Honourable Mr Speaker
Honourable Premier
Colleagues in the Executive Council
Honourable members of the house
Distinguished guests
Ladies and gentlemen
Fellow South Africans
1. Introduction
2009 will be one of the most challenging years for the world economy since the 1930s. Faltering global growth should have a negative impact for the South African economy as export demand and investment inflows weaken.
Companies will feel the pain, with operators in the mining and mineral processing industries already hard hit, whilst manufacturers are increasingly feeling the strain and retailers being among the worst off.
Considering this economic slowdown, it is not surprising that employment losses have already occurred. Most of the reported job losses were in the informal sector, with the mining and manufacturing sectors being the worst performers in the formal sector.
Many of the benefits associated with the buoyant global conditions of the recent past will not be revisited for years to come. Macroeconomic conditions have become more difficult as investment flows to emerging markets dry up and the cost of capital on global markets becomes prohibitive. Macroeconomic conditions will be more difficult over the period ahead.
The central goals of economic policy remain accelerating growth and job creation, broadening economic participation and reducing poverty. Progress in these areas will be more difficult over the period ahead.
Policy adjustments need to reinforce macroeconomic stability in the context of a deteriorating international environment and provide a temporary cushion to the domestic economy (IDC: 2009).
Honourable Mr Speaker, We have chosen to preface our policy speech by citing from the economic overview analysis done by the Industrial Development Corporation (IDC) in March 2009. We have chosen so because this citation provides both a context and reality within which our work is to be undertaken.
Our manifesto is indeed very explicit on what needs to be done and our people have said it loud and clear that through their votes they expect their conditions of destitution to be changed. It is therefore important to understand this mandate given to us by the people and our programme as outlined in the manifesto against the backdrop of the global economic realities.
This honourable members, is by no means predicating excuses for non delivery, but alerting us to the fact that we have to be resilient, prudent and strategic when navigating the journey ahead. The policy choices we have made have been carefully thought out informed by the realities of the day, capacity as well as resources at our disposal.
A solid foundation has indeed been laid for us to proceed with building on the good things that have been made while amending or changing that which is not working. In this regard Honourable Speaker, our people in their millions have also confirmed that they are happy with what has happened so far, but much more still needs to be done.
2. 2008/09 financial year highlights
At this stage, honourable members of the house let me also confirm that a lot has happened by recounting what we have done in the last financial year. In doing so, I will start by reminding the house on the commitments we have made in the last financial year.
We wish to state it upfront that some of the initiatives could not start in earnest; however, these have not been lost but will be carried out this financial year. On 13 March 2008 my predecessor, Honourable Martin, stood here and undertook to do the following:
- The department said it would increase the Expanded Public Works Programme (EPWP) job creation target from 40 000 to 52 000 and training target from 35 650 to 39 000. EPWP is a nationwide employment creation cum poverty intervention programme which seeks to draw significant numbers of the unemployed into productive work, so that workers gain skills while they work and increase their capacity to earn an income. The main object of this programme is to use public sector budgets to alleviate unemployment by creating temporary productive employment opportunities coupled with training. Regarding this programme, we are proud to report that we have created 75 000 job opportunities, of which 30 155 for Youth, 35 815 for women and 421 for people with disabilities. In total 60 557 person days of training were held. We must also hasten to make the point that as a province we are one of the top provinces that have contributed immensely in ensuring that government exceeds its targets way before the set time.
- Regarding the Accelerated Professional and Trade Competencies Development Programme (APTCOD), a skills development programme focusing on the production and development of artisans and professionals. We undertook to improve its support and management systems to ensure quality output. Indeed honourable members this approach is yielding results as we are now having 34 trainee artisans that have passed trade test. In other words this programme has produced 34 artisans as a contribution to the country’s effort of skills development and the construction industry, in particular.
- The department said it would implement in earnest the construction incubator programme, targeting 30 emerging contractors in each region with special emphasis on youth and women owned contractors. Today Honourable Speaker, we are not afraid to report that we have recruited 162 into the programme. 84 contracts have been awarded so far to the value of R103 755 096 million. Of course, we are experiencing some teething challenges, but they are not insurmountable.
