Public Works and Infrastructure BRRR

Public Works and Infrastructure

19 October 2022
Chairperson: Ms N Ntobongwana (ANC)
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Meeting Summary

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Tabled Committee Reports

The Committee convened to consider its draft Budgetary Review and Recommendations Report for the Department of Public Works and Infrastructure and entities.

The Committee's assessment of the budget was based on the analysis of the Department’s strategic plan for 2020-25, annual performance plan, quarterly performance reports for the 2021/22 financial year, audited annual reports and the Committee’s engagement with the Auditor-General on its findings.

The budgetary review for the Department of Public Works and Infrastructure (DPWI) was incontestable and had increased to R8.35 billion during the adjustment process. There had been underspending in each of the branches of the Department. The Department needed to provide more detailed reports on the issue of reasons for underspending to enable the Committee to make appropriate recommendations on the forward use of resources.

The Content Advisor also mentioned that the Property Management Trading Entity seemed to be having an issue with construction project management, which was weak. There was therefore a need for qualified leadership but also planning, project management and property manager. He pointed out that the Department did not include property contract lawyers and project managers in its list of critical occupations vacant posts.

The Committee thanked the support team for preparing a comprehensive report in such a short amount of time.

Members emphasised the issue of legislation that was not being taken seriously. The legislation would cover the whole sector – Public Works and its entities. There needed to be a recommendation in that regard, over the various pieces of legislation that needed to be enacted or amended. They said that the lack of legislation dedicated to Public Works had made the Department’s work so much difficult. For instance, Infrastructure South Africa (ISA), which resided within the office of the President, in terms of DPWI, was like “candyfloss”. Something that was known to exist but was not there, yet its budget is enormous.

The Members resolved that the Committee needed to find a mechanism whereby they are in a position to engage with the construction mafia so that they can contribute meaningfully, as opposed to being more destructive than they are at the moment. This was making the lives of those involved in the industry more difficult.

For the Department and its entities, Members said that the Committee should no longer entertain the expiry of contracts because they do not happen overnight, and management has sufficient lead time to know that the contract of an employee or contractor is going to expire. Therefore, stock gaps should be to make sure that the contracts do not expire.

On the parliamentary villages, a Member said there was a big problem with the facilities management contracts, particularly with relationships to Arts and Culture and Justice. There was a big difference between what was spent on various management activities and what was recouped. Regarding old irregular expenditure that gets carried forward, waiting to be condoned, a Member sought clarity on whether there was mention of the specific amounts in the report in terms of what the old irregular expenditure and the new irregular expenditure were

On the immovable asset register, Members suggested that the Committee needed to demand accountability and a roadmap with particular timeframes for the conclusion of the asset database. They reckoned that there was a need to also have regular updates on the progress – what software they are now using, because there were different statements around the software that would be used.

The Content Advisor assured the Members that he would include all the suggestions made in the recommendations, which he would share with the Committee after the meeting.

The Committee adopted the BRRR.

Meeting report

The Chairperson opened the meeting, welcoming the Members and the support staff. There was an apology from Mr T Mashele (ANC).

She then invited the secretariat to give a brief overview of the report being tabled.

Budgetary Review and Recommendation Report (2021/22) of the Portfolio Committee on Public Works and Infrastructure on the Performance of the National Department of Public Works and its Entities

Mr Shuaib Denyssen, Committee Content Advisor, gave a recap of the contents of the report being considered, stating that it was the Committee’s draft budgetary review and recommendations report (BRRR) for the current financial year for the Department of Public Works and Infrastructure (DPWI) and its entities. It reports on the activities of the Committee, beginning from 11 October, 12 October and 13 October 2022. The assessment of the budget was based on the analysis of the Department’s Strategic Plan 2020-25, annual performance plan, quarterly performance reports for the 2021/22 financial year, audited annual reports and the Committee’s engagement with the Auditor-General on its findings. He said that the report was a reflection of the responses obtained by the Committee from the Department, the Auditor-General (AG) and the various entities within the Department, to flesh out the strategic steps of how the Committee can assist the Department and its entities to accelerate improvement as it continues to work.

