Money Bills Amendment Procedure & Related Matters Act Workshop, Home Loan Mortgage Disclosure Act & Beneficiary Occupancy Audit: Department's Reports

Meeting report

Money Bills Amendment Procedure and Related Matters Act, No 9 of 2009: Committee Workshop
Mr Mkhethwa Mkhize, Parliamentary Committee Section, tabled his presentation on the Money Bills Amendment Procedure Act, No 9 of 2009 (the Act) to the Portfolio Committee.

He highlighted the background to the Act, saying that it was in drawn in accordance with Section 77(3) of the Constitution of South Africa. The objective of the Act was to make provision for a procedure to amend money bills before Parliament, and related matters. He noted that a money Bill was defined as “a Bill that appropriates money, authorises direct charges against the National Revenue Fund and one that imposed, abolishes or granted exemptions from levies, duties or national taxes and surcharges.” In addition, the Act made provision for the establishment of the Parliamentary Budget Office (PBO) as well as the establishment of various committees, in both the National Assembly and National Council of Provinces for the consideration of money bills.

Mr Mkhize highlighted the powers and functions of these committees. He noted that the committees on Finance were responsible for the consideration and report on the macro-economic and fiscal policy, as well as for the amendments to the fiscal framework, revenue proposals and bills. The committees on Appropriations would report on and consider spending issues, as well as report on and consider amendments made to the Division of Revenue Bill (DORB) and the Appropriation Bill, as well as reporting on the recommendations made by the Financial and Fiscal Commission (FFC). National Treasury dealt with publication of revenue matters and reported on actual expenditure.

Mr Mkhize gave a breakdown of the Medium Term Expenditure Framework (MTEF), which comprised the three-year spending plans of provincial and national government, and highlighted the medium term policy priorities.

Mr Mkhize turned to the establishment of the Parliamentary Budget Office (PBO), and explained the provisions of the Act in this regard.

He noted that the Act contained dates for specific submissions to be made. The forthcoming Budget Review and Recommendations Reports (BRRR) had to be submitted within the first few weeks of October 2010. The Medium Term Budget Policy Statement (MTBPS) had to be submitted by late October 2010. The next National Annual Budget had to be submitted by February 2011, and the Fiscal Framework and Revenue Proposals, Division of Revenue Bill and the Appropriation Bill must be submitted by February 2011. He noted the processes leading up to the submissions of all the reports (see attached presentation for detail). He explained the process of the tabling of the National Budget, which dealt with processes relating to the Fiscal Framework and Revenue Proposals, the DORB and the Appropriation Bill. He also noted that other committees would act in an advisory capacity which would assist the Appropriations Committees if there were proposed amendments to the Appropriation Bill.

Discussion
The Chairperson commended Mr Mkhize on a clear presentation. She noted that the request for a workshop had been made in June and emphasised that the MTBPS was fast approaching and that it was imperative that the Act be implemented.

Mr A Steyn (DA) sought clarity as to what changes could be proposed by committees. He asked for confirmation whether a committee could only make a change within the allocated budget for that particular committee, and if it could request more money or transfer money to another department if one department had too much.

Mr Mkhize said that Parliament was permitted to make amendments provided that this did not involve more than R10 billion, which he noted would be inclusive of debt, and must take into account all decisions regarding appropriations. Once the DORB had been adopted, Parliament was deemed to have agreed to it. A Committee could note, by way of the Appropriations Bill, that it was desirable that one department be allocated less, or another be allocated more, but it could not ask that more money must be given to a particular department. Only the Committee on Appropriations could make changes after it had received and was in agreement with recommendations from a specific portfolio committee, and after having weighed up all the relevant factors of the departments being discussed. It was possible to “shift” money from one Department to another by amending of the money bills. However, good reasons had to be provided and challenges could arise if one priority area was in direct conflict with another priority area.

Mr Steyn noted the quarterly reports, which stated the expenditure. He was, however, concerned that these did not allow for parliamentary oversight.

