Didiza, MP, National Assembly, Parliament, Cape Town
28 March 2007
Madam Speaker
Honourable Members
Provincial MECs responsible for Public Works
Chairpersons and CEOs of our Public Entities
Senior Officials
Our Stakeholders present
Ladies and gentlemen
On the Friday, 27 of April 2007, our country will be celebrating its 13th
birthday of democratic rule. These celebrations, whatever fan fare that
accompany them, will also mark the journey of transformation in our society.
Our political freedom as envisaged in 1994 was not an end in itself, but rather
a beginning of process of change. South Africa is a country in transition and
therefore in some way the challenges it faces have been faced by others before,
however the difference is on the format each of these took. For us we chose a
reconstruction and development trajectory that places people at the centre of
our development as an approach to social transformation.
Today, through this budget we are acknowledging our achievements of the past
12 years as the infrastructure delivery arm of the South African Government.
Congratulations goes to those who were the pioneers such as Minister Radebe and
the late Minister Stella Sigcau and those they led at the time because they
laid a foundation from which we are now constructing a new face of South
Africa's infrastructure and property industries. At this moment I would like us
to remember the family of Dr Ian Phillips who passed on Sunday, 25 March
2007.
He was one of our cadres in Civil Service who through his advisory role to
Minister Radebe at the time, contributed in shaping public works policies and
legislation. It is these members of our society who make us remember that ours
is to serve our people to the best of our abilities. As the department whose
responsibility is akin to the property developer of public infrastructure, we
are proud that through our development efforts within the public sector we have
not only laid the basis for shared growth but have created assets that will
contribute towards improving the physical environment for our clients and
thereby improving their functional spaces. It is in context that we commit once
again to make South Africa Work because we would have created an enabling
environment for all those who utilise our assets.
This year's Public Works Budget represents a principal resource in the
creation of the infrastructure necessary for South Africa's accelerated and
shared growth. Not only is the department responsible for the delivery and
maintenance of State infrastructure, it is also required to lead, regulate,
develop and transform the infrastructure sector, which is central to the goal
of accelerated and shared growth, to grow the economy and to halve poverty and
unemployment by 2014.
Madam Speaker, this is a budget for growth, development and transformation
of the South Africa's construction and property sectors. Importantly, it is a
budget for job creation, underpinning the commitment of the department, its
leadership and management, to the understanding expressed by President Mbeki in
his State of the Nation Address that, and I quote: "None of the great social
problems we have to solve is capable of resolution outside the context of the
creation of jobs and the alleviation and eradication of poverty and therefore
"the struggle to eradicate poverty has been and will continue to be a central
pad of the national effort to build the new South Africa."
Together with the public entities reporting to it, Public Works is fully
committed to this national effort and the economic growth that underpins
sustained employment. To achieve economic growth of six percent by 2014,
Finance Minister Trevor Manuel has continuously emphasised that Gross Fixed
Capital Formation (GFCF) must rise from 16% in 2004 to 25% of Gross Domestic
Product (GDP). This means that construction investment must rise to about 8% of
GDP and government has reaffirmed its commitment to a massive infrastructure
programme to address economic growth, social development and transformation of
the built environment. With GFCF currently at 18,4% and construction at six
percent, we are on track to achieving these objectives. However, there are many
challenges that need to be tackled by Public Works in a range of public and
private sector partnerships to further unlock infrastructure bottlenecks, to
create capacity and skills, to promote the small and medium enterprise (SME)
business sector, broad-based black economic empowerment (BBBEE), job creation
and the role of women in all Government programmes for the delivery and
management of public infrastructure.
Infrastructure delivery mandate
Over the past five years we have directed major effort towards the critical
goal of developing and transforming the construction industry. Implementing the
White Paper "Creating an Enabling Environment for Reconstruction, Growth and
Development of the Construction Industry", we have worked closely with the
industry to establish a regulatory platform for accelerated growth and
empowerment. The construction industry emerges from decades of declining
investment as a result of the failure of the apartheid economy.
During this process of decline, it lost significant capacity and emerges off
a low capacity base into a period of sustained growth and increasing
opportunity. Construction output is currently growing at a rate of 10% per
annum. South Africa will need to double its construction output in less than 10
years and public sector construction delivery is doubling over a five year
Medium Term Expenditure Framework (MTEF) period, namely between 2003/04 and
2008/09. The delivery challenge is immense and includes capacity challenges
affecting both the public and private sectors.
The role of Public Works is therefore critical to overcoming a range of
potential capacity constraints including the planning, procuring and
maintaining of infrastructure. In this context, I am pleased to report that
significant results have been achieved. Notably, provincial public
infrastructure spend improved last year by 29% under the impact of
multi-faceted interventions and partnerships promoted by the department.