- To carry through with the intentions of the Government Immovable Asset Management Act (GIAMA), the department said it would continue with its support to client departments in terms of developing User Asset Management Plans (U-AMPS) so that we can be able to complete the Custodian Asset Management Plan (C-AMP). This, the department said, is the basis for the development of a comprehensive infrastructure maintenance strategy. Regarding this aspect of our work, the department has completed five trial U-AMPS as per the requirement of the Act. Six policies have also been reviewed to be GIAMA compliant.
- The department has made tremendous progress in ensuring the department and indeed the provincial government has a credible immovable asset register. To enhance it, 8 600 more properties have been captured and added during the year under review.
- Regarding our commitment to maintain our infrastructure we committed ourselves to double our efforts in coordinating all stakeholders in ensuring that we develop a provincial chapter of the National Infrastructure Maintenance Strategy (NIMS). Implementation of this programme has been delayed due to a number of factors including the completion of U-AMPS, C-AMPS as well as the comprehensive asset register on which the strategy is dependent. We will however continue with this work this financial year.
- Regarding the payment of rates and taxes devolved to us, the house would recall that we were given R119 million conditional grant. We have now paid all the invoices that were submitted to us by various municipalities. This exercise honourable member has also exposed us to serious capacity challenges faced by municipalities, especially small municipalities in respect of billing. Various initiatives have been explored in this regard, including entering into agreements with municipalities on how best to manage the situation. Just a few weeks ago we held a successful meeting with almost all municipalities to attempt to support each other on this issue. We believe that we are making progress.
- On the infrastructure side, we have completed a number of projects for both the Departments of health and Education. In addition to these, the Department has also completed the following projects:
- Project: Eastern Cape legislature Chamber
Project Value: R39,198,015,77
Status: Complete
Location: Bhisho
- Project: Conversion of Pick ‘n Pay Building into government offices
Project Value: R31,073,583,35
Status: Complete
Location: Bhisho
- Project: State House phase1
Project Value: R6,572,180,89
Status: Complete
Location: Bhisho
- Project: Amathole Office Block A
Project Value: R24,780,000,00
Status: Complete
Location: East London
- Project: UKhahlamba Regional Office
Project Value: R7,075,367,41
Status: Complete
Location: Sterkspruit
- Project: House of Traditional Leadership
Project Value: R79,613,977,75
Status: Complete
Location: Bhisho
- In the spirit of business unusual and as a contribution to the efforts of saving energy, we have already undertaken a study on various options and initiatives to save energy. On the basis of the results on this we will, in partnership with Eskom, roll-out these initiatives to all government departments starting with the Qhasana, Dukumbana Tyamzashe and the legislature buildings. In this regard, we have started by installing energy saving light fittings (lamps) to these buildings.
- To take this work forward, we have signed a Memorandum of Understanding with Eveready South Africa. In terms of this agreement, Public Works will procure energy savings lamps and turbines from Eveready and they in turn will ensure better prices for sub-contractors and to protect the local economy/industries against the world economic recession. This we did in the interest of promoting local business opportunities, creating and protecting jobs in the face of global and local economic strain.
- Being the second biggest landlord in the province, we believe that we have a critical role to play in altering the economic complexion, property relations, and ownership patterns in the property sector. As members would recall that the department undertook to create a platform for strategic engagement with all role players in the sector in the form of a property summit, we have had to change the approach thus delaying the holding of the summit as planned. However, we have decided to engage various stakeholders starting with holding a seminar with the landlords.
This approach is informed by new programmes we have introduced during the year and is a solid build up towards the summit. We recommit ourselves to host the summit on 15 August 2009. Through this work, the department is in a better position than it was five years ago and indeed we are more than ready to build on this work to accelerate change in people’s lives.
3. 2009/10 priorities
Honourable Speaker and members without rehashing our business plan let us now turn to our priorities for 2009/10 financial year which derive from our revised mandate. In doing so, let us once again preface these priorities with some reassurances from our party and government.
The State of the Nation Address by President Kgalema Motlanthe and the National Budget Speech by Minister Trevor Manuel, delivered on 6 and 11 February 2009 respectively, highlighted the need to re-inforce the momentum of the large public sector Capex programme, now valued at R787 billion over the forthcoming three years.
