28 MAY 2007

1. 28 MAY 2007 STRATEGIC PLANNING AND BUDGET PREVIEW PRESENTATION TO THE SELECT COMMITTEE ON PUBLIC SERVICE

2. Context of the Strategic plan • The department’s strategic plan is premised on the Government’s renewed pledge to foster partnership in the fight against poverty pronounced in the 2007 SONA. • To complement SONA, the strategic plan gives expression to the strategic pillars pronounced by the Minister to the Department’s Lekgotla held in November 2006 namely: • Transformation and regulation of the construction and property industries to yield economic growth and development • Optimise effective strategic asset management over the State property portfolio as well as private sector properties utilised by Government

3. Context (cont.) • Identify and infuse job creation opportunities in all its programmes. To this end, the department has committed itself to employing 5000 young people under the auspices of the NYS, whilst also ensuring that labour intensive methodologies will be applied in all its building programme in future (where applicable). • Fostering relationships with sector entities and other stakeholders towards the realisation of the department’s mandate • Maintenance of sound relations with Parliamentary structures and other Government spheres.

4. Situation Analysis In reflecting on its mandate, the department sees itself as: • The “handy man” of the State • The leader of the EPWP in efforts of poverty alleviation and job creation • The regulator of the industries and associated professions falling under its jurisdiction • The asset manager for and on behalf of the State These will now be discussed in turn: DPW AS THE “HANDY MAN” OF THE STATE • The department is acutely aware and committed to ensuring that its accommodation provisioning function meets its clients’ operational, technical and social needs. • In recognition of this imperative as well as the observation of the poor

5. DPW as the" Handy Man of the State” (Cont…) state in which public assets are in, the department developed a National Infrastructure Maintenance Strategy (NIMS) that was approved by Cabinet in July 2006. • The vision of NIMS is that infrastructure is adequately maintained and operated, resulting in sustained service delivery, growth and employment creation, thus contributing to the goals of ASGISA and the EPWP. • NIMS is founded around four thrusts namely: • Strengthening the regulatory framework governing planning and budgeting for infrastructure maintenance • Assisting institutions with non-financial resources • Developing the maintenance strategy

6. NIMS is founded around four thrusts • Strengthening the regulatory framework governing planning and budgeting for infrastructure maintenance • Assisting institutions with non-financial resources • Developing the maintenance strategy • Strengthening monitoring, evaluation and reporting and feeding this into a process of continuous improvement

7. 1. Regulatory framework governing planning and budgeting • Create links between the capital budget, the operating budget, and the infrastructure asset management plan of each institution, to ensure that financial provision for maintenance is specifically linked to currently owned strategic infrastructure and to decisions on investment in new capital infrastructure. • All Treasuries to plan for increasing global allocations for maintenance over time (assuming adequate motivations) • Gazette regulations in terms of GIAMA, requiring adequate planning for maintenance.

8. Regulatory framework governing planning and budgeting (cont…) • Incorporate in the regulatory framework described above requirements for (1) identifying key strategic infrastructure (for example water and water waste treatment works, key arterial roads, etc.), (ii) specifically budgeting for the adequate maintenance of this strategic infrastructure, and (iii) reporting performance. • Carry out an audit of heritage sites in order to identify work to make them complaint with government policies and regulations • Develop and promote guidelines, norms and standards for the maintenance of infrastructure – covering financial, technical and skills aspects

9. 2. Assisting institutions with non-financial resources • Carry out a study of the non-technical human resouce capacity requirements for improving infrastructure maintenance, including identifying actions to address the identified skills shortages. • Identify the Category B institutions and build targeted capacity within them, through the Infrastructure Delivery Improvement Programme (IDIP), Project Consolidate and other capacity building programmes. In particular, provide direct support to assist them (at the very least) to prepare asset management plans including maintenance plans.

10. 3. Developing the maintenance strategy • Build the maintenance sector within the construction industry, recognising its importance with various interventions including:- • Developing models, guidelines and procedures for procurement of maintenance services, particularly ongoing long-term SMME development, BBBEE, involvement of women, and local employment coupled with appropriate enterprise development, and • Building capacity in the industry, through means such as learnerships, mentorships and other forms of skills and contractor development programmes. The EPWP will play an important role in this regard.

