Rental Housing Amendment Bill: adoption; 3rd quarter 2012/13 performance of Department, Eastern Cape on 2012 oversight findings, Nelson Mandela Bay Municipality response to complaints from contractors; Department Action Plan on AG's report

Meeting report

Chairperson’s opening remarks
The Chairperson welcomed all the government officials present from the national and provincial Department of Human Settlements (DHS). She reprimanded both national and provincial spheres of on the fact that there had been complaints of non-payments to contractors. Whilst the Committee was not sure how accurate or reliable the complaints were, this suggested that neither sphere was monitoring closely enough what was happening; instead of supporting the local spheres of government and attending to complaints from the public timeously, matters were instead being referred to the courts. She hoped that this point would be attended to, and that the Committee would not hear a repetition of these complaints.

Rental Housing Amendment Bill [B56-2013]: Finalisation and adoption
Mr Khwezi Ngwenya, Acting Chief Director: Legal Services, Department of Human Settlements, read the B-List of the Rental Housing Amendment Bill, clause by clause, so that the Committee could agree and adopt each clause.

Ms P Duncan (DA) announced that the DA would reserve its right to vote either for or against the Bill in the House.

The Chairperson said it was the DA’s democratic right, and the Committee could not argue with that. She noted that the DA did not seem to have a problem with the Bill, as the Committee was aware that its Members had actively participated in the process.

Ms G Borman (ANC) said there had been a tremendous amount of work that had gone into the process and the ANC was happy to accept what it saw as a good Bill.

Mr R Bhoola (IFP) said the Bill had been dealt with meticulously and this had been probably one of the most extensive Bill processing processes he had ever been involved in. He said he fully supported the Bill.

Ms M Njobe (COPE) said she had never been involved with legislation with so many amendments. A lot of work was done with the Bill and the DA contributed greatly. COPE supported the adoption of the Bill.

The Chairperson said the Bill had been in the process since 2011. It would certainly have an impact on both tenants and landlords.

The majority of the Committee adopted the Bill, with the DA abstaining from voting.

Adoption of Committee Report on the Housing Amendment Bill [B56-2013]
Ms Borman read through the draft report on the Housing Amendment Bill, which detailed the process of the Bill.

Ms Duncan indicated that she must again abstain from voting at this stage.

Ms Njobe pointed out some grammatical errors and mistakes.

The majority of the Committee adopted the Report, as amended.

The Chairperson thanked the DHS for its support and expressed her sincere appreciation to the Director General (DG) for allowing official to stay longer in Cape Town while Parliament was going through the process. She also thanked the Parliamentary staff for their tireless work and the Members of the Committee for a remarkable job.

Ms Borman thanked the Chairperson for the hours and the strong leadership, quipping that she had been a hard taskmaster, but that was exactly what had been needed. She asked how long it was likely to take until the DHS was ready to implement the Bill, once signed into law.

Mr Ngwenya said that there was a timeframe within which the Department had to attend to matters, such as development of regulations, but the Department was ready to implement.

3^rd quarter 2013/14 performance report of Department of Human Settlements
Mr Thabane Zulu, Director General, Department of Human Settlements, noted that the overall achievement by the Department during the third quarter of the 2013/14 financial year was 77%, and that out of 118 targets which were planned for the period under review, 91 targets were achieved. During this period, there was an improvement of 5% in performance compared to the second quarter.

The drive to fill all funded posts continued. The current vacancy rate now stood at 19%, a 6% improvement from the last report. The Department had recruited 28 interns in line with the Cabinet decision of 2002. This constituted 70% of the requirement. There was improvement in resolving office accommodation problems. The refurbishment should be finalised by end of May 2014. The building would be ready for occupation with effect from end of June 2014.

The process on the consolidation of the Development Finance Institutions (DFIs) was on track.  The business case was being completed and the legislation process will follow.

For programmes 1 to 6 the aggregate performance of the Department to date was achievement of 72%, or 258 out of the 354, annual targets.

The main challenges faced by the Department could be attributed to;
-Non availability of suitable land for human settlements in the provinces
-Insufficient active monitoring presence in provinces and metros to monitor and verify performance of the Human Settlement Development Grant (HSDG) and Urban Settlement Development Grant (USDG) expenditure and delivery.

The DHS had taken some measures to address these challenges. These included:
- offering meaningful support to provinces and line functionaries to fulfil their functions.
- managerial intervention to provinces, with political support also offered
- development of appropriate operational guidelines to coincide with the new Medium Term Strategic Framework for 2014-19.
- managerial intervention to provinces with political support, because only five Provinces were implementing the Peoples Housing Project (PHP)
- approval of guidelines to standardise and guide the implementation of PHP across the sector.
- holding a workshop with relevant line function units on how to improve intergovernmental relations (IGR) and stakeholder management
- presentation of Technical Capacity Development Strategy at Technical MINMEC for consideration, approval and commitment  

Mr Zulu went on to examine the department’s expenditure and performance for each of the units.

Administration spent 52% of their budget and achieved 88% of its target. Human Settlements Delivery Frameworks spent 84% and achieved 45% of its targets. Human Settlements Strategy and Planning spent 42% and achieved 63%. The Programme Management Unit spent 30% and achieved 78% of targets. The Office of the Chief Financial Officer spent 79% and achieved 100%. The Office of the Chief Operations Officer spent 98% of its budget and achieved 85% of targets.

