Asset Management & Annual Report 2006/07: Department briefings

PORTFOLIO COMMITTEE ON PUBLIC WORKS
17 October 2007
ASSET MANAGEMENT & ANNUAL REPORT 2006/07: DEPARTMENT BRIEFINGS

Acting Chairperson: Ms N Ngcengwane (ANC)

Documents handed out:
Department of Public Works Annual Report
Asset Management Report
Government Immovable Asset Management Act (GIAMA)

Audio recording of meeting [Part 1]&[Part 2]

SUMMARY
The Portfolio Committee was briefed by the Department of Public Works on the Implementation of the Government Immovable Asset Management Act. This Act should be implemented in April 2008, by which time the regulations would have been drawn, and the Department described the steps taken to set up and test the various requirements under the new Act.  National user plans were formulated, and had been piloted. It was likely that a phased approach would be needed. The content of the guidelines already drawn, to show the areas of responsibility, was tabled. Members queried the maintenance plan, and expressed disquiet over the delay in signing the Act into operation. Further questions related to vesting, the amnesty principle for declaration of public assets, possible other incentives,  the compilation of the foreign asset register, transference of skills, and the need for communication to the provinces.

The Department then briefed the Committee on its asset management, describing the E Works and IE Works programmes that aimed to achieve comprehensive systems and interface for identification and management of assets. The methods to obtain information included a toll-free line, a hotline, use of the Military and Intelligence registers. The information would assist in identifying buildings and facilities in need of repair, upgrade, or change to accommodate the disabled. Lists of grey immovable assets would be compiled. Parliament was asked to assist in using their recess periods and public involvement to try to identify assets. Members raised questions on skills, filling of vacancies, the target dates, involvement of the National Youth projects and capacitation of provinces.

The Department then briefed the Committee on its Annual report, giving an update on each of the programmes. Key strategic objectives were outlined and included refocusing and re-alignment to better implementation, presentation and gazetting of the Construction Charter, capacity being given to the Expanded Public Works Programme and a turnaround strategy for asset management. The Department had received a qualified audit report, with a focus on asset management, but the Trading Account achieved an unqualified report. There had been underspending of R99 million, of which R68 million was to be rolled over. The Department was attempting to address the vacancy rate and was implementing learnerships, graduate programmes and internships. Members raised questions on the Expanded Public Works programme models, .the technicians to be appointed to assist municipalities, the challenges of the stipends, contractor development,  and the Construction Education Authority. A number of other questions could not be answered, due to shortage of time.

MINUTES
Implementation of Government Immovable Asset Management Act (GIAMA): Department of Public Works (DPW) Briefing
Ms Lydia Bici, Deputy Director General : Policy. DPW indicated that the Government Immovable Asset Management Bill had been passed by both houses and submitted to the President for approval. In the meantime DPW was preparing to implement the provisions of the new shortly-to-be-promulgated Act at national and provincial level. The Department had prepared a guideline, finalised a discussion document and made plans to implement, and set up a task team with the Department of Provincial and Local Government (DPLG). It was proposed to establish a technical committee to deal with the implementation, which would meet quarterly, with its sub committees meeting more regularly. The Committee would look at the guidelines, asset register, norms and standards. The team would advise the Heads of Department and Minister at MinMec. The Department had been already consulting extensively and provided a list of provinces consulted. The Department had been constantly consulting with National Treasury to ensure that there was alignment with the Public Finance Management Act (PFMA) and its regulations for implementation.

Ms Bici mentioned the responsibilities of the users and custodians as set out in GIAMA. Users developed their own user plans, and custodians consolidated all those plans into custodian management plan. The Department had done all the national user plans, covering all national and provincial assets, and already had piloted these in a number of provinces. The Department would assist the users this year although next year they would do it on their own. The plans would have to be submitted to Treasury and included both in the budgets and Strategic plans of the Departments. For the implementation to finally take place the Minister must consult with the relevant role-players and determine the dates for implementation, publish norms and standards and determine whether there should be any exemptions. It was likely that a phased approach would be needed. The content of the guidelines already drawn, to show the areas of responsibility, was tabled.

Ms Bici indicated that issues identified during the meeting of the GIAMA Technical Committee as priorities for uniform guidance to all provinces included examination of government officials in State Owned housing, national valuation of properties, leasing of accommodation from the private sector, minimum requirements for the asset register and the vesting of State-owned properties. Devolution of property rates and taxes and the SA Schools Act were further issues identified as needing attention.

Ms Bici tabled the milestones and target dates in the lead up to implementation. Regulations should be gazetted by end March 2008. It was anticipated that the national government users and custodians should be commencing preparation in November 2007, ready to deliver in 2009, and the provinces should be commencing in April 2008.

