Sanitation & Human Settlement National Priority Projects progress report; Department 4th quarter report 2012

Meeting report

Mr Thabani Zulu, NDHS Director General, initiated the Department’ presentation. The report included the activities undertaken during the last quarter of the 2011/12 financial year. The report focussed on the annual performance monitoring plan, the overall Department performance, its communication and outreach programme, the delivery agreement linked to Outcome 8, job creation, accreditation of municipalities, housing entities’ performance and reflected on the financial implications.

Mr Neville Chainee: NDHS Chief Executive Officer, said the total number of approved targets was 305 and of that, 71% was achieved. As a result of the turnaround strategy both operational and strategic deficiencies had been dealt with. Among them was staffing. A pie chart on slide 5 showed targets achieved and those not achieved. As part of its outreach programmes the Department staged the Women’ Build as part of its women and youth project. Preparations for the Youth Build had commenced and included with that was the formation of an annual working session with youths scheduled for July this year. The Department together with the North West Department of Human Settlements launched the Northam Project - a public private partnership with Anglo-Platinum. The project formed the basis of the Finance-linked Individual Subsidy Programme (FLISP) programme and an estimated 20 000 units would be built. Other projects include the Southernwood Square Social Housing Project in East London, the Jabulani Hostels and the launch of the Klarinet mixed settlement at Emalahleni in Mpumalanga. The projects would help water down some of the non-delivery criticism on the Department.  The fifth Programme of Action progress report for Outcome 8 up to 30 September 2011 was submitted to the Technical Implementation Forum and had been approved for submission to the relevant Cabinet Cluster.

Outcome 8 progress report
The Department was a quarter behind in its reporting because the content of its delivery agreement required a substantial amount of verification of figures. It was important that the process be followed because the progress report on Outcome 8 was uploaded onto the Presidential website and was a public document. The Cabinet had complained about the delay but the Department had said that a substantial amount of attention was paid to the report.

Upgrading of informal settlements: About 91 358 sites had been serviced representing 22% of the total target of 400 000 households. The detailed progress for Outcome 8 was submitted to the Presidency as part of government’ mid term review process and once that had been dealt with it would be submitted to the Committee.

Rental accommodation: Until now, there has been 11334 rental accommodation units, about 14% of the targeted 80 000 units.

National Upgrade Support Programme: 46 (94%) municipalities out of a targeted 49 were offered technical assistance; six provincial National Upgrading Support Programme (NUSP) structures had been established in KwaZulu Natal, Eastern Cape, Limpopo, Mpumalanga, Northern Cape and Western Cape.

Accreditation of municipalities: An additional 17 municipalities had been assessed by the Capacity and Compliance Assessment Panel and were awaiting MEC approval to be awarded certificates and the first tranche of the Urban Settlement Development Grant (USDG) had been transferred to the eight metros.

Access to Basic Services: It was be the last time that ‘access to basic services’ would be included in the Department’ accounting books as the managing and monitoring responsibility would now lie with the Department of Cooperative Governance and Traditional Affairs (COGTA). Sanitation provision up to 30 September 2011 was 158 337. Thus total since April 2010 was 418 709 households.

Release of land for Human Settlement development: The Housing Development Agency (HAD) had identified 17 000 hectares of state land released up to 30 September 2011. Despite measures being put into place to improve the performance of HDA, the Department was concerned that while the land was being identified there was very slow progress in releasing the land.

Increased Urban Densities: The Department had developed a policy document aimed at addressing the dynamics of the Built Environment that would assist provinces and municipalities in dealing with increased densities.

Land Use Management Framework: The Department of Rural Development and Land Reform released the spatial planning and Land Use Management Bill for public consultation and the Department had participated in the process and a report on its submissions would be sent to the Committee.

Mortgage Default Insurance Guarantee: The Department had submitted the application in December and Treasury was still considering it. Its concurrence was required. Commercial banks had confirmed their support.

Outcome 8 provincial delivery for Rental: A table was provided for delivery statistics for rental housing.
Informal Settlements Upgrading Programme (ISUP): A provincial breakdown was also provided. The Department indicated that at the Technical Implementation Forum together with MinMEC, the provinces had been encouraged to work hard so that the 400 000 target for upgrading of Informal Settlements would be achieved by 2014, failure of which would compel the Department to impose penalties.

