National Housing Rectification Programme: briefing by National Department of Human Settlements

Meeting report

Introduction by Chairperson
The Chairperson said the focus of the meeting was to receive a presentation on the details of the programme launched by the NDHS to rectify state subsidy houses. Of essence was how the programme was going to be carried out, be funded and be monitored.

National Department of Human Settlements (NDHS) presentation
The delegation from the NDHS was led by the Director General, Mr Thabane Zulu. The presentation comprised of a background of the rectification programme, the objectives, implementation framework and coordination of the programme, the financial implications, funding arrangements and the 2012/13 provincial budgetary allocations.

Mr Zulu told the Committee that the National Rectification Programme (NRP) was aimed at correcting the defects of subsidy houses resulting from poor workmanship that did not meet technical requirements as specified by the South African National Standards (SANS) and the National Home Builder Registration Council (HBRC) as applicable at the time of construction. Structural defects had been observed on a substantial number of subsidized low cost houses built between 1994 and 2010 and this had necessitated the DHS to embark on the rectification programme.

The factors which contributed to the defects included, but were not limited to: poor workmanship, the use of inferior and inappropriate material, deviation from specifications, poor project management, lack of supervision and unscrupulous contractors.

The Chief Director of the Programme Management Unit (PMU) in charge of the rectification programme at the DHS, Mr Wonder Nkosi, defined rectification and said that the process of rectification was preceded by a thorough engineering assessment of the structural condition of each unit to determine the nature and extent of the defects and the rectification required. Based on the technical specification of the rectification, an estimation of cost per house was then determined.

Objectives and Implementation Framework of the Project
Mr Nkosi said that the objectives of the National Rectification Programme were to:
• Identify the full extent of the scope and estimated cost of the defective houses;
• Implement a process of successful rectification of all defective houses;
• Ensure the professional execution of the project within time, budget and according to specification;
• Proper liaison between all stakeholders to ensure long term positive outcomes in affected communities;
• Consideration of environmental and social impacts;
• Establish a proper and effective reporting system.

The implementation framework of the NRP proposed a management at both national and provincial levels. The national level was to be championed by the Programme Management Unit and it was going to conceptualize and plan the implementation. The PMU was also going to obtain support from provincial and local government, approve the implementation programme, standardize tender documentation, align the approach, plus consolidate and coordinate reporting. The provincial and regional levels were going to be charged with issuing instructions, construction supervision and quality control, certify payments, and monitor and report on performance.

As part of national coordination, a professional service provider was going to be appointed to support the PMU to coordinate and align the implementation programme. The service provider was also going to evaluate and verify the findings from the NHBRC, conceptualize and plan the programme and obtain approvals, compile standardized tender documentation, engineer cost estimates, facilitate the tender, evaluation and appointment of building contractors in provinces and facilitate the tender, evaluation and appointment of local service providers for site supervision, quality control and safety aspects.

Financial Implications and Funding Arrangements
The rectification of houses was divided into three categories. The first category was nonstructural defects where moderate rectification work was necessary. The estimated cost for this category was R19 523.74 per house. The second category was minor structural defects where extensive rectification work had to be done. This was estimated at R38 673.00 per house. The third category was major structural defects where there had to be demolitions and rebuilds. This category was estimated to cost R85 468.88 per house. The cost of temporary accommodation was R25 000 and the cost of civil engineering infrastructure per stand was R45 000. The new assessment for houses that had not been assessed was estimated to cost R1200 per house.

The Chief Financial Officer at the DHS, Ms Funaneng Matlatsi said that the rectification programme was funded from an amount of up to 10% of the budgetary allocation of the provincial Human Settlements Development Grant. The number of units covered by the rectification programme for 2012/13 was: Eastern Cape 5 700, Free State 1 076, Gauteng 20 004, KwaZulu Natal 3 249, Limpopo 881, Mpumalanga 120, Northern Cape 180, North West 1 285, and the Western Cape 1 734. The total number of units were 34 229 with a total budget allocation of R929 750 000. This total amount was 6% of the Human Settlements Development Grant.