11. 4. Monitoring, evaluation, reporting and continuous improvement Institutional Arrangements for the NIMS Programme will include the following committees for M&E • Political Oversight and DPW as a Lead Department • Programme Steering Committee • Provincial Coordinating Forums • Advisory Group • Programme Manager • Task Teams These Committees shall be in place by the 31st July 2007

12. DPW as the “Handy Man” of the State (Cont…) • Strengthening monitoring, evaluation and reporting and feeding this into a process of continuous improvement • This strategy gives substance to PFMA Act, which places an obligation on accounting officers “for the management of the assets of the entity, including the safeguarding and maintenance of those assets”. • The department has since established an Intergovernmental Implementation Steering Committee lead by the Minister to develop an implementation plan of NIMS.

13. DPW as the Handy Man of the State • Focus on the improvement of service delivery efforts to clients through Zimisele • Build the capacity of the department for the implementation of the EPWP and NYS on the implementation of the building programme

14. DPW as the “THE LEADER" of the EPWP • The department derives its renewed mandate from the President’s call following the Cabinet Lekgotla held in July 2006, the mandate which includes the eradication of poverty, unemployment and underdevelopment. To this end, the department has established critical strategic with the three spheres of government, SOE’s and the private sector. • As would be revealed, in the discussion of the budget, the department has increased its staff in EPWP to capacitate it for the leadership role it has to play. • The following programmes will be implemented, monitored and evaluated in the medium term: • Expand beneficiary training as orchestrated by SETA’s • Enhance internal EPWP capacity

15. DPW as the leader of EPWP (Cont…) • Enhance Provincial and Municipal EPWP delivery capacity • The EPWP Unit has established a Technical Support Programme to give hands on support municipalities to ensure that they contribute to the EPWP. • The initial focus is on 19 District Municipalities containing 99 local municipalities (2 Direct) • 6 Metros (3 Direct) • 20 Local Municipalities • Total Municipalities: 144 Municipalities • Total 07-08 MIG Allocation for these municipalities: R4.974 billion • Enhance performance of the Environmental Sector • Clarify on-going role of the EPWP • In line with the President’s call, the department in collaboration with DoL and UYF through its EPWP unit will be employing 5000 young people in its building maintenance programme in the 2007/08 financial year under the NYS using EPWP Methodologies. Projects amounting to R2.9 billion have already been identified for implementation as from 2007/08 financial year. A similar roll-out programme will be implemented by the Provincial Public Works.

16. DPW as the REGULATOR • The department continues to provide strategic direction for sustainable growth, transformation and development of the construction sector in partnership with its sector entities. • The construction sector charter has recently been gazetted by the dti and the process of establishing the Construction Sector Council is currently underway • The department through the CIDB is implementing the national contractor development programme in line with the CIDB Act. • The department initiated a review of the CIDB in January 2007, and it is hoped that that the results of the Review Panel will assist in identifying the focus areas that will ensure that DPW, through CIDB achieves the objectives of the CIDB Act. • The board of Agrément South Africa, which operates under a ministerial delegation of authority from Minister of Public Works, was established in 1969.

17. DPW as the REGULATOR (Cont…) • In recognition of its responsibility of ensuring that there is constant supply of adequate built environment resources, the department will: • Enter into a bilateral agreement with the Cuban Government in July 2007, to source built environment professionals from Cuba to be deployed in the various spheres of Government. • Working with our own entities, especially CBE, the Department will develop a comprehensive skills development strategy for the industry. • Explore effective ways of engaging the institutions of higher learning to ensuring the constant supply of adequate suitably qualified built environment professionals / practitioners in future. • Continue with the implementation of the existing skills development initiatives in the form of 2014 Youth Foundation

18. DPW as the REGULATOR (Cont…) • DPW together with IDT will enhance the human the human and institutional capacity of community-based, non-governmental organizations and local government operating in poor and marginalized communities. A primary focus will be on organizations with women as their primary participants. • Working with Agreement Board, DPW will engage in the promotion and piloting of innovative development practice and advocacy in pursuit of poverty eradication and the advancement of women.

19. DPW as the REGULATOR • In line with our key strategic pillars, the department will focus on the transformation of the property sector in the forthcoming months to deal amongst others with the deracialisation of this important sector in the country’s economy • Extension of GIAMA: The focus in the medium term will be assisting provincial and national departments in the understanding and implementation of GIAMA.  The department will continue engagement with dplg and SALGA to bring local government on board. 

