DRAFT BUDGET SPEECH 2008/09 - Department of Public Works



20 May 2008

DEPARTMENT OF PUBLIC WORKS

Honourable Speaker

Honourable Premier

Members of the Executive Council

Portfolio Committee led by Chairperson Mme Koti Nyama

Chairperson of SCOPA Mr. Rudolf Phala

Distinguished Colleagues in the Legislature

Mayors, speakers, Councilors and Municipal Managers

Leaders’ of opposition parties

The Director General and Heads of Departments

Head of Department for Public Works, Mr Johannes Rantete

Our Technical advisors from the ILO and Cuba

Youth, Women, business and community leaders in our midst

Members of the Media

Distinguished guests

Comrades

The people of Limpopo

Ladies and Gentlemen

As we were preparing to deliver this budget speech, I was reminded of one of the famous words spoken by the father of our Liberation movement, Chief Albert Luthuli. He once said:

"We must fight on in all fronts along the path of non-violence and when, at times, the human weakness of despondency assails us, let us gain courage and inspiration, not only in the justice of our cause, but in its universality in all ages.”

As we approach the last stretch of our mandate term, it becomes critical to note that, this is the time in which we need to collectively intensify the fight, this time against the ills that scourge our societies, such as poverty in order to deliver on our commitment for a better life for all.

Even though the human weakness of despondency can assail us, we need not betray or disappoint expectations of our people.

He further went on to say: “ We should be stirred to greater effort by the knowledge that it is our undeserved honour and privilege to be numbered among followers of the heroes of freedom of all lands and ages: men and women who have so meritoriously championed the cause of freedom.”

Honourable Speaker

It is an honour to stand before this august house again, fulfilling the vision and hopes, which those that led and went before us, carried for our nation.

The democratic era in which we live in, has year after year brought hope, freedom and dignity to our people. We are more assured of the dream of a South Africa that is prosperous. As we present this budget speech before the house today, honourable speaker we want to reaffirm our commitment in continuing to improve the lives of our people.

I am confident that this financial year will be one of the most remarkable years in our calendar.

In February this year, we had an opportunity to host the National Women in Construction summit in our province. It was pleasing to see that women are taking advantage of our programmes and government initiatives aimed at to empowering them.

At least fifty women from Limpopo were recognized for the contribution they are making in the sector, through their construction companies. Amongst the fifty, thirty of those were products of government, who were recognized for having completed their training through the Sakhasonke programme. We salute women such as these, who continue to make us proud.

Honourable Speaker

To give face to these women, allow me to acknowledge the overall winner, Mme Khalo Emily Sbisi of Masibitsi General Manufacturing, who is present here today. She scooped the overall grand prize as she has proven that women can also excel in this industry. Mme Sbisi is registered on the CIDB register, Graded at 6GBPE, her commitment is evident in the fact that she is one of the people that do not abandon projects, but see them through to completion.

We also would like to salute the late Mme Moon Moshoana who was awarded second prize, posthumously, for her contribution in transforming the building environment through her company Telegenics trading 65CC, which at the time of her death was graded at 4GB. We were still expecting many more great things from her. May her soul Rest In Peace.

2007/08 PERFORMANCE REPORT

Honourable Speaker

We are pleased to look back at the past financial year and appreciate the fact that, as Public Works, we have been a critical player in the surge to improve the lives of our people.

During the 2007/08 financial year, a total of two hundred and sixty three (263) projects for the Department of Education were awarded. A total of thirty nine (39) projects for the Department of Health and Welfare, Twelve (12) projects for the Department of Agriculture, seven (7) projects for the Premier’s office and seventeen projects (17) for other Departments

We are proud to announce that seventy six (76%) of these projects were awarded to companies owned by Youth, Ninety four (94%) to companies owned by women and 0,1% to companies owned by people living with disability.

