Members of Cabinet and MECs
The Chair and members of the Portfolio Committee
Honourable Members of Parliament
Let me also recognise in the gallery the presence of:
Chairpersons and CEOs of our public entities and professional councils;
The Representatives of the Auditor-General’s Office
Members of the Audit Committee;
The Director-General and senior management of the Department of Public Works, as well as HoDs of provincial departments;
Representatives of SALGA (SA Local Government Association)
Representatives of labour
Representatives of women’s organisations (SA Women in Construction and Women with Disabilities)
Beneficiaries of the Department of Public Works’ (DPW) school support, bursary, and young professionals training programmes
Participants from Expanded Public Works (EPW) programmes. I would like to acknowledge our young heroes from the Working on Fire programme who played a prominent role in combatting the recent Cape Town fires.
Members of my family, and particularly my wife;
Distinguished guests, ladies and gentlemen.
You are all welcome. I will:
present policy proposals for the budget vote and commitments for 2015/2016;
account for what we have done as a Department over the last year; and
provide a progress report to this House on the turnaround strategy for Public Works, and the five priority areas I announced in my 2014 Budget Vote.
Turnaround Strategy: From stabilisation to efficiency enhancement
Our Seven Year Plan to Rebuild the Department of Public Works, developed in 2012 with the support of National Treasury, envisages 3 overlapping phases:
Phase 1: Stabilisation
Phase 2: Efficiency enhancement, and
Phase 3: Sustainable development
Phase 1 of the Turnaround Strategy: Stabilisation was necessitated by the lack of adequate management and financial controls culminating in adverse audit findings and highly publicised levels of fraud and corruption. To quote an old African saying: “A falling tree makes more noise than a growing forest.”
Three years into the Seven Year Plan, I can report that we have stabilised core business areas: lease management, the Immovable Asset Register and finances – as well as making significant headway in combatting corruption.
In relation to lease management – 1,455 out of 1,576 leases were renewed through the National Treasury special dispensation – with projected annual savings of R33 million.
In relation to the Immovable Asset Register –Public Works has produced a reliable register of state properties under its custodianship. 99.1% of properties were physically verified. This has already resulted in significant improvements in audit outcomes.
Public Works is now able to:
Determine its property portfolio – comprising 108,657 buildings on 32,509 land parcels;
Confirm the existence and high level condition assessment of its properties, and
Confirm the User Departments occupying those properties.
The existence of a reliable Immovable Asset Register, and the establishment of a Real Estate Information Registry Services Division, enhances Public Works’ ability to leverage this portfolio for socio-economic development, black economic empowerment, support for small businesses and job creation – as well as to generate revenue to maintain state assets.
Part of the Immovable Asset Register project has been to assign fair values to assets. Applying municipal values to 60% of the assets has increased the disclosed value from R49 million in 2012/13 to R59.5 billion in 2014/15. The disclosed value of immovable assets will increase significantly as the Register is finalised – thus more appropriately reflecting on the national balance sheet.
The clean audit project – has stabilised the finance and supply chain management environment and addressed negative audit outcomes: The Main Vote improved from a disclaimer to a qualified audit opinion in 2012/13 and an unqualified audit opinion in 2013/14.
The PMTE improved from a disclaimer in 2012/13 to a qualified audit opinion in 2013/14 with significantly less areas as the basis for qualification. Due to the complexity and sheer volume of transactions, the PMTE remains a concern for the 2014/15 audit. We are, however, encouraged by PMTE’s steady migration from a simple cash basis of accounting to an accrual (GRAP) basis of accounting.
In relation to irregular expenditure, 1.5 million transactions were revisited for the period 2009/10 to 2012/13. The result was that the Department identified R35 billion of irregular expenditure – some of it originating as far back as 2001. All irregular expenditure identified is being systematically investigated for further action.
Meanwhile, the Department – working with National Treasury – has reviewed SCM processes and put in place control measures to prevent the recurrence of irregular expenditure.
The President has stressed the need to pay creditors within 30 days of receipt of invoices – as crucial to the financial health of small and emerging businesses. I have to report a mixed picture in this regard.
With respect to invoices paid within 30 days, the Main Vote’s performance improved from 86% in 2013/14 to 89.4% in 2014/15. The PMTE performance has regressed slightly from 93.9% in 2013/14 to 92.3% in 2014/15. This was largely due to the implementation of new billing, accounting and verification systems which only stabilized during the latter part of 2014/15.
Measures to enhance compliance include:
a central registry
tracking of invoices
a call centre, and
Ministerial road shows to address staff and suppliers.
Furthermore, the Construction Industry Development Board (CIDB) – an entity of DPW – is publishing draft regulations for comment – compelling payment within 30 days throughout the industry.
