Department of Human Settlements on its 2010/2011 Annual Report
Meeting Summary
The Department presentation focused on human resource management, legal and governance issues, research, monitoring, evaluation and capacity building support. The Department gave an overview of priority project support and an update on the sanitation programme. Intergovernmental relations and stakeholder management were outlined as well as a summary of human settlements entities. The financial report was discussed, and challenges with its proposed interventions were presented.
The Department had received an unqualified audit opinion for the year under review. The audit’s Matters of Emphasis would receive attention, particularly the matter of performance management and reporting. A key issue was that the DHS monitoring and reporting programme was weak and would be strengthened through the turn-around strategy. The lack of appropriate programme and project management at provincial and municipal level was a matter which clearly was reflected in performance and measurement of the outcomes. The Department had a vacancy rate of 19.4 % and an annual staff turnover rate of 15.4 %. The biggest contributor to the staff turnover rate was the expiry of contracts. A total of 204 beneficiaries received performance rewards. With regards to training and development, the Department awarded 42 internships and 20 bursaries.
The Sectional Titles Schemes Management Act 2011 and the Community Schemes Ombud Act 2011 was promulgated. The Rental Housing Amendment Bill was submitted to Cabinet for approval for introduction into Parliament. The Department was a party in the Makhaza case where the City of Cape Town was ordered to build and enclose the unenclosed toilets. With regards to special investigations, 401 municipal employees were arrested and 334 court cases were finalised and 936 government officials were arrested and 871 were convicted of offences related to the National Subsidy Programme. The sentences handed down included suspended sentences with conditions to repay subsidy amounts. It was in the process of collecting R21,7 million from civil servants who had defrauded DHS. The Department’s capacity-building support meant 281 previously disadvantaged learners were awarded scholarships to study towards human settlements qualifications. Four provinces (Limpopo, Eastern Cape, Western Cape and North West) were supported to effectively implement the South African Cuban Technical Support Programme and hands-on support was provided to all provinces in developing credible provincial capacity development business plans.
The Sanitation Unit had served a total of 13 923 households from a target of 17 418 and had created 275 sustainable jobs. Eight municipalities were recommended for accreditation to levels one and two; six metropolitan municipalities and two district municipalities in the Northern Cape. The Department had in place a Technical MinMec (Minister and Members of Executive Council) as well as a MinMec and an Implementation Forum with a technical component had been established. The performance of following DHS entities was discussed: National Urban Reconstruction and Housing Agency (NURCHA), Rural Housing Loan Fund (RHLF), National Housing Finance Corporation (NHFC), Housing Development Agency (HDA), Social Housing Registry Authority (SHRA) and the National Home Builders Registration Council (NHBRC).
Overall, the Department had spent 99% of its budget with an under spent amount of R199 million from an allocation of R16,091,954 billion. From a delivery target of 213 634 households, the Department had delivered 185 425.
Looking at challenges, it reported:
• Under and non-reporting by Provinces on the total value chain.
• The lack of a planned and implementable programme and project pipeline
• Failure by provinces to prioritize and budget for the resolution of blocked projects.
• Lack of capacity to verify performance of all projects in the nine Provinces;
• Reliability and verification of reported programme and project performance data;
• Availability of reliable data for indicators to measure Human Settlement Index
• Intergovernmental co-ordination of Capacity Development Programme.
• Improvement in provincial allocation for resources for the implementation of the capacity development interventions including training and consumer education.
• Required improvements in the alignment and accuracy of delivery performance between the Local, Provincial the National Department.
• Delays in reporting timeframe and gaps in the information reported needed to be addressed.
• Lack of availability of capacity and expertise at provinces for project management to ensure the effective utilisation of available resources within current priority programmes and projects
• Alignment of provincial and municipal budget allocations to achieve required national outputs and outcomes.
