Bongi Ngoma
CAPE TOWN - Public infrastructure has been subject of discussion in recent weeks, a matter that has been receiving attention from the national audit office for a number of years.
The matter received special attention in the 2020-21 PFMA report Auditor-General Tsakani Maluleke tabled in December.
We are pleased that the matter is receiving attention particularly from the public works portfolio which is responsible for infrastructure in government.
It is widely accepted that South Africa’s economic recovery from the devastation of the Covid-19 pandemic and social unrest hinges on infrastructure development.
And one of the key initiatives in the South African Economic Reconstruction and Recovery Plan is aggressive infrastructure investment, which will lead to employment opportunities, skills development and transfer, and much-needed economic growth.
In our latest (2020-21) consolidated general report on national and provincial audit outcomes (available on www.agsa.co.za), we report that our country’s health, education and human settlements sectors received R34.32 billion in grant funding for infrastructure projects to create sustainable human settlements, build health-care facilities, and construct and upgrade schools.
Although each of these sectors has unique circumstances, infrastructure investment in them faces the same problems.
Over the past few years, we have reported on the internal control deficiencies that led to money being wasted and value not being derived because of inefficient and ineffective infrastructure delivery and management.
But our call to address these deficiencies has not been heeded, and so infrastructure projects continue to face the same challenges. These unattended project deficiencies include:
⋆ Inadequate needs assessment and project planning.
⋆ Ineffective monitoring of project milestones and of contractors or implementing agents.
⋆ Contractors underperforming without facing consequences.
⋆ Contractors not being paid on time
⋆ Ineffective co-ordination and collaboration between different levels of government, or between stakeholders in the same institution.
These deficiencies resulted in delayed project completion, increased project cost and financial losses, defects in build quality as well as completed infrastructure not being commissioned or not being used optimally.
The continued shortage of housing, school infrastructure and health-care facilities is a direct result of these project failures.
Poor-quality infrastructure also results in shorter lifespans for completed projects and exposes the public to potential harm.
In addition, the money wasted on such projects could have been spent on other government priorities.
The public works sector is responsible for providing and maintaining infrastructure that will enable government departments to deliver services to the public.
Given the large number of properties under its custodianship (145 712), the sector could be expected to spend a significant portion of its budget on facility management to ensure that these properties are regularly assessed and properly maintained.
However, the public works sector actually allocates only 18% of its budget to facility management, while spending the largest portion (37%) on private leases.
According to the Government Immovable Asset Management Act, properties that have had their condition assessed at 20% are considered to be in poor condition and neither safe nor fit for use. However, 1 765 of the 2 160 properties in poor condition are still being used. This includes schools, which puts learners and teachers at risk of personal harm.
For example, our latest report reveals that three Free State schools that have been assessed to be in a poor and unfit condition – Joe Solomon Public School in Heidedal, Reitz Combined School in Reitz and Witteberg High School in Bethlehem – are still being used despite not adhering to occupational health and safety standards.
On the flip side are state buildings that are in good condition but that remain unused. This is especially true for the Property Management Trading Entity, which has several usable properties that are unoccupied.
The Telkom Towers building in Pretoria is another example. The building, located opposite the headquarters of the national Department of Public Works and Infrastructure, was initially purchased in September 2016 for R695 million. The intention was for the SAPS to use the building, but the move has been delayed for unknown reasons.
As at March 31, 2021, the costs incurred on this building included R152m paid to consultants, R10m for securing the building and R15m in facility management costs.
Cumulatively, the public works sector has spent R872m (excluding rates, taxes and security costs) on this building while it remains unoccupied.
The public works sector has a strategic initiative aimed at leasing out unoccupied buildings to reduce the number of private leases entered into on behalf of user departments.
However, over 1 000 a thousand of these buildings are unoccupied because they do not meet the needs of the user departments, with the sector instead relying heavily on private leases to meet these needs.
As a result, 3 704 buildings are being leased from private property owners, of which 28% have expired lease contracts and are leased on a month-to-month basis. Some of these leases are very costly and escalate at a rate of 10% each year, which is generally above the inflation rate.
As a result of the lack of competitive processes, the sector has incurred millions of rand in irregular expenditure and lost opportunities to negotiate these contracts to market-related levels.
If the sector reprioritised its budget to focus on fixing unoccupied buildings, it could reduce the number of leases held, yielding a significant impact.
As the custodian of government’s immovable properties, the public works sector has the mandate to provide user departments with the necessary infrastructure to deliver services to the public.
However, our latest report reveals significantly delayed infrastructure projects, as well as poor and unfit properties that are still being used or that have been closed, thereby affecting service delivery.
Additionally, the mismanagement of lease contracts is resulting in a loss of funds that could be used to fulfil key targets supporting the overall mandate of the sector.
It is thus critical for the sector to prioritise key initiatives that directly support its mandate, such as facility management and on-time completion of infrastructure projects.
The sector should also curb the financial losses and irregular expenditure arising from mismanaged leases so that these funds can be used to back the mentioned initiatives. This will ensure that the delivery of key services such as education, health care as well as safety and security is not further affected by significantly delayed projects or poor and unfit properties that have to be closed.
Those tasked with accountability must exercise their responsibility in the interest of the public good.
Ngoma is the head of national audit at the Auditor-General of South Africa (Agsa)
Cape Times