Performance against Government Outcome 8
He then went on to look at performance against Government Outcome 8: Upgrading of Informal Settlements. The number of households provided with upgraded services as at 30 September 2013: was 267 563 households. This represented 66.9% of the 2014 target. In the same period, provinces
delivered 209 319 formal housing units to households in informal settlements and it was estimated that 125 591 were constructed on newly serviced sites. It therefore seemed that the total number of households provided with upgraded services was 393 154 households, which represented 98.3% of the 2014 target.

Reporting on the National Upgrading Support Programme, Mr Zulu noted that technical assistance for upgrading of informal settlements was in place in 43 Municipalities throughout the country.

He then moved on to report on the Increased Provision of Well-Located Rental Accommodation.
The number of Rental Units delivered through HSDG up to 30 September 2013 was 34 184 units. The programmes utilised to achieve this included the Social Housing Programme, Community Residential Unit Programme (CRU) and the Institutional Housing Subsidy Programme, which represented 42.8% of 2014 target. The USDG increased to 39 252 units, which represented 49.6% of 2014 target. Over the same period, private rental units delivered amounted to 10 368 units. The total number delivered was 49 620 units, representing 62.0% of 2014 target. The Social Housing Regulatory Authority (SHRA) completed 2 143 units and had 11 005 units under running projects, and there was an approved pipeline and various work in the planning stages for 21 445 units.

Reporting on Well-located Affordable Rental Accommodation, Mr Zulu said that with the revision of the Community Residential Units (CRU), the DHS’s social and institutional policies were currently receiving attention. A Low-income Rental Policy (Backyard) was being developed in consultation with South African Local Government Association (SALGA).

In the area of Restructuring Zones, he reported that 79 zones were approved and 51 were still under discussion. A number of smaller towns had been identified as restructuring zones for expansion of the Social Housing Programme.

Agreements were signed with all provinces and Provincial Steering Committees were in place to ensure increased geographical spread of Social Housing Institutions, including in Limpopo, which was under represented

Establishment of rental tribunals in Provinces and advisory offices within municipalities would be investigated to enhance institutional and regulatory capacity.

In order to respond to the funding challenges a Social Housing Programme budget review would be undertaken.

Mr Zulu moved on to note that to date, eight District Municipalities were accredited as Level 1, and at level 2, there were eight metros, and twelve district or local municipalities. Implementation protocols were concluded at 24 Municipalities. In respect of assignment (level 3 accreditation) of metros, the national DHS and the Municipal Accreditation Capacity and Compliance Assessment Panel met with provincial MECs and Executive Mayors, on a one-on-one basis, to provide feedback on the Financial and Fiscal Commission (FFC) findings and the way forward. A technical meeting between DHS and National Treasury (NT) was also held in August 2013 to agree on a funding estimate. In terms of an administrative decision, the assignment process had been put on hold under further notice. A total target of 27 municipalities had been achieved and to date 23 implementation protocols had been signed. The Implementation Protocol between the provinces and municipalities would be monitored.

Performance against Government Output 3
Output 3 required efficient utilisation of land for human settlements development. Mr Zulu reported that there had been actual delivery of 278 497.9 hectares (ha) of state land identified for assessment and 70 934.8 ha had been assessed for suitability for release. 8 923.7 ha were well located land, and this had been released for the extension of existing settlements, land tenure upgrading, integrated development or for the gap market. This also included 1 336.4 ha that was acquired.

The National Land Assembly Strategy for Human Settlements and Accompanying Land Pipeline was being developed to facilitate forward planning and justify proper funding, and to ensure a focus on national priorities and avoid missed opportunities. There were 14 implementation protocols concluded with various organs of State. Three medium term operational plans were signed with Limpopo, Free State and Northern Cape, which set out the support their Agencies would be getting over a three year period. Four implementation protocols were currently pending (Gauteng PHSD, KwaDukuza Local Municipality, Buffalo City Metro and Free State PHSD including Mangaung Metro).

Challenges experienced in this regard ranged from capital funding for acquisition, land release turn-around time, company interest on land, land claims on some prioritised properties and lack of planning and preparation for acquisition and release of land.

Performance against Output 4
Output 4 related to ensuring an improved property market. The target was to provide 600 000 housing finance opportunities to households in the gap market. Other interventions initiated to assist with reaching this objective were the Mortgage Default Insurance Scheme, on which concurrence from the National Treasury was still outstanding, and the Revised Finance Linked Individual Subsidy Programme (FLISP), which was implemented on 1 April 2012, and where there were Memorandums of Understanding (MOUs) between the National Housing Finance Corporation (NHFC) and the four banks, to actively support the implementation of the programme. The programme was rolled out in Eastern Cape, Northern Cape, Gauteng, North West and Free State. KwaZulu Natal, Western Cape and Limpopo had started collaboration with NHFC in the second quarter of the current financial year.  36 FLISP projects were approved and stood to produce 7 070 units. In total, 466 households were assisted, with bank bond finance of R46 million committed against FLISP approvals. Various marketing and communication initiatives (covering 215 municipalities) were launched to promote awareness of FLISP programme.  An amendment to the revised policy had been proposed to address implementation problems.

331 807 of the targets of Output 4 were reached. This was 55.3% of the 600 000 targets set.