He said that the Department, as critical a role as it plays, fails to do well in terms of the maintenance and construction of projects, on time and within budget – which negatively impacts the service delivery in various government offices. There has been an emphasis on investing in the infrastructure in the five-year administration term, which was incorporated into the National Development Plan (NDP) and the Vision 2030. The Department is behind in its targets. Therefore, extraordinary measures need to be taken to ensure that vision 2030 is realised. The Committee should therefore put more energy, understanding what it means to manage infrastructure projects.

The budgetary review for the Department of Public Works and Infrastructure (DPWI) was incontestable and had increased to R8.35 billion during the adjustment process. There had been underspending in each of the branches of the Department, and the report highlighted what the spending and adjusted budget looked like, as the over-expenditure and under-expenditure. The Department needed to provide more detailed reports on the issue of reasons for underspending to enable the Committee to make appropriate recommendations on the forward use of resources.

The DG needed to act much faster with Treasury regarding issues of unauthorised expenditure. The Department had 99 unfilled posts, translating to a vacancy rate of 13%. This was in addition to the already existing high vacancy rate.

Mr Denyssen said that the Department’s audit outcomes were unqualified, with emphasis on matters that go back as far as the 2015/16 financial year. This amounted to seven years of unqualified audits, which should not be considered a good thing. The matters of emphasis include details of fruitless, wasteful and wrongful expenditure, under the assessment impairment of receivables; Expanded Public Works Programme (EPWP); failure to meet its targets; the annual financial and annual reports expenditure management; consequence management; as well whereby investigations did not take place for one reason or another. There were also material irregularities, which the accounting officer was taking appropriate measures to deal with. The Auditor-General also assured the Committee that they will follow up on the implementation of further actions taken, including the recovery of the lost funds and finalisation of the disciplinary actions during the next audit.

The report also reflected on the PMTE, which has not been operationalised as envisioned, because it is not making money that would go into the fiscus and not draw from other programmes. It struggles to properly manage the government’s immovable assets register. It does not have proper staff to take the pressure off, but it is also struggling because it has regional offices that are the ones doing the work, not the head office. He suggested that there should be a recommendation to deal with the defragmentation and recentralisation of the PMTE.

He also stated that the PMTE seemed to be having an issue with construction project management, which was weak. There was therefore a need for qualified leadership but also planning, project management and property manager. He pointed out that the Department did not include property contract lawyers and project managers in its list of critical occupations vacant posts. There should be a recommendation on that. This included social facilitators who were crucial in helping reduce the stalling of projects. The biggest reason for the high vacancy posts was the expiry of contracts.

He said other information, including recommendations, was contained in the draft report that had been shared with the Members before the meeting.

Discussion

Ms M Hicklin (DA) thanked the support team for preparing a comprehensive report in such a short amount of time. She highlighted that, in all the reports that were served before the Committee, the most important part was filling vacancies in every single solitary entity that the Committee dealt with, as well as the issues that came up repeatedly. The Committee had spoken about it numerous times, but it was unable to accomplish critical things within each department because there seemed to be an inability of entities to fill up critical posts, disenfranchising them from accomplishing their goals. The Auditor-General’s report picked up on the issue of high vacancies all the time. There was a leadership vacuum, which translated into absenteeism, making it very difficult. One of the recommendations she would like to include is the critical need to fill vacancies across the board for the DPWI to fulfil its mandate as a department.

She said that the lack of legislation dedicated to Public Works had made the Department’s work so much more difficult. Infrastructure South Africa (ISA), which resided within the office of the President, in terms of DPWI, was like “candyfloss”. Something that was known to exist but was not there, yet its budget is enormous. As DPWI is a department whose major component is infrastructure as an economic driver, the Committee needed to have some form of oversight mechanism and handle on what the ISA is and what it does. This was currently not the case, whereby the Committee lacked access to anything ISA related.

She said that, somewhere along the line, the Committee needed to find a mechanism whereby they are in a position to engage with the construction mafia so that they can contribute meaningfully, as opposed to being more destructive than they are at the moment. Right now, the delays in the construction industry are a result of the mafia wreaking destruction on every single private or state-owned construction project. This was making the lives of those involved in the industry more difficult.

