Department of Public Works and Infrastructure 2018/19 Annual Report

Meeting report

The Chairperson welcomed Members and the Department of Public Works (DPW) management. The Committee would be looking at annual performance, with the aim of holding the executive to account. It needed guidance about programmes at the provincial level. There had to be a holistic, countrywide review. Apologies had been received from the Minister and Deputy Minister, and the Director-General. The Deputy Minister had been present at the previous meeting, but Members were complaining about the absence of the Minister. The Executive had to be held accountable.

Mr E Landsman (ANC, North West) complained about the absence of the Minister and delegates from the Minister’s office.  He referred to a person who had to represent the Department, who was always in Cape Town, but never attended meetings. The Committee was not taken seriously. There had to at least be a Parliamentary Liaison Officer (PLO) or a Chief of Staff present.

The Chairperson told the DPW delegation that the Minister had to be asked why there was no-one from the Ministry.

Mr Imtiaz Fazel, DPW delegation leader, responded that he would convey that to the Minister.

Department of Public Works (DPW): 2018/19 annual performance

Mr Imtiaz Fazel, Deputy Director General (DDG), and Mr Mandla Sithole, Chief Financial Officer (CFO) briefed the Committee on non-financial information; the audited DPW and Property Management Trading Entity (PMTE) programme performance; financial information, and the PMTE’s financial performance. Programmes covered for the DPW were those of administration; inter-governmental coordination; the Expanded Public Works Programme (EPWP); property and construction industry policy and research; and prestige policy.

The strategic objective to accelerate transformation in the Department had been achieved in full. All investigations had been initiated within 30 days of reported allegations. There was an 87% reduction in the irregular expenditure baseline. The preferential procurement bid award target was 94% achieved. All the reported cases of fraud and corruption were subjected to disciplinary processes. The EPWP had created 997 286 work opportunities. There had been a qualified audit outcome for the EPWP. The PMTE reported that 30 of 84 construction projects had been completed within the agreed construction period.  

Discussion

Mr T Brauteseth (DA, KZN) expressed concern that the Minister and the Deputy Minister were not present. It would be possible to see the Minister in the House only the following week, and Members wanted to engage with the Minister about fixing the DPW. A letter had to be written to complain about the disrespect shown.

He referred to the cutting down on cases of irregular expenditure. In 2015, the Deputy Minister had alluded to 350 000 cases. Was all in order currently? There was no list of disciplinary measures and prosecutions. The Department had to provide a list of disciplinary matters. Consequences had to be seen to follow on fruitless and wasteful and irregular expenditure.

The Public Works Academy had been abandoned. The Minister had stated that the public sector would be turned to. How much money had been wasted on the abandoned attempt, and who did the Minister speak to in engaging the public sector?

There was a massive reporting problem related to the EPWP. What was the cost/benefit ratio of the programme? The Medium Term Budget Policy Statement (MTBPS) would include a need to cut back on staff, which could impact on the EPWP.

The Construction Industry Development Board (CIDB) could not protect the standards of small companies that were just starting out. Of the preferential procurement contracts, only 30 out of 84 were completed. There were too many incomplete projects. A list of contracts and their value had to be provided, with information on whether the project was completed or abandoned. Value for money had to demonstrated. Procurement could be a guise for fraud. 42% of contracts had been awarded to Broad-based Black Economic Empowerment (BBBEE) companies, of which a list had to be provided.

 The DPW had a legacy problem, concerning assets. The Price Waterhouse Coopers (PWC) audit of 2015 found that only 41% of assets had been inspected to assess their condition. Did the DPW know what it owned and what condition it was in? Without information, it was not possible to budget.

Ms B Mathevula (EFF, Limpopo) commented that Mr Brauteseth had pre-empted questions, by asking ten questions. Why was the Public Works Academy not approved? She referred to gender equality, noting that the entire DPW delegation of seven members did not include a single woman. Only men were in the senior positions. How was the recruitment drive for the EPWP monitored? There was a challenge in the municipalities -- when the EPWP was presented, more men than women were employed. How was that monitored? What were the DPW programmes to attract artisans and engineers?

Mr M Dangor (ANC, Gauteng) asked how fruitless and wasteful expenditure had occurred, and about assets and the asset registers in all departments. Had all pre-1994 properties been identified? Security clearance might have to be moved away from the State Security Agency (SSA) to the Public Service Commission, unless it was top secret.

Mr M Rayi (ANC, Eastern Cape) remarked that the annual performance plan (APP) and the annual report (AR) had to be properly aligned. The Public Works Academy was still tabled on 24 July. What were the timeframes for extending the small harbour programme to provinces other than the Western Cape? Houses owned by Members of the Executive Councils (MECs) in the provinces were being let out by officials. How could allegations of such practices be monitored?

It seemed that the EPWP employees worked at a slow pace, in order to be employed longer. At municipal level, people could be seen sitting under trees, which could be a strategy to prolong employment. He asked for an update of land occupied in Buffalo City around East London airport. Clarity was lacking about the contractor incubation programme.