Performance in respect of job creation
Ms Zoleka Sokopo, Chief Director, Department of Human Settlements, briefly spoke to the Committee about the job model of the Department. During the quarter 7 276 serviced sites and 25 335 top structures were delivered. This delivery translated to 11 912 job opportunities (if the definition of a person employed for a period of one year was used). If temporary employment was taken into account, of three months duration, then for that quarter it was estimated that 25 145 jobs during the construction phase were created.

Sanitation delivery progress
Mr Mbulelo Tshangana, Deputy Director-General: Project Management Unit, Department of Human Settlements, spoke in depth about sanitation to the Committee and outlined how far the country had come in 20 years and what was still lacking (see attached presentation for full details). He noted that the sanitation target was not achieved. National Treasury and DHS were re-gazetting the Rural Household Infrastructure Grant (RHIG) to Water Service Authorities (WSA) during the period under review. Eight municipalities were trained in Health and Hygiene programmes.  36 Municipal Infrastructure Grant (MIG) projects were monitored across nine provinces, four per province.

During the period under review sanitation jobs created included, in Gauteng, 76 jobs in Winterveldt, and in Free State, the creation of 4 440 jobs. Only those two reported on the jobs created through sanitation programmes. The national office visited several regions as part of support to job creation and youth development.

Regional support initiatives and training initiatives
It was noted that there were 20 Job Creation Support Plans developed for municipalities in line with municipal Integrated Development Plans (IDPs). The DHS developed a Pit Emptying Strategy document to assist WSAs in job creation and Small, Medium and Micro Enterprise (SMME) development. A revised reporting template was developed to assist regions.

Training material was developed for Health and Hygiene and Sanitation Builder Skills course
Funding Proposals were submitted to the Sector Education and Training Authorities and the Development Bank of South Africa.

The main challenges were non reporting by municipalities and regions, and lack of cooperation by key role players in municipalities

Financial Report - MTEF Allocation
Ms Funani Matlatsi, Chief Financial Officer, NDHS, took the Committee through the financial report for the quarter under review. She noted the percentage allocations of budget as follows:

Administration – 1.5%
Human Settlements Policy, Strategy and Planning – 0.3%
Programme Delivery Support – 0.8%
Housing Development Finance – 97.4%

Grants and transfers to entities constituted 97% of the total allocation.

During the budget adjustment process there was a rollover approved. The amounts allocated for the grants or for specific schemes were:
R100.5 million for the Rural Household Infrastructure Grant
R17 million for the Community Schemes Ombud Service Capitalization
R3 million for the Community Schemes Ombud Service Startup Funding

Amounts unallocated during 2013 ENE included:
R44 million Human Settlements Development Grant: Disaster relief
Declared Unspent Funds
R20 million National Upgrading Support Programme

The expenditure per programme for the third quarter ranged from 34% being spent for Programme Delivery Support, and 100% being spent for Housing Development Finance. Expenditure, as at 31 December 2013 was at 43% for Programme Delivery Support and 66% for Housing Development Finance. The Programme Management Unit’s expenditure per branch, as at 31 December 2013, was the lowest of all braches, with 28% spending, and the Office of the Chief Financial Offer had the highest expenditure, having spent 66% of its budget.

Out of the target of eleven transfer payments for the third quarter, only five were made. As of 31 December 2013 there were no funds transferred to Rural Households Infrastructure Development, Social Housing Regulatory Authority: Operational, Community Service Ombudsman Scheme and UN HABITAT.

The reasons for underspending were summarised as:
- Special Investigation Unit (SIU) not providing the Department with invoices.
- The budget for the leasing of additional office accommodation was not utilised, as issues were not resolved with the Department of Public Works (DPW)
- There were delays in the implementation of the National Upgrading Support Programme.
- The inability of State Information Technology Agency (SITA) to provide resources at an adequate level to maintain the Housing Subsidy System, as stipulated in the Service Level Agreement.

Meetings had been arranged with SIU on outstanding invoices for work performed, but submission of invoices was still delayed, due to outstanding supporting documents. It was also noted that one requirement for the submission of invoices from service providers was that municipal boards had to approve the plans. Delays were being experienced in getting the approvals, so invoices could not be submitted. Now, however, there had been a new service level agreement (SLA) finalised, which was in the approval process.

Ms Matlatsi noted that, under the HSDG, four of the provinces had overspent on their funds transferred between 1 October 2013 to 31 December 2013; namely Free State, KwaZulu Natal, North West and Western Cape. By 31 December 2013 the Northern Cape had under spent on its budget by 14%. Limpopo was raised as a particular concern, with an under expenditure of 85% between April and December 2013.

In general, challenges to spending included:
- Poor or slow performance by contractors
- Slow delivery due to labour unrest and inclement weather
- Non-availability of suitable land for human settlements developments
The DHS had made certain interventions – including the fact that provinces were requested to submit the recovery plans, provincial visits would be conducted during the fourth quarter, and 3rd quarter performance reviews would be conducted with the provinces and metros.

