Department of Human Settlements strategic plan & budget: Financial & Fiscal Commission & Community Law Centre comment

Meeting report

Financial and Fiscal Commission comment on budget of the national Department of Human Settlements
Mr Bongani Khumalo, Acting Chairperson, Financial and Fiscal Commission, outlined the comments of that Commission (FFC) on the budget and strategic plans of the National Department of Human Settlements (DHS or the Department). Whilst the FFC appreciated Strategic Outcome 1, for  accelerated delivery of housing opportunities, it believed that the goal of delivery of  400 000 houses by 2014 had caused the DHS to set its yearly targets too high, and it had failed consistently to achieve the targets over the past years. The Integrated Housing and Human Settlements Development Grant (IHHSDG) consumed more than 85% of the DHS budget, and this was transferred to provinces.
The IHHSDG also consistently fell short of annual delivery targets in terms of housing units, either because the targets were too high or the funding was inadequate. The number of housing units delivered decreased, even when allocations were increasingly rapidly. He noted that housing units delivered decreased from 161 854 units in 2009/10, to 121 879 units in 2010/11. The Department spent 98.8% of allocated funds during the 2010/11 financial year. Spending had been achieved by reallocating funds from Free State and KwaZulu Natal.

Mr Khumalo noted that public entities in the Department had also been rationalised, through the dissolution of Servcon and closure of Thubelisha Homes, whose functions were transferred to the Housing Development Agency (HDA).

The FFC had recommended to government that it should actively and specifically pursue development of a more spatially compact urban form for cities, by developing and adopting appropriate policies and financing instruments. Government agreed to this, and there were initiatives already with the recent launch of 512 newly-built flats for the residents of Jabulani Hostel in Soweto. The Gauteng Premier had indicated that this formed part of government’s long term strategy of the provision of sustainable human settlements closer to places of work, and the new approach of ensuring not just the building of rows of houses, but real human settlements where all social amenities were within the community.

In 2011, FFC decided to generate research and recommendations through a comprehensive and extensive public hearings process. These public hearings provided a platforms for all key stakeholders to share ideas. Some of the key issues explored at the public hearings included the extent of demand for housing in South Africa, as indicated by backlogs, informal settlements and backyard dwellings.  The public hearings also opened up debates on housing affordability. They noted that the backlogs for housing remained at similar levels as in 1994, and although the budget allocated had increased significantly, it had not resulted in increased delivery. Poor data collection and understanding of housing demand was also identified as a serious challenge during the hearings.

The sum required to eliminate the housing backlog, at a cost of R140 000 per unit, was about R300 billion was required – a sum far beyond the fiscal capacity of the state. Even if government combined housing and infrastructure subsidies, and provided land for free, there would still be a budgetary shortfall. The FFC was of the view that annual housing unit targets were unrealistic, given the  consistent shortfalls in meeting those targets. The demand for housing in South Africa remained high,  and was estimated at 2.1 million housing units. FFC noted that there was a need to look at other housing delivery options and their fiscal implications. FFC intended to undertake an options analysis which would inform the Commission’s second public hearings in August 2012).

Discussion
Ms M Borman (ANC) welcomed the presentation. She was concerned by the Department’s failure to meet its targets. She noted that capacity and funds were interlinked. She asked who had attended the public hearings, and the level of public participation. She also noted a general acknowledgement about the issue of poor data collection.

Mr Khumalo said that the public participation process conducted by the FFC was open to a whole spectrum of stakeholders. The public hearings were open to the whole country, and civic organisations and the private sector made contributions. Views that were submitted during public hearings were compiled in a report, and copies of this had been circulated to Parliament, in accordance with the FFC Act. He noted that the FFC did not want to pre-empt the findings of the research as this required a scientific analysis.

Mr R Bhoola (MF) asked what the impediments were that precluded the Department from correcting some of the errors of the past. He also commented on the glaring weakness in data collection and noted a need for synchronisation and alignment within the Department to meet these challenges. He commented that the DHS should also not deviate from the priorities set out in the State of the Nation Address. He hoped that the FFC had the expertise to analyse the challenges faced by the Department.