Sustainable Human Settlements and Basic Service Task Team: It had convened jointly with COGTA and NDHS and reported on: (1) rapidly growing towns and cities, (2) informal settlements upgrading programmes in the 45 municipalities (3) progress report on the 23 rural municipalities identified by the Cabinet Lekgotla of June 2011 (4) report on Presidential Infrastructure Commission on Strategic Integrated Project (SIP) 7. A comprehensive report on the four items could be provided to the Committee.

Job Creation
The Department had created 54 031 direct jobs and 27,838 indirect jobs. From April 2011 to March 31 2012, 116 056 houses had been completed, 56697 sites serviced and the projects had sustained about 81, 868 employment opportunities in total.

Accreditation of municipalities
During the period under consideration, assessments of three municipalities (Tlokwe, Rustenburg, Matlosana) were done in the North West and the Department was in the process of finalising implementation protocols with accredited municipalities and Provincial Departments of Human Settlements.

Turnaround strategy
This had been presented already. It had been approved and implementation date was 1 April 2012.

National Home Builders Registration Council (NHBRC): In the fourth quarter, it had registered 708 new home builders against a target of 836. A substantial amount of work on backlogs had been done though the variance between targets achieved and not achieved was still too high. 

Housing Development Agency (HDA): Land was being identified without getting released.

Social Housing Regulatory Authority: Despite being in existence for only two years now, its performance was pleasing.

The Department would do a consolidation process towards the end of the year on the National Housing Finance Corporation (NHFC), National Urban Reconstruction Agency (NURCHA) and the Rural Housing Loan Fund (RHLF) towards the end of the year.

Financial Report
Ms Funaneng Matlatsi, NDHS Chief Financial Officer, provided the 2011/11 final adjusted allocation for each of the five NDHS programmes. The total budget allocation was R22.5 billion. The adjustments and variances between allocation and expenditure were explained for both transfers and grants. About R31. 1 million was used for the Accelerated Community Infrastructure Programme (ACIP), R26 million for the Rural Household Infrastructure Programme (RHIP), R3.1 million for the development of the turnaround strategy and R3.4m for SITA infrastructure services. The additional amount of R180 million for disaster fund was split among eight provinces in contrast to the previous years when KZN had received the bulk of funds. About R2.4 million for higher salaries was received as additional funds. The total allocation to the Department including adjustments was R22.8 billion and the preliminary spending was sitting at R22. 5 million. Administration: about 75% (R166m) was spent. Housing Policy Research and Monitoring allocated R39.4 million, R33 million was spent (83%); Housing Planning and Delivery Support: R186.7 million (93%) of the total allocation of R200.7 million. Spending on strategic relations was at 63% because the tender for SITA was still being finalised. The Department had picked up a number of variances it could not honour during the period under review. In Administration, it was a result of problems associated with the payment of leases particularly that of the Department of Public Works. The Special Investigating Unit surrendered a portion of the money they had requested at the beginning of the financial year. Only positions that had been identified as of priority had been filled for the period under consideration. The total variance was R229 million and the Department had requested a rollover.

With regards to transfers, the Human Settlements Development Grant was allocated R14.9 billion which was all transferred to the provinces. The Rural Development Grant had an expenditure of R172.8 million (62%) and a variance of R84 million, the Urban Settlement Development Grant was all transferred and the money that goes to the housing entities. Three million was lost to the Social Housing Foundation and the Department had asked Treasury to shift the money but to no avail and the money had since been requested as rollover. Of the total HSDG grant of R14.9 billion, R302 million of the conditional grant was not spent. Gauteng, Western Cape, Northern Cape and Mpumalanga spent 100% of their allocations. Limpopo had not spent 10% allocation because it had administration issues. NDHS hoped the remaining amount would be rolled over to become part of the new allocation which would be used to settle some of the outstanding obligations. The Eastern Cape had not spent 13% of its allocation. The Department would request rollovers for all provinces. With regards to the Northern Cape, the money they had overspent would be solicited from their equitable share and taken care of by the provincial treasury.