On the Prestige portfolio, she said that the Parliamentary Villages Management Board needed to be forced or coerced to actually do their job. The portfolio is mandated to run the parliamentary villagers appropriately, which was not the case because there was no oversight. The fact that they had not handed in management and annual reports cannot be allowed to continue because the Committee cannot hold the prestige portfolio to account if the Villages Board is not doing its job. The Committee needed to ensure that the board was being held to account. This also goes back to the vacancy rate within the Department and over what the Committee has to exercise oversight.

On the immovable asset register, she agreed that, unless the Committee looks at the REIS (Real Estate Investment Services), REMS (Real Estate Management Services) and the CPM (Construction Management Branch) – unless the Committee is in a position to get that immovable asset register complete and ensure that it is a working immovable asset register, it would not be able to ensure that the entity works comprehensively to achieve what it is supposed to achieve. By moving away from Archibus and SAGE (Enterprise Resource System), and looking at implementing a new software package, the Committee could only be doing immeasurable harm to what was already a fragmented department. PMTE cannot become a property management training entity if there are constant software package changes. The disenfranchising regional offices further distances their ability to communicate with the national entity and office. There was a need for property contract lawyers and property management specialists to be brought in to manage the biggest property entity in the country. Ms Hicklin said that the Committee should no longer entertain the expiry of contracts because they do not happen overnight, and management has sufficient lead time to know that the contract of an employee or contractor is going to expire. Therefore, stock gaps should ensure that the contracts do not expire. There was a need for pre-emptive and preventative measures in place, leading back to having one’s eye on the ball. That can only happen if one has skilled people in key positions of government – people who know how to plan ahead. The Committee had spoken before that the PMTE seemed to have an aversion to collecting on its debts. She found it hard to understand how an entity that was supposed to be generating money is averse to the generation of money. This was a major problem that manifested in the overpayment of leases that should never ever happen.

Ms Hicklin insisted that the Committee needed to keep a very close eye on the CBE, which was an umbrella body that should not be operational. It was far too involved in the operational functions. The chairperson and deputy chairperson should never, in a million years, be in a position where they attend 111 meetings. The previous chairperson attended about 38 meetings over a year. They were paid an honorarium for every meeting they attended. It was physically impossible for them, as oversight, to be so operationally involved that they could attend 111 meetings. In the previous financial year, Dr Dlamini attended 96 meetings, earning himself a cool R563 000. Another board member attended 78 meetings, earning R324 000. In the current year’s financial report, they each attended 111 meetings. The average councillor only attends 17 meetings. Keith Jacobs attended 41 meetings in the last year. Something was very wrong for them to attend 111 meetings in a year. She said it was not a vindictive witch-hunt, but the Committee’s job to find out why they are so operationally invested in attending so many meetings. Something was going on at the CBE that was wrong. The CBE was failing in its mandate, in terms of its knowledge hub, for which it underspent by so much money. They were too involved in operational work. They underspend where they are supposed to be working and overspend where they are not supposed to be involved.

The research and advisory work of the CBE was sadly lacking, as they only produced four research papers in the entire year. They underspent dramatically, spending 0.9% of their budget. They underspent by R127 million. She reiterated that the underspending should be the focus of their efforts but that was the area they were doing nothing. The CBE offers little support where they need to offer support and do much investigation where they should be keeping their nose clean. This is a major worry. She felt that should be the area of focus for the Committee, in its recommendations.

Ms S Graham (DA) again thanked the support staff for the outstanding job on the report. On the parliamentary villages, she said there was a big problem with the facilities management contracts, particularly with relationships to Arts and Culture and Justice. There was a big difference between what was spent on various management activities being about R235 million and what was recouped about R11 million. There was a need to have regular feedback on the implementation of total strategies management that was coming to play – whether it is bearing fruit or addressing, particularly the highlighted departments.

The other recommendation would be in terms of construction project management, and one of the big issues pertains to consultants. There was a need for a report on whether the department is deriving value for money from consultants and project managers because there are majorly overt-time and over-budget projects while still paying these consultants and project managers. There was something not right with that system. So, at some point, the Committee should get a report from the Department, on whether there was value for money in appointing consultants and project managers. There was also the need to bring in social facilitators. She explained that social facilitation is one of the mechanisms that can be used to counter the effect of the construction mafia. The Committee should look into whether social facilitators are being properly utilised in the Department – consultants and project management.