Mr Nkosi told the Committee that rectification was a very critical and sensitive programme but should not be the mainstream activity in the business plan.

Discussion
Mr B Mashile (ANC Mpumalanga) said that it was not true and did not make sense that Mpumalanga had only 120 units which needed rectification. Were the allocations showing what the national department had allocated to the provinces or was it information that the provinces had collated and sent to the national department. If the projects were coordinated from a national level, there was supposed to be some equity in the allocations. Was the NDHS in control of the programme?

Mr C De Beer (ANC; Northern Cape) said that the provinces had to be called by the Committee to account for the amounts allocated and how spending was done. In the case of the Northern Cape, it could not be correct that the units for rectification were only 180. What were the criteria for monitoring and evaluation? Such a document had to be made available by the DHS to the Committee. On the objectives of the NRP, which were the stakeholders referred to and what was the reporting system? The Committee needed more details on the critical issues so as to avoid another process of rectification in the future. Who did the assessment of the defects for each house?

Mr Lees asked what was meant by ensuring long-term positive outcomes in affected communities. At what point did the owners of the houses take responsibility for the normal maintenance for the houses as some of the houses were built in 1994 and some of the defects could just be normal wear and tear. On the reporting system, who was reporting, what was being reported and to whom was the reporting done? Did the DHS mean that when the 34 229 houses were repaired, there were no longer going to be any houses to be repaired? The unit costs were not uniform and with the high cost of repairs, why did the DHS not just build new houses? What action was the DHS taking to recover the costs of repairing the houses from the contractors who did not do their jobs properly and what disciplinary action had been taken against officials who did not do their jobs properly? Did the rectification programme entail only repairs or did it include upgrading and restructuring. What was new in the functions of the national coordinator? The PMU and the national coordinator were only new forms of bureaucracy which meant more costs to the taxpayer and to the government system. How was the national coordinator going to inspect and control the building of houses all over the country from a central office and was the role being taken over from the Provincial Departments of Human Settlements? Did the estimated cost presented include all the overhead costs of construction?

Ms T Memela (ANC KwaZulu Natal) said that the upgrading of houses and the discrimination in the process was causing huge divisions in the communities. Were the provincial and national Human Settlements departments parallel structures? What had caused the national department to now want to implement the rectification programme which was previously done by provinces? When and how did the DHS do its monitoring and evaluation? Did the DHS have on site inspectors who made studies before the houses were built? Was the national department depending on information and data from the NHBRC?

Mr S Montsitsi (ANC Gauteng) asked what the DHS was doing to investigate and track the unscrupulous contractors who were the major cause of the problem. What did the DHS mean by a “professional service provider” assisting the PMU? The structure of the PMU was questionable because it was a national structure but with a function of obtaining support from provincial and local government. It was a lot of bureaucracy and there was still no guarantee of the effectiveness of the programme.

Mr Mashile said that the Committee had not been told that the defects were as a result of corruption and officials of the department not seeking value for money. There was no desire for compliance by the DHS. The Committee was not told that the defects were a result of no consequences for the officials who were supposed to ensure compliance. The presentation did not outline the underlying factors and did not seek to prevent the recurrence of the defects. How many officials had been held to account in the department? There was no purpose for appointing the PMU if professional service providers were going to be appointed to assist them. The cost of demolishing and rebuilding a house put together with the other costs was more than the cost of a new house. This meant that the rectification programme made no sense as it was logically and economically wiser to just build new houses.

Mr Zulu replied that the conceptual process had been completed and a decision had been taken that the NRP was to be coordinated by the National Department of Human Settlement. The conceptual process was done with the Portfolio Committee on Human Settlements in the last financial year. The conceptualization strategy was submitted to MinMEC and the matter had been concluded. The DHS was at the infant stages of the implementation of the rectification programme. This was the first financial year in which the NDHS was handling the issue. Most of the questions raised by the members could not be dealt with as the NDHS had never been responsible for the programme so far. The presentation was a process of the way forward on the NRP at national level and what attempts were being made to handle the programme.