These interventions include the partnership between Public Works, National
Treasury, the Construction Industry Development Board (CIDB) and the
Development Bank of Southern Africa in support of Governmentâs Infrastructure
Delivery Improvement Programme (IDIP). A direct outcome of the Growth and
Development Summit, IDIP has built the coordination and capacity of Provincial
Departments of Education and Public Works to ensure that South Africaâs
children are no longer schooling under trees.
Public Works and CIDS support has included the development of the Toolkit
Infrastructure Delivery Management System that forms the foundation for IDIP,
covering the full delivery cycle from needs identification through to
procurement, project delivery and maintenance.
Our strategic interventions further include the introduction of the Register
of Contractors and Register of Projects together with streamlined procurement
regulation. In the roll-out of these interventions, over 2 000 officials and
built environment professionals were trained over the last year and the CIDB
procurement training programme has been accredited by the Engineering Council
of South Africa and the South African Institution of Civil Engineers.
The resulting procurement improvements have also reduced the time to award
of contracts by all organs of state from as much as six months in some cases,
to 60 days and less, meaning that we are effectively beginning to unlock public
sector delivery. We will continue to expand the expert support provided to
organs of state, particularly municipalities in the procurement and delivery of
critical infrastructure, including the 2010 World Cup.
Introduction of the national Register of Contractors has not been a smooth
and easy process, but we have remained firm in our resolve to regulate the
sector for improved equity and quality, and to create a firm foundation for
development and transformation of the industry. Over 25 000 contractors are now
registered in all provinces and, through the national Construction Registers
Service, receive cell phone and e-mail notification of all public sector
tenders. It is worth noting that over 1 000 contractors improved their grading
status over the past year and 80% of these are black-owned small and medium
sized enterprises. This is because these contractors are now tendering in a
regulated and enabling environment and are not competing with "fly by night"
players, whose failure rate has undermined delivery and some of our development
objectives such as quality, safety, and accessible finance for real industry
players.
This year's budget therefore provides for the establishment of a National
Contractor Development Programme (NCDP) that will be led in partnership between
national and provincial Public Works departments together with the CIDS. Our
focus is on sustainable enterprises. Sustainable enterprises perform better.
They are better employers and contribute to skills development. They are part
of an industry that delivers quality and value to clients and society.
This programme will therefore build on the stakeholder commitments of the
Construction Charter and the commitment of other stakeholders, including the
financial services sector. To facilitate programme implementation and an
improved registration service, Public Works and the CIDB will establish
construction contact centres at provincial level.
Work has commenced on four of these centres and the next will open in
eThekwini in May of this year. It is important to note, however, that
contractor development is already well underway in most provinces. Through the
Expanded Public Works Programme (EPWP), 720 small contractors have qualified
through accredited learnerships to exit at Grade, 3, 4 or 5. In this context
the EPWP will scale up to achieve 1 500 learnerships over the next two years
and the Independent Development Trust will intensify its focus on women in
construction, promoting their employment, skills and development as
contractors.
Our focus on the construction sector takes full cognisance of the immense
potential of the industry as an employer. Under the impact of growing
investment and the Expanded Public Works Programme, employment in the
construction sector has risen from 645 000 in 2004 to 926 000 (Sept 2005). With
construction output set to double, the industry has the potential to generate
several hundred thousand further jobs by 2014, contributing significantly to
the goals of shared growth. Many of those employed will need to be skilled. The
department will work with all stakeholders, the Construction Education and
Training Authority (CETA), Further Education Training (FET) Colleges and
Industry to ensure that we overcome bottlenecks in the development of critical
skills.
Property development
The public Sector property portfolio remains one of the largest in our
society in the form of land and buildings. Some of these are and will continue
to be used for the accommodation needs of government departments and public
entities. The property portfolio therefore requires that we do not only pride
ourselves as being a dominant player but rather we should also concern
ourselves about the return on the investment for the state as it relates to
these assets. It is for this reason that we have developed the maintenance
strategy so that each one of us budget for maintenance for our existing
infrastructure as well as those that will be newly constructed assets.
Our National Youth Service on building maintenance will also enable us to
undertake this task in a manner that creates jobs and imparts skills to those
young people who are currently unemployed. The young people in our Vukuphile
learnerships programme have given us confidence that it is possible to build a
contractor and a contractor supervisor programme in a period of two years. I
wish to commend the Municipalities who have used their Municipal Infrastructure
Grant as part of the Vukuphile learnerships programme. Congratulation goes to
the Enkangala Municipality for having been pioneers in this regard. In our
department's budget last year, our late Minister Stella Sigcau indicated that
the department will be setting up the Trading Entity to help us manage in the
first instance the accommodation rental from government departments following
the devolution of budgets to them. Processes have been undertaken to create
this entity, however the institutional capacity of the Trading Entity has not
yet been finalised. We will endeavour during this current year to bring this
matter to finality.