Through the EPWP we have been able to deliver 54 428 jobs which constitute 94.84% of set targets of the year. We have also benefitted 5 844 people with skills development and imparted life skills training to 11 747 workers in our projects. Our National Youth Service programme has benefitted 500 youths. In our Real Estate programme, we transferred 57 R293 towns to municipalities and vested 30 properties from national to the Province. In terms of our budget performance as a Department, we managed to spend R557 184 000 against the revised budget of R558 209 000. This constitutes 99.8% of our budget allocation.

Honourable Speaker, Going back to the business of the day, there are policy priorities that I would like to outline that governs our day to day operations and will assist in ensuring that we speed up service delivery in line with the Presidents call to do business unusual.

POLICY PRIORITIES

INFRASTRUCTURE DELIVERY IMPROVEMENT PROGRAMME

As we all are aware, Infrastructure delivery underpins the very strength of the province’s competitive performance and contributes to the welfare and improvement in quality of life of our people. Post 1994, developments in our Province have increasingly been undertaken in various sectors of the economy and this includes infrastructure. Partnerships between the public and private sectors in areas such as housing, roads, rail, water supply and sanitation, health services and education have all contributed to infrastructure development and enhancement of service delivery.

However, Limpopo Province infrastructural needs are still massive on both a social and economic level. There is therefore a need for an integrated infrastructure planning framework which supports the economic, spatial and human settlement dynamics of the province in order to accelerate infrastructure delivery. Such an infrastructure planning should provide a further basis for the appraisal of capital projects and this should include the following:

o Costs benefit analysis studies,

o Options analysis,

o Life cycle costs and affordability,

o Implementation readiness,

o Funding and approvals,

o Risks and contingencies,

o Cost effectiveness analysis and sensitivity analysis.

This need to improve infrastructure delivery has also prompted National Treasury to review provincial infrastructure delivery systems, hence the introduction of the Infrastructure Delivery Improvement Programme (IDIP)

The overall goal of IDIP is to ensure realization of the Provincial Growth and Development Strategy targets through effective management and implementation of best practice methodologies and systems as well as capacity building in order to improve the planning and delivery of infrastructure projects and thereby improve on the spending patterns.

Provincial Technical Assistant Teams (PTATs) consisting of external consultants, have been mobilized to the Province to work in the Department of Education, Public Works and Health and Social Development. The improved effectiveness and efficiency of delivery of provincial social sector infrastructure in the past two financial years bears testimony that IDIP is successfully managed and implemented in the Province.

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As I speak, most school building projects that were awarded in November last year, for the current financial year of 2008/09 have already reached completion stage.

GOVERNMENT IMMOVABLE ASSET MANAGEMENT ACT (GIAMA)

Honourable Speaker

Government has always been confronted with service delivery needs which must be matched with the efficient and effective use of all resources, including immovable assets. Government’s extensive and diversified immovable assets have a significant impact on the overall macro-economic, socio-political & physical landscape. Decisions on immovable assets have long-term implications and should be based on the full impact of costs over the expected lifespan of such assets. It is against this background that the Honourable President of the Republic of South Africa, Comrade Thabo Mbeki, signed into law the Government Immovable Asset Management Act, No. 19 of 2007 in November 2007 to ensure a uniform, efficient, effective and accountable immovable asset management. This Act affords government the opportunity to improve service delivery through a structured immovable asset management plan and thereby promote implementation of properly costed maintenance and operational programmes. Since its enactment and in pursuance of the strategic objectives of the Act, the Department has already established a Custodian Forum comprised of officials from my department, Provincial Treasury and the Provincial Legal Services to provide strategic leadership and advisory services on the development and implementation of norms and standards as provided in GIAMA provincial guidelines, and to facilitate strategic planning and budgetary processes in line with the Act.

We have also established the Provincial User Department Forum which is comprised of all provincial departments to deal with the compilation and implementation of User Asset Management Plans which are required by Provincial Treasury by the end of November 2008. Already the process of updating the 9 000 registration of properties we reported on last year is continuing. Additional 5 000 properties will be finalized in 2009.

