Strategic Infrastructure Projects (SIP) 18 and related SIPs: briefing by Department of Human Settlements

Meeting report

Opening remarks
The Chairperson welcomed back Members and said the term was short. MPs would soon be leaving Parliament to mobilise the nation to register to vote. This meant Members would have four weeks to finish most of the term’s work, and that meant working very late in the next few days. An effort was required to finish of the Committee’s business. Getting people to register to vote should be a priority as voting was crucial if the nation were to achieve the dream of a better life. The agenda indicated two items, but only one would be delivered. The Department of Human Settlements (DHS) had indicated that it was not ready to do a briefing on the national evaluation framework introduced by the Presidency that all departments ought to evaluate own performance. That item would be presented on 10 September.

The only item on the agenda was the Strategic Infrastructure Projects (SIPs). Government had adopted 18 SIPs for its infrastructure development programme, many of which were pertinent to DHS’s function. The Department had been directly allocated SIP 18, which sought to ensure delivery of sanitation and water. This necessitated a sound working relationship between DHS and the Department of Water Affairs (DWA). Information on all the SIPs, even those that concerned economic activity, was crucial to the Committee especially for purposes of oversight. This would not be tantamount to trampling over other parliamentary committee’s work as human settlements was an umbrella sector and its mandate often straddled other departments.

Strategic Infrastructure Projects (SIPs)
Mr Mbu Tshangana, DHS Deputy Director General (DDG): Programme Monitoring and Evaluation (PMU), apologised on behalf of the Director General, Mr Thabane Zulu, who had attended a late night handover meeting with the Minister, and were both visiting the Cornubia project in KwaZulu-Natal (KZN).

Overview
Mr Anton Arendse, DHS Chief Director: Human Settlements Planning, indicated the presentation was made up of over 70 slides. This was intended to provide as much detail as possible, but the presentation would be a summary of those slides. When DHS was introduced to the work of the Presidential Infrastructure Coordinating Committee (PICC) it undertook to rationalise the priorities it had adopted as key. This year DHS had looked at priorities that were important, and saw how such dovetailed with the SIPs. DHS would like to see its footprint in each of the SIPs that related to the function of human settlements. The strategy was to escalate the importance of the priority through the SIPs, but also look at the grant performances within key metropolitan space.

In 2010, the President introduced the huge infrastructure drive that had now been given recognition through the PICC and the 18 Strategic Integrated Projects. DHS had looked at key priorities and how the two key development grants it administered – the Human Settlements Development Grant (HSDG) and the Urban Settlements Development Grant (USDG) – would be channelled for that purpose. Some of the SIPs were “very place specific” and others were more “programmatic in nature”. The work of the Department was covered in SIPs 1-7, and SIP 18 as well. For 2013, DHS interventions had been around SIPs 1-4, that dealt with priority projects, mining towns and the rapidly growing areas. SIP 6 dealt with the 23 municipalities in distress. The strategy around the HSDG and the USDG was covered in SIP 7.

Mining town interventions (SIP 1 & 4)
Ms Julie Bayat, DHS Chief Director: Programme and Project Planning, said in 2011/12 there was a reasonable expenditure by the mining towns. Rustenburg was off mark and had spent nothing in that financial year. Leading up to Marikana in August 2012, there was poor delivery record in this area. DHS felt it was important to closely monitor this, in order to get the mining towns to deliver. It was decided that DHS first allocate money and ensure the business plans were in place. Everything was ready and delivery should happen.

In the current financial year, DHS had allocated to Rustenburg around 10% - an amount of about R181 million – for all the projects that were underway. DHS had prepared a framework to indicate to municipalities what they were expected to do. Meetings had been scheduled to ensure concerned municipalities were informed of the interventions of the Special Presidential Package (or the mining towns project). The Department had also designed a template for the human settlements implementation plan. The plan would drive the manner in which the mining town would be implementing. The plan was more focused and spelt out what was expected of the mining towns.

While planning for 2014, DHS had ensured that all the processes were in place and the projects were starting to happen. The details of the work were presented to the Inter-Ministerial Committee (IMC). The Department worked closely with the National Upgrade Support Programme (NUSP) and the Housing Development Agency (HDA) to ensure alignment in the work done. Coordinating the work was crucial and would ensure there was no disjuncture in the manner the Department implemented the Special Presidential Package.