During this year we will undertake work in enhancing our asset register. It is
clear that during the transition period there may be assets of the state that
were not correctly captured or missed. We would therefore make a call to those
who know of any state asset to come forward with the relevant information. In
order to accelerate this work we will endeavour to give amnesty to those who
may currently be using our assets and come forward within a period six months
starting from 1 April until October 2007.
Honourable Speaker,
I indicated that we are expanding our focus to ensure that the goal of
shared growth and broad-based black economic empowerment are also ingrained in
our maintenance and management of state assets. In the year ahead, we will
begin to leverage these assets to transform the property sector. Collectively
government remains the single biggest landlord, tenant and client of the
property industry in South Africa, a position which inevitably thrusts
government into the forefront of the transformation of this sector. The reality
however, is that apartheid social planning denuded the majority of the people
of the right to access and own property, thereby creating a massive class of
the landless and, by implication, property-less people.
Consequently property ownership has been historically skewed against the
poor and Public Works is called upon to lead the process of restorative justice
to promote access to, and meaningful and universal participation in the
property sector. Every year government through the national Department of
Public Works and provinces invests billions of rands of its budget to lease
property from the industry in which only less than 10% of players are from the
historically disadvantaged groups. We will now begin to use this investment
muscle to drive increasing participation by black- and women- owned businesses
so that they are rapidly able to gain experience in leasing and facilities
management, a critical entry point to the sector and one that does not require
major capital resources.
We are also considering implementation of a Property Academy to support this
drive. At the same time, we reiterate our call to the property sector,
including the financial institutions and their role in providing access to
finance, to work with government on these initiatives so that we collectively
ensure the contribution of the sector to the goals of shared growth. Our
commitment is clear and within the next six months we will establish concrete
interventions that support empowerment. These will be based, inter alia, on
lease renewals, new leases, minimum participation goals and longer leases that
support empowerment.
Honourable Speaker,
Central to the management of public infrastructure is their ongoing
maintenance. In last year's Budget Speech the Minister of Finance signalled the
development by the Department of Public Works of a National Infrastructure
Maintenance Strategy (NIMS) to address concerns particularly with regard to
municipal water treatment, water and sewerage reticulation, on-site sanitation,
some provincial and municipal roads and other infrastructure, The strategy was
approved by Cabinet in the latter part of last year and Public Works is gearing
to lead its implementation. Proposed interventions include:
* strengthening the national regulatory framework governing planning and
budgeting for the maintenance of infrastructure
* providing non-financial assistance to those institutions which require
it
* developing the maintenance industry
* strengthening monitoring and evaluation related to maintenance.
The maintenance sector forms an integral part of South Africa's total
construction delivery capacity. As the Deputy President has indicated, its
activities are ongoing and substantially local in nature. Rapid growth of the
maintenance sector, with its inherent labour intensity, wilt stimulate
sustained job creation, skills development and broad- based black economic
empowerment
Our contribution to the urban renewal strategy of government includes major
projects such as Re Kgabisa Tshwane that not only contributes to improving
working space for our civil servants, but also enhances Tshwane as an economic
growth point. Currently major work is underway and this will be elaborated in
the Deputy Ministerâs address. Such maintenance-intensive programmers will
support our effort to implement the National Infrastructure Maintenance
Strategy.
Honourable Speaker,
The Independent Development Trust (IDT) has been particularly successful in
supporting the National Provincial Public Works, Education and Health
departments in addressing the backlogs in social infrastructure delivery. The
IDT has developed and refined a service delivery model which is rooted in
labour intensive methodologies, and EPWP principles. I met with the IDT late
last year to support and provide direction to its corporate strategy
development process.
I am happy to report that following the IDT's participation in the study
tour to Chile and Tunisia, to which the President referred in the State of
Nation Address, the IDT has a redefined and sharpened niche for itself so s to
ensure the relevance its mandate, and its distinctive role in sustainable
development and poverty eradication. Hence, with effect from 6 November, the
core role and niche area of the IDT is to facilitate the creation of
sustainable livelihoods and cohesive communities in poverty pockets and
underdeveloped areas by focussing on women as targeted beneficiaries. We are
looking forward to seeing impact of IDT innovations towards shared growth. In
this context the organisation has set some challenging targets for the year
ahead. These include:
* 10% of programme spend will be dedicated to women contractors
* women contractors employed by the IDT will improve their grading on the
national Register of Contractors.