Mr Mkhize said that the National Treasury did a trend analysis of the quarterly reports and that the information was available on request, for Committee purposes only but not for distribution. If information was required, the Portfolio Committee could call for it to be presented, and thereafter deliberated by the Committee, in a closed meeting. He added that qualitative assessment would be necessary for committee oversight so that financial performance could be matched with qualitative performance.

Mr Steyn was concerned that the National Department on Human Settlements could be spending money, but still not achieving the appropriate outcomes for the amounts spent. He wanted to know if there should not perhaps be a link between reports submitted to the National Treasury (NT) by the Department.

Mr Steyn noted the procedure of portfolio committees making recommendations to the Committee on Appropriations, who, if they approved of them, would submit them to the House, and finally to the Minister of Finance. He asked if the Minister could ignore recommendations adopted by the House.

Mr Mkhize said that the Minister of Finance could not ignore Parliament’s recommendations, provided that they did not require additional money from the Minister.

Mr Steyn stated that the Act was silent on the role of the National Council of Provinces (NCOP).

Mr Mkhize noted that the National Assembly (NA) and the National Council of Provinces (NCOP) had a definite role to play, as set out in Section 8 of the Act.

Mr Steyn enquired as to Mr Mkhize's view on sustainability in the economy. This had attracted much attention, as South Africa was increasing the number of social grants being issued through making them available to older children. This would put more attention on the fiscus.

Mr Mkhize said that some of the questions required the attention of the House Chairperson. He thanked the Committee for all relevant questions, and said that he would report on the matter to his line manager.

Mr J Matshoba (ANC) similarly sought clarity on sustainability and the social grants increase. However, he was not sure that this was a question that Mr Mkhize should answer. A complete re-orientation of committees was necessary for the successful implementation of the Act. He noted that when the Act had been tabled, the intention was to implement it fully in five years. He was concerned that committees were not adequately orientated for this as yet. He was not sure that the legislature's resources were not equal to the task at hand.

Mr Mkhize said that he could not respond on the readiness of the committees, and the answer lay in what could practically be implemented. Only a presiding officer of Parliament could really address issues around resources. He agreed that local government and human settlements were two top priority areas, which meant that this Portfolio Committee had added responsibilities. Because portfolio committees must make their recommendation to the Appropriation Committee, those recommendations should be very sound. This Committee would probably need high level support to undertake a proper analysis of the budget.

Mr Matshoba said that the Legislature needed just as much resources as the Executive, and he felt that more advisory resources should be provided. In addition, committees needed to be given greater capacity to obtain information from departments, as this was not always provided freely, and was needed so that the Committee could make an informed decision.

The Chairperson said that the exercise would help assist the Committee Section to take up particular issues. She commented on the capacity of Parliament and its Research Unit, saying that many Parliamentary researchers got their information from departments, instead of the Parliamentary Research Unit doing its own field research.

Mr Mkhize agreed that field research was vital as a department could easily report in a way that highlighted only its strengths and not its weaknesses. In future, the PBO would be able to do that type of research. He added that the parliamentary researchers were specialist researchers and that the Act had put equal emphasis on quantitative analysis.

The Chairperson noted that this Portfolio Committee did not have its own researcher or content advisor but would strive to implement the Act.

Mr Mkhize noted that he was from the Committee Section of Parliament. The Parliamentary Research Unit was independent of the Parliamentary Committee Section. He added that the question needed to be directed to the Section Manager for research.

The Chairperson said that this Portfolio Committee had been deemed as a specialist committee, as housing was of utmost importance, and it had also been listed as a State priority area. However, the budget allocated to the Committee was very small in comparison to the elevation of the other specialist committees' budgets. She feared that it might not be adequate to undertake proper oversight.

The Chairperson sought clarity on time frames that had been mentioned.