Public sector employment programmes will be intensified, particularly through plans to expand employment in health, social work, education and law-enforcement agencies, whilst the next phase of the Expanded Public Works Programme will be rolled-out. Mitigating actions can be taken within the private sector to counter an excessive deceleration in investment activity, plant and production closures and the accompanying job losses
In his inaugural address President Jacob Zuma reassured the nation by indicating that despite the global economic down turn, the effects of such a down turn are mitigated by the fact that South Africa’s economy has been firmly grounded over the last decade and this should cushion us from being hard hit by these bad economic times. Our priorities are therefore predicated on this firm economic foundation and we are thus confident that we will weather the storm.
4. Custodianship of immovable assets
Sometime during the last financial year the previous Premier formally devolved the custodianship authority to the MEC responsible for Public Works. This made Department of Public Works (DPW) the official custodian of all immovable assets in the province.
This responsibility had to be undertaken guided by the newly enacted Government Immovable Asset Management Act (GIAMA). Even though GIAMA was enacted a year earlier, its real practical and operational implications are taking effect only now.
In view of these implications the department has taken strategic decisions to effectively implement the act. These include the review of institutional arrangements of the entire directorate, upgrading it to a chief directorate to allow for specialisation and greater focus.
The act required that the department develops and maintain a comprehensive and credible asset register. Accordingly, the department has taken measures to compile a credible asset register.
As we indicated earlier that we have added 8237 more properties into the asset register. The asset register is currently having 9 367 provincially owned properties. This financial year we will continue with this work to enhance the asset register. In this regard, we will appoint 20 unemployed graduates to focus, in the main, in site visits to assist with verification and condition assessments.
These graduates will be trained to have basic skill in this field, and hopefully, pursue careers like asset management property sector. We have had to review the disposal policy for it to be compliant with all other empowerment legislations. We have now finalised the review and are ready for consulting on it with various stakeholders.
We believe that we will be in a better position to dispose superfluous and redundant immovable property. To kick start the process we have asked municipalities to identify properties in their respective jurisdictions so that we can prioritise them when we dispose property.
Furthermore, we are exploring possible public private partnerships to refurbish, maintain and management properties in distressed conditions and dilapidated. Some of these properties will be used to revitalise small towns. This will be done in conjunction with municipalities informed by their Integrated Development Plans (IDPs) and Local Economic Development (LED’s) strategies.
5. Provision of accommodation for effective functioning of departments
The provision of office space is a major challenge for the department and indeed for the entire provincial government. Various options are explored to resolve this challenge key among these is enforcing proper space planning by provincial departments.
To achieve this, the department is finalising all departments office space needs plans for the Medium Term Expenditure Framework (MTEF) period. This also includes rationalising and reorganising office accommodation according to the new developments including accommodating departments that have been combined in the same building, where possible.
We are convinced that we are not using the available space optimally and wisely, so we are working hard to find other alternative means, including prefabricated structures to alleviate overcrowding experienced by a number of departments.
To succeed in this endeavour, government employees will have to change their mindsets and gradually move away from the enclosed four cornered offices, to an open plan arrangements.
To pursue the long term solution for space provision, the department will once again present to Executive Council (EXCO) the progress on the Bhisho Government Complex (PPP) and Mt Ayliff One-Stop-Centre with an intention to ensure that actual construction of this project starts in earnest soon.
Leading transformation and development in the property and construction sectors
Honourable Mr Speaker It seems that we have our work cut out in these sectors, especially the buildings and manufacturing segments of the construction industry as well as the property sector.
The report by the IDC revealed the following about the above assertion: The local construction sector still managed to report a sterling performance in the third quarter of 2008, with real value added increasing by 15% (after posting a 9,1% increase in the second quarter).
It would appear that most of the growth momentum has emanated from civil engineering activity (i.e. road building, bridges, harbours, railways, etc.). The building construction segment, however, remained under pressure as indicated by a steep fall in the composite building confidence index to its lowest level since 2001.
The non-metallic minerals product sub-sector (which includes cement, tiles, bricks and other building materials) saw sales volumes plummet as conditions in the residential property market deteriorated.
The basic metals and machinery sub-sector experienced a sharp drop in production volumes during the third quarter of 2008. Honourable members of the house, we have every reason to believe that the emerging contractors and emerging property owners are the hardest hit by these negative developments in these industries.
Needless to mention our people who constitute the majority of the labour force in especially the buildings industry are at the receiving end. In the light of the foregoing, we believe that our policy choices are relevant in cushioning the most vulnerable in the sector.
