Department of Human Settlements Budget Report 2011; Committee Report on Study Tour to Cuba & Committee Strategic Plan 2011: adoption

NCOP Public Services

22 May 2011
Chairperson: Mr M Sibanda (ANC, Mpumalanga)
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Meeting Summary

The Department of Human Settlements presented its budget report for 2010/11 to 2013/14 with special emphasis on the 2011/12 financial year. The Department’s total Medium Term Expenditure Framework allocation amounted to R22 578 495 000 for the 2011/12 financial year. The Department allocated 96.11% of its budget for 2011/12 to subsidies and transferred payments, while 3.89% was allocated to compensation of employees; interest and rent on land; payments for capital assets; goods and services. The 96.11% of the budget allocated to “transfers and subsidies” amounted to R21 695 605 000 of which R14 941 516 000 was allocated to the Human Settlements Development Grant, while R6 266 998 000 went to the Urban Settlements Development Grant. The Human Settlements Development Grant expenditure as at 31 March 2011 was at 98.4% as per total adjusted, with R14 808 361 000 spent from the R15 041 763 000 that was transferred to provinces. The provinces which spent over 99% of their budgets were the Free State, Gauteng, KwaZulu-Natal, Mpumalanga, Northern Cape, and the Western Cape.

The Department’s main focus areas was to provide accelerated delivery of housing opportunities; access to basic services; more efficient land utilization; and an improved property market. The National Outcome 8 targets for 2011/12 were to have100 000 slum upgradings; affordable rental with 5 349 Social Houses and 4 000 Community Rental Units. The 2011/12 Human Settlements Development Grant was allocated to the Uplifting of Informal Settlements; Rental and Social Housing; and Land and Priority Projects.

Members asked what criteria were used to determine the budget that was allocated to provinces and how a province was defined as a rural province. Members stated that the presentation was helpful to the Select Committee in providing oversight, because it provided the information the Committee always wanted. Members emphasised the need for rural housing and asked if the Provincial Department’s programmes were in line with the National Department’s priorities. Members asked why the Housing Development Agency was allocated such a small amount for 2011/12 and asked where it drew its resources for its actual mandate. Members inquired if there was uniformity in the building of houses and asked if there were any mechanisms in place to ensure that the same standard for structures was applied nationally.

The Select Committee adopted its report on its international study tour to the Republic of Cuba, and its Strategic Plan for 2011 to 2014.

Meeting report

Department of Human Settlements’ 2010/11 to 2013/14 Budget Report
Mr Thabane Zulu, Director-General (DG), Department of Human Settlements, thanked the Committee for the opportunity to present its Budget Report. He stated that the presentation was divided into three sections, whereby each section would be presented by a member of the Department. It was one of the objectives of the Department to develop certain criteria that would determine the jobs that would be created in it. The various categories of jobs had to be clearly defined by all provinces (e.g. permanent, temporary, etc.). The criteria would be implemented once they had been agreed upon by all relevant stakeholders. All provinces had been informed and only the agreement was still outstanding.

Mr Nyameko Mbengo, Acting Chief Financial Officer (CFO) stated that the total Medium Term Expenditure Framework (MTEF) allocation amounted to R22 578 495 000 for the 2011/12 financial year. This amount was divided to the Administration department (R232 435 000); Housing Policy, Research and Monitoring (R39 215 000); Housing Planning and Delivery Support (R156 163 000); Housing Development Finance (R21 995 147 000); Human Settlements Development Grant (R14 941 516 000); Urban Settlements Development Grant (R6 266 998 000); Departmental Agencies (R487 091 000); Strategic Relations and Governance (R155 535 000). The Department allocated 96.11% of its budget for 2011/12 to subsidies and transferred payments while 3.89% was allocated to compensation of employees; interest and rent on land; payments for capital assets; goods and services. The 96.11% of the budget allocated to “transfers and subsidies” amounted to R21 695 605 000 with R14 941 516 000 allocated to the Human Settlements Development Grant, while R6 266 998 000 went to the Urban Settlements Development Grant. The Social Housing Regulatory Authority received R19 305 000 for Operations and R226 168 000 as Capital Restructuring Grant; the Rural Housing Loan Fund (R49 500 000); Housing Development Agency (R89 100 000); National Urban Reconstruction and Housing Agency (R100 000 000); and the Social Housing Foundation (R3 018 000).

