Department of Human Settlements response to State of Nation Address & budget; 2nd & 3rd quarter reports

Meeting report

Department of Human Settlements response to State of the Nation Address (SONA) and budget speech
Mr Thabang Zulu: Director-General, Department of Human Settlements, noted that the Department of Human Settlements (NDHS or the Department) had analysed on both the State of the Nation Address (SONA) and the Budget Speech, and would focus on interventions the Department would make on issues arising from these speeches.  

Mr Anton Arendse, Chief Director, Human Settlements Project, NDHS, said the SONA issues that affected the NHDS were largely related to growth, job creation and how the Department would ensure that the interests of the poor were served.  The Department was much interested in targeted interventions that supported infrastructure development, and that were related to the guarantee fund, which had now grown to over R1 billion in the last financial year, and Mortgage Default Insurance (MDI). His presentation would outline how priority projects supported key infrastructure initiatives identified in the SONA, as well as land acquisition and land assembly. He would touch on job creation and the contributions through the housing institutions.

Mr Arendse said that, in the interests of time, he would not explain in what the Mortgage Default Insurance was, as this had already been presented in the previous year. However, under the leadership of the National Housing Finance Corporation (NHFC) much of the preparatory work had been done, and the funding model was close to conclusion and would be presented to MinMEC next week. The communication strategy of the Department was nearing completion. The National Housing Finance Corporation (NHFC) had reported that it should be in a position to sign agreements with banks at the end of March, in line with what the SONA recommended.

The launch and implementation of the Finance-Linked Subsidy Programme (FLISP) programme would happen from mid-April to the beginning of May. He referred to an email sent from the President to the Department on the matter, and said that the Department would shortly respond. The Department had attempted to look at infrastructure nodes listed by the President in the SONA and had drawn a short list of likely investments, especially corridors that supported infrastructure development. These referred to the corridors between Mpumalanga and Limpopo, with a grant amount of over R1 billion to be spent in this financial year. The other infrastructure nodes were the Eastern Cape-KwaZulu Natal (KZN) Agri-corridor, which was costed at R475 million, the Sishen-Saldana-Rail Expansion (R25 million) and the Mthatha Revitalisation Project (R9, 6 million). If the infrastructure corridors were constructed, the second support from the government would lie in human settlements. The Department would present the business plans shortly, but these figures indicated alignment of the initiatives with the Human Settlements Development Grant (HSDG).

The Department was funding a number of priority projects. These included Lephalale project in Limpopo (R274 million), Cornubia in KZN(R114 million) and both the Duncan Village and Mthatha Revitalisation projects in the Eastern Cape (over R1 billion).

The Research Unit of the Department had done a fair amount of work on job creation, and had developed a model that took into consideration variables such as rate of delivery, land requirements in hectares per land use and capital expenditure. It was not possible for the Department to give an absolute figure of the number of jobs it would create now, but he suggested that a dedicated session on this topic would be required. He noted that on page 18 (see attached presentation) there was an indication of the number of jobs that could be created by different scenarios of economic growth and variables. For instance, in one scenario where about 324 908 houses could be produced, the number of jobs amounted to 505 190. The following tabled showed how the Department, working together with housing institutions, was going to intervene in human settlements issues. The Social Housing Regulatory Authority (SHRA) could generate about 7 500 direct and indirect job opportunities (professional, artisans and manual) in the 75 projects anticipated over the Medium Term Economic Framework. In addition, Nurcha had indicated that it could provide financial assistance to about 40 emerging contractors per annum, who were likely to contribute to creation of about 30 000 jobs over the next two years. At the moment, Nurcha was financing a contractor for construction of Medupi Power Station, and it had made energy a priority in its projects.