The anticipated outcomes for the Special Presidential Package were around integrated human settlements in the mining towns. A strategy to formulate the human settlements implementation plan was achieved, and an approval had been received. DHS then set out to develop the municipal plans that would lead to the draft implementation plans. It was hoped that this would be complete by July 2013 but there were challenges with municipalities. And as a result, DHS had sent an official to the phase one municipalities in the Bojanala district (Madibeng, Rustenburg, and Moses Kotane municipalities). The official went there to ensure that the plan would be completed. The plan had now been taken to the province to ensure provinces were comfortable as they would be funding the exercise. As soon as the province had finished looking into the matter, the Department would take the draft plan to technical MinMec in order to get approval for implementation in the next financial year.

In addition to this there had been land issues that DHS was trying to address, where the mining company, Lonmin, had offered land. Together with the province, DHS was in the process of doing a lot of work. There were infrastructure challenges on that piece of land but those were being attended to. The housing programmes that the Department hoped to deliver in the towns were: Incremental Housing programme such as informal settlements upgrading and the Social & Rental programme. The Social Housing Regulatory Agency (SHRA) would be roped in for the rental stock. This was an important component, and SHRA was required to come up with a pipeline on what it planned to do.

Funding was requested for the upgrade of informal settlements from National Treasury and R1.1 billion was approved for Phase 1 of the mining towns for 2014/15. The money would be divided among the nine mining towns. The implementation plan was crucial as it was wherein municipalities had to indicate how they would spend. There were planned meetings with Phase 2 municipalities to introduce them into the programme as well.

Mr Arendse clarified it was noticeable that expenditure and commitments in projects that had started tended to be very low. The R1.1 billion was first mentioned in the budget speech by Finance Minister Pravin Gordhan. The amount would be set aside, over and above DHS allocation, specifically for informal settlements upgrading. A lot of the upstream activities were being done this year, in preparation for the anticipated allocation which would come on stream in 2014/15.

Limpopo (SIP 1 & 4)
Ms Bayat mentioned the Lephalale husing project that aimed at addressing the housing challenge. A plan had been put together for around 5 000 housing units. Over half a billion rand had been set aside in the current Medium Term Expenditure Framework (MTEF), for this purpose. There had been funding, electricity and land issues that made delivery difficult, but during this time a lot of the bulk services had been put into place. A reservoir was also being built in the area.

There were major issues with Eskom, but that had since been resolved following a meeting of the executive managers from Eskom, Lephalale and DHS. Until DHS got involved and facilitated the processes, the project just could not move. Eskom had indicated that it required an upfront payment of over R284 million for a feasibility study. The problem was that nothing happened, the procurement processes were taking too long. DHS called all stakeholders in and alerted them to its discomfort. Eskom had since fast tracked the procurement processes, and had a programme in place. This was a good exercise in breaking down the barriers with Eskom.

Mpumalanga (SIP 4)
Mr Arendse said the Department had also committed to do work outside of the mining towns. DHS was doing work at eMalahleni (Mpumalanga). He took the Committee through a breakdown of projects that the Department was involved with in the area. The Klarinet integrated housing project had received a fair amount of coverage. He promised a detailed report on the performance of provinces during the first quarter of 2013/14. Focus had not only been on the grant but on its social consequences, and how the money translated into visible outputs.

SIP 5 Saldanha-Northern Cape Development Corridor
This related to the development corridor in Saldanha in the Western Cape to Sishen in the Northern Cape. The Northern Cape had committed a fair amount of its allocation to the mining towns. When the Portfolio Committee pointed out that the Northern Cape was not included in the list of mining towns earmarked to benefit from the Special Presidential Package, DHS had moved swiftly and acted.

The Chairperson agreed that this change of heart resulted from the Committee's instruction. The Northern Cape had been ignored from the initial towns that were scheduled to benefit.

Mr Arendse said there had been a fair amount of pressure from local politicians, the provincial department and the parastatals responsible for SIP 5. All these stakeholders had been asking DHS why it had not identified SIP 5 as a priority. The DHS response had been that the Department wanted to leave a footprint, by starting small and expanding. The Northern Cape indicated it was ready to roll; but because the province ran a small budget, it had to sacrifice some programmes. The province had made a fair commitment to the mining towns.