The Human Settlements Development Grant expenditure as at 31 March 2011 was at 98.4% as per total adjusted, with R14 808 361 000 spent from the R15 041 763 000 that was transferred to provinces. The provinces which spent over 99% of their budgets were the Free State, Gauteng, KwaZulu Natal, Mpumalanga, Northern Cape, and the Western Cape. The rest of the provinces underspent on their budgets. KwaZulu Natal spent all the R133 800 000 Housing Disaster Relief Grant that was allocated to it from the R15 383 238 000 that was available to provinces. The total Human Settlements Development Grant for 2011/12 was R14 941 516 000. The 2011/12 Urban Settlement Grant allocated to the eight Metros amounted to R6 266 998 000. The Eastern Cape received R926 072 000; Free State R411 995 000; Gauteng R3 013 327 000; KwaZulu Natal R1 091 574 000; and the Western Cape R824 030 000.

Mr Anton Arendse, Chief Director (CD) for Human Settlements Planning, presented the confirmation of national priorities. The defined outcome was to provide sustainable Human Settlements and improved quality of household life. The Department’s main focus areas was to provide accelerated delivery of housing opportunities; access to basic services; more efficient land utilization; and an improved property market. The National Outcome 8 targets for 2011/12 was to have100, 000 slum upgradings; affordable rental with 5 349 social houses and 4 000 community rental units (slide 11). The Eastern Cape allocated 12.85% of its 2011/12 budget to Informal Settlement Upgrading; 7% to Affordable Rental and 6.2% to Rural Housing. Unlike the Eastern Cape, the Free State allocated 48% of its budget to Informal Settlement Upgrading; 10% to Affordable Renting, and 6.74% to Rural Housing. Gauteng allocated 44.45% to Informal Settlement Upgrading; KwaZulu Natal 10.6% and 24% to Rural Housing; Limpopo 4% to Informal Settlement Upgrading and 58.3% to Rural Housing; Mpumalanga 23.2% to Informal Settlement and 35% to Rural Housing; Northern Cape 19% to Informal Settlement Upgrading and 5% to Rural Housing; North West 4% to Rural Housing and 65.72% to Informal Settlement; the Western Cape 84% to Informal Settlement Upgrading and 15.1% to Affordable Rental.

Ms Funani Matlatsi, Chief Director for Financial Management, presented the 2011/12 Allocation of the Human Settlement Development Grant (HSDG). The HSDG was allocated to the Uplifting of Informal Settlements; Rental and Social Housing; Land and Priority Projects. The HSDG allocated for Upgrading of Informal Settlements amounted to R886 091 000 for the 2011/12 financial year while Rental and Social Housing received R1 033 773 000. Priority Projects received R886, 091 (slide 14) and R147 682 000 was allocated to Land (slide 13). The targeted outputs per Business Plan for houses and sites in the Eastern Cape was 74 305 with R2 177 676 000funds allocated; 33 974 in the Free State with R913 907 000; 47 263 in Gauteng with R3 804 611 000; 62 125 in KwaZulu Natal with R2 769 871 000; 44 353 in Limpopo with R1 398 914 000; 19 242 in Mpumalanga with R916 677 000; 13 654 in the Northern Cape with R322 639 000; 31 222 in North West with R998 376 000; and 21 748 in the Western Cape with R1 638 845 000. 

Mr Zulu concluded the presentation by saying that the Department was left only with the challenge of practical implementation. He expressed his excitement on the new grant that was allocated. The establishment of the Project Management Unit (PMU) was in progress and would play a vital role in monitoring and the implementation of the budget. He also emphasized on the importance of establishing strategic relationships with the relevant entities involved.

