By Cathy Motsisi Chief Financial Officer Presentation of the MTBPS comments to the Standing Committee on Appropriations 2 November 2009 By Cathy Motsisi Chief Financial Officer

Table of Contents Introduction Additional Funding through the Adjustment Estimates Additional funding requested for the next financial year Financial Performance as at 30 Sept

Introduction The department welcomes the MTBPS as announced by the Minister of Finance, Mr Pravin Gordhan. And yes indeed, the department received an additional funding of R751 mil representing an increase of 14,18% to the baseline. The additional funding relates to unforeseen and unavoidable expenditure and requested roll over of the capital budget.

Adjustment Estimates: Unforeseen & Unavoidable – R524 mil Unallocated during the ENE: The amount which was announced by the Minister of Finance in his budget speech but unallocated during the ENE is R 114,500 million. Funds have been allocated through the adjustment estimates. The allocated funds are for EPWP Incentive grant and will be distributed to: Independent Development Trust R 5 million Community Works Programme R 51 million Trade and Industrial Policy R 58.5 million Provision of office & residential accommodation for new Ministers & Deputy Ministers including furniture & security:- R150 mil Increase to the Devolution of Property Rates Grants:- R353 mil General salary adjustments R 21,7 mil

Adjustments Estimates- Funds Rolled Over Funds Rolled over: R 111 686 mil Inner City Regeneration Projects R 54 285 mil Bloem - Upgrading of buildings R 6,187 mil Land Ports of Entry redevelopment projects R 17 101 mil Prestige Accommodation R 34 113 mil

Additional Funding Requested for 2010/11 Financial year.

Policy Option 1 and 2 Option 1. Additional Funding for Compensation of Employees:- R 20 344 mil The department is currently facing serious challenges around operational resources and the filling of strategic and technical skills. The budgetary constraints have made it more difficult to implement retention strategies as well as to create the necessary capacity needed to maintain and manage the immovable assets of the state. The department is also faced with the challenge of implementing the OSD as approved by DPSA. The costing exercise undertaken with the assistance of DPSA showed that an additional R20.3 million is required for the implementation. Option 2. EPWP:- R835 874 mil Contribution to the national priority of job creation and poverty alleviation through the strengthening of the Expanded Public Works Programme incentive scheme. The additional funds will cover other sectors which were not included in the incentive scheme such as the Social Sector, Environmental Sector, Community works Programmes etc and the additional funding for the infrastructure sector including capacity building for the management of the grants.

Policy Option 3 –Infrastructure/Capital Budget Border Control Operational Coordinating Committee (BCOCC); –R451 093 mil DPW is the custodian of immovable assets (infrastructure) at 54 land ports of entry on behalf of the BCOCC, which is responsible for the co-ordination of strategic and operational management of the South African border environment. Readiness of infrastructure to support operational mandates of the various departments at land ports of entry by 2010, and beyond; to support economic growth and socio-political stability in SADC is an increasing imperative. DPW provides redevelopment projects; additional accommodation; upgrades; repair; maintenance; facilities management services; and provision of temporary infrastructure resources for peak season (festive and Easter) on a limited budget; which has potential to create challenges and risks of national safety and security in border control. Implementation of this programme will be Labour and BEE Intensive to support Expanded Public Works Programme.

Policy Option 3 –Infrastructure/Capital Budget cont. Parliamentary Precinct:- R771 579 mil This is for the construction of a New Parliament Precinct, construction of parking bays and multipurpose centre to address expansion requirements, compliance with OHSA and need for the parliamentary precinct to meet the international Standards and reputation of first class countries. Extension of the Parliament will also cater for the public participation which was never catered for in the old regime. Comparison with other countries was undertaken and this showed that the present Parliament is not as functional in terms of condition and size, etc. A comprehensive feasibility has already been completed.

Policy Option 3 –Infrastructure/Capital Budget cont. Accessibility:- R16 184 mil As per the legal requirements, the projects aims to make State-owned buildings accessible to people with disabilities and in this way make government services accessible to all. The programme also aims to minimise risk to citizens and to Government resulting from claims for damages and non-compliance. Water Efficiency:- R214 760 mil In line with life cycle management, the project aims to address problem of old and inefficient water works systems in State-owned buildings. The Department is also proactively addressing the problem of water shortages in South Africa through this project.