Mr Khumalo answered that the question of how government should correct the current impediments in the housing market was very difficult to answer, and noted that housing delivery was not just about houses, but also about the infrastructure and amenities of housing projects. It was pointed out that the Department must take action to ensure that the current challenges around delivery of houses were resolved. Service performance contracts between the President and Minister must cascade down to staff in the Department.

Mr Bhoola wanted more details on the overspending by the KwaZulu Natal provincial department.

Mr J Matshoba (ANC) also asked for more elaboration on the re-allocation of funds and more specifics on the various areas facing challenges.

Mr Khumalo added that the re-allocation was intended to ensure that money actually allocated would be spent, in line with the economic principle of opportunity cost. The responsibility after the re-allocation was given to the national departments. The national departments should ensure that re-allocation was not necessary. The two provinces that had their allocations taken away had faced challenges, and because of a 3% overspending elsewhere, there was a need for a re-allocation after over 3% overspending. However, he noted that if the funding had not been re-allocated, the two provinces would in any event have ended up underspending. The funding re-allocated could be used elsewhere for housing development.

Ms P Duncan (DA) agreed with comments made by her colleagues. She too commented that issues around poor data collection remained a serious challenge, and asked if FFC could get to the crux of the problem. She also requested that reports from the public hearings be furnished to the Committee.
She wanted to know who had designed the IHHSD Grant and whether it was part of the integration process.

Mr Khumalo advised that the Minister of Finance was in charge of designing the grants that fell under Chapter 13 of the Constitution and the departments simply motivated for how the grant would work and what must be contained in these grants. He pointed out that it was unfair to take money from the grant because the Department had failed to meet up to expectations

Mr S Mokgalapa (DA) pointed out that the current housing policy was unsustainable, and there was a need for a thorough review and assessment of this policy. The issue of sanitation also needed to be addressed. He thought there should be a greater focus on improving the capacity of provinces, and he too commented on the poor, inaccurate and often estimated data. He also pointed out that the fiscus was being inadequately supported, with only 5 million taxpayers, compared to 15 million on social grants, and this was also unsustainable. He urged that government must made stringent efforts to move away from this dependency syndrome, and said that bold political moves were needed to acknowledge the problems. He also agreed that most of these targets of DHS were unrealistic and had the effect of depleting the fiscus.

Mr Khumalo concurred that the issue of dependency was a serious problem and needed to be dealt with. He also reiterated the FFC’s concerns that the targets set by the Department were too high, and said that the non-achievement could be due to this, and well as funding constraints. The problem of housing backlogs could not be solved by relying on the markets, although the market did play an important role in solving the problem. The question of affordable housing from the private sector was one of the matters that the FFC technical team would investigate.

Ms N Mnisi (ANC) noted that the demand for housing remained high and it was imperative to look at other mechanisms, such as different rental systems. She also requested clarity on certain figures in the presentation as she doubted whether the figures in fact represented the total number of houses that needed rectification. She, like her colleagues, agreed that poor data needed to be addressed, and said that there were also several policy gaps needed rectification.

The Chairperson flagged the issue of private sector housing as a discussion point for the future. She then enquired about the overcrowding in the housing market and wanted to know what type of low cost housing was provided by the private sector. She thought it would be incorrect for government to depend on the market to provide essential services. It was noted that a comprehensive policy network was critical to solve the current housing challenges.  She urged political parties to talk to the issues affecting all South Africans, and noted that debate would be crucial to solving the plethora of challenges in the country. Accurate figures were important, as a basis for government’s work.

Mr Khumalo noted that the DHS would be evaluating its funding and the policy, starting from the end of the month, and these evaluations would inform a review of the subsidy. The decline of delivery statistics were being examined, but he also noted that the shift from provision of housing, to delivery of human settlements had not been accompanied by real changes to the subsidies and policy review. The question of capacity needs to be critically analysed by the Department. Community-based development was critical in speeding up housing delivery. The crowding of the private sector was more of a societal issue, and the government needed to address these challenges.