On the construction mafia, she said that the 30% allocated to SMMEs was not actually legislated anywhere, but it emanated from a SONA speech that former President Zuma made. Beyond that, it had never been developed into a policy. If that was the case and there was no proper policy that allows for the allocation of 30%, then there was a lack of clarity on what part of the construction project the 30% covers. This was creating a lacuna that was enabling the construction mafia to thrive. At some point, when the Construction Industry Development Board Act is being amended, or as part of a policy direction, something needs to be done regarding the 30% and in ensuring that there are proper guidelines that are in place. Another recommendation would be the Public Works Bill. There was a promise that the Public Works Bill would happen during this period, but with 18 months left of the term, the Bill has yet to be drafted or gazetted.

She agreed with Ms Hicklin on the immovable asset register, but said that there was a need to also have regular updates on the progress – what software they are now using, because there were different statements around the software that would be used. There is a need for progress update in terms of getting the information together. They also need feedback on the ROT (Refurbishment Operation and Transfer) Programme, and whether the Department is addressing underutilised and poor buildings.

Mr W Thring (ACDP) thanked the secretariat for an excellent report. The Committee had three levels of accountability, which involved the Committee itself, the Auditor-General and Parliament. Clarity was needed because it was his view that the Committee does not just have the mandate to hold the executive to account; it goes further than that. The head of entities needed to be held accountable for reporting to this Committee. It was therefore important for the Committee to get clarity on who it should be holding to account, and the depth that that could go to to avoid contradiction.

Regarding old irregular expenditure that gets carried forward waiting to be condoned, he sought clarity on whether there was mention of the specific amounts in the report in terms of what the old irregular expenditure and the new irregular expenditure were. If not, the same should be included. There was also a concern with the overstatement on the leases raised by the Auditor-General regarding the PMTE. He said that the PMTE also needed to be held to account, and the Auditor-General had also raised a number of concerns concerning it. The Committee may need to look at the quarterly reports of some of the different entities so that, where the Auditor-General has raised red flags, the Committee can hold these entities to account, over those quarterly reports.

On the issue of the construction mafia, Mr Thring said that he understood that there are legitimate calls for inclusion into the construction industry, but he felt that they needed to call to what it was – these mafias do not exist only within the construction industry but also within other industries. The mafias exist, and there should be no sugarcoating. There needs to be clear protocols and policies around how those with legitimate grounds for inclusion are dealt with against those that just demand 30% without doing any work – which is completely unacceptable.

On the immovable asset register, he reckoned that the Committee needed to demand accountability and a roadmap with particular timeframes for the conclusion of the asset database. It was troubling that, in a country with one of the largest property portfolios, they are not able to button down something as simple as having an immovable asset register in place. The Committee needed to give guidance and set parameters in place to ensure that the issue of the register is not raised year after year.

Ms S Van Schalkwyk (ANC) emphasised the issue of legislation that was not being taken seriously. The legislation would cover the whole sector – Public Works and its entities. There needed to be a recommendation in that regard, over the various pieces of legislation that needed to be enacted or amended.

On DPWI, she commented that their unqualified audit for the last seven years is a point of concern. The Committee needs to have a recommendation in order to deal with it. The issue of CBE and the reduction of membership in their engineering grounds also needed to be addressed.

She said that she was unapologetic about the transformation that needed to take place. The transformation targets were not being reached. This is a point of concern, as there is no effort to address the issues regarding the designated groups. Instead, the Department and its entities are regressing, and there is a need to craft a resolution that deals with that matter. She expressed worry about the high number of vacant posts, considering the high rate of unemployment rate among the youth, especially graduates. This was a recurring problem that the Department always seemed to have an excuse for each year. The Committee needed to see the will of senior managers to address the issue in terms of filing those funded vacant posts. Another concern was the additional posts through the establishment, which, in her opinion, was not assisting because it was a short-term relief. There ought to be a decrease in contract employment and increase in full-time employment. The quarterly report should also include the reasons for such a high turnover in the Department and its entities, and what strategies the Department has regarding retaining or absorbing those contract workers. There should be plans to decrease the number of consultants and up-skilling in-house workers to ensure that those areas can be dealt with. There should be a recommendation on the 21-day performance in terms of payment of suppliers being uniform across the entities. There was also a need to see Department reporting quarterly, the same.

