SPEECH BY S SIGCAU, MINISTER OF PUBLIC WORKS, AT THE OCCASION OF THE TABLING OF THE BUDGET VOTE FOR THE DEPARTMENT OF PUBLIC WORKS FOR THE 2004/05 FINANCIAL YEAR, National Assembly, Cape Town
10 June 2004

The Deputy Minister of Public Works, Mr Ntopile Kganyago
MECs for Public Works
The Chairperson of the Public Works Portfolio Committee, Honourable Bhengu
Honourable Members
The Director-General and his team, including provincial Heads of Departments
Distinguished Guests
Ladies and Gentlemen

Introduction

Today as we deal with the Public Works budget we have in mind the people out there who are keen to know what we, as a department will do to deliver on our mandate and to honour the people's contract.

Five years ago we punctuated our operations with a call for improved service delivery characterised by an intensive implementation phase. We simply entitled our pledge Mintirho Ya Vula Vula (Actions speak louder than words) and vowed to stop at nothing to better our business processes and other practices. We are encouraged by the progress we have made.

Service Delivery Improvement Programme

Our starting point was a transformation process aimed at realigning the departmental operations in order to deliver a high quality service. Thus the regional operations of the department have been strengthened through capacity building and delegation of powers to make client- satisfaction a central focus of their business. A departmental task team has been established to oversee the initiation and implementation of this programme and a generic Service Level Agreement has been developed to formalise service relationships between my department and our clients.

Budget 2004/2005

Madam Speaker, it is my honour to table my Department's appropriation of four point eight billion Rand (R4, 8 billion) for the 2004/05 fiscal year. Whilst this amount represents a 10% increase compared to the previous year, it is still not sufficient to meet all the needs, which we face, particularly the backlogs of maintenance on government buildings. In this regard, my Department is currently developing a comprehensive maintenance plan so that we can make more convincing and credible arguments for increased funding for maintenance in the forthcoming fiscal year.

Nine hundred and seventy (970) capital works projects are already at various planning stages for this financial year (2004/2005) with Correctional Services leading the pack with three hundred and eighty six (386) contracts estimated at two point eight billion Rands (R2, 8 billion). They are followed by the SAPS with two hundred and fifty (250) contracts estimated at just under three quarters of a billion (R736 million) and Justice with hundred and sixty nine (169) contracts estimated at four hundred and sixty one million Rands (R461 million).

Major construction, acquisitions and leaseholds

Provision of physical accommodation to government and its departments for enhanced public service delivery remains a key function of my Department. In the previous financial year we spent one point eight five billion Rand (R1, 85 billion) on capital works including three hundred and sixty four million Rand (R364 million) on planned maintenance as part of our extensive building programme nationally. Major clients under our capital works programme included Correctional Services (R510 million), Justice (R240 million), SAPS (R214 million), Arts, Culture, Science and Technology (R86 million) and Defence (R43 million).

Major projects in progress include the one hundred and eight million Rand (R108 million) upgrading of the Port Elizabeth Magistrate Office, construction of fifty million Rands (R50 million) and forty three million Rands (R43 million) Magistrate Courts for Justice at Randburg and Tembisa respectively, as well as the ninety million Rand (R90 million) and seventy million Rand (R70 million) upgrading and maintenance of the Klerksdorp and Cullinan Prisons respectively for Correctional Services.

In the last financial year we handed over a completed one hundred and fifteen million Rand (R115 million) Chancery in Berlin and a new seventy six million Rand (R76 million) Chancery in Kinshasa to the Department of Foreign Affairs.

Seventeen new properties were acquired and registered at the Deeds Office, at a total cost of sixteen point seven million (R16, 77 million). The majority of these properties were for the purposes of accommodating South Africa Police Services (SAPS) as well as the National Directorate of Special Operations (Scorpions). Preparations are at an advanced stage to finalize the two point three million Rand (R2, 3 million) acquisition of four point zero six four (4,064 ha) hectare of land for the South African Revenue Services in support of the Golela Border Post development in Mpumalanga.

