Minister Thulas Nxesi: Public Works pre budget vote media briefing

Media Statement Budget Policy VOTE 11: Public Works, Tw Nxesi MP Minister of Public Works

Zero tolerance of corruption; Improving the way we do business; Utilising state property for economic development

Programme Director

Deputy Minister, DG, management of Public Works

Members of the Media

The figures for the Departmental budget allocation, you will get from the speech this afternoon. What we want to do in this briefing is to flag to the media the main messages in the Budget Vote speech.

This Budget Vote debate takes place against the backdrop of new political leadership which is committed to, amongst others:

Rooting out corruption and state capture;

Professionalising the organs of government to strengthen service delivery;

Generating investment and job creation; and

Driving real socio-economic transformation in the interests of all our people � addressing the land question, unemployment, poverty and inequality.

So those are also the priorities for us as the Department of Public Works and the PMTE (Property Management Trading Entity).

The Turnaround Plan

For me, returning to Public Works, after a brief spell with Sport and Recreation, it was a question of: ‘Back to Basics’. In 2012 when we announced the Seven Year Turnaround Plan, I said it would be based on two pillars:

Zero tolerance of fraud and corruption, and

Improving the way we do business.

PMTE

At the core of improving the way we do business, as Public Works, is ring-fencing and fully operationalizing the PMTE to optimally manage the state’s massive property portfolio (over 93,000 buildings on some 29,000 land parcels under the custodianship of National Public Works.)

The plans for the PMTE also speak to the President’s SONA commitment to drive new investment in the economy to promote growth and jobs. Examples include:

We have identified unutilised properties with a deemed value of R7.4 billion � for disposal or letting out. This list will be advertised on open tender culminating in a National Property Marketing and Investment Conference to be held within the next 6 months.

Before I went to Sport, I had commenced a process of engagement with the private property and finance sectors to identify opportunities for investment in state property � to our mutual advantage. These engagement are being revived.

The Small Harbours and Coastal Properties programme � part of Operation Phakisa: Oceans Economy – has already attracted expressions of interest to the value of R6.3 billion from the private sector and is generating R17 million in leases. This programme has the potential to contribute R6 billion annually to GDP and to create 12,000 jobs by 2030.

Priorities for the PMTE include the following:

Working with National Treasury’s Office of the Chief Procurement Officer, we are finalising procurement processes which are both transparent and streamlined for the specific needs of the PMTE.

We are beefing up our Joint Negotiating Team with National Treasury to review all leases to ensure that government gets value for money and does not pay above market rates � as happened previously.

At the same time we are moving away from reliance on leasing-in to utilising state-owned properties � starting with the security cluster. [So where we do acquire new stock we are looking to Leasing-To-Buy and Build-Operate-and-Transfer models � which will require partnerships and investment from the private sector];

In the current year, we are implementing infrastructure and maintenance projects to the value of R3.2 billion which include police stations (R885 million), courts (R771 million) and correctional facilities (R657 million).

Transformation

Professionalising the PMTE is being done also with an eye to other government priorities, particularly empowerment and job creation:

Land and properties continue to be identified for land reform and social housing � including student accommodation. [In this regard we have supplied Higher Education and Training with a list of possible buildings, and established a Joint Task Team to expedite the matter. The focus will be on empowering entrepreneurs, as well as co-ops.] 3,500 hectares are to be released to Human Settlements, whilst some 22,000 hectares have been identified for land reform.

The work of the PMTE will be guided by the recently adopted Property Management Empowerment Policy to empower formerly disadvantaged and designated groups.

In the current year, the Department has targeted 75% of procurement to go to designated groups, and 33% of new leases to go to B-BBEE companies.

Let me sound a note of caution to the tenderpreneurs. This is not an invitation to Radical Economic Looting whereby a few politically-connected syndicates receive huge contracts, in return providing minimal service. Rather, we will be targeting emerging black entrepreneurs in the property and construction space who offer a real value proposition and tangible benefits to government.

We will be holding a national meeting with our largest landlords on 31st May – specifically to expedite the matter of expired leases and the signing of long-term leases, including so-called ‘9.11 leases’ [9 years, 11 months]. This meeting sends the message that government is now ready to do business with the property sector and to bring certainty to the market � based on market-related pricing, improved value and service to government, and broad-based black economic empowerment.

The Main Vote: DPW

The ring-fencing of the PMTE also provides the space for the Department of Public Works to re-focus on its core mandate � to regulate and transform the Built Environment � as well as lead the Expanded Public Works Programme. Deputy Minister Cronin is driving these processes.

Zero tolerance of corruption

The second pillar of the turnaround strategy is zero tolerance of fraud and corruption. We will shortly be announcing jointly with the SIU (Special Investigating Unit) some of the successful outcomes of investigations we started some years ago. That is a story for another day � but suffice to say that currently the SIU is seeking to recover R1.2 billion as a result of irregular or fraudulent transactions.

Investigations into the cost of maintenance by the Department’s Anti-Corruption Unit has uncovered over 16,000 suspicious payments to the value of R2 billion. We are calling for the extension of an existing proclamation to enable the SIU to investigate the matter.

Operation Bring Back for the return of state properties wrongly transferred or occupied has:

identified some 1,300 such properties. These will be

verified and regularised during 2018/19.

As a result of 54 cases reported by whistle-blowers, some 14 eviction orders were obtained, and illegal transfers detected in Gauteng and KZN where a criminal syndicate was stealing vacant state land.

The entities will be receiving priority attention in the coming months. Already, we have taken action in regard to the Board of IDT [Independent Development Trust] where there has been a failure to act on the recommendations of forensic reports which found clear evidence of corruption. The court has dismissed with costs an attempt by a faction of the dismissed Board to prevent me from taking action.

I have also announced that all senior managers and officials who occupy positions of high risk will undergo lifestyle audits – starting with myself.

I thank you.

Source: Government of South Africa