Minister and Department of Human Settlements on its 2014 Strategic Plan

Human Settlements, Water and Sanitation

03 July 2014
Chairperson: Ms N Mafu (ANC)
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Meeting Summary

The Committee had its first meeting and briefing with the Department of Human Settlements and its entities. The Minister gave a political outline of where the Department was and where it would be heading in the next five years. The entities were also given a chance to introduce themselves briefly to the Committee and describe what they did, in order to get a sense of how the budget of the Department was spent.

The Committee expressed excitement over the emphasis in overcoming the title deeds backlog and eradicating the bucket system. People had not received their title deeds, which also meant that they could not take ownership of their houses .The question of illegal occupation of land and evictions was brought up as one of the major issues the Department had to deal with. The Minister acknowledged that some of the issues the Committee had brought up were indeed issues that the Department had been looking into and government was battling with. The Prevention of Illegal Evictions (PIE) Act had not provided the Department the instrument it needed.  It had not delivered what the Department had hoped for. The Department would be prioritising the revision of all its legislation, as the laws were out-dated and not coping with the problems it had to deal with.

A Member brought up the issue that crucial positions remained unfilled at both national and municipal government level. The Department acknowledged that targets were dependent on capacity, and the unfilled vacancies did hinder the pipeline. At national level, the Directors-General of departments were working on the matter, but what was important for the Department of Human Settlements was to ensure that there was vertical and horizontal contracting.  Failure to do so would render the targets useless, and they would be unachievable.

The Minister felt that all the targets of the Department were easily achievable, and both the Department and the entities could exceed their targets and get the country where it once was, which was building 1 000 houses a day and changing lives of South Africans on a daily basis.  
The Committee decided they would scrutinise the budget, as presented, during the debate. However,  it had been made clear how the Department their budget was disbursed down to municipalities, and the controls in place were clear.

Meeting report

The Chairperson asked the Minister to provide a political overview of the Department.  The accounting officer of the Department would then present the programme of the Department, after which all the CEOs of the Department’s entities would provide a brief outline of their mandates for the Committee Members to have a sense of what each entity did.

Remarks by Minister
Ms Lindiwe Sisulu, Minister of the Department of Human Settlements, said the Department was basing its plans on Chapter 8 of the National Development Plan (NDP) as adopted by Cabinet, Parliament and the country. The Department had adopted a document called ‘Breaking New Ground’ in 2004, and the NDP had proceeded from that plan and added on it.

After extensive consultation for the Breaking New Ground Plan the Department found that the current housing concept, at the time, was not sustainable as it continued the spatial planning of the apartheid era. The finding was that the Department had to move away from that and find a comprehensive integrated human settlements approach.  Thus by 2009, the name of the Department had gone from “Housing” to “Human Settlement.” The Department now dealt with human settlements in its entirety - bringing people closer to working opportunities, building houses with all the necessary amenities, and providing an environment that gave quality life.

The Department had good relationships with most stakeholders.  These included the banking sector and non-governmental institutions that dealt with housing. Since 1994, the Department had produced 6.4 million houses.  The backlog -- based on 2007 statistics -- was that there were 2.3 million people who needed decent housing that was nearer to their jobs. The current target for the next five years stood at 1.4 million, to make a dent in the housing market.

The urbanisation rate was 16%, which was a very worrying phenomenon. The Department was hoping to work closely with various other departments within government, like Rural Development, to see if it was possible to bring the same facilities in urban areas to rural areas, to attract people back to rural areas. Also, the Department would be negotiating with the newly established Department of Water Affairs and Sanitation to retain sanitation, as defined in the Breaking New Ground initiative, and have the Department of Water Affairs and Sanitation deal with bulk sanitation.

The Department formed part of the Inter-ministerial Committee (IMC) as appointed by the President to look at the possibility of the Department providing housing in mining towns. Mining towns had been a concern and the Department had interacted with mine owners and had worked on a pilot project with Anglo American Platinum Ltd (Amplats).

