National Planning Commission on urban development and movement trends; Department of Human Settlements on progress of the Scottsdene / Kraaifontein Self Help Project & North West Housing Corporation

Human Settlements, Water and Sanitation

22 February 2011
Chairperson: Ms B Dambuza (ANC)
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Meeting Summary

The National Planning Commission discussed issues of urban development and movement trends. The pattern of movement from rural to urban areas had been slow and the Commission wanted to increase the percentage of people in the cities in order to increase employment opportunities for disadvantaged people. They found that the urbanisation trends were still under par because of the legacy of apartheid which restricted urban living for the poor. Infrastructure needed to be upgraded to accommodate the movement of people to the bigger cities.

The percentage of people having to travel great distances to get to work and other places of service was estimated to be 65%. This was unfavourable as it meant these people were spending an average of 8% of their salaries on transportation costs alone. It was a discouraging factor to those people trying to find employment and sustain their families. The National Planning Commission was working on plans to improve infrastructure in and around cities to accommodate more people living in the epicentre of cities. It had the mandate to inform the Department on suitable land available for development of new and innovative housing initiatives.

Members suggested that the Commission look to new ideas which were outside of the box. They thought that the idea of developing new cities would be feasible in the future. Members said that these types of concerns had been raised before and thought that it was time to do something about these types of issues. Prime land allocated for development was another concern as the cost of this land was higher than usual leading to higher rates and tax amounts which most people could not afford.   

The Department of Human Settlements gave a presentation on the progress of the Scottsdene / Kraaifontein Self help project. This project was initiated in 1988 and there were issues with the implementation of the third phase of the project. Some beneficiaries had not received there plots and building materials as promised. A private developer came and built show houses on beneficiaries' allocated land and community members were upset that nothing had been done by Government up to his point.
 
Members were concerned because people were promised houses and up until now nothing had been delivered. Members were disappointed that provincial representatives for the Department were not present to answer their questions on why this had happened. Members were concerned at the lack of consultation with community leaders as to the progress on this self help project. They called for an urgent meeting with the relevant stakeholders to resolve this issue.

The Department of Human Settlements gave a presentation to the committee on the North West Housing Corporation and the old government stock. The properties, which consisted of blocks of flats, had been run by the Corporation but this institution had run into problems with rental agreements being broken by tenants. Subsequently, financial losses were incurred and the decision was made to wind down the Corporation and have tenants evicted.

Members were extremely vocal about the maladministration that had run this project into ruins. They wanted the relevant board members of the Corporation to be held accountable for what had happened and requested that a meeting should be held. The impact of the evictions was troublesome to Members as women would be suffering mainly in this action. Members asked what types of processes were used and said that it was troublesome that these were peoples’ homes being auctioned off. Some Members felt that the winding down process was a good initiative as it allowed the Department and themselves the opportunity to gather as much information as possible about what had happened to this Corporation.  


Meeting report

National Planning Commission on urban development and movement trends
Mr Kuben Naidoo, Head: Secretariat, National Planning Commission (NPC), explained that the Commission was made up of 26 commissioners appointed on 30 April 2010 and was inaugurated on 11 May 2010. They were mandated to develop a vision and long-term plan for South Africa. They had to produce thematic reports on any issues that impacted on the country’s long-term development. The Commission was organised into five thematic groups which were nation building, the economy, human condition, institutions and governance and material condition.

In pursuit of its mandate the NPC would take a broad, cross-cutting, independent and critical view of South Africa. The NPC would put forward solid research, sound evidence and clear recommendations to the Government. It was necessary for the NPC also to work with broader society to draw on the best expertise, having consulted the relevant stakeholders, in order to help shape a consensus on what to do about the key challenges facing us as a country. The NPC was planning to formulate a national vision and development plan which was to be presented to Cabinet later this year.

