Government Immovable Asset Management Bill [B1-2006]: Department briefing

Meeting report

Public Works Portfolio Committee

PUBLIC WORKS PORTFOLIO COMMITTEE
24 MAY 2006
GOVERNMENT IMMOVABLE ASSET MANAGEMENT BILL [B1-2006]: DEPARTMENT BRIEFING

Chairperson: Mr F Bhengu (ANC)

Documents handed out
Government Immovable Asset Management Bill [B1-2006]
Proposed extension of application of Bill [B1-2006] to include local government

SUMMARY
The Department of Public Works reported back to the Committee after Members had raised concerns about the Government Immovable Asset Management Bill. The main concern was the exclusion of local government when the Bill was drafted. The Department had indicated that there were complexities that warranted the omission of local government. The Department of Public Works and the Department of Provincial and Local Government did not think that there was a need to deal with local government in the Bill. It was proposed that asset management in local government should be dealt with through amendments to the regulations issued under the existing body of legislation that dealt with local government. The legislation concerned was the Local Government: Municipal Systems Act, 2000 (MSA) and the Municipal Finance Management Act, 2003.

The Committee felt that the Bill should contain a Chapter devoted to asset management in local government and the Department of Public Works was instructed to further consult the Department of Provincial and Local Government on this matter.

MINUTES
The Chairperson said that during the last Committee meeting Members had raised certain issues and had requested the Department of Public Works (DPW) to provide information in relation to such issues. The area of concern was the exclusion of local government when the Government Immovable Assets Management Bill was drafted. The Department had indicated that there were complexities that warranted the omission of local government. The agreement was that the Department would get the information from Treasury and presented it before the Committee. He invited the Department to take the Committee through the complexities.

Department of Public Works presentation

The DPW was represented by Dr S Phillips (Acting Director General), Mr A Meiring (Director: Property Policy), Mr B Annerdale (Director: Legal Services) and Ms J Botha (Legal Advisor). Dr Phillips made the presentation. (See document attached). He said that during discussions on the Bill, the Portfolio Committee had expressed the view that the scope of application of the Bill should, as a matter of urgency, be broadened to include Local Government. The Committee had requested the Department to provide reasons why it was of the opinion that Local Government could not be included in the scope of application of the draft legislation.

He said that there were key differences in the legal framework and structure of local government compared to national/provincial government. It would be difficult to draft a single piece of legislation on immovable asset management principles that would apply to all spheres of government. A different approach had been identified to apply the principles of immovable asset management to local government without undue delay. This objective could be achieved by harmonising the regulations governing municipal planning with the principles embodied in Bill. The Department of Local Government (DPLG) fully concurred with this view.

Dr Phillips said that the Bill was structured around the following building blocks: role players within the asset management arena and management processes of government. While the management of all spheres of government stemmed from the same fundamental principles, the role-players and management processes of local government differed substantially from those in the national and provincial spheres. Municipalities were governed by a separate body of legislation, of which the Local Government: Municipal Systems Act, 2000 (MSA) and the Municipal Finance Management Act, 2003 (MFMA) were the most important. The principal strategic planning document of a municipality was its Integrated Development Plan (IDP). The MSA prescribed a specific process for the compilation of IDPs, which should also be aligned with provincial development plans and national priorities. The MSA also prescribed comprehensive consultation requirements in relation to the compilation of IDPs. An IDP was an inclusive strategic plan for the development of a municipality. In terms of the existing regulatory framework, an IDP should, as part of its financial strategy, contain an asset management strategy. The only shortcomings in the existing IDP process were that it did not explicitly specify the immovable asset management planning process; and also did not make immovable asset management mandatory, as was the case in the Bill.

He said that such shortcomings could be remedied by additions to the Local Government: Municipal Planning and Performance Management Regulations, issued by the Minister of Provincial & Local Government (in terms of the Local Government: Municipal Systems Act, 2000). The Department of Provincial & Local Government fully concurred with DPWs’ proposal that the applicable regulations governing municipal planning should be harmonised with the principles embodied in the Bill. He proposed that the Portfolio Committee should recommend the promulgation of the Bill in its current form. He also recommended that the Department should engage the Department of Provincial & Local Government without delay to harmonise the applicable regulations with the principles of the Bill to make immovable asset management planning an integral part of the compilation of Integrated Development Plans.