The SIP 5 projects consisted of small towns that originated from mining activity. The towns in the Northern Cape included Joe Morolong, Khatu, Sesheng, Olifantshoek, Ga-Segonyana, Siyanda and Danielskuil. The province was challenged because the growth of the towns was not commensurate with the kind of infrastructure that DHS was able to roll out. In a lot of cases the province was almost a secondary partner to the municipalities in so far as infrastructure funding was concerned. Houses provided by the mines were selectively given to middle and higher income employees. The labour force was left to depend on the municipalities and the province; this was the dilemma the province found itself in. The Northern Cape Premier had made representations for additional funding to deal with infrastructure challenges arising from SIP 5. The Northern Cape had always exceeded its targets, and had indicated it had capacity to take up additional funding. Discussions on this matter were ongoing.

SIP 7 Integrated Urban Space and Public Transport
Mr Arendse said SIP 7 was slightly different from other SIPs that DHS was involved in. Specifically DHS did not look at individual projects, but rather at the performance of the grants within the eight metros. Of interest, though, was the impact of the grants. Alongside the parastatal that was responsible for SIP 7, Passenger Rail Agency SA (PRASA), DHS looked at the impact of government money, and how it contributed to more efficient integrated public spaces and public transport systems. DHS spent a combined 50% of the two grants (HSDG and USDG) on the eight metros. The Department needed to show tangible evidence that it was responding to urbanisation and migration and that it did so through key human settlements programmes. He took the Committee through a breakdown of the grants’ performance per metro.

He said the USDG allocation amounted to R9 billion, and the Department was doing all it could to respond to migration and urbanisation. DHS had a formal working relationship with the PICC Secretariat. Most of what was being presented on funding requirements, commitments, expenditure, and state of projects had already been presented to the Secretariat. The PICC coordinated the SIPs Coordinators Forum where quarterly reporting happened. The public entities had been identified as champions for the various SIPs, and the Department had held several bi-laterals with them.

SIP 18 Sanitation and Water
Mr Tshangana said SIP 18 was now part of Human Settlements. There was clarity of purpose and this was needed to achieve what was contained in the master plan. All of the sanitation components were under Human Settlements. There was now a troika-IMC from Department of Water Affairs (DWA), DHS and the Department of Cooperative Governance and Traditional Affairs (COGTA). Three meetings had been held, and a fourth one was scheduled for 9 October 2013.

DHS had quantified the backlog and was aware of the magnitude of the challenge. The Department was aware of the challenge of the bucket system in the country in both the formal and informal dwellings. A memorandum of agreement had been signed by the three Ministers, and would also be signed by provincial Premiers, Directors General of the three departments, and Chief Executive Officers (CEOs) of the entities administered by DHS and DWA. They would also be expected to sign implementation protocols to gear up capacity to deliver both bulk and household sanitation.

There were about 88 000 buckets in formal areas and about 240 000 in informal areas countrywide. This information could be broken down by provinces, municipalities and by settlements. A steering committee made up of the three DGs was created at national level. The CEOs of the Water Boards would sit on that steering committee. There would be provincial task teams to be chaired by provincial heads of departments. There was a structure on how DHS would manage water and sanitation backlogs.

Sanitation was not just a service item but a health item as well. Water services boards were explicit about this, but the biggest problem had been that in the past sanitation had been over-shadowed by water. That had been recognised by all the ministers. Sanitation had to be accorded the same status as water; DHS should gear up its capacity to run the function effectively.

A number of engineers sat within the water sector to address challenges that might be there; DHS also needed such engineers to assist in the management of the sanitation function. Sanitation was a moving target, settlements grew and the demand grew as well. The total figure for the country was 2.4 million as of 2011, and getting rid of that figure would virtually be impossible.

The backlogs could be categorised into six: service delivery, refurbishment, extension, new households, upgrade needs and operation and maintenance backlogs. Service delivery backlogs related to those people who had never been served, while refurbishment was about sanitation infrastructure that had deteriorated beyond regular maintenance requirements. The extension backlogs related to the existing infrastructure that needed to be extend to provide the service; upgrade needs related to infrastructure that did not meet the minimum standards. Operation and maintenance impacted on economic opportunities in small towns. There was a relationship between sanitation and investment opportunities. He recited the story of a small town where the Nandos franchise had refused to open an outlet until the local municipality had provided proper sanitation facilities. To address all the backlogs the Department required about R50 billion.