The Minister hoped that the country could go back to where they could once again say that government was providing 1 000 houses per day. The Department had had very good relationships with the Committee in the past and together had built houses in Mount Frere, when the Deputy Minister was still Chairperson of the Committee. She hoped that a great partnership between the Committee and Department would continue.

The Department had established a number of special projects, like a housing register, where there would be a database of houses to alleviate the problem prevalent at the municipal level, where people were not sure if the waiting list was credible or manipulated by their councillors. Also there would be a project that would verify that the people that were recipients of the houses still occupied them. According to the law, no one was allowed to sell the house without first selling the house back to the state. However, it was clear that the rule was not being upheld. The Department was also part of an inter-ministerial committee to eradicate the bucket system. The committee hoped to eradicate the bucket system completely by 2016.

The Minister said though the strategic plan had been prepared last year, the concerns of the Committee would certainly be considered and taken on board by the Department.

Department of Human Settlements overview
Mr Thabane Zulu, Director General of the National Department of Human Settlements, thought it was only appropriate that he specified the mandate, vision and the overall plans of the Department to the Committee.

The Mandate of the Department Of Human Settlements:
Everyone had a right to have access to adequate housing and other embedded rights, such as the right to an environment that is not harmful to health or well being (Section 24), the right to clean water (Section 27), the right to property (Section 25)

A Vision for Human Settlements 
By 2050, visible results from effectively coordinated spatial planning systems shall have transformed human settlements in South Africa into equitable and efficient spaces, with citizens living in close proximity to work and access to social facilities and necessary infrastructure.  By 2030, measurable progress towards breaking apartheid’s spatial patterns shall be made, with significant advances made towards retrofitting existing settlements, offering the majority of South Africans access to adequate housing in better living environments, within a more equitable and functional residential property market

Mission Statement for the Next Five Years
Ensure all South Africans have access to adequate housing and quality living conditions through programmes that provide one million housing opportunities for qualifying households over the next five years, and providing basic services and infrastructure in all existing informal settlements.

Mr Zulu said the challenges facing Human Settlements were dysfunctional and inequitable settlement patterns, a fractured housing market with inequitable access to its workings and benefits, housing affordability problems, weak spatial planning and governance capabilities, the need to ensure continued provision of housing (addressing asset poverty) and basic services to meet a complex set of housing affordability needs, and the need to reactivate strong social solidarity among communities and the building of capable and confident citizens

The National Development Plan sets out the development praxis for human settlements for the next 15 years, with a specific focus on changes to land management systems, with improved and coordinated spatial systems that would transform human settlements in South Africa into equitable and efficient spaces, with citizens living in close proximity to work with access to social facilities and necessary infrastructure.   Significant advances would be made towards retrofitting existing settlements offering the majority of South Africans access to adequate housing, affordable services in better living environments, within a more equitable and functional residential property.
Department’s entities
The Director General handed the presentation over to the Department’s entities to introduce who they were and what they did, to the Committee.

The Chairperson said the entities need not go into detail in their introductions. Though they had already sent their presentations to the Committee they would still have an opportunity to come to the Portfolio Committee individually.
Housing Development Agency (HDA)
Mr Taffy Adler, CEO of the Housing Development Agency, gave an overview of what the Agency did and its establishment. The HDA was established in 2009 as a public development agency to address the issue of land acquisition and assembly process, to accelerate housing delivery and human settlement development.  The two main objectives of the Agency were to:

*           Identify, acquire, hold, develop and release well-located land and buildings
*           Provide project management support and housing development services

The HDA collaborated with provinces and municipalities to provide land identification, assembly and planning; project pipeline development; project management; informal settlement upgrades; Inter-Governmental Relations (IGR) support; and geo-spatial information.  The Agency currently had a national footprint and was operational in all nine provinces, with offices in six provinces.

The Minister added that in the upcoming two months, the N2 Gateway project would also be cleared.