Mr Khulekani Mathe, NPC Secretariat, said that the Commission was working on spatial planning and factors that influenced the occupation of certain spaces in the country. He explained that a city spatial structure was defined by the average density or consumption of land per person. It also involved the spatial distribution of densities and populations and the pattern of daily trips by commuters. Mr Mathe explained that it was deficient when commuting distances for a significant part of the population was too long to be travelled within a reasonable travel time or at a reasonable cost.

The implications of a dispersed spatial structure for the poor was that the poor could not fully participate in the labour market when they were spatially dispersed beyond one hour commuting time from employment areas or when transport costs represented 8% of their income. Spatial dispersion in essence decreased economic opportunities for the poor and reduced the economic efficiency of the entire city.

Mr Mathe explained that a key conclusion from the current human settlement trajectory was that rural areas also needed to be planned and located closer to the city areas. This would increase employment opportunities and allow Government to plan effectively with regards to basic service delivery. The focus on quantity, particularly in relation to the provision of housing and infrastructure had entrenched existing inefficient settlement patterns. The past and present delivery models resulted in very low urban densities in relation to international benchmarks for efficient and vibrant urban form.

Mr Mathe said that there were inefficiencies in the use of resources such as energy and water, in addition to poorly constructed systems of public transportation and other infrastructure networks. There was a growing pressure on urban areas to ensure adequate functioning of towns and cities. The quality and availability of service infrastructure such as water and sanitation for livelihood creation and support had been compromised by the legacy of underinvestment in infrastructure over a long period of time due to the poor management of resources. There was growing pressure on urban areas and weak institutional capacity to ensure adequate functioning of towns and cities.

The NPC put forward critical questions that it needed to answer for itself. It wanted to find out how it could build future-looking towns and cities that were economically efficient, environmentally sustainable and socially inclusive. It also wanted to revive rural areas whether that included agricultural development and if so what types of agriculture. The NPC was also striving to leverage new and existing technologies to improve the lives of the vulnerable population and promote more effective forms of inclusive and sustainable development.

To address these issues the NPC was undertaking national spatial as well as regional spatial trends analysis to gain better understanding of economic, social and environmental patterns. The analysis would inform the formulation of a spatial vision or perspective which would form an integral part of the vision and development plan. The sense from work done thus far was that to reverse apartheid geography and promote inclusive development and economic efficiency would require bold decisions about both location and timing of major investment and the location of future settlements.

The NPC was currently working with the Ministers of Human Settlements, Rural Development and Land Reform, Cooperative Governance and Traditional Affairs, and Environmental Affairs to develop a new spatial planning and land use management bill. The NPC hoped to table the bill in Parliament during the 2011 session and release a spatial vision together with the plan in November 2011 for Cabinet's consideration.

Discussion
Mr T Botha (COPE) thanked the NPC for its presentation and said that it was very useful to the Committee to have such information at hand. The presentation showed a lot of challenges that needed to be addressed.
These issues were nothing new as the old apartheid government had created these issues. The poor had been left out of the epicentre of the economic hubs of the major cities around the country. He said that development was driven by people occupying land, such as in the rural areas. The problem was that the laws made it difficult for people to be removed and moved closer to the cities, especially when they did not want to be relocated. Also, when trying to bring people closer to the cities, the infrastructure was not good enough and the land could not hold the amount of people coming in. Land closer to the cities was also found to be more expensive, and poorer people could not afford to pay higher rates and tax amounts.

Mr R Bhoola (MF) said that it was correct that creative planning would lead to better service delivery and sustainable communities. There were many challenges but he believed the NPC was on the right path. He said that things going wrong could not only be blamed on apartheid as there were some recent pieces of legislation that were also destructive to development. He hoped that the 26 commissioners appointed would be representative of the diversity of all South Africans.

Ms A Mashishi (ANC) said that the presentation affected people directly. She asked whether there was a timeframe for the critical questions to be answered. She supported the point made in the presentation that the apartheid spatial legacy needed to be addressed as this was hampering development.

Mr Mathe said that these critical questions would hopefully be answered by November 2011.

