Human Settlements Budgetary Review and Recommendations Report

Human Settlements, Water and Sanitation

16 October 2012
Chairperson: Ms B Dambuza (ANC)
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Meeting Summary

The Committee met to consider the adoption of the Budgetary Review and Recommendation Report for 2012

Members questioned the accuracy and validity of the figures presented in the report. Several inconsistencies were pointed out between the information in the Budgetary Review and Recommendation Report, and the Annual report.  Members and the Auditor General were in agreement that information from the Department could not be relied on and was not useful, because it was unclear.  Members repeatedly expressed concern about the Department under-spending its allocated budget.  Apart from the Minister of the Department, Members also wanted to be briefed on various issues by the Cabinet, the National Treasury, the Chief Financial Officer and consultants.

Members made numerous grammatical changes, but the report was not adopted, as the Committee wanted to have information and figures clarified by the Minister of the Department.

Reports on the Department by the Public Service Commission and the Financial and Fiscal Commission were also included in the Budgetary Review and Recommendation Report.  Members and the Public Service Commission indicated that vacancies in critical positions was a contributing factor to the problems experienced in the Department.

The Public Service Commission (PSC) had found that the Department had an unqualified audit, with findings.  It had spent 99% of its budget and had achieved 77% of its target during the period under review. The achievement of pre-determined outputs was fairly low.  Of the senior managers in the Department, 32% may have had potential conflicts between their private interests and their official responsibilities.  The Department had reported two cases of financial mismanagement, one involving an amount of R100 million.  By June, the vacancy rate within the Department had been 24.4%.  It had taken the Department, on average, over two years to fill posts. The PSC was concerned that the National Home Builders Registration Council had declined and that the Department was facing serious challenges in meeting South Africa’s daunting housing and sanitation needs.

Meeting report

Apologies were made for Ms N Mnisi (ANC) and Mr J Matshoba (ANC)

The Chairperson stated that the Department of Human Settlements had to make sure that they had measurable outcomes and that the Cabinet adopted this outcomes-based approach.

The Committee could not report about the transferal of the Estate Agency Affairs Board from the Department of Trade and Industry to the Department of Human Settlements because they had not yet interacted with the Department about the transfer.

The Chairperson remarked that the Annual Report of the Department must speak to its targets.  What was missing was the strategic plan of the Department for 2011/2012. The issue of the responsibility for reports was also discussed. The reports had to include the quarterly performance, as of October the previous year.

Ms M Borman (ANC) noted that section 32 reports came directly from the Treasury.  They gave the Committee more detail on the quarterly reports which came from the Department.  The Committee looked at them in relation to the work they were doing,so that they were on top of their oversight role.

Budgetary Review and Recommendation Report
The Chairperson tabled the Committee’s Budgetary Review and Recommendation Report.  The report included the mandate of the Committee and the Department, an analysis of programmes implemented, financial statements and expenditure reports.  The report also included the Public Service Commission Report and the Financial and Fiscal Commission presentation on the Department’s performance.

The Chairperson requested that the heading numbered 1.2 on page two be changed to “The mandate of the Department.”

Referring to sub-section 2 on page three, Ms Borman preferred that the Committee be provided with the total picture, instead of with just the adjusted appropriation.

Ms Borman added that the same problem was prevalent on page 16 of the Annual Report. She suggested that the last column on page three of the Budgetary Review and Recommendation Report be inserted on page 16 of the Annual Report.

Ms Borman expressed her concern about the under-expenditure mentioned on page three.

The Chairperson supported Ms Borman’s concern and said that just because the allocated amount was not spent, it could not be labeled as a saving. The Department had to make sure that they were cost efficient, but this did not mean that they should just keep the money. The Chairperson added that the Department was misrepresenting the National Treasury.

Ms Borman calculated that R25.8 million subtracted from the allocated R56.1 million amounted to R30.3 million. Therefore the figures in the report did not add up. The report said that out of a saving of R18.9 million, only R11.3 million could be utilised.  Ms Borman wanted to know what had happened to the R7.6 million in savings. She insisted there was a need to investigate the Department. She emphasised her concern that they were saving instead of spending their budget.

The Chairperson responded that the Minister of the Department was supposed to brief the Committee on all these issues, but he was not present to do so. She said that this confirmed what the Auditor General had said about information from the Department -- that it could not be relied on and was not useful because it was unclear.

The Chairperson stated that the failure to fill vacancies had to be highlighted, because the Committee had been told that those vacancies would be filled by the end of the year. The vacancies occurred in all the programs implemented by the Department.  She suggested that the Department should have appointed people on a contract basis -- an issue that had been raised by the Public Service Commission. She inquired why Government had not thought of a temporary structure. That was a recurring issue and millions had been wasted.

The Chairperson said that on page four of the report, it was mentioned that there was an under- expenditure in Programme 2. The Department did not say by how much they had under-spent, therefore the information was still not valid.

Ms Borman expressed her concern that the national policy framework was not completed because it was critical to the Department’s work, and therefore it held up delivery. She suggested that human resources, not money, was the problem.

Ms Borman wanted to know why a virement of R6 million had been made from Programme 1 to Programme 5, when there was already an under-expenditure of R61 million in Programme 5 and a roll over of R4.3 million.