Discussion
Mr Z Mlenzana (Eastern Cape, COPE) thanked the Department for a well presented budget report, but noted that there were many questions to be asked. He also expressed his appreciation on Mr Zulu’s concluding remarks on the briefing in terms of implementation and stated that the PMU’s role might be extremely helpful to the Department. He highlighted that the Department of Cooperative Government (DoCG) had its own way of allocating budget and asked about the criteria the Department used for allocation. He noted that priority areas differed from one province to another and asked about the role of the National Department. He asked how a province was defined as a rural province.

 

Ms L Mabija (Limpopo, ANC) discovered that the Western Cape had rural housing at 0% and asked if rural housing was neglected in that province.

 

Mr R Tau (Northern Cape, ANC) stated that the presentation would be helpful to the Select Committee in providing oversight because it provided the information the Committee always wanted. He emphasised the need for rural housing and asked if the Provincial Department’s programmes were in line with the National Department’s priorities. He asked why the Housing Development Agency was allocated such a small amount for 2011/12 and asked where it drew its resources for its actual mandate.


Mr M Jacobs (Free State, ANC) asked what the Department was researching and monitoring. He noted that the Department allocated funds to various courses and asked how the entity ensured that the funds were used for their intended purpose. He noted that most houses were built by municipalities and asked why the Department did not set up a structure with the role of ensuring job creation. He asked why the Department mainly responded hastily under media pressure and service delivery protests. He inquired why it did not do its own research to identify areas that needed serious attention. He asked if there was uniformity in the building of houses and if there were any mechanisms in place to monitor that same structures were built nationally. He asked why Tshwane was allocated less budget regarding the Urban Settlements Development Grant compared to Johannesburg and Ekurhuleni while it was also an influx area.

 

The Chairperson said the Department had given the Committee what it needed but it was still not enough. He asked why there were no timeframes and targets presented regarding job creation. He asked for an update on the PMU programmes per province because the Select Committee represented the various provinces. He did not know what criteria were used to allocate budget to provinces because the sizes and populations differed. He asked why the budget was concentrated on the provinces like the Western Cape which already had a well established infrastructure. He asked for a clear definition on “affordable rental housing” from the Department and highlighted the challenges surrounding the N2 Gateway in defining what affordable rental housing entailed. He asked why there was under spending in the Human Settlement Development Grant expenditure as at March 2011 in some provinces. He asked why so much money was allocated to Khutsong as a priority area while a lot of money had already been given to that area.

 

Mr Zulu noted the concerns raised and stated that some of the issues required immediate attention while others would be attended to at a later stage. He asked the CFO to elaborate on the allocation of the budget and the criteria of the allocation used. He asked Mr Arendse to deal with the elements of the budgets from the various provinces. The Premiers exercised oversight of the provincial Head of Departments (HODs) and he could not tell the HODs what to do and what not to do. The Department was scheduled to have had a meeting with the various stakeholders in June 2011 to reach an agreement on delivery. The PMU would play a vital role in monitoring and evaluating the effectiveness of implemented projects. The PMU would also provide systems to monitor how budget was spent. The Department had to recognize that it was part of Government and needed to work in collaboration with other Department’s in achieving goals. Uniformity was a critical issue that needed to be guided by policy which clearly defined norms and standards for houses to be built. He acknowledged that the Department already had serious financial implications on shady construction work, because of different norms and standards.

 

Mr Zulu agreed that the criteria and targets for job creation was not included in the presentation and asked to present the information to the Committee at a later date. He stated the importance for clarity on the different categories that had to be clearly defined in order to avoid misunderstanding from provinces on the various projects that would be at hand. He indicated that the Acting CFO would deal with the question on budget allocation but asked why there should not be a policy review if the need arose. He said it was important to note if the budget allocation served the interest of what wanted to be achieved.

 

Mr Zulu stated that the Department only budgeted for the operational purposes of the HDA and did not cater for its actual mandate. The Housing Development Agency (HAD)’s main purpose was to acquire state owned land from different parts of the country at no cost. He suggested to the Committee that the various entities like the HDA, Social Housing; etc presented its strategic plan to the Committee so that the Committee could gain a much better understanding on how these entities functioned.