The annual target as at 31 March 2012 was a total of 222,977 (82,344 sites and 140,633 top structures). The actual delivery performance was 172,753 (56,697 sites, and 116,056 top structure units). The total variance on delivery was 50,224 (25,647 sites and 24,577 top structures). This would be taken care off in this financial year.

The Urban Settlements Development Grant (USDG) was transferred to municipalities at a total allocation of R6.2 billion and the total spending was R2.6 billion so far. The Department was confident that the remaining R3.5 billion would be spent by 30 June this year.

Discussion
Mr S Mokgalapa (DA) welcomed the presentation but noted that the Department had promised to forward it to the Committee the previous week; instead it was delivered only at the meeting. If the Department was going to assess 17 municipalities for capacity, did the others have enough capacity and were they complying? He said it was unacceptable that the responsibility for monitoring access to basic services was being shifted to COGTA because it formed the basis of Human Settlements and the later was failing to do its own load already. Had the NDHS obtained the proposed densification plans of the accredited municipalities? What was NHBRC doing to improve quality delivery because that formed the core purpose of their mandate? He sought clarification on the appointment of officials at NHBRC and whether the amount spent on transfers was a true reflection of the situation on the ground. It was unacceptable that provinces were failing to spend the HSDG grant when they were a lot of backlogs in basic service delivery. What was being done to make sure that provinces were spending the grant for the intended purpose?

Ms Matlatsi replied that the Department had a 100% transfer in its accounts. The transfers were part of the capitalisation that was received by institutions and formed part of their income statements. There were some monitoring mechanisms on spending.

Mr Chainee said that with regards to the spatial development framework, the Department considered municipalities’ build environment performance plan and it had made improved densities one of its priorities in the eight metropolitan municipalities. However a number of factors were taken into account in the densification process including flood line issues. One of the aspects of NHBRC was to ensure quality of building materials and utilisation. NHBRC did undertake inspections and the enrolment process involved a range of technical issues to be factored in.  

The Director General said that would establish the reason for failure to submit documents to the Committee as had been promised. The documents had been sent on 25 April and should have reached members by 27 April, except for the sanitation document. He agreed that it was unacceptable that municipalities were abusing the grant to execute other programmes and were not spending their USDG allocations. However there were a number of challenges that the Department had to grapple with in the initial stages when the grant was first introduced.  One of the challenges was the failure to understand what the grant was to be used for and that National Treasury had given strict conditions for the usage of the grant. One of the conditions was that the Department was not allowed to release the grant without proper business plans being submitted by municipalities which accounted for further delays. The Department had advised municipalities on how they could better manage the grant and in drafting business plans, failure of which the grant would be withheld.

Mr Chainee said with regards to progress on existing municipality accreditation, the Minister had issued compliance certificates to the eight Metros. What had been dragging the process was the formal accreditation of municipalities but the Department had through the MinMEC instituted that accreditation be completed before 31 March. Although the Department had done its part, other bottlenecks were a product of a lack of smooth intergovernmental relations. If permitted, the Department would return together with provinces and municipalities to present their Business Plans on the USDG grant. There was progress so far in EThekwini, Western Cape and KZN and protocols had been signed with Nelson Mandela and the Eastern Cape.

Ms J Njobe (ANC) sought clarity on whether the variance of R11 million under Administration was as a result of over budgeting or another reason. What was the correlation between the amount and the R2.4  million indicated for higher salaries adjustments. Why did Treasury not give the go-ahead for the R3 million not spent by Social Housing Foundation to be shifted to other programmes and what efforts had the Department made to convince National Treasury. Was NDHS meeting its job creation target?

Ms Matlatsi said the R3 million was the last allocation of the medium term to the Social Housing Foundation (SHF). The Department had suggested that the money be used for operational costs for the SHF but National Treasury refused to transfer it to other programmes. In this financial year it had requested for the money to fund some of the unfunded mandates and Treasury had replied towards the end of the financial year that money would not be fiscally dumped. As such the money had been requested as a rollover. The variance of R11 million under Administration was not part of personnel compensation but was part of the money surrendered by the SIU. The SIU still had work to do but it had adjusted its targets to this financial year after realising that they were not going to be able to attend to all of them last year. The money was regarded as savings and had been split between other programmes. The R2.4 million was part of normal allocations by Treasury based on the allowance in the Department’s July allowances.