Honourable Speaker

Allow me to announce to this house that in keeping with our vision, National Government has confirmed that the Limpopo Province is a leader in the implementation of the Government Immovable Asset Management Act and we undertake to maintain this status.

Honourable Speaker

PROPERTY MANAGEMENT STRATEGY

Our Department in collaboration with the National Department of Public Works has developed a Property management strategy. The Provincial Government invest millions of rands to lease properties from the industry in which only less than 5% of players are from Historically Disadvantaged groups.

It is for this reason that Government has adopted a Property Management Strategy in response to the November 2006 National Cabinet Lekgotla resolutions where it was evident that there is a need to transform the property industry. We view this development, in support of the assertion made by the Honourable Minister of the National Department of Public Works, Comrade Thoko Didiza when she said: “Property ownership has been historically skewed against the poor and Public Works is called upon to lead the process of restorative justice to promote access to, and meaningful and universal participation in the property industry”.

The Property Management Strategy aims to:

• address the skew property ownership that is currently existing in the property industry;

• promote black participation in the property industry through management, control and procurement; and finally

• create jobs and alleviate poverty and thereby attain the 2014 millennium goals

Honourable Speaker,

In the coming months, the department of Public Works will be rolling out the Strategy in preparation for its logical implementation. In terms of this Strategy, we will encourage provincial departments to occupy office buildings which are owned by Historically Disadvantaged Property Owners for longer periods. We will ensure that established landlords outsource management and maintenance of leased buildings to Historically Disadvantaged companies.

DEVOLUTION OF MUNICIPAL RATES AND TAXES

The Provincial Department of Public Works paid for rates and taxes to municipalities only on state buildings where Provincial Departments shared occupation as well as where the Department of Public Works occupies state building alone.

The National Department of Public Works has been paying for rates and taxes to municipalities on some of the state land belonging to the Provincial Government. Since 2001, the payment of municipal rates and taxes for the rest of state land has been scattered amongst Provincial Departments of Limpopo according to land use. The National Treasury has decided to relieve the National Department of Public Works of the function by devolving the same function to our province with effect from 01 April 2008. This function is now centralised in the Provincial Department of Public Works.

Officials of my department are preparing to undergo training on iEWorks, a system that will be used nationally for the paying of municipal rates and taxes. Very soon we will be engaging municipalities to agree on a uniform provincial billing system to facilitate easy invoicing and payment of municipal rates and taxes.

CIDB CONSTRUCTION CONTACT CENTRE

Honourable Speaker

The National Department of Public Works has a regulatory body under the Construction Industry Development Board (CIDB) to facilitate the establishment of Construction Contact Centres in partnership with the provincial Departments of Public Works

The aim of the centres is to provide clients, stakeholders, partners and CIDB registered contractors with a one stop construction support service. This is meant to bring services closer to the people, instead of them travelling to Pretoria to be assisted. Services rendered by the Construction Contact Centres are the following:

o Contractor registration advice and help desk;

o support service to clients and contractors;

o procurement and best practice advice to client departments;

o ensuring access to contractor development training;

o ensuring access to finance and technical support service;

o facilitate links to CIPRO, SARS, Tax/VAT compliance; and lastly,

o Facilitate implementation of National and Provincial contractor development programme.

We have established a Construction Contact Centre which will be fully operational with effect from 01 June 2008. The new offices are situated in the Head Quarters of the Provincial Department of Public Works in Ladanna, Polokwane. Registration for the first grade will be done on site and certificates issued on the spot. As this construction centre grows we will ensure that we extend our services.

EXPANDING THE EXPANDED PUBLIC WORKS PROGRAMME

During his state of the Nation Address in February this year, President Thabo Mbeki outlined some key proposed interventions among them are:

o Expanding the public works programme,

o Employment subsidies for direct job-creation for targeted groups,

o Enhancing employment search capability,

o Improving education and training,

o Improving services and assets among poor communities,

o Specific interventions in poor households, and

o Ensuring effectiveness of institutions supporting women and other sectors.

