Rental Housing Amendment Bill: public hearings; Department of Human Settlements Turn-Around Strategy update; Nelson Mandela Bay Metropolitan Municipality on its Urban Settlements Development Grant

Meeting report

Submission by Ms Simone on the Rental Housing Amendment Bill
Ms NaNandi Simone thanked the Committee for its patience and said she would not necessarily go through all of the points she had made in her written submission. She would rather present the Committee with her reasoning for wanting to state her case before it. She had not been very well and had been in the hospital for tests which was why she had asked to present to the Committee today. As irony would have it, she, as someone who had been involved in eviction matters personally and on behalf of her clients for some time, had been informed after leaving the hospital yesterday that she was being evicted from her house. All of her belongings were currently on the side of the street; she had nowhere to put them and nowhere to go. Ms Simone was a “Rights Empowerment” consultant and she tried to help people see that their rights were protected. She had interacted with the Rental Housing Tribunal (RHT) in some of her own personal matters and in some of her clients’ matters and was busy preparing a paper to send to the Human Rights Commission along with all the proof of the cases.

Ms Simone said that the Rental Tribunal only helped people if their rent was paid up to date. While she understood that a number of people could, and should, be paying their rent, there were also a number of people who were struggling to pay their rent because of genuine circumstances such as losing their jobs or becoming ill such as herself. A lot of the time these people did try to make offers of partial payment but these were not seen as good enough and so people did not want to negotiate with them. The courts were very biased in favour of landowners. The landlord that Ms Simone had rented from had done an ITC check without her consent, after taking her money. The landlord then tried to refuse Ms Simone access to the house. The RHT was called in and had responded very quickly. There had been a follow-up meeting and matters were resolved. It was from here on that things took a bad turn. Things happened and she got sick. One of the conditions when she went into the rented house was that she had surety, so that in the event that something happened, the landlord would be covered. The surety was very capable of coming through and had been guaranteed in writing. When something happened, the landlord went straight to the court to apply for an eviction notice. Ms Simone asked for the RHT to please proceed with the surety and they said no. The RHT told her that they could not help her because her rent was in arrears and therefore there was nothing they could do. Ms Simone had been due money for damages for which the RHT had paper work. The RHT however said that the damages fell away under the circumstances. This had all been very frustrating for her as the matter could have played out very differently had the RHT been able to continue to assist her.

Ms Simone had other examples of cases involving her adopted son and a number of clients, that she could provide. The RHT needed to be given more power to assist even those tenants who were in arrears with their rent where the merit of the case allowed for it. Ms Simone had recently been a whistle-blower on someone committing corruption in a corporate and was due a payment out of this. She had brought this to the attention of the RHT which said it could still not assist her. The RHT had been very effective in the beginning stages of the case but that that had been it. The magistrate had ruled that Ms Simone was clearly a woman of intellectual means and did not see any reason why she could not come through. Yet Ms Simone was literally homeless today. The Constitution said that persons could not be evicted unless they at least had somewhere to go. The Prevention of Illegal Eviction from and Unlawful Occupation of Land (Pie) Act said that all relevant circumstances must be considered in spite of unpaid rental. The magistrate had not done this in her case. When she asked the RHT to give her an affidavit for their part in the matter, it did not. The irony of her case was that her landlord had actually lied about the ownership of the building which was owned by a trust fund and not herself as she had said. A lot of this could have played out very differently had the RHT behaved differently and had more power to help her. The abuse against people who were trying their best to sort their problems out was great. A lot of staff on the Tribunals did not have the experience or expertise to be of assistance.

Discussion
Ms G Borman (ANC) thanked Ms Simone for coming to the meeting and for sharing her story with the Committee. She regarded Parliament as a caring body. Ms Simone stated in her written submission that sections of the current Act “contradicted or clashed with the Constitution”. Could Ms Simone please clarify which sections she felt contradicted the Constitution as the Committee needed to be very careful about this?

Ms Simone replied that the Constitution said that nobody should be left homeless and that everybody had the right to a house. There was a double-edged sword in that landlords had their rights too. The City of Cape Town was unable to even remotely supply the levels of housing needed yet the Constitution said that nobody should be rendered homeless.

Ms Borman asked if the proposal in the Amendment Bill to increase the number of Tribunal members to six adequately dealt with Ms Simone’s suggestion that satellite offices be established in the larger municipal areas.

Ms Simone replied that the Tribunal staff and fieldworkers were spread too thinly across a city as large as Cape Town. Sometimes it could take staff two days to get to a site by which time it might be too late. Her suggestion that satellite offices be set up in the larger cities was so that there could be more staff and fieldworkers in different geographical locations in the city so that they could respond more quickly. Increasing the number of Tribunal members from five to six would definitely make a difference.