Social Housing Regulatory Agency (SHRA)
Advocate Seeng Ntsaba-Letele, Acting CEO of SHRA, gave the Committee a brief overview of SHRA. The Social Housing Regulatory Authority was established in terms of the Social Housing Act (2008). The Regulator was established in 2010 to facilitate investment in social housing and to introduce a regulatory environment to ensure that institutions and cooperatives that were financed through SHRA were regulated. The institutions and cooperatives were required to be accredited.

The functions of SHRA were to regulate the social housing sector and to support the restructuring of urban spaces through investments in social housing. It was responsible for the disbursement of restructuring capital grants to social housing institutions.

SHRA runs an affordable rental housing programme that targets income bands between R1 000 and R7 500, but if calculated in terms of the consumer price index, the income bands should have gone up to between R13 000 and R14 000. Social housing projects could be developed only in restructuring zones, so it was important that the Regulator worked with the HDA, as HDA’s main mandate was to acquire strategic land, after which SHRA would come in and develop the land.

The accredited social housing institutions include cooperatives and thus far only one housing cooperative had been accredited. SHRA’s human capital should be strengthened to ensure its growth and success.

Ms Zohra Ebrahim, Chairperson of SHRA, added that another key mandate of SHRA was to ensure that spaces and cities that were previously excluded, were integrated. Also there were three core functions of the Regulator -- accreditation, investment, and monitoring and evaluation. The difference between the Regulator and institutions that had come before, were the powers of intervention of the Regulator.

National Home Builders Registration Council (NHBRC)
Mr Mongezi Mnyani, CEO of the NHBRC, introduced the Council to the Committee. The NHBRC had been established in terms of the Housing Consumer Protection Measures Act of 1998. The primary responsibility of the Council was to protect the interests of housing consumers and regulate the building industry, and also to ensure regulation and norms and standards in the built environment industry. The NHBRC informed both parties (consumer and builder) of what their rights and responsibilities were.  It was responsible for structural inspections, registration of home builders, training of builders, and protection of the home owner against a faulty structure within five years of completion.

The CEO added that the funding of the Council did not come from the budget, but from the registration of builders and income from investments.

National Urban Reconstruction and Housing Agency (NURCHA)
Mr Viwe Gqwetha, CEO of NURCHA, introduced the mandate of the entity to the Committee. NURCHA was established in 1995, and its mandate was to provide finance to small and medium contractors and developers that were active in producing subsidised and affordable housing.

NURCHA ensured the availability of bridging finance to small, medium and established contractors, building low and moderate income housing and related community facilities and infrastructure. NURCHA initiated programmes and took considered risks to ensure a sustainable flow of finance for the construction of low-income and affordable housing, community facilities and infrastructure.

National Housing Finance Corporation (NHFC)
Mr Samson Moraba, CEO of the NHFC, said the Corporation had been established in 1996 and it was what was referred to as a Development Finance Institution (DFI). Though sometimes misplaced as a private entity, the Corporation was exclusively owned by the South African government, but was self-sustained.

The main function of the Corporation was to broaden and deepen access to affordable housing finance to low-income and middle-income South African households. The Corporation had created housing opportunities in the spheres of private rental, social housing, and home ownership. The success of the Corporation was partly attributed to strategic partnerships. 

Rural Housing Loan Fund (RHLF)
Mr Jabulani Fakazi, CEO of RHLF, said the Fund aimed to provide access to housing credit to low-income rural households in order to enable them to improve their housing and living conditions. The fund also supported the implementation of the government’s rural development programme - the Comprehensive Rural Development Programme (CRDP).

The CEO explained that the Fund attracted teachers and nurses who lived and worked in rural areas, and deserved greater access to facilities and better housing for their families.

Department’s Strategic Plan and Budget
The Director General handed the Department’s presentation over to Mr Mbulelo Tshangana, Deputy Director General (DDG): Project Management Unit, who went into detail about the plans the Department had for the 2014/2015 financial year, as well as the bucket system eradication programme and the other grants of the Department.
Strategic Plan: Output Targets 2014/15
The Department planned to have a framework for the development of a green paper finalised by May 2015, and for the revision of the regulations and incentives for housing and land use management by March 2015. It also planned to have the cooperatives policy approved, to have in place a framework for development of a comprehensive rental policy finalised, to have an implementation strategy to increase the supply of affordable housing, and to increase the number of housing opportunities in informal settlements located in quality living environments. All the targets were planned to be met around March 2015.