The SONA had raised issues of efficiency of settlements. The Department had prepared a response to that, based on spatial reconstruction projects in which Social Housing Regulatory Authority (SHRA) and Housing Development Agency (HDA) played a pivotal role.  These were inner city and in-city development. SHRA was discussing them with a number of “secondary cities”, such as Polokwane and Rustenburg, and metropolitan cities. At the outset SHRA would address issues of management of the centres. SHRA was making sure that the areas being developed would have access to transport, economic opportunities and social amenities, and was working in tandem with relevant municipalities to fast-track the assessment of Restructuring Zones and declaration of new infrastructure zones. This was true of the Lephalale project in Northern Cape Province. Appropriate forms of rental accommodation were being discussed in the Saldana area. Mining operations were seen as significant investments. The Rural Housing Loan Fund (RHLF) would play a significant role in promoting the development of communities through providing affordable housing finance. In response to issues of Energy Efficiency raised in the SONA, SHRA had made innovative commitments towards the use of heat pumps, which seemed to be more cost effective than solar products.

In relation to access to basic amenities and transport, the strategic location of land was vital, because there was always competition between human settlements and other land use. In the past, land would go to the highest bidder, despite the fact that the NDHS and HDA may want it for residential purposes. A number of pieces of land had been identified and prioritised, and projects had been aligned not only to SONA priorities, but also to areas where the Department felt that intervention was required. The Department was required to respond to rapidly growing cities, and deal with informal settlements in collaboration with Departments of Cooperative Governance, Economic Development and Energy, among others. The Department had reached some synergy between its own plans, intervention strategies, and SONA priorities.

Mr Zulu noted that building of infrastructure remained a core business of the Department and government. The Department had developed a model to measure how many jobs were created per annum in the construction industry, in respect of the projects that had been identified. The Department had received a “silent instruction” from government to be bold in identifying projects that would create jobs, and that would be addressed by the priority projects outlined.

Discussion
Ms P Duncan (DA) said she was concerned about the terminology used in government in relation to job creation. Government did not specifically “create jobs”, but rather provided an enabling environment for the creation of jobs. When tenders were issued, the small, medium and micro enterprises (SMMEs) or established business actually “created” the jobs.

Ms Duncan asked how the Department was liaising with provincial and local government with regards to Spatial Restructuring framework and land uses. She wanted to know whether the document on Spatial Restructuring could be used to ascertain the size of valuable land that belonged to the State, across all municipalities, so that houses could be built in areas allowing for economic empowerment.

Mr S Mokgalapa (DA) noted the comment that most of the funding to support infrastructure would come from the HSDG. He asked if this was budgeted for, and whether the Department would be able to deliver, noting that it had backlogs in infrastructure development in rural areas. He wondered if there were alternative funding models to this grant. He also asked if the provincial allocations for priority projects came from provinces’ shares, or from the HSDG, and whether the R83 000 subsidy that would be used for the production of affordable units for the gap market was part of the provincial allocation, or whether provinces would have to find alternative funding.

Mr Samson Moraba, Chief Executive Officer, National Housing Finance Corporation, said the funds were part of the provincial allocation. The Minister of Finance had highlighted in his speech that additional funds would be made available for the finance-linked individual subsidy programmes.

Ms Funaneng Matlatsi, Chief Financial Officer, NDHS, explained that the projects were funded within the 20% allocation of R886 million, as a portion of that money went to development of Government Outcome 8 indicators (land, informal settlements and rentals). She stressed that the NDHS regarded human settlements as part of the built environment, and the difficulties that the Minister of Finance had raised were in this area. The Department would be giving a detailed presentation on the allocations when it presented its budget and strategic plans. R120 billion was available for built environment, and NDHS had received an amount of R1 billion over the MTEF. She noted engagement also with Department of Cooperative Governance and Traditional Affairs. NDHS was looking at consolidating the ground contributing to the development of human settlements. It had selected a model that would assist in priority projects.

Ms D Dlakude (ANC) hoped that HDA would be proactive in acquiring State land for human settlements. She noted her concern that little was said about rural areas, where there was a huge backlog in infrastructure and houses. She was happy about the infrastructure development in some areas mentioned in the presentation, but wanted to know what criteria would be set by the Department in implementing RHLF programmes, to ensure that professionals in the rural areas benefited.

