Portfolio Committee on Public Works 24 May 2006

1. National Department of Public WorksProposed extension of application of Government Immovable Asset Management Bill [B1-2006] to include Local Government Portfolio Committee on Public Works 24 May 2006

2. Content • Background • Decisions informing current Bill • Summary: Review of scope of application of current Bill • Fundamentals of current Bill: National/Provincial vs Local Government • Legislation guiding strategic planning in Local Government • Use of GIAM principles in Local Government strategic planning • Conclusion 1

3. 1. Background • On 3 May 2006, during discussion of the Government Immovable Asset Management Bill, the Portfolio Committee on Public Works expressed the view that the scope of application of the draft legislation (currently limited to National & Provincial Government) should, as a matter of urgency, be broadened to include Local Government. • The Committee requested the Department to provide reasons why it was of the opinion that Local Government could not initially be included in the scope of application of the draft legislation. 2

4. 2. Decisions informing current Bill • Cabinet mandated the Min of Public Works to develop a policy framework to govern the management of immovable assets throughout Government and to implement that policy by means of legislation, stating: “…there needs to be new legislation and regulations that govern the maintenance, handling and disposal of immovable assets”. [Item 1.2.9, Minutes of Cabinet, 02 April 2003] • In August 2005, Cabinet approved (a) the Government-wide Immovable Asset Management Policy; and (b) the Government Immovable Asset Management Bill, applicable to National and Provincial Government only. [Item 3.2.1, Minutes of Cabinet, 17 Aug 2005] 3

5. Decisions informing current Bill(Continued) • In June 2005, DPW informed the Portfolio Committee that the draft legislation would initially only apply to National and Provincial Governments, but that the objective remains to extend the legislation throughout Government (without disturbing the existing mandates of government entities). • In particular, it was stated that due to (a) complexity of legislation governing Local Government and (b) varying levels of autonomy of Public Entities, DPW would need to embark on a more extensive consultation process before submitting legislation applicable to these spheres of Government. 4

6. 3. Summary: Review of scope of application of current Bill • There are key differences in the legal framework and structure of local government, compared to national/provincial government. • It would be particularly difficult to draft a single piece of legislation to apply immovable asset management principles to all spheres of government. • A different approach has therefore been identified to apply the principles of immovable asset management to local government without undue delay. • This objective can be achieved by harmonizing the regulations governing municipal planning with the principles embodied in the current Government Immovable Asset Management Bill. • DPLG fully concurs with DPW’s proposal. 5

7. 4. Fundamentals of current Bill: National/Prov Gov vs Local Gov • The Government Immovable Asset Management Bill is structured around the following building blocks – A) Role-players within the asset management arena B) Management processes of government. • While the management of all spheres of government stem from the same fundamental principles, the role-players and management processes of local government differ substantially from national & provincial government. 6

8. A) Role-players: Nat/Prov Government Users: Departments who use immovable assets to perform their functions Required to compile user asset management plan Custodians: Departments who perform caretaker functions in relation to immovable assets Required to compile custodian asset management plan A) Role-players: Local Government No standard institutional delineation between users and custodians of immovable assets No separate accounting officers in various departments of a Municipality GIAM legislation for Local Government would require different “building blocks” Would be problematic to apply Bill, as currently structured, to Local Government Fundamentals of current Bill (Continued) 7

9. B) Management Processes: Nat/Prov Government National & Provincial Depts (both users and custodians) will be obliged to compile an immovable asset management plan, as part of the annual strategic planning process (prescribed in the Public Service Act & PFMA). Such immovable asset management plans must be submitted to the relevant Treasury and will inform the annual budgetary process. B) Management Processes: Local Government Municipalities are not required to prepare specific annual strategic plan, but in terms of Municipal Systems Act, are obliged to prepare an Integrated Development Plan, which serves as their “principal strategic management planning instrument” Different budgetary process in Local Gov. IDPs not submitted to “Treasury”. GIAM legislation for Local Gov would require different “building blocks”. Fundamentals of current Bill (Continued) 8

10. 5. Strategic planning in Local Government Municipalities are 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) are most relevant to immovable asset management - • The principal strategic planning document of a municipality is its Integrated Development Plan (IDP). • The MSA prescribes a specific process for the compilation of IDPs, which must also be aligned with provincial development plans and national priorities. • The MSA also prescribes comprehensive consultation requirements in relation to the compilation of IDPs. 9

11. 6. Use of GIAM principles in Local Gov strategic planning • An IDP is an inclusive strategic plan for the development of a municipality. In terms of the existing regulatory framework, an IDP may, as part of its financial strategy, contain an asset management strategy. • The only shortcomings in the existing IDP process are – • it does not explicitly specify the immovable asset management planning process; and • it does not make immovable asset management mandatory, as is the case in the Government Immovable Asset Management Bill. 10

12. Use of GIAM principles in Local Gov strategic planning (Continued) • Such shortcomings can 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 concurs with DPW’s proposal that the applicable regulations governing municipal planning be harmonized with the principles embodied in the Government Immovable Asset Management Bill [B1-2006]. 11

13. 7. Conclusion It is therefore proposed that – • the Portfolio Committee recommends the promulgation of the Government Immovable Asset Management Bill [B1-2006] in its current form; and • DPW engage the Dept of Provincial & Local Government without delay to harmonize the applicable regulations issued in terms of the Local Government: Municipal Systems Act, 2000 with the GIAM principles, to make immovable asset management planning an integral part of the compilation of Integrated Development Plans. -ooOoo- 12