The Urban Settlements Development Grant spending was outlined. Between 1 October and 31 December 2013, the City of Cape Town only spent 25% of its budget. eThekwini had the highest expenditure with 74%. For this grant the challenges were identified as:
- Delays in projects due to roll-overs approved in December 2013 and January 2014
- Land invasions and land disputes
- Community disrupting projects progress due to labour issues
- Delays in Eskom to supply points
- Certain metros were not responding in line with the Performance Matrix

DHS was now engaging with NT to fast track roll over approvals, which were approved in October 2013. It was engaging with the metros to involve ward councilors. There were also engagements between DHS, Eskom and the Department of Energy, and further meetings were held with those metros showing reporting problems. Finally, the DHS could implement the provisions of the Division of Revenue Act such as withholding transfers, or issuing letters of non-compliance.

Discussion
Ms Borman said the report was comprehensive. She asked what the category “Other” (expenditure) comprised. She was concerned at the erratic nature of the percentages of expenditure. She cited that Nelson Mandela Bay Metropolitan Municipality, in the second quarter, spent 44%, but in the third quarter spent 66%. Ekurhuleni spent 65% in the second quarter and then dropped to 54.8% in the third quarter. The City of Johannesburg went from 29% in the second to 76.7% spending in the third quarter, and she wondered where it suddenly had capacity.

Ms Borman suggested that the SHRA must account as to why it did not put through a request for the funds. There was also R17 million “sitting around” for the Community Service Ombudsman Scheme.

Ms Borman was concerned that although the Sectional Title Schemes Management Bill was passed in June 2011, and money had been set aside for it, nothing had been spent by February 2014. This Fourth Parliament was therefore not actually seeing the implementation of that Bill. Priority projects were not raised at all, and she wanted an explanation on that.

Ms Matlatsi said that there may have been some confusion caused by the way the figures were presented. In answer to the query about apparently erratic expenditure, she noted that the figures on slide 62 showed only expenditure for the three months between October and December. The amount transferred, for those months, was R4 billion. However, slide 63 was based on six months (July to December). She agreed, however, that the City of Cape Town was also a concern to the Department, as there was no significant performance in the first quarter, hence the 25% spending only.

Ms Matlatsi said a comprehensive report on what the “Other” comprised would be provided to the Committee; there were many facets in there like libraries and cemeteries.

Ms Matlatsi said she would give a more comprehensive breakdown of the USDG expenditure; there were four provinces that received the grant. Almost 95% of the USDG was used for infrastructure development.

The Chairperson interjected and said the Committee would not agree to that. The Metros had access to funding from other departments. When the Minister and National Treasury made their budget speeches they said that Human Settlements only received R25 billion of the budget. This Committee would not support the spending of Human Settlements money on building libraries and cemeteries, since there were other grants to cater for such things. Human Settlements still had a backlog. Metros still using the bucket system could not prioritise libraries. She was insistent that there should be one report compiled by the three spheres of government, where they all worked together on their successes and failures.
 
Ms A Mashishi (ANC) asked how long it would take to introduce a poverty reduction instrument, as mentioned in the presentation. She asked that the job model be presented to the Committee in writing. She asked when other municipalities would be trained on the sanitation delivery programme.

Mr Zulu said the DHS had mentioned that it was looking into different policy instrument to continue delivering on the work of the Department - for example the Department had to develop a policy instrument regarding cooperatives as they related to Human Settlements. The Department was also positive the capacity that it was developing internally was critical. Whilst DHS might have recourse to outside sources if there were highly specialised matters, it was important to have the internal capacity in order to sustain the transfer of skills in the delivering of the policy instruments.

Ms Duncan raised a concern around the filling of the funded posts. Everyone knew of the seriousness of the unemployment rate in the country. The Department should make more effort to fill the vacant posts, unless there were other issues and reasons as to why the posts were left open.

Ms Matlatsi said the filling of vacancies had affected the performance of the Department drastically. Although there had been a 6% improvement in the vacancy rate, however between April and December vacancies were either not filled or they were slow and that was a factor in the under spending of the Department. It was also a fact that if vacancies were not filled, the operations in the programmes were affected.

Ms Duncan also stressed that DHS must ensure that there were competent contractors. The Department had to have processes in place to ensure that it would not be hampered by the need to do rectifications after the job had supposedly been completed. Commenting on the challenge of non-availability of suitable land, she said that local government had to be empowered, and, as pointed out, there was a need to develop land close to cities. However, as the population would continue growing, the country would have to look at new cities, for the current infrastructure could not carry further load. Local government needed to be equipped to look at new cities, new towns and new plans.

Ms Duncan expressed her thanks to the DHS for establishing good working relationships.

Ms Njobe also commented on suitable land for human settlement, and said the country should expand the small towns or start at looking into new towns. Canada was proof that this could be done. She appreciated that there was more engagement with the levels of government, which was obvious from this presentation and how DHS had addressed the issues raised by the Committee previously.

Ms Njobe questioned how there could be underspending in the Management Unit and the Strategy and Planning Unit and asked if this was a question of over budgeting, or of people not doing their job.

Ms Njobe was also worried that the SHRA had not made any request for funds, but what was more worrying than that was that there was money available, not being used, despite other areas in which money was needed.

The Chairperson asked Mr Zulu how far the DHS had gone with discussions of the funding model, as all the issues in fact related to that funding model of Human Settlements. The Department of Human Settlements could not afford to have its funding so fragmented, and it was under strain in trying to account. Members appreciated the engagement with other sectors and spheres, but that was not enough and a review of the whole funding model was needed.

The Chairperson pointed out that the DHS development programme, as a whole, was allocated to infrastructure, so she expected the DHS, in its reporting, to reflect the linkages with the Presidential Infrastructure Coordinating Commission (PICC). She asked if DHS was participating in, and was included in, the Infrastructure Development Bill.