The State, through the Department of Public Works, also purchased back a property at the Parliament precinct for six point three million (R6, 3 million) from the British High Commission.

In the period under review we disposed of one hundred and twenty one (121) properties in extent of four thousand five hundred and sixty five (4565 ha) hectares with an estimated value of forty five million Rands (R45 million), for purposes of land reform, low cost housing, municipal infrastructure, government to government transfers and commercial gain.

As part of our contribution to land redistribution and local development, two of our largest gratis transfers were the Thabazimbi farm one thousand four hundred hectares (1400 ha) to Baphalane-ba-Mantserre Community Development Trust and seven hundred and seventy five hectares (755 ha) to the Greater St. Lucia Wetland Park Authority.

The property sector also has an important role to play in the social development and economic growth of the country and hence we are continuously engaging with property industry to align it to the transformation goals of government and work towards the adoption of a transformation charter.

A total leasing amount of just over a billion Rand (R1, 07 billion) was spent in 2003/04 indicating increasing demand and associated costs for accommodation and space.

Asset Procurement and Operating Partnership Systems (APOPS)

The achievements of APOPS in the past financial year included the awarding of a SABS - ISO 9001 certificate for the Kutama Sinthumule Maximum Security Prison at Makhado in Limpopo for compliance and meeting the quality standards along international norms. This is a first for a privately operated prison in South Africa and the African continent and follows on the heels of an earlier announcement by Privatisation International, which named this Public Private Partnership prison "Africa Project of the Year 2000".

Together with National Treasury, the Department is also working on further PPP projects for Head Office accommodation for the Departments of Foreign Affairs and Education.

Accommodation in Central Business Districts (CBD)

The department is concerned about the condition of both government-owned and leased buildings and is proactively preparing plans to address this issue. These plans will contain proposals for comprehensive solutions for adequate accommodation for government departments in Tshwane and for Parliament in Cape Town. The department has been working closely with both municipalities to ensure these plans are in line with their urban renewal plans.

Contribution to Black Economic Empowerment

Black Economic Empowerment as defined and embraced by government informs all aspects of our business. The designs for the new generation prisons have been completed and the construction of four new prisons will proceed in 2005 and 2006 on behalf of the Department of Correctional Services. The four Prisons will be built at Kimberley, Nigel, Johannesburg, Leeuwkop and Klerksdorp. Each prison will be built at a cost of two hundred and twenty million Rand (R220 million) over a 22-month construction period. To create opportunities for small, medium and large construction companies, the building work has been divided into 20 separate nominated subcontracts ranging from one point four million Rand (R1, 4 million) to one hundred and twenty million Rand (R120 million), which will be the main contract.

To ensure maximum participation by Affirmable Business Enterprises (that is businesses supporting black economic empowerment), the contract participation goal will be fixed at 40%. This will ensure that no less than eighty eight million (R88 million) will be allocated to ABE contractors per prison. This translates to a total of three hundred and fifty million (R350 million) being awarded to ABE's for the four prisons over the two-year construction period.

Black Economic Empowerment and the Repair and Maintenance Programme (RAMP)

Fifty percent (50%)of the four hundred and ninety (490) firms appointed under the RAMP programme since 2001 have been Affirmable Professional Service Providers (APSP), representing a total value of one hundred and twenty nine million Rand (R129 million) in professional fees. By 30 April 2004, 206 of the 305 RAMP contracts were awarded to Affirmable Business Enterprises (ABE), to a value of one point two billion Rand (R1, 2 billion).

In 2003/2004 contracts to the total value of seven hundred and ninety one million (R791 million) were awarded to emerging contractors under the Emerging Contractor Development Programme (ECDP), of which eighty eight million (R88 million) went to Women Owned Enterprises (WOE's) under the Emerging Contractor Development Programme. DPW has commissioned a review to asses the impact of women participation in the industry with a view to increase both quantitatively and qualitatively their participation in the industry.

