Gauteng & Tshwane, Johannesburg, Ekurhuleni metros performance & challenges on Human Settlements Development Grant; Urban Settlements Development Grant; social & rental housing; mining towns; rectification; Operational Capital Budget Programme
Human Settlements, Water and Sanitation
17 March 2015
Chairperson: Ms N Mafu (ANC)
The Gauteng Department of Human Settlements (DHS) and the province’s three metropolitan municipalities -- Ekurhuleni, City of Tshwane and City of Johannesburg – appeared before the Committee to account for the under-performance indicated in their reports to the national DHS. Only Limpopo had performed more poorly, and the Committee had already paid an oversight visit to the area and made recommendations.
A major concern had been the under-spending of budgets and non-achievement of targets. The Gauteng DHS explained how it had had to reduce its targets for the provision of sites and houses owing to the need to allocate R1.1 million to repair hail-damaged settlements. There had been no expenditure yet on urban renewal and informal settlement eradication in the Westonaria, Randfontein and Merafong mining towns, except for a R4.2 million mass cleaning campaign in Westonaria, where 2 400 garbage trolley bins had been procured. The operational capital budget programme (OPSCAP) had been used for shack fire disasters, security costs for completed houses and hostels not yet handed over, rental costs for regional offices, legal costs incurred to prevent illegal invasion, to obtain eviction orders, and so forth.
Ekurhuleni said it had experienced challenges that had resulted in poor expenditure. These included a review of the City’s procurement processes and the introduction of new committees, which had slowed down the finalisation of bids, and a loss of technical capacity, which included engineers and project managers.
Tshwane said there had been issues with land claims and the re-opening of the land claims process. There were delays with finalising the Land Administration Authorities (LAAs), there were land invasions, disruptions on site by local labourers and political interference, and there had also been huge boulders underground that had required blasting.
The key challenges for the City of Johannesburg were procurement delays, lengthy land acquisition processes and capital planning. However, moving forward, the metro planned to use the budget adjustment period to reallocate funds to over-performing projects. Improvements were sought from the Department and its entities in respect of capital planning.
The Committee called for a full report on the Department’s rectification programme, considering the large amount of money that had been allocated to it. They said the Urban Settlements Development Grant (USDG) was largely being spent in the wrong places, instead of the core human settlement function, such as bulk infrastructure development or providing new housing opportunities. Another thorny issue the lack of capacity in the Department, as there were programmes where not a cent of the budget had been spent, or no funds had been allocated for pipeline projects. How practical was it for a manager to sit in an office for 12 months and receive a salary, 13th cheque and all other benefits, but could not spend any of the allocated budgets?
The Province said it was not disputing the challenges and issues raised by the Committee. They had also identified them and there were turnaround strategies to deal with them. The new administration had inherited a department that had a crisis of functionality on being efficient and effective. The MEC said that the oversight visit to Gauteng would be a great opportunity to fully present to the Committee the work of the Department looking forward. The Committee was assured it would see an improvement in the quarterly reports.
The Chairperson welcomed all Gauteng provincial Department of Human Settlements officials and the members of mayoral committees (MMCs) of the metros.
The meeting had been called following the quarterly reports that had been presented to the Committee by the national Department of Human Settlements. Gauteng was not the worst performing province. The worst performing province was Limpopo, and the Committee had already had an oversight visit and made recommendations. However, Gauteng followed after Limpopo, hence it was important to call them and interact, to hear the challenges of the provinces and to see how Parliament could assist.
Mr Jacob Mamabolo, Member of the Executive Committee (MEC) of the Gauteng Department of Human Settlements (DHS), introduced the provincial delegation to the Committee. He made reference to speeches given by the Premier of Gauteng and the MEC of Finance, as they had given a guiding mandate that had carried the provincial DHS. At the core of the Premier’s speech were human settlement development, building post-apartheid cities in Gauteng, and integrating Gauteng.
Since the new administration came in, two important things had happened. As South Africans knew, since 2010 Gauteng had had a rapid increase in violent service delivery protests. When the new administration came in, they had worked very hard to restore confidence in communities and convey the principle of the commitment of government to interact with them, to meet their demands and address their concerns.
Gauteng Department of Human Settlements
Ms Daphney Ngoasheng, Head of Department (HOD) of the Gauteng DHS, made a presentation on the expenditure performance of the province of Gauteng and the three metros -- Ekurhuleni, City of Tshwane and City of Johannesburg -- under it.