Mr Mkhize said that if the Budget Speech was held around 11 February, this meant that the Committee on Finance had to report on revenue proposals by around 20 March, as this report had to be given within 60 days after the tabling of the National Budget. The Act then required the DORB to be adopted within another 30 days, which would take until the end of March. The DORB must be passed before the beginning of the new financial year. The Appropriations Bill had to be adopted by the House four months after it was tabled. In other words, Parliament then had until the end of June to report on the Appropriation Bill. This year, June had been a constituency period, with Parliament being in recess during the World Cup. Mr Mkhize said that, in the spirit of cooperative governance, he thought that the annual reports could be produced within four months.

The Chairperson agreed with him.

Mr Mkhize noted that the Public Finance and Management Act (PFMA) aided departments, and had made allowance for a five month period.

The Chairperson was not sure whether the need for public participation had been accommodated.

Mr M Mdakane (ANC) emphasized the importance of the Committee on Appropriations attending other committee meetings, so that this committee could make informed decisions when deciding on which committee recommendations to accept. He added that lobbying for more money could sometimes be damaging.

Ms N Mnisi (ANC) sought clarity on the BRRR template and time frames.

Mr Mkhize said that it was the decision of the House whether it wished to accept the proposed template. If the House Chairperson was happy with the template, then the Committee Section would be too. He added that a workshop would be held later with members regarding the template, and that it would allow for greater interaction.

The Chairperson said that she was looking forward to working closely with the Committee Section in the future.

The Chairperson concluded that the Portfolio Committee on Human Settlements was still waiting for the last report from the National Treasury and that the report was vital.

Home Loan Mortgage Disclosure Act (HLAMDA) Report: National Department of Human Settlements (DHS) briefing
Ms Revelation Modisenyane, Representative, National Department of Human Settlements, advised the Committee that the National Department of Human Settlements (the Department or DHS) required all financial institutions to disclose necessary home loans information annually, in terms of the Home Loan and Mortgage Disclosure Act (HLAMDA). This was done to ensure that the main objective of HLAMDA, to promote fair lending practices, was carried out. The analysis of the information provided, now being tabled to the Portfolio Committee would assist in identifying key problem areas.

Ms Modisenyane highlighted the total home loan applications received and approved by each bank, as well as the total applications received and approved by race group. She covered 15 banks in the briefing, of whom ABSA Bank received the most, being 41.96%. Further analyses were provided of the home loan applications sorted by income category, and the total numbers of applications approved.

Ms Modisenyane also gave a breakdown of the total applications received by each province and displayed a pie-graph breakdown. Eastern Cape had the highest percentage of applications, followed by the Free State and Gauteng. Reports were also included of performance ratings as well as findings by the Department.

She reported that the Department had recommended that the Compliance Manual needed to be reviewed, and that the national data repository system needed to be developed.

Discussion
Mr A Steyn (DA) acknowledged that the reporting for this year took place against a background of strenuous economic circumstances, with no historic data for comparative purposes.

Mr Steyn noted that even though the office had been in existence for three years, this was the first time a report had been tabled. He was concerned that not all information or data had been provided and found that to be unacceptable. He cited, for example, that the Report included a column for a province denoted “other” and that it was not acceptable that the information should not be able to be sorted into the recognised provinces. He would have thought that there should be communication between the various banks and the Department over quite some time. He enquired whether the Director General knew of the budget for this office for the past financial year. He contended that the office should not just be a receiver of numerical data compiled into a report.

Mr Thabane Zulu, Director General, Department of Human Settlements, noted that the Minister of Human Settlements was empowered to give instructions to any bank regarding its reporting, if the Department thought that the specific bank was in non-compliance with the HLAMDA. Some letters had been written by the Minister and the Department was currently engaging on the issue. He said that there were no problems of capacity. Data did need to be analysed thoroughly in order for the Department to make adequate interventions when it became aware of challenges.

Mr Steyn noted that the data reflected that bank loans had been issued to “unknown” persons, which brought into question the accuracy and validity of the data that had been presented. He also expressed concern regarding the discrepancies for ABSA Bank, in the “total amounts” column of the presentation.

