Department of Human Settlements: 2012 Strategic Plan & issues from 2011 Annual Report

NCOP Public Services

05 March 2012
Chairperson: Ms J Moloi-Moropa (ANC)
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Meeting Summary

The Department of Human Settlements (DHS) briefly outlined some of its challenges, as noted in the 2010/11 Annual Report of the Department, and then presented an overview of its 2012 Strategic Plan and Turn-Around Strategy. There had been issues around performance management and reporting in 2010/11, and the outcomes-based performance now required by Cabinet required readjustment of programmes and responsibilities. DHS had therefore undertaken a review and weaknesses would be corrected by the new Strategic Plan. Policy, planning, funding and implementation gaps were identified, including those in data collection and integrity, and obtaining value for money, and steps were taken to address them. The new Strategic Plan and Turn-around Strategy was then described, with the new structure to take effect on 1 April 2012, and this financial year would be used to implement the new system, without compromising on delivery and performance. Key focus areas would be the accreditation of municipalities, to enable full uptake of the Urban Settlement Development Grant (USDG). Collaboration with private and intergovernmental sectors was recognised as of prime importance, and dedicated programmes on youth and women’s build would receive attention. The Department had been restructured into six instead of five programmes, and the functions of each was outlined. The new programme, Programme 4, comprised the Programme and Project Management Unit (PPMU) which would oversee the execution of human settlement programmes, under a number of different sub-programmes, and it would be particularly active at provincial and local levels.  It was later noted that this structure was funded. The Department said that the strategic outcomes were directly related to the delivery agreement that the Minister signed with the President, and looked to accelerated delivery of housing, improved access to basic services, achieving an improved property market, and more efficient land utilisation. The presentation on the budget indicated that the greatest portion of the funding went to Housing Development Finance, and would be distributed by way of the Human Settlement Development Grant (HSDG) to provinces and the Urban Settlement Development Grant (USDG) to accredited municipalities, as well as financial transfers to the Department’s institutions. The Rural Housing Loan Fund (RHLF) would receive a final allocation from the Department. There would have to be proper and effective management of fiscal allocations to the provinces, and PPMU would assist with this. There would be a particular focus on provision of infrastructure and socio-economic improvements to the lives of citizens. The DHS still had capacity challenges and a 19% vacancy rate. It hoped that the new structure would, however, correct anomalies in reporting and feedback between provincial branches and head offices, duplications, and better control over job functions. Chief Directors and Deputy Directors General would have to undergo competency assessments, which would run concurrently with mergers and new placements.

Members asked if the performance agreements were aligned to the new Cabinet requirements, and it was stressed, in reply, that performance agreements were one indirect way to ensure that provinces would align to the national agenda. The discrepancy in the standards of similar projects was noted with concern, and Members asked when the Department intended to roll out a fully fledged and DHS-owned human settlement, stressing that this was urgent. Members were concerned about the demolition of houses, particularly in KwaZulu Natal, asked about the budgetary implications, and called for a status report. They questioned the reasons for some provincial allocations, noting that some provinces seemed unable to spend but others had as great a need, and also asked about the relationship with traditional rulers. Members questioned if the Department was ready to implement the new structure and urged it to ensure that staff were retained after training. They asked if asset registers were kept of houses built, and allocated, and asked about controls on spending in the provinces, who attended to sign-off, and whether the Department could influence provincial business plans to ensure that they fell in line with the Department’s objectives. They questioned why funding was withdrawn from the Rural Housing Loan Fund, and asked how financial institutions would be guided on loans for development of urban housing. The Department was finally asked how it intended to improve work ethics and address corrupt inspectors.

Meeting report

Department of Human Settlements 2010/2011 Annual Report Briefing
Mr Thabane Zulu, Director General, Department of Human Settlements, said that the presentation on the 2010/11 Annual Report of the Department of Human Settlements (DHS or the Department) would focus mainly on the challenges that the Department had identified, leading into more detail on the strategic plan and turnaround strategy would be given.

Mr Neville Chainee, Chief Operating Officer, DHS, gave an outline of the challenges identified. Although the DHS had received an unqualified audit report, there were some issues highlighted in the last meeting with this Committee around performance management and reporting. The Outcomes-based performance introduced by the Cabinet meant that there must be a substantial readjustment to the workplace performance of the Departmental officials. The weaknesses of the monitoring and reporting process would be addressed under the Programme and Project Management Unit (PPMU), in terms of the new strategic plan. He highlighted the need to establish branches of the PPMU in provinces and municipalities, given the direct impact on the Department’s performance.