The total allocation for 2014/15 was R4 417.6 million, and total expenditure as at 31 December 2014 (the third quarter) was R2 786.6 million. As of 12 March 2015, there was a balance of R632.3 million. The original annual delivery targets for sites (10 407) and houses/units (24 261) had totaled 34 668. The revised total was sites (7 728), houses/units (17 6780, for a total of 25 406. However, actual performance as at 31 December 2014 was 2 293 sites and 10 340 houses/units – a total of 12 633.
The budget revision and reduction of targets by 9 262 housing opportunities was due to expenditure on items that were not on the business plan, like the rectification of hailstorm damaged houses and asbestos assessment at a cost of R1.1 billion. Another challenge had been the regularisation of expired and invalid contracts. For 2015/16 an allocation had been made for emergencies, and disasters would be referred to the Department of Cooperative Governance and Traditional Affairs (COGTA). This meant that there would be no further assessment done for asbestos roofs.
The original annual target for social and rental housing had been 2 265. This had been revised to 616, and the actual performance as at 31 December 2014 was 181, increasing to 261 as at 12 March 2015. The Gauteng Partnership Fund (GPF) was the delivery agent for the Department for affordable rental and social housing. It had not been included in the original approved departmental budget and got allocated during the budget revision process. For the new financial year provision had been made for GPF, and the allocation would be in terms of the approved five-year strategic plan.
There had been no expenditure yet on urban renewal and informal settlement eradication in the Westonaria, Randfontein and Merafong mining towns, except for a R4.2 million mass cleaning campaign in Westonaria, where 2 400 garbage trolley bins had been procured.
The operational capital budget programme (OPSCAP) had been used for shack fire disasters, security costs for completed houses and hostels not yet handed over, rental costs for regional offices, legal costs incurred to prevent illegal invasion, to obtain eviction orders, and so forth.
The province’s delivery model was underpinned by the connection between all elements of the human settlements. However, there were also programmes to improve the delivery model.
Ekurhuleni Metropolitan Municipality
The Ekurhuleni Metropolitan Municipality’s Urban Settlements Development Grant (USDG) budget for 2014/15 was R1 985.1 million, which included a R31.6 million roll-over amount for the Human Settlement USDG. The total USDG expenditure as at 6 March 2015 amounted to R640.7 million, or 32.3% of the total budge. The total expenditure plus commitments was R695.1 million, expenditure plus commitments represented 35% of the budget, and unspent funds as 9 March 2015 were R1 235.8 million. The HOD highlighted the financial performance for the metro per service and department.
The Municipality had experienced challenges that had resulted in poor expenditure. These included a review of the City’s procurement processes and the introduction of new committees, which had slowed down the finalisation of bids, and a loss of technical capacity, which included engineers and project managers.
An institutional review was in the process of being approved by Council, and this would result in the augmentation of the organisational structure, with appropriate levels of technical skills. The Enterprise Project Management Office (EPMO) set up for the Metro was complete, with all top management positions filled. The set up of departmental PMOs had commenced, with more than eight departmental PMOs already operational. The Ekurhuleni Metropolitan Municipality (EMM) was working on implementing a project management system that would assist in the planning and monitoring of projects. The EMM had an sourced external service provider to carry out an implementing agent role for a substantial part of the infrastructure building programme.
The HOD gave a non-financial performance report on each project funded by the USDG in the metro, the link between the USDG and the HSDG, and the EMM HSDG programme overview.
City of Tshwane
The budget allocation for the metro was R1 469.5 million, and as at 31 December 2014 expenditure was at R528 million (35.9%) overall had been spent. The actual total budget allocation of the USDG was R1 514.3 million, including the R44.8 million roll-over from 2013/14. The presentation went into detail on the financial performance of housing and human settlements, water and sanitation, electricity, and transport. As of 28 February 2015, of the allocated R1 469.5 million, had reached R631 million, which represented 43% of 2014/15 USDG allocation.
There had been issues with land claims and the re-opening of the land claims process. There were delays with finalising the Land Administration Authorities (LAAs), there were land invasions, disruptions on site by local labourers and political interference, and there had also been huge boulders underground that had required blasting.
The mitigation plan would involve regular meetings with the Land Claims Commissioner, Province and land claimants. The final LAA’s had been submitted to the city in February. There needed to be the eviction of people illegally occupying land, political intervention had to be dealt with, and increased resources were required on site.
City of Johannesburg
The presentation went into detail on the financial performance and forecast to June 2015, providing figures per department and entity. The presentation further detailed financial performance per service delivery area. The presentation also gave an extensive and detailed project progess report, including the non-financial actual progress per project.