The Chairperson noted that the report was a good foundation for future discussions and had suggested some appropriate solutions to assist the Department. 

Community Law Centre & Centre For Disability Law and Policy, University of the Western Cape: Comments on Department of Human Settlements 2012 Strategic Plan (with specific reference to Special Needs Housing).
Ms Gladys Mirugi–Mukundi, Researcher, Community Law Centre (CLC), University of the Western Cape, outlined the comments on the budget and strategic plan of the DHS. She introduced the CLC as a human rights institute which conducted research, education and advocacy, with a strong focus on  socio-economic rights, children’s rights and the Parliamentary programme. The institute focusing on disability law and policy was established in 2009. Its work was based on the Convention on Rights of Persons with Disabilities.

She explained that Special Needs Housing (SNH) was housing designed for orphans, vulnerable children, people infected or affected by HIV/AIDS, elderly persons, persons with disabilities(physical, intellectual, psychosocial), victims of domestic abuse and family violence, and the homeless or those living on the street (including street children, refugees, and trafficked people). Because the needs were broad, there was also a broad range of housing options, which included emergency shelters, transitional housing (second stage housing for battered women), specialised health care (frail care for elderly persons), community group homes (for persons with disabilities), and access to affordable rental housing (the waiting list). Delivery of SNH was mostly at provincial level.  Registered Not for Profit Organisations (NPOs) and other welfare organisations assisted in the provision of SNH services at grassroots levels.

Dr Helene Combrinck, Researcher, Centre for Disability Law and Policy, pointed out that the National Housing Code did not provide for SNH as such, nor for development by provinces. Organisations providing SNH services at grassroots levels did not receive adequate support from provincial departments of human settlements or local government. Because of the lack of a national policy on SNH, certain provinces were reluctant to develop their own policy. There was also little clarity on the role of the transitional subsidy and so the SNH became ‘invisible’ in the national planning environment. She noted that the development of a national policy directive on SNH would fit in squarely with the Department’s operational framework.  She also emphasised that a national SNH directive should involve provincial departments, stakeholders and welfare organisations at grassroots levels.

The CLC therefore recommended that the Department should issue a policy directive authorising provinces to develop and implement SNH policies, based on existing housing delivery mechanisms. The DHS was also urged to provide support to provinces in the planning, funding, management and evaluation of these SNH projects, as envisaged in the Strategic Plan. The Portfolio Committee was also asked to monitor the development of a national SNH policy directive, and to ask the DHS to report on the integration of SNH in its strategic plan and programme plans.

Discussion
The Chairperson thanked the CLC and noted that the Committee should give attention to these issues, and would check as to what the DHS was doing to accommodate challenges currently faced by the disabled.

Ms P Duncan (DA), who  had previously served on the Portfolio Committee on Women, Children and People with Disabilities, noted that each national department was supposed to give a breakdown of what it was doing specifically for women, children and persons with disabilities. It was important to go beyond the Millennium Development Goals in assisting the disabled, and departments’ policies should be informed by this.

Ms M Borman (ANC) thanked the CLC for being proactive in raising the issues of the disabled. She asked how the SNH was working, in the three provinces that currently were running this type of housing.

Ms M Njobe (COPE) asked if the question of policy had been discussed with the Department itself. She agreed on the importance of implementing policy at all spheres of government, and she suggested that the Committee needed to arrange another session to discuss these issues with the DHS.

Mr Neville Chainee, Deputy Director General, National Department of Human Settlements, Department of Human Settlements said that the Housing Code did cater for the disabled. He agreed that the Department had not done enough yet to coordinate issues of SNH. The DHS did have policy, but there were problems in implementation.

Dr Combrinck noted that the variation in the SNH depended on the type of disability. She was not aware of the exact location of the projects being run in the Eastern Cape, but was aware that the Departments of Health and Social Development also became involved in the various projects in the different provinces. This was still work in progress.

The meeting was adjourned.