Phase 2 of the Turnaround: Efficiency Enhancement
This is where we seek to improve the business model and processes of the Department – focusing on the five key priority areas that I presented to this House in the 2014 Budget Vote. Priority One – the creation of 6 million work opportunities through the EPWP – Deputy Minister Jeremy Cronin will provide a full report.
Priority Two – Operationalisation of the PMTE (Property Management Trading Entity) to manage the core business of Public Works – custodianship of state immovable assets and provision of accommodation to government.
The vision for the PMTE is to ring-fence, professionally manage, secure, maintain and optimally utilise this massive state property portfolio to:
build value and bring savings to the state;
to promote job creation and empowerment; and
to improve service to client departments by better projecting demand and client needs.
The outputs of the PMTE and its sub-programmes over the last year include the following:
As part of the Accessibility Programme, 21 buildings were made accessible to people with disabilities, with a further 15 buildings in the final stages.
Two properties measuring 475 hectares, earmarked for sustainable human settlements, were approved for release in 2014/2015. Systemic issues in relation to disposal processes have been identified and will be addressed in 2015/16 to expedite the disposal of properties identified for human settlement and land reform.
160 capital projects representing expenditure of R349 million were completed during 2014/15 – representing expenditure of:
98% of the PMTE Capital Budget compared to 88% in 2013/14;
86% of the Client Capital Budget compared to 70% in 2013/14; and
99% of the Planned Maintenance Budget compared to 84% in 2013/14.
PMTE targets for 2015/16 include:
to make available 100 vacant, unutilized free hold properties for re-development by black developers;
to make available 600 surplus freehold properties to let out for revenue, utilising the services of black Real Estate Agents;
In support of Operation Phakisa, the Department has established a special unit to facilitate the development and modernisation of small harbours. We will also audit all state coastal reserves falling under the custodianship of Public Works to promote development and job creation.
Framework documents to operationalize the National Infrastructure Maintenance Strategy will be completed by 31 July 2015. These tools, once approved, will ensure that public sector institutions improve their maintenance policies and practices in line with a holistic national strategy and standard.
Since last year, the Inner City Regeneration Programme, which previously focused exclusively on Tshwane, has expanded its mandate to include other urban and rural areas – supporting integrated development and the creation of government precincts in collaboration with provincial and municipal counterparts to facilitate frontline service delivery to the public.
Precincts in the planning phase include: Polokwane, Mahikeng, Christiana, Idutywa, Balfour, Mt Fletcher and Kwa Mahlanga.
One of the eight new government head offices planned for Salvokop (Tshwane) is already under construction. The restoration of the Agrivaal Building – with green-design features – will be complete by August 2015 and will house the Head Office of the DPSA.
Looking forward, PMTE has set the following 5-year targets:
75,000 work opportunities created through construction projects;
60% of construction projects allocated to BBBEE contractors;
25,000 job opportunities created through maintenance programmes;
65% of facilities management contracts allocated to BBBEE businesses.
In response to the President’s SONA call to save energy, the following five year targets have been set for buildings falling under Public Works:
1,6 billion kilowatt-hours reduction in energy consumption; and
23,8 million kilo-litres reduction in water consumption.
To support delivery of construction projects, Public Works is collaborating closely with the Independent Development Trust (IDT). During 2015/16, the IDT, working with the Department, will finalise its business case and mandate – positioning itself as an implementing arm of Public Works for the social facilitation and delivery of social infrastructure.
Priority Three: the operationalisation of the Governance Risk and Compliance Branch
In 2012, I stated that the Turnaround Strategy rested on two pillars: improving the way that Public Works did business, and combatting fraud and corruption. Both are concretely addressed by the establishment of the Governance, Risk and Compliance Branch.
In relation to fighting fraud and corruption, achievements include the following:
The establishment of an Anti-Corruption Unit focusing on investigations and fraud awareness to promote a culture of zero tolerance towards corruption. Investigations now commence within 30 days of receipt of information.
The backlog of 289 allegations of fraud and corruption were investigated – resulting in 129 disciplinary actions and 18 criminal referrals to SAPS.
The SIU (Special Investigation Unit) has investigated 39 separate matters and recommended disciplinary action against 41 officials, of which: 3 resigned, 7 were dismissed (including DDGs and Directors), 7 received final written warnings, and the rest are still in process. 22 criminal referrals have been made to SAPS, and civil action undertaken for recovery of fraudulently obtained funds.
Summonses were issued against landlords and former officials to recover money paid for unoccupied buildings, whilst 8 criminal cases have been opened against service providers and an official.