Mr Zulu said that the NDHS had not been in control of the situation but it was in the process of taking over and handling the situation. The framework was being built. There was not even capacity at the national level as the DHS had never had a branch called the PMU. The PMU was not being run by consultants. Interviews had just been concluded for the Deputy Director General in charge of the PMU. In the past, the functions were done by various elements in different branches which were not properly aligned and there was the need for a turnaround strategy. Rectification was going to be one of the projects to be managed under the PMU. Mr Zulu said that the timing of the meeting was not correct as the process was still in its infant stages and the DHS had not yet put together the process as was expected of it. The process was at a transition stage. There was the challenge of the systems at national level not yet functioning properly but the process could not be stalled as the people living in the houses were vulnerable and were exposed to disaster. There was a need to be dynamic. An assessment had been done in the Eastern Cape and KwaZulu Natal and they needed to start the programme. The capacity at national level was a challenge but the PMU was going to be built to meet the challenge.

Mr Zulu said that the DHS had started blacklisting companies which were found to be involved in corrupt practices and poor quality work. The National Treasury and the Special Investigating Unit had been working with the DHS to blacklist companies. The DHS was going to provide the details of such companies to the Committee. Money and funds had also been recovered and returned to the government from these blacklisted companies.

The Chairperson said that the NRP was not new as it was doing what was already being done or it was doing what was supposed to have been done a long time ago. It had always been the responsibility of the NDHS as the transferring department to make sure that the money transferred was appropriated correctly. The programme had started in April 2012 and it was now the second quarter of the financial year. It was therefore wrong for Mr Zulu to say that the meeting was premature. The NDHS was supposed to be ready to answer questions at any time on the work it did. The problem of poor construction was not a new thing as it was clear to everyone who lived in South Africa. The whole idea of rectification was as a result of money transferred by NDHS for which was no monitoring with regards to performance. The NDHS had to avoid the temptation of thinking that the grant was new.

Mr Zulu replied that the grant was not new but the mechanism to handle the programme was new.

The Chairperson said that the Division of Revenue Act gave the NDHS the power to stop transfers if the provinces were not in compliance with the conditions of the grant. The DHS had to play the role of monitoring.

Mr Zulu said that the DHS was putting in place structures that were linked from provincial to national levels in dealing with rectification. The NRP and PMU were a strategic response to existing issues and the provinces needed to understand that they were part of a whole and could not act independently of the entire system.

The Chairperson said that the NDHS only started picking up the problems when complaints were flooding their offices. As a result of the negligence of the Department and failure with regards to monitoring, the government now had to spend billions on a rectification programme. What was the guarantee that the defects were not going to repeat themselves even after the rectification? There was clear failure on the part of the department because the problem should have been picked up a long time ago.

Mr Zulu replied that they accepted that the systems had not been effective in picking up the challenges that were experienced in delivery. The strategic response was a turnaround strategy and hence the creation of the PMU. The fault on the part of the department was a structural defect and the PMU was going to assist the NDHS in all its areas of responsibility such as sanitation and rental housing.

Mr De Beer said that he had just received information from the Head of Department of the Northern Cape on the number of units and it was not what had been presented by NDHS. The Mayor and MEC had also provided him with information which differed with the figures in the presentation.

Ms Matlatsi replied that the figures presented to the Committee were for the 2012/13 financial year and did not indicate the total number of houses that needed rectification.

Mr Mashile said that many of the critical questions by the members were not answered and Mr Zulu was providing excuses instead of answers. He proposed that the Department should be asked to come back with clear information on the situation.

The Chairperson said that Mr Zulu was being political and sarcastic when there were serious issues. The Department was negligent and this could be seen even in the numbering errors on the pages of the presentation.

Mr Lees said that the questions by members had not been answered. He proposed that the Committee secretary should document the questions and forward them to the DHS for written responses to the questions.

Mr Zulu said that the DHS was going respond to the questions in writing and the department was happy to come for a follow up meeting. The department was going to continually update the Committee on the progress made with the rectification programme.

The Chairperson said that the DHS would be invited at a later stage especially when the provinces were presenting on the use of their grants.

The meeting was adjourned.