The Chairperson said that there was a challenge with FLISP and MDI, although she did note that an amendment Bill was to be processed before the end of the current term and asked what contribution had the Department made to that Bill, as it should be familiar with the Bill and use it to advance the area of human settlements.

The Chairperson agreed that contractors were a challenge and this was not limited to emerging contractors, as the well-established contractors were taking advantage of government. There must be a plan to address the matter. DHS should ensure that all contracts signed with contractors were strengthened and covered any loopholes. The President, in the ANC Manifesto, had noted that government procurement policies had to be reviewed. This Department should lead the process, not wait for others to take the lead.

The Chairperson asked for an actual number for the 6% improvement rate on the vacancies.

The Chairperson felt that when it came to SHRA, restructuring zones were a problematic topic, which needed to be looked into. There might even be a need to go back to the legislation to review the problem was. SHRA needed to move into district municipalities, assess the needs of workers and evaluate trends in order to make adequate provision for them in the municipal plans and IDPs. The focus should not only be on Metros.

The Chairperson said she was worried about the USDG, as the report did not mention anything for “number of hectares of land proclaimed to township establishment”. The Committee needed to know what the problem was. If the Department did not proclaim the townships it was problematic to develop them. She said it was not acceptable that there was a specific target and at the end of the financial year, nothing was achieved.

The Chairperson was critical of the earlier reference to “other” expenditure; this was neither an acceptable nor a justifiable category especially when there was so much spent.

The Chairperson felt that the Special Investigating Unit (SIU) should be called to account to this Committee, as the same issues could not be allowed to go on for years.

The Chairperson asked that the Department name and shame the municipalities who had failed to submit their business plans, so the Committee could follow up on them. Although the process in 1994 was negotiated, people now had to take their responsibilities seriously. Every sphere of government had a responsibility to deliver, and she questioned why national government should be always locked into “negotiations” to bring services to the people. The Portfolio Committee wanted to make it quite clear that it was not happy with this.

The Chairperson asked that Mr Tshangana send to the Committee all the information he had that MPs needed. The DHS sometimes seemed to forget that Parliament had a duty to inform people what was going on in government, as this information took a slightly different tone coming from the representatives for whom the people voted.

The Chairperson noted the discussions by other Members on suitable land. South Africa had a lot of public land and government state properties – such as the vacant SABC building in Sea Point, for which requests had been made to turn the building into affordable rental social housing. SHRA had to do its own research to find similar state-owned properties in all the Metros, and then the Housing Development Agency (HAD) could come to check on the buildings as it had the capacity to do that. PHP was a very important programme and the Committee was passionate about it, because nowhere else in the world, other than South Africa, were people given free housing, and that had to be nurtured. South Africans had to be given the opportunity to do things for themselves and PHP was critical, allowing to build for themselves.

The Chairperson asked what the problem was exactly in provinces and said that all should commit to using standardised systems.

Mr Zulu agreed that there needed to be a leadership intervention with SIU leadership, as the problems there were affecting the Department’s spending patterns. It was not merely about spending their money, but also reporting properly how the money was being spent.

Mr Zulu agreed also that the current situation with contractors was unacceptable, as mentioned before to the Committee. Projects that were fully paid for should not be needing repairs three years later, and National Treasury had started a process of blacklisting contractors and companies that were not providing quality products. He said that the procurement process was where things could go wrong. A system had to be in place was to monitor projects from the very beginning, so that any necessary interventions took place on time, before further investment in doomed projects. DHS was working on strengthening its internal mechanisms.
 
Mr Zulu confirmed that, in line with the request by the Chairperson, there would be a detailed report on sanitation.

Mr Zulu said that five provinces were actively involved in PHP, and a recently introduced Contract Management Unit encouraged that penalty clauses be included in every contract, and, during the monitoring and evaluation process, that should be able to be invoked, where necessary, and a new contractor could be appointed so that the momentum of service delivery could not be lost.

The Department was working with National Treasury to review the funding model, which was currently a standardised formula used by Treasury. The model used for every sector should be relevant and dynamic to deal with the issues of that sector, and the Department was engaging with Treasury on that point also.

Mr Zulu assured the Committee that funded vacant posts were monitored on a weekly basis and reports were made to the Minister. Recently there had been a number of posts advertised by the Department, but there was still a 19% vacancy rate in the Department. The Committee would be sent a breakdown of the vacant posts.

Ms Zohra Ebrahim, Chairperson, SHRA, commented on the developing restructuring zones and said there were certain difficulties that the current policy and Act placed on SHRA. Part of the investigation concerned whether social housing would continue to be used as a form of rental housing delivery. City boundaries would not look the same ten years on, and accommodation needs would vary according to where job opportunities were found. SHRA had to look into that, and a range of other matters, and appropriate policy and regulation. The Committee also raised important points about SHRA doing its own research, particularly on state owned property, and having synergy with other institutions within the Human Settlements arena, like HDA. There had been investigations in the Agency and NT was involved in one court case that Treasury of one institution having disbursed funding irregularly, although the matter was sub judice. The Department had raised issues around the control environment. The controls were in place and a letter was written to the DG to inform him of that. Also the investigations that were going on would be reported to the Committee when things were resolved.