In this regard, in line with the national programme to transform the property industry, the department will be implementing the Property Incubator Programme (PIP).
This is a programme meant to develop emerging property owners, property brokering and facilities managers wherein the department is aiming at enforcing ownership and/or partnership in this industry through its lease portfolio. We are now finalising recruitment for the first intake of the Property Incubator Programme participants.
As part of rolling out the programme, there will be no more leases or renewals for landlords who are not BEE Compliant. At the recent property seminar we alluded to earlier, landlords were made aware of the department’s programme, especially the policy review in order to fast-track entry and meaningful participation of blacks in the industry.
As we indicated earlier in the speech, we will still convene a property summit wherein we will come up with clear recommendations, towards developing a comprehensive property industry development strategy.
We are also continuing with the contractor incubator programme through which we develop contractors in the construction sector. We are certainly making progress in this programme; we however need to strengthen the support systems for these contractors participating in the programme.
To build on this work we are targeting to give contracts to 99 contractors in the incubator. To improve the efficiency of the programme we will also review the contractor incubator policy. We have already started with the consultation process with contractors which will culminate into a provincial contractor’s conference later in the year.
We will also continue with our work of producing artisans and professionals through the accelerated professional and trade competencies development programme. In this regard, we will recruit 122 more trainee artisans during this financial year.
6. Expanded Public Works Programme (EPWP)
Having done exceptionally well with EPWP phase one, government has seen it fit to proceed with phase two whose emphasis is sustainability of jobs created. One of the cardinal differences between phases one and two is the introduction of the wage incentive to encourage and motivate departments, municipalities and public bodies who are performing well in meeting their targets to continue to do so.
To this extent, R29 million will be disbursed to the following municipalities: Amathole DM, Chris Hani DM, Ukhahlamba DM, Buffalo City LM, Nelson Mandela Bay Metro, Emalahleni LM, Quakeni LM, Intsika Yethu LM and Alfred Nzo DM. These municipalities have been selected by the National Department of Public Works for their good performance in running and managing EPWP as well as meeting their job creation targets.
With the global economic crunch, EPWP is hailed as the most appropriate programme to cushion, especially the poor. During this financial year the department will contribute by creating 247 327 job opportunities. We have now finalised provincial targets and the province is targeting to create 484 737 jobs over the next five years. We are now in a process of having implementing departments, public entities and municipalities sign EPWP target pledges. This is to ensure commitment, support and consistent adherence to these targets.
7. National Youth Service Programme (NYS)
The honourable members would recall that in 2006, government introduced the National Youth Service Programme as an intervention to youth employment creation, skills development and instilling the values of patriotism to, especially young people. While as the department we have contributed to NYS through our APTCoD programme.
Admittedly, NYS as a programme has not received much attention and focus in the province and the department in particular. It is against this background that in this financial year, we will give attention to this programme with a view to accelerate and expand it beyond APTCoD. As part of our contribution to job creation, we are targeting to employ 1000 unemployed youth through NYS.
They will be equipped with basic skills as handipeople to be utilised in the maintenance of public assets (schools, clinics, hospitals etc). The young people will be in the programme for 18 months after which some will join APTCoD, others will be assisted to pursue their careers by establishing small enterprises and others will be absorbed into the establishment where possible.
8. Infrastructure delivery
In the course of 2008/09 financial year the Provincial Cabinet took a decision that confirmed the Department of Public Works as a preferred infrastructure implementing agency in the province. This resolution has put public work at a strategic pedestal to drive infrastructure delivery in the province. Whilst efforts have been undertaken to effect this decision, the department still needs to recommit on this very important and strategic decision.
This means among other things, reviving engagements with the client departments who have since established their own infrastructure delivery capacity, with a view to have this capacity transferred to Public Works, this includes transferring infrastructure budgets over to DPW.
This will ensure that capacity within Public Works is enhanced and that client departments focus on their core mandates. We will continue to implement the infrastructure capital projects which started in the last financial year some of which include: Ex Mary Theresa Hospital (Conversion of hospital to cluster offices), Ex-Maluti College (Conversion of hostels to offices), ECLA Cabinet Chamber (Upgrading phase two) and Botha Sigcau Parkade.
9. Governance and corporate support
Honourable Speaker, it is clear to us that we are becoming victims of our success and therefore our biggest challenge is to sustain the good work that we are doing, including the unqualified audit report we received last financial year.