The DDG pointed to an issue that was a problem pointed out by the previous Committee, and that was the issuing of title deeds. The Department hoped that title deeds would be issued to new homeowners in the subsidy sub-market on occupation, and to have a confirmed plan of action by March 2015, as well as an actual number of the outstanding deeds.

The total bucket system backlog in the country was 272 995, the Free State had the highest backlog rate with 37.29% which translated to 101 810 units. It was followed by the Eastern Cape and the Northern Cape. The grant allocation of the programme reflected this, as these provinces had the highest allocations.

The Human Settlement Development Grant (HSDG) would be see greater emphasis on securing tenure, water and sanitation.   ‘Anomalies’ in delivery were ascribed to allotment of 5% of the HSDG to the sanitation programme, a significant increase in the subsidy quantum and the use of the HSDG to overcome bulk infrastructure shortages.  While the allocation may have increased, in real terms, this number had actually decreased.  The implications of this decrease had to be carefully considered.

A significant percentage is committed to Informal Settlement Upgrading.  39% of all households (sites) to be provided with secure tenure and services, were located in informal settlements.

There was continued commitment to the Financed-Linked Individual Subsidy Programme (FLISP) and rectification programmes.

Historically, KwaZulu-Natal, Mpumalanga and Limpopo committed the bulk of their allocation to rural areas, while the Peoples Housing Process (PHP) remains the anchor programme for Western Cape and Mpumalanga.

Cities remained key spaces in regional, national and international economies, cultural activities, education and so forth.  Urbanisation and growth continues unabated, especially in the large urban areas.  The Departmental response was a positive one, and 61% of combined HSDG and Urban Settlement Development Grant (USD) would be spent in the eight metros.

The BEP (Bucket Eradication Programme) grant was attained by “top slicing” 5% of the HSDG over two years, to fund the programme.  The BEP grant for the 2014-2015 amounted to R899.2 million, and for 2015-2016, R975.4 million.  Grant funds were divided among provinces in proportion to the number of households that reported using buckets. This grant is allocated for two years and will end in March 2016.   Service level agreements had been entered into with the following public entities: NURCHA (National Urban and Reconstruction Agency) – Eastern Cape; HDA (Housing Development Agency) – Western Cape; Bloem Water – Free State; and MISA (Municipal Infrastructure Support Agent) – Northern Cape.

Status of business plans from implementing agents   
The Director General asked Mr Anton Arendse, Chief Director: Planning, to address the Committee about the business plan submissions.

To date, business plans had been received for six of the nine provinces. The status of readiness of business plans from implementing agents for the three outstanding provinces (Gauteng, Kwazulu-Natal and Mpumalanga) could not be determined at this stage.

Of the business plans received, reviews were under way to submit these to National Treasury.

To facilitate the execution of the BEP, NDHS will utilise its panel of multi-disciplinary Professional Resource Teams (PRTs). The PRT’s approach is intended to make a significant and efficient contribution to the successful implementation of the bucket eradication programme’s projects.

It needs to be highlighted that a minimum of 3% of the USDG, which goes directly to the eight metros, is allocated towards bucket eradication in formal areas.

Rural Household Infrastructure Grant (RHIG)
The receiving municipalities are finalising their business plans.  The use of the BEP implementing agencies will be applied to ensure performance and compliance.  In terms of the Medium Term Strategic Framework (MTSF), the emphasis would be on outcomes, rather than mere outputs.  The
2014/15 Plan begins to set a baseline for outcomes and measured delivery, with a greater emphasis on location, density, integration with infrastructure and amenities.  There was alignment with national priorities and a firm commitment to basic service provision.