Between 2009 and 2012 DHS provided about 63 000 ventilated improved pit (VIP) toilets through the Rural Household Infrastructure Grant (RHIG) programme; 800 000 VIP toilets were delivered through the HSDG grant. In the same period, municipalities delivered about 1.2 million VIP toilets through the Municipal Infrastructure Grant (MIG). The first deliverable for SIP 18 was to come up with a water and sanitation master plan. The plan would be administered by both DWA who would largely oversee the water part of the plan, while DHS would monitor sanitation. The ultimate aim of the master plan would be to attain open defecation-free status and promote hygiene. The plan also hoped to promote cooperation among municipalities. The approach had shifted to become more inclusive, as opposed to leaving the function only to municipalities and provinces. This was a cooperative arrangement; where all stakeholders needed to avail resources and steady the ship. And institutionalise the Village Development Committees (VDC) level to back up the sanitation movement at strategic and operational levels.

The master plan would define realistic design criteria for an integrated sanitation system with special regard to institutional strengths and weaknesses, community preferences and environmental considerations. It would identify areas where on-site sanitation proved the most economic and appropriate solution, but also would develop alternate solutions for on-site sanitation.

The Council for Scientific and Industrial Research (CSIR) had spent time trying out alternative forms of sanitation. The Council had been invited as well to the troika. The intention was to have the CSIR assist in areas where it was virtually impossible to provide water-borne toilets. The view of the Department was that the VIP toilet was not an appropriate form of sanitation as they posed a risk of contaminating ground water.

The work to find alternative sanitation methods was ongoing with the CSIR. Although meeting the capital targets (providing top structures), most municipalities struggled with operation and maintenance issues. Often the municipal maintenance budget was very little, and when municipalities experienced financial challenges elsewhere, they tended to target this budget.

The water value chain was crucial in the debate about sanitation especially because the country was a water-scarce country. It was crucial to manage the chain from the source, to the tap, and eventually to the waste water treatment plant. It was proper that water was managed correctly so that it could be distributed for other uses such as irrigation. The amount of water loss in the country was just too high and comparable to Brasilia, the worst city in the world in this aspect.

The funding gap was around R50 billion, but this would not be accurate until the comprehensive master plan and costing had been finalised. The Department intended eradicating 25 000 buckets this year, and funding was available for this purpose. Bucket eradication projects were ongoing, and the worst province that had the highest number of people using the bucket system was the Free State. The figures would still have to be verified, especially given how low the figure provided by KZN was.

DHS hoped it would secure and contract service providers by December 2013. The first draft master plan would be available by June 2014, and the final draft would be available by August 2014. Interim strategies to eradicate the bucket system included negotiating 50% of the USDG and Municipal Infrastructure Grant (MIG) grant to be used exclusively for sanitation over the MTEF period. Most municipalities did not prioritise water and sanitation. Most waste water treatment plants (WWTPs) were under strain. Upgrade and maintenance of the WWTPs using the Regional Bulk Infrastructure Grant (RBIG) would be considered. The Municipal Water Infrastructure Grant (MWIG) would be used as well, although it was an interim water provision measure.

Urban sanitation and operation and maintenance were being catered for under the equitable share. A number of toilets had been rolled out to the rural areas as part of the RHIG, and they had to be maintained as well. Failure to maintain these would result in massive damage; the ground water and the rivers could potentially be polluted. DHS was requesting special funding for the purpose of maintaining the rural sanitation toilets. There were service providers and municipalities that were good at maintaining the rural toilets.

Discussion
Mr S Mokgalapa (DA) said although the Department was doing a good job in trying to coordinate the SIPs and ensuring proper plans, one thing that was lacking was implementation. It was clear there were challenges with the mining towns. Could the challenge be the lack of capacity or lack of understanding on how to spend the funds? The 10% of the HSDG allocated for the SIPs was under-spent, and yet R1.1 billion would be pumped into the project. The municipalities still struggled with some of the basic infrastructure issues like water and electricity.

Mr Mokgalapa proposed that the SIP projects be treated the same way as the USDG when it came to oversight role of the Committee. The municipalities would have to come and account on the mining towns projects to Parliament, the same way the eight metros were expected to come and account for the USDG. There were all these forums and they were not yielding any results. The programme was promulgated in 2009, and yet on the ground there was nothing.

Mr Mokgalapa said he found it strange that there would still be issues with stakeholders like Eskom, and issues of land and water. These were all matters that ought to have been dealt with if the projects were proclaimed as strategic and priority projects. The mining towns should be treated the same as the USDG, where reporting would be done in Parliament. He congratulated the Department for acceding to the Committee recommendation that the Northern Cape be included in the list of mining towns earmarked for the Special Presidential Package. The report was very good and flawless, except for the challenge of implementation.

