Annual Budget Vote speech in Cape Town
29 March 2006
Madame Speaker
The Deputy Minister of Public Works, Mr Ntopile Kganyago
The Chairperson of the Public Works Portfolio Committee, Mr Fezile Bengu
All the MECs for Public Works from various provinces
Honourable members
Senior Management from the Department of Public Works
Senior leadership and management of our statutory entities
Distinguished guests
Ladies and gentlemen
The successful 2004/05 financial year brought us a step closer to our vision
of making ours an efficient and effective organisation characterised among
others by prudent financial management. In that year the Auditor-General
awarded an unqualified audit report to the Department, a history making
gesture, in recognition of the various interventions instituted since we
launched MINTIRHO YA VHULA VHULA (Actions speak louder than words) in 1999.
Mintirho was our maiden programme of action through which we publicly committed
ourselves to clean administration, good corporate governance and accelerated
delivery of quality products and services in creating a better life for all and
the hard work is beginning to pay off. We are encouraged.
In line with our White Paper, the Department of Public Works (DPW) will,
beginning April 2006, devolve its leasing, maintenance, property rates and
municipal services budgets to its client departments. The property rates will
also be devolved to the provinces in the course of the year for all the
properties vested in their names. Capital works budgets were devolved to
clients more than three years ago. The motivation for this devolution of
budgets is to increase transparency in the budgeting process, and to introduce
incentives for more efficient use of resources. The transparency of the
budgeting process is increased by ensuring that all the costs associated with a
particular service are part of the budget for that service, and departments
will have a much stronger incentive to use office space and water and
electricity more efficiently when they have to pay for these resources from
their own budgets.
However, DPW will continue to render the functions associated with these
budgets. Departments will be required to pay the funds back to DPW in the form
of an accommodation charge made up of an amount for actual leases and an amount
for pre-determined rentals of state-owned property. Due to the current
under-funding for maintenance, the rental charge for state-owned property will
be very low compared to market-related rentals.
DPW will therefore continue to manage the expenditure of the funds which it
is devolving, but will now manage this expenditure on an agency basis on behalf
of departments. DPW will use the income from the accommodation charges:
* To pay leases on behalf of departments;
* To carry out maintenance and refurbishments on state-owned buildings;
and
* To provide funding for capital works including planned maintenance.
A Trading Entity is being established in DPW for the purpose of receiving
and spending the accommodation charges. This will require dividing the
Department into two sections, with the planning and operational units falling
under the Trading Entity, which will produce a separate annual report. The
Trading Entity will operate as a self-sustaining entity, with the costs
associated with the planning and operational units of the Department being
included in the accommodation charges. The Trading Entity will be fully
established by 1 April 2007. I would like to acknowledge the cooperation and
assistance being provided by National Treasury for the establishment of the
Trading Entity.
On the request of the South African Police Service (SAPS), we have agreed to
delegate some custodial responsibilities, including construction and
maintenance, for police stations to SAPS from 1 April 2006. However, DPW will
continue to provide these services to all its other client departments.
I am pleased to announce that my Department has been allocated an amount of
three comma zero eight billion rand (R3.08 billion) for the 2006/07 financial
year. This amount represents a decrease of two comma eight billion (R2.8
billion) compared to the previous year and is attributable to the amount
devolved to the national departments in line with the process of introducing
accommodation charges referred to previously. However, as mentioned previously,
DPW will continue to manage the expenditure of the devolved funds, apart from
part of the funds devolved to SAPS.
DPW has been allocated R500 million to capitalise the Trading Entity, and
these funds will be largely used for maintenance. As a result, taking into
account the revenues to be received from client departments through the
accommodation charges, DPW will spend approximately 50% more on maintenance
next financial year than it spent this financial year. We anticipate that this
increase in maintenance expenditure will continue into the future, as the
accommodation charges are gradually increased towards market-related
levels.
The Department has relentlessly pursued the path of efficiency and
effectiveness. This year (2005/06) will again see the Department achieve 100%
expenditure on its allocated budget of R5.56 billion. Approximately R2.5
billion will have been spent on capital construction works and R900-million on
maintenance programmes.