Ms T Baker (DA) asked for clarity on the number of informal settlements mentioned in the presentation. The number of informal settlements had been referred to as a fixed amount, but informal settlements had been known to “crop up” continuously. The Member referred to an incident in an area she lived in, where private land was being sold for R10 by “one of the new parties”, so in fact the number of informal settlements was now 2 201 and not 2 200 as mentioned in the presentation. She asked what mechanisms had been put in place to curb the development of new informal settlements.

Minister Sisulu said curbing the invasion of land and growth of informal settlements was a matter with which the Committee and Department would have to engage continuously during their respective terms. Government had tried to manage the growth of informal settlements but had not been been able to exercise control effectively.

One of the reasons for the exponential growth of informal settlements was that when the apartheid regime fell, most people who had been locked into certain areas found the opportunity to go into the cities. As a result, the rate of urbanisation had grown far beyond what any government would be able to cope with.  Another problem was that the judiciary, in its interpretation of the law, had actually defined for the Department what they should be doing, starting with the Grootboom case and Abahlali Base Mjondolo case, among others. The judiciary had been defining policies for the Department instead of the Department defining its own legislation. However, it remained illegal to illegally occupy land. The instruments for dealing with the matter were difficult.

The current case the government was dealing with was Lwandle, and government realised that it was dealing with an impossible situation when it came to the eviction of occupants, especially in the winter season. Moving forward, the Department would be setting up a special policy unit that would focus on legislation and the policies of the Department.

Regarding one of the political parties selling land, that was illegal and it should be reported to the police. No one could sell land that did not belong to them. When dealing with evictions, even when approved by courts, the Department found that it was dealing with slumlords, which created a whole new culture for government to deal with.

Mr S Gana (DA) referred to a question he had previously directed to the Minister regarding the funds allocated for sanitation purposes, and asked if the Rural Household Infrastructure Grant (RHIG) would remain in the Department of Human Settlements or would move over to the Department of Water and Sanitation. He asked what the impact would be on budgeting, should that happen.   There had been a case referred to him regarding subsidies; this subsidy had been called an ‘institutional subsidy’, but in the presentation there had been no mention of that.

The Minister said during the MTEF planning phase, the Department still had sanitation as their responsibility. The Department was now in the process of looking into separating the responsibility with the Department of Water Affairs and Sanitation.  Regarding the bucket eradication initiative, the Department had the same concerns - should they give the budget over to the Department of Water and Sanitation?  Would the R1.9 billion come back to the Department when the Department of Water and Sanitation was done with bucket eradication?

Mr Zulu said RHIG was based on an interpretation that the Department needed to engage effectively with the Department of Water Affairs and Sanitation. The Department of Human Settlements had a clear position in relation to sanitation, and that was that household sanitation remained a Human Settlements function and responsibility.

Mr Tshangana said the best way to look at “institutional subsidy” was that it was a top-up fund, administered by provinces. Where there was a project in a restructuring zone, provinces were expected to top up the fund.

Mr M Shelembe (NFP) said that the Department had mentioned that one of the key challenges affecting tangible delivery of houses to people was that in municipalities there were critical positions that were not filled. He asked for clarity on how many vacancies were not filled in the Department and municipalities to ensure tangible delivery of houses.

There was also the issue of linkages between the departments involved. It was clear in the presentation that the targets of the Department were dependent on other departments. If the Department had a target of 1.4 million houses, how would the Department of Water Affairs and Sanitation be ready to ensure that people would be getting adequate housing, as per the targets of the Department of Human Settlement?  Also, were municipalities ready?  There were instances where there were changes in leadership in municipalities, and community-based organisations were not recognised by the new leadership, therefore discarding people that had experience about the projects. How would these linkages and relationships be secured to ensure that stakeholders were participating, to ensure the targets of the Department were achieved?

The Minister said the unfilled positions problem was an issue she had been involved in when she was the Minister of the Department Public Service and Administration (DPSA), though at the time it was not department specific. The programme had been completed, the framework was now available and it was up to each department to identify the critical positions that were vacant. Critical position were not allowed to go unfilled for more than six months but it had been discovered that some of the posts had gone unfilled for almost three years, and that did affect the pipeline.