Mr Kaga Kabagambe, Deputy Director General, National Department of Human Settlements, said that sometimes the banks had informed the Department that the “unknown” persons represented those for whom the banks had not captured the full details, such as their demographics. The Department, in this case, would tell the banks exactly what needed to be captured for record purposes. On occasions, reference was made to the Constitution in regard to the disclosure of certain types of information.

Mr Steyn enquired whether the implementation of the new National Credit Act had any effect on the HLAMDA, and whether there was synergy between these two Acts.

Mr Zulu said that there should be synergy if the HLAMDA was implemented correctly, but that complete synergy had not yet been achieved.

Mr Steyn asked if the Annual Report of the Department had yet been tabled in Parliament.

Mr Zulu noted that it had not yet been tabled.

Ms M Borman (ANC) was also concerned about the accuracy of data and information provided. She wondered if the Department had been properly exercising oversight and enforcing full accountability of the banks during the collection of data. She also asked if this was a “paper-shuffling” exercise, or if there was real awareness on the part of banks, and whether there was full interaction. She was concerned with the performance of some of the banks, noting that those who received the largest numbers of loan applications seemed to be performing the least well. She questioned the statement by some banks that they were not receiving the necessary information, saying that she did not believe that people were hiding information. She asked, in this regard, what had been the Department’s interaction with the banks, and how proactive the Department had been in trying to obtain outstanding information from the various banks.

Mr Kabagambe noted that the Minister's letters to the banks had covered a number of areas. The Minister had written to each and every financial institution on the basis of the Department’s specific analysis of that institution. In addition to that, the Minister was also in direct contact and discussion with all the institutions. He explained that it was not always the case that banks were withholding information. Sometimes they did have capacity problems, which was why the Department was now speaking of a National Repository.

Ms D Dlakude (ANC) sought clarity on the code “07A” used in the presentation. She also asked for an explanation of the term “other” in the presentation.

Ms Dlakude noted her concern for people living in the rural areas and on communal land, and wanted to know if the Act catered for these people, should they apply for a home loan.

Mr Kabagambe noted that there was a tendency for more applications to be made in respect of urban loans than loans for housing in rural areas. However, it was a priority for government to look at rural development strategy.

Mr Zulu added that the Department was currently engaged in discussions regarding the rural areas, and the Department’s interventions to develop rural areas.

The Chairperson said that when people from rural areas applied for loans they were often asked to present urban addresses to the banks. This matter required urgent intervention.

The Chairperson wanted to know if the Department had established the Board, in accordance with the Act.

Mr Steyn sought elaboration on the criteria used for performance ratings.

Mr Zulu noted that it was important for the Department to implement the spirit of the Act, conceding that in the past the Department had not taken advantage of the way in which the Act could be used as a tool for assessing performance. HLAMDA had been passed by Parliament to force financial institutions to provide information, so that the Department could make the necessary interventions where there were challenges. For this reason, there could obviously not be a situation where financial institutions did as they pleased, without any accountability as to how they applied their credit policy for home loans. He reiterated that the Minister was currently pro actively and personally engaging with all the banks, including meetings with all banks to seek clarity on the challenges. The Department, through the Radical Funding Module, was suggesting the creation of a competitive environment, as it would be beneficial to consumers.

Beneficiary Occupancy Audit Report: National Department of Human Settlements briefing
Mr Philip Chauke, Chief Director, National Department of Human Settlements, tabled the Beneficiary Occupancy Audit Progress Report (the Report) to the Portfolio Committee. He outlined the background to the report, saying that the compilation of the Report had first been announced during the 2008 Budget Speech. It enabled a determination as to the number of subsidised housing units occupied by the approved beneficiaries. Various criteria were laid down for investigation. The study's findings would assist the Department in making decisions on the regularisation process, rectification, reliability and replicability of data.

Mr Chauke noted that beneficiaries had not been issued with title deeds, and the project had been outsourced to three services providers in seven provinces.
He outlined the methodology of the study, covering the areas of population, sample size, data collection techniques, data analysis, quality control, and the known limitations of the study.