This achievement was made possible mainly by our deliberate efforts to
improve our efficiency and effectiveness. Earlier this month in Bloemfontein,
the Department formally launched its Zimisele - Give It Your Best â service
delivery improvement programme. This is a comprehensive turn-around programme
aimed at introducing more business-like management methods into the Department,
so that the Department will become a service provider of choice for our client
departments. A three-year plan for rolling out the Zimisele programme is
underway in the Department; and Service Delivery Improvement facilitators have
been appointed internally and are currently undergoing training.
Public Works is responsible for the management of three public entities,
namely the Construction Industry Development Board (CIDB), the Independent
Development Trust (IDT), and the Council for the Built Environment (CBE). It
transfers funds to the CIDB and the CBE, and receives regular reports and
carries out its oversight role in terms of the Public Finance Management Act
(PFMA). During the course of next financial year, the Department will carry out
a performance review of these entities, in line with its obligations in terms
of the PFMA.
The Government-wide Immovable Asset Management (GIAMA) Bill has been tabled
in Parliament, and the Department is already starting to put in place Immovable
Asset Management Plans for government departments. GIAMA provides for improved
planning for immovable assets, which in turn will result in more efficient and
effective use of these resources. National and provincial government
departments will be required to compile User Immovable Asset Management Plans
(UAMPs) as part of the strategic plans, which they annually submit to Treasury.
These plans should indicate how the assets are being planned and managed in
terms of established asset management principles, based on the fundamental
principle that the contribution of immovable assets to service delivery must be
optimised. As a result of this improved planning, the fiscus will benefit from
a reduction in the overall cost of service delivery coupled with reduced demand
for new immovable assets. The Asset Management Plan for the Department of Home
Affairs is currently being finalised, and the plans for the remaining client
departments will be completed during this calendar year.
In an effort to further improve the utility and compliance of our immovable
asset register, the Department has recruited and employed 54 young graduates as
part of a three year, R30-million project, to collect further information on
the Departmentâs properties and enhance the data integrity of the asset
register. An agreement has been reached with the Accountant-General and the
Auditor-General regarding the minimum information requirements for immovable
asset registers, and this project is focusing on collecting the remaining
information which will enable the Department to fully comply with these minimum
information requirements for all its properties. This includes, for example,
measuring the exact extent of properties where such measurements have not been
made previously. The project is moving briskly and in tandem with the
Department of Land Affairsâ vesting exercise.
At the same time, the Department has prioritised disposal of immovable
assets and to date has identified more than 2000 properties for analysis prior
to their phased disposal. As set out in the GIAMA Bill, the principle
underlying this disposal process is that the state should only retain
properties which are required for service delivery or for prestige or heritage
reasons. The state should not be paying rates and services for properties,
which are not being utilised for service delivery. Currently 170 properties are
being disposed of under phase one. Subsequent phases will see also the disposal
of bigger properties including the re-advertisement of both a 150 hectare
property at Midrand and the Blaauwberg property. The latter will be sub-divided
into smaller portions, which will be individually disposed to achieve a
meaningful participation of empowered property development and management
entities. Badly dilapidated vacant residential properties will be auctioned to
accelerate their disposal and save on costs.
Currently these disposals are being carried out in terms of the Preferential
Procurement Policy Framework Act and its Regulations, which provides for the
allocation of either 10 or 20 preference points for Black Economic Empowerment
(BEE) during the tender adjudication process. However, we are working with the
Department of Public Enterprises on a new disposal policy with the aim of
increasing the contribution of the stateâs disposals to BEE and to addressing
inequities in the property market. A submission in this regard will be made to
Cabinet by the end of April.
My Department will set up a mechanism similar to a call centre to encourage
and invite the members of the public to volunteer any information that will
help us to prevent the misuse of state properties including incidents of
vandalism, neglect and laundering. The Department is considering a limited
amnesty period for those confessing to illicit associations with these
properties.
The recently signed Transformation Charters for the construction and
property industries create a new platform of collaboration for sustained growth
and empowerment in the respective sectors. These charters now set out clear
targets and commitments supported by the private sector. I take this
opportunity to thank the many organisations and individuals that have worked so
hard for more than a year to deliver agreement on achievable and challenging
targets.
In the forthcoming financial year, the Department will spend approximately
R1.4 billion on leased accommodation from the private sector. In line with
spirit of the recently launched Property Charter, the Department will be
developing various mechanisms in consultation with the client departments,
existing landlords and financial institutions, to encourage the entry of black
owned property owners into this lucrative market. I will be setting stringent
targets to the Department to ensure that new leases and renewals are used to
achieve the stated transformation and empowerment objectives. The Department
will also be communicating its transformation strategies so that the key
stakeholders have a clear understanding of our long-term transformation
objectives.
