Division Revenue Bill [B5-2014]: Department Human Settlements briefing

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Meeting Summary

The Department briefed the Committee on appropriations on the readiness to administer grants allocations. It stated that it had identified six key priorities for accelerating human settlements delivery, inter alia, informal settlement upgrading; sanitation and bucket eradication; mining towns; affordable rental and PHP; military veterans; and affordable housing finance. Bucket Eradication Programme was not funded and this programme would be funded by the National Treasury. Twenty-seven municipalities were accredited including the six Metros earmarked for assignment. The Department was ready to embark on capacity building on business plans for operational (or capacitation) grant and human settlement grant.

The members of the Committee expressed their concerns on the growing of townships and this would be a challenge in eradicating bucket systems. Yet members asked the Department which factors were taken into account to arrive at the budget. Several questions were asked and more clarifications were sought. However, the Chairperson requested the Department to provide answers and clarifications in writing as most of members of the Committee who asked questions were left to attend other meeting.

Meeting report

Chairperson's opening remarks
The Chairperson noted that the Department of Human Settlements (DHS or the Department) had been asked to speak to this Committee about the grants allocations for the 2014/15 Financial Year.

Department of Human Settlements briefing on readiness of provinces to implement grants
Mr Thabane Zulu, Director General,  Department of Human Settlements thanked the Chairperson for giving the Department an opportunity to address the Committee. He went on to read through the prepared presentation (see attached document), which set out the readiness of provinces to implement the 2014 Medium Term Expenditure Framework (MTEF) grant allocations, the progress on the devolution of housing function and municipal accreditation, alignment and coordination of the upgrade of sanitation including the revision of the Human Settlement Development Grants (HSDG), and efforts at improving spending performance in the roll-out of human settlements.

The DHS, in giving effect to the mandate to accelerate delivery of human settlements, focused on six  key priorities, namely:

(1) informal settlement upgrading;
(2) sanitation and bucket eradication;
(3) mining towns;
(4) affordable rental and Peoples Housing Programme (PHP);
(5) military veterans; and
(6) affordable housing finance.

More emphasis was placed in the latest budget on the eradication of bucket systems, which the Department said also fell under alignment and coordination of the upgrade of sanitation.

He reported that there were 272 995 households that used the facility of bucket systems countrywide. Free State had the largest number of households with bucket systems, at 101 810 households. Notwithstanding this, there was a need to upgrade sanitation in all provinces. The decision taken to eradicate bucket systems was ratified by the Presidential Coordinating Council that took place on 17 October 2014. At the time of addressing the Committee, the Bucket Eradication Programme (BEP) was not funded. However, the National Treasury had, after various discussions, agreed to fund the BEP. When implementing the BEP, the Department would ensure that Regional Bulk Infrastructure Grant (RBIG) and the Municipal Infrastructure Grant (MIG) funded the bulk infrastructure while the HSDG funds would deal with connector and reticulation services to eradicate bucket sanitation.

Moving on to accreditation of metros and municipalities, Mr Zulu noted that there were currently 27 municipalities accredited at levels 1 and 2. This included the six Metros earmarked for assignment, namely, City of Cape Town, Ethekwini, Ekurhuleni, City of Johannesburg, Tshwane Metro, and Nelson Mandela Bay Metro. The estimated Human Settlements Development Grant (HSDG) allocations to the six metros were about R21.7 billion over the Medium Term Expenditure Framework (MTEF) period. The assignment of functions implied that the above capital grant allocations would flow directly to the six metros. Nonetheless, the National Treasury had made available a budget of R900 million over the 2014 period for operational capacitation of the six metros. The 2014 Division of Revenue Act had prepared the provinces and metros for the change in funding flows to support assignment.

The Department was ready to embark on capacity building and business plans for both the Operational/ Capacitation grant, and the Human Settlements grant. The training would focus on Human Subsidy System (HSS) and the Needs Register System. The preparation of toolkits with business processes, housing policies, housing value chain and housing sector plans were reported to be under way. Provinces had been capacitating Metros on reconciliation and redemption processes.

The Chairperson thanked Mr Zulu for this address and said that the presentation did not touch on how the budget was arrived at. The Committee would like to hear the Department comment on that issue. He sought clarification on whether the support for building houses in the Metros and provinces was simultaneously being provided. However, he said that the Department could respond on the issue now, if it could, or stand over the answers to another time.