Ms M Borman (ANC) thanked the NPC for its presentation. She said it gave her a sense of the bigger picture and this information would help the Committee to address certain issues. With the change in legislation coming up, she wanted to know whether this would affect current projects. She was concerned whether all relevant departments would come together in a cohesive manner, as mentioned in the presentation.

Mr Naidoo explained that the functioning and implementation of current projects would continue, and new projects would take on the changes in legislation. There were some implications on the interaction between departments, but at the end of the day, it was up to the relevant departments to conduct their own implementation.

Mr K Sithole (IFP) said that the statistics shown in the presentation needed to be updated. He suggested that the formalization of informal settlements was needed in order to improve service delivery to those informal areas.

Mr Mathe explained that the statistics in the presentation were just a framework for the conversation about planning issues. Access to opportunities and services was the central message of the graphs.

Mr A Steyn (DA) thanked the NPC for their pictures and sketches in the presentation. He said that a new bill could be tabled by the end of 2011 but warned that this could take another year to be finalized. The information presented was not new to Members and he was concerned that the NPC may have been disillusioned as it focused on medium to long term plans, but the current projects were already underway. The NPC should have given more input on the current planning happenings. A lot of focus was on increasing densities in urban areas, but the NPC should have thought out of the box. He suggested that the NPC should start thinking of creating new cities to update existing rural areas.

Mr Naidoo said that the idea of creating new cities was being explored. The Commission was thinking about the idea and looking at it. It needed more time to explore but the analysis and diagnosis were already being done.

Ms M Njobe (COPE) said she appreciated the presentation and the work done thus far. However, the disadvantaged population remained in a disadvantaged situation without the basic services such as education, health and sanitation. She thought the concept of creating new cities was a good idea as there were currently not a lot of major cities in South Africa. She said that the NPC had to be innovative in order to solve settlement issues in South Africa. She suggested that a positive forced removal concept be implemented to move people closer to cities and make them accept changes which were positive. It was time to educate people and also get their opinion on the matter.

Ms N Mnisi (ANC) commented that the apartheid problem was still haunting people as the post-apartheid resolutions had not been effective. A turnaround strategy was needed to protect the future generations to come.

Ms T Gasebonwe (ANC) said that geographical planning was needed to promote basic services in remote rural areas. She questioned the feasibility of the NPC and whether it had the needed expertise to address this concern.

Mr Naidoo highlighted that the role of the NPC was not an executive authority. It had the mandate to advise Cabinet on long-term planning as stated by President Zuma but it could not implement anything by itself. 

Mr M Mdakane (ANC) said that the issues at hand were difficult to separate, as they crossed over between the mandate of the NPC as well as the Department. He said that it was still too early to say that apartheid could not be blamed. Apartheid had been developed by highly intellectual individuals and therefore it would impact for generations to come. It seemed that the Commissioners were committed and very scientific people, but people out there needed a lay person's view on what was still to happen.

Scottsdene / Kraaifontein Self Help Project: presentation
Ms Itumeleng Mabalane, Director, national Department of Human Settlements, presented the progress on the Scottsdene and Kraaifontein self help project. She explained that the Scottsdene community brought its plight to the attention of the Human Settlement Portfolio Committee during a meeting held in Wallacedene on the 04 February 2010. The community alleged that there had been no housing developments implemented in the area since the late 1980s.

The Scottsdene Self help project was initiated in 1988. It was during the transitional period, prior to the enactment of the Housing Act 1997 (Act No. 107 of 1997). The main objective of these self help projects was to assist the communities to build houses for themselves. Provincial government advanced loans to the Local Authority (LA). The LA would in return re-issue the loans to beneficiaries for the purchasing of building materials and beneficiaries would then build their own houses. These loans were referred to a phase one loan whereby beneficiaries were given material to construct homes for themselves. Beneficiaries had to repay the loans over a period of 20 years based on Treasury repayment stipulations, Circular 2, 1987.