Expanded Public Works Programme and Community Based Public Works Programme

At its height, the Community Based Public Works Programme (CBPWP) was the flagship of government's poverty alleviation drive through rural infrastructure development. For a decade, the Department targeted rural poverty brought by lack of basic but essential infrastructure including rural roads. In that period, the CBPWP invested over two point five billion (R2.5 billion) Rands in six provinces: Limpopo, KwaZulu-Natal, Eastern Cape, Mpumalanga, Free State and North West. All in all about four thousand and forty seven community infrastructure projects were implemented, resulting in the creation of more than one hundred and sixty seven thousand (167 000) job opportunities, of which forty eight percent 48% went to women and thirty percent (30%) to youth.


A warm word of gratitude goes to our heroines and heroes as represented by Mrs N Tshalata and Mrs T Dube who are with us today. Umama Tshalata is part of the Vukuzakhe Community Development project at KwaMachi near Harding who recently led other women in discussions with government to establish poverty alleviation projects for their rural community. Mrs Dube is a farmer par excellence and was last year nominated for the Female Farmer of the Year Award for her work with other women at one of our CBPWP projects at Ndaya Community Production Centre.

At the Growth and Development Summit last year, government, trade unions, business and the civil society agreed on the need for an Expanded Public Works Programme or EPWP.

The objective of the EPWP is to utilise public sector budgets to reduce and alleviate unemployment.

The EPWP will target the following groups
* The Unemployed
* The Unskilled
* People not receiving grants
* Rural and Urban Poor
* Women and Men
* People with Disabilities
* Mostly youth, as seventy percent (70%) of the unemployed in this country are youth)

One million (R1 million) work opportunities will be created through:
* Increasing the labour-intensity of government funded infrastructure projects.
* Creating work opportunities in public environmental programmes (e.g. Working for Water)
* Creating work opportunities in public social programmes (e.g. community care workers)
* Utilising general government expenditure on goods and services, to provide the work experience component of small enterprise learnership/incubation programmes.
* Other possible economic sector initiatives include micro enterprise development.

Over the first five years, we conservatively estimate that the EPWP will through the:
* Infrastructure Sector, create nine hundred thousand (900 000) jobs
* Environmental and Cultural Sector, create two hundred thousand (200 000) jobs
* Social Sector, create twenty thousand (20 000) jobs.
* The Economic Sector will create three thousand (3000) venture learnerships lasting 18 months and employing nine thousand (9000) people.

We are also happy to announce that my Department has already received firm commitment from the following relevant organizations, all of which will be key to the success of the EPWP. We (are about to) or have already signed Memoranda of Agreement with the following:
* National Treasury and the Construction Industry Development Board (CIDB), to work with provinces and municipalities to improve their capacity to spend on infrastructure
* Department of Labour, to fund and manage the training of the workers
* The Construction Education and Training Authority (CETA) has already put in place 10 unit standards accredited by the South African Qualifications Authority. These will enable the training of engineers, government officials, contractors and site supervisors.
* The Research Centre for Employment Creation in Construction at University of the Witwatersrand- will provide bursaries and research fellowships to infrastructure students and researchers. The aim is to produce cadre of engineers who understand labour-intensive technologies
* Five Municipalities and Provinces namely Western Cape, Mpumalanga Department of Public Works, Oliver Tambo District Municipality, EThekwini Metropolitan Council, Roads Agency Limpopo, are already implementing two hundred and eighty eight (288) of the nine hundred and thirty (930) labour-intensive construction learnerships.
* Statistics SA will collect data through the Labour Force and General Household Surveys

The EPWP is mainstreamed on the budgets of departments, provinces, municipalities and State Owned Enterprises. The large-scale labour-intensive provincial and municipal infrastructure programme involves ring-fencing fifteen billion Rands (R15 billion) of the conditional infrastructure to provinces and municipalities.

