpositionsreportedinthe2024/25financialyear,thisisan additional 6 positions than the 42 reported in 2023/24. It is unclear if these positions are all filled, or whether there are any vacancies.

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.

Background:

The IDT evolved from a grant‐making organisation into a responsive development agency with a well‐established footprint across South Africa. Due to the importance of transforming this entity into a proper functioning and revenue-generating agency of government, we repeat some information setting out its challenges and attempts to remedy them.

The IDT augments the 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.

This public works and infrastructure entity is well-positioned to address the challenges in which geospatial patterns of poverty, inequality, unemployment and underdevelopment occur 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.”[7] 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 since 2018/19, 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 in reduced trust between the entity, and 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 the government, i.e. 5, 10 and 20 years[8], as well as the NDP 2030,emphasized 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 DPWI, 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 are 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 Sona.

Unfortunately, although the entity has yet again seen a regression in its governance and administration, the DPWI APP was silent on the attempt to reconfigure it into a social infrastructure development agency for the country. This requires ongoing oversight attention.

Summary of Challenges:

Despite a long-drawn-out transformation process since 2015, the IDT was not converted from a Schedule 2 to a Schedule 3A public entity.
The policy leader and the DPWI did not report on progress with the implementation of any aspect of the 2018 Turnaround Plan including how to align the IDT and the DPWI’s mandates.
Despite the knowledge that the IDT was unable to collect management fees from client departments, despite reported efforts, debt repayment to strengthen the entity’s financial position remains a serious challenge.
The long-drawn-out transformation process of the IDT caused competent administration and financial management personnel to leave, and this weakened its ability to collect debt, negatively affected financial management, and caused compliance with legislation and regulations to suffer.
These resulted in negative audit findings made by the Auditor-General in its latest Management Report and previous Annual Financial Performance Reports.
The IDT suffered from a trust deficit with government departments looking for project management, and maintenance services from other entities such as Coega Development Corporation and the Development Bank of South Africa (DBSA).
The Board of the IDT lost members, which meant that it could not appoint financial, and management personnel.
The former Minister and policy leader did not timeously assist to ensure that the Board was quorate to develop restructuring and organizational design processes. The ongoing inconsistencies in the composition of the Board to ensure that it is quorate,bedevilled attempts to put it on a path of recovery. While this situation was addressed and a new fully functioning Board has made some improvements to its operations, the entity has in 2023 been beset with further problems. The Ministermust address this to ensure that the entity returns to stability, as in the past instabilities led to several staff members suffering job losses - security of employment for all staff must be urgently restored.

Strategy to deal with the entity’s challenge:

The DPWI stated that the IDT had to be transformed into a more technically proficient, social infrastructure delivery agency. This process would be undertaken by a task team that includes the National Treasury, DPW, the IDT, Public Service and Administration and other key role players.

The plan was to pattern the newly configured IDT along the same model as that of the Government Technical Advisory Centre (GTAC)[9]. This model results in a highly professional advanced technical advisory agency that provides programme, project management and transactionsupport to the National Treasury and the Minister of Finance. Similar to the GTAC, the new social infrastructure agency would be established as a government component in terms of the Public Service Act.

The DPWI asserted that the Committee had to remember that the process required a new mandate from the Minister as policy leader.

The Committee stressed that the Minister as policy leader and the DPWI as the implementer of this policy had to do oversight that is more stringent over the IDT. It stressed, however, that the policy leader and the DPWI were committed to driving the process of restructuring it.

MTEF Priorities

IDThighlightsthefollowingselectMediumTermExpenditureFramework(MTEF)priorities:

The IDT Empowering poor communities by providing Project Management Services for delivering and refurbishing social infrastructure such as Schools, Clinics and Community Centres, mainly in rural areas.
Create 240 000 work opportunities, mainly through the Expanded Public Works Programme, and 14 335 work opportunities through other programme portfolios.
These activities fall under the Programme Management Programme, which is allocated R554 million over the medium term.

Select Performance Targets:

The IDT’s key strategic goals are to implement projects commissioned by National and Provincial Departments and implement transformative mechanisms geared towards empowering communities using Social Infrastructure Programmes. The select targets reported in the 2024 ENE fall under Programme Management.

The entity reported the followingtargetsaresetunderProgrammeManagementfor2024/25:

R4.8 billion value of Programme spend annually. An increase of R300 million from the2023/24 target of R4.5 billion.
4367constructionWorkOpportunities(WO)createdperyearthroughtheTrust’sportfolio. Anincreaseof1267fromthe3100WOreportedin 2023/24.
64000 Expanded PublicWorksProgramme (Non-StateSector)WOcreatedperyear. Unchanged from the 64 000 WO reported in 2023/24.