Loans between the LA and the province were captured on the debtors system. Province did not have details of the loans to beneficiaries because they were administered by the respective LA. The details of the beneficiaries were captured on the National Housing database. The phase one loans were phased out in 1998 and the Extended Discount Benefit Scheme (EDBS) came into existence and later on the Enhanced Extended Discount Benefit Scheme (EEDBS) was introduced in December 2005.

EEDBS was a national policy aimed at facilitating the transfer of public housing stock to occupants and superseded the previous Discount Benefit Scheme and phasing out programme. The LA firstly serviced the land, subdivided it and allocated it to beneficiaries who would then build for themselves. Beneficiary lists with erf numbers were available but there were no ID numbers available. The LA utilised the funding from the provincial government to purchase material on behalf of beneficiaries. The project was implemented in three phases. The first and second phase had been completed. Prior to the implementation of the third phase in 1993, funding was no longer forthcoming from province.

According to beneficiaries, the municipality committed to source funding from National Treasury and to continue with the project. Phase three beneficiaries were allocated their plots but had to wait for funding from the local government. The project was ultimately stalled due to lack of funding. The community constantly engaged the local authority and province without success. In 2007 the allocated sites for phase three beneficiaries was once again subdivided by province without consultation with the community. The private development, Scottsdene Show Houses, was implemented for gap housing, and units sold for R220 000. The Scottsdene community did not benefit nor participate from the project and the majority of the community could not afford the houses built.

Ms Mabalane highlighted that the challenge was that the housing needs of phase three beneficiaries had not been addressed. Land given to them by the LA was no longer theirs. The local community had challenged this and Scottsdene Showhouses development on different occasions without success. The beneficiaries highlighted that no housing development had taken place in the area since 1987, besides the implementation of this self help project. The surrounding areas such as Scottsville and Wallacedene also required houses. The recommendations were that the Department should conduct a detail investigation into the issue and create sustainable human settlements for the community of Kraaifontein.


Discussion
Ms Borman said that this project was a major problem to development. The Committee visited the area early in 2010 and the same problems were discussed at a meeting in June 2010. She was disappointed that nobody from the provincial department was present and requested that the provincial representative should be present at a future meeting. The concern was whether or not these problems were being taken care of. 

Ms D Dlakude (ANC) agreed with Ms Borman’s comment. The provincial and municipal representatives needed to be present to account for what was happening in this area. There were many loopholes in this project and the list of beneficiaries should have been on the national database.

Mr Steyn supported the suggestion that the provincial department needed to give some answers. He was concerned about the different phases of the project and the land that was subdivided. The information in the presentation was incorrect as it stated that these people had been living in these houses for over 30 years but the project was only started in 1988. He said that the Committee needed the correct information to make informed decisions.

Mr Bhoola said that he was confused by the presentation. The Department was allowing Government policies to be defied. Land was awarded to these people and expectations were created but these beneficiaries still do not have homes. The private contractors mentioned in the presentation were working on their own self-enrichment and this was wrong. He said that it was disappointing that the community was left out of the consultative process and the provincial department needed to come to the Committee with the relevant answers.

Ms Mnisi agreed with Mr Bhoola’s comments and said that this project was an example that the Department was not delivering. Nothing had happened until now after all these years and it was very disappointing.

Mr J Matshoba (ANC) agreed that the right people from the provincial department should come and account for what had happened with this project.

The Chairperson said that the provincial department should have the database of beneficiaries. The national Department needed to interact with the provincial department. The intention should be that the Committee should receive quality information. This issue could not wait for another year and the committee had been patient enough. This message needed to be conveyed, even to the Minister and the relevant Member of the Executive Council (MEC). She was concerned because if these challenges could not be dealt with now then it would hamper the progress of the NPC. The intention was to resolve these issues and not to crucify anyone.

