Community Schemes Ombud Service Bill [B21-2010]: Department of Human Settlements: briefing

Meeting report

The Chairperson welcomed the Department of Human Settlements (DHS) and said that the Committee would not discuss the Sectional Titles Bill as there was not enough time to study it.

Community Schemes Ombud Service Bill [B21-2010]: Department of Human Settlements: briefing
Advocate Jan Tladi, Chief Director: Legal Services, DHS, explained that the Department had addressed the Committee on 13 August 2010 on the Community Schemes Ombud Service Bill [B21-2010]. This briefing would deal with the business case for the Bill.

The Bill sought to establish an office for the Community Schemes Ombud Service. The Service would offer a simple and inexpensive process to enable disputes in community schemes to be dealt with. It would ensure independence, fairness and impartiality in disputes. It would also promote uniformity and consistency and provide a remedy and protection for the parties involved. The increased number of housing community schemes created the need for this service. Community schemes included sectional title schemes, share block schemes and retirement schemes. Because these schemes involved a control of finances and behaviours, it gave rise to various kinds of disputes. At present there was no effective dispute resolution system in this sector.

The Ombud Service would be a public entity with a board. The Bill covered the procedural matters that would be linked to the office of the ombud. The office would have to comply with the Public Finance Management Act 1999 (PFMA). Subordinate to the board would be the Office of the Chief Ombud. The structure would involve three regional offices in Gauteng, KwaZulu-Natal and the Western Cape to begin with. These provinces were chosen since they had a large number of community schemes. The other provinces would also receive the service since the ombud would work like a circuit court. The Ombud Service would either obtain the staff to travel to these regions or provide the local service by using local agents. The funding for the service would be primarily from the Government and secondly from revenue that the service would make from charging for the service. The Ombud Service would have four divisions. Two of these divisions would deal with the primary or core activities which was adjudicating disputes. The other two divisions would deal with financial and corporate services. Each region would also have a regional ombud.

Discussion
Ms G Borman (ANC) asked whether the four divisions would cascade down to the regions as well, whether the cost had been worked out, and how people in the other six provinces would access the service.

Professor Graham Paddock, a consultant to the DHS, replied that the four divisions would not be cascaded to the regions. The focus however would be to have a strong back office in these regions. The aim was for people to deal with the ombud and not with other people. The challenge was that they were not sure how many community schemes and disputes there were at present. Complaints would be given to the ombud physically, via telephone or by post. It was hoped that later on, complaints could be submitted electronically.

Mr A Steyn (DA) added that the six provinces needed this service and that it was important for the DHS to explain how it would work. The cost to the consumer for this service was also a point of concern. It was important to know how much extra this would be on levies. There also needed to be a means to force board members to declare their interests. Their skills should not give them any advantage.   

Adv Tladi replied that the requirements for the board members were sound. Should the Member be suggesting a change to the Bill, it would have to be considered at a later stage. If the resources were available, offices would have been established in all nine provinces. The reality however limited them to the three provinces mentioned.

Prof Paddock added that most community schemes were in the urban areas and therefore the three provinces had been chosen. He added that the Bill did provide for part time people on the board.

Mr K Sithole (IFP) also enquired about the charges made to the consumer and the affordability of information that was required by consumers.

Mr Khwezi Ngwenya, Director: Framework Legislation: DHS, added that the funding for the ombud would be from the Government and from charges to the consumers. The impact on the consumer had been considered, but it had been decided that the ombud could not be dependent on Government funding. The Minister however could give a discount or waive charges in certain cases such as retirement complexes. The plan however was to have a minimum charge to sustain the office. 

Prof Paddock added that the charges to the consumer had been estimated to be R3 per sectional owner per month. He emphasised that this was an estimate and would depend on Government funding. There was a need however for more education around the service. This would be ongoing as there were new people joining these community schemes constantly.

Mr R Mgiba, Chief Director in the DHS, added that the office would be a Schedule 3 (a) entity, which would dictate how it would operate. The cost for the first year had been estimated as in the area of R20 million. They would charge for services which would provide an income for the office. Government would come in with operational funding. This would be increased by 10% after the first year. The office would also make certain investments which would also provide an income for it.

Mr M Mdakane (ANC) agreed that people had to pay for the service unless they were indigent. The office however should be accessible to the public and not be another bureaucratic nightmare. The board should also not exclude certain people.

Adv Tladi said that the office would be underpinned by corporate governance principles, which should prevent it from becoming a bureaucracy. It would be accountable to Parliament through the Minister.

Mr Steyn said that the Committee needed a business plan from the DHS with more detail. The manner in which the levy was determined also needed to be explained. There should also be something in the Bill which would force board members to declare their interests.

The Chairperson interjected at this point and indicated to Mr Steyn that Members would not discuss the Bill in detail. This would be done at a later meeting. Only the business case was to be discussed.

Mr Mgiba said that the aim of the office was to be self-sustaining. Initially R20 million would be obtained from the Government for operations. It would be a Schedule 3(a) entity so there would be a provision for it to ask for funds should there be a shortfall of operational costs. This would not apply to capital funding. If it was self-sustaining it would not use the funds in full. One of the primary functions of the office was to raise awareness and then extend the service to all the provinces.

Mr SIthole was also concerned about the fact that there would only be offices in three provinces.

Adv Tladi said the regional offices were a major concern to the DHS as they wanted the service to be accessible to all. Education about the service was also important as this would increase the accountability.

Ms N Njobe (COPE) suggested that the other six provinces could have satellite offices. To save costs, these could perhaps be situated in the DHS offices using DHS staff.

Adv Tladi said that it was not advisable to have someone in the DHS doing the work of the ombud as the service needed to be seen as independent of the Department.

Mr Steyn expressed concern that the enforcement of decisions, made by the ombud, would be a problem.

Adv Tladi replied that they had interacted with the Department of Justice and Constitutional Development around the area of enforcement.

The Chairperson said that the information the DHS had provided was only the foundation for a discussion on the Bill. Some information, however, had been provided but not enough had been shared with the Committee. The Committee had requested a business pan that had been sent to the National Treasury. She stressed that Members did not want the same situation that had happened with the Housing Development Agency, which was now asking for capital funding. Members would therefore take time with the Bill. The DHS would therefore have to give Members more information, as had been requested.

The meeting was adjourned.