"Rebuilding the Department of Public Works: rebuild capacity, improve service delivery and expand job creation."
1. Introduction
Honourable Chairperson
Honourable members of Cabinet
Honourable MECs
Honourable Chairperson and members of the Select Committee on Public Services
Honourable Members of Parliament
The DG, HoDs and officials
Distinguished guests
Ladies and gentlemen.
Welcome. Today, I will present the budget vote for 2013/14; account for what we have done as a department over the last year; and, most importantly, convince this House that the Department of Public Works is serious about turning itself around, and that we have a plan to take us forward.
2. The budget vote
The departmental budget allocation has been reduced by 20% from R7.7 billion in 2012/13 to R6.2 billion in 2013/14. The decrease is attributable to the following:
- The phasing out of the devolution of the property rates grant to provinces;
- Cabinet approved budget reductions of R1.5 billion over the Medium Term Expenditure Framework (MTEF); and
- Shifting of R290 million to the Department of Home Affairs for border management.
Adjustments to the department’s baseline reflect the ongoing reorganisation of the department and new priorities, and include the reprioritisation of R827 million to the Administration and the Immovable Asset Management programmes to provide for the implementation of a turnaround programme in the department.
The department’s budget reflects government priorities and our efforts to address, in particular: Outcomes 4,8 and 12.
In relation to the National Development Plan (NDP), my department is aligning activities to support goals of the NDP.
3. Expanded Public Works Programme
The Expanded Public Works Programme (EPWP) remains an effective part of government’s response to the triple challenge of poverty, unemployment and inequality.
Our initial target in the second phase of the EPWP - for the period 2009-2014 - was to create 4.5 million work opportunities. This has been increased to nearly 5 million work opportunities – with a special emphasis on unemployed youth and women. As part of this, some 8,000 youth will be recruited for artisan training to be employed by the national and provincial departments of public works.
I am pleased to announce that the problem of under-spending on the EPWP incentive grant – which amounted to R358 million in 2011/12 - has been eliminated in financial year 2012/13.
None of this would have been possible without the active partnership, coordination and participation of provinces, municipalities and non-profit NGOs, Community Based and Faith Based Organisations.
As we move into Phase III of EPWP, we have to ensure that all these stakeholders are supported where necessary – and that, collectively, we further up-scale EPWP programmes. We need to embed EPWP in the roll out of the SIPs, and ensure that - collectively as government departments – at all levels - and State Owned Enterprises - we all utilise EPWP and labour intensive methodology to maximise job creation.
Concrete examples of EPWP projects include:
- Eastern Cape - with the Eastern Cape Provincial Department of Public Works and Roads, and the Department of Defence, we are rolling out low cost bridges.
- KwaZulu-Natal – Road Maintenance Project at Newcastle Local Municipality at Madadeni – 100% labour intensive; providing livelihoods and skills transfer, as well as reducing flooding.
- Northern Cape – The Hakskeenpan Bloodhound Project – within the Municipal area of Mier – to clear and prepare a track for the latest attempt on the World Land Speed record. It involves work for 317 EPWP beneficiaries (60% women) and long-term benefits in terms of tourism resulting from media exposure for this unique facility – the world’s longest and fastest race track.
- Western Cape – street cleaning project in the Breede Valley Municipality.
- Free State – EPWP Social Sector ECD programme – has trained 1,310 practitioners and matrons in Grade R curriculum over the last three years (360 in 2012/13).
- North West – the ATCSC (Angels of Tomorrow Community Support Centre) partnered with the Mafikeng Local Municipality to create 400 work opportunities involving the following programmes – waste collection, maintenance of roads and storm water drainage, as well as care of parks and grave yards.
4. Capital Projects
In the course of 2012/13 some 214 projects were completed – including the upgrading of the Nelson Mandela Museum in Mthatha. Capital projects created some 18,815 jobs during 2012/13. The target for 2013/14 is approximately 40,000 jobs.
Some 300 capital projects will be completed by end of March 2014. This includes the Matola Raid Monument in Mozambique.
The erosion of core professional services of the department has impacted negatively on our ability to deliver on the mandate. The following mitigating measures have been adopted:
- The department has secured a budget appropriation of R66 million to fill 88 out of 219 vacant and unfunded core professional positions.
- Joint professional teams have been created to support smaller regional offices, and to work with major clients.
- The department has mapped out the roll-out programme to resuscitate maintenance workshops with priority areas being Western Cape and Gauteng.
5. Asset Investment Management
Concrete achievements and plans include the following:
- Eleven buildings were rehabilitated in 2012/13, with a further 15 earmarked for the current year in order to accommodate user departments.
- As part of the Accessibility Programme, 42 buildings were made more accessible for people with disabilities last year, with a further 146 buildings prioritised for the current year.
- Two properties measuring 433 hectares earmarked for sustainable human settlements were approved for release in 2012/13. A further five properties have been identified for release in the current year.