The key challenges for the metro were procurement delays, lengthy land acquisition processes and capital planning. However, moving forward, the metro planned to use the budget adjustment period to reallocate funds to over-performing projects. Improvements were sought from the Department and its entities in respect of capital planning. Finally, there had been a concerted effort by both the Department and entities to plan for projects over the medium term to eliminate the “hockey stick” spending pattern. The City of Johannesburg had also explored the link between the USDG and the HSDG.
The 2014/15 repairs and maintenance provision had represented more than 9% of the total expenditure. The presentation tabulated the all expenditure associated with repairs and maintenance.
Ms V Bam - Mugwanya (ANC) said the MEC had mitigated the case of the province by his enthusiastic and elaborate explanation before the presentation. However, the state of the revolts, uprisings and demonstrations was worrying. The papers were still clamouring about unrest as a result of the lack of housing service delivery and related issues in the province. It would be interesting to hear an explanation on how the Department would curb the unending clamour for housing service delivery. There were protests reported as recently as 13 March 2015.
Mr S Gana (DA) said one of the things requested by the Committee was for the province to brief it on the rectification programme in the province. All that had been said in the report was one line that said the province had taken R1.1 billion that would be spent on rectification, due to the hailstorms. That was a lot of money to be just mentioned in one line, with no further elaboration. Further elaboration offered was just that R500 million had been spent on the assessment of asbestos roofs, and it was also not clear what assessment actually meant. Regarding the hailstorm, it was assumed that the priority was on subsidy housing and not private dwellings, where some of them were bonded houses. There needed to be a more extensive report on this R1.1 billion -- one line was not adequate. However, what had been learnt from the presentation was that there was a target to build 35 000 houses and because of the shift of the R1.1 billion, now only 24 000 houses would be delivered.
Regarding mining towns, the Department had come to Parliament 14 days before the end of the financial year to say they had spent a lot of time, but ultimately did not know how to spend the allocated budget. This was why they had essentially spent money on one project. The HOD had said that there was spending on some projects and progress, but there was nothing in the report except for one project. The HOD was saying there were houses built in Khutsong (which were waiting for quality assurance), yet there was no indication of funds spent on the project. An important point that needed to be raised around mining towns was that of capacity. If it took the Department so many months to figure out how to spend the budget and still did not know how to spend it, was there a capacitated unit that dealt with mining towns?
There was another point that the MEC had spoken to, but had not been included in the report. This was about the statement on inheriting a department that was close to collapsing. In the meeting, there was the former MEC of housing in Gauteng – what was happening in Soweto (Meadowlands, Dube, Orlando West and Diepkloof)? It was unfair that there were houses there that had been built and had been standing unoccupied for over five years -- what was the province doing to deal with this?
There were a lot of things the on which the USDG had been spent. Ekurhuleni had spent R31 million on real estate, but it did not make sense that the Department spent money on buying and selling houses. Tshwane had taken USDG money and spent it on upgrading cemeteries.
Mr Mamabolo said he had pointed out that they had come through a very difficult period. In the last audit report, the outcomes of the Department had been very worrying. The points that Members had raised were challenges that the province had also to acknowledge. They acknowledged and considered that there was a problem with expenditure patterns and outcomes, and there was a problem of coordination with municipalities. In the last MINMEC, a protocol on how the USDG was spent and the role of the provincial government had been considered.
The MEC said there was a full report on the hailstorm, and they would give a detailed breakdown on hailstorm expenditure, areas and targets during the oversight visit of the Committee. At the time when the hailstorm happened, the assessment of expenditure was added to that programme. Most of the roofs that were damaged were made of asbestos. The removal of asbestos programme had always been there. When the hailstorm happened, the programme to do asbestos assessment had been added and done simultaneously.
Ms Queen Duba, Members of the Mayoral Committee of Ekurhuleni, said last year the oversight Committee had raised an issue with Ekurhuleni which had been elevated to the Minister, hence the meetings with the mayors of the metros to ensure that there were conditions attached to the USDG, and everyone had complied.
Ms Duba said that the parks were part of the real estate in Ekurhuleni, and the establishment of parks in the previously disadvantaged areas was one the functions of real estate. This was part of infrastructural development. Real estate was about facilities of the metro -- parks, cemeteries, grass cutting and so forth. Detailed information of what exactly was included in real estate could be provided to the Committee.