Mr Zulu confirmed that there was correspondence with SHRA that controls were in place as part of ensuring good governance in Human Settlement institutions, especially when the budget was coming directly from the fiscal budget.

The Chairperson appreciated the improvements shown.

Eastern Cape Provincial Department of Human Settlements progress report on findings and recommendations of this Committee following oversight visits in 2012
Dr Sjekula Mbanga, Chief Operations Officer, Department of Human Settlements (DHS) relayed an apology from the Head of the Provincial Department in the Eastern Cape (the provincial Department), who was unable to attend the meeting. He reminded Members of the oversight visit to the Eastern Cape from 29 July to 3 August 2012, which had been concerned with the implementation of the human settlements strategic plans, projects and programmes. He would give a report on the implementation and responses to the Committee’s responses and findings.

The first recommendation of the Committee was around policy gaps which were found to constrain implementation. It was suggested that these gaps be taken up during a policy review process which related to the Housing Act of 1997. The provincial Department was participating fully in the National Forum, which was led by the National Department of Human Settlements, in collaboration with the National Policy Unit.

The Committee had also recommended that the Department draft a policy on the rectification programme detailing the utilisation of the 10% that the Department deducted from the provincial allocations. The provincial Department was presently utilising the National Policy and had since commenced to draft policy in which the inputs from the Committee would be accommodated.

The Committee also recommended that the Department fast-track the provision of clean water to communities, and that existing boreholes be revitalised and maintained. In response,  the Rural Housing Subsidy programme made provision for a water harvesting tank as part of the top structure. This was done in the lieu of water services provided in the urban housing projects.

Another recommendation made to the provincial Department was that the registration and issuing of title deeds to beneficiaries be fast-tracked. Title deeds acted as collateral when a home owner needed to provide surety for home improvement loans. He assured Members that the provincial Department was working closely with municipalities in this regard. In addition, the Department had also entered into Memorandums of Understanding (MOUs) with affected municipalities to fast-track the issuing of title deeds. This approach had begun to yield results. The provincial Department had set a specific target in the 2013/14 financial year, and had already made positive strides towards reducing backlogs.

The Committee had also recommended that the Department work towards assisting Malitswayi Municipality to enhance the work of Joe Gqabi Development Agency, so that the agency could extend its work throughout the district.

Other recommendations made by the Committee included:
- Encouraging municipalities to consider utilisation of Municipal Infrastructure Grant for human settlements infrastructure development
- Ensuring that Port St John’s received priority in developing infrastructure for human settlements that would also unleash both socio and economic growth and development
- Installing temporary toilets in Thabo Mbeki village as soon as possible
- Investigating the toilets and temporary structure materials in Ingquza Hill local municipality
- Encouraging the intergovernmental relations and cooperative governance in provincial and local government spheres
- Urgently addressing all sanitation challenges reflected in this report, as they posed risk and hazardous condition to the communities

In addition, the Committee was perturbed and disappointed by the prolonged development on the Molteno project, which was supposed to accommodate beneficiaries from poorly constructed units and target implementation of an integrated human settlements project. The provincial Department responded that the Molteno Project had commenced and it had appointed 16 emerging contractors who were on site for construction of 500 houses. Work was in progress and houses were at various stages of construction. Amenities were also incorporated in the plan of this project, such as Multi-Purpose Community Centres.

The Committee had said that the delays in resolving the Cala sanitation and water challenges was disappointing, and the installation of services in Tarkastad was also not on target. The provincial Department replied that the challenge was non availability of funding for bulk infrastructure within Chris Hani District .Municipality, and this had been escalated to the national Department, which had since committed to make a once off funding injection available to address water and sanitation problems within Cala. This was undergoing an approval process.

Discussion
The Chairperson thanked the provincial Department for the presentation. However she was not impressed with it as it seemed rather academic and difficult for the ordinary citizen on the street to understand. The Department needed to provide a report which would make it clear to citizens what word was actually done. This report raised questions such as how many water harvesting tanks had the Department rolled out? The Committee was looking to receive a quantifiable report on the work conducted. In relation to Port St Johns, she argued that it did not seem that the Department looked closely at the Committee’s report, but only at the final recommendations, for the report had clearly noted that there was a particular challenge, in that municipality, of holes which were dug and then abandoned, which posed a health hazard to the communities. The work conducted by the Department needed to also consider the daily lives of ordinary residents, and how they could be improved and developed. The provincial Department was expected to instruct its Regional Managers to go and actually visit areas highlighted as concerns to provide a comprehensive report. Members had argued that if Port St Johns would be adequately developed, the lives of many people would be greatly improved. Furthermore, she wondered if the provincial Department had approached the national DHS to request funding to address specific concerns raised by Members.

Ms Borman said the biggest problems facing the Department were around topography, sanitation, title deeds and beneficiaries and all of these were the main contributors to service delivery protests at local government level. She agreed with the Chairperson that the presentation was not very satisfactory. No numbers and time lines were allocated to the Department’s responses.

Ms Borman wanted to know of the actual process on title deeds, and whether, for instance, the provincial Department was considering land demarcation in order to open up a title deeds office. She asked what was in place to ensure that beneficiaries were happy with delivery. How was the Department collaborating with the National Homebuilders Registration Council (NHBRC) to improve workmanship? She did not feel this report was useful to the Committee.