Expanded Public Works Programme (EPWP)
Another critical component of our mandate is the Expanded Public Works
Programme (EPWP) that establishes a bridge between the first and second
economies, enabling job and skills opportunities, an essential foothold for
those historically marginalised from economic participation. The EPWP is on
target to achieve its commitment of one million job opportunities, with the
Environmental and Economic sectors of the Programme exceeding their
job-creation targets. As of September 2006, the Programme has delivered 459 840
net job opportunities, ahead of the target of 425 000 for the same period,
exceeding targets for women (54% against 40%) and youth (60% against 30%). In
an ongoing effort to upscale the scope and the impact of the EPWP, government
has announced the launch of the National Youth Service (NYS) a joint initiative
with the Umsombovu Youth Fund, Department of Labour and the provincial
departments of Public Works. Our contribution to the NYS as announced will
include the recruitment and built environment skills training of no less than
10 000 unemployed youth and graduates.
Amongst us today are four of the first new recruits, pioneers of the EPWP
contribution to the National Youth Service as announced by the President in his
State of the Nation Address. So far the national Department of Public Works has
identified 64 building projects with a total value of R3 billion to kick start
the NYS. Provinces will also select their own projects. A Committee made up of
the national departments of Public Works and Transport and their provincial
counterparts, the Presidency, and the National Treasury will co-ordinate the
implementation of the additional R3 billion allocated under the provincial
Infrastructure Grant for the construction and maintenance of mainly rural
access roads, contributing to the further expansion of the Programme and job
creation. One of the new areas identified for the scaling up of the EPWP is the
waste management programme which we will be piloting with municipalities.
As an impetus to the local government, a technical support programme will be
rolled out in conjunction with the private sector to assist municipalities to
implement the EPWP initiatives in the infrastructure sector. Known as the
Expanded Public Works Support Programme, the initiative will target 130
municipalities that have the largest capital budgets. Municipalities continue
to post low job creation data, the problem that is also compounded by the
current inefficient monitoring and reporting mechanisms. To reflect the true
potential of this sphere of government in the identification and implementation
of the labour-intensive projects in support of EPWP and its objectives, a more
reliable web based reporting and monitoring system is being developed to
replace the current use of spreadsheets for reporting purposes.
On Thursday, 15 February 2007 we held the maiden EPWP Excellence Awards as
an annual event in recognition of the men, women, and youth who give it their
best. From the Home Based Care Givers of Nkomazi at Tonga, community access
road builders of Embalenhle near Secunda to the builders of the June 16 Youth
Monument in Soweto, one cannot help but notice the appreciation and gratitude
in their voices, for the opportunity given to make a difference not only in
their personal circumstances but also to leave a legacy in their communities.
We thank all participants, individuals and institutions alike.
Governance
The department welcomes the vote allocation of three billion, six hundred
and ninety three million and one hundred and twenty thousand rand (R3 693 120
000) for the new financial year (2007/08). The vote represents an increase of
five hundred and eighty five million rand (R585 million) compared to the
preceding year and is indicative of the growing confidence in the abilities of
Public Works to execute both its mandate and functions with increasing finesse.
As from January 2007, we have affected the mandatory Quality Assurance in line
with the recommendations of the International Institute of Internal Auditors.
Our management processes supporting good governance, controls and management of
risks were independently evaluated by Mr Graham Joscelyne, who is an
international expert and a former Auditor-General of the World Bank Group in
Washington, DC. In his report, Mr. Graham remarked, and I quote: "DPW conforms
and exceeds the International Standards". To sustain the good work, all our
senior officials have participated in the training on the processes of risk
identification and controls management. We have also continued to maintain
cordial and co-operative relationships with the DPW Audit and Risk Management
Committee as well as the Office of the Auditor-General.
The departmentâs Internal Audit and Investigation Services Unit has
developed and is implementing a comprehensive Fraud Prevention Strategy to deal
effectively and efficiently with internal fraud and corruption. This strategy
is already bearing fruit as proven by the recent sentencing of a private
individual to 15 years imprisonment in the Pretoria Specialised Commercial
Crimes Court for her role in a fraud of R4,2 million. This significant
breakthrough is the result of rigorous internal investigations and good
cooperation with the National Prosecuting Authority. I would like to thank all
others for their integrity, honesty and diligence. You are the strong link in
the value chain of service delivery. South Africa continues to work because you
work.
Closing remarks
Honourable Speaker, I take this moment to announce the appointment of Mr
Manye Moroka as the Director-General of the department. He will assume his
responsibilities from the Monday, 2 April 2007. I wish him success and together
with the staff and management, assure him of our support. I also welcome the
appointment of Mr Ronnie Khoza as the new CEO for the Construction Industry
Development Board (CIDB).
The process of appointing the Deputy Directors-General of Operations as well
of Corporate Services is at an advanced stage. We shall be making announcements
in due course. We certainly require firm management and stringent leadership to
uphold corporate governance. A special thanks to the Deputy Minister for his
continued support. Our work would be incomplete without the oversight function
of the Public Works Portfolio Committee. In reverence to your role, we have
resolved to consciously work at strengthening the relationship with you. This
is one of the key strategic imperatives that will inform and influence
everything we do as a department.
I thank you all.
Issued by: Department of Public Works
28 March 2007