Policy, planning, funding and implementation gaps were identified, including data collection and integrity, and obtaining value for money, and there were steps taken to close the gaps. Governance and compliance gaps, as well as other deficiencies identified, would be addressed through the turnaround strategies of the Department.

Department of Human Settlements Overview of Strategic Plan and Turn- Around Strategy
Mr Zulu stated that the new structure of the DHS would come into effect on 1 April 2012. Full details on this process were outlined in the presentation (see attached document).  The strategic focus of the Department was apparent from the key strategic objectives and targets contained in the Strategic Plan, Government Outcome 8 and the Estimates of National Expenditure. The Department was prioritising achievement of key performance indicators, outputs and outcomes in its strategic and annual performance plans.

Mr Zulu noted that the new structure would ensure managers to drive delivery in the new micro and macro structures. The Department intended to use the 2012/13 financial year as a transitional phase from the old to the new system. However, he indicated that there would not be compromises on delivery on targets, and that there should be no excuse allowed for under-performance. The implementation of the revised Finance-Linked Subsidy Programme (FliSP) would commence in April 2012.

The Department intended to focus attention on accreditation of municipalities, to ensure that full advantage could be taken of the Urban Settlement Development Grant (USDG) which was now in its second year of implementation.

Intergovernmental and private sector collaboration was key to the achievement of the Department’s strategic priorities and the DHS would be leveraging on these collaborations. Specialised, designated and sector-focused programmes such as the “Youth Build” and “Women’s Build’ would receive attention.

Mr Neville Chainee, Chief Operations Officer, DHS, dealt with the presentation on the programmes under the new structure. He briefly outlined the vision, mission and values, noting that the Department aimed to achieve sustainable human settlements for all. Its values include accountability, fairness and equity, sustainability, innovation and adherence to Batho Pele principles.

He discussed in detail the main and sub programmes envisaged under the new structure, including their performance objectives (see document). Programme 1: Administration would provide leadership and executive support to the provinces, in order to facilitate provision of adequate human settlements and oversee the provisioning of corporate services. This programme encompassed the offices of the Director General, Corporate Support, Human Resources Management, Information Management Services and Information Technology Services, Communication Services and Legal Services.

Programme 2: Human Settlements Delivery Framework would manage operational frameworks, governance frameworks, and advisory services. Programme 3 covered Human Settlements Strategy and Planning, and encompassed stakeholder and intergovernmental relations, human settlements planning and the human settlements strategy. Programme 4, which is the main thrust of and latest addition under the new structure, was the Programme and Project Management Unit (PPMU). This programme would oversee the execution of human settlement programmes and projects. It was further subdivided into units of Programme and Project Planning, Programme Implementation and Facilitation, Programme Monitoring and Evaluation, and Sanitation Programme.

Programme 5 encompassed the Office of the Chief Financial Officer, which would oversee the provisioning of financial management services of the Department. The Chief Investment Officer and Financial Management offices also fell under this programme. Programme 6: Office of the Chief Operations Officer would oversee the provision of human settlements operational services, and it would cover projects in Enterprise Architecture, Technical Capacity Development and Regulatory Compliance Services.

The Department had four strategic outcomes for the new structure. These were directly related to the President’s delivery agreement signed with the Minister, and looked to accelerated delivery of housing opportunities, improved access to basic services, achieving an improved property market, and more efficient land utilisation. These targets would be linked into the provincial business plans and would be presented to the Committee at a later date.

Ms Funani Matlatsi, Chief Financial Officer, DHS, outlined the full financial plans around the new structure (see attached presentation). She noted that the highest portion of the Department’s budget went to Housing Development Finance, which was the core in which most of the grants were situated, and was cost-based. The funding for Housing Development Finance would be distributed by way of the Human Settlement Development Grant (HSDG) to provinces and the Urban Settlement Development Grant (USDG) to accredited municipalities, as well as financial transfers to the Department’s institutions. The Rural Housing Loan Fund (RHLF) would receive its final allocation from the Department for this financial year. She noted that in terms of the HSDG formula for allocations, Gauteng would receive the largest amount, followed by Kwa Zulu-Natal (KZN) and Eastern Cape. This grant and the USDG would be increased over the next two financial years.