Mr Jabulani Fakazi, Chief Executive Officer, Rural Housing Loan Fund, said that in addition to intensifying marketing efforts, the RHLF would use employee membership organisations to reach the intended beneficiaries. For instance, a union organisation had been identified to target rural-dwelling employees, so that they could access affordable finance to build their houses. SHRA had discovered that many employees did not build houses during their work tenure, because of lack of loans, instead using their pension lump-sums to do so, instead of using it for their welfare. The Committee would be briefed on progress of discussions with the union.

Mr Viwe Gqwetha, Director: Operations, Nurcha, said the FLISP implementation plan and access to land would speed up the development of affordable housing rather than relying on the private sector.

The Chairperson was concerned that Nurcha’s Youth Development programme was invisible.

Ms M Njobe (COPE) agreed that there was a need to build new settlements along the infrastructure development zones (IDZs) highlighted in the SONA. She noted that the current development plan of NDHS would draw to a close in 2014 or 2015 and wondered if the Department would change its programmes to fit the new infrastructure development projects. She asked if funds that were originally earmarked for commitments would be diverted to priority projects. She asked whether the areas for new human settlements had been identified, where were they located, the size of the areas and funds needed for construction.

Mr Zulu said that one important aspect that had come out of the discussion was how the NDHS acquired land for human settlements. He reiterated that the business plans of the Department would be presented shortly, and these would outline the implementation of projects in provinces. Some of the questions were to be dealt with in the priority projects report. He noted that there was absolute alignment across the plans and projects that contributed substantially to infrastructure, and sufficient funding would be allocated and prioritised so as to avoid losing the opportunities. The Department might need to review some projects, in light of the policy shifts, but would do so without “killing” any plans in place. More emphasis had been put on job creation and infrastructure development. The effectiveness of the interventions would only become clear when the Committee engaged with the business plan.

Mr J Matshoba (ANC) pleaded with the Department to intervene in Nxuba Municipality, which he said was faced with sewage disasters. In the Chris Hani District and Alfred Nzo District, houses had been destroyed, and Northern Cape saw the same problems, yet it seemed that nothing had been done, since 1998, to address the disasters. Even if CoGTA implemented disaster management, NDHS was surely supposed to assist in alleviating problems. He asked for an outline of its own disaster relief plans.

Mr K Sithole (IFP) applauded the Department on its presentation. He noted that the SHRA programmes were intending to create about 100 jobs per project implemented, but there was no mention of disabled people among the beneficiaries. He wanted to know whether the inner-City and in-City programmes were new initiatives by the Department, or were similar to other projects of the Department of Public Works (DPW). He asked how much land the state owned.

Mr Brian Moholo, Chief Executive Officer, Social Housing Regulatory Authority, said that at the moment SHRA was not privy to the employment equity policies of the institutions with whom it worked, so could not comment on the employment of disabled people, but agreed that this issue was very important and SHRA would meet with the Federation of Social Housing Institutions and developers to engage them on their employment equity plans.

In respect of the inner-city and in-City developments, he noted that the inner-city plans were in respect of the traditional areas of cities, and in-City projects were related to the broader geographical space within cities. He noted that there were some exciting developments in greater Johannesburg, particularly the Jabulani Central Business Unit in Soweto and some social housing projects.

Mr Taffy Adler: Chief Executive Officer, HDA, presented a map depicting state land around the country. There were about 700 000 properties owned by different organs of the state. The map also indicated that 90% of informal settlements that had been tracked were situated within 5 km of state land, and about 80% of state owned land was located within 10 km of major service centres. The map also listed a breakdown of the total numbers of parcels of state land per province. He said that the HDA was currently making applications to the Departments of Public Works (DPW), Economic Development (EDD) and Rural Development and Land Reform (DRDLR), which were the custodians of state-owned land, for 543 properties measuring 14, 416 hectares (ha), on which 800 000 units could be built. Not much of that land had been transferred.

The Chairperson proposed that the Department of Public Works be invited so that there could be a full discussion with both departments on the matter.

Ms Njobe wanted to know what percentage of South Africa as a whole was state land, and who owned the rest.