The current boom in the property and building sector signals the beginning
of a period of sustained growth, underscoring the centrality of the
construction industry to the Accelerated and Shared Growth Initiative for South
Africa (AsgiSA). Driven by increasing public and private sector investment in
infrastructure, the construction industry will need to more than double its
output over the next ten years. Investment growth provides immense
opportunities to increase the participation of blacks and women within the
industry. The biggest single challenge is to boost the skills and capacity of
both the industry and the public sector to deliver the infrastructure that is
pivotal to our countryâs development.
In this context the Department is working closely with the Construction
Industry Development Board (CIDB) and the Department of Trade and Industry on
an industrial strategy for the construction industry, with the aim of
positioning the industry as one of the growth industries in AsgiSA. In
addition, the Department and the CIDB are co-ordinating a study to determine
the projected skills needs and shortages in the construction industry over the
next 15 years. The study is being coupled with an initiative to recruit and
train unemployed people to meet the projected skills gaps over time. These
initiatives are part of the Joint Initiative for Priority Skills Acquisition
(JIPSA), under AsgiSA.
This year, the CIDB will focus on the development of registered black and
women contractors. With over 8500 contractors now registered in different
categories, the CIDB Register of Contractors provides a framework for targeted
interventions to gear finance, training, mentoring, and appropriate information
and management tools. The program will build on the commitments of the
construction charter and the experience of national and provincial departments
of Public Works.
Contractor registration is already opening doors to support by banks and
financial service providers as the industry moves into a more regulated
environment. For example, National Urban Reconstruction and Housing Agency
(NURCHA) now offers finance to all registered contractors on public sector
projects, provided the tender is viable. In a related initiative, Public Works,
the Independent Development Trust (IDT) and First National Bank recently signed
an agreement to promote registered emerging contractors on schools and health
facilities in the North West and Eastern Cape, with other provinces to
follow.
Strengthening the infrastructure delivery capacity of the public sector
remains a key objective in the CIDBs continued roll-out of streamlined and
uniform procurement documentation and procedures, and governmentâs
Infrastructure Delivery Improvement Program (IDIP). The need to improve the
states ability to deliver services efficiently and effectively was stressed by
the President in his State of the Nation Address. The IDIP is a joint
initiative of National Treasury, the Development Bank of Southern Africa
(DBSA), the CIDB, and the departments of Public Works and Education. It
involves introducing improved infrastructure planning and management methods
into provincial Education and Public Works departments, with the aim of
ensuring that funds are both fully spent and spent efficiently and effectively.
As a result of this initiative and the improved working relationship between
the national and provincial departments of Public Works and Education, the
problem of children learning under trees will be eradicated by the end of this
financial year.
The launch of an independent Association for Women in Property in 2005
heralds prospects for the historically disadvantaged groups in the industry
that is still reeling from the adverse effects of apartheid space planning and
property development. The Department of Public Works has been implementing BEE
programmes in the construction sector for some time, including the Emerging
Contractor Development Programme, the EPWP Vukâuphile and venture learnership
programmes, and the Incubator Programme. In order to increase its contribution
to transformation in line with the charters, the Department will also be
establishing similar programmes in the property industry. Discussions are
currently under way with a number of high street banks regarding putting in
place access to finance for emerging black landlords. This access to finance
will be a component of a new Emerging Landlord Development Programme, which the
Department will launch during the coming financial year. The Department has
also adopted a revised BEE strategy, which includes BEE targets for its
expenditure in the construction and property industries. These targets are in
line with the Charter targets.