Ms M Njobe (Cope) thanked the presenter for her submission. Ms Simone said in her written submission that the Tribunal should have the power to overrule its own ruling but that this needed to be done by a “set appeal process and not addressed by the same people who issued the first ruling”. What did Ms Simone suggest to deal with this?

Ms Simone replied that if the Tribunal was to be increased to six members, and only three would hear a particular case, then the same three members who heard the original case should not deal with the appeal of the judgement.

Ms Njobe said that Ms Simone had said in her written submission that case officers were sometimes under-qualified to deal with rental housing matters. Was Ms Simone referring to the Tribunal members or to the support staff at the RHT? Was Ms Simone happy that the new amendments required at least two of the Tribunal members to be persons with legal qualifications?

Ms Simone replied that some of the senior staff members of the RHT that she had dealt with did not know what she was entitled to and she had to then educate them on the Act and on her rights. This negatively impacted on the ability of staff members to bring cases to the Tribunal.

Mr B Steyn (DA) sympathised with the situation that Ms Simone found herself in and although the Committee might not be able to assist her right now, it was looking at amendments to the Act to perhaps make it less easy for people to find themselves in such a situation. Mr Steyn said that he had not known that the RHT could not take on cases in which tenants were in arrears with their rent. Perhaps the Department could assist with this but he was not aware of where in the Act this was stated. As far as he was aware the fact that a tenant was in arrears was not a condition for the RHT not to take on a case.

Ms Simone replied that when one approached the RHT, it sent out a letter stating it could not help tenants who were in arrears. The RHT website also clearly stated this condition. When she and other people had gone to the Tribunal, they had been told that the Tribunal could not assist them if their rent was in arrears.

Mr Steyn said that Ms Simone had made a number of points but that she had not been very specific about what amendments should be made to the Act. With this in mind, did Ms Simone have any suggestions on how the amendment on the matter of rescissions should read?

Ms Simone replied that she had been faced with situations where the Tribunal had made a ruling that she had wanted to appeal, but she had been told by the Tribunal that it was not possible to do so because there was no system for appeals. She had written letters to the Chairperson of a Tribunal about this but had not received any replies.

Mr Steyn got the impression that Ms Simone was suggesting that when tenants were in genuine financial distress, landlords should overlook that and continue to house the tenant at a financial loss to the landlord. While some landlords might be in a position to do this, many were not. There was a concern that allowing this would suppress the supply side of rentals which would make it more difficult for people to find rental accommodation. This would inevitably drive the price of rentals up. Accommodating this type of thinking would result in a vicious cycle but it was agreed that the merit of the case should prevail.

Ms Simone acknowledged Mr Steyn’s point but said that in cases where people were genuinely trying to come up with a solution and get back onto their feet, they were so busy defending harsh accusations against themselves that they were prevented from doing so. She could produce photographs of her own and her clients’ evictions that proved that the eviction process was handled with little consideration for the dignity of the person being evicted. The process of eviction needed to be looked at. Tenants being evicted should be given at least 24 hours to organise their belongings prior to the eviction.

Mr Steyn referred to paragraph (e) of Ms Simone’s written submission in which she said that  Tribunal hearings were “at times satisfied with little or incorrect submissions or paperwork or investigation by a case officer causing the ruling to be biased or incorrect”. Although this could not be addressed right now in terms of the Act, if Ms Simone had specific evidence of these cases, she should submit it to the Committee so that the Committee could follow up with the relevant Tribunal/s.

Mr Steyn asked if Ms Simone wanted to suggest any specific amendments to the Act and proposed that she forwarded these to the Committee. It would be appreciated if Ms Simone could be a bit more specific.

Ms Simone replied that she did not have her amendments with her as they were sitting in a pile somewhere. Her suggestion was that the Tribunal should have more power to assist people and look at the merits of the case. The Tribunal should be able to assist people who were in arrears for genuine reasons.

Mr A Figlan (DA) asked for how many months of rental payment Ms Simone was in arrears.

The Chairperson said that some of the suggestions made by Ms Simone were covered in the amendments and others were still being considered. The Committee would give Ms Simone the opportunity to send her amendments to the Committee by the next day.

The Chairperson said that considering Ms Simone had received such poor treatment, perhaps the Department of Human Settlements could take down her details and assist her. The Chairperson thanked Ms Simone for her contribution.