- In terms of Inner City Regeneration, targets for 2013 include: the completion of Precinct Development Plans for West Capital and Paul Kruger Street – as part of the Tshwane Inner City Project and Master Plan.
In implementing the Green Building Programme a number of pilot projects in water efficiency, waste management, energy efficiency and eco-labelling of construction materials are being rolled out. Key amongst these is the current base-line study on energy efficiency targeting 1,000 public buildings.
6. Prestige
We have taken firm control of Prestige by centralising it, and creating a direct reporting line to the Director-General. This has already resulted in the cancellation of a number of high-priced projects.
All Prestige projects are now undergoing investigation. The process is complete in regard to Pretoria. We have now extended the investigation to Cape.
Similarly many of the problems surrounding the security upgrade at Nkandla are rooted in the failure of supply chain management processes, poor management and lack of accountability. As a department we completed our preliminary internal investigation at the beginning of the year. We have referred our findings to the SIU for further investigation. We are also cooperating with the Public Protector’s investigation. Parliament will discuss our report, and the Auditor-General has undertaken to audit Prestige projects.
I can assure honourable members, that as a department, we will act against any individual where evidence of wrong-doing exists.
We have revived the parliamentary village boards. Our priority is to now deal with unauthorised and illegal residents and to introduce an access card system and review all aspects of security. Meanwhile MPs houses have been programmed for a maintenance upgrade.
Additionally, policy proposals on norms and standards will be presented to the Executive for a decision by June 30th. These measures will be underpinned by the deployment of additional resources in Cape Town and Pretoria. The new systems will be fully operational within six months.
I also need to mention that we have completed an audit of heritage buildings and drawn up a detailed inventory of moveable assets. This greatly assists in safeguarding these important heritage items, and provides a baseline for the future care of heritage buildings.
7. Policy: Transforming the Built Environment
The Department of Public Works remains responsible for the regulation and transformation of the construction and property sectors. Racially skewed property ownership patterns need to be addressed, and the construction industry has to create an environment where emerging contractors graduate into sustainable businesses.
The following processes were finalised in the last year:
- The Construction Sector Charter Council was registered as a section 21 Company.
- The National Contractor Development Programme (NCDP) – driven by the Construction Industry Development Board (CIDB) – was launched in December 2012, and a National Contractor Development Forum -comprising DPW and other national infrastructure development departments - has been established to co-ordinate contractor development. The NCDP is also being rolled out to municipalities in partnership with COGTA and SALGA.
On the legislative front, this year the department will be tabling in Parliament the Expropriation Bill, as well as a bill to establish Agrément South Africa as a public entity.
8. The department’s Public Entities
I need to mention the important work of the Entities that report to the Minister of Public Works:
- Agrément South Africa – The Department of Public Works has utilised Agrément certificated products in the construction of new schools in the Eastern Cape and North West provinces.
- The Construction Industry Development Board (CIDB) – outputs include: developing standards for government tenders; and maintaining a national Register of Projects, as well as the contractor registration and grading system which is both a risk management tool for clients, as well as a development tool for emerging contractors.
- The Council for the Built Environment (CBE) - ensures that only registered and competent professionals are allowed to practice.
- It remains a major concern that only a quarter of registered professionals in the built environment are black. Last year the CBE established a candidacy programme to help remove bottlenecks and assist young black graduates to attain professional registration.
- The Independent Development Trust (IDT) - supports the DPW to fulfil its mandate – as well as providing project management services to other departments – to deliver social infrastructure. IDT supports the EPWP’s management information system and the Non-state Sector programme.
DPW is currently working with IDT to develop a new business case to review the organisation’s mandate, funding model and institutional form – to ensure the long-term sustainability of the organisation.
9. The Turnaround Strategy: Rebuilding Public Works
The department’s past performance has been characterised by corruption and mismanagement.
This is a large and complex organisation where, all too often, there is misalignment between the mandate and the structure of the organisation. We are currently addressing the challenge of organisational structure with the assistance of the DPSA.
I want to assure this House that the turnaround project to ‘Rebuild the Department of Public Works (DPW)’ is now well under-way:
- We have the funding from National Treasury;
- The core of the Turnaround Team is in place under the office of the Director-General – not in the Ministry - so if the Minister is recalled tomorrow it will not derail the whole turnaround.
- Annual, 3-year and 7-year plans are in place – developed in consultation with National Treasury.
- We have said that much of DPW’s problems can be traced to a long period of unstable and changing leadership. I have also said that any turnaround strategy needs to be led from the top. I believe we have now stabilised leadership with the appointment of the new DG and CFO, and other changes at leadership level.
Our strategic focus has been on taking control of five key areas:
1. Combatting fraud and corruption
We have worked closely with the SIU (Special Investigations Unit) to investigate irregular leases and projects – some 40 investigations in all, of which 23 are completed. This has resulted in successful disciplinary actions, the suspension of six officials and the dismissal of three, including one DDG. We have instituted court actions to recover monies wrongly paid by the Department. We are also awaiting reports from disciplinary hearings involving a further two senior officials.