Mr Zulu briefly highlighted the risks and challenges identified so far for the new structure. There would be an ongoing challenge of ensuring proper and effective management of fiscal allocations to the provinces. It was envisaged that the PPMU, which had been established both at the National and branch levels under the new structure, would assist with proper management. The DHS intended to ensure that there was effective strategic coordination at various levels. It would be paying closer attention to the provision of infrastructure, a main feature of the USDG. The Department also intended to focus on and play a meaningful role in social economic activities, which would improve the quality of citizens, so as to sustain the services that government was currently providing. The under capacity in the Department was also highlighted as a challenge and there was a need to deal with this quickly and efficiently. There was also a need to align programmes and projects of the Department to Outcome 8, and it was important to ensure implementation of the new structure and proper adherence to the policies underlining these structures.

Ms Yvonne Mbane, Chief Director: Human Resources, DHS, discussed the implications of the current and new structure for the budget and development of human resources (see attached document for full details). She noted that the current structure had operated since 2007, with some reorganisation in 2009, but that it contained anomalies that the new structure would correct. These anomalies included reporting and feedback mechanisms between provincial branches and Head office, the span of control of branches, the reorganisation and merging of job functions, reducing duplications, to ensure efficiency and smooth running of the Department, within the parameters of the available resources.

In December 2011, the Department secured the consent of the Minister of Public Service and Administration (DPSA) for the new micro structure, but it was decided that this should commence only from April 2012, to allow for proper migration of internal processes. Consultations with unions, to ensure that they were happy with the new structures, had been held. There were still a few administrative issues outstanding, such as sending out letters to staff to inform them of job function and/or designation changes.

One key decision related to the merging and placement through the competency framework assessment. Chief Directors and Deputy Directors General would have to undergo competency framework assessments as the human resource plan of the Department was reviewed, but the merging and placement decisions would be taken concurrently with the assessments. The DHS still needed to fill the 19% vacancy rate, and the DHS would be undertaking a rigorous advertising process, and developing a human resource plan, taking gender equity considerations into account.

The difference in the compensatory allocations and operational costs under the new and old structures was not very substantial, especially when considering that the new structure had six programmes instead of five. The new structure was therefore funded.

Discussion
The Chairperson sought clarification as to when the new structure would come into operation.

Ms Mbane responded that it would come into effect on 1 April 2012, the start of the new financial year.

The Chairperson asked whether the Director General’s contract had been adjusted to reflect the performance agreement signed by the President.

Mr Zulu replied that his performance agreement was aligned with those of the President, the Minister and even the provinces. Performance agreements were an indirect way to ensure that the provinces aligned with the National agenda.

The Chairperson noted with concern that there had been instances where the same projects commissioned by the Department had been run with different standards in different places.

Mr Zulu said that each of the Department’s projects came “in different sizes” and had different challenges. He assured Committee Members that this was one of the many issues the Department hoped to resolve under the new structure.

The Chairperson asked when the Department intended to roll out a fully fledged and DHS-owned human settlement.

Mr Zulu stated that already three brand new projects had been earmarked to be implemented as fully-fledged DHS human settlement initiatives. These had been approved by Cabinet.

Ms Themba asked the Department to impress on the Minister the need to accelerate these projects and give them priority status.

Mr Zulu responded that the projects were monitored on a National level. If they were to be accelerated, this would involve galvanising all available resources, and reviewing time frames, at the same time ensuring that there was no compromise on quality.

The Chairperson enquired how many houses had been demolished so far, how many were yet to be demolished and what budgetary implications these demolitions may have. He noted with concern that once again third-highest allocations were given to the Eastern Cape, although there were other rural areas perhaps just as badly in need of infrastructure, in the Northern region and Western Cape.

This comment was not addressed directly.

The Chairperson inquired as to the Department’s relationship with traditional rulers in rural areas.

Mr H Groenewald (DA, North West) had some concerns about the Department’s new organogram, and asked if the DHS was indeed ready to implement from 1 April, particularly since there was still a 19% vacancy rate. He also asked how the Department intended to ensure that the staff whom it trained were retained, and that their skills would be used in the areas in which they were trained.

Mr Zulu responded that there was a need to repackage the remuneration of civil servants to retain the skilled and experienced workers. He noted that in future it might be necessary to introduce a system whereby civil servants would sign agreements to work for a certain period of time, before they were given training opportunities, to ensure that the skills acquired were fed back efficiently into the system.

Mr Groenewald asked if the Department kept an asset register, containing updated records of how many houses DHS had built, and to whom the houses were allocated.

Mr Zulu responded that this would be one of the primary functions of the PPMU under the new structure, and that all systems would be centralised. The Information and Communication Programme of the Department would also help ensure that all houses were reflected on the Department’s system, in order to allow for verification of both the houses and the owners.

