Minister Grant’s Policy Debate Speech on Budget Vote 11: Public Works

• Deputy Chairperson of the National Council of Provinces
• Honourable Deputy Minister
• Honourable Members and Office Bearers
• Delegates from the Provinces
• Distinguished Guests
• Ladies and Gentlemen

As always, it is an honour for me to represent the Western Cape Provincial Parliament here in the National Council of Provinces to-day on the occasion of the Policy Debate on Budget Vote 11: Public Works.

Almost a year ago in this House I indicated that I had been on a steep learning curve in the few weeks which had passed since my assuming my current responsibilities. I went on to say that I had already learned that if a government allows the less than efficient provision and management of its assets and overall infrastructure its chances of meetings its economic growth and job creation targets are significantly reduced.

Chairperson, I have now been in this portfolio for close on a year. And nothing I have experienced or observed has caused me to change my view of the central importance of a properly and efficiently managed and utilised physical asset base to the development plans of any country. Internationally and locally, report after report stress the fact that infrastructure is the backbone of national and regional economies. In this way it supports growth, sustainability and social upliftment. A recent World Economic Forum fact sheet put the shortfall between infrastructure needs worldwide and actual investment as almost one trillion dollars.

And, Chairperson, it is a mistake to think that the need for such investment is limited to developing economies such as ours. Infrastructure – buildings, roads, energy generators – does not remain static and functional for ever. It has to be maintained and updated as new technology and techniques are developed. Five years ago, the economist Paul Krugman in examining infrastructure in the USA described America as being “on the unlit, unpaved road to nowhere”. As a consequence, in the USA, it is estimated that an investment of almost ninety billion dollars per year in infrastructure is needed to maintain or improve the productivity of the economy. It is no wonder that the USA tracks carefully the relationship between infrastructure spend and job creation.

The African Development Bank records that in Sub-Saharan Africa countries invest between 2-3 per cent of gross domestic product in infrastructure projects. China currently spends approximately 9% of GDP on similar projects.

This demand must place huge strains on the budgets of all countries and increasingly the trend world-wide is for governments to concede that their own budgets cannot meets these demands on their own. It is no wonder that a whole range of alternative partnership financing models has developed around this need to invest massively in infrastructure.

However, Chairperson, before a country can plan for its built environment needs it has to know what it has and what the condition of its existing infrastructure is. In this regard the Minister of Public Works inherited a massive challenge and has referred to the need for his department to go through a phase of stabilisation before embarking on enhancement and development.

In a masterpiece of understatement the Minister said that this was “necessitated by the lack of adequate management and financial controls culminating in adverse audit findings and highly publicised levels of fraud and corruption “.

That this situation had been allowed to develop is obviously unacceptable and reveals at best a casual approach by his predecessors to their custodial responsibilities. At worst it was flagrant ignoring of governance responsibilities and accountability.

That the Minister has been willing and able to address this state of affairs is to his credit. It is clear from the documentation and information available in the various structures in which my department and I participate that much has been done to establish accurate records of immovable assets, their condition and value. Never again should the invaluable immovable asset base of South Africa be allowed to degenerate to the point where it jeopardises crucial economic development potential. Where people are identified as having being criminally involved in any fraud and corruption, they must be charged and dealt with in terms of the criminal justice system.

Chairperson, departments of this nature interact with and service many aspects of society. Public Works would be failing in its responsibilities if it did not respond to the countless developments and new ideas in these fields, applying this new awareness and the new agenda wherever appropriate. As knowledge of environmental sustainability, the urban ecology, green building technology and alternative energy resources increases, the Department of Public Works has to ensure the responsible incorporation of these developments in its day to day activities or be accused of creating infrastructure for a society which does not need it any more – a society which has moved on, so to speak.

In addition, given that these assets are distributed throughout the breadth and width of South Africa – across all Provinces – I would expect that there will be the highest level of co-operation across the various spheres of government to achieve the highest possible impact on the improvement of the lives of people in South Africa. Last year in this same debate I pointed out that an intervention made by government, especially one which has an infrastructure focus, ultimately lands in a municipal space. The dynamics are clear and must be taken into account in planning and implementation.

Chairperson, there has been much coverage in recent times about the difficult financial position of many municipalities. In this regard the attempts made by the Public Works Minister to resolve the often unacceptably high levels of state department debt to various municipalities is also to be commended. As clarity emerges about the proper allocation of the debt the payment of outstanding amounts – usually of critical importance to the municipalities involved – can be pursued. There are lessons to be learned from the ESKOM experience.

Earlier in this speech, Chairperson, I mentioned that in the USA there is careful tracking of the link between infrastructure spend and employment opportunities. Evidence there indicates that for each $1 billion spent on infrastructure on average 18 000 jobs are created. In my budget speech in March in the Western Cape Provincial Parliament I indicated that our spend in this field generated over 13 000 work opportunities on infrastructural and maintenance projects and more than 6 000 such opportunities on road and rail networks. In this regard the role which the Minister’s department plays in the Expanded Public Works Programme is critical and welcomed.

I thank you, Deputy Chairperson.