Mr Thabane Zulu, Director General: Department of Human Settlements, agreed that the provincial representatives were needed to answer the Members' questions. He said that a meeting would be held during the next few weeks with the relevant persons responsible for this project, as the Department could not engage with the Committee on this issue without them.

North West Housing Corporation and the old Government stock: presentation
Ms Noligwa Tembani, Director of Rental Housing, Department of Human Settlements, gave a presentation on the North West Housing Corporation (NWHC). The North West provincial government had a responsibility, like that of any other province, to create mechanisms for the growth and development of the rental housing sector. This was done in the quest to eradicate housing backlogs through the disbursement of Restructuring Capital Grant institutional subsidies and top-up grants to qualifying and accredited delivery agents in the province.

It was noted however, that while the province continued developing rental housing projects mainly through Community Residential Units (CRU), the co-operative model was not running in the North West. What existed in the province was then called the North West Housing Corporation. Due to the resolution by the then Bophuthatswana government to provide accommodation to the civil servants, nine blocks of flats were constructed to provide such accommodation and the North West Housing Corporation was set up to facilitate the construction and management of the stock which was then established in terms of what was now called Social Housing.

Ms Tembani explained that post 1994 elections when the Bophuthatswana government became the North West province, the government was also faced with the challenge of relinquishing the responsibility to hold and manage the properties, because of the resolution taken by the Department of Public Works to have transferred all government assets to the public and interested parties. At this juncture, some staff members within the NWHC had acquired some loans from the Public Investment Company (PIC) and used the flats as security to the loans. A stand-off between the NWHC and the members under the umbrella called Joint Tenants committee resulted in minimal rental collections, and this eventually led to a request for South African Housing Co-operatives Association (SAHCA) to intervene.

According to SAHCA’s report, primarily it was agreed that all properties were to be transferred into the ownership of the members, and be co-operatively owned, and that SAHCA would assist with the education, incorporation and management of all properties. In return, the NWHC was to facilitate the process of transferring the properties to the members, more so that the NWHC was then in the process of foreclosure. The NWHC then began a process of trying to auction the properties off. The reason given was that, the NHWC was unable to repay the loans acquired from the PIC and as a result, was compelled to sell off properties to raise funds and settle the loans.

Ms Tembani explained that this sparked a frenzy of protests that eventually compelled the North West provincial government to appoint an ad hoc committee to assist the legislature to arrive at an informed position. Apparently a report of the ad hoc committee was released in which the legislature was advised against selling off the properties, yet NWHC moved to auction off all properties. The private entity which bought the project managed the project and individuals in the project until the tenants were unable to meet their contractual obligations and rental payment. Subsequently, the Corporation decided to evict them.

With regards to Government’s old housing stock, the Portfolio Committee had further requested information and data for the public rental stock pre-1994 for the North West province. The public stock referred to buildings that were in the ownership of the Provincial and Local Authorities. Ms Tembani said that it must be noted that in terms of the approved CRU, these units, if not transferred for the ownership to individuals in terms of the Enhanced Extended Discount Benefit Scheme (EEDBS), could be used as rental stock in terms of the CRU.

Ms M Mogale, Director: Legal, North West Department of Human Settlements, then gave the progress and status of the winding down of the North West Housing Corporation. She explained that the North West Housing Corporation was a Schedule 3(C) Public Entity in terms of PFMA Act 1999 (Act No.1 of 1999) and established in terms of the North West Housing Corporation Act 1982 as amended.

The entity had been in existence for over 27 years operating as a housing parastatal of the North West Provincial Government within the Department of Developmental Local Government and Housing (DDLG&H) and recently under the Department of Human Settlements. It operated in the provinces of North West, Gauteng, Northern Cape and the Free State and owned rented houses, instalment houses, flats and vacant stands.