Mr T Apleni (EFF, Eastern Cape) commented that in the Eastern Cape there was widespread vandalising of government buildings, and there was no plan to cope with it. It seemed that no fraud and corruption cases ended up in court. What attempts were being made to recover money? People went to prison for five months and then returned and used the money gained from fraud and corruption. Vacancies were said to be filled, but elsewhere it was stated that the number of employees had decreased.

The Chairperson asked about the prestige policy with regard to moveable assets. Inadequate verification of assets could lead to an audit qualification. There might be a capacity impediment. What did the DPW intend to do within a cost-cutting framework? Assets acquired after 1994 had to be listed. The liquidity of local government finances had to be addressed. Did the DPW have the capacity to host the EPWP? Currently people worked for three to six months and then were unemployed again. There had to be a policy shift towards the post-employment phase and training. What resolutions had been taken about small harbours like Port Nolloth?

Mr Brauteseth referred to slide 46, which dealt with cost drivers. How much was spent on legal fees and audit costs? Slide 54 mentioned overspending on the Compensation of Employees (CoE). Were individuals being paid too much, or had the wage bill grown bigger?

Mr E Landsman (ANC, North West) congratulated the DPW on its improved audit outcomes. The DPW could count on the full support of Parliament when it corrected the Auditor General’s (AG’s) outcomes and concerns.

Department’s response

Mr Stanley Henderson, DWPI DDG: EPWP, responded for the DPW about the EPWP. A detailed report on the EPWP could be presented to the Committee. He agreed that cost-cutting could impact negatively on reporting problems and the cost/benefit ratio. If the Municipal Infrastructure Grant (MIG) budget was cut, it would impact on labour-intensive programmes. The aim of the EPWP was to transfer income to poor households. It offered social protection to people who had access only to social grants, and could serve as a pathway to decent employment. Each project had an early childhood development (ECD) centre which could take care of children, freeing women to work. In the municipalities, recruitment drives targeted women, youth and the disabled. The desired figure was 60% women and 55% youth. EPWP employees not working were objects of ridicule. It was a programme and managerial matter, and the municipal manager had to answer to that. Serious training during phase four of the EPWP had been approved by Cabinet. It was a core aspect of the EPWP, about which details could be shared.

Mr Clive Mtshisa, DPWI DDG: Corporate Services, responded that the apparent decline in employee numbers was on account of secondment and migration to the PMTE. The Public Works Academy was approved, but not budgeted for. It was thought that it could be on-line, and therefore cheap, but anything beyond on-line was costly. Technical and Vocational Training and Education (TVET) colleges and universities had been engaged to drive recruitment and training. The DPW recruitment drive was biased in favour of women. Unfortunately, the Public Service regulations required advertisement in national media, which opened it up to competition. The filling of vacancies was impacted on by the moratorium on employment issued by the previous Minister. The Public Service Commission (PSC) had found 12 irregular appointments, where there was insufficient qualification for the positions.

Mr Sithole responded about the asset register audit, and said that money would have to be spent to rectify the asset register. It would be necessary to go into the components of facilities, of which there were 90 000. The National Treasury (NT) could not grant money for condition assessment. The Special Investigating Unit (SIU) had recovered lost money for the DPW. The Public Auditing Amendment Act helped with the recovery of money.

Mr Aaron Mazibuko, DPWI Chief Director: Finance, referred to the overspending on goods and services, and said service providers had been taken to court, with expenses shared by the DPW and the DPMTE. Contract expenditure included national awards, state visits and state funerals. Travel and subsistence costs included air travel, accommodation and car rentals. The bulk of the expenditure had been in programmes 1 and 3.

Mr Mzwandile Sazona, DPWI Chief Director: Prestige Policy, said that the request for gyms at Parliamentary villages went through the Sports Committee. The DPW could only provide the structure for gyms, and Parliament had to supply equipment.

Mr Fazel responded that it had to be determined if cooperation with TVET colleges and universities on the Public Works Academy would be cost-effective. It had been tabled in the APP, but could not be retracted, because the Minister had to supply political direction.

The Construction Industry Development Board (CIDB) had had to drop thresholds to accommodate and assist smaller contractors. Black contractors were not represented at the top levels.

Operation “Bring Back” was aimed at pre-1994 assets. Progress was uneven. There were allegations of illegal transfers and properties not being properly registered. There were illegal occupations and staff abuses around the leasing out of state property. The small harbour unit could appear before the Committee. A total of R1.3 billion lost through fraud and corruption had to be recovered through the SIU and civil processes. It could be recovered directly through landlords or through the courts. The President had signed a proclamation for SIU to have its own civil court. R152 million had to be recovered from the implementing agent for Nkandla. Details on money recovered could be provided.

He replied about punitive measures against staff members who had defaulted, and said that the Department and the SIU had forwarded 152 cases to the courts and the National Prosecuting Authority (NPA). However, the NPA had more than 100 cases before it, so there was pressure on the prosecuting system. The Hawks were also involved, and there was the possibility of obtaining 60 prosecutions.

The Chairperson told the Department that any further responses would have to be in writing, as the meeting time had run out.

Adoption of minutes

The Committee minutes of 11 September were adopted without amendment.

Members commented that they wanted to talk to departments after meetings, and if a department was excused before the adoption of minutes, that opportunity was lost.

The Chairperson agreed to look into the matter.

The meeting was adjourned.