Mr L Khorai (ANC) said there was mention in the presentation of people who worked in the Department but who were not qualified. He asked the HOD to explain to the Committee if there were currently people not qualified in the Department. Also, could the HOD elaborate on the unqualified audit outcome. There were three metros that had smade a commitment that before the end of the financial year they would spend their budget -- how were they going to do this, and when? There were areas where no funds had been allocated, so how was that going to be possible?
Members were asking these questions because the Department and the Minister had made a commitment that they were going to build 1.5 million houses, and it was important to know if the metros contributed to that commitment.
Ms Duba said in an endeavour for metros to get a clean audit, Ekurhuleni had wanted to ensure that this was sustained. The metro had undergone a process of reviewing its supply chain process to ensure that it was in line with the law and regulations. This had caused a delay in the appointment of service providers and therefore resulted in low expenditure. However, an intervention had been secured in relation to external service providers. The metro was using the Department of Public Service and Administration (DPSA) to assist on a short term intervention basis while dealing with the capacity issue.
Ms T Gqada (ANC) said it was very strange that in the middle of the financial term, the province had decided to change their planning, viewing this in the light of the province not managing to spend their allocated budget. It seemed that there was a serious planning problem. The MEC had said in discussions with the metros and municipalities in the area, that the Minister would have an input on how the USDG was allocated – it was not clear if that was going to be one of the delays in terms of service delivery.
Looking at the report, it was very apparent that lack of capacity and inability to plan were serious issues in Gauteng. The new vision was not clear. Gauteng would continue to have a lot of protests. The HOD had made mention of regulating expired and invalid contracts, but it was still not clear how much money had been put aside for that, and many units or housing opportunities would emerge from it.
There was already a budget set by the national Department for the upgrading of informal settlements, Most of these informal settlements formed part of the informal settlements programme. But again, Human Settlements in the provinces were also setting aside budgets to cater for the very same informal settlements. Planning in Gauteng and its metros was a serious issue -- it needed to be revisited, to change the expenditure outcomes and delivery of the province.
Mr Mamabolo said that the province had worked with the municipalities since September to have integrated planning. A perspective, which included new cities to be built in the province, had been worked on, and this would be launched on 7 April 2015. There would be MOUs signed with all municipalities on how there would be integrated planning. He asked that when the Committee went for the oversight visit to Gauteng, that the province be allowed to present their turnaround strategy on where they wanted to go to. The quarterly report had not presented that aspect of the work of the department.
Mr Dan Bovu, Department of Human Settlements MMC of the City of Johannesburg, said looking into the USDG and what it was intended for, had led to a debate on what exactly human settlements were, and what was required of the department. If one visited hostels in the province, the province with its metros would give one what was referred to as ‘Action Practical Programmes,’ which the Committee could touch and feel. The metro had accepted that they had been planning incorrectly, and wanted to plan three years ahead, so there was no stopping to create plans.
Mr K Sithole (IFP) said the report was disappointing, as it did not truly reflect what was happening in the province. There was R1.4 billion that had not been spent, but the MEC had all but 3% would be spent -- was that possible? Another problem was the external service provider for Ekurhuleni. How much would be spent on that?
In Mogale City, if one was going to be talking about hailstorms, there were houses that still had not been repaired since 2010/2012. The people who had moved out of Mogale City to temporary structures in 2005 had still not been moved back. In fact, 11 people had died. In Mamelodi, the City of Tshwane had had to be called to Parliament, as there were a lot of issues that needed to be addressed. In ward 67, people had been there since 2008 in temporary structures, and 100 people were sharing one toilet.
Mr N Capa (ANC) said if poor expenditure was a trend, there needed to be measures and a convincing way forward on how this would change. Gauteng was supposed to be the best performing province -- it was given a lot of money -- but Parliament needed to be given a convincing and detailed way forward of how this would be addressed.
Ms T Baker (DA) said the report was extremely disturbing. Gauteng was the most financially viable and vibrant province, so to have such a report was worrying, as one had to think about how other provinces were doing. The figures painted a very bad picture of service delivery. The MEC’s fear of overspending was not shared, as the whole report was a bleak picture of under-spending. The revised targets were much lower than the original targets, yet actual performance was even lower that the revised targets. There had been extremely poor performance and therefore poor service delivery.
Ms Baker asked when it had been realised that disaster management needed to have its own budget, and that it was a competency of COGTA. That was not something new that had been discovered overnight, so why was the fund not utilised?