20. DPW as the Asset Manager • Asset Management ensures that immovable property owned and/or utilised by the State for delivering various government services yield functional, economic and social benefits to the State • The department will as asset manager for the State: • ensure effective and efficient management of government’s immovable assets. • Implement GIAMA once promulgated. • Develop norms, standards and toolkits for proper management of immovable assets. The property performance standards will enhance the optimal performance of state-owned and leased properties through determination of the minimum requirements in relation to cost and space.

21. Other Strategic Issues • The department had been successful in turning around its financial management challenges and this trend will continue. • In line with the Minister’s mandate, the department will constantly play its oversight over its sector entities to ensure that their legislative mandates are fulfilled whilst also providing its guidance under applicable circumstances as well as discharging its reporting and related functions to Parliament and its Committees.

22. Other Strategic Issues (Cont.) • Enhance skills development through internships, learnerships and external bursary programme focusing on the built environment professions • Endeavour filling all funded posts in the department’s establishment • As far as practically possible, unbundle the building programme projects to advance BEE procurement objectives

23. Key Policy Developments affecting the Budget • Refinement of Budget Devolution and introduction of accommodation charges that commenced in 2006/07 financial year • GIAMA – more systematic planning and prioritization of accommodation and budgeting process • Implementation of the National Infrastructure Maintenance Strategy • Envisaged devolution of Property Municipal Rates to the Provinces has been delayed. It is however, envisaged that this process will be finalised in the 2008/09 financial year.

24. DPW Budget Vote Allocation for 2007/08 • - Vote allocation for the 2007/08: R3 693 120 000 • - Increase of R584 922 000 compared to 2006/07 financial year • - Breakdown per programme: • Programme 1 (Administration) : R 628 610 000 • Programme 2 (Land and buildings) : R 2 866 556 000 • Programme 3 (NPWP Policy and EPWP): R 173 574 000 • Programme 4 (Auxilliary): R 24 380 000

25. Analysis of DPW Vote Allocation by Standard Items (after devolution) (R’000) Expenditure Item2006/07 2007/08 Personnel Budget (Refer Table 6.B) R619 506 R709 544 Administration R222 192 R262 307 Accommodation charge* R247 360 R274 965 Trading Entity Transfer* R450 000 R476 000 Capital Works Budget (Table 6.E) R493 450 R798 450 Municipal Rates/Provincial Properties R710 343 R836 570 EPWP R 54 502 R71 742 Facilities Management* R231 639 R156 864 Transfer Payments to CIDB (Table 6.8) R 40 012 R49 891 Transfer Payments to CBE (Table 6.9) R 8 000 R23 939 Transfer Payment to Agreeme’nt Board R 8 065 R8 468 Auxiliary Services R 23 129 R24 380 TOTAL R3 108 198 R3 693 120 *Funds to transferred to the PMTE *ds to be transferred to Trading Entity

26. PMTE estimates of revenue: 2007/08

27. PMTE estimates of expenditure: 2007/08

28. Reflections on the Budget Allocations Over the next financial year, there has been a notable improvement in the baseline allocation on the following items, details of which are set out in the Vote: • Personnel Budgetincreased by R90M - The increase will mainly fund the additional staff to be recruited to drive the EPWP objectives as well as the appointment of Interns and Learnership candidates • Capital Works Budget increased by R305M – the bulk of which as explained in Table 6.E will be used to fund the following projects: • Prestige Projects amounting to R135M • Dolomite Risk Management amounting to R132M • Ports of Entry Projects amounting to R268M • Government Head Office Projects amounting to R116M Provincial Property Rates budget increased by R126M - The increase is meant to address the arrears that get identified as part of the on-going improvement initiatives with the Local Government’s sphere

29. Reflections on the Budget (cont.) • Maintenance and Rates charges for the National Property Portfolio increased by R478M – the breakdown of which is as follows: • Property Rates to Municipalities: R70M • Maintenance Budget increased by R408M this amount is not reflected on the Department’s allocation as it represents the amount devolved to client departments to be reimbursed to the department in return for services rendered

30. THANK YOU