Discussion
Mr B Radebe (ANC) appreciated the consultation process between the Department and DPLG. It showed that the Department respected the Committee because that was exactly what the Committee had requested it to do. The consultation process was not enough because the South African Local Government Association (SALGA) was not consulted. SALGA was the actual stakeholder in local government. He asked if any attempts were made to get the views of SALGA especially in relation to the position of the DPLG. The Acting Director General had said that there were no separate accounting officers in the various departments of municipalities. Mr Radebe said that there was a single accounting officer in the form of the Municipal Manager.

Mr Radebe added that the MSA prescribed a specific process for the compilation of IDPs, which should be aligned with provincial development plans and national priorities. Although there were different spheres of government, their priorities were the same and had to be in line with each other. There was no municipal IDP that would be accepted if it contrasted with the developmental plans of the whole province. He could not understand why there would be a problem in relation to asset management. The IDP was presented as if it was not similar to the Strategic Plan of the Department whereas they were the same. There was a process of public participation when the IDPs were compiled. He asked if it would be a problem to dedicate a Chapter to deal exclusively with local government. All issues that would give rise to problems could be addressed in that Chapter. Municipalities were also required to report on assets disposed and acquired.

Ms T Nwamitwa-Shilubana (ANC) concurred with Mr Radebe. Members of Parliament stayed in municipalities and often saw a lot of immovable assets getting "lost". The government was trying to capture all the immovable property when it started with the asset registers in 1995/6. The Committee and Department would not have done their job well if they were to concentrate on the national and provincial governments to the exclusion of local government.

Mr J Blanche (DA) said that the Department had picked up problems because it had to manage property on behalf of other Departments. It had picked up problems with other Departments in the past and if a new suburb were to be built in a local government, there would be instructions that a Post Office site had be identified and purchased in that suburb. At one stage Kempton Park had 46 vacant plots that belonged to the Post Office. The same thing happened in relation to schools. In recent years the government had been selling off property that had been allocated for future schools. In some places it was realised that the existing schools were adequate and there was no need for another school. In the meantime the property remained unused and local government had to maintain it. It was for this reason that local government had to come on board.

Mr Blanche said that there had been some problems in the past two years because some Departments had not paid their rates and taxes to municipalities even though they were budgeted. The Department was centralised in Pretoria and expected to maintain property across the country. This added to the costs of running the Department at national level. This was the ideal opportunity to involve local government. It was important for the Portfolio Committee on Provincial and Local Government to also discuss this issue. South Africa demanded that the Committee come up with a Bill that would give control to local government.

Mr G Anthony (ANC) sought clarity on the process that the Bill should have gone through. He wondered if Section 4 of the MSA had been exhausted. The process of consulting had to take place even before the Bill was presented to Parliament. The intention was to see that there was control and management of assets at local level because assets were used at that level. The Committee had made a lot of input in terms of identifying and registering the assets, establishing the database and drafting policies. It seemed that the Department was putting the cart before the horse. A number of processes were not yet completed. The Department had not explored policies on how to dispose of assets.

Mr S Opperman (DA) said that oversight was one of the Committee's important responsibilities. The Committee had seen waste and problems around property in local government during its oversight visits. There was a need to address issues like the transfer of property between spheres of government. There was a need for a specific section dealing with the management of assts at local government level.

Dr Phillips said that DPLG and DPW agreed that it was important for the local sphere to come on board with regard to improved asset management. The key question was how to legislate in order to achieve this. One possibility was to use the Bill and the alternative view was to amend regulations and use the existing body of legislation that dealt with local government. The National Treasury and DPLG preferred the later solution. It would be possible to add a Chapter to the Bill to address specific issues relating to local government. The Department would have to consult the DPLG again given that DPLG had indicated it would prefer using the existing legislation.

The Chairperson said that Members were concerned about the lack of consultation from 1996. SALGA was not consulted. The focus of the Department was on national and provincial governments to the exclusion of local government. Committee had felt that there was nothing very complex and the presentation had indicated how the process could be taken forward. He encouraged the Department to go back and meet with the DPLG and see how to take the process forward.

Mr Blanche reiterated that the Committee should engage the Portfolio Committee on Provincial and Local Government to bring them on board.

The meeting was adjourned.