Update by the National Department of Human Settlements on its Turnaround Strategy and Structure
The Chairperson welcomed the NDHS and especially the Director-General of the Department. The Committee had raised a number of issues with the Department’s presentation of its turnaround strategy on 8 November 2011. The Committee’s main concern with the Department’s turn-around strategy had been the proposed new structure. For example, the Committee had been unable to locate the research function within the new structure and had been advised by the Department that this function would fall within the Office of the DG. However, members had not been convinced based on the organogram presented. The Committee had also raised a number of questions about the implementation of the human settlements programmes, most especially in the provinces, due to a lack of project management capacity. The Committee has requested that these matters be addressed.

Mr Thabane Zulu, the Director-General of the NDHS, thanked the Chairperson for the opportunity to come before the Committee. The Department had prepared a response to the issues raised by the Committee and would give the Committee more clarity as it had requested.

Ms Yvonne Mbane, Chief Director: Human Resources in the NDHS, presented the update on the Department’s turn-around strategy and structure. The Department’s turn-around strategy was based on the expanded mandate of the Department from “Housing to Human Settlements”. The need had arisen for the Department to reconsider its Business Model and Value Chain and for it be reconfigured to cater for the expanded scope, focus and depth of work in relation to the three spheres of government. The turn-around was aimed at giving effect to seamless administrative processes; improvement of internal departmental performance; improvement in coordination and effective layers of management and specialisation. Each branch had a focused research function which had been decentralised and was aimed at enhancing specific competencies relevant to that branch in order to enhance delivery.

A new Programme Management Unit (PMU) would be added on to the current structure which would encompass all delivery functions. Its purpose would be to oversee the execution of human settlements programmes and projects. It was critical to establish a PMU capability in the Department so as to facilitate the execution, progress, monitoring and reporting of human settlements initiatives on a national basis. There would be four chief directorates under the PMU which would be headed by a deputy director-general. These were:

▪ Programme and Project Planning
▪ Programme Implementation Facilitation
▪ Programme Monitoring and Evaluation
▪ Sanitation Programme

Given the historical spatial and planning distortions in South Africa, a Strategy and Planning Unit would assess and support the national development strategic and planning objectives on a macro level. The Human Settlements Strategy would embrace the SMART (Simple, Measurable, Achievable, Realistic and Time-bound) principles in setting its targets.

The Department would not be receiving any extra money from National Treasury for its restructuring. The costs of the current structure and the costs of the proposed new structure would therefore be the same. Compensation and operation allocations for 2012/13 were R303,378,000 and R357,203,000 respectively; R350,199,000 and R4422,852,000 for 2013/14; and R369,869,000 and R470,766,000 for 2014/2015.

It was standard practice and procedure that, in the event of an anticipated restructuring/re-alignment, a moratorium was placed on filling non-critical posts and only those posts that were critical and that might not be affected by the proposed changes were to be filled.

The Department had sought the required concurrence from the Minister of Public Service and Administration on the restructuring proposal and this process was at an advanced stage.

Mr Neville Chainee, Deputy Director-General: Chief of Operations, NDHS wished to add one point on the research function. The Committee should not get the impression that the research function was scattered all over and not coordinated. It was coordinated and managed at the level of the Office of the DG. There were two types of research: one was “Research and Evaluation” and the other was “Monitoring and Evaluation”. The two could sometimes be confused conceptually but were more “beefed up” in the current structure.

Discussion
Ms Borman asked if the Department could explain, in practical terms, how the proposed structure of the PMU would operate. How would it address the many project management-related problems in the Department?

Mr Chainee said that there was substantial documentation that operationalised the PMU and that this could be provided to the Committee. There was a concept paper on which the restructuring and the new PMU was based that set out the details of the operationalisation of the PMU.

The Committee said it would like to see this concept paper and the supporting documentation.

Ms Borman asked how senior management employees would fit into the proposed new structure.

Ms Mbane replied that there were parameters for the migration of senior management staff across to the new structure. There would be an agreement with the Bargaining Chamber around this. In terms of the rules, management staff would need to meet 50% of the job requirements for their new post. Competency assessments and skills audits would be done in terms of the new framework so that people would be assisted. This was done differently at the macro-level of senior managers. The core management principles and criteria in terms of the Public Service Regulation were the same across the board. “A manager was a manager” no matter what function they were managing.

Ms Borman appealed to the NDHS to apply the SMART principles so that the Portfolio Committee could exercise its oversight role. The Committee needed to be able to exercise oversight but could not do this without the SMART principles and if the Department did not set itself measurable targets.

Mr Steyn agreed with Ms Borman. At the end of the day he was not interested in whether the Department had three chief directors or five. He was interested in what each of those chief directors produced. This was where the Committee could hold the Department accountable in the next two years.

Mr Steyn said that the Committee needed to “follow the money” and referred to slide 15. None of the figures in the columns of the first two rows added up to any of the other figures (for example “current total compensation allocation” did not seem to be the sum of any of the other figures in the same row). Could the Department please explain how the table worked?

