The Department of Human Settlements presented a detailed breakdown, by province, of both the Human Settlements Development Grant (HSDG) and Urban Settlements Development Grant (USDG) allocations for the 2011 to 2014 period. The bulk of the R22,6 billion MTEF allocation for 2011 – an amount of R22 billion – was specified for housing development finance. This had been split into two – R14,94 billion for the HSDG and R6,27 billion for the USDG. During the current year, 104 962 slum units and sites would be upgraded, 39 112 housing units would be created in the rural areas, and 17 425 poorly built units would have their defects rectified. Seventy per cent of the country’s slums were located in the eight main metropolitan areas, and between 65% and 72% of the HSDG was spent in those metros. A key inhibitor in the delivery of housing was the lack of bulk and connector services, and the USDG sought to address these infrastructural problems.
Several Members expressed concern at the apparent lack of control once grants had been disbursed to the provinces, and the Department’s monitoring and risk management systems came under scrutiny. The comment was made that people were demonstrating over housing service delivery while billions of rands were available.
The Department said it was in the process of implementing a turnaround strategy regarding control measures. This had been signed off by the Minister and was with the Department of Public Service and Administration for concurrent approval. This would result in the establishment of a Programme Management Unit to strengthen monitoring, evaluation and reporting. There was already a monitoring unit within the Department, which followed up allocations in a structured way, but it would now be possible to track developments from the approval of the business plan right through to the final outcome.
The provision of electricity did not form part of the Department’s mandate – a situation described by the Department as “not healthy.” Its specifications went as far as providing the DV board, while the grant for transferring the power from the street to the house was given to the municipalities. For a house to be built without being electrified, was a flaw in the programme. What the Department wanted to see was for a project to flow through a holistic system that provided housing with water, roads, sanitation and electrification.
Other major topics covered during discussion were the extension of the USDG programme to more towns and cities, implementation of the rectification programme, the criteria for giving projects priority status, and responsibility for the provision of sanitation.
Department of Human Settlements (DHS) on Grant Allocations 2011/12 to 2013/14
Mr Neville Chainee, DHS Acting Director-General, apologised for the absence of the Director-General (DG), who was away on a departmental study visit. He also advised Members that as the Department had received an invitation to brief the Committee only last Friday, it had not been able to prepare a comprehensive briefing.
The Chairperson confirmed that the invitation had, in fact, been sent only last Friday. However, it had not been possible to reschedule the meeting.
Mr Z Mlenzana (COPE,
Mr M Jacobs (ANC,
Ms Funaneng Matlatsi, DHS Chief Financial Officer, said the purpose of the Human Settlements Development Grant programme was to provide funding for the creation of sustainable human settlements. The bulk of the R22,6 billion MTEF allocation for 2011 – an amount of R22 billion – was specified for housing development finance. This had been split into two – R14,94 billion for the HSDG and R6,27 billion for the USDG – with the small balance available for departmental agencies and rural households infrastructure development. The HSDG allocation would increase to R16,46 billion by 2013/14, and the USDG allocation to R8,13 billion over the same period.
A breakdown of the allocation to the different provinces showed that
Ms Matlatsi also listed priority projects which had been identified by the Department, approved by MinMec,
and endorsed by the provincial departments. These were
So far, R6,4 billion had been transferred to the provinces in accordance with the approved payment schedule, but only R4,7 billion (74%) had been spent. The Department was engaging with the provinces to identify the challenges preventing the funds being spent as scheduled, and had found that the main stumbling block was the non-receipt of invoices from service providers. She expected the backlog to be made up in the forthcoming months.
Mr Andre Arendse, Chief Director: Human Settlement Planning Unit, DHS, said that the Urban Settlements Development Grant (USDG) had its genesis in the Municipal Infrastructure Grant (MIG), and took into account the pressures the larger centres faced. He pointed out that 70% of the country’s slums were located in the eight main metropolitan areas, and between 65% and 72% of the HSDG was spent in those metros. This confirmed that the Government – through the Department and the provinces – was distributing funds to where the needs were greatest.
A key inhibitor in the delivery of housing was the lack of bulk and connector services, and the USDG sought to address these infrastructural problems, thereby unlocking projects for the HSDG. It achieved this through land acquisition, bulk infrastructure provision and the better alignment of priority programmes in funding sources given to national, provincial and local government. Unlike the HSDG, whose funds were distributed to the provinces, the USDG’s funds were allocated directly to the eight metros as grants, and were intended to augment their municipal capital budgets. These grants would amount to R21 billion over the next three years.
Mr Chainee concluded the Department’s presentation by saying it was not the intention to allocate development grants exclusively to the eight metros, but to other towns and cities as well, in accordance with their capacity building and accreditation. A whole range of towns and cities -- centres of economic activity within their provinces -- were currently under consideration.
Mr H Groenewald (DA,
Mr Mlenzana said he appreciated the Department’s undertaking that consideration was being given to extending the USDG programme to other towns and cities, other than the main metros. He referred to the requirement that provinces had to submit business plans before funding was released to them, and asked whether the Department had the power to ask them to amend their plans, if necessary. He also expressed concern that the system might lead to financial “dumping” towards the end of the budget year.
Mr M Jacobs (ANC,
Mr Jacobs asked if funds were allocated to provinces on the basis of research into the needs in each area. If money were allocated for land, did this cover the cost of infrastructure? He pointed out that when RDP houses were built, it often took up to two years for electricity to be installed, and suggested there should be better synergy between the Department and Eskom to overcome this time lag.