Mr Adler said he could not provide the exact figure but it was more than 13%.

A Member agreed that a joint session with the DPW would be useful. Much work had been done on identifying the land, but there was a need to start implementing.

Ms Dlakude asked why some provinces were still saying they knew nothing about HAD, despite its work around the country on land acquisition.

Mr Adler stressed that HDA was responsible for identifying, rather than acquiring land, and noted that its visibility perhaps depended on the province; HDA had worked with provincial departments and had made agreements with provinces on work to be done.

The Chairperson said the HDA would respond to some questions that it perhaps could not answer now in March, particularly how much land belonged to the state and who owned the rest.

Mr R Bhoola (MF) noted the progress and thanked the Department for a clear presentation that set out the links with SONA and its optimistic plans for the poor. However, he noted that there were still problems in development of housing and the willing-buyer-willing seller option was not working. The Department had made it clear that in order to deliver on the implementation plan it was necessary to evaluate progress, but it had complained, several times, that the legislation was hindering delivery. He asked what exactly the NDHS was doing to acquire land for emerging farmers, particularly women who were excluded. He said that he wanted to hear how the R83 000 subsidy allocation would work, and how the NDHS would deal with the situation where an applicant was blacklisted. He was concerned about the Cornubia project, where about R114 million had been allocated, and said it was not clear what was happening in eThekwini.

The Chairperson interjected to advise Mr Bhoola that these matters would be dealt with separately, and asked him to question only the current presentation.

Mr Bhoola replied that he had just wanted to mention the allocated R114 million, so that some aspects could be attended to. He was glad to hear the presentation by the Western Cape Province in the previous week, around land acquisition and removal of informal settlements and evictions, and asked how the Department was ensuring security of tenure, delivery of homes in eThekwini, and what was being done for those living in appalling conditions of sanitation.

The Chairperson again appealed to the Member to focus on the presentation that day. The Committee would be discussing eThekwini separately, and would still consider the report on the oversight visit to KZN.

Mr Bhoola wanted to know when the Department was going to initiate skills training projects, as indicated on page 14 of the presentation, and who would be responsible for this.

Mr Bhoola was concerned about solar water heaters, saying that in eThekwini the systems had been installed, but no electricity or water were available.

Ms A Mashishi (ANC) was happy to hear that that Limpopo, particularly Lephalale, was going to benefit from the Department’ projects. She asked what types of jobs, in the job creation strategy 2010-14, were indirect jobs.

Ms Mashishi sought clarity on what the Department called “rapidly growing towns and cities”

Ms Mashishi pointed out that although the presentation noted that youths and women were going to benefit from the infrastructure projects, there was no mention of people with disabilities.

Ms M Borman (ANC) commented that the housing project was “amazing” and could create a lot of jobs if well managed. She questioned whether, in costing the Cornubia project, the Department had factored in escalating costs.

Ms Borman asked where there were delays in the guarantee fund.

Mr Moraba said this arose because the instrument was a financial market intervention, and thus needed to involve the Reserve Bank, Financial Services Board, and National Treasury, who had to stress-test the instrument against risk. A further update would be given when the Department provided presentations on the business plans of the NHFC.

Ms T Gasebonwe (ANC) was happy to learn that RHLF was providing lending opportunities to rural communities, but it was not helpful to install water pipes when sources were dry. She recommended that the NDHS and Department of Water Affairs must work together to address the problems.

Ms J Sosibo (ANC) asked whether the funding for infrastructure corridors was going to come from the human settlements allocation and, if so, how the Department was going to support its own programmes related to sanitation and housing. She was not sure whether people were supposed to pay for the installation of geysers, noting that some houses in townships had solar geysers but others did not.