Mr Zulu replied that the main issue had to do with the relationship of housing infrastructure and housing delivery, but not building enough houses. This problem was being dealt with in all six metros.   In Mangaung, it was possible to see that some schemes had been upgraded. However, there were some challenges. For example, there was sometimes no budget to deal with urgent housing infrastructure. Generally, all provinces were supported ,to ensure an effective performance. 

The Chairperson asked the South African Local Government Association (SALGA) to comment whether what the Department was saying seemed to be correct.

Ms Alison Tshangana, Specialist: Human Settlements, SALGA, responded that an increase in the housing subsidy had a positive impact.

Mr M Swart (DA) asked what exactly the Department did to support municipalities and referred to the statement of former president Thabo Mbeki on eradication of the bucket systems. This noble aim had never to date been achieved. He felt, therefore, that the eradication of bucket systems was a challenge and its complexity was added to by the fact that citizens migrated from rural to urban areas.
Mr Swart also wanted clarification on BEP financial implications.

Dr SM Van Dyk (DA) sought clarification on issues around capacitation, eradication of bucket systems and what process was followed in allocation of the budget. He stated that the eradication of bucket system could not be dealt in isolation. To deal with this issue effectively and sufficiently, various different matters would need attention.

Ms A Mfulo (ANC) praised the programme of eradicating bucket systems as a good approach in coordinating and upgrading sanitation. However, she expressed concerns that the townships had been growing, and this would challenge the programme. She therefore asked what measures were taken by the Department to control the growing of townships.

Ms N Dambuza (ANC, Chairperson of the Portfolio Committee on Human Settlements) reminded the Committee that the Committee had a duty to conduct oversight visits, and this had provided her Committee with a good overview of exactly what improvements were effected, as well as gave the Committee an opportunity to hear the grievances from the people on the ground. She appreciated what the National Treasury had done in relation to capacitating metros and funding the eradication of bucket systems. However, she expressed her concerns about the Metros’ struggle to use the grants appropriately. She gave an instance that her Committee had seen where grant funding was supposed to be to sanitation but had instead been used to upgrade cemeteries. She asked whether there were strategies put in place to ensure that the allocated grants were consistently spend on the programmes for which that money was issued in the first place.

She also indicated that the presentation did not adequately address the issue of toilets. In her home town and neighbouring towns there were places with no toilets at all. In some other areas where the Committee did an oversight visit, people who did not have toilets also raised this matter.

With regard to the mining towns, she asked what kind of policy the Department had put in place s. She stated that the whole issue of the budget needed to be reconsidered. She advised the Department to have a specific policy framework in place, for the mining towns, separate from other policies. She also expressed the view that a national budget should be set aside to intervene to deal with capacitation.

The Chairperson said that the Department should answer on the critical questions now, but it was clear that there was not sufficient time left to deal with all the issues. Two of he Members had already asked to be excused to attend another important meeting. The Department should thus answer in writing. 

The Chairperson commented to Mr Swart that in relation to the statements by Thabo Mbeki on eradication of bucket systems, he felt that this was achieved in the context of the framework within which the eradication was structured.

Ms Marissa Moore, Chief Director: Public Finance, National Treasury, spoke to the numbers issue and explained that the National Treasury had arrived at the estimate of almost R100 million for operational capacity of six metros after conducting a number of studies.

Mr Zulu said that the overall vision had moved from providing housing to building human settlements. People fwere given an opportunity to make choices where they wished to live. There were great criticisms that the Department was no longer providing houses, but this did not take into account the fact that the Department had changed its approach to the provision of housing and other social amenities. Since 2009, there had been great changes effected, especially when the Department worked as a business entity. The Department was still capacitating the Programme and Project Management Unit, so as to have an effective mechanism of monitoring and evaluating performance at national level.

Ms Dambuza was happy to hear that DHS and National Treasury were working together and there were no contractions arising out in the grants allocation.

The Chairperson said that the Department did well but there was always room for improvement. The Department should simultaneously build houses and toilets. To his understanding, the issue was about planning, especially at the provincial level. For example, taking the instance of the province of Limpopo, where strategic planning was at stake, there should be a proper plan to implement the national policy.

The Chairperson asked that other questions be answered in writing.

The meeting was adjourned.


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