Mr Chainee replied that the Department was meeting its job creation targets. The jobs that were created directly or indirectly were temporary. 

Ms D Dlakude (ANC) suggested that the Youth programme set for July be done in June to avoid a clash with Mandela birthday commemorations. Which provinces had received the Rural Housing Loan Fund (RHLF)?

Mr Chainee said all provinces had spent their RHLF.

Ms J Sosibo (ANC) was unhappy that the Department had defaulted on its promise to forward the 4th Quarter report in time. She agreed with Ms Dlakude that the Youth day needed to be changed and sought clarification on whether money that was rolled over would be treated as part of the new financial year allocations or as additional money. She wanted clarity on whether the overspend of the USDG grant in KZN was 1 million or R1 000 and what measures NDHS would take against North West’s overspending.

Ms Matlatsi explained that soon after the end of the financial year if there were unspent funds, they were requested as rollovers but the percentage was decided by Treasury based on the Department’s commitments. Once the money was approved it become coupled with the voted allocation and was reported as such at the end of that financial year. It was normally received at the end of December or in January. The Eastern Cape had not spent its HSDG allocation of R280 600 of the total allocation of R2.1 million. The figures were however preliminary and final figures would be available after 15 May. The R1 000 overspend by KZN had to reflect to balance accounts. It was an acceptable figure as it was not a material amount. However it was unacceptable that North West had overspent R150m as that would turn out to be an unauthorised expenditure. The Department had explained to the province that it had no funds to set off the amount and it had to speak to its provincial treasury to provide the funds.    

Mr Chainee said the Youth summit date would be changed. 

Ms P Duncan (DA) asked if NDHS was going to achieve its 2% employment target with regards to disabled people. She sought clarification on the challenges in the controversial lease of the Department of Public Works. What was causing delays in the finalisation of the SITA tender and when would it be solved? What was the original target for serviced sites and top structures since NDHS had indicated that some of the targets not achieved would overlap into the next financial year.

Mr Chainee replied that the original target for sites was 82 344 of which it had delivered 56 697. Houses constructed was 140,633 and 116,056 was achieved. Variances were 25,747 and 24,577 respectively. Mr Chainee said the Department had instituted a process to ensure compliance with SITA but there was no compliance. They were trying to follow the process.

The Chairperson asked how the State Information Technology Agency (SITA) could do justice to all the departments that were supposed to work with when it had about three pages of critical positions that were unfilled.

The Director General said SITA was currently undergoing a turnaround strategy and the new CEO had made a presentation to all government directors general, reflecting on the existing challenges at SITA. The advert was part of its effort to solve challenges because lack of capacity had had a negative impact on all government departments. The Cabinet had made reference to the issue during the Lekgotla but despite challenges, the Department had made other arrangements for the procurement process.  

Mr Chainee said NDHS had not yet achieved its 2% target but more effort would put into this area in respect of existing vacancies. The Department had requested the lease of a building for occupation from the Department of Public Work. The building was secured, but NDHS was not satisfied with its condition. Public Works had invoiced them sparking the dispute. 

Ms Duncan said it was sad that the two departments could not settle the matter amicably and the Department of Public Works should have provided an alternative building instead. 

Mr Chainee replied that NDHS had given Public Works its specifications for the building but the latter had not done the job to the former’s satisfaction. Since NDHS had not taken occupation, it was not responsible for settling the payment.

Mr K Sithole (IFP) was concerned about the constant transfer of sanitation to different departments. He wanted to know why Buffalo City and the other Metros had not spent 81% of its USDG grant.

The Chairperson said that more effort was needed on the USDG and NDHS should come up with a recovery strategy on the matter. Municipalities had been crying for support but after the grant was availed they were failing to spend the money and it was unacceptable. After they had presented strategic plans last year on how they were going to spend the grant, they were failing to deliver. The issue of NHBRC senior management was a political matter that should be raised with the Minister, not with NDHS. Sanitation was a thorny issue that should have had received more attention but was overlooked in the presentation. The fact that the monitoring of basic services was transferred to COGTA was confusing and the Portfolio Committee would do its best to ensure that the role remained with NDHS. 