The Chairperson said he was also concerned about the control aspects of the development grant programme, as huge amounts of money were involved, and a follow-up mechanism was required. People were demonstrating over service delivery while billions of rands were available. He asked how much money had been unspent by the provinces and returned to the Treasury – and what had happened to that money? He reiterated Mr Groenewald’s concerns about Khutsong, where about R105 million had been spent. He wanted details of how this money had been used, as two days ago, people were demonstrating over service delivery.
Mr Chainee said the Department was in the process of implementing a turnaround strategy regarding control measures. This had been signed off by the Minister and was with the Department of Public Service and Administration (DPSA) for concurrent approval. This would result in the establishment of a Programme Management Unit in order to strengthen monitoring, evaluation and reporting. There was already a monitoring unit within the Department, which followed up allocations in a structured way, but it would now be possible to track developments from the approval of the business plan right through to the final outcome. The focus was now on what the money allocations were actually buying and how they influenced improvements in the household quality of life, rather than accepting that if money was being spent, the intended outcomes would be achieved. The Special Investigating Unit (SIU) was undertaking investigations where complaints had been laid. Besides this, there was an internal unit under the chief audit executive, who conducts monitoring visits. There was also the National Home Builders’ Research Council to conduct inspections, as were the various provincial and municipal entities. He assured the Committee that while there may be fraud and other bad practices, there were response mechanisms to deal with them.
Referring to the upgrading of RDP homes, or informal settlements, Mr Chainee described this as an incremental process conducted by the provinces and municipalities whereby a beneficiary was provided with tenure, then services and then a constructed house.
The Department had a job creation model, which measured the entire value chain, looking not only at the direct jobs created, but also areas like the brick making, cement, steel and so on.
Answering criticism that not enough emphasis was being placed on rural housing, he said a great deal was being achieved through the rural housing loan fund, while a rural voucher scheme was being piloted in the Eastern Cape and KZN, which provided access to building materials in exchange for vouchers.
He said the Department would welcome the opportunity to work in partnership with the Committee when it conducted its provincial oversight visits.
Answering questions about the powers and functions of the Department, he said the Department provided the money, the provinces and municipalities ran the programmes, and the Department monitored them. It also had the responsibility to enforce national priorities, such as the norms and standards for infrastructure and house construction. The rectification programme would also be handled on a national basis, as one could not allow the provinces and municipalities to “act as player and referee.”
Mr Chainee said that expenditure trends were analysed every quarter. Last year, this had led to the
He said the Department was not involved in the supply of electricity, as this was the responsibility of the Department of Energy. At issue here was the requirement that electricity could not be provided unless a township had been established. However, the possibility of integrating the energy grant with the USDG was under consideration.
Ms Matlatsi said the Department was required to provide quarterly reports to the National Treasury, and these included details of their monitoring and oversight visits. In future, the Committee would be provided with a copy of these reports.
She said money was allocated to the provinces on the basis of an approved formula based on statistics, rather than on the number of projects being implemented in a particular province. However, there was a review process to ensure that the funds were being employed efficiently.
Referring to the Khutsong situation, she said the R105 million was an allocation which had not yet been spent. The Department was aware of the unrest which had taken place there, and would be reacting to the situation.
Mr Arendse said that the provinces’ business plans were essentially “consensus” documents, in which national priorities had to be married to grassroots local needs. Where a balance could not be achieved, the Department had sent plans back to ensure these priorities were properly addressed.
The Chairperson asked whether the grants covered the provision of sanitation.
Mr Chainee said the Department was responsible for the national sanitation function, and provinces and municipalities were able to use HSDG and USDG funds to include sanitation in their projects. Full details would be given to the Committee later.
The Chairperson said it appeared as if, once the funds had been allocated to the provinces, the Department lost control of them, and asked whether a form of risk management was employed.
Mr Chainee said the Department had a “very vibrant” risk committee, which reported to the audit committee.
Mr Arendse said it was incorrect to infer that control was lost when the Department handed over funds to the provinces. It was merely not involved in the day-to-day running of the grants, such as the payment of invoices and the management of projects
Mr Jacobs said he was not happy at the fact that the provision of electricity did not form part of the Department’s mandate. He also asked what the criteria for priority projects were, or whether a project’s priority status was related to the extent of social unrest in the area.
Mr Chainee agreed that the situation regarding the provision of electricity was “not healthy.” The Department’s specifications went as far as providing the DV board. The grant for transferring the power from the street to the house was given to the municipalities. For a house to be built without being electrified, was a flaw in the programme. What the Department wanted to see was for a project to flow through a holistic system, so that it provided housing with water, roads, sanitation and electrification.
He said the current projects were accorded priority status after consultation with the provinces or municipalities.
Mr Arendse added that there were MinMec-approved criteria against which projects were identified and classified. The President, by decree, and the Cabinet, by decision, could also determine the status of projects.
Mr Mlenzana said that pre-1994 RDP houses in the
Mr Chainee said that for this financial year, the rectification programme allocations were the responsibility of the provinces, and if they did not allocate funds, it meant they did not have any rectification programmes on the go. However, from next year the Department would be implementing a national rectification programme, allowing it to make interventions where required.
Mr Arendse suggested that it might be useful for a meeting to be held, dedicated solely to discussing the rectification programme. A number of variations in the subsidy existed, taking into account different conditions in the provinces, and these had to be considered separately from the issue of poor workmanship.
Ms M Themba (ANC,
Mr Chainee said that as part of the rectification programme, a detailed national audit would be carried out. So far, audits had been carried out in only a few provinces.
The Chairperson thanked the delegation for its presentation and responses to questions, and undertook to invite the Department to participate in the Committee’s oversight visits to the provinces.
The meeting was closed.
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