Members congratulated the Department on a good Annual Report. They enjoyed the detail as this would assist them with their oversight function. Members wanted to know why some gaps were only discovered now after all these years. They were glad for the recovery of funds. Members wanted more information on the Department’s cash flow projections; how it measured value for money; what criteria were used to allocate conditional grants to provinces; and why the Department’s vacancy rate was so high. The capacity challenge in the North West was noted. Members were concerned about DHS not having a uniform way of setting up beneficiary lists. Members wanted more information on how the Department planned to unblock blocked projects and on the content of the training programme for councillors.
Meeting report
Department of Human Settlements (DHS) presentation
Mr Thabane Zulu, DHS Director General, gave an introduction and overview to the Annual Report. The audit’s Matters of Emphasis would receive attention, particularly performance management and reporting. The Outcome Based Performance Management introduced by Cabinet came into place and this meant substantial readjustment in how the Department worked. The Department was “internal” focused and there was a clear need for the Department to take its place as the leader and driver of ensuring sustainable human settlements and improving household quality of life. A Departmental turn-around strategy was commenced to ensure the mandate from “housing to human settlements” was achieved.
Mr Zulu said that a key issue was the DHS monitoring and reporting programme was weak and this would be strengthened in the turn-around. The lack of appropriate programme and project management capacity at the provinces and municipalities was a matter which clearly was reflected in performance and measurement of the outcomes. A number of policy, planning, funding and implementation gaps had been identified including data collection and integrity, value for money, improved performance of the grants and subsidy instruments. Governance and compliance gaps would also be closed, improved and strengthened and this included the entities under the Department’s control.
Mr Neville Chainee, DHS Deputy Director General and and Chief Operations Officer (COO), presented the outcomes for human resources management and gave an outline of personnel and vacancies. Of a total of 863 posts, 696 were filled which left the vacancy rate at 19.4%. The annual staff turnover rate was at 15.4% with the highest number of terminations as a result of contracts expiring. This was followed by an overview of performance rewards, labour relations management and training and development (slide 10 to 12). A total of 20 bursaries and 42 internships were awarded for the year under review.
Mr Chainee went on to discuss legal and governance matters. The Sectional Titles Schemes Management Act 2011 and the Community Schemes Ombud Service Act 2011 was promulgated. for introduction into Parliament. The Department was a party in the Makhaza case where the City of
Mr Chainee spoke about fraud investigations by the Special Investigating Unit: 401 municipal employees were arrested, 334 court cases were finalised and 860 acknowledgements of debt to the value of R8.2 million were signed by municipal employees who committed fraud related to the National Subsidy Programme. With regards to government employees, 936 government officials were arrested, 871 were convicted of offences related to the National Subsidy Programme and 1615 acknowledgements of debt to the value of R21.7 million were signed by civil servants who defrauded the Department and/or provinces. The Department had to date recovered a total of R19 million. This figure was a consolidation of both government and municipal employees.
The DHS research programme for 2010/11 included:
▪ Economic Impact of Government Housing Programme in low cost housing construction
▪ Assessment of the performance of government subsidised housing as an asset
▪ The costs of building an informal dwelling in informal settlements
▪ Understanding beneficiaries’ perceptions on alternative technologies.
The Monitoring and Evaluation Unit had completed the physical verification of project performance in 285 projects in all provinces and monitoring reports were completed. An Impact Assessment Study of the Upgrading of Informal Settlements Programme in
Mr Chainee said DHS capacity-building support meant that 281 previously disadvantaged learners were awarded scholarships to study towards human settlements qualifications. Four provinces (
Mr Chainee discussed the DHS Priority Projects support in all provinces. Of a total of 21 projects, eight projects had not yet started due to various reasons but most projects were on course (see document for details). The Sanitation Unit had served a total of 13 923 households from a target of 17 418 and had created 275 sustainable jobs.
With regards to intergovernmental relations and stakeholder management, eight municipalities were recommended for accreditation to levels one and two; six metropolitan municipalities and two district municipalities in the
Mr Chainee gave a summary of the performance of DHS entities:
▪ National Urban Reconstruction and Housing Agency (NURCHA): The Department authorised a loan of R75 million approved from
▪ The Rural Housing Loan Fund (RHLF) was rated as one of the best performing entities in an assessment of government entities. The Department approved the recapitalisation of the Fund to the value of R49 million. The number of loans disbursed was 40 289 against a target of 44 933. The value of the disbursed loans was R133.6 million against a target of R112 million. Total disbursement was R224.4 million against a target of R202 million.