The Chairperson said that the signed Delivery Agreements were not working and the Presidency should assist the Portfolio Committee on whether the agreements were working or not. The blame for non-delivery was being laid at the wrong door. Department relied on other departments (such as Public Works and the Department of Water Affairs) to deliver its targets. She asked where the Free State had obtained the money that accounted for overspending when NDHS had informed the Committee in December that the province had 1% left of its allocation. She asked why the SIU had surrendered some of its allocated budget. With regards to the Youth summit, she asked what plans were initiated last year and what problems had been encountered in their implementation.

Ms Matlatsi replied that a forum had been created with the CFOs of municipalities as part of the efforts to attend to underspending on the USDG. Mr Chainee had said they welcomed the suggestion to convene a meeting with NDHS, Metros and the Committee to iron out the issue of USDG spending. COGTA was taking responsibility for the reporting and monitoring of basic services implementation but it was not taking responsibility for functions which remained with the municipalities and provinces as outlined in the Constitution. Cabinet had arranged that one department would report on basic services. With regards to the Youth Summit, NDHS had agreed that provincial youth summits would be held and some took place. The Department would present to the Committee on its Youth Development Strategy. With regards to overspending by the Free State, this was a political issue. There were questions why Limpopo was put under administration yet the Free State was not. There was no solid explanation why R10 million was not spent when the province had arrears. The CEO of the province had indicated that it could not pay using the R10 million because the biggest invoice was larger than that amount. 

The Chairperson said NDHS was the source of the confusion because it had not placed well the issue in its presentation.

Mr Chainee said that NDHS would provide the support in terms of its programmes to sanitation and water among other things, but the figures were consolidated by COGTA

The Chairperson assumed Cabinet had decided that Outcome 8 was responsible for basic services which could create constitutional confusion as was the case in Higher Education. While Outcome 8 was a very good initiative, something should have been done to prevent departments having overlapping roles.

The Director General said that it was a matter of institutional reporting confusion which Cabinet was trying to resolve. There was a need for forced collaboration between the two departments as they were interconnected. However, to avoid confusion it was not possible to have two departments reporting on the same issue which could affect data consolidation. There was a need for collaboration between the two outcomes: the provision of basic services and sustainable human settlements. This however did not mean that NDHS would no longer report to the Committee but the major department that would be charged with the duty was COGTA. Even though COGTA was taking over the monitoring role, NDHS was still responsible for ensuring that basic services were provided for every development.

Ms Njobe said the issue was similar to another department where funds were allocated for the Expanded Public Works Programme (EPWP) but NDHS was not the implementing agent. The problem was that NDHS may not be happy with the way funds had been used yet they were supposed to give a report. The same could happen between COGTA and NDHS. She supported coordination between the two departments but was concerned that COGTA would do reporting.

Ms Dlakude there was no problem with NDHS transferring funds to COGTA but it should ensure adequate monitoring of the programmes implemented. It would create a problem if both departments did monitoring as that would result in conflicting reports.

The Chairperson said the matter would be looked at further. The Department was urged to submit a report on the definition of roles, along with COGTA’s report to the Cabinet, so as to aid understanding. 

Mr Sithole said he was not convinced that NDHS should be charged with ensuring basic services were provided, yet the monitoring of the same services rested with another Department.        

The Director General agreed it was for the best that the NHBRC issue be handled as suggested by the Chairperson because he could not comment on it without a mandate from the executing authority.

National Priority Projects presentation
The Director General, Mr Thabani Zulu, introduced the NDHS progress report on the implementation of National Priority Projects, funded out of a 20% ringfenced allocation of the USDG. The presentation would look at the implementation of the Grant projects and the challenges that were being experienced.