The Chairperson noted that no mention was made of the Disaster Relief Fund amounting to R180 million. The coordination between CoGTA and NDHS had to be strengthened, particularly since the allocation was small in relation to the numbers of disasters, particularly in Mpumalanga and North West. The Chairperson agreed that the question of solar geysers had to be addressed, as unscrupulous opportunists were cheating people. She was very irked about the issue of suitable land, when some people would try by all means to prevent development, although no concerns were raised about damage to environment caused by mansions being built on sensitive mountain areas. The Department must lead the discussion to ensure that development and provision of services were aligned. She noted that sanitation had to be elevated and given more priority, particularly as this was part of the Millennium Development Goals (MDGs).

The Chairperson reminded the RHLF that the Committee had indicated, in previous meetings, that signposts and billboards should be put up in communities to notify people of where they could borrow money to build houses.

The Chairperson asked how the institutions would function without a board of directors. She noted that strong leadership was vital. The issue of MDI would be discussed in other meetings.

Mr Moraba noted progress in development of the MDI process and setting up of the company. The NHFC would revert to the Committee with a detailed presentation, but in the meantime was working with National Treasury.

The Chairperson asked what was meant by “higher salaries”.

Ms Matlatsi apologised for using the wrong terminology; she had intended to refer to “salary increments”.

Ms Sosibo wanted to know whether multi-storey buildings were a good idea, asking if NDHS had made any specific plans to assist the elderly and disabled.

Mr Moholo pointed out that the President had also recommended that people should take exercise, including climbing stairs, to guard against obesity, but lifts were installed in the structures and units had been designed to accommodate people with special needs.

The Chairperson said SHRA was supposed to participate in restructuring zones, and the NDHS should ensure this was done. Although the Committee appreciated the presentation on SHRA contributions, the proposed interventions should be implemented. She questioned the earning limits, noting that even those on low salaries had deductions from their salaries, but said that this would be dealt with later. Another issue for later discussion was norms and standards of furnishings, as some houses had furniture installed while others did not.

Mr Moholo said the norms and standards would be outlined on 13 March when SHRA presented its business plan. SHRA was visible, but was also dealing with areas outside its mandate. It was working with provinces and had entered into agreements as to how other commitments would be dealt with. It had also met with the NDHS to discuss its involvement in clarifying restructuring zones.

The Chairperson said it was high time the NDHS tabled the legislative amendments that were needed to deal with the impediments in human settlements. However, she was pleased with the efforts in inter-governmental arrangements.

Mr Sithole was concerned about the link between NDHS and DPW.

The Chairperson said that the Committee would hold two sessions on the Department’s Business Plan, linking it to the previous budget and performance.

2011 2^nd and 3^rd Quarter Reports (July to September 2011 and October to December 2011)
Mr Neville Chainee, Chief Operations Officer, NDHS, presented the 2^nd and 3^rd quarter reports. He noted that from October to December (3^rd quarter) there had been 206 targets that were achieved, and 97 (32%) that had not been achieved. The Department had a monitoring plan for following up on targets that might not be achieved. He noted the launch of the private/public partnership with Anglo American, in terms of the programme in which Anglo-American would provide 5 000 units for platinum mine workers. He also highlighted programmes in North West. The Department had covered the 16 day campaign of activism on violence against women. He further pointed to the report on Government Outcome 8, indicating progress made on the agreement between the President and Minister.

He noted that Output 1 contained three sub-outputs- upgrading of informal settlements, implementation on the National Credit support system, and provision of R890 000 well located units. The Department had so far achieved 20% of the 2014 target. The overall performance would be outlined again when the NDHS presented its business plan.

He said that page 4 of the presentation (see attached document) listed the upgrades of Informal Settlements Support programmes, which targeted 49 municipalities. 40 municipalities were briefed. 24 312 social housing units had been provided from 1 April 2010 to 30 September 2011. 16 municipalities had been assessed for accreditation. However, the Department had not yet concluded most of the protocols between municipalities and metros and provinces, other than Western Cape. A report would be tabled to the Minister, as the deadline had been 30 November 2011.

Output 2 dealt with access to basic amenities, and here the NDHS played a crucial role. The figures were not for household access, but reasonable access.

Output 3 dealt with land assembly and utilisation of land for human settlements; this was an area that HDA would address in its business plan. Output 4 dealt with an improved property market, and that would be addressed by the MDI.