▪ National Housing Finance Corporation (NHFC): The Mortgage Default Insurance Program was approved by the MinMec in November 2010. The Department supported the approval of an agreement with the European Investment Bank for the rand equivalent of €30 million. An agreement with Old Mutual Life Insurance Company and its BEE partners was reached to participate in an affordable housing fund with initial funding of R900 million to finance the development and sale of 25 000 affordable units. The Trust for Urban Housing Finance (TUHF) loan portfolio reached more than R1 billion mark (R1.2 billion). The distressed clients turnaround and collection recovery strategy was successfully implemented.
▪ The Housing Development Agency (HDA) had done much preparation work and this year would see a lot of land being released. Seven implementation protocols had been signed with the provincial governments of
▪ The Social Housing Regulatory Authority (SHRA) accredited and managed the Social Housing Regulatory Programme (SHORP) and the Social Housing Investment Programme (SHIP). A total of 18 social housing institutions were accredited by SHORP. A call for a proposal for SHIP II was issued and in summary a total of 11 242 units were applied for with a budget of R1.2 billion. SHIP launched the Emerald Sky,
▪ The National Home Builders Registration Council (NHBRC) had targeted to enrol 39 000 non-subsidy homes. Of these, they managed to enrol 32 424 homes. The variance of 6 576 was due to difficult economic times. The number of houses completely inspected was 15 631. The NHBRC also targeted to enrol 94 000 subsidy homes. Of this total, they managed 49 929. This left them with a variance of 44 071 and the total number of houses completely inspected was 57 420.
Mr Nkameko Mbengo, DHS Acting Chief Financial Officer, gave the financial report by providing a breakdown of funds allocated and spent for Programme 1 (Administration), Programme 2 (Housing Policy, Research and Monitoring), Programme 4 (Housing Development Finance) and Programme 5 (Strategic Relations and Governance). A rollover amounting of R82,678 million was approved as follows:
▪ Programme 1, R7,1 million was approved for the renewal of Microsoft licences which were delayed due to outstanding documents from State Information Technology Agency (SITA); the renewal was paid in April 2011 and R5,2 million was paid for the purchasing of a server which was delayed and had to be imported.
▪ Programme 2, R1,2 million for an outstanding payment on a contract to the value of R1,2 million.
▪ Programme 4, R34,9 million for a transfer payment to the SHRA for its establishment;
▪ Programme 5, R7,7 million for outstanding payments for the closure of Thubelisha Homes; business plan and establishment of SHRA; policy development for SHRA and determination of institutional arrangement and establishment of Human Settlements Development Finance Institution; Treasury approved R31,5 million for outstanding sanitation expenditure not approved for in the Department 2010/11 budget.
Mr Mbengo then outlined the virements approved R27 million was required to fund the Special Investigating Unit (SIU) for an audit in the provinces. This audit was an extension for the expanded mandate to the current agreement between the Department and the SIU to provide for the proclamation of 2007. R14,4 million was to fund the appointment of a service provider to develop and facilitate a DHS turnaround strategy. R34 million was to assist Servcon with its outstanding income tax liability and R7,6 million was required to fund the Servcon closure process. From its adjusted allocation, DHS had spent 99% of its budget. Overall the Department had spent R16,091 billion. On the Human Settlements Development Grant (HSDG), three provinces (
Mr Zulu presented the challenges the Department faced:
• Under and non-reporting by Provinces on the total value chain indicated Outcomes 8 targets were not being reached.
• Lack of a planned and implementable programme and project pipeline indicated that all provinces needed to establish and implement a Project Management Office.
• Failure by provinces to prioritize and budget for the resolution of blocked projects.