The legal mandate of the NWHC was found in Section 19 of the NWHC Act and was to assess, determine and review on a continuous basis, the position regarding homelessness and housing in the province and, in the light thereof, to determine the needs of the province in regard to shelter, accommodation and housing. The mandate of the NWHC included investigating, planning, preparing, commissioning and executing schemes and programmes for the provision of shelter, accommodation and housing. The NWHC was tasked to advise, render physical assistance and any other relevant assistance to any local, regional or rural authority and any private person with regards to shelter, accommodation and housing.

Notwithstanding its mandate, the Corporation was not able to fulfil its mandate because the shareholder ordered that the institution should be wound down by 31 March 2009 and later on by 31 March 2011. In her State of the Province Address, Hon. Premier Maureen Modiselle pronounced that the NWHC winding down would be completed by the end of 2009 financial year and the MEC for Human Settlements further re-affirmed that the process of winding down should be brought to its logical conclusion by 31 March 2010.

Ms Mogale explained that by 31 March 2010 the Corporation had ceased to exist but it was still in existence legally as a legal entity. Task teams were set up for the purpose of ensuring that the winding down process was completed by the pronounced date. The task team was a cross section of various departments such as the Departments of Human Settlements, Public Works, Internal Audit and NWHC. However, in August 2010, Treasury recommended that a service provider be appointed to drive the winding down process, legally, financially and operationally. A service provider was then appointed in November 2010. The service provider was expected to wind down the institution by 31 March 2011.

Ms Mogale explained the reason for the winding down as due to inadequate funds. The Corporation started experiencing extreme cash flow problems from 2009. This was as a result of the moratorium placed by the Department of Human Settlements, Public Safety and Liaison, on transfers of any properties registered in the name of the NWHC. The other reason for the inadequate funds was due to the general apathy in the payment of rentals and instalments by the tenants. This was mainly due to the fact that there was no proper communication to the public regarding the status of the corporation with respect to the winding down process.

The cash flow dilemma that NWHC had been experiencing resulted in the Corporation failing to meet its commitments. The announcement to wind down the institution caused panic amongst creditors. The creditors felt that the contractual arrangements made with them would not be honoured and therefore felt exposed. This resulted in most creditors litigating and some obtaining warrants of execution of the NWHC on the movable as well as immovable properties.

Mr Zulu said that this project and its failure was one of the most challenging situations the Department faced. It was important to note that investigations had been done by a service provider. Historically, the management of corporations were not good or sufficient. What exactly transpired needed to be made clearer to the Department and the committee. Institutions needed to understand that governance had to be respected and adhered to.

Discussion
Mr Steyn said that the term 渡ot good_ used by Mr Zulu was an understatement. He asked how it was possible that the Portfolio Committee had allowed this to happen. This was a state entity that had not been audited since 2008. He thought that the Committee needed to make an example of the people running the Corporation by holding them accountable for what happened.

Mr Bhoola was concerned about the processes being used. He said that these were peoples’ homes being auctioned off. All things that were happening needed to be governed. He agreed with Mr Steyns’ comments. Those people who did not adhere to the law had to be charged criminally. The mandate of the Department was to create homes for people.

Ms Borman asked, with regard to the evictions, where the people were going to live.

Ms Tembani explained that the evictions would not be done illegally, and the reason for people being evicted was because on the non-payment of rental monies.

Mr Mdakane said that the board of directors were the right people to confront and said that someone from the board should have been present to account for what had happened.

The Chairperson said that the role of the Department was important in regards to those people who had not yet been evicted. The legalities of it all needed to be checked. She felt that something could be done for those people until the matter was finalized. Women suffered the most in these situations. She was surprised to see that the NWHC was spread across four provinces. When the NWHC board members planned to come and attend a meeting with the Committee, they needed to account for all four provinces, not just the North West province. The winding down process allowed for the Committee to interact and get the most information as possible. EEDBS had been progressive but the relevant records were a critical problem. The Department of Public Works should have had the records on its asset register.

Mr Zulu said that the Department accepted the Committee's guidance and assured it that more would be done. The Department needed to find out what was being done to hold the responsible people accountable for what had happened.
The meeting was adjourned.


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