Discussion
The Acting Chairperson wondered about the Department’s maintenance plan, with reference to fiscal dumping. She further mentioned that when some departments did not deliver on time then they would blame the Public Works Department, and she requested an explanation for that.

Ms Bici responded that GIAMA addressed the issue of fiscal dumping. It was part of its requirements that Departments would complete certain tasks in certain periods. She further mentioned that fiscal dumping was due to delays.

Mr L Maduma (ANC) appreciated the presentation and noted that this was a working document. He further mentioned that there would be limited interrogation towards the implementation as a result.

The Acting Chairperson was disappointed that the Bill had not been signed yet although it was passed by the two houses of Parliament a few months ago. She suggested that the Department should have an amnesty programme in provinces so that people occupying government property illegally would come forward.

Mr Maduma agreed with the Acting Chairperson and noted that the Committee was not informed of the reason for the delay.

Mr Mandla Mabuza, Chief of Staff, DPW, responded that the Bill had been submitted to the President and was allocated an Act number but would not come into force until signed by the President. He further mentioned GIAMA would be implemented on the 01 April 2008.

Mr Maduma indicated that vesting was important and wondered how the Department would deal with that.

Ms Bici replied that the Department had intensive consultation through surveys where they gathered information and had further developed a comprehensive proposal to deal with this. She stated that matters had therefore commenced, although at the moment they were moving slowly.

Mr Maduma referred to the Minister of Public Work’s budget speech about amnesty and was concerned that in the presentation there was no mention of amnesty. He asked if this amnesty was a nationally coordinated initiative.

Mr Mabuza answered that as a matter of principle the Minister said there should be amnesty, and the question still to be asked was when that amnesty should begin and end. They should also consider the role of provinces and respect the jurisdiction of all provinces. The other option would be, for example, to declare amnesty for three to six months and consider what should be done subsequent to the closing date. If the consequence were to impose punitive measures those would have to be stated clearly and submitted to the Committee for further consideration. 

Mr S Nxumalo (ANC) requested clarity on the terms used, such as custodian and user.

Ms Bici answered that users were the people or departments that used the property, although they might not hold ownership rights on behalf of the government. The custodians were those departments that looked after or owned government assets. 

Mr Siphiwe Mathobela, DDG: Asset Management, DPW replied that U-AMP referred to the user management plan, which had to advise on various matters, including location.

The Acting Chairperson stated that the people at local level knew where government assets were situated and who was occupying them. She suggested that the Department of Public Works should have some incentive initiative, where they paid whoever came forward to give back government assets.

The Acting Chairperson was concerned about the assets outside South Africa and how far the Department was in compiling that foreign asset register.

Mr Maduma emphasised the need for amnesty and stated that people were abusing state houses.

Mr B Radebe (ANC) wondered what happened in absorbing historically disadvantaged groups on asset management, thereby ensuring the transference of skills.

Mr Radebe asked how far the technical team was in assisting provincial and local government to help South African Local Government Association (SALGA) and municipalities.

Ms Bici replied that a technical committee had been developed that would be incorporating principles of GIAMA. She further mentioned that GIAMA was complex and this made it difficult to incorporate the same principles at local level, since the local level was regulated by its own principles. She gave an example of the distinction between Public Finance and Municipal Finance legislative requirements. The Department would look at the local level’s existing legislation and ensure that the principles of GIAMA could be incorporated without changing the existing legislation at local level.

Mr N Magubane (ANC) stated that the Deeds Office was destroyed at Umtata local municipality, and there was no record of people occupying government houses. He mentioned that state houses were being rented out, and suggested that this be addressed immediately.

Dr S Haung (ANC) asked the Department how they would do campaigns to all the nine provinces and suggested the Department hold a workshop for all the provinces so that they understood GIAMA.

Ms Bici replied that GIAMA was presented to all provinces and the Department was in the process of ensuring that everyone understood where they were. The Department had been communicating with National Treasury, and HODs at provincial level to ensure that they understood the impact of GIAMA.

Mr Maduma requested the intervention strategies on traditional leaders and land enquiry.

Ms Bici mentioned that most of the questions would be addressed in the asset management presentation.


Asset Management Briefing
Mr Siphiwe Mathobela, Deputy Director General: Asset Management, DPW began by stating that there was an operational register in the Department, although the Department had been striving towards achieving a comprehensive one. It was aiming to inter-operability of information technology systems, using the E-Works platform. This would be used to find government assets and account for those that had previously existed, but had been destroyed. He mentioned that audits were used to look at the status of assets at different levels, and that they had captured 99% of data. He tabled a summary of the type of information that had already been captured. The Department had listed a combination of factors that resulted in assets not being accounted for. He further mentioned that the Department was working with State Information Technology Agency (SITA) to establish a toll free line where people would forward details of state property that dated as far back as 1977, since that was the only traceable document they could find.