Mr Steyn noted the Department said it wanted to have its new structure up and running in the next financial year which was 2012/13. The Department had said it would not be getting extra money from National Treasury. According to slide 15, the operational allocation for 2012/13 was R357.203 million and for 2013/14 it jumped up to R442.852 million. This did not make sense considering that restructuring would have already taken place in 2012/13. Why was there such a big jump in operational allocation from 2012/13 to 2012/14?

Ms Mbane replied that the Department had been told that it could realign but that it would not receive any extra funds from National Treasury to do so. The Department had worked around this. The operation budget was allocated by Treasury and increases in the allocation amount from year to year were based on inflation.

Ms Funani Matlatsi, NDHS Chief Financial Officer, added that the operational allocation supported the function and the notion that the Department follows the budget. It was standard practice that the operation allocations increased in proportion to inflation.

Mr Steyn said he was now even more confused. He understood that the budget allocations had to increase year on year at least in line inflation. However, the increase in the operational allocation from 2012/13 to 2013/14 was more than 20% which was way more than inflation which was around 6%. The increase in the operational allocation from R442.852million in 2013/14 to R470.766 million in 2014/15 was approximately 6% which was in line with inflation. Why was the increase in operational allocation from 2012/13 to 2013/14 so much more than this? It did not make sense.

Mr Chainee added that the 2013/14 figure was an “indicative figure that covered a whole range of issues”. On an annual basis the Department was allocated money from Treasury which indicated what these amounts were. Between the time that the current presentation was prepared and now, there was an updated figure for the allocation for 2013/14 and in fact the figure had not gone up so much. The Department had to work operationally within what Treasury said the country could afford. The Department could give the Committee a provisional breakdown of these indicative figures for the three years so that the main cost drivers could be seen. 

Mr Steyn said he had been following Ms Mbane on the research function until Mr Chainee stepped in at the end to say that the coordination of the research function would take place in the DG’s office. According to the presentation, the DG’s office would house the Internal Audit, Risk Management and Special Investigation functions. Where, in amongst that, would the coordination of research take place? This was where it became quite confusing. Mr Steyn could not pick up the two research components in the new proposed structure that Mr Chainee had mentioned and said were coordinated in the DG’s office.

The Chairperson said that many adjustments had been made to the budget in the current year. If the Department was restructuring, then everyone should know about it. It was unfair that there was a moratorium on filling vacancies because it meant that certain work was not being done. At the same time he understood the reasoning behind it.

Ms Borman referred to the moratorium on vacancies and the adjusted estimates of R19 million for compensation of employees. The Committee would be watching how the constituencies were affected and it would be watching to make sure that the Department did not get to the end of the financial year only to say that vacancies had not been filled because it had not had enough money. There needed to be certainty about the R19 million.

Mr Zulu replied that the Department would keep the Committee informed about all of the processes involved in the restructuring. The Department would also keep Treasury fully informed of what was going on. If the Department did not provide good reasons for why money needed to be rolled over then that money would just be taken away. The Department would try to prevent this situation from happening.

Ms Mbane said that the Department would be working around the clock to make sure that the reorganisation of the Department was in place for the next financial year. The longer the process was drawn out, the more difficulties the Department would face.

The Chairperson thanked the Department for their presentation.

Afternoon session

Chairperson’s remarks about the Nelson Mandela Bay Metropolitan briefing
The Chairperson explained the reasons for the Nelson Mandela Bay Metropolitan (NMBM) briefing. The Portfolio Committee had visited the Nelson Mandela Bay Metropolitan on an oversight tour on 29 November 2011. The Committee had asked the Municipality to respond to a number of issues including the implementation of the Urban Settlements Development Grant (USDG), and matters related to Fitch’s Corner and Grogro informal settlements. The Department allocated R502 million to the Municipality for the USDG. The Department and the Municipality had been called to account for this money. The Committee was “following the money” and unfortunately NMBM could only account for R95 million of the R502 million. This was not acceptable and was the main reason the NMDM was called here on this day.

The Chairperson said the Committee had visited NMDM in 2009 and had gone to see the Fitch’s Corner informal settlement. The Committee had received a report saying that there was land that had been taken by the NDHS and that that land was specifically for development. There had been a decision taken that the land would be built on and that appropriate infrastructure would be built too. In the consultation it had been clear that it was not that difficult to develop that land and that all that was needed was proper infrastructure. If one rich man were to build a big house on the mountain, then the infrastructure would follow him. When the Committee went to NMDM on its oversight tour, it found that this community had not been properly settled in terms of provision of basic services. The Committee had also visited Grogro informal settlement where people were settled on private land. The Committee had heard stories that the owner of that land had offered the land for sale for housing development.