Ms Van Schalkwyk said that the Committee receiving quarterly reports outside the standard time frames was not assisting the Committee in fulfilling its mandate, as Members are unable to deal with the matters and monitor the implementation of the resolutions taken. Another area of concern was the backlog of candidates registered as professionals, which she admittedly did not know how to address. Ultimately, something needed to happen. It was frustrating to have the same issue from 2019, as there is no progressive movement. Instead, they are regressing. There is a concerted effort within the industry not to register candidates because some might feel threatened by the incomers. It is not fair on the country or those candidates and prospective students who want to go into the industry. There needed to be some movement in terms of this.

On the Villages Board, which had been audited and seemed to not have changed despite the Committee making recommendations, there was a need to alleviate it to higher structures in terms of enforcement to see that something was happening. The parliamentary board is failing, and it needs to be dissolved. A new one has to be put in place in order to perform.

She also recommended that there should be a concerted effort in terms of consequence management, where there was irregular, wasteful and fruitless expenditure. She noted that a few culprits could not be pursued because the people responsible had either resigned or retired from the entity or their contracts had ended. The Department’s plan should put in place measures for dealing with the people even after they leave the Department or the entities. There needed to be a way to hold them accountable.

The issue of decrease in terms of the month-to-month leases needed to be addressed In terms of inflation of prices and overcharging. There should be regulatory measures so that, by the same time next year, there will be some improvement.

She stated that the security of underutilised buildings needs to be upgraded. The safety of the building, especially the unused ones, also needs upgrading so that they can see if it is not possible to limit the vandalisation through renovation and thereafter, leasing out.

The Chairperson said that the report was quite detailed and clear. In her opinion, there needed to be a recommendation on the Villages Board. The issue had been raised by the Auditor-General, and it had a bearing on the opinion of PMTE.

On the registration of new candidates, she pointed out that it had been a long time since the Committee last called the councils to present. They raised the fact that some companies do not want to take new students for registration. Even if not registered, one is allowed to work. This is also another factor in the decreasing number of those that are registering.

On the issue of different rates being charged for rental space, for the same amount of square metres and for longer lease periods – it is the same companies that are getting these leases. The Auditor-General has suggested that there need to be investigations on which recommendation should feature in the report.

Mr Denyssen said that he had noted all the Members’ suggestions and would be sure to include them in the report. He assured Mr Thring that he would be sure to give the breakdown of the irregular expenditure.

He reassured the Members that the issue regarding the Villages Board was covered in the report. He said that the matter about skills audit had been raised, and the Department and the DPME had promised to provide it, but the same had never occurred. The PMTE lacked qualified property management specialists who could negotiate the best lease formula per area so that properties are able to be effectively managed. Even then, the matter would not only require the best talent in that field, but retaining that skilled individual would cost a lot of money. He suggested that he curves a recommendation that covers the issues of underspending and high vacancies, which are interlinked.

He said he had no problem calling his fellow countrymen mafias as a starting point. But when they want to solve the problem, it must be done knowing that using that term is not going to be constructive. The matter of social facilitation ought to include a discussion regarding effective types of community liaison. The matter of social unrest as a response to bad service delivery requires joint efforts across a number of government departments. Having the DPWI report on the matter was not enough.

He requested the Committee allow him to craft a recommendation that brings all these matters together.

He again assured Members that he would include all the suggestions made in the recommendations, which he would share with the Committee after the meeting.

Ms Hicklin said that there ought to be a recommendation on the issue of acquiring the best skilled property managers and retaining them, even if that would come at a heavy cost, as the PMTE had the largest property management portfolio in the country.

The Chairperson invited the Members to adopt the report.

Ms L Mjobo (ANC) moved for the adoption. Ms Van Schalkwyk seconded the motion.

The report was adopted, with amendments.

Committee Minutes

The Committee considered and adopted the minutes of 21 and 28 September, 11, 12 and 13 October 2022.

The meeting was adjourned.

 

 

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