Initiatives such as the Departmentâs Re Kgabisa Tshwane programme will
provide many opportunities for emerging property enterprises. In partnership
with the Department of Public Service and Administration (DPSA) and the City of
Tshwane Metropolitan Municipality, the Re Kgabisa Tshwane programme was
formally launched on 10 November 2005 in response to the Cabinet and
Presidentâs call to improve the physical working environment of public servants
as part of Batho Pele. The programme will also contribute to urban renewal and
help to position Tshwane as the leading capital in Africa. The Department of
Public Works has developed a Spatial Development Framework and has begun the
Options Analysis process to determine the most appropriate, long term
accommodation solutions for national government departments and their agencies,
which will be accommodated in seven precincts in and around the inner city. The
upgrading work has started with the R50-million upgrade of the Central
Government Offices for the Department of Public Works and the R200-million
upgrading of the Civitas Building for the Department of Health. Construction
work for the National Library (Arts and Culture) is also underway while work
for the headquarters for the Departments of Education and Foreign Affairs is
imminent. The Tshwane Municipality is working on plans to upgrade the urban
environment in the precincts, particularly safety and security, recreational
spaces, cleaning, and public transport, including feeder systems to the
Gautrain. It is estimated that approximately R10 billion worth of investment
will be mobilised over a period of 10 to 15 years through the Re Kgabisa
Tshwane. Many of these projects will be implemented through
public-private-partnerships.
Some of the future construction expertise (and capacity) necessary for
successful execution of projects such as the above, are currently being
developed in the Expanded Public Works Programme (EPWP) Vukâuphile Contractor
Learnership Programme. To date the EPWP has surpassed its employment creation
targets, across four sectors, with more than 220 000 work opportunities created
in the first year (2004/05). At least 40% of the beneficiaries were female, and
an additional 60 000 work opportunities were created in the first quarter of
the second year (2005/06).
Contributing to skills development, a total of 39 provincial departments and
municipalities has signed Memoranda of Understanding with the Department of
Public Works and the Construction SETA (CETA) for the training of contractors
and supervisory staff in the management of labour-intensive construction
projects. This has resulted in the growth of the Vukâuphile Learnership
Programme from the initial target of 500 to 2175 learnerships. Approximately
40% of the Vukâuphile learners are female and 68% are youth. A total of 3000
Vukâuphile learner-ships are planned by the end of 2009. I would like to
acknowledge the Department of Labour, Construction SETA, IDT and ABSA bank for
their efforts in making Vukâuphile a success.
In addition, beneficiaries working on the Expanded Public Works Programme
have received training in Life Skills courses such as HIV/AIDS, Career Guidance
and Personal Finance through the Memorandum of Understanding between the
Department of Public Works and the Department of Labour. Additional technical
training in areas such as kerb-laying, paving, building and brick-making has
been provided to people working on EPWP projects. Public Works is working with
the Department of Transport to increase the number and the size of
labour-intensive road construction and maintenance programmes in an effort to
enhance the scale and impact of the EPWP, as part of AsgiSA, and proposals have
been made to National Treasury for additional funding in this regard.
Two focus areas have been identified for immediate work and training
opportunities in the social sector of the EPWP. These are the
Home/Community-Based Care (HCBC) Programme and Early Childhood Development
(ECD). The Social Sector Plan aims to create a total of 231 000 work
opportunities, with 125 000 in the HCBC Programme and 106 000 in ECD. An
additional R4.2 Billion has been allocated to the provinces as part of the
provincial equitable share to expand ECD and HCBC from 2006/07 to 2008/09.
Cabinet has mandated the EPWP Economic sector through the EPWP Venture
Learner-ship Programme to develop and support 3000 businesses by 2008/09. To
date, in partnership with the Sector Education and Training Authorities (SETAs)
and several provincial and municipal departments, 170 businesses responsible
for executing government contracts worth R37 million have participated in the
Venture Learner-ship Programme. These businesses receive business-related
training through the SETAs, practical training projects from government, and
access to finance through ABSA bank, and exit the learnership programme with a
National Certificate in business.
By the end of April 2006, the sector would have signed commitments for the
development of a further 320 SMMEs. By the end of the 2006/07 financial year,
in total 1000 SMMEs will be assisted through the Venture Learner-ship
Programme. These businesses will be developed in all the provinces and will be
in sectors such as agriculture, tourism, food and beverages, information
technology, wholesale and retail, and waste management. Opportunities for
venture learner-ships in other sectors where government procures goods and
services are currently being researched.
The EPWP is well on its way to meet its target of 1 million jobs by 2009. I
would like to take this opportunity to thank all municipalities, provinces and
national sector departments for their efforts in ensuring that the EPWP is
making an impact. I would also like to acknowledge the contribution of the
Business Trust, whose technical assistance and support to further enhancing the
impact of the EPWP has been indispensable.