Mr Groenewald referred to the Committee’s visit to KZN, when the Committee had observed that 500 houses had been demolished. He asked how the Department and intended to control spending in provinces and municipalities, particularly since most of the incidences of corruption and inefficiency happened at this level.

Ms M Themba (ANC, Mpumalanga) also wanted to know more about the status of the 500 demolished houses in KZN.

Mr Zulu replied that under the new structure, the PPMU’s oversight would serve to ensure that monies were used as budgeted and as intended, both at national and provincial levels.

Mr Groenewald asked the Department to elaborate further on its macro structures.

Mr M Jacobs (ANC, Free State) noted that an “unqualified” audit report, in the 2010/2011 Departmental Annual Report was not the same as a “clean” audit report.

Mr Jacobs asked what factors were taken into consideration by the Department when deciding on its budgetary allocation to the provinces. Experience had shown that the provinces who received the largest chunk of the allocation often ended up having to return it to National Treasury at the end of the fiscal year.

Mr Chainee responded that the provincial allocation formula was derived from consultation with the provinces. Factors taken into consideration included the number of shacks in each province, the number of households earning below R3 500 in the province, the rate of rural urban migration in the province and other issues. The Department intended to review the current allocation, in consultation with the provinces.

Mr Jacobs sought clarification on the Department’s procedures for signing off on completed houses, particularly in regard to checking quality, as also about on the allocation of completed houses.

Mr Chainee replied that the provinces and municipalities had inspectors who carried out the inspections of completed houses. Under the new structure the PPMU would be checking on the flaws and try to address the gaps identified in the checking systems. In regard to allocations, he noted that it was necessary to adopt a developmental approach.

Mr Z Mlenzana (COPE, Eastern Cape) noted that the Department’s presentation did not say anything about trying to minimise the gap for people living with disabilities.

Mr Mlenzana asked the Department how it would ensure that it influenced Provincial business plans to fall in line with the Department’s objectives, and how it would also ensure that the provinces’ budget for rural development was actually used for the rural areas.

Mr Zulu replied that the provinces were encouraged, and avenues were created for them, to meet with National staff and the Director General of the Department, to discuss issues relating to the National plans and direction. The DHS, at national level, was guided by government priorities and agendas. The provinces were encouraged to follow suit. However, he noted that the National department actually had no authority to insist upon the provinces taking a particular direction in their business plans.

Mr Chainee added that the national agenda would be prioritised through business planning, but the DHS must be cautious that it did not infringe on provincial powers.

Mr Mlenzana noted the reference to the RHLF receiving a final allocation in this financial year. He wondered if the total scrapping of this Fund was the best way to end corruption. He noted that rural people, who were unlikely to get home loans from commercial banks to build in rural areas, would suffer from this decision.

Ms Matlatsi clarified that the Department had only been ‘boosting’ the financial situation of the RHLF, and had not been solely responsible for its funding. There was no intention to close down the scheme, as other sources of funding would still be available to RHLF.

Mr Mlenzana also wanted to know what the Department would do to guide financial institutions on loans under the Urban Housing Development plan.

Ms Themba suggested that perhaps there should be meetings arranged with provincial officials, to try to get alignment of the provincial and national plans.

Mr D Feldman (COPE, Gauteng) expressed satisfaction and optimism with the Department’s proposed turnaround strategy.

Ms L Mabija (ANC, Limpopo) noted her disappointment at the “unhealthy work culture” of most civil servants and wondered how training by the DHS would impact upon and improve this.

Mr Zulu confirmed that this was also an issue of concern for the Department.

Mr Jacobs thought that it might be addressed by appealing to and inculcating a spirit of patriotism in all civil servants.

Ms Mabija asked the Department how it intended to deal with the issue of corrupt inspection officials in the Provinces.

Ms Themba requested that reports of inspectors be sent to the Committee, so that the Committee knew what to expect when going on oversight inspections.

The Chairperson concluded that it was disturbing for the Committee still to see so many uncompleted projects, some of which were abandoned, and others not funded at all, as these created opportunities for corruption. He urged the Department to respond to all challenges which it had identified in its presentation.

Mr Zulu thanked the Committee for its time, and assured members that issues of inspection would be dealt with effectively under the PPMU, and all concerns and questions of the Committee members that were not addressed by the Department would be addressed at a later date, during future presentations and communications with the Committee.

The meeting was adjourned.

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