Mr Mokgalapa welcomed the comments on the SIP 18 (Sanitation and Water), and said it indicated there was progress. He pointed out the presentation still was vague on which department would take the lead in sanitation; there were still gaps as to who was accountable for what responsibility. He acknowledged there was still the challenge of legislation. Until there was proper legislation on the ground, there would still be a grey area about responsibility. Cooperation among departments was welcomed and all stakeholders needed to be part of these projects. The Department ought to treat VIP toilets as the bucket system. A strong commitment to work with the CSIR on alternative sanitation technologies was required. He also asked why the USDG figures on sanitation delivery were not included in the presentation.

Ms N Mashishi (ANC) sought clarity on the ultimate objective of the master plan? Who would be responsible for monitoring given that the approach adopted by DHS was the cooperative one? She said the backlog categories should be elaborated on, and the Committee should be provided with a list of those who had never been serviced.

Ms J Sosibo (ANC) sought clarity on how many mining towns would receive a slice of the R1.1 billion? She asked what deadline DHS had set itself for the total eradication of the bucket system. She asked what stopped DHS from asking that 50% of the MIG be ring-fenced for sanitation.

Ms G Borman (ANC) said the comment on sanitation gave the Committee a sense that DHS was managing the matter very well. The Department should see to it that administering the function was translated into detail.

Ms Borman asked if the R50 billion for the total sanitation backlog took into consideration future price fluctuations on materials. She requested that going into the future, the master plan address the issue of the type of sanitation put into use. DHS should ensure sanitation types were suitable to future developments, and avoid a situation where water-borne toilets would be placed in an area that had water challenges. She pleaded with DHS that the grants allocated for infrastructure should not be used for anything else but that. The Department should not build stadiums but houses.

Ms Borman said it was crucial that DHS started to think about ensuring mining towns did not became sleepy towns when the mining activity had dissipated. Departments like the Economic Development (DOD) should be roped in, and pipelining should happen now.

The Chairperson said the USDG was initially crafted to cover the top structure. There was a demand to expand it and accommodate sanitation; that was not a nice move. How did DHS intend to address that? This meant there was a gap that had to be attended to in terms of the human settlements funding model. Were there processes in place to review the funding model? The funding for sanitation was too fragmented. School sanitation was not addressed in the presentation. The troika arrangement was incomplete; the Department of Basic Education (DBE) should be involved in the troika.

Ms Borman jibed “and may consider renaming the committee the 'quadruple' ".

The Chairperson said DHS was not moving on policy and legislation. The Committee had expected DHS would indicate there was a Memorandum of Understanding (MOU) that had already been submitted to Cabinet. Such an MOU would guide DHS and ensure an interim policy arrangement around water and sanitation. She said she was not comfortable with DHS making a reference to the Water Services Act, and yet not uttering a word about ground covered in developing its own legislation on sanitation.

The Chairperson said she doubted the agreement DHS claimed was there about who should administer the function of sanitation. It would be ideal to clearly project the line of accountability. This would avoid a situation where no one wanted to take responsibility once challenges cropped up. Accountability ought to be clear before any project was undertaken. The water value chain should be broken down, and clearly articulate that sanitation happened where people lived – often, this was in a house.

The Chairperson asked if the matter relating to the confusion of what projects to use the USDG on had been settled. Community halls and soccer stadiums could not be built from the USDG grant; that was unacceptable. People did not have houses, but community halls were being erected. Could DHS confront the municipalities that prioritised community halls using USDG funding? All this appear to be brought about by inability to prioritise. Nevertheless DHS had done well and had shown leadership.

The Chairperson also sought clarity on the both the Klarinet project in Mpumalanga, and the R50 billion that would be required for total eradication of sanitation backlogs. The Committee had met the Presidency and was informed about this amount, but it was indicated in that meeting that the money was there. The Department should indicate how it would source the R50 billion from National Treasury. The engineers that sat at DWA were troublesome and should become DHS employees. They could not deal with sanitation from the DWA; DHS should be firm and ensure that it brought the engineers under its wing. If they refused, DHS should engage the council for engineers in order to have engineers seconded to DHS to manage the function. She asked if the CSIR had reviewed the chapter on sanitation in its Red Book on guidelines for human settlement design.