In the spirit of Zimisele, we have been implementing a number of initiatives
aimed at improving our service delivery, including business process
re-engineering; decentralisation to regional offices and increasing delegations
to regional offices; restructuring involving increasing capacity at regional
offices; and a thorough revamp of our supply chain processes. Our human
resources section has been recruiting young and skilled blacks for placement in
learnerships and internship programmes with the aim of simultaneously
addressing skills shortage and employment equity in the Department. In
addition, working together with the Council for the Built Environment (CBE),
the Department has established partnerships with tertiary institutions to
attract young graduates to replenish scarce skills. Internationally it has
linked up with Cuba to import skills in the built environment and the United
Arab Emirates to identify women for training in project management. These
efforts are in line with, and amplify the ideals of AsgiSA.
Ethical conduct is key to doing business in South Africa and the Department
will continue to step up pressure to create a zero-tolerance environment for
fraud, corruption and maladministration. In April 2005, DPW initiated a process
to develop a Broad-Based Black Economic Empowerment (BBBEE) strategy. The
preliminary phase to this process was to do an assessment of the current
contribution to BBBEE by the Department. This involved looking at mainly
R10-million or more of individual contracts awarded by the Department over a
three-year period including 2005 financial year. Companies found to have been
fronting have been handed over in a report to the National Prosecuting Agency
(NPA) for further investigation including forensic audits. Those found guilty
by the NPA will be prosecuted.
Internally, the Department has improved its anti-corruption capacity in
accordance with the Cabinetâs decision for the creation of âa minimum capacityâ
to create awareness against, and pursue total eradication of fraud and
corruption. The approved Fraud Prevention strategy of the Department is aligned
to the governmentâs National Anti-corruption Strategy and was recently singled
out for praise as âa best practice exampleâ by a DPSA publication.
As a demonstration of our zero-tolerance to corruption, at our Nelspruit
Regional Office members of the management team, including senior managers, were
suspended pending outcomes of disciplinary processes. The Department has joined
forces with the National Prosecuting Authority to investigate allegations of
irregularities in the award of contracts at other Regional Offices. Working
with the Commercial Branch of the SAPS, a fraud of R4,2 million was uncovered
at the Pretoria Regional Office and our timeous action prevented further
fraudulent transactions to the value of R11 million. Criminal prosecutions will
be instituted against those implicated in both cases.
Corporate governance is compatible with good administration and the
Department has developed performance measures and targets for all its
programmes as part of its continuous improvement. This balanced score card will
ensure that our programmes have clear outcomes linked to the goals and
objectives as set out in the Departmentâs strategic plan. It will also by
implication, assist with the realignment of our performance to the imperatives
of AsgiSA.
As we record new milestones, we shall revert to our publics with vigorous
communication and marketing campaigns because we owe it to the nation to
amplify the successes and challenges of government. The electorate has on six
occasions (including three local elections) diligently mandated this government
to govern. We have launched a public relations campaign called âSouth Africa
Works because of Public Worksâ. This is part of our earlier undertaking to
contribute to socialisation and democratisation through constant public
awareness efforts. I invite honourable members to visit our stall at the Rand
Easter show this year. The teasers heralding the launch of the National
Construction Week campaign in July are already out. A brainchild of the
Department, the Construction Week will mobilise public sentiment behind the
construction sector and confirm its status as an asset to the nation.
In conclusion I want to acknowledge the role of the Independent Development
Trust (IDT) in the work of managing development programmes as well as
monitoring and assessing their impact. This includes assisting with the
maintenance of stateâs immovable assets on behalf of my Department as a
contribution to the job creation and skills development objectives of the EPWP.
In the next few months a new Board of Trustees for the IDT will be appointed. I
like to thank the current Board for their contribution.
My sincere appreciation and gratitude goes to the Deputy Minister, Mr
Kganyago, for all the cooperation and support particularly his stewardship in
moments of my incapacitation. I also want to thank the Portfolio Committee for
their oversight role including all constructive inputs. We commit to nurture
this relationship. The contract of the Director-General, Mr James Maseko ended
in January and I wish him well in his new endeavours. I also want to thank men
and women who make us proud working under the different programmes of EPWP.
Some are here with us today. I call upon the entire staff of the Department to
double their efforts to realise the aims of AsgiSA and other millennium
targets. When we say SOUTH AFRICA WORKS BECAUSE OF PUBLIC WORKS, let us always
ponder over those words.
I thank you.
Issued by: Department of Public Works
29 March 2006
