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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. ADDITIONAL FUNDS REQUESTED IN THE 2005 BUDGETING ROCESS

10. INDICATIVE ADDITIONAL ALLOCATIONS TO PREVIOUS BASELINE

11. PRELIMINARY INDICATIONS OF NEW MTEF BASELINES

14. 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

15. 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

16. THANK YOU