Responses
Mr Arendse replied the institutional arrangement in getting the Red Book revised was a challenge because the CSIR reported to the Department of Science and Technology (DST). To have the CSIR appointed, the two departments would have to enter into a funding arrangement. An MOU had been signed by the Director General, and passed over to DST. While those formalities were being concluded, departments had looked at how that would be managed. This was a mammoth exercise and could only be done in two years' time. Colleagues at DWA had supported DHS, and had always been keen to get the chapters on water and sanitation revised in the Red Book. DWA officials were more than ready to assist with the technical aspects of sanitation and water as captured in the Red Book. DHS would soon be starting the actual work in revising the Red Book and money would be moved to DST.

Ms Bayat ran the Committee through a separate presentation on Klarinet. The land issues as well as environmental matters relating to Phase 1 had all been resolved. The bulk infrastructure and electricity had also been completed and roads construction was in progress. This kind of progress was visible in each of the phases; houses had already been constructed and were above window height and some awaited roofing. There were glitches with the beneficiaries, much to the surprise of DHS. But most beneficiaries had now been identified. DHS kept the project in check and was beginning to understand what some of the challenges were.

Ms Bayat replied about Northern Cape not being accommodated in the mining towns project, saying this came as a mandate to the officials. The officials would have to go back to the committee of the ministers, and to Cabinet, to indicate the Committee’s recommendation that the Northern Cape be included in the list. The initial instruction was to focus on eight towns, and that work had been broken down into Phase 1, 2, and 3. Going into the future, the Northern Cape and other mining towns might come on board.

The Chairperson interjected and said DHS was given a mandate. The Committee based its work on the policy statement by the President, and fully supported the work that had been done already on the mining towns. Officials should go back and inform the IMC of the recommendation to include the Northern Cape in that list of mining towns. How soon could that be done? It would be important in the next presentation to the troika to include the recommendation, so that the Committee’s concern was fast-tracked to Cabinet.

Mr Cassel Mathale (ANC) clarified that this was not a question and the official need not explain why the Northern Cape was excluded, but rather carry the message to the troika that mining towns in the Northern Cape would have to be included in the list of eight. The official should only respond that the matter had been noted and would be communicated to the troika.

Ms Bayat replied the matter would be on the agenda at the next meeting. She clarified that all eight mining towns would get a slice of the R1.1 billion. The towns were Lepalale, Sekhukune, Rustenburg, Graskop, West Rand, Carltonville, eMalahleni, and Bojanala. There was a need for forward planning on the towns. In Lephalale this was indeed the case and around this place there was a huge amount of economic activity and growth.

Mr Tshangana said he had noted the comments raised, the majority of which were recommendations. DHS noted the comment about it needing to go beyond meetings on SIP arrangements, to the implementation phase; the comment was fair. The comment that the mining town projects should be treated the same as USDG projects was a good idea when considering how accountability would be enhanced by such a step. He reiterated that most of the comments were recommendations rather than questions.

Mr Tshangana welcomed the comment that DHS should also look at eradicating the VIP toilets. The Minister had expressed a similar view on VIPs especially for the risk they pose to ground water. It was sensible to engage CSIR on alternative technology models in delivering sanitation.

The reason the USDG was not included in the presentation was because it had a separate list of things it should fund. The information on the categorisation of the backlogs would be provided, but would even be more comprehensive once the master plan was finalised. DHS had looked to eradicate the bucket system in two years' time; that would be in 2016 but DHS would want to be realistic given the challenges that were involved in sanitation provision. DHS would not want to set unrealistic targets; there were water constraints in some areas. There was a lot of reprioritisation of the existing sources of funding. The main sources of funding for sanitation were the USDG, MIG, HSDG and RHIG. The Department knew how much of the USDG budget went into sanitation.

Mr Tshangana  accepted the comment on giving consideration to the type of development when providing sanitation. The CSIR would have to be roped in, and every area would be assessed before the model for delivering sanitation was decided upon. DHS had met with the Mangaung municipalities about using the USDG for social amenities, and their explanation had been that it made sense to provide these amenities at the time the houses were being built.

The Chairperson disapproved of the view and said money for social amenities could be sourced elsewhere.

Mr Tshangana commented that the mining towns had grown rapidly. DHS had a plan to diversify their economic activities and its planning unit would have to work in consultation with the Department of Economic Development (EDD) on this. He agreed DBE would have to be brought into the troika committee and said the entire sanitation budget would have to be rationalised. This would be communicated to the IMC the following day.