The Chairperson said the Committee also wanted to know what inter-governmental relations (IGR) protocol had been signed with the NMDM on the USDG.

The Chairperson said that everyone in the room had one common objective which was to come together to ensure that that South African citizens received the best services that they deserved.

Briefing by Nelson Mandela Bay Metropolitan Municipality
Mr Kosalin Naicker, Acting Executive Director: Human Settlements, NMBM, led the presentation on behalf of the Municipality and began with an introduction to the USDG. The USDG was intended to give effect to the integration and sustainability components of Human Settlements. To this end the funding, as conceived by the NMBM, was intended to cover capital projects including land planning, provision of water and sanitation services, provision of adequate housing, electricity and roads and storm water services. According to the conditions as per Division of Revenue Act (DoRA), multi-year performance targets had been agreed on. The following would be prioritised for residential infrastructure: water, sanitation, refuse removal, street lighting, solid waste, connector and bulk infrastructure and roads supporting human settlements. The Draft Performance Framework had been submitted by 30 March 2011 and had received final approval by 7 June.

It was said the USDG could be used for the acquisition or redevelopment of land, basic infrastructure services for poor households and the upgrading of informal settlements. The total allocation for the USDG in 2011/12 was R502 million. Of this, R247 was contractually committed to projects based on Municipal Infrastructure Grant and MIG-cities framework. On 16 March 2011, the NMBM had sought communication to seek clarity on the definition and utilisation of the USDG. The National Treasury had agreed with the NMBM’s thinking but no response was received from the National Department of Human Settlements.

The NMBM had spent R97.1 million of the R502 million allocated for the USGD in the period 1 July 2011 to 30 November 2011. According to the NMBM’s cash flow however, 78% of the R124.3 million received up to 30 November 2011 had been spent. As part of its action plan, the NMBM was “fast tracking” the appointments of contractors as well as environmental impact assessment (EIA) approvals.

The residents of the Grogro informal settlement lived on land that was privately owned and had been so since 1965. There had initially been 30 households in the settlement but this had grown to about 300 households. Residents had been residing in the area for years without any form of services, not even water provision. The reason for this was that the Metro’s policy was that it did not provide services on private land. The Deputy Executive Mayor had initiated a process to acquire the land and the land-owner had shown willingness to dispense with the land. The process of acquiring the land had started and a final report to the Council would be submitted early next year. The Housing Development Agency (HDA) had been involved as part of its mandate was to acquire land on behalf of municipalities.

In the case of Fitch’s Corner, about 80 households had been staying on an “undevelopable” cemetery site since 1987. This project formed part of the NMBM’s seven year housing plan and plans had been made for the households to be relocated to St Albans. However, because of biodiversity and wetland related issues, the conditions for St Albans were very restrictive and left no land for housing development. The Department of Economic Development, Environmental Affairs and Tourism was not prepared to change the conditions. Water supply, refuse collection and traditional pit sanitation were the services available in Fitch’s Corner. There were now plans for the households to be relocated to Rocklands, Kuyga or Chatty. Chatty was ready for relocations however there was a political intervention that would unlock community resistance in the area.

Mr Naicker addressed the issue of the land audit saying that Generally Recognised Accounting Principles (GRAP) required that all immovable assets be identified and valued. As per the audit, 25 000 land parcels had been identified. All land for the seven year housing plan had been secured.

Capacity did exist for the NMBM to address households living in undignified areas, by relocating these informal settlements to Chatty. The challenge of acquiring suitable land rested with the HDA.

Mr Naicker concluded that the NMBM did have the capacity to spend the capital budget for the USDG. Underperformance was addressed by various forums and committees to ensure delivery based on the budget. At these sittings, spending was measured against cash flow targets which were reconciled to the budgets.

Discussion
Ms Borman asked for some clarity on the two expenditure tables which showed firstly the USDG expenditure compared to the allocated budget and, secondly, the USDG expenditure compared to cash flow. She did not understand the major discrepancy between the cash flow for the USDG and the amount allocated (which were R124.3 million and R502 million respectively). Could the presenter please explain this?

Ms Borman commented that there seemed to be a lot of time that passed between the submission of the draft performance framework on 30 March 2011 and the final approval on 7 June 2011.

Mr A Figlan (DA) asked what the Municipality had done for the people staying in Grogro for more than 30 years. There were no services there and one member of the community complained that the councilor of the ward had cut off the water supply. What did NMBM do when people came to complain to it?

Mr Figlan said that in the NMBM’s “action plan” on the third to last slide, one of the interventions in Fitch’s Corner was the “provision of a bucket system”. Why was the bucket system being promoted when the aim was to eradicate the bucket system across the country?