Ms Njobe shared other Member’s concerns on the inadequacy of the Report. She thought that the provincial Department’s progress on title deeds was “too good to be true”, pointing out that this was a tedious and contentious process. The large numbers of tile deeds issued in such a short time was a concern, and she wondered how exactly the Department managed to accomplish this. She asked whether the housing in at Maclear Municipality, between Stutterheim and East London, consisted of RDP programme houses and why no progress was reported here. She wondered if the increased number of NHBRC inspectors carried any budget implications, and, if so, asked what they were. She said the Committee needed a report with more practical examples of how the Department had responded to the Committee’s recommendations and concerns.

Mr J Matshoba (ANC) commended the Department on its inter-departmental efforts in investigating the planning of mines and land claims. He informed Members that during the national voting registration weekend, many miners at Ethongwe refused to register because they argued that the home owners who had benefited from the new housing development did not apply for those houses. The “invisible surveyor” packs was also still a serious concern because the matter was related to the land claims and he wondered if the Department had gone through the claims, and which claims had been addressed. He noted that the matter had since been handed over to the Public Protector for investigation.

The Chairperson repeated that the style and tone of the presentation was too academic. The Committee had asked for an investigation into a variety of matters, and a concise report, and that was not what was presented. She asked what the provincial Department had done about the depleted toilets in Lusikisiki and eCala. She reminded the provincial Department that in Molteno there was a challenge with beneficiaries who were supposed to have been de-registered. The Department’s report indicated that forensic investigators were appointed to conduct occupancy audits, but the Committee needed to know in which areas, and the outcomes. She asked what assessments had been conducted to monitor quality assurance by NHBRC, together with the Department.
 
Dr Mbanga apologised for the manner in which the report was packaged. A detailed special report talking to Port St Johns would be presented to the Committee. A special report would also be presented on title deeds transfers that would provide detailed information on the work done in this regard. He said one of the challenges with the issuing of title deeds was around the management of beneficiaries; some beneficiaries were either dead or missing. He argued that the quality of houses being built had in fact improved. The NHBRC had greatly enhanced its capacity and this had improved the quality and work of the Department.

The Chairperson asked whether the Department had consulted the NHBRC to correct the damages in previously built houses.

A member from the DHS apologised for the incomplete report and said it was in no way an indication of the work which the Department had done. He said as part of the controls processes, the Department had also implemented a process where independent auditors would assess the work done, once completed, so both the quality and the number of houses built would be assessed.

The Chairperson said the Committee observed poor workmanship from NHBRC, and wanted to know what the DHS had done to rectify houses, seeing that the DHS would still be claiming 10%, and how many units had been rectified.

Ms Funani Matlatsi, Chief Financial Officer, DHS, said there were two analyses done; one by NHBRC and secondly, provinces were also requested to come up with a report indicating their assessments. Only after these reports were compiled was the Department able to claim the 10%.

The Chairperson asked whether these assessments were able to quantify the damage done. Rectification was one of the most serious concerns of this Committee had. NHBRC was supposed to be liable for all rectification claims.

Mr Songezo Booi, Acting Chief Financial Officer, NHBRC, said there about 222 houses in four municipalities for which the NHBCR was responsible for rectification. The NHBCR had conducted detailed analyses of each house, and, although this took longer than expected, it had been completed. Each house was costed, and a budget of R13 million was approved for rectification. The tendering process was also concluded and it was expected that contractors would be on site from March 2014.

The Chairperson thanked the NHBCR for the input.

The Chairperson asked for a progress report on the Southern Cape Coastal Condensation Area (SCCCA).
 
A Departmental representative said that not much progress had been made with regard to the SCCCA, because of the current applicable norms and standards.
 
The Chairperson asked that the Department address the issue of topography.

Mr Martin Mapisha, Deputy Director General, National DHS, said topography was high on the Department’s list and the Department had addressed the issue. A submission would be made to MinMEC. In the next meeting, the Department would be in a better position to brief the Committee. The approved manual would be applicable to all relevant provinces. He said the Department had presented seven policies to MinMEC, which were due to be considered at that next meeting.

Another Department representative commented on costing, saying that a full costing exercise had been conducted. Some projects were costing from R140 000 to R150 000 per unit. Technical committees had been appointed to assess the costing submitted.

The Chairperson said that policy was internal and should not be taking such a long time to finalise, unlike legislation. She said the Department could not continue with costing when issues of topography had not yet been addressed.

Mr Mapisha said MinMEC had already approved the standards for SCCCA because this fell under the new subsidy quantum which had been shared with all provinces. This was informed by the Department of Trade and Industry (dti), which had already passed the minimum norms and standards. The Director-General had written to all Heads of Departments discussing how the Department was going to deal with the new building norms and standards. SCCCA was previously an area of contestation, because the Western Cape area and Saldana were previously not benefiting from it. The new norms and standards would be applicable to all areas. Municipalities had also taken a strong stance that they would not approve any building plans which did not comply with the new norms and standards. The only outstanding part was the geo-technical variances, which included topography.

Mandela Bay Municipality briefing on the complaints received from Metro Builders and Civil Construction and Chatty 600 Contractors
The Chairperson said that many complaints from contractors in the Eastern Cape had been referred to the Committee, and serious attention needed to be paid to the issue.