DHS would have to leverage resources from partners when it came to technical capacity. It was better to do it that way because if these technical people were looking for recruitment, they were not motivated to apply to government advertisements. The best model was to have them seconded to DHS. If one recruited directly, it was difficult and they did not even respond to these advertisements. This was a general challenge that other departments in the public service grappled with. Managers had agreed that seconding technical people was the best way to go. But also most engineers were ageing and were mostly in the mid-50s. The country should be looking to rope university graduates into the system.

Ms Funani Matlatsi, DHS Chief Finance Officer (CFO), responded that the principle of budgeting was clear when coming up with estimated figures for future costs. In finance, people mostly look at the inflation and topped it up by 6%. Government would normally look at the MTEF and the reviewing of the indications, and then would add 6%. This projection was done with the understanding that funding would be changing in future. The same principle was applicable to the R50 billion projections.

The USDG was complex. The Department held a meeting with the Department of Sports and Recreation on the utilisation of MIG. The Department formerly had a share in the grant, and an agreement when the USDG was introduced was that for a period of two years, municipalities would be allowed to finish running projects using the USDG. Two years was allowed for municipalities to use the USDG for recreational facilities, but the model had since changed. This information was communicated to the municipalities, and they were also informed that in 2013, no stadiums would be built from the USDG. The priority was to house people and put in infrastructure. In the event that municipalities continued to use the USDG for another purpose other than infrastructure, DHS had threatened to stop the funding. There were a lot of municipalities who were not USDG-funded but needed infrastructure. The debate was ongoing on how the USDG would be extended to such municipalities. The Department would consider a small percentage of the USDG for amenities, and 80% of the grant should be used for housing.

Ms Borman interjected and said not a cent from the USDG should be used for amenities or stadium construction. These things did not enable DHS to build houses; the USDG was an infrastructure grant.

Mr Mathale cautioned DHS against the claim that it had built stadiums. This item needed to be presented to a different committee as it had nothing to do with the Committee’s mandate of ensuring housing to the people.

The Chairperson agreed that the USDG money should be used for no other purpose other than housing infrastructure. The reason the grant was introduced was because there was no progress in human settlements development projects because of the lack of bulk infrastructure. Until DHS could proudly say it had adequately addressed bulk infrastructure in the country, then the grant could not be diverted. Other departments should also provide money from their budgets for the purposes of social amenities. This required collaborative and integrated planning.

Ms Matlatsi said DHS had reached out to some of the projects Mangaung had built and was impressed. The Department looked to review the funding model for sanitation. This exercise had allowed DHS to tap into other resources from different entities. There were different subsidies with the different water boards. The Department would want to get to a point where it knew the kind of funding it had for sanitation that could be reported on. The Department agreed with school sanitation, and DHS had the responsibility to provide sanitation in all schools. She said DHS had also met National Treasury to review how to eradicate the bucket system by the end of next year. The CFOs of the three departments and their entities would strategise on the eradication. The CFOs would come up with an interim financial model for this financial year.

Mr Arendse said useful work was being done by DHS and the Presidency on the review of the USDG. The Department of Performance Monitoring and Evaluation (DPME) had commissioned a review of a number of programmes government-wide; the USDG under Human Settlements was identified. A report would soon be availed and it showed interesting issues. If the Committee programme allowed, that report could be presented. Extending the USDG to secondary cities, was on the agenda of DHS and Treasury. Many of the secondary cities happened to be the mining towns. He cited Rustenburg as an example of a municipality that did not receive the USDG, but relied on the MIG allocation for infrastructure. This was woefully inadequate; it came as no surprise in the presentation that Rustenburg did not have money for infrastructure. This was a dilemma that had to be seriously looked at.

The Chairperson said DHS needed to strengthen capacity and the support it provided to provinces. She asked what was being done about the training of communities, and the role of Sector Education and Training Authorities (SETAs).