Mr Chainee said the Department would submit its model on housing and job creation to the Committee, articulating how it worked. NDHS was different from other departments because it spent money in projects, and those projects created direct, indirect and induced jobs.

In relation to sanitation, the Department had hosted the World Toilet Day, the Global Hand Wash day and conducted other campaigns.

Twelve projects were approved for the Social Housing Implementation Programme, the National Rental Project Consolidation plan had been initiated, and the SHRA website was under construction. NURCHA had approved a R73 million loan value for an affordable housing project in Protea Glen, which would deliver 793 houses with a project value of R283 million. R100 million from the Department and National Treasury was approved for the Public Investment Corporation (PIC). There was enhanced support in programme management and accounting administration in KZN and Free State. Page 14 showed the performance on funds disbursed during the quarters.

The National Home Builders Registration Council amounts spoke to the enrolment of houses in the non-subsidy sector. Mr Chainee noted that the NDHS had challenges in ensuring provincial compliance with enrolment, and a number of initiatives were being considered to link enrolment with release of funds.

An application had been made to National Treasury on the National Housing Finance Corporation’s large mortgage default insurance.

Ms Matlatsi presented on the financial performance. A rollover from National Treasury, in the amount of R64.5 million, was approved, out of the R101.1 million rollover requested. An allocation of R4.1 billion was broken down into R31,1 million for the Accelerated Community Infrastructure Programme (ACIP), R26 million for the Rural Household Infrastructure Programme (RHIP), R3,1 million for the turnaround strategy for the Department and R 4,3 million for State Information Technology Agency Infrastructure services. These were additional amounts to the R22.5 billion awarded for 2011/2012. National Treasury approved an additional R180 million for the Department’s Disaster Relief programmes, and it was split among eight provinces (excluding Western Cape). The funds were not expected to increase much in the new financial year.

National Treasury approved an additional R2, 4 million for salary increments, payable in July. The money had been divided across five programmes. The Department needed to fund the National Upgrading Support Programme (NUSP) to the tune of R8,5 million, for provinces to start up, as there were no funds allocated in that financial year. That amount would be made up of R1,5 million from Human Settlement Planning, R4 million from Financial Services, R1 million from inter-governmental relations and International Relations, and R2 million from Management Information Services. The total Departmental budget amounted to R22, 8 billion. Transfers to provinces amounted to R14.9 million, under the Human Settlements Development Grant, as well as other transfers of R6.4 million, whilst the remainder were operational funds.

Page 21 set out the expenditure of the Department as at 31 December 2011, summarised per programme, noting that it was at 76% expenditure, instead of the 75% expenditure budgeted. She explained that some high invoices were presented from the Special Investigating Unit, and DPW, but after negotiations with DPW it was agreed that this invoice would not be included until inspection of the  new building had been done and approved. Housing Development transfer money had already been paid to municipalities.  

She set out an expenditure by economic classification, and highlighted R14.9 billion transfer for Human Settlement Development Grants, noting that a further R2.8 billion would still be transferred. There was expenditure of R51 million on the Rural Housing Infrastructure grant. Under the Urban Settlement Development Grant, R4, 1 billion had already been transferred, and R2 billion was still to be transferred. The R180 million Housing Disaster Fund had not been transferred yet, and NDHS was discussing a rollover with National Treasury, as there were no concrete plans as to how this grant should be used. The transfer to the SHRA had been effected as part of the operational budget. Provincial spending was at 69% by end September 2011, as the NDHS had helped provinces to spend. It was hoped to raise it to 76% by January. However, the spending was to be examined also in the light of what had actually been delivered.

Discussion
Ms Njobe wanted to know when the transfers to the provinces were done and whether the transfer amount was determined by spending of the province. She wanted to know why there was very little spending on administration. She sought clarity on exactly what was being upgraded in informal settlements – structure of houses, or basic amenities. She asked how the land tenure programme would help people who lived in overcrowded areas, such as informal settlements.
  