Mr Chauke then presented the major findings for all nine provinces, broken down into criteria that included the legal occupant, rental or purchase, whether there was valid identification (ID) provided, whether there was a registered title deed, and whether the units were deemed non habitable or habitable. He explained how the data was compared.

The Department was of the view that the beneficiary administration process had not been performing as well as expected, and that there were a large percentage of illegal beneficiaries in the Free State Province, Mpumalanga and the North-West Province. He said that the official waiting list was crucial, and that traditional leadership was part of the process.

Mr Chauke then noted that there were also challenges around the quality of subsidised houses as well as the profiles of beneficiaries.

Introductory meetings with councillors to try to address the problems were of vital importance, as was the need for careful planning and execution and keeping the communities informed. The perceptions of interviewees could easily distort outcomes.

Mr Chauke then said that a process to initiate the process of matching occupants and properties on the National Housing Subsidy Database was vital. The Department would determine progress made with the compilation of official waiting lists in municipalities. He noted the current status of verification of data collected by service providers and said that meetings had been arranged with Provincial Departments of Human Settlements, where records were compared. This was done to help identify problem areas or challenges within the administration process. Service providers would be conducting beneficiary occupancy audits in the Eastern and Northern Cape Provinces.

Discussion
Ms M Borman (ANC) wanted to know if the Department was working on its own or in conjunction with municipalities. She said that this was a mammoth task and noted the costs involved, which had dropped.

Mr Chauke said that the Department was working with all three spheres of government, as it was virtually impossible for national government alone to do this work. It had already been working in close conjunction with all municipalities, wards and especially ward councillors in local government, including interaction at council meetings.

Ms Borman noted the methodology used by the Department, as well as the training of field workers and service providers. She said that field workers tended to embark upon projects with great gusto, but lose enthusiasm along the way. She therefore asked to what extent the Department was managing its field workers.

Ms Borman was concerned about the title deeds, which she saw as a major problem.

Ms Borman asked what the progress was on the beneficiary data base.

Mr Chauke said that the data base was currently being perfected on a national level.

Mr Steyn sought clarity and more information on the criteria that had been used to identify sample size.

Mr Steyn asked why, if all field workers were using the same template, some provinces such as Western Cape and Kwa-Zulu Natal provided no registration of title deeds, and why Limpopo had not recorded anything in respect of valid identifications. He enquired what specific training had been given to enable a person to undertake an analysis whether a house was habitable or not.

Mr M Mdakane (ANC) wanted to know what was being done to speed up the process of the registration of title deeds.

Mr K Sithole (IFP) appealed to the Department to work in collaboration with all its provincial counterparts to speed up the process of the registration of title deeds.

The Chairperson was concerned about the low percentage reflecting that there were only 23.8% of legal occupants in the Western Cape.

The Chairperson said that although she was not actually disputing the report, she was not happy with the content of it, and felt that it definitely had to be re-examined. She said that it would have been better if the presentation had contained actual numeric data, and not percentages.

Mr Zulu confirmed that the Department would have to simplify the statistics in the report and would provide numeric information rather than percentages alone. Mr Chauke also gave an assurance that he would follow up on this.

The Chairperson noted that both the minor and major defects recorded were disturbing. Although minor defects could perhaps be rectified, the presence of major defects may mean that the houses needed to be demolished.

The Chairperson was also concerned that there was no re-registration in terms of the Act.

Mr Chauke said that he would respond to all the Portfolio Committee's questions in writing, including all questions that pertained to the title deeds and criteria.

Ms Borman wanted to know if the Department had a proper data and statistics monitoring and storage system in place.

Mr Chauke said that the presentation made to the Portfolio Committee had been based on empirical evidence, and that all data had been captured in huge data format. Graphics of houses and townships had also been included. This would create a base line for the Department in moving forward. There was no way in which the Department would double count houses. It was considering whether to bar-code houses.

The Chairperson noted that for record purposes there always seemed to be qualifications regarding allocations, and that child-headed families must be considered.

The meeting was adjourned.