PRESENTATION TO PORTFOLIO COMMITTEE ON PUBLIC WORKS Medium Term Budget Policy Statement 9 November 2005

BACKGROUND DG presentation to Joint Budget Committee on 1 November 2005 DPW requested to present on: Financial effect of MTBPS on DPW budget Any other allocations requested from National Treasury Changes to departmental activities due to MTBPS Effect of allocations on service delivery

CHANGES TO DEPARTMENTAL ACTIVITIES DUE TO MTBPS MTBPS states that national Departments will take over financial responsibility for their accommodation (pg 59) from 1 April 2006 1997 Public Works White Paper said budgets would be devolved and user-charges introduced in time DPW has been in discussions with National Treasury regarding the devolution of budgets to client departments and introduction of accommodation charges

The following DPW budgets will be devolved: Motivation: Increase transparency of budgets Introduce incentives for efficient use of immovable assets Improve funding for maintenance of immovable assets The following DPW budgets will be devolved: Leases Maintenance Property rates Municipal services

DPW will charge departments an accommodation charge, made up of: An amount for leases (based on actual lease costs) An amount for rental of state-owned property (rand per square metre of type of property occupied) Departments will pay municipal services themselves, unless they specifically request DPW to do this for them, in which case DPW will charge a fee Departments will be required to continue to use the services of DPW to enter into leases

DPW will use the income from the accommodation charge to: Pay leases on behalf of departments Carry out maintenance and refurbishments on state-owned buildings Build up a capital reserve for capital works DPW also in process of devolving payment of property rates for provincial properties to provinces, along with budgets – timing of this under discussion with National Treasury

DPW has submitted draft document with proposals for devolution to Treasury, still to be discussed at Ministerial level DPW working with Treasury to create a second PMG account which will be used as an interim mechanism until a trading entity can be created The trading entity will be run within the department, but might become a separate entity in future Current plan is to devolve the budgets and introduce the accommodation charges from 1 April 2006 Treasury has provided funds to capitalise the trading entity (interim mechanism) in the 2006/07 financial year

DPW has taken the following policy positions on this issue: Some Departments have become increasingly vocal in requesting to take over the management of their properties from DPW, particularly SAPS, Defence, and Correctional Services DPW has taken the following policy positions on this issue: To implement a turn-around / service delivery improvement programme to retain clients To offer to delegate custodial responsibilities for functional / specialised assets to certain departments DPW, NT and SAPS are currently in negotiations regarding the gradual delegation of custodial responsibilities for managing police stations to SAPS, from 1 April 2006

ADDITIONAL FUNDS REQUESTED IN THE 2005 BUDGETING ROCESS

INDICATIVE ADDITIONAL ALLOCATIONS TO PREVIOUS BASELINE

PRELIMINARY INDICATIONS OF NEW MTEF BASELINES

SUMMARY OF EFFECTS OF MTBPS ON DPW BUDGET AND ON SERVICE DELIVERY Devolution of budgets, introduction of accommodation charges and creation of trading entity: will fundamentally change the management of accommodation-related immovable assets should result in greater efficiency in the management of these assets over time There is a large increase in the funds available for maintenance over the MTEF

EPWP: There is an indication that funding for the expansion of the EPWP in the social sector will be provided to provinces as part of the provincial equitable share The preliminary allocations to DPW for the EPWP are inadequate: DPW requested funding for learnerships and mentoring or learners for the infrastructure sector and economic sectors of the EPWP The Construction SETA has insufficient funds to meet the demand for learnerships DPW will not be able to expand the learnerships in the construction and economic sectors as planned without additional allocations Discussions with Treasury still under way in this regard

THANK YOU