The Department of Foreign Affairs had an asset register for assets outside of South Africa but had no indication whether or not it was comprehensive. He mentioned that amnesty itself was an incentive, seeing that people had been using government property illegally, which constituted as an offence.

The portfolio included a wide range of assets, from buildings, dams and farms through to roads. The purpose of the template was so that works managers could determine the scope of work for the repairs. Facilities must be made disabled-friendly, not only for those with movement disability. Staff were being required to assess the properties, situation, facilities and floor areas occupied by government department. The objective also included being able

to draw up a list of all grey immovable assets and being able to implement legislative changes for better service delivery and enhanced shareholder value. The identification of “hidden, unknown lost and/or missing properties” was a huge task. This would be done by using call centres, the Intelligence Services, Military Intelligence and their asset registers. The institutional framework must assist, with certain statutory bodies. The National Assembly and National Council of Provinces were asked to use their recess periods and public involvement in soliciting location of unidentified assets. SALGA would be asked to assist in reaching municipalities, and the media would also be asked to cooperate in publicising the issue.

There was a need to establish a multi skilled task team comprising various players in the field. It was suggested that there be a project office formed.

The IE Works project aimed to

modify the E-Works system and implement it. It would integrate all the systems and ensure alignment. The conversion was under way and the Director General had approved appointment of consultants to conduct a conditions audit.  The asset register was not static and would continue towards a comprehensive asset register.

Discussion
The Acting Chairperson asked about the status of the asset register in Gauteng.

Mr Radebe requested clarity on the valuation skills and wondered how they would attract other skills needed by the Department.

Mr Mathobela stated that asset management should be about concentration and analytical skills. The department had advertised positions. The non-financial skills task team would provide skills to provinces.

Mr Radebe wondered what the target date was in putting systems next to each other and when they would be ready.
 
Mr Mathobela answered that it would be on the 30 October 2007.

Mr Radebe asked how many people responded to the amnesty call, and suggested that the Department work with the Intelligence units to investigate those still illegally occupying state houses.

The Acting Chairperson suggested that the Department uses trainees from the National Youth Service project for repairs and other needs, in order to equip them with more skills.

Mr Mathobela responded that two years ago the Department developed projects but that there had been some problems in fitting these within the National Youth Service or Expanded Public Works Programmes. The Branch now had three chief directorates, and each had employed interns to equip them with skills.

Mr Maduma asked how the Department capacitated the provincial departments.

Department of Public Works Annual Report Briefing
Mr Manye Moroka, Director General, DPW began by indicating that for the first time in this financial year the Department had reported on two sets of financial statements including the trading account. He further mentioned that the Pan African Parliament (PAP) would be based in South Africa and the Department had looked at the technicalities. He mentioned that 98% of the Departments had signed the memorandum and they have a maintenance infrastructure memorandum.

Key strategic objectives included the refocusing of DPW from coordination to leadership and implementation roles, capacitating the Expanded Public Works Programme (EPWP) Unit for increased roll out, strong intergovernmental relations, the presentation and gazetting of the Construction Charter, increasing contribution to government imperatives, and maximising performance of assets by service delivery. The turnaround strategy for asset management included revenue generation and cost reduction measures, financing and restructuring, an integrated approach to decommissioned assets, value enhancements and institutional reform.

The National Infrastructure Maintenance Strategy had been approved. A steering committee was proposed. Prioritised capital works were identified for the whole Medium Term Expenditure Framework (MTEF) instead of year-by-year, and a number of considerations were now set out to be taken into account. A planned maintenance budget committee was established.

Mr Moroka highlighted the requirements and intentions also of the User Asset Management Plans, the Investment Analysis Framework, Service Delivery Standards, the Border Control Operational Coordinating Committee, and concluded that all of these new initiatives would assist the Department in it turnaround strategy.

Mr Moroka turned to the Operations Programme, indicating that it was intended to execute all operational activities related to the management of state owned property on behalf of the government. The debt by regional offices has improved, having been reduced from R24 million to R6 million. The Re-kgabitshwane project was looking at government buildings to ensure that these buildings were accessible to everyone, including maximising benefits through transport means. 33 national departments had been identified for work, but the DPW was currently working with 13 national departments. The challenges experienced included shortage of staff and consultants not cognisant with the requirements of the Department.

Ms Lydia Bici reported that the National Public Works Programme (NPWP) focused on the management and regulation of property. The forum emphasised on coordinating the sharing of information and policies. The challenges included alignment of procurement processes to black economic empowerment and the transformation charters, the need to establish a value chain of bursary-managed processes and graduates of the Military Skills Development Programme. There were also some challenges in obtaining the necessary response from the private sector.