Mr Steyn referred to the R247 million that had been contractually committed to projects. He understood that this money had been committed in the previous financial year and so R255 million should remain for the current financial year. His own conclusion would first of all be that the contractually committed projects were already up and running. Within the first three quarters of the financial year, one should have at least spent a large amount of the R247 million. Judging from the NMBM’s expenditure this had obviously not happened. Mr Steyn wished to know why this was so.

Mr Naicker addressed the question on the expenditure of the R247 million. There was a trend for extreme expenditure towards the latter part of the financial year and this was because a lot of the projects that had been started were new. At the beginning of a project, expenditure was mainly on administrative functions but then increased towards the end of the project. There would therefore, by the nature of the projects, be large expenditure in the last quarter of the financial year.

Mr Steyn said that not everything could be done with the USDG and that other Departments had money for the provision of things such as public health. The Department of Human Settlements needed to work with these other departments otherwise the DHS would not catch up with its backlog. For the USDG to spend 24% of its budget on Public Health was concerning.

Mr Steyn said that the Committee relied on the information it received from entities and when it got conflicting information from an entity, then the entire presentation or report by that entity was called into question. Anything that was said thereafter would be viewed by him with suspicion. The Committee was being presented with a report this week with drastically different figures compared to the report presented last week; this particularly in connection with the figures presented under “cash flow”. The cash flow amount up to a period three months back should be the same this week as it was last week. Had the NMBM adjusted the figures to make them gel with what it said? All of the cash flow amounts had been adjusted. How was this possible? The expenditure figures had also been adjusted compared to information received last week. The NMBM must have known last week what it had spent up to 30 April 2011 and surely there was no need to readjust the figures from one week ago.

Mr Naicker replied that the figures presented to the Committee were “the gospel” and were not unreliable. The discrepancies between the figures given to the Committee last week and today could be for one of two legitimate reasons, one of which is that the figures given to the Committee the previous week might have been for up to 30 September 2011.

Mr Steyn was concerned about the promotion of the bucket system. Why did the NMBM not make use of alternative technologies and why for “heavens sake” was the bucket system being promoted? It could not be promoted in one area when the target was to eradicate the bucket system? This could not be accepted.

The Chairperson asked why it was that the people in Fitch’s Corner who were using the bucket system prior to 1994 were still having to use the bucket system now. Were these people not important enough to the NMBM? Why was the Municipality doing this?

Mr Chainee replied that the USDG was meant for things such as eradicating the bucket system and for human settlements development. The NDHS took this seriously. The DG had delegated himself and no one else to chair meetings with Municipal officials. There were certain challenges particularly in relation to accountability and responsibility. Mr Chainee was not quite sure whether there was the right level of seniority in the NMBM to deal adequately with the human settlements function. The NDHS would go back and give the Committee an action plan for accountability.

Mr Naicker added that he was working in a very hostile environment and that it was not easy. The NMBM was working on the issue of water supply and sanitation and did have a bucket system eradication plan in place which it could submit to the Committee.

Mr Barry Martin, Director: Water and Sanitation, NMBM, said he needed to give an explanation on the areas in which bucket systems existed. There were very low lying areas in the river valleys where alternative sanitation options (such as Ventilated Improved Pit toilets) were not viable options as they would just be flooded out. Unfortunately there were also problems with the chemical option with more than 10 000 buckets being emptied every two days or so. Mr Martin was not offering excuses but these were the real problems that the NMBM was dealing with.

Mr Martin said that the Municipality’s infrastructure programme since 2000 had been focused on supporting the housing settlement programme. Providing water and sanitation did however remain a challenge.

Mr Steyn said he had seen that there had been EIA approval for local housing development in Fitch’s Corner but today the presenter had said the land was not suitable for local housing development. Again, what was he to believe? He asked why a piece of the 25 000 land parcels identified in the land audit could not simply be used for the Fitch’s Corner community. What was so difficult about this? Why was it not being presented as an option?

Mr Figlan asked how far along the negotiations were between the HDA and the Grogro settlement landlord.

The Chairperson said that the Committee had received a bunch of information from the NMBM and it could not collate all of it. The Committee had asked to receive the documents on 5 December because it was standard practice for the members to study the documents before they were briefed on them. The Municipality was trying to confuse the members but it would not succeed. The Municipality would simply not get away with it because this was never done to the Committee. Now the members could not make sense of all the documents that had been brought to the meeting. What did the entities expect the Committee to do? This would not be the end of the engagement with NMBM. Until the NMBM “came up clear” and gave the Committee trustworthy information, the Committee would not be finished with it. As Mr Steyn had said, the Committee did not know what to believe.