Mr Zulu said the government was following a standard where Directors-General were monitoring all national departments on progress being made and the DPSA, had also been monitoring the vacancy rate across government. It was correct that if strategic posts were not filled then the delivery of services would be affected. The two -- vacancies and service delivery -- were linked, so government was taking the matter seriously.

There was both vertical and horizontal contracting to give a fully encompassing, total package for the area to which a service was being delivered. For instance, the Department had the USDG for which it was responsible, but that grant went to municipalities to implement and provide the necessary basic services on the projects that were being put on the ground. If there were no contracting arrangement between the Department and the municipal manager, that would lead to the Department chasing its tail from one year to another.

Mr H Mmemezi (ANC) was concerned about the uncompleted houses. Some were left at foundation level and others were almost finished, but were never given to beneficiaries. In other areas it took five to ten years for beneficiaries to receive houses. The Minister may describe delivering 1.4 million houses an easily achievable target, but there were many problems in the building process. He asked what solutions the Minister was giving to remedy these problems.  He was excited over the emphasis on title deeds because people had been given houses, but they had been deprived of title deeds. The Department had to work closely with the office that prepared them. Regarding policy review, on the precise issue of land invasion and sometimes housing invasion, there should be clarity on where the law stood, and the Department should move faster to ensure that legislation was clear on how to deal with such instances. One could not simply invade land and expect to own it.

The Minister said incomplete housing had been an issue for some time.  Sometimes it happened due to a developer -- or even the municipality -- running out of funds. The unfinished houses, however, were “low hanging fruits” and the Department could come in and finish them, as there were beneficiaries that were in need of housing. The Department was certainly dealing with the matter of title deeds, and as the DDG had mentioned, title deeds were an asset. When a beneficiary got a house, they needed a title deed to have tangible ownership of that land and house.

Ms L Mnganga-Gcabashe (ANC) directed her comment to the HDA. Based on the legacy report from the previous Committee, there had been a request for targets of the Agency to be increased.  However, the HDA had exceeded their targets, but clearly the previous Committee thought that they could do more. If it was practically possible to increase the targets, then the HDA certainly should increase their targets.

She said it was not clear how the Department of Human Settlements and the Department of Rural Development and Land Affairs (now “Land Reform”) linked. Their interactions were possibly problematic.  Land Affairs was not eager to donate land to municipalities given by the national Department to develop for housing. Land Affairs wanted to sell the land, or took long periods to hand the land over. The Member said she was happy that the Department was focusing on the matter; the Committee would be sure to monitor it, as it was a challenging point.

She asked how the Department was going to deal with Rural Development and Land Affairs, as each year there seemed to be a “go slow” at Land Affairs offices. They had no sense of urgency, which then created problems for the Department.  One would like to see alignment between NHBRC inspectors and provincial Department of Human Settlement inspectors. On Community Residential Units (CRUs), the Member hoped that the Department would assist municipalities in the management of hostels that were transferred to them, as it was difficult for municipalities to deal with the state of the hostels.

The Minister responded on the question of dependency on another department. The possible approach would be for the Department to “ring-fence” its own property out of the other department’s property, and negotiate with them. Technologically this was possibly, but legally it had to be examined if it was possible. The HDA was capable of doubling its targets, and so did the other entities. The Department needed to strengthen its own monitoring on projects.  The NHBRC would have to be involved, along with the Project Management Unit.

The Deputy Minister said regretfully the Prevention of Illegal Evictions (PIE) Act was being abused and the Department had to go back to the drawing board and rework the legislation. The PIE Act, the Communal Land Rights Act (CLARA) and all other pieces of legislation that were related to land, needed to be put together so that the Department did not lose what it wanted to achieve. The PIE Act was the only piece of legislation that protected those that did not have access to land. However, at the moment it was being abused and had to be reviewed.

The Chairperson said that when the HDA addressed the Committee, they had said they had offices in six provinces.  In terms of accelerating and achieving the targets of the Department, what would happen to the three provinces with no offices?  Also, it seemed as though SHRA had done a very good job, but it was concerning to hear that they had accredited only one cooperative.

