Speech notes: Consideration of the Finance Portfolio Committee’s infrastructure oversight report

Madam Speaker, Honourable Premier, Honourable members of the House, officials and visitors, I greet you all.

In the recent oversight visits to infrastructure projects across the province, some very obvious and repetitive findings came to light.

The first finding that I will address is that of payment delays by the Department of Education. In some cases, the department has delayed the payment of contractors and SMME’s by as much as 120 days and more. By any standards, this is outrageous!

Bear in mind Madam Speaker that these contractors and SMME’s have financial obligations that occur monthly that they cannot avoid.  They cannot afford to conduct business as usual without any cash flow. One of the reasons given for these delays by the department is the concept of batching.

This means that the department will lump certain accounts together so that they all get paid in one tranche. However, if there is a query about one of the payments, the entire tranche is held back. This practise is discriminatory toward the contractors and SMME’s who have submitted their invoices timeously and must be revised immediately.

Government cannot profess to want to support and indeed expand the involvement of SMME’s in infrastructure projects on the one hand, and then fail to pay them on the other. You are failing the people you are supposed to be serving and supporting.

Another issue that was raised more than once was the lack of administrative and financial skill of the SMME’s. These emerging small companies require development in order to compete effectively and the responsibility for this development falls squarely on the shoulders of the province.

The rollout of skills development and training for SMME’s across the province on a regular basis will result in a higher success rate amongst SMME’s, which in turn will result in more jobs being created and less dependence of our citizens upon our ever shrinking fiscus.

Skills development in the DA – governed Western Cape continues to be a huge game changer which has created thousands of permanent jobs and significantly reduced unemployment by several percentage points in the province.

A third theme from the oversight visits was that of community unrest around some of the projects. The reasons for these were varied, but mostly linked to late or non-payment of community members for work done. This is a disgrace. Our rural communities are desperately poor and depend heavily on the extra money they receive from such projects.

I have two questions in this regard – who will be held to account for this abuse of poor communities? And what will the consequence management in this regard entail? Until accountability actually starts being enforced, I believe we will be having the same debate about the same findings year after year.

The practise of making informal payments or inducements in order to secure a contract was not a finding on this particular oversight visit, but you can rest assured that it happened behind the scenes. The Financial and Fiscal Commission’s  report of yesterday referred specifically to this practice within the Education, Health and Transport departments, which were precisely the departments whose projects we were overseeing.

According to the report presented yesterday by the Financial and Fiscal Commission, 76% of contractors in the province say that they pay a bribe of between 3 and 12 % of the value of the contract in order to secure the contract.

If we isolate the allocations from these departments which are allocated to infrastructure development, we look at an amount of R5,06 billion. Assuming then that at least 76% of this budget is exposed to inducements, this equates to R3,85 billion which is exposed to inducements, when set in the Eastern Cape context.

The inducements range from 3 to 12%, so let us use the average of 7,5%. This means that an astounding 288 million rand is being paid out to bribes in order to secure contracts. This equates in real terms to a new school or a new hospital wing – every single year. Spent on bribes. This is NOT a good story to tell.

One of the Honourable members asked yesterday how we can counter this practice. It is simple – far stricter oversight of the infrastructure directorates and implementing agents.

But you need the political will to do this, as resistance to this clean- up will be high. The truth of the matter is that this type of corruption runs very deep – in all corridors of this province. And it is this relentless practice of corruption that the citizens of this province have had enough of.

A further point to note is that our fiscal outlook for the foreseeable future is bleak. We have to develop a culture of maintaining what infrastructure we have. We simply cannot afford to replace buildings and roads willy nilly when a good maintenance plan would keep them perfectly functional.

Many public works buildings are standing empty across the province. If they had been properly maintained, they could still have been in use today, for one purpose or another. Maintenance must become the buzz word of the future.

In conclusion, Madam Speaker, I believe that a concerted effort needs to be made across all departments with medium or large infrastructure directorates, to aggressively ramp up  our oversight visits, our oversight skills and the consequent resolution of findings by the departments themselves.

The people of the Eastern Cape are speaking out against dirty governance – with their votes. So the take home message is this: clean up, or pack up.

I thank you.

— Jane Cowley MPL, Shadow MEC for Health.