Ms Mpho Ndoni, Regional Director: Eastern Cape, Department of Human Settlements, said the Department had various meetings with the contractors. In respect of the Joe Slovo 950 claim, the Department never in fact received any claim from the builders; as they were sub-contracted by Veren Builders. In respect of Chetty 600, she explained that the money owed to these contractors was paid at the closure of the project.

Mr Nicholas Tsewu, Programme Director, Housing Development Agency (Eastern Cape), said the Joe Slovo 950 and the Chetty 600 projects were independent of the Zanemvula project. Metro Builders was one of the sub-contractors appointed.
 
The Chairperson asked for an explanation as to the stage when sub-contracting took place, and whether main contractors would have to introduce their sub-contractors to the Bid Committee.
 
Ms Tsewu explained that the contractor was required to put out a contracting methodology, which would explain in detail how the contractor planned to deal with the contract. The contractor then divided the specialised work. Once the tender was awarded, 70% of the labour had to be drawn from the local community, and 20% from sub-contractors. Localisation was managed by the Office of the Councillor that managed all statistics.

Ms Duncan commented that since no presentation document had been given, she was lost.

The Chairperson agreed, but said that the matters had to be addressed since they were urgent and important.

Ms Duncan said the urgency was understood, but Members still needed documents.

The Chairperson said documents would be handed out at a later stage, and asked that the considerations continue. She asked if it was possible that a bid was accepted without any knowledge of who the sub-contractors would be.

Mr Matshoba said the main contractor was accountable for everything.

The Chairperson asked what the policy said about sub-contracting, and whether government policy protected sub-contractors from exploitation by main contractors. She also wanted specifics of how ordinary citizens were being serviced by the Department.
 
Mr Tsewu said sub-contractors and labour were protected. On a monthly basis, the Extended Public Works Programme provided a report which stated how many jobs were created. In relation to sub-contracting there were three considerations. At the first stage, the sub-contractor entered into a contract with the contractor, and the client then acknowledged the agreement. Secondly, the minor works agreement was used to assist the sub-contract. Finally, the JBB Sub-Contracting Agreement helped sub-contractors. Once linked, these three would then be released from accountability, and the liability moved to the province or municipality. In addition, every claim from the contractor needed to acknowledge the work done by the sub-contractor, and an invoice from the sub-contractor needed to be attached to the invoice, with a letter of instruction included. This process had been followed in regard to the Joe Slovo matters. The balance of the claim was paid to the main contractor and all invoices owed to the sub-contractors were paid according to the value created. A sub-contractor had no right to claim consultant fees or contract management fees.

The Chairperson asked why the sub-contractors appointed consultants. She asked why they were apparently not informed as to what was stated in the policy, before the matter reached Parliament.
 
Ms Borman said in most cases sub-contractors were the ones who suffered from not being paid. The main contractor held the main contract.  She wondered if there was a document setting out very clearly the rights and responsibilities of main and sub-contractors so that there was no misunderstanding.

Mr Tsewu replied that the Joe Slovo matter was a very isolated case.

The Chairperson thanked Mr Tsewu for the presentation and said the issue of sub-contracting and policy needed to be corrected so that sub-contractors were protected from all exploitation.
 
Department of Human Settlements briefing on findings of Auditor-General
Dr Mbanga said the presentation would focus on the audit findings contained in the Report from the Auditor-General (AG) and the actions taken by the Department in response to these findings.

He dealt with the findings in turn. The reference to significant uncertainties related to a contingent liability in respect of a building leased through the Department of Public Works (DPW) for office accommodation. The DHS had not occupied the building as it still needed to be refurbished by the lessor. The DHS had not paid lease payments, as it had not occupied the buildings, although DPW continued invoicing DHS. The total invoice amount was R 22.4 million.

The AG had commented on material under-spending. The total adjusted budget was R340.625 million, of which R135.06 was spent. R126 011 000 related to payments made in the last month.

The AG commented that the financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework and were not fully supported by full and proper records. With regard to the short comings on performance information, adequate and reliable corroborating evidence could not be provided on all major variances as disclosed in the annual performance report. About 38% of the reported indicators and targets were not consistent with the indicators and targets as per the approved annual performance plan. For this reason, the AG had concluded that the department did not have or /and did not maintain an effective, efficient and transparent system of internal control regarding performance management.

Dr Mbanga reported on the actions taken to address the audit findings. In order to exercise oversight and ensure compliance with performance reporting prescripts, the Department had introduced an ongoing system of exception letters where there was poor performance and non-compliance. The Department had also introduced a system of compulsory performance review sessions. A system for tracking outstanding targets had also been introduced. DHS has reviewed the financial delegations in order to ensure proper certification of payrolls. It had taken a decision to fill all the vacant positions before the end of the financial year, and the process of recruitment had been enhanced to address all the bottlenecks such as the verification process.

Discussion
The Chairperson said there was a Treasury Regulation concerning the Annual Performance Plan and asked what progress had been made in this regard.

Mr C Mathale (ANC) asked whether the filling of funded vacant posts was able to be done, bearing in mind the current financial crisis.

Mr Matshoba asked whether the pre-paying of contractors for material before they delivered was not a form of corruption and questioned what would happen if they did not deliver, and what consequences would attach.

Ms Borman asked how it was possible that the Department still received invoices for a building which it did not occupy.

The Chairperson asked that the questions be responded to in writing, because of time constraints.

The meeting was adjourned.