Mr Tshangana replied the critical question was how far DHS had moved in addressing the infrastructure backlogs. The question could best be answered by the work the Palmer Group was doing. DHS did a simple quick exercise in three metros – Mangaung, City of Cape Town and the Nelson Mandela Bay Metro. If one looked at the mega projects that Mangaung funded from the USDG, it had made it easy for them to address that backlog. The municipality was building a mega reservoir to address the challenge of bulk water. This was forward planning. Cape Town used to have a number of experienced WWTP, but now had a bulk pipeline for treatment works towards south east of Cape Town. Without upgrading that plant, no public or private housing development would have continued in and around that area. One could see what the USDG had done to unlock investment opportunities in these eight metros. The bulk of the USDG grant in all the metros went into water and sanitation. The training was a challenge, especially with managing the partnership arrangement with SETA. But funding had been set aside by SETA for this purpose, but Mr Phillip Chauke was better placed to comment on the matter.

The Chairperson congratulated the Department and said it had done well. The issue was that a lot of work had been done behind the scenes but had not been underscored.

The meeting was adjourned.

Appendix:
The Strategic Infrastructure Plans (SIPs)
SIP 1: Unlocking the northern mineral belt:  Investment in rail, water pipelines, energy generation and transmission infrastructure to tap Limpopo’s rich mineral reserves.
Co-ordinator: Eskom
SIP 2: Durban-Free State-Gauteng logistics and industrial corridor: Linking the industrial hubs in Durban, the Free State and Gauteng, and improving access to Durban’s import/export facilities.
Co-ordinator: Transnet
SIP 3: Southeastern node and corridor development: Upgrade of port and rail capacity, construction of a new dam in Umzimvubu in the Eastern Cape, construction of rail infrastructure to transport manganese from the Northern Cape to Port Elizabeth, construction of a manganese sinter facility in the Northern Cape and a smelter in the Eastern Cape.
Co-ordinator: Trans-Caledon Tunnel Authority
SIP 4: Unlocking economic opportunities in the North West: Acceleration of identified investments in roads, rail, bulk water and water treatment and transmission infrastructure; further development of the mining, agriculture and tourism sectors in the province.
Co-ordinator: South African National Roads Agency
SIP 5: Saldanha-Northern Cape development corridor: Expansion of rail and port infrastructure in the Saldanha area; construction of industrial capacity at the back of these ports (including a possible industrial development zone); strengthening maritime support for the gas and oil activities along the West Coast; expansion of iron ore mining production.
Co-ordinator: Industrial Development Corporation
SIP 6: Integrated municipal infrastructure: Addressing all maintenance backlogs and upgrades required in water, electricity and sanitation bulk infrastructure in the 23 least-resourced municipalities, covering 17-million people.
Co-ordinator: Development Bank of Southern Africa
SIP 7: Integrated urban space and public transport: Construction/expansion of public transport, housing, economic and social infrastructure in 12 urban areas.
Co-ordinator: Passenger Rail Agency of South Africa
SIP 8: Green energy: Supporting sustainable green energy initiatives nationally using options envisaged in the integrated resource plan; supporting biofuel production.
SIP 9: Electricity generation: Accelerating construction of power plants to meet energy needs identified in the integrated resource plan.
SIP 10: Electricity transmission and distribution: Expansion of the transmission and distribution network.
SIP 11: Agri-logistics and rural infrastructure: Investing in infrastructure such as storage facilities, transport links to main networks, fencing of farms, irrigation schemes to poor areas, agricultural colleges, processing facilities (including abattoirs) and rural tourism.
SIP 12: Revitalisation of public hospitals and health facilities: Building and refurbishing hospitals, public health facilities and 122 nursing colleges. Extensive capital expenditure to prepare the public healthcare system to meet the further requirements of the National Health Insurance scheme.
SIP 13: National school build programme: Replacing inappropriate school structures and addressing basic service backlogs. Provision of basic services under the Accelerated School Infrastructure Delivery Initiative.
SIP 14: Higher education infrastructure: Construction of lecture rooms, student accommodation, libraries and laboratories, and improving ICT connectivity. Development of university towns with a combination of facilities from residences, retail and recreation, and transport.
SIP 15: Expansion to communication technology: Enabling the Department of Communications’ target of 100% broadband penetration by 2020. The private sector is focusing mainly on urban areas, while government will invest in rural and township areas. It will also invest in e-government and school and health connectivity.
SIP 16: The Square Kilometre Array and Meerkat radio-telescope installations.
SIP 17: Regional integration: Investment in mutually-beneficial projects in the Free Trade Area, encompassing east, central and southern Africa. The countries will need projected growth ranging between 3% and 10%.
SIP 18: Water and sanitation: Addressing backlogs in water and sanitation; maintenance of water and sanitation infrastructure, which are “near collapse” in some municipalities; construction of sewerage plants.