The Chairperson said that the NMBM had managed to spend only 6.1% of the money allocated to it for the USDG in the first quarter. As she understood it, the NMBM should be aiming to spend 25% of its budget within the first quarter of the year. By the 31 October 2011, the NMBM had only managed to spend approximately 11% of its budget, although the Chairperson was subject to being corrected on this. The Committee did not believe that the NMBM would be able to spend all of the money allocated for the USDG unless it was going to start spending money just for the sake of it.

The Chairperson wanted to hear what oversight role the national and provincial departments of human settlement were playing with regards to the NMBM. What had they done about everything that had happened? Why had the NDHS not responded to communication from the NMBM when it sought clarity on the definition and the utilisation of the USDG? The national department had an obligation to follow the money and so what had it done?

Mr Chainee replied that he did not want to get into laying blame or defending but he wanted to first contextualise some issues. The USDG was a Division of Revenue legislated grant and had a “grant framework”. The grant framework clearly stated what could and could not be done with the USDG. There had been a substantial amount of consultation with officials at the provincial and municipal level around this grant framework. The NDHS assumption was that there were no officials at either the provincial or municipal level who did not know what the grant conditions were and what the framework consisted of. During the course of the last year there had been a substantial amount of in-depth consultation between the national department, the provincial department and the municipality. Mr Chainee personally chaired the first session in which the NMBM presented its performance plan. In this meeting, the NDHS clearly articulated the NMBM priorities were not consistent with what the USGD was intended for. The NDHS had had to make it clear that the USDG and the Municipal Infrastructure Grants were two different grants. Implementation of the USDG required a behavioural and mental shift. The NDHS had made this very clear. It was unfortunate that the person from the NMBM who had led this process was not present at the meeting today. In the process between February 2011 and 7 July 2011 there had been a substantial amount of consultation. There was no ambiguity in the way in which the USDG should be applied. The grant framework was very clear. It would be very wrong for people to come to the meeting and say that they thought the grant should be doing other things. It had always been so that the USDG was pro-poor. There were a number of officials sitting in the room today who had worked for municipalities and who knew the intricate dynamics of how money was handled in municipalities. There must not be any illusion that no one was aware of the purpose of the USDG.

Mr Naicker said he was unable to speak about the in-depth consultation that Mr Chainee referred to as he had not been involved with the NMBM at that time.

Mr Chainee added that he had led five chief directors from the NDHS on an oversight visit to East London and the NMBM. The NDHS was following the money but needed to be careful as the money situation did not necessarily reflect the underlying performance or non-performance. The USDG of R502 million was transferred in three tranches and performance was measured in terms of what had been transferred. The NDHS had had discussions with the Province in which it had said there were certain issues that needed to be addressed.

Mr Chainee said the USDG had been specifically created to address the kinds of issues encountered with the Fitch’s Corner and Grogro informal settlements. These issues should have been prioritised in relation to the USDG. The USDG was meant to enable municipalities to set up bulk infrastructure so that these types of settlements could be serviced. The HDA would confirm this fact. It was the responsibility of the municipality to provide water to communities whether they lived on public or private land, and especially if they were poor. It was wrong for the Municipality to come to the meeting today and say that it was not part of its policy to provide services to settlements on private land.

Mr Gaster Sharpley, Head of Department: Eastern Cape Department of Human Settlements, said he would be brief because what he had to say would become “more and more depressing”. One of the things that the province needed to do was to “follow the money”. In the previous year financial year, the NMBM had had capacity challenges, including challenges related to municipal management. The current acting director, Mr Naicker, was actually the regional director of ECDHS. The NMBM had requested to second Mr Naicker into the Metro to try and assist it with its human settlements programme. Mr Sharpley had met with the acting management of the Municipality the previous day and indicated the province’s concerns and willingness to assist the NMBM. The province’s issue was with the information communicated by the Metro and the reliability of that information. Last week the province heard the NMBM say that it was not performing because it was not receiving the three year allocation of the USDG money in advance. The province then got a different version of this story on Monday 5 December 2011 when it was told that the NMBM had been unable to meet its targets because it needed R800 million and not R502 million. The Province then wrote a letter saying that if the NMBM spent more than R500 million then the Province would honour payments up to R800 million. The reality was that the commitment of funding was done on the basis of cash flow projections based on the NMBM’s performance. If the NMBM processed “value-creating” payments to the Province then the Province had to pay them. The number of “happy letters” coming out of the NMBM was dwindling by the month. Yet, money was being spent and the Province was not sure where value was being created. If anybody was getting the impression that the Eastern Cape was airing its dirty linen, it should be remembered that everyone in the meeting was part of the same government. The Province wanted to extend a hand of support to the NMBM. In its most recent oversight tour the Committee had gone to visit the same locations as it had visited in 2009. If it was the case that the situations had worsened in some of these places since 2009, then the province only had itself and the municipalities to blame. Chris Hani District Municipality and the NMBM had been identified as having major problems.