Ms Borman asked why the Department had failed to spend in July to September and October to November. She also questioned the breakdown of the grant spending. She was concerned that to date only 20% of the 2014 target had been achieved, and questioned whether it could be realised over the next two years. She was pleased to see the figures on the campaign for HIV/AIDs awareness.

Ms Matlatsi said that the NDHS was, in terms of the Division of Revenue Act, obliged to transfer money to provinces, but if provinces failed to utilise the funds it was also empowered to withhold further transfers for 30 days, to allow for spending, and then transfer in the following month. If the province did not improve its spending, the NDHS could reallocate to another province that was spending. In the past, money was taken from Free State and Mpumalanga and reallocated to Northern Cape. In this financial year the Department had taken steps in terms of the Urban Settlement Development Grant fund and provinces did not receive money until they complied with submission of reports. A six-months assessment of the provinces was done, to make sure that they would be in a position to spend, even though their spending had not reached 50%. The Department had not transferred money to KZN, because there was no spending, particularly on the Cornubia project, but a second recovery plan by the Head of Department indicated that the province would spend the money by January 2012. The Department was cautious about making transfers if provinces could not spend their 25% quarterly budget, or 50% by September. The Department was enforcing the laws and also helping provinces to spend their allocations.

Ms Matlatsi noted that for Programme 1 the spending at the time was 24%. It had not yet increased to the level required by the Department. The reporting must improve in future.

Ms Matlatsi stressed that the fact that provinces did not spend all their budgets was not necessarily an indication that there was no value on the ground. Many contactors did not submit invoices on time, and even if they did submit, the project management unit in the provinces still had to verify them, and this might delay the payments. This explained why most invoices were settled toward the end of the financial term.

The Chairperson said that one of the issues raised was that invoices were submitted, but they were not processed timeously. The NDHS must do something about this. She cited contractors in Eastern Cape, who had done work in December last year for the Department of Education and Health, but who would only their settlement in April this year.

Mr Zulu confirmed that the NDHS could do something about the matter, and said that this problem appeared with all departments. The issue of late payments affected emerging contractors, since they could not sustain themselves if not paid on time. All service providers whose invoices were not under investigation or dispute must be settled within 30 days, and this was a compliance issue, raised by the Auditor-General as a concern across many departments. The NDHS was trying to ensure that invoices without queries were settled promptly. Provincial Treasury in KZN had launched “Operation pay in time”, a hotline had been set up for service providers to register any complaints of non-payment.

Mr Mokgalapa asked why the NDHS was continuing to try to accredit municipalities if there was not capacity. He wondered why there was a backlog on sanitation when funds were being made available. Only 20% had been spent on Rural Housing, despite the fact that only two months were left of this financial year. He questioned how Limpopo was performing well despite problems there, and suggested the Committee should visit the area to establish what was happening on the ground. He asked how the NDHS was handling the issues of salaries. He noted that consultants were paid on time, yet contractors were not, and commented on the tendency to rely still on consultants. He lastly questioned the Special Investigating Unit matter.

Mr Chainee said the backlog was only R2,7 million but conceded that much still needed to be done in respect of sanitation. In respect of municipality accreditation, he noted that the Department conducted an assessment, and said it would be counter-productive for the Department to resile now from this accreditation process. Despite the problems in Limpopo, that provincial Human Settlements Department was well run, had been the only provincial department to obtain a clean audit, and was the first to blacklist incompetent contractors. The Head of Department was doing a sterling job and the Committee was free to undertake an oversight visit to the area.

Ms Dlakude questioned the figures on Outcome 8, output 2, which suggested that the NDHS had reached 95% in the provision of water, 82% in the provision of Sanitation and 75% in refuse collection. She said the figures were not a true reflection of the situation on the ground. During its oversight, the Committee had noted some areas without any water.

Mr Chainee said that CoGTA’s targets spoke to “universal access” and this meant “reasonable access of a household to the basic services”.

The Chairperson asked what “reasonable access” was.