The Deputy Minister said the issue of cooperatives in relation to human settlements still needed to be legislated.   The Department had agreed that in the next five years they needed to make strides on the matter.  The delay was around the Department of Trade and Industry and ensuring that the cooperatives were properly legislated for, and were willing to come on board.

Ms Sashni Ebrahim, Deputy Director, DHS, said part of the accreditation of cooperatives had to do with the funding model.   SHRA had come into existence with offices in January 2011. SHRA had to have accreditation of Social Housing Institutions, which meant that the government had to be up to scratch and have the financial checks in place, so that there could be investment. Most of the cooperatives that SHRA had dealt with had not met the necessary checks. Legislation also did not cater for where most cooperatives were -- only cooperatives that were in restructuring zones could receive grants, and most cooperatives were in more outlying areas.

Mr Adler said that the HDA had exceeded its target by a third over the last five-year period, so it had the capacity to achieve the targets. There were three categories of land that the Committee had to be aware of:

Land owned by national departments - where there was no funding issue, but there was a blockage, especially with the Department of Public Works, where the processes were not as quick as they could be.

Land owned by state-owned companies (SOCs) – where the SOCs had a requirement to be paid market value for their land. The big blockage here was funding, and the HDA was preparing a memorandum that would go to the Minister and Cabinet on the matter.

Land owned by the private sector - this was easy to process, but the entity needed money.

The HDA was a tool of government and worked in conjunction with other national, provincial or local government institutions. The entity operated in all nine provinces.  There were agreements with a number of provinces and the work in those provinces justified having offices and officials in them.

Mr Mnyani said the NHBRC had an inspection protocol which governed the rules and responsibilities throughout all spheres of government involved in the housing and building environment. There was an agreement of who did what between the national and provincial NHBRC inspectors.  The banks were now joining in. However, it may be wise to bring the matter back to the Ministers and Members of Executive Council (MINMEC), as there were political and administrative implications. It needed to be discussed further at MINMEC on how the protocol was to be implemented in all the spheres of government.

Budget vote 2014-15
Mr Nyameko Mbengo, Acting CFO, DHS, took the Committee through the budget of the Department.

He said the national Department operational budget made up 3% of the total 2014-15 budget allocation of the Department of Human Settlement of R30.5 billion.   The remaining 97% of the budget went to grants and transfer payments.  

The budget for ‘direct grants’ amounted to R27.7 billion, and would gradually increase in the following two years.  ‘Indirect grants’ would amount to R964.6 million for 2014/15.  Entity transfers would be R1 billion and developmental transfers were R 9.5 million for 2014/15.

The Housing Development Finance programme received the biggest portion of the programme allocation, with R29.7 billion, which would increase from 2014/15 to 2016/17.  Over the three year financial years Gauteng, KwaZulu Natal and the Eastern Cape would receive the largest amounts of the Human Settlements Development Grant.  All the provinces would see a steady increase over the years, except for the Eastern Cape, where there would be a small decline.

The Director General, Mr Zulu, officially concluded the presentation of the Department.

Ms Baker sought clarity on the bucket eradication programme. The original target was for eradication had been 2009.  However, the problem had persisted and was still being dealt with, making the new target 2016. She asked what the challenges were that had been faced prior 2009 that resulted in the target not being achieved, and what measures had been put in place to ensure that the target was achieved in 2016.

Mr Tshangana said the first wave of bucket eradication had started in 2005/2006 and continued until 2009.  Significant achievements had been made, but the progamme had a moving target.  There were instances where buckets were replaced with Ventilation Improved Pits (VIP) and the VIP life span, if properly maintained, was three years. What the Department was attempting to do now was to supplement what the municipalities were doing, which was to replace the bucket system with water borne sanitation. This was already taking place in Mangaung.