Ms Matlatsi presented on the financial cost of the National Priority Projects (NPP). A funding model for NPPs and other priority projects was developed in the last financial year after realising that provinces had failed to present convincing Business Plans on how they were going to utilise the 20% allocation. The 20% was part of the R14.9 billion HSDG allocation. Part of the 20% was transferred to provinces, which were responsible for the appointment of service providers. Apart from NPPs, the 20% had also been focussed on Outcome 8 programmes. The fund was split between land acquisition, the upgrading of informal settlements and Social and Rental housing which was part of NDHS’ output programme. MinMEC had approved eight priority projects that would receive a portion from the 20% allocation.

Mr Wonder Nkosi, NDHS Chief Director National, noted the objectives. The challenges that were faced by NDHS included the fact that it still relied on provinces and municipalities to be implementing agencies, there was poor project planning and design, poor contracting and tender packaging, in-house capacity constraints and misalignment of funding facilitation in terms of bulk infrastructure. The core objective of the NDHS turnaround strategy was to solve some of the challenges. In spite of the challenges NDHS was making progress in the implementation of the projects. The projects identified were three Cabinet endorsed projects: Cornubia, Lephalale, Lufhereng and five other projects: Khutsong, Sweetwaters, Diepsloot, Duncan Valley and Drommedaris. NDHS had made considerable progress especially on the first three Cabinet endorsed projects. For 2011/12 the total provincial allocation was R886 million, for the current financial year it was R923 million and the 2013/14 allocation would be R974 million.

Mr Nkosi provided a profile and progress report for each priority project (see document). For example, the first project was Lufhereng, situated near Soweto. The Department had made progress on the development which when finished in 8 to 10 years would have 24,145 units. Progress in bulk infrastructure included completion of internal services, electrical reticulation; temporary bulk infrastructure was supplied by December 2011, home and streetlights had been electrified. There was completion of 2 016 foundations. The total estimated cost for the entire project was R4.6 billion.

Some of the challenges affecting progress were the need for additional funds for electricity supply, finalisation needed on farmer land settlements, land owned by Public Works Department not yet released, delay in registration of a services servitude over a privately owned land to allow bulk line infrastructure to pass through private property, exposure to vandalism, beneficiary administration, interference of work by community members, need for improved project management by provinces, insufficient waste water treatment, large portion of land lost due to environmental requirements of excluding an area occupied by rare bullfrogs.

Discussion
The Chairperson said it was unacceptable that Gauteng was still hiding behind the bullfrogs at the expense of progress. The first interaction about that concern was in 2009 and the agreement was that after three years, the problem was supposed to be solved. The three years were over now.

Ms Julie Bayat: NDHS Chief Director: Priority Project Facilitation, said that the agreed period for the operation was three years adding the period had just started. The Environmental Impact Assessment was done and a fence had been erected by environmentalists on cleared land to prevent frogs from returning but they were getting through the fence. Environmentalists had decide to keep the frogs in the area because it was their natural habitat

The Chairperson said it was not the first time the issue was being discussed. A solution should have been found already.

Ms Bayat said that land was bought and through the EIA, it was discovered that part of the land was sensitive. Environmentalists had met last year and agreed on a management plan that would be implemented going forward.

The Chairperson asked when she had last attended meetings on the project.

Ms Bayat replied that it was in December 2011, adding that meetings had been far between due to the slow progress of the project.

Mr Chainee suggested that the matter be dealt with as part of another agenda item on the HSDG with provinces.  The Department would request that the Head of Department (HOD) of Gauteng and the Human Settlement Head for the City of Johannesburg be present at the Portfolio Committee meeting.

The Chairperson sought clarity on the matter of the Diepsloot project where it was noted that private land had been purchased on the condition that the seller be the developer.

Mr Chainee explained that part of the agreement was that the seller would become the developer. The province was responsible for planning and preparing the land while the seller would develop the land. The delay was a result of the developer waiting on the province to prepare the land so that construction could commence.

Ms Dlakude said it was unacceptable that a province would consent to such an arrangement where the seller insists on being the developer.

Mr Chainee replied that as a result of such arrangements, the Housing Code had been amended to say that any development where a subsidy was solicited, the project must be tendered.