IDT Budget:

Notes on the IDT budgetary information:

The IDT struggles with funding. This is evident in the recurrent references in past years of requiring grant fundingthroughprogramme 4 of the Main Vote. In programme 4 of the main vote there is no allocation for 2024/25, from the R80.8 million adjusted allocation of 2023/24. National Treasury made it clear that as it is a Schedule 2 entity, it should be self-sustaining and not receive an allocation from the Department, as is the case for Schedule 3 entities.The IDT receives an allocated budget of R555.3 millionwhichis R100.1million less than the R455.2 million adjusted budget of 2023/24.

ProgrammeAllocations

Programme Rmillion	Budget
	2023/24	2024/25
1:Administration	289,9	379,6
2:ProgrammeManagement	165,3	175,8
TOTAL	455,2	555,3

Programme1:AdministrationreceivesanallocationofR379.6millionwhich is a reduction of R89.7million from the R289.9 million adjusted allocation for 2023/24.

Programme 2: Programme Management receives an increased allocation of R175.8 million for the 2024/25 financial year. This is an increase of R10.5 million from the R165.3 million adjusted allocation for 2023/24.

In terms of economic classification in 2024/25 IDTs Current Payments of R555.3 million comprise of:

R236.4millioninCompensationofEmployees, a decreaseofR10.9millionfromthe previous year.
R312.4millioninGoodsandServices, an increaseofR80.2millionfromthepreviousyear.
R6.5millioninDepreciation,which remainsunchangedfromthepreviousyear.

The entity reportedatotalof298approvedpositionsontheestablishmentforthe2024/25financial year.Thisisthesamenumberofpositionsreportedinthe2023/24financialyear.Itisunclear if these positions are all filled, or if there are any vacancies.

6.4. AGRÉMENT SOUTH AFRICA

Mandate

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, and the long-term policy objective in the NDP 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.

TheimplementationofASA’smandatedependsonsynchronisingitsworkplanwith the government’snationalprioritiesandothernationalplans,theentityhasindirectlinkswith strategicnationalplanningdocuments.

MTEF Priorities

ASAhighlightsthefollowing:

A focus on the implementation of programmes that promote social cohesion and safer communities, by issuing a targeted 40 Eco-labelling schemes, conducting annual quality and compliance inspections and certifying a further 44 products and systems.
R51.7 million is allocated over the MTEF period in the Technical Services Programme to achieve these targets over the MTEF.

Itreported that its Planned Certification for 2024/25 declined from 24 in 2023/24 to 14 in 2024/25.

Select Performance Targets

The select targets reported in the 2024 ENE fall under the Technical Services Programme of which the mainobjectiveisto certify non-standard construction-related products and systems so thatmethods of construction are improved to contribute towards the impact of innovation for which there are no South African national standards and to positively impact on the environment.

ThefollowingtargetsaresetunderTechnicalServicesfor2024/25:

95percentofCertificationProjects are managedandfinalisedannuallywithintheset timeframe. An increase of 5 per cent from the 2023/24 target of 90 per cent.
95percentQualityComplianceInspectionsconductedannuallyforCertificates.Anincreaseof5percentfromthe2023/24targetof90percent.
14Certificatesissuedannually.Adeclineof10Certificatesissuedfromthe2023/24target.
10Eco-labelsissuedannually.Thetargetremainsunchangedfromthatof2023/24.
92percentofValidityReviews(renewals)are conductedannuallyforvalidcertificates, which is a new indicator.

ASA Programme Allocations

ASA is funded from two sources, an annual government grant and own revenue generated from testing and licensing alternative fit for purposes building systems and products.

It receives a budget allocation of R35.9 million for the 2024/25 financial year adecline of R1.9million from the R37.8 million adjusted budget of 2023/24.

Programme	Budget
Rmillion	2023/24	2024/25
1:Administration	21,5	19,4
2:TechnicalServices	16,3	16,5
TOTAL	37,8	35,9

A large component of this budget is an annual government grant from the National Treasury through programme 4 of the Main Vote:

Agrément South Africa is allocated R31.9 million, a decrease of R2.2 million from theR34.1 million adjusted allocation of 2023/24.

Programme1: Administration receivesanallocationofR19.4millionforthe2024/25financial year. This is a decline in nominal terms of R2.1 million or 9.8 per cent, from the R21.5 million adjusted allocation for 2023/24.

Programme 2: Technical Services receives an allocation of R16.5 million for the 2024/25 financial year. This is an increase in nominal terms of R200 000 from the R16.3 million adjusted allocation for 2023/24.

In terms of economic classification Current Payments of R35.9 millioncomprise:

R24.6 million in Compensation of Employees, decreases by R2 million from 2023/24.
R11.3millioninGoodsandServices,decreasesbyR400000from 2023/24.