A comprehensive Fraud Risk Assessment was conducted to inform the introduction of control measures to prevent fraud and corruption before they occur; and
The department is re-launching Operation Bring Back to reclaim state properties that have been misappropriated or unlawfully occupied. Previous efforts relied exclusively on the goodwill of the public claiming amnesty. The current project is proactive: investigating and recovering misappropriated state properties – drawing on unusual land and property transfers identified in the process of compiling the Immovable Asset Register.
The department has identified more than one thousand properties that have been illegally occupied. A panel of mainly black-owned investigation firms has been established to resolve these matters.
Operation Bring Back will utilize the National Anti-Corruption Hotline and launch a strong marketing campaign to encourage the public, and current and former government employees, to report unlawful transactions.
The first National Operation Bring Back Forum will convene next month with a clear message to wrong-doers: “You can run, but you can’t hide.”
The Governance, Risk and Compliance Branch also spearheads the Efficiency Enhancement Phase of the Turnaround – using the tools of strategic planning, Service Delivery Model processes and performance management.
A Service Delivery Model Framework has been developed as the basis for implementing a Service Delivery Improvement Programme.
During 2015, Public Works focused on improving strategic planning. I invite honourable members to compare the quality of strategic plans and APPs for 2015/16 with those of last year. In this effort, we were supported by officials from DPSA, National Treasury, the Public Service Commission and Planning, Monitoring and Evaluation in the Presidency.
I would like to acknowledge the support and advice that I received from our dearly departed Minister Collins Chabane. We honour his legacy by striving to entrench continuous improvement in the planning, measurement and management of service delivery – a sentiment expressed yesterday by Minister Radebe.
Priority Four: the Policy Review
The department will develop a new Public Works White Paper to review its mandate and role. This will form the basis of a Public Works Act which we intend to table in 2017/18. A large part of the policy review will address the concurrent mandate of Public Works.
On the ground, national and provincial public works are working closely through MinMec – addressing areas of concurrence, interdependency and best practice ranging from state accommodation, the Immovable Asset Register, IDMS training, the implementation of GIAMA, energy efficiency and the roll out of EPWP. We have also formalized the development of Provincial Customised Performance Indicators that help us to determine the performance and delivery mode across the Public Works family.
Priority Five: the Transformation of the Built Environment
I can report that the Construction Sector Charter Council and the Property Sector Charter Council are aligning their Sector Codes with the revised BBBEE Act 2013 (Act No 46 of 2013) – to promote black enterprise and supplier development and skills acquisition.
Working with stakeholders, my Department is developing a property management empowerment policy. I also need to flag developments on the ground. The operationalisation of the PMTE has provided major empowerment opportunities – which are reflected in the construction and property targets I have announced.
The entities of Public Works have developed policies and programmes to concretise our mandate to transform the built environment:
CIDB (Construction Industry Development Board) seeks to support the emerging contractors as they graduate into sustainable businesses. This work includes the continuous roll-out of the National Contractor Development Programme, and the development of best practice Standards for public sector contracts which specify goals for black enterprise development and skills acquisition.
CIDB also has a role in combatting collusion in the sector. Fifteen contractors have been charged for contravention of the Code of Conduct. The point here is that collusion not only cheats the state and the taxpayer, it also shrinks the space available for black empowerment. The CIDB is also developing standards for an Integrity Management System to eradicate fraud and corrupt practices in the industry.
CBE (Council for the Built Environment) – in a situation where only a quarter of registered professionals are black, CBE has made the following strides:
It has implemented a Maths and Science programme to support learners in disadvantaged communities – achieving impressive results particularly in Limpopo (with the top 27 matric learners in Vhembe District achieving 90% and 89% averages in Maths and Physics respectively.)
CBE has implemented a Workplace Training Model for the built environment professions – to unblock the skills pipeline whereby many black engineering graduates fail to find placements, and even those who do find positions do not receive the appropriate workplace training to lead to professional registration. Currently 53 graduate candidates are participating in a pilot programme. 66 University of Technology students have been placed with employers for workplace experience as part of their diploma qualifications.
I should also mention that the DPW itself has active schools, bursary, candidacy, work placement and artisan programmes with some 1,297 participants.
Honourable Members will be interested in the expansion of our Water Management Programme. Last year the department appointed 120 youth in KZN and Mpumalanga in a pilot training programme to operate water services – under supervision. Currently a further 320 unemployed chemical engineering graduates are receiving training and will be appointed to 97 water facilities across the country.
In my 2012 Budget Vote, I likened the Department of Public Works to a patient in ICU. In 2013, with some improvements, I said that we had now stopped the bleeding. In 2014, I informed honourable members that the patient was fully stabilised. Today, I can inform this House that the patient has been discharged… but is still subject to a strict medicinal and therapeutic regimen.
I thank you!
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SOURCE: South African Official News