Ms Dlakude said that Gauteng had not given a true picture of their problems. She welcomed the proposition that the HODs attend the Committee meeting. Gauteng had obtained the land in 1999 but it was still struggling to deliver. The new Gauteng HOD should inherit the responsibilities of his predecessor.

The Chairperson wanted to know the cause of delays in the Drommedaris project in the Western Cape.

Ms Bayat replied it was because of the lack of bulk infrastructure in the whole of the Drakenstein area and the appointment of contractors.

Mr Mokgalapa said the provinces were supposed to have been asked about these matter in one of the meetings NNDHS had had. He supported the proposed meeting with NDHS provincial counterparts. Most of the challenges were a product of poor intergovernmental relations.

The DG said NDHS was putting protocols in place, identifying specific roles for each sphere of government. The major three projects that were endorsed by Cabinet would be prioritised.

Mr Mokgalapa welcomed the explanation that relations between spheres of government were very poor. 

Ms Njobe wanted to know if NDHS was prepared to collaborate with other departments.

The Chairperson said that such issues were the preserve of politicians and the Committee would engage and make recommendation to Cabinet.

The DG answered that collaboration was possible but needed a change of mindset by technocrats and the the players within government and an understanding of integrated Human Settlements. At some point NDHS required political guidance but technocrats could also become the source of problems.

The Chairperson wanted to know why Lerato Park was not part of the projects.

Ms Matlatsi replied that Lerato Park was not funded under the current financial year.

The Chairperson asked what had happened because initially it was part of the other priority programmes. Also, beneficiaries were aware of the project. If it were not completed, that would create problems.

The DG explained that Lerato Park did not form part of the ringfenced 20% allocation but NDHS would come up with a way of reprioritising it.

Ms Dlakude noted that when the HOD of Gauteng made a presentation to the Committee, he never mentioned any challenges. Members should challenge the Gauteng HOD with this report on challenges.

Progress Report on Rural Household Infrastructure Programme (Sanitation)
Mr Thabani Zulu presented the NDHS comprehensive report on sanitation. NDHS had received the quantity survey report and some of the proposed interventions were implemented.  The Rural Household Infrastructure Programme was a special four-year programme to provide basic water and sanitation to rural communities. It was allocated a budget of R1.2 billion. The budget allocation over the MTEF period was R100 million for 2010/11; R231.5 million for 2011/12, R479.5 million for 2012/13 and R389 million for 2013/14. The allocation would increase if Treasury approved the rollover of R70 million that had not been spent last year. The objectives were to:

▪ Support municipalities to address the rural basic water and sanitation backlog
▪ Contribute to the rural development priority of government
▪ Contribute to job creation and Local Economic Development
▪ Contribute towards meeting water and sanitation Millennium Development Goal targets
▪ Accelerate delivery of water and sanitation to meet the 2014 target
▪ Improve the general quality of life of rural communities.

The next two slides provided a progress report table for 2010/11 and 2011/12 showing provincial breakdown, allocation amount, the number of municipalities benefitting in each province, target for number of toilets, number of toilets built. Only Limpopo had not achieved 100% in 2010/11 while the average completion percentage for 2011/12 was 83%. Some of the problems referred to were: the late introduction of the programme, failure by municipalities to spend, bad weather, small contractors struggling to source building material and have it delivered to site on time, some contractors struggling with difficult ground conditions forcing them to review their strategies. Also, some municipalities wanted to implement the programme themselves (appoint contractors and suppliers of materials).

The total provincial allocation for 2011/12 was R257 508 00 and expenditure stood at R187 265 920 and the remaining balance of R70 million would be added to the current allocation.  The Department had engaged with some of its service providers in particular Mvula Trust because the survey had shown that capacity within Independent Trust (IDT) was insufficient. NDHS had engaged the two and they indicated that the work would be completed by June. Most of the 4 726 jobs created were of a temporary nature.

Realizing the challenges faced by the sanitation programme in the first and second years of implementation, the Department conducted a quantity survey assessment to identify bottlenecks and devise means of redressing the matters affecting performance. The objectives of the survey were:
▪ To assess capacity of programme service providers to implement and complete their scope of work within the timeframes set
▪ To identify risk areas in the delivery chain that required special attention
▪ To assess the linkages and delivery outputs of Maxima Global and the two service providers - Mvula Trust and the IDT.
▪ To provide recommendations to NDHS to improve the rate of delivery of the programme.