Matters from deliberations – Main Vote and Entities:

Budgetary constraints are evident in all funding allocations across the main vote and the entities. To give effect to the mandate of functional accommodation, the DPWI, PMTE ISA, and entities mustremain in compliance with the PFMA and financial management regulations.
The Committee remains concerned about the human resource management of the DPWI, PMTE and ISA. The executive authority needs to issue a relevant policy direction in this regard to ensure that qualified, skilled staff can be attracted and retained. If not, the PMTE overdraft and debt will lead to continued inefficiencyat a time when more prudent use of funds is required.
The full operationalisation of the PMTE so that the value of thegovernment’s property portfolio can be used to address the collection of client debt, the growing PMTE overdraft, and dependency on the fiscus.
Members remain concerned about the low targets set for vulnerable groups across the DPWI, PMTE, ISA and the entities.
The Committee signalled its commitment to ongoing monitoring of the Infrastructure South Africa and its work on large infrastructure projects across the country.
It will continue to track the progress with outstanding legislation such as the Expropriation Bill, Public Works Amendment Bill, Council for the Built Environment Amendment Bill, Construction Industry Development Board Amendment Bill, and the Infrastructure Development Amendment Bill.
Members raised the seriousness of funds used for the Enterprise Resource Plan (ERP) of the shared services of the DPWI and PMTE.From 2015 to date this project was unsuccessful and did not result in an integrated digitised financial and property management system. This is despite the millions of Rands that were spent on the procurement of the ARCIBUS and SAGE software and the training of staff.
The ongoing challenges with the PMTE and IDT as “going concerns” remain hurdles that the Minister and department must arrest and mend. The large overdraft of the PMTE due toits inability to collect fees from client departments remains a growing threat. Similarly, the IDT has yet to break even and struggles to collect management fees. It reported that its project book is declining over the MTEF period which may necessitate another injection from the main vote.
The matter of legal cases for unfair dismissal that employees won at the Public Service Coordinating Bargaining Council keeps being referred to the Labour Court for review. Large amounts - that grow annually - need to be kept as bonds for such cases. In addition, instead of arbitrating out of court, the department is spending allocated budgets to fight cases that have been successfully arbitratedby the bargaining council.

7. Recommendations:

The Minister to instruct the Director-General and senior management to report on:

Progressmadeonthe implementation of Phase IV and the introduction of Phase V of the EPWP. Detail on the unique features of the fifth iteration of the EPWP to ensure that beneficiaries are skilled and certified to enter the employment terrain of the formal economy.
Progress withtheintegration of the Infrastructure DevelopmentCoordinationfunction that funds the Infrastructure South Africa (ISA) through Programme 4.
The Total Facilities Management and the Refurbish Operate and Transfer programmes (ROT), are to be operated as public-private partnership solutions for leasing, accommodation, and maintenance of functional accommodation for service delivery departments.
Progress with the construction of government service precincts as one-stop service delivery points in large towns and cities.
Update on plans to ensure the continued viability of the Independent Development Trust, given its sustained operational and financial challenges over the last few years. Information required includes the rescheduling and draft legislation to ensure that it operates and functions on the GTAC model as a social infrastructure delivery agency.
Progress made with updating and completing a reliableandaccessibleImmovableAssetRegister,andanyfinancialimplications.
Progressmadeintheassessment ofthecompliance of the nine Provincial Immovable Asset Registers.
Progresswith the implementation of Regulation 135 and the LeasingPortfolio.
Progress with the continued operationalisation of the PMTE to ensure that the debt collection strategy results in a reduction of the overdraft, it turns the value on the Immovable Asset Register into revenue and starts trading as a fully operationalised Property Trading Entity.
Report on the R6.0 million allocation towards bursaries for infrastructure-related studies with relevant details of beneficiary organisations, number of bursary holders, and tracking of the throughput rate of beneficiaries.
Progressinthefillingofvacantpositions,particularly those at senior management level, (i.e. the Director-General and the Head of the PMTE. The report to include progress to date on the filling of vacant specialist areas, such as property lawyers, engineers, economists and quantity surveyors.
The continued monitoring of the Supply Chain Management (SCM) and procurement processes and efforts to integrate systems for a more seamless financial operation and management system between the Head Office and the eleven Regional Offices.
Internal controlsof the shared services, thebudget, and thetimely payment of invoices within 30 days of its receipt.
Reportonconsequencemanagementaswellasprogressin preventingfraudandcorruption.
Update on matters related to the Kosi Bay Border project with the KwaZulu Natal Provincial government and the broader border maintenance project.

Report to be considered.

[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 See page 30 of this report. In the case of the DPWI, over the last threefiscal years, the Director-General has been suspended and an Acting Director-General (ADG) is performing these tasks. The tendency of unstable and inconsistent administrative leadership has become a feature of this administration– the analytic and deliberations sections refer to this instability and the consequences to its mandated deliverables.

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

[4] Ibid.

[5] Ibid.

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

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

[8] 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).

[9]The Government Technical Advisory Centre (GTAC) is an agency of the National Treasury. It was established to support public finance management through professional advisory services, programme and project management and transaction support. GTAC promotes public sector capacity building through partnerships with academic and research institutions, civil society and business organisations. GTAC reports to the minister of finance and is established as a government component in terms of the public service act. See www.gtac.gov.za for further information.

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