Creating job opportunities is still key and essential to the eradication of poverty, as we strive to create sustainable livelihoods to our people. The Expanded Public Works Programme, still holds the key to this objective.

The Programme affords us the opportunity to cater for our people, by harnessing resources across government departments and agencies, in order for us to deliver on our promises.

The Limpopo Provincial Government is implementing EPWP based on an approved 5-year business plan, as part of its strategy to deal with the challenges of poverty alleviation and eradication. In essence the strategy seeks to meet the objectives of the Provincial Growth and Development Strategy and the Millennium Development Goals.

In this business plan, we have set ourselves and the province, targets that will assist us to realize the PGDS. We are pleased to align ourselves with the APEX priorities of government, which will further deepen the implementation of EPWP on a wider scale.

What needs to happen in the year ahead is for participating stakeholders to begin to upscale the programme by implementing fairly large projects for more visibility and higher impact in terms of the war waged on poverty, in which the EPWP is seen as a critical contributor.

I call upon all stakeholders to familiarize themselves with the political and socio-economic issues of Expanded Public Works Programme, so that we can begin to make a meaningful impact in the lives of the poor, through proper targeting.

NATIONAL YOUTH SERVICES

Honourable Speaker, in line with nation building, we are pleased to announce that the youth of this province, taking part in the National Youth Service are doing us proud.

500 young people of our province, enrolled to serve this province. They have since completed their theoretical training in brick laying, plumbing; landscaping, painting, carpentry and electrical engineering and are now on site. This was made possible in partner ship with Umsobomvu Youth Fund, the Youth Commission and the Department of Labour. This year we intend to recruit another 500 to take part in the programme.

Honourable Speaker

Let me emphasise that this Department is committed to empower the youth of this province even outside the National Youth Service Programme. Through our busrsaries and learnership programmes. Twenty students completed degrees and Diploma’s in the past financial year. Of the 20, ten got Diplomas in building Sciences, three in electrical engineering and one in Architectural technology. Six of those got their Degrees in BCom Accounting. We are also proud to announce that 218 learners completed their studies out of which 28 managed to be absorbed in the Private sector.

Honourable speaker

APEX PRIORITIES

During his state of the Nations Address, the Honourable President of South Africa, comrade Thabo Mbeki, directed both National and Provincial Departments to identify and implement using labour intensive methodology, projects which will make positive impact on the lives of ordinary citizens. Through the national department of Public Works, our Department is participating in the implementation of the following four APEX projects:

o Eradication of mud schools, and undesirable structures

This involves efforts geared towards construction, reconstruction and rehabilitation of schools in poor areas using labour intensive technology that accommodates rapid delivery, without compromise of quality.

o Environmental rehabilitation

This project revolves around creation of sustainable human settlement which is in line with the social contract and the millennium development goals. Activities identified under this project are in the main, tree planting in government buildings which are in the public eye and grass cutting in government institutions which are in dire need of this service.

o Access to government structures for people with disabilities

Through a collaborative effort with other provincial departments, our Works Inspectors will be deployed throughout the Province to identify government owned structures for purposes of erecting ramps which will ensure easy access.

Rehabilitation of unused buildings.

Structures such as office buildings and Community Based Public Works Projects are targeted under this project.

PLANNED 2008/09 PERFORMANCE

Honourable Speaker

The core programmes that the Department will focus its attention on in the 2008/09 financial year are: Professional and Project management, Building maintenance, Real Estate, EPWP and Administration.

