Department of Human Settlements on 1st Quarter 2010 Performance

Meeting report

Mr Thabane Zulu, Director General: Department of Human Settlements, thanked the Committee for the opportunity to present a report on its progress between 1 April and 30 June 2010, the first quarter of 2010/11 financial year.

Department of Human Settlements Performance: First Quarter 2010
Ms Funani Matlatsi, Chief Director: Department of Human Settlements, presented the Committee with expenditure of the R16, 2 billion which the Department was granted for the 2010/11 fiscal year. The Department would seek to increase its Medium Term Expenditure Framework (MTEF) to R18, 4 billion in the 2011/12 fiscal year and R19, 6 billion in the 2012/13 fiscal year.

The Department allocated 93.58% of its budget for 2010/11 to conditional grants and 6.42% to administration. The Department allocated each province a percentage of its Human Settlements Development Grant (HSDG) and a Housing Disaster Relief Grant. Eastern Cape received 11% of the HSDG, Western Cape received 12%, Gauteng received 25%, Northern Cape received 2%, Free State received 9%, North West received 9%, and KwaZulu Natal received 18% of the HSDG and 1% for disaster relief. Mpumalanga received 6%, and Limpopo received 8%.

The Department spent R24, 376,094 on Administration, R5,588,146 on Housing Policy, Research and Monitoring, R25,313,900 on Housing Planning and Delivery Support, R3,571,090,066 on Housing Development Finance and R12,065,872 on Strategic Relations and Governance. Total expenditure came to R3, 638,434,077 of the R16, 201,481,000 which had been allocated. This translated into 22% of total expenditure by the Department.

The Department highlighted the fact that it had setup Departmental Agencies which were yet to be operational due to staffing issues. The Agencies had been allocated money and would be operating as soon as the posts in each Agency had been filled (sees report). The Department also outlined the various administrative areas where it spent money including bursaries for internal staff and development in order to improve the Department’s capacity to deliver.  The Department reported that the Office of the Minister had spent R593, 472 of its allocated R4, 732,991 and that the Office of the Deputy Minister had spent R1, 023,747 of its allocated R4, 466,000. These funds fell under Programme 1: Administration.

Discussion
The Chairperson said that the Director General should have presented the Committee with an up to date expenditure report as of 31 July and not as of 30 June.

Ms Matlatsi apologised for not presenting an up to date report but said that the Department had presented the figures available to them at the time of the Committee’s summons. A written version of the up to date report would duly be sent to the Committee.

Mr T Botha (COPE) asked how much money was unspent due to projects not starting on time as a result of administrative issues.

Ms Matlatsi replied that there was no way for the Department to know that answer as it was responsible for the allocation of funds to the various provinces as opposed to being an implementing agency.

Ms M Borman (ANC) commended the Department on its allocation of 93.58% of the money for the provinces. She suggested that the next report should be up to date. She expressed concern about the amount of unspent money; she commented that this was aligned to a lack of service delivery on the ground. She commended the Department’s rule of allocating funds to provinces according to the business plans presented by those provinces. She expressed concern over the high expenditure on consultants and asked whether consultants were being used for every aspect of Department work. She asked why there was a big disparity in spending between the Office of the Minister and the Deputy Minister.

Ms Matlatsi responded that the consultant fees were indeed excessive and that in future as the Department developed internal capacity, that money would be shifted for use in areas which needed it. The reason the Deputy Minister had spent more of his budget than the Minister was that the Deputy Minister had had more road shows in keeping with his duties.

Mr A Steyn (DA) expressed his concern over the huge amount of money which had been unspent despite the request for more money for his department by the Minister. He commented that the Department should not still be checking on the progress of first quarter expenditure but should rather be concerning itself with second quarter issues as the first quarter had already ended. There seemed to a lack of forward planning and management with regard to assessing expenditure. In the presentation, the Department had commented on the Northern Cape as being an area of concern - why was the Department worried about a province which seemed to be actually spending its allocation, unlike other provinces?

Ms Matlatsi responded that the concern about the Northern Cape was about the need to allocate more funds to the province rather than lessen its funds. It had showed a capacity to spend its allocation and do so effectively. In future the Department would look to send more funds to that province to further aid it in meeting its goal of helping more people find viable settlements.

Mr M Mdakane (ANC) commended the Department on the report. He asked why expenditure was still being made to Thubelisha Homes which had closed earlier in the year.

Ms Matlatsi responded that Thubelisha was meant to have closed on 31 of March 2010 but due to the resignation of the Chief Executive Officer, the process had undergone some delays but an interim CEO had been put in place and the process would end as quickly as practically possible.

Mr R Bhoola (MF) said that the Committee needed information to compare spending with level of delivery. He asked if the money that had been allocated and not spent, went back to the Department. The situation on the ground needed to be assessed to see how the money that was spent was being used. He commented that the great amount of unspent money pointed to a lack of delivery and that concerned him.

Ms Matlatsi replied that the money which was unspent was kept over for the next financial quarter. She added that when provinces were allocated money for Human Settlements, they requested that the money be kept at National Treasury as opposed to Provincial Treasuries. This was because Provincial Treasuries tended to allocate money earmarked for Human Settlements to other provincial projects. This hindered delivery and expenditure on specified Human Settlements projects.

Ms M Njobe (COPE) said that the report showed an improvement in Eastern Cape expenditure but that that did not necessarily translate into improvement on delivery. She expressed concern hat the Departmental Agencies, highlighted in the report, did not seem to have employees yet to carry out their intended work. She asked if it was necessary to allocate money where it was yet to be utilised.

Ms Matlatsi replied that when Departmental Agencies became operational it would be important to have funds immediately available for it to operate without hindrance. She emphasised that it was important that the Department plan properly for programmes which were close to being initiated. Not allocating funds to them would be irresponsible.

The Chairperson said that not enough was being done to deliver housing to poor communities despite the prolonged period of incumbency of the ruling party. It seemed to her that KwaZulu Natal was not being allocated enough money. The relatively new Director General would have to assume the mantle of the Department’s successes and failures both past and present. Not enough was being spent on Rental Housing. Finally, she commented that it was not necessary for the Director General to have advisers.

Mr Zulu replied that he did not have advisers nor did he intend to hire advisers in the near future. External procurement of advice or services was administered through a process. It was important for the Committee to be mindful that the Department was not the implementing agency but allocated money according to the needs raised in business plans submitted to the Department.

The Chairperson asked what the Department’s role was in implementing decisions taken at a national level.

Mr Zulu responded that the Department did what it was mandated to do according to national imperatives. Ms Matlatsi added that the Department allocated funds according to the business plans it received from provinces. 

Mr Botha commented that coordination seemed to be lacking with the implementation and monitoring between the national and provincial departments of Human Settlements.

Ms Njobe said that it would be very important to develop policy to ensure that money was only allocated to operating programmes; she referred to the dormant nature of Departmental Agencies noted in the report.

Ms Borman asked who qualified for the training and development noted in the report.

Ms Matlatsi replied that the training and development was aimed at internal staff at the Department and was provided to improve capacity.

Mr Bhoola noted that the Director General had said that there were challenges with the alignment between the provincial and national department. Efficiency was important and time frames for the completion of projects would assist with achieving goals.

Mr Steyn said that the restructuring of the Department was taking too long and that priority areas needed to get more attention in the Department’s allocation and planning. In the next quarter’s report, the Department should provide the Committee with lists of projects and the level of progress on each one.

Mr Zulu said that he took on board all the concerns and comments made by the Committee and would be sure to work on improving areas that were discussed in the sitting.

The meeting was adjourned.