Arising out of the completed investigations into Prestige in Pretoria, the SIU has recommended that we suspend and discipline the responsible officials – which we have started to implement.
In the light of continued evidence of collusion between some officials and sections of the construction industry, we have started to enhance investigating capacity within the Department:
- Internal Audit was empowered to commission forensic investigations. Some 19 investigations have been completed.
- We are also establishing an internal Compliance and Enforcement Unit – advised by SARS – as part of a separate Risk Management Branch.
- Looking forward, we are establishing a separate Supply Chain Management (SCM) Branch. In this regard we are working closely with National Treasury to strengthen SCM processes.
Our broad approach is one of zero tolerance: to prosecute cases of fraud and corruption, but to also put in place robust systems “to make it easy for weak people to do the right thing, and difficult for bad people to do the wrong thing.”
2. The Immovable Assets Register
The state land reconciliation with Deeds Office records was completed by 31 March 2013. This involved scrutinising the records of 180,000 state land parcels. The findings will form the basis of a physical verification process to commence in July 2013. This will also reveal where assets are being occupied illegally. Moreover, we will be applying a fair value to our register to give a more accurate reflection of the current value of the portfolio.
Crucial to the success of this project, is the on-going collaboration between the National DPW and the provinces to confirm custodianship of land parcels and treatment of unregistered land. This has meant developing policies, regulations, operating models and a standard reporting template that requires national and provincial DPWs to keep track of all state land categories. Together with the provinces, and input and co-operation from the departments of Rural Development and Land Reform and Human Settlements, we are rebuilding the state’s immovable asset registers.
National DPW still has to allocate custodianship to some 3,200 land parcels, and approximately 24,000 land parcels need to be vested – a process which is expected to take until March 2016 to complete.
My main point: although this is a lengthy exercise, I am very confident that we are on track for the creation of an Asset Register that will – for the first time ever - accurately reflect the state’s assets.
Let me make a further point: that this is a real game-changer. With a sustainable register of state immoveable assets in place, we will have at our disposal the tools to leverage this massive property portfolio for economic development. This will also assist us to drive the transformation of the property sector in South Africa.
3. Audit of Leases
The Department presently manages a portfolio of 2,788 leased properties across the Republic. In his 2012 Budget speech, the Minister of Finance announced Treasury’s support for a national audit of leases by DPW – a timely response to the numerous lease scandals at the time.
To date, 100% of these leases have been reviewed. Of these, 1,316 required attention, revision or renewal. 365 of these leases have already been addressed. Recommendations for the remaining 951 leases will be in place by the end of June, 2013. Meanwhile all new leases are now being correctly processed.
4. Improving audit outcomes
The Clean Audit project was initiated in December 2012 to address audit queries – and includes a consortium of specialist service providers deployed across the Department’s Head Office and 11 regional offices. I am pleased to announce that the Department has appointed 64 unemployed commerce graduates as part of this initiative. This number is likely to be increased. Skills development of Finance and Property staff is a vitally important output of this project.
A key area of focus is the reduction of late payments and compliance with the President’s instruction to pay suppliers within 30 days. As part of this project, the DG and I are visiting the regions to meet with service providers, and to work with officials to address complaints.
Irregular expenditure is also a key focus of the Clean Audit Project. I am pleased to confirm that all transactions for the Department and the PMTE will be fully tested for the 2013/14 financial year – in order to eliminate irregular expenditure going forward.
5. Operationalising the PMTE (Property Management Trading Entity)
Honourable members will be aware that in 2006 Treasury approved the establishment of the Property Management Trading Entity within DPW with the injunction that a business case be submitted within two years. The failure to finalise these processes contributed significantly to both DPW and PMTE receiving negative audit opinions in subsequent years.
I am pleased to confirm that we have now formalised the establishment of the Entity. A detailed business case is under development and will be submitted to Cabinet for approval in August, 2013.
I wish to assure this House that the turnaround is proceeding in full consultation with organised labour.
10. Concluding remarks
I would like to conclude by thanking the following people:
- The President for entrusting me with the Public Works portfolio.
- The Auditor-General, Public Protector, SIU and members of the parliamentary committees for their constructive criticism and support.
- Treasury – and DPSA - for the assistance and support in developing and implementing a turnaround strategy.
- The Director General and senior management of the department who have kept the ship afloat, even as we try to turn it around.
- MECs and HoDs – whose participation has reinvigorated MINMEC – so that we now speak of a ‘Public Works family’ – which includes us all.
- I particularly want to thank all those officials of the Department of Public Works who are actively assisting in the process of rebuilding.
My message to them – and to honourable members - is this:
- Whilst we must never underestimate the magnitude and scope of the task we face, even so:
- We have stabilised the department;
- We are making real progress in tackling the immediate – and systemic - challenges;
- We have put in place the building blocks – and we have a plan – to rebuild Public Works;
- Together we can make Public Works work.
I thank you.