 

Mr Mbengo indicated that Mr Zulu had already touched on the allocation of the budget. The allocation of the Grant to provinces was based on an 80/20% split. The 80% was based on a formula provided by MIMEC using the latest statistics from Statistics South Africa and the 20% was allocated to approved priority projects as indicated on the last part of the presentation. Some provinces took money from the equitable share to top up the grant allocation it received from the National Department. The HDA was expected to acquire land using funds from the 20% allocation.

 

Ms Matlatsi said the Department was aware that not all provinces spent their budget allocation. The provinces informed the Department that they could not implement certain projects because of some complications within local government, but the Department would visit provinces where money was not spent. The amount that was allocated to Khutsong was future funds to be spent and not necessarily money already spent. The Department requested to present a full report on Khutsong in the meetings to follow.

Mr Arendse said that Mr Zulu already explained everything regarding the Business Plan. Regarding the Division of Revenue Act, the Minister and Mr Zulu exercised authority only from the point where National Treasury transferred money to the National Department. The Department’s influence was very minimal once the money was transferred to provinces. It was important for the Department to ensure in its planning and before it signed off provincial budgets that targets to be met nationally was reflected provincially. The Department presented the numbers to the Committee in its briefing where provinces committed itself to obtain certain targets. The provinces presented to the Portfolio Committee of Human Settlements how their budget would be spent and it was the Department’s role to exercise oversight ensuring that commitments made were honoured. The Urban Settlements Development Grant) USDG should be seen as a new grant focusing on cities and not as a carry over of cities. The USDG was classified was classified as a Schedule 4 Grant according to the Division of Revenue Act as it was meant to augment the HSDG. The Minister and Mr Zulu had to account on how the USDG would be used, and the priorities of the Department were based on Outcome 8 as listed in the presentation. The USDG needed to address the Outcome 8 priorities.

 

Mr Tau asked that the Select Committee to revisit the Division of Revenue Act to see what powers Parliament had in relation to the implementation of the Division of Revenue Act. There was a Portfolio Committee on Human Settlements (National Assembly) that did oversight, but also a Select Committee on Finance (National Council of Provinces) that recommended the passing of the Division of Revenue Act by the NCOP. The Select Committee had to find a way on how it could bring its efforts together to monitor and ensure adherence by provinces on uniformity, norms and standards. He was of the view that the Select Committee had power to support the National Department in that regard.

Mr Mlenzana expressed his appreciation for the engagement of the Portfolio Committee on Human Settlements with the provinces. However, he emphasised that it was the role of the Select Committee to keep provinces accountable and that it had greater influence. The Portfolio Committee on Human Settlements was not the correct Committee to hold provinces accountable; it was the function of the Select Committee. He asked the Chairperson of the Select Committee to meet with the Chairperson of the Portfolio Committee to correct the issue. He recommended that the Select Committee call all provinces for engagement. He also asked since when the Eastern Cape ceased to be a rural province.

 

The Chairperson thanked the Department for a well presented report. He noted that Mr Zulu indicated that the Department had waited for MIMEC in order to provide full details of targets and dates on job creation. Mr Zulu had also recommended that the Select Committee called the various entities which were closely working with the Department for briefings. Ms Matlatsi had recommended presenting a full report on Khutsong in the meetings to come. The Chairperson emphasized that all issues should be addressed with the relevant stakeholders so that appropriate action could take place.
 

 

Committee Report on Study Tour to Cuba: adoption

Mr Tau moved the adoption of the Committee’s Report on the international study tour to the Republic of Cuba. Ms M Themba (Mpumalanga, ANC) seconded. The Report was adopted.

Committee Strategic Plan 2011: adoption
Mr D Feldman (Gauteng, COPE,) moved the adoption of the Committee’s Strategic Plan. Ms L Mabija (Limpopo, ANC) seconded. The Plan was adopted.

 

The meeting was adjourned.



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