Mr Bongani Gcilishe, Deputy Director General, DPW, then discussed the Expanded Public Works Programme, noting that much of the work had ended up being delegated to other departments. This position had been rectified, and specific achievements were listed. The Vukuphile programme assisted learners to develop and had reached around 3 000 people, and there were around 320 000 work opportunities created. Challenges included the need to improve the quality of data, increasing the labour intensity, increasing the training and exit opportunities, and involving more public bodies.  under reporting since they had excluded a number of projects since infrastructure projects do not give provision to training at provincial and local government.


Mr Zingi Ntsaluba,  Chief Financial Officer, DPW, reported on financial management. The Department had been allocated R5.6 billion but had under spent by R99 million. R68 million of this had been rolled over, with the approval of National Treasury. Although the Trading Account had received an unqualified audit report, the Department was given a qualified audit report, the qualifications relating largely to asset management, due to miscommunication on immovable assets.

The report on the human resources management, given by the Deputy Director General, explained the reasons for the 17% vacancy rate, and tabled the gender profiles across the Department. The Department had implemented a number of interventions through learnerships, the graduate programme and internship.

Mr Moroka concluded that the Department had put in place corrective measures to address the audit concerns. It had also implemented the turnaround strategy, was trying to align the programmes better to meet national imperatives, and was improving capacity. On the governance side, there were interventions to improve corporate governance. Although the qualified audit report had been a cause for concern, the EPWP exceeding its targets, implementation of the asset management systems, alignment of operations and gazetting of the Charter had been positive aspects. 

Discussion
Mr Radebe asked the model used by the Department on the extended public works programme.

Mr Gxilishe replied that there was a model based on local experience in the implementation of public works programme, although the Department also had drawn on international influence. EPWP tapped on the existing budget, and that was advantageous.

Mr Radebe referred to the resident technicians, and engineers that should be appointed to help municipalities and wondered which municipalities they would help.

Mr Gxilishe responded that the target was 110 municipalities and district municipalities. He would provide the list to the Members.

Mr Radebe asked when the historically disadvantaged individuals and companies would turn the corner.

Mr Gxilishe responded that this was an issue the Department was working on, through learnership programmes that aimed to ensure people could move out of their disadvantaged status. 

Mr Maduma mentioned that the stipend issue was still a challenge and suggested that it be coordinated at national level.

Mr Gxilishe replied that stipends were complex and would be difficult to standardise due to affordability from the various municipalities. The idea was not to displace people from other sectors.

Mr Likotsi asked if there were guidelines crafted on the contractor development programme.

Mr Gxilishe responded that they do have mentorship guidelines but the problem was monitoring. They have realised that a mentor does not monitor or delegates junior people because they have other commitments, which was a problem the Department would address.

The Acting chairperson requested the Construction Sector Education and Training Authority update.

Mr Gxilishe responded that it has made a huge improvement although it would still take time. The Department has helped the Authority in ensuring they obtained funding from the National Skills Foundation and Department.

A number of other questions were asked but could not be responded to, due to shortage of time.

Dr S Haung (ANC) wondered how the operations programme would deal with the skills shortage.

Dr Haung requested clarity on the six projects that were in design.

Mr Maduma referred to the ministerial forum challenge, believing that the challenge was to open doors not to white established companies in Africa but to BEE companies.

Mr Maduma wondered about the follow up projects to provide practical understanding from the theoretical training.

Mr Nxumalo referred to the draft management strategy for BEE and asked if the Department had follow up projects. He further asked if it had been implemented yet and if so where.

Mr Nxumalo requested a breakdown of recruits and where the Department placed them. He also requested an update on scholarships.

Mr Nxumalo wondered if there was a human resource plan or whether the Department were reducing the figures as they saw fit from time to time.

Mr Nxumalo mentioned that in Durban Port Police Station, the air conditioner had not functioned since the previous year.

Mr Nxumalo stated that a hotel burnt down in June this year in Durban; the police station requested accommodation but that was still not addressed.

Mr Ntsaluba replied that he was disappointed that such matters were not raised but assured the Committee that they would immediately consult with the Durban office.

Mr Likotsi requested the estimated value of construction for the African Parliament and estimated number of jobs to be created.

Mr Likotsi mentioned that most of the construction planned for the Re-Kgabisa Tshwane programme was in Tshwane and wondered the Department hoped to close the economic divide from former township and city when doing their construction around town.

Mr Likotsi requested an elaboration on projects not requiring training.

Mr Likotsi mentioned that there was a huge outcry from the Chinese community not featuring in terms of the employment profile.

The Acting chairperson referred to the BEE access to finance and wondered how they addressed that and contracts that would expire soon.

 
The Acting chairperson referred to the EPWP at local government level and funding from the national monitoring projects.

 The meeting was adjourned.