PROFESSIONAL AND PROJECT MANAGEMENT

The Department of Public Works implements a number of infrastructure projects on behalf of client Departments. For 2008/09 financial year, we will implement the following projects:

▪ Department of Education: R242 million

▪ Department of Health and Social Development R555 million

▪ Department of Sports, Arts and Culture R37 million

▪ Department of Roads and Transport R20 million

▪ Provincial Treasury R6 million

▪ Department of Agriculture R16 million

▪ Office of the Premier R5 million

For Public Works to be able to successfully implement these projects, we have agreed with Provincial Treasury to strengthen the Department’s project management capacity and systems right from project tendering to project delivery. The infrastructure Delivery Improvement Programme is playing an important role in assisting the Department to live up to its mandate of efficient infrastructure delivery. In addition to that, the South African government also took a decision to recruit technical advisors from Cuba. These friends of ours have technical expertise needed in the build environment, expertise we lack in the country. Five of them are in this province and will be here for a period of three years, to assist in ensuring that our people are capacitated and that we improve in the delivery of infrastructure. An amount of Thirty-three point two million (R33.2 million) is budgeted for the Project Management Programme, which is responsible to deliver all these projects.

BUILDING MAINTENANCE

The Building Maintenance Programme will, during this financial year, put in place strategies that will reposition it to meet the mandates imposed by GIAMA. The basic requirements of the Act with respect to asset maintenance are that condition assessment of all government immovable assets should be done. This will inform the development of asset management plans for the purpose of scheduling maintenance programmes for the various assets.

In order to meet this new challenge the Department will strengthen its institutional capacity and develop systematic approaches to apply GIAMA imperatives on maintenance in line with the national Infrastructure maintenance Strategy, which the Minister of Public Works will be launching tomorrow.

The specific projects that we will implement during the year which includes our APEX projects are as follows:

▪ Maintenance of 3 Government Complexes

▪ Maintenance of 21 office blocks

▪ Maintenance of 143 residential houses

▪ Landscape development

▪ Maintenance of sewer lines

▪ Electrical maintenance

▪ Rehabilitation of unused buildings

▪ Providing access to government buildings for people with disabilities

▪ Environmental rehabilitation

▪ Conducting condition assessment of government buildings, and

▪ Conducting Demand Side Management for electrical energy consumption in government buildings.

A total of R62 million will be spent in the implementation of the above maintenance projects. The overall budget for this programme is Two hundred and Eighty seven point three million (R 287.3 million)

Honourable Speaker, it is also important to mention that under this programme, the Department will be implementing energy saving measures in response to the energy challenges facing us.

REAL ESTATE

Today I’m pleased to report that our communities have responded to our call which we made during the last financial year for people to assist us to identify government assets we did not know about, like I said earlier, apart from the 9000 properties we had in our Asset register last year, we now have 5 000 additional properties - some coming from national and others being new discoveries. We are tirelessly working to ensure that we compile the asset register for the 9 000 properties to be completed in October this year and then embark on the second phase to register the 5000. We are encouraged and grateful for the continuous support shown to us by those community members who have come forward to disclose some of these properties which were unknown to us. We still encourage anyone in the same position to do so.

Honourable Speaker

The department has moved swiftly in ensuring that we transfer the R293 towns to municipalities. As I speak today, a total of 57 towns were transferred during the last financial year. This year we intend to dispose the remaining 9 R293 towns. It is also pleasing to report that 30 properties were vested in the name of the Provincial Government as per our commitment during the last financial year. This year we intend to vest 324 properties and dispose 93 properties.

With regard to rental collection, the department will continue to accelerate the collection of arrear rentals, by, within the legal prescripts, evicting defaulters and enhancing the management of rental collection. The allocated budget for the Real Estate programme responsible for all the above is Eighty-three point one million (R83.1 million.)

EXPANDED PUBLIC WORKS PROGRAMME

This programme, Honourable Speaker, still remains the central focus of the Department as it enables us to Marshall Government institutions to the frontline of reversing the frontiers of poverty. The Department of Public Works with the assistance of the ILO technical advisors has been conducting workshops and training sessions to implementing institutions to enable them to understand and champion the implementation of EPWP in their line function projects. Although there has been slow movement, a significant number of government institutions are beginning to implement the EPWP. Together with Provincial Treasury, we intend to tighten our monitoring role over implementing institutions so that hey not only implement EPWP projects but also report timeously on their achievements of targets. Taking a lead in implementing the Programme, public Works will utilize its maintenance budget to continue implementing the Programme.