Among the key findings of the survey were:
▪ The scope of work approved for IDT was at high risk of not being completed by end of 2011/12.
▪ Two service providers are not sufficient to implement such a programme and achieve the outcomes set.
▪ The service level agreements between Department and programme manager - Maxima Global on one hand and Mvula Trust and IDT on the other were not consistent with each other.
▪ There is a need to restructure the process of handling claims of the service providers to assist them with cash-flow management.
▪ The recovery plans submitted by the service providers were too optimistic.
▪ The procurement of building materials posed a serious challenge to the outcomes of the programme.

Actions taken to address the findings:
▪ In December 2011 Department reallocated 7098 units from IDT and negotiated with Mvula Trust to complete the units by end of financial year.
▪ In line with the recommendations of the Portfolio Committee and the Quantity Survey Report, in current financial year the Department revised the budget of both Mvula Trust and IDT and will put to tender the contracting of additional service providers in the programme.
▪ The contract of the Project Manager will be aligned to the performance of appointed service providers.
▪ Where necessary both machinery and manual labour would be used for difficult ground conditions.
The Department was in the process of ensuring that the remaining ones were completed by 30 June. 

The Department was in the process of revising the sanitation policy and the Committee should assist NDHS in that. The current Basic Household Sanitation White Paper was approved by Cabinet in September 2001 so there was a need for reviewing the sanitation policy to accommodate changes in the service delivery environment and priorities since 2001 and to address gaps identified by the sector. This policy was under revision as well as a coordinated sanitation strategy. Although part of the sanitation function was now with the Department of Human Settlements (NNDHS), the Department of Water Affairs (DWA) was still the custodian of the Water Services Act, which included sanitation. The two Departments as well as SALGA were working on the revision of strategy and policy. A Task Team comprising the relevant sectors of NDHS, Water Research Commission, civil society and SALGA has been formed to provide oversight. A project Drafting Team (NNDHS, DWA, and SALGA) had been formed to analyse and incorporate the inputs receive. Stakeholder consultations had been held in all nine provinces in two phases during 2011. The content of the draft would be discussed at an Executive Management Team and it would be brought to the Committee for its input after which it would be submitted to Cabinet.

The Department would ensure all Quantity Survey report recommendations would be implemented in the remaining two years of the programme. Periodic reports would be provided to the Committee.

The Chairperson said the Committee welcomed the report and it would do its part to ensure progress and delivery on sanitation. 

Mr Mokgalapa commended the initiative for having the report done. He asked how NDHS was going to deal with the conflict between IDT, municipalities and Mvula Trust. He could not understand why the two implementing agents were given the contracts to execute the programme when they had no capacity.

The Chairperson said while she agreed with NDHS that there were problems with IDT, there were no problems with Mvula Trust. The problem was only recent because they had become overloaded. Some of the problems were associated with the terms and conditions put to NDHS by National Treasury.  The issue had been dealt with but the Committee was more interested in progress in the implementation of programmes. It was not all municipalities that had complained about the agencies but only some. She welcomed the grace period that had been given to Mvula to finish its work at end June.

The DG said the Quantity Survey Report would be used as leverage to engage Treasury so that it can relax the terms and conditions of the grant.

Ms Duncan said a coordinated government effort was necessary for delivery to occur. The Integrated Development Plan (IDP) could be used to solve some of the needs of the people

The Chairperson said she was aware that the Ms Duncan had a passion for IDP. It was problematic, if one municipality had a functioning IDP process, to say the process was credible. Though she was a Member of Parliament she could not guarantee the credibility of IDP of her own municipality. Some IDPs were clogged with nepotism and worked on excluding other members of society, as was the case in her constituency.

Ms Duncan said she agreed with the Chairperson absolutely. The only problem was with coordinating the IDP process and despite its weaknesses, it was a starting point for obtaining data.

The Chairperson said she was aware that the Member was obsessed with IDPs but the issue would be discussed further.

The meeting was adjourned.