As the coordinating department for the EPWP, we are only saying that we are specifying the methodology of expenditure, i.e. that an increasing number of government projects must use labour intensive methods of construction.

We have engaged the Business Trust regarding the establishment of a facilitation fund to support capacity building and innovation in the EPWP. The British Department for International Development (DFID) will contribute to this fund.

The Human Sciences Research Council has developed a monitoring and evaluation framework for the EPWP to collect data, which will assist the department and I to report regularly and in a scientific manner to the nation on our progress. As we have indicated above, the role of Stats SA in collecting employment data will be no small one.

We are currently in advanced talks with the Department of Minerals and Energy, and Housing on their roles in the EPWP.

The department has finalized the appointment of staff for the EPWP Unit, which will be the driving force behind the success of the programme. After the successful launch of the EPWP in Limpopo on 18th of May 2004, there is lot of enthusiasm among stakeholders and this we witnessed during our road shows to the provinces and meetings we have had with the South African Local Government Association (SALGA). Recently I received a letter from one member of the public who asked to be trained in bricklaying and baking. It is enthusiasm such as this that we need to nurture. In order to ensure major contribution of our metros and cities we have requested the South African Cities Network to commission an investigation into how all nine members of the network can contribute to the EPWP.

We invited one of the contractors from the Gundo Lashu (an Expanded Public Works Programme) to be with us here today, a woman called Reinet Mhlarhi, the owner of Lulama Construction, which is currently employing hundreds of people in the rural areas of Limpopo to build provincial roads using highly labour intensive construction methods, and who wrote to the President to thank him for the opportunities provided to her through the Limpopo Public Works Programme.

Construction Industry Development Programme

The South African Government has set a number of priorities for the Construction Industry to create an enabling environment for the industry to develop, transform and grow. These priorities include skills development, innovation, increased investment and the transformation of the industry to deliver on the needs of the South African Society. In addition to this it must be seen in the context of general Government objectives including creating employment and reducing poverty as well as inclusion of previously disadvantaged sectors of the population.

The construction industry's aging skills profile provides a challenge to transfer knowledge and ensure that South African youth participate in the construction industry in the future.

For this purpose we have identified a number of initiatives to promote the image of the industry and to improve the overall performance and growth of the industry. These initiatives include:

* Procurement reform;
* Innovation and absorption of innovation;
* Making South Africa more attractive for fixed investment
* Accelerated skills development to ensure a quality workforce
* Ensuring a healthy workforce through improved labour practice
* Investing in research and technology development
* Improving the quality of construction products.
* Facilitating mega projects
* Improving the functionality of public buildings to enhance service delivery.

We have also identified a number of areas to move the industry into the 21st century.

These include:
* Transferring knowledge
* Maximising Potential in the Workplace
* Technological innovation
* Process improvements
* Use of Information Technology, and
* Sustainability of the construction industry as well as the broader Built Environment.

The announcement of South Africa as a host country to organize the 2010 Soccer World Cup will bring opportunities to the construction industry with regard to the delivery of necessary infrastructure.

Construction Industry Development Board

This year, the Construction Industry Development Board (CIDB) completes its first 3-year term of office. This is an appropriate opportunity for me to congratulate the outgoing Board for the work done in establishing this young institution and for fulfilling the mandate assigned to it by Parliament. I would like to extend special thanks to the Chairperson, Brian Bruce, and the Deputy Chairperson, Pepi Silinga, for their outstanding leadership in promoting the special partnership between industry and government, which is at the core of the CIDB legislation.

In April this year, the CIDB launched a comprehensive review of the construction industry and its development, a valuable contribution to 10 years of Democracy and one that adds to the broad body of understanding encapsulated in Government's Towards a 10 Year Review.