Mr Tshangana said it was important to note that bucket eradication was not about the household -- it was about an entire network. When a water-borne system was put in place, there needed to be bulk sanitation and a bulk sewage plantation station in place.   The Department was trying to plan for the entire cycle of sanitation. Looking at the backlog, countrywide there were about 280 000 buckets in informal settlements and about 88 000 buckets in formal settlements. The budget would not be able to completely eradicate all the buckets. The Department was planning to mainstream the programme, but that had to start in municipalities which did not seem to prioritise bucket eradication.

In the Free State about 11 000 buckets had been eradicated in formal townships. In informal settlements, the programme would be linked to the informal settlement upgrading programme, but there was no point in eradicating the bucket system where there was no clear plan for the settlement. However, the Department should be able to tell where the settlement would be in two to three years’ time.

Mr Gana asked for clarity on the budget, as there was a column for “sites” which had its own budget and then “units,” that also had a budget. Under rectification for Gauteng, there were zero sites and R7 million was set aside and zero units and R5 million was set aside. If there was nothing to be rectified but there was money set aside, was the Department saying that the units that may be built in the current financial year would be of low quality, and the NHBRC would not have done its job and there was budgeting for houses that were yet to be built?

Mr Tshangana said Gauteng was the first province to do rectification work and they had managed to reduce the backlog significantly.  That was the reason the Gauteng budget was lower than the other provinces. The biggest backlog for rectification was in the Eastern Cape and that was where the largest budget was. The budget was not in anticipation of poor quality houses, but it was there should the need arise.

Mr Arendse said the numbers were drawn from the business plans of the provinces. For instance, the Eastern Cape planned to spend just under R400 million rectifying 514 sites, whereas Limpopo chose to rectify 714 units for R58 million. The figures did not suggest that there was a backlog of these amounts. The allocations were commitments for the current financial year.

Mr Mbengo added that the Human Settlements development process was one that happened in phases. What provinces did was to come in and put up the bulk infrastructure and this led to the provision of “serviced sites”. In the next phase, there would be the top structure. Also, where there was a serviced site and someone built a shack on it, that person was already accessing the service.

Mr N Capa (ANC) asked for clarity on the fact that only six provinces had brought their business plans to the Department.  What was the problem with the other three?

Ms V Bam-Mugwanya (ANC) asked about the measures that were put in place by the Department to avert the grants’ poor expenditure trend.  The Department should explain the rationale in splitting the grant between direct and indirect categories, and if there were measures implemented by the Department to ensure that the direct component was not misused by municipalities for other purposes. The bucket system eradication programme was said to be for two years.  Was this sufficient time for the project, or was that on purpose so that there was a review after the two years?

Mr Tshangana said the grant was split because the accounting officer wanted to make sure that in those areas where there was poor capacity, the grant was administered by the national Department. This made up the indirect component of the grant. The direct grant was monitored by the national Department, but the Department was also convinced that the municipalities involved had the capacity to control it. There were professional teams in place that monitored the usage of the grant in all the provinces.

Ms Mnganga-Gcabashe asked for clarity about the USDG.  Was the Department engaging with Treasury because the USDG had been given to the Department of Human Settlements. From there, it was given to municipal treasuries that allocated the grant to the engineering departments, which dealt with infrastructure separate from Human Settlements. This meant that Human Settlements, at municipalities and metros, was unable to control the USDG, or they had a limited say on it. Was the Department nearing a settlement with National Treasury to rectify the matter?

Mr Arendse said prior to the start of the USDG, there had been the mixed cities grant.   This was largely infrastructure driven, and was therefore managed by the engineering departments in the metros. In the past year, however, most of the bulk infrastructure problems that were started by the mixed cities grant needed to be wound down. Over the last year and a half, the USDG had been managed by the Human Settlements Departments within the metros, and the metros were now responding to the human settlements mandates and using the USDG to fulfil them.

The Chairperson thanked the Minister, Deputy Minister, the Department officials and the officials of all the entities of the Department for availing themselves to address the Committee and answer the Committee Members’ questions.

The Chairperson reminded Members that they would still have an opportunity to make adjustments to the plans of the Department, and also explained the budget debate process moving forward.

The meeting was adjourned.

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