• Lack of capacity to verify performance of all projects in the nine Provinces;
• Reliability and verification of reported programme and project performance data;
• Availability of reliable data for indicators to measure Human Settlement Index
• Intergovernmental co-ordination of Capacity Development Programme.
• Improvement in provincial allocation for resources for the implementation of the capacity development interventions including training and consumer education.
• Required improvements in the alignment and accuracy of delivery performance between the Local, Provincial the National Department.
• Delays in reporting timeframe and gaps in the information reported needed to be addressed.
• Lack of availability of capacity and expertise at provinces for project management to ensure the effective utilisation of available resources within current priority programmes and projects
• Alignment of provincial and municipal budget allocations to achieve required national outputs/outcomes.
Mr Zulu proposed interventions to eradicate these challenges. A Departmental turnaround strategy had been approved for implementation and it was awaiting the Department of Public Service and Administration to finalise it. The establishment of a programme management unit had commenced and an Implementation Forum had been established to adhere to Outcome 8 to ensure that other departments also did their part and to ensure proper accountability for agreed outputs and outcomes. A Human Settlements and Basic Services Task Team made up of officials from DHS and COGTA had been established to improve national, provincial and municipal coordination. This unit was up and running and meeting regularly.
Required evaluations were to be conducted on key programmes including informal settlement upgrading and social and rental housing to improve performances in funding, planning and implementation. The development and commissioning of an appropriate Performance Management System to monitor and manage internal and stakeholder performance had commenced with the assistance of SITA (State Information Technology Agency). Improved governance, compliance and performance oversight of provinces, Human Settlement entities and municipalities was a consistent work-in-progress. Improved human resource recruitment, capacity training and development were planned when the revised organisational structure was implemented.
Discussion
Mr H Groenewald (DA,
Mr Zulu replied that each year, the Annual Report was reviewed by the Department. This time they did a more in-depth assessment of their mandate and as a result they found more gaps. They had to identify gaps within the Department.
Ms L Mabija (ANC,
Mr Z Mlenzana (COPE,
Mr Mbengo replied that the cash flow projection was a general requirement from National Treasury. The Department had to submit it.
Mr O De Beer (COPE,
Mr Zulu replied that value for money was measured in different ways and by different means. This was one issue which formed part of the new Project Management Office plan. The Department would go down to the ground to check the quality of houses built. Under-spending indicated that the planning cycle was not right.
The Chairperson asked what criteria was used to allocate the conditional grants to provinces. He felt that the poorer areas were not receiving enough funds.
Mr Chainee replied that the criteria for the allocation of the conditional grants was reviewed every year in consultation with the provinces and their municipalities. There were still some areas of concern that DHS was looking at when it came to the criteria but it was all inclusive of what was happening in the provinces.
Mr Groenewald (DA,
Mr Zulu replied that the vacancy rate of 2010/11 had not included the appointment of certain posts. The Department found that some vacancies were not adding value to their new mandate and strategy. Critical vacancies were being filled upon analysis. However, 20% was still a high percentage and the Department was working on having vacancies reshuffled and filled.
Mr Mlenzana (COPE,
Mr De Beer (COPE,
Mr Chainee replied that the Department was putting together and rolling out a national database which would inform how beneficiary lists were set up. However, there were some challenges as the Department did not want to impose a format which would seen as racial and inequitable. Provinces and municipalities should also try to take charge of this matter.
The Chairperson asked which steps were being taken by the Department to unblock blocked projects.
Mr Zulu replied that the Department was engaging with the different stakeholders to address this problem. The Department did not currently know how exactly to unblock these projects but was consulting with the Technical MinMec to address this issue.
Mr Groenewald asked what exactly was the content of the training programme for councillors.
Mr Johan Wallis, DHS Acting Deputy Director General: Service Delivery, replied that the content of the training programmes had been developed five to six years ago and had been ongoing. Its function was to assist councillors with regards to housing policies, decision-making, and consumer education and especially with regards to handling beneficiaries. Every five years, new councillors was appointed which meant that the Department had to re-educate new councillors. The exact training document could be made available to the Committee if needed.
The meeting was adjourned.
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