The Portfolio Committee on Public Works and Infrastructure was briefed yesterday by the Department of Public Works and Infrastructure and its entity, Property Management Trading Entity (PMTE), on leasing government properties and accommodation to other government departments.
The committee heard that despite the department’s national infrastructure footprint – 4.7 million hectares of land, 29 955 parcels of land amounting to 4.5% of the country’s land mass – government departments continue to lease land and accommodation from the private sector at a higher rate than the one offered by the department. In addition, PMTE has R49 billion worth of assets under management but they remain underutilised and/or underperforming.
The Chairperson of the committee, Ms Nolitha Ntobongwana, reiterated that the department had told the committee that its Immovable Asset Optimisation Strategy would solve some of its challenges. However, PMTE is incurring a R7 billion shortfall and is yet to operate optimally. This is a concern for the committee and raises questions about the strategy’s fitness for purpose, she said.
Ms Ntobongwana pointed out that some departments have resorted to performing some of the core services that should be performed by the PMTE, such as building and office maintenance. If the entity is stripped of its core services, what purpose does it then serve, she asked.
In reply, the Minister of Public Works and Infrastructure, Mr Sihle Zikalala, assured the committee that, in fact, the optimisation strategy is doing enough to ensure that the PMTE’s asset management portfolio grows and yields enough revenue to allow the PMTE to achieve it mandate.
The head of PMTE, Mr Siza Sibande, emphasised that for its portfolio to grow as it should, the state must reduce its private leasing portfolio and use state properties. However, Mr Sibande pointed out that some government departments have reduced the amount they spend on securing government accommodation. This has hampered PMTE growth.
To mitigate this in the short term, PMTE has a new operational model it believes will unlock new revenue streams. This model includes reducing the amount of state leasing and embarking on property development initiatives, such as building conference centres and parking areas, to kickstart economic growth.
Committee Members then asked various questions about how to unlock the value of the department’s assets in the face of chronic problems besetting its operations. These include the lack of a functional register of its immovable assets, poorly maintained and managed operational assets, and the resignation of over 150 staff members. In addition, the Auditor-General continues to flag departmental governance and internal audit control deficiencies.
On the lack of an assets register, Mr Sibande responded that the department is in the process of procuring an ICT platform to register its assets and manage and monitor them around the clock. Later in the discussion, the Deputy Minister of Public Works and Infrastructure, Ms Bernice Swarts, assured the committee that the department will not rely on the State Information Technology Agency (SITA) to resolve the problem of the asset register but will go to the open market to find a holistic ICT solution, as the department believes that some of its goals can be achieved through private–public partnerships.
As for the exodus of departmental staff and the Auditor-General’s findings, Mr Sibande replied that under new leadership and with improved controls and governance, these should start to improve.
Ms Swarts also reported that the department is currently engaging with state law advisors on the broader implications of the Public Works Bill, which aims to alleviate some of the problems under discussion. The department believes the Bill will be ready for ratification in August 2024.
The committee Chairperson, Ms Ntobongwana, concluded the meeting by emphasising the committee’s desire for the department and PMTE to be self-sustaining and not rely on support from the fiscus. In addition, she pointed out that some departmental decisions have been in breach the Public Finance Management Act and there have been insufficient consequences for these breaches. The committee is required to play its oversight role over the department and it is pleased that, although there is no visible progress currently, “at least now there is a vision to change the course of PMTE to ensure that it is self-sustainable and can grow and unlock its commercial and economic capabilities,” she said.
Abel Mputing
5 March 2024
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