In terms of EPWP five –Year Business Plan, the overall job creation target for the Province in the 2008/09 financial year is 81 991 and skills development is 13 597 and workers training is 72 240. The budget for EPWP is Fourteen point Eight million (R14.8 million).

ADMINISTRATION

This programme consists of strategic support services that propel the department to function in an efficient, effective and economic manner. This functions ranges from human resources, finance, corporate services, information technology services to strategic management. The total budget for Administration is Two hundred and Thirty- one point three million (R231.3 million)

The overall budget for the department of Public Works for 2008/09 financial year is therefore Six hundred and forty-nine million, Seven Hundred and ten Thousand Rand (R649 710 000).

In this financial year we will focus more on improving the implementation of the performance management system, recruitment of more staff especially in project management; beefing up financial systems especially around asset management, improving record management, business process re-engineering and strengthening supply chain management. As part of business unusual we intend to run the department on the ethos of management by objectives which require focused attention on delivery of set targets and regular reporting on achievements of targets. Risk management and timeous attention to audit issues will inter alia, serve as the bedrock of our corporate governance framework.

Honourable Speaker

As the history of this Province is re-written, we in the Department of Public Works would like to be remembered not only for having transformed the cosmopolitan outlook of Polokwane City through our high rise government office buildings. But we would also like to be remembered for many previously disadvantaged individuals and companies we have managed to benefit through the tenders for schools, hospitals, clinics and other myriad projects. To be remembered for having put pieces of bread and certificates on tables of hundreds of people that benefitted from our EPWP projects, learnership projects and bursaries. Indeed no one can move mountains, but through efforts we have and continue to. We have begun to gradually move the frontiers of poverty, we have begun to bring hope to the downtrodden and slowly but surely the future is now becoming certain to those who have lost hope.

CONCLUSION

Honourable speaker,

Indeed the people of Limpopo deserve to have a better life. As we start a journey into this financial year, we undertake to make this a reality for them as the department of Public Works. I would like to thank the management of the department led by Mr Johannes Mutshutshu Rantete, for showing a passion and will to serve, through out this year. I would also like to thank the Portfolio Committee on Public Works under the leadership of Mme Koti Nyama, for the support and advice, they have always given us.

In conclusion Honourable speaker, let me repeat the words by Chief Albert Luthuli and say " indeed We must fight on in all fronts along the path of non-violence and when, at times, the human weakness of despondency overwhelms us, let us gain courage and inspiration, not only in the justice of our cause, but in its universality in all ages.”

I Thank you

| |

|LIMPOPO DEPARTMENT OF PUBILC WORKS 2008/09 BUDGET STATEMENT |

|  |  |  |

|Programme 1: |Administration | 231,297 ,000 |

| Programme 2: |Public Works | 403,592 ,000 |

| Programme 3: |Expanded Public Works Programme |14,821,000 |

|TOTAL | | 649,710 ,000 |

| |

| |

| |

|THE ECONOMIC CLASSIFICATION OF THIS BUDGET IS AS FOLLOWS: |

|Current payments | 557,507,000 |

| | 401,550,000 |

|Compensation of employees | |

| | 155,941,000 |

|Goods and services | |

| | 16,000 |

|Interest and rent on land | |

|  | - |

| | 18,038,000 |

|Transfers and subsidies to: | |

| | 16,049,000 |

|Provinces and municipalities | |

| | 1,989,000 |

|Households | |

|  | - |

| | 74,165,000 |

|Payments for capital assets | |

| | 61,547,000 |

|Buildings and other fixed structures | |

| | 12,618,000 |

|Machinery and equipment | |

| | 649,710,000 |

|TOTAL | |

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