Ms Borman said that two things were questionable in considering Programme 3.  An amount of R713 000 in reported salary increases had not been recorded in the table.  In the report, the Department talked about a total budget for Programme 3 of R200.7 million, but looking at the report, the total amount was R193 .011.  So there was R7.5 million missing.  She proposed that the Chief Financial Officer be contacted for clarity.

The Chairperson said that analysing the expenditure patterns was critical, because it assisted in the Committee’s support of delivery. She added that the Department took the Committee for granted.

Ms Borman observed that the information on page 84 of the Annual Report was not useful or accurate. It had to refer to the Committee’s own observation, and not just that of the Auditor General’s report.

Ms Borman said that once again, the situation with Programme 4 did not correspond with what was in the table of the report.

Ms Borman requested that the spelling of “Housing Disaster Relief Grant” on page five, be corrected.

The Chairperson said that the National Treasurer had to brief the Committee on why he had allocated money to the Department when there had been no need for it. He also had to inform the Committee of who had told him to issue the money.

Ms Borman was concerned about how the Department was being monitored if there was a lack in their Information Technology department.

Regarding the upgrading of informal settlements, Ms Borman said that it would be impossible for the Committee to reach its target if the rate given in the report was accurate. She added that it explained why it was not delivering. It was crucial that the Committee was given a proper breakdown of pre- determined figures in 2009, as they could not monitor what they did not have in front of them.

Ms Borman said that the Committee was concerned that the municipalities were accredited without actually having adequate capacity, as it was imperative that they should have capacity in order to be accredited. It had been clear that municipalities did not understand what the Urban Settlement Development Grant (USDG) was for. The Committee found that the under-spending of 44% of the USDG was unacceptable.

The Chairperson said that the target of access to basic services was not clear, because the Committee did not have the information about the Cabinet lekgotla’s decision. The Department had to brief the Committee on that personally so that they could monitor it. The Committee did not know whether those decisions were being implemented.

Ms Borman commented that the release of land for human settlement development was far too slow. It had taken three years to get 1 066 hectares of land released.

The Chairperson requested that on page seven, ‘HAD’ be corrected to “HDA.”

Ms Borman said that if there were blockages regarding increased urban densities, they should be reported to the Committee so that they could try assist in unblocking them.

The Chairperson expressed her desire that the National Treasurer brief the Committee on the mortgage default insurance guarantee.

The Chairperson said that the section on page seven dealing with sustainable human settlements and a basic services task team did not make sense to her, as the Cabinet had those reports, not the Committee. The Cabinet should therefore brief the Committee, as the Department was unable to.

The Chairperson voiced her concern that it was difficult to assess the performance of the Department, as there was no clear information. She added that the Department had been unable to comply with laws and regulations until the Auditor General had intervened.

The Chairperson requested that on page 11, “My findings” be changed to  “The Auditor General’s findings.”

Ms Borman suggested that “The Auditor General’s findings” be changed to “The findings of the Auditor General.”

The Chairperson pointed out that the Minister, not the Director General, should brief the Committee on the Auditor General’s findings, and his plans to address the findings.

The Chairperson said that the deliberations and responses on page 15 and 16 should not be there. She added that page 17 fell under “Comments.”

Ms Borman remarked that one of the Committee’s objectives was job creation,  and that they had received no comment about that or corruption.

The Chairperson noted that on page 211 of the Annual Report, 26 consultants had been paid R100 million to review the White Paper over a period of 24 months. The Paper was still not there, but the money was gone. The Chairperson wanted to meet with those consultants to ascertain the details.

The report was not adopted, as the Committee wanted to have information and figures clarified by the Minister of the Department.

Public Service Commission Report
The Public Service Commission (PSC) found that the Department of Human Settlements had an unqualified audit, with findings. There was a need for restatement of corresponding figures. The Rural Household Infrastructure Grant showed material under-spending.

The Department had spent 99% of its budget and had achieved 77% of its target during the period under review. The achievement of pre-determined outputs was fairly low.  Of the senior managers in the Department, 32% may have had potential conflicts between their private interests and their official responsibilities.

In the 2011/12 financial year, the Department reported two cases of financial mismanagement, one involving an amount of R100 million. The Department’s website was not user friendly. The Department did not have a human resource plan, as required by the Public Service Regulations.

By June, the vacancy rate within the Department was 24.4%.  It had taken the Department, on average, over two years to fill posts. The Department had a Special Investigations Directorate and a whistle-blowing policy in place. It had implemented an extensive anti-corruption awareness campaign. The PSC was concerned that the National Home Builders Registration Council had declined and that the Department was facing serious challenges in meeting South Africa’s daunting housing and sanitation needs.

Financial and Fiscal Commission presentation
The Financial and Fiscal Commission (FFC) stated that the Department’s spending of  99% of its funds, yet not achieving its targets,  was partly due to the Department having to transfer funds to other entities and provinces.

The FFC indicated that the actual number of housing units delivered was not contained in the Annual Report.  By December 2011, the Department had reported that the number of houses completed was 88 441, and it was therefore unlikely that the target of 220 000 would be reached.

The FFC pointed out that the Upgrading of informal settlements and proper services and land tenure target was set at 400 000 households by 2014. However, no annual target for 2011/12 had been set. The actual performance was not provided in the Annual Report.  On the target to supply affordable housing finance to 600 000 households in the gap market, the actual performance had not been reported.

The meeting was adjourned.

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