The report provides a comprehensive review of progress, challenges and the need for sustainable empowerment to meet anticipated growth in construction demand. It will undoubtedly inform the proposed 2004 Construction Summit and the work in progress by industry and government towards a Construction Charter. This report will be tabled in Parliament shortly.

We have already started on a path to look at attracting foreign investment into this industry and the signs are looking good. Our aim is to make the construction industry an asset of government that speaks with one voice.

Council for the Built Environment (CBE)

The Council for the Built Environment (CBE) was established to promote uniform application of policy and improved coordination between professions and Government for the attainment of development goals. The CBE that is now fully established with executive capacity is well on its way to becoming an effective umbrella organization for the built environment professions, to drive the objectives of transformation and improved performance.

Incubator strategy

Building on the experience of the ECDP, DPW will launch an Incubator Programme by November to further promote the development of sustainable emerging contractors. The purpose of the incubator programme is to create an enabling environment within which selected existing contracting enterprises can develop into sustainable contracting enterprises, to ensure that black-owned medium-sized contractors are developed to become sustainable businesses.

Fronting

Fronting poses a great threat to the realisation of government's vision for economic transformation. The CIDB register of contractors and other related procurement policies are the main tools through which the DPW intends to combat "fronting". The credentials of all suppliers will be checked rigorously before they are registered with the Department.

Construction week

The South African construction industry is not immune to the image problem afflicting this industry. The Department of Public Works will together with the private sector jointly launch an intensive public and stakeholder relations campaign over a period of a week in October 2004, aimed at repositioning the industry and emphasising its importance in the growth and development of our country. The Construction Week will also aim to attract school leavers and other postgraduate students into careers in the industry.

Construction Summit and Industry Transformation Framework

Plans to convene a construction summit, which is being coordinated by NEDLAC, are in place. Various stakeholders are already involved in discussions to develop a Charter for the sector. This will be followed by a comprehensive implementation and monitoring plan to ensure that our efforts yield the desired results.

Contribution to NEPAD

As part the NDPW's contribution to NEPAD, a partnership with the Ministry of Defence and the CSIR has been forged where the partners have developed a strategy for peacekeeping that encompasses a strong developmental component. The concept of developmental peacekeeping has received support from the Presidency and the NEPAD Secretariat.

Fifty-seven trainees have completed the basic military training component of the Military Skills Development (MSD) programme. The programme will continue with functional training until the end of 2004. The Department has signed Agreements with each of the 57 graduates in order to assist them with placement or further education and training in 2005. Upon graduation from the MSD programme, those learners who will be chosen for further training will then enrol in institutions of higher learning in disciplines that would address the needed skills within the construction industry following a skills audit exercise currently underway.

The challenges faced by the Department and the South African construction sector are not unique to this country. It is for this reason that we will spearhead an initiative to establish a forum of Public Works Departments initially in the SADC region and in other regions in Africa in the future. I will be convening a Conference of African Ministers of Public Works to discuss challenges facing the construction and property industries, job creation, and poverty alleviation projects in the continent. This will be part of our contribution to NEPAD, as African Ministers of Public Works.

Conclusions

In conclusion, as we look back over the last ten years of democracy, we are quite pleased with progress we have made, both in terms of policy formulation and in terms of implementation. However, as indicated by the President, the next five years are going to be focused on delivery, and we are committed to meeting and I would like to thank you all for attending, especially those of you who travelled from far to attend this function. Last but not least I would like to thank the team from the Department of Public Works.

Honourable members, this decade represents a new dawn in our historic social compact with the people of this country. The ever-present queues of work seekers and the beggar at every intersection on our way to work remind us every waking minute of what stands at the centre of the people's contract - delivery. It is the delivery of jobs and skills that will move the masses of our people from the Second Economy so that they assume their rightful place in the First Economy.
We make this clarion call today for all to come on board with us. Let us put the shoulder to the wheel! Let's make it happen.