Mr Chainee answered that if a household had access to sanitation and to water about 20 metres away from the dwelling-place, that was considered as reasonable. This was, however, a serious issue that needed to be discussed and fully understood.

Ms Dlakude said that Mr Chainee’s explanation was still not sufficient. In rural areas, there was not a tap within 20 metres, nor was there refuse removal. The Committee’s oversight visit found filthy areas in Buffalo City, Eastern Cape and Nelson Mandela Bay. She said that a further session was needed to explore this issue.

Mr Chainee said he agreed that there were a lot of contradictions and the Department had requested that the matters must be addressed, to avoid problems later.

Mr Zulu agreed that the statistics on the provision of basic services were unreliable, and this was an issue he had contested several times with CoGTA. Interpretation of the statistics was also problematic, since it suggested that South Africa was doing well in provision of basic amenities.  Mr Chainee would provide a more detailed explanation, especially on the role of CoGTA, which was charged with sanitation services and handled outcome 8.
  
The Chairperson suggested that this must be discussed at the next meeting with the Department. She noted that South Africa was committed to the Millennium Development Goals.

Mr Sithole asked when the accreditation process was done, and whether it differed between provinces and municipalities.

The Chairperson was concerned about the enrolment of units and projects by the provinces. She hoped that the people put in charge of the projects were selected on the basis of their trustworthiness. A session was needed to clarify rectification of houses; in North West many houses were on the verge of collapse yet priority was placed on building new houses, not putting right the problems in existing houses. She thought the NDHS was doing its best to deliver, and needed support from the Committee.

Mr Zulu responded that the Department had taken a decision, at its technical MinMEC in 2011, that all new projects must be enrolled with a competent entity for proper inspection and monitoring.  The Department had not yet established a mechanism for monitoring of the decision, though a standing resolution had been taken and all provincial Departments on Human Settlements were on board. He added that it would be helpful for the Committee to discuss and conducting oversight with associated Parliamentary Committees, particularly in regard to management and monitoring of the process of accreditation and sanitation.

The Chairperson questioned the benefit that facilitating of institutional subsidies and private rentals played. The Minister had highlighted the problem of backyard dwellers, which was described as a “ticking time-bomb”, and she therefore wanted to know what the NDHS was doing to arrest this, as there was no indication that it had been prioritised.

Mr Chainee said the NDHS had drafted a paper on the rentals issue. There were families earning under R7 000 who were renting. The NDHS wanted to find ways of assisting poor people who came into cities yet could not support themselves. SHRA had been tasked with this, and would report shortly. SHRA and NHFC funded social and rental housing. A person earning more than R7000 could not qualify for SHRA projects, and would have to pay full rental. A full report would be provided on the topic during a future presentation.

The Chairperson asked if the Department had managed to submit a report in preparation for the upcoming UN conference.

Mr Zulu said he would check on that issue and forward the report, if available.

The Chairperson noted that Free State had spent all its budget allocation by December, and asked what was being done in that province at the moment. She urged that the NDHS must interact with it, to avoid negative consequences for the poor.

Ms Matlatsi noted that since the Department had begun with its turnaround strategy, all crucial posts had been filled and the rest would be filled by 1 April 2012. In the Eastern Cape the work was continuing and the Provincial Treasury had provided R50 million to settle a portion of the debt. NDHS had not had the money to bail out the province at the time. The incoming Head of Department in the Eastern Cape had been asked to come up with a strategy to liaise with contractors owed, and to advise them that their money would be payable in April.

The Chairperson said she was concerned because the Free State province had settled 2011 arrears using money from the 2011 budget allocation. The Committee could not tolerate a situation where money from the 2012 allocation might be channelled towards settling the arrears.

Ms Matlatsi reiterated that R50 million had been made available by the provincial treasury, and that province had been asked to settle all its problems in this financial year, and make a fresh start in the new financial year.

The Chairperson requested that the Department provide a comprehensive plan on the issue of rentals. She also noted that nothing had been said about the Subsidy Programme in the Free State, Mpumalanga, Northern and Western Cape Province.  .

The meeting was adjourned.