Option 4 - Additional Funding for Entities of the DPW Independent Development Trust (IDT): - R200,000 (2009/10; 0) The request for additional funding for the (IDT), is a new request which has never been part of the department’s baseline. The IDT has always been self funding, however, due to their increased mandate and their reducing capital reserves the request for additional funding is included in this submission. Council for Built Environment (CBE):- R30,375 (2009/10; R24,155) The CBE has always been funded through the goods and services budget of the DPW. An amount of R24,155 million was budgeted for in the 2009/10 financial year. During the course of the previous fiscal year, 2008/09 the CBE realised that in order for the institution to effectively deliver on its mandate additional capacity would have to be obtained, this resulting in 7 new posts being created and filled within the organisation. This capacity will ensure that some of the projects and research originally performed by external parties on behalf of the CBE will now be produced internally.

Option 4 - Additional Funding for Entities of the DPW cont. Agrément Board:- R42,733 mil (2009/10; R8 554 mil) The main objective of Agrément S.A. is to support and promote the process of integrated socio-economic development in South Africa as it relates to the construction industry by facilitating the introduction, application and utilization of satisfactory innovation and technology development in a manner which will add value to the process of assessment and certification. It was established by the Minister of Public Works in 1969 as an independent organization to bring impartial judgment to the evaluation of innovative construction products and systems in the interest of the consumer. Currently the department is only providing R8,5 million funding for the entity. The Agency is grossly under-resourced and is struggling to fully and effectively discharge its mandate. The Agency relies heavily on CSIR Built Environment for certain services. Intervention in the form of additional funding will allow Agrément South Africa to begin to address its capacity problems and to more effectively fulfil its mandate.

Financial Implications of the Options over the MTEF Policy Options 2010/11 R’000 2011/12 2012/13 TOTAL Infrastructure/Capital Budget 1 453 536 1 313 068 1 613 705 4 380 309 Expanded Public Works Programme 835 874 1 092 316 1 606 893 3 535 083 OSD Implementation  20 344  21 565  22 708 64 617 Increase of Transfers to Entities 73 108 281 802 396 078 750 988 3 382 862b 2 708 751b 3 639 384b 9 730 997b

Financial Performance of the Department for the period ending 30 Sept 2009

Exp % as at the 1st Quarter 2009 Possible overspending/ Savings Total Department: Financial Performance per Economic Classification as at 30 Sept. Economic classification Budget Allocation 2009/10 Exp as 30 Sept 2009 Exp % as at 31 Sep 2009 2nd Quarter NT Benchmark Exp % as at the 1st Quarter 2009 Available Budget Possible overspending/ Savings   R'000 R’000 Compensation of employees 889 473 465 702 52% 49% 26 % 421 791 93 mil Goods and services 674 168 240 739 36% 59% 19 % 433 429 63 mil Property Management 317 479 231 140 73% 86 339 20 mil Transfers and subsidies 2 150 697 1 168 812 54% 61% 21 % 981 885 - Infrastructure 1 220 639 300 480 25% 27% 920 159 Machinery and equipment 47 524 17 157 46% 17 % 30357 Total 5 298 000 2 424 030 51% 22% 2 873 970 23 mil

Financial Performance per Programme –(Benchmark 50%) Appropriated allocation 2009/10 Exp as 30 Sept 2009 Exp % as at 31 Sep 2009 Exp % as at the 1st Quarter 2009 Available Budget Possible overspending % Possible Overspending   R'000 R’000 Prog 1. Administration 777 972 388 382 50% 31% 389 590 Prog 2. Provision of Land and Buildings 3 709 274 1 784 586 48% 22% 1 924 708 Prog 3. National Public Works Programme 768 511 203 309 26% 13% 565 202 Prog 4. Auxiliary and Associated Services 42 243 47 773 113% 70% -5 530 Shifting will be made from Prog 2. under Goods & Services Total 5 298 000 2 424 030 46% 39 % 2 873 970

I Thank You.