To succeed in all these efforts we will have to strengthen our corporate support and governance. In this regard, we will, in this financial year, ensure that we continue with the following initiatives:
Whilst our internal audit section is functioning fairly well, however, we are in the process of strengthening it. We have just appointed a senior manager, she is being supported by a capacity availed to us by the Provincial Treasury through the CFO support programme. Our focus will be to rationalise and improve levels of the entire unit starting with middle management downwards.
We have started with the process of developing risk registers for different directorates. We will complete this work by ensuring that all directorates have risk aversion strategies. This will ensure that the department is able to manage and minimise material risks. We will also ensure that our fraud prevention plan is reviewed and implemented effectively.
Honourable Speaker, We must concede that much as we have been implementing processes to minimise conflict of interest, code of conduct, safety, health and environmental issues facing the organisation, however, we have not been strict in managing these. We intend to be very effective in executing these functions. As we all know that we have to start with the planning for the next five year term horizon, we are advanced with the preparations for this all important function.
As part of this process, we will revamp our human resources management section, in order to position it to play a responsive and strategic support role to the departmental strategy. This will include reorganising the entire institutional capacity and structure. This is going to be very critical in the advent of the reincorporation of the roads function back to the Department of Public Works.
We have started strengthening the top management of the department by filling in the posts of general managers and reduced appointments on acting capacity by among other things putting back acting officials in their original positions.
We have also appointed a Regional Senior Manager for Ukhahlamba region and have now finalised secondment of staff for that region. This, honourable members will enable us to service more effectively this region which has been in the neglect for a long time.
Other issues include the implementation of transformational programmes. We have held an important session wherein we were re-examining the effectiveness of our Special Programmes Unit (SPU).
This we did out of the realisation that SPU has turned out to be events coordinating unit. We are convinced, honourable members, that we have now positioned SPU better, in order for it to play its strategic role of ensuring that the department meets its transformational obligations.
These include monitoring the department to meet Employment Equity targets, but more importantly, to ensure that the previously marginalised groups are empowered.
Transfer of the Roads function back to the Department of Public Works
The incumbent provincial administration has taken a decision to reconfigure departments.
In terms of this reconfiguration, roads function will be transferred back to the Department of Public Works. Going forward, the department will be seized with the task of implementing this resolution. Processes have already started; the legal team has already met and mapped out the legal process.
Other processes will really be informed by this legal framework and process. We hope that we will conclude this task with minimal disruption to the system. Honourable members in this speech, we have outlined what is necessary to do but possible within the confines of our budget which is outlined below.
10. Budget allocation
Honourable Mr Speaker Allow me at this stage to indicate how we have allocated the budget we have been given this financial year. Whilst appreciating the allocation given to us we however do realise that there is a lot to be done and that we will have to exercise financial prudence in executing our tasks. Our allocation is disaggregated as follows:
- Category: Compensation of employees
Administration: 126,469,611
Public Works: 167,917,129
CBPWP: 20,760,000
Total: 315,146,740
- Category: Goods and Services
Administration: 84,160,762
Public Works: 374,868,818
CBPWP: 39,746,000
Total: 498,775,580
- Category: Total current payments
Administration: 210,630,373
Public Works: 542,785,948
CBPWP: 60,506,000
Total: 813,922,321
- Category: Households
Administration: 5,300,000
Public Works: 134,061,000
CBPWP: -
Total: 139,361,000
- Category: Payment of capital assets
Administration: 12,337,679
Public Works: 45,361,000
CBPWP: -
Total: 57,698,679
- Category: Total
Administration: 228,268,052
Public Works: 722,207,948
CBPWP: 60,506,000
Total: 1,010,982,00
11. Conclusion
Honourable Speaker and members, those who have eyes can definitely see that we have indeed put the department on the delivery course, however, a lot more needs to be done. Our operational plan will elaborate on most of the issues we have raised in this speech.
Honourable Speaker, at this juncture I wish to take this opportunity and thank my predecessor who has managed to lay a solid foundation in this department. I also wish to thank the management and staff of the department for having received me with so much enthusiasm; I wish that we could keep the energy going. Our people have entrusted their lives on us, we dare not fail them.
I thank you.
Source: Department of Public Works, Eastern Cape Provincial Government