Ms Matlatsi said that the Department had clearly stated from the beginning that the NMBM’s should do something about planned expenditure under the USDG that were not related to the human settlements function. The NMBM had been told that programmes that had been put under the USDG but that were not related to this particular grant, should be redirected. The NDHS was still waiting for this plan. The NDHS expected for the NMBM to have spent at least 50% of its allocated budget by 30 November 2011, notwithstanding the fact that the expenditure on public health under the USDG should be redirected to fall under another grant. The NDHS would be following up with the NMBM and its managers.

Mr Naicker said that discussions with the national and provincial departments about the alignment of the NMBM’s projects under the UDSG would take place outside of the meeting and would be reported to the Committee.

The Chairperson asked for someone to come up clear on the situation with Fitch’s Corner. The NMBM was playing games with Fitch’s Corner. What was its agenda? The NMBM had an agenda and so what was it? The Municipality was not going to get away with this.

The Chairperson asked where was the owner of the land on which Grogro informal settlement was situated.

Mr Alastair Jordan, Acting Assistant Director: Properties, NMBM, said the NMBM had received an indication from the owner of the Grogro land that he wanted to sell the land to the Municipality. A report on this was currently being prepared to be submitted to Council early on in the New Year.

Mr Chainee addressed a point raised by the Chairperson in her opening remarks saying that there was no need for the IGR protocol because there was a framework in place. The Delivery Agreements were that the province would oversee the delivery performance of the municipality in relation to human settlements.

Mr Chainee replied that it was wrong for anyone to say that there was a discrepancy between the National Treasury and the NDHS as both departments were on the same page. For the Committee’s benefit the NDHS was narrowing down the grant framework for the USDG to four main functions.

Mr Matshoba said that, in 2009, the report it received from NMBM had been too good to be true. The provincial and national departments and the NMBM should sit down together and prepare a report for the Committee that was closer to what it was looking for. What had been seen on paper was not what had been happening on the ground.

Ms Borman said that the Committee was responsible for the oversight of money that government paid out. One of the ways in which the Committee could establish what had been happening was by looking at the money that had been spent. Please could someone address her question about the difference between the cash flow and the budgeted amount? Mr Naicker had said the NMBM had almost spent 100% of the money that had been transferred to it, but if that was not in relation to the total amount allocated then there was a problem.

Mr Naicker said that the cash flow for the five months from 1 July to 30 November 2011 had been R124.3 million of which R97.1 million had been spent.

The Chairperson asked for a community representative from Fitch’s Corner to speak on behalf of the community.

Mr Soyisile Hempe, Community Representative from Fitch’s Corner, thanked the Committee for the opportunity to speak before it. The community had felt it important to follow up with some of the issues experienced by the Fitch’s Corner. Accountability of local government was the community’s main concern. In 2009, not a single political or other official had come to account to the community about the housing issue. It was only around voting time that the political officials come to the community. After the voting, no one came to the community to account for the housing situation. One thing that the NMBM needed to take into account was that the community should not be relocated to a place that was far away from where they were currently settled. Many of the community members worked in the area and if they were to be moved to a place far away from their work, it would become very costly for community members to get to their work. The Members of the Committee had given some ideas in the meeting about land that could be identified for the community (such as those land parcels identified in the land audit). It had been a waste of money for the government to put a bulk sewer in because of the fact that the land could not be used at the end of the day because of the EIA. Mr Hempe hoped that going forward the community would see a different approach from the Municipality.

Mr Steyn asked where the bulk sewer referred to by Mr Hempe had been installed. Had it been built on the land that the community was living on or on the land that there were supposed to have been moved to?

Mr Hempe replied that the bulk sewer had been installed in the land on which the community was currently living.

Mr Sharpley said they would ring-fence the issue of the Grogro and Fitch’s Corner communities and deal with them.

The Chairperson said that the Committee wanted the NDHS to lead in the production of a comprehensive and consolidated report by itself, the ECDHS, and the NMBM. The Committee had done its oversight in Nelson Mandela Bay Metropolitan and the Metro would in future be coming down to Cape Town to report to the Committee on its progress.

Mr Naicker said he had noted the other concerns and questions raised by Members but time was against him if he were to address all of them now. Could he please have some time to consider the questions and submit answers to the Committee at a later date?

This was approved and the meeting was adjourned.