Mr Mamabolo said he was confident that the budget would be spent. The Department had ensured that there was no fiscal dumping. The problem was that the Department had a problematic history of paying suppliers with whom they did not have contracts. The Department had taken a decision to bring this to an end in August, and it had caused a lot of problems.
Mr M Shelembe (NFP) said when looking in the challenges -- especially in Ekurhuleni -- if a budget was allocated to the municipality and the procurement section was not functional, then that budget would surely not be spent. The province had acknowledged this challenge, but there was no strategy on how to overcome it. There was no explanation for the cause of the loss in technical capacity whether they were due to deaths or resignations. If they were a result of resignations, what had caused them? Could the province also elaborate on the improved approach for the Community Residential Unit (CRU) developments?
Ms Duba said that there had been a delay in adopting the retention of critical skills policy, which had led to some of the engineers leaving. Lack of technical capacity had almost led to the collapse of the roads department in Ekurhuleni.
Ms L Mnganga-Gcabashe (ANC) said the under-spending and poor performance indicated that the National Development Plan (NDP) outcome 8 was not being taken seriously. If there was such serious under-expenditure, why were these managers still in their offices when they could not spent any of their budgets to service the poorest of the poor? She asked who in the provincial Department was monitoring this issue quarterly, and accepting R0.00 expenditure reports. The Committee would like to get an indication of the estimated expenditure In the last three months of the metro’s financial year.
On land acquisition, there had been no mention of utilising the Housing Development Agency (HDA) to assist in buying well located land. There had also been no mention of the provincial land to be released by the province through working with the departments of Human Settlements and Public Works, or realising land that was in custody of the Department of Public Works. Throughout the report there had been no mention of the expropriation of land.
The rollover of funds would end up in metros as fiscal dumping, as the metros would have only three months to spend that money. The province would be able to close their clean books, and when the metros had to close their books, they would have a problem. When auditors came, the metros would have the problem, not the province. However, this was still not an excuse for not spending the budget. Planning needed to start in the previous financial year in preparation for the upcoming year.
Ms Ngoasheng said the Department had already started engaging with the HDA and other departments. It worked closely with metros and knew what their needs were, and vice versa. The metros had been requested to prioritise mega projects for the allocations of the USDG. At last the planning was being done in a coordinated fashion, which meant that implementation would follow suit.
Mr H Mmemezi (ANC) said the Committee had a called the province and the metros because they were concerned about the performance of the province. Gauteng was a province with a history of delivery, so to find it as the second lowest performing province was worrying. Delivery was not measured by protests, it was measured by the budget spent, and if there were no protests it did not mean there was service delivery. The report should have indicated plans per project and delivery.
There were no projects in Mogale City, yet it was a mining town – there were long term projects that had already been planned. Money was being spent in the wrong places. The budget was for core human settlement functions, for human settlement development. The Committee was worried, because this money was being spent on other things.
Mr Mamabolo said that when challenges occurred, there was time lag, and problems that happened today had a ripple effect that would show up in future. For example, the hostels were built years ago and had not been handed over. There had been an investigation commissioned to find out the reasons why they were not handed over. There needed to be one report to address the matter holistically. A preliminary report had already reached the MEC and would be finalised in the next two to three weeks, and the Committee would also be given the report when they were in Gauteng. There were also houses and properties that had not been handed over that the province was stuck with -- the province had to pay security to protect them, some did not have basic services and could not be handed over to people, and some had been damaged and needed to be repaired. There were completed housing projects that had not been handed over in seven or eight years. Some of them were even invaded by undeserving people and the government had lost court cases against them.
Mr Mamabolo added that Gauteng was managing the protests well. The intention was not to stop them, as they were guaranteed the right to protest in the Constitution. However, when the province had interacted with the communities on the issues, the protests had subsided. The communities had legitimate and genuine demands, and when the provincial government responded to them, the protests stopped.
The Chairperson said the Committee’s general concern about Gauteng had still not been dealt with by the presentation, and the Committee was still not at ease. The province had the capacity to do better. One of the main issues that had come from the Committee was how metros were allowed, by the national Department and the province, to use the USDG on things they were not supposed to use the grant on.
The metros had been called to Parliament because the Committee saw red flags. The next oversight visit of the Committee was to Gauteng, and that would not change because of the delegation being in Parliament. In fact, as the Committee had received a report assuring them that Gauteng would do better, if the Committee did not see the turnaround strategy working during the oversight visit, there would be a big problem. The province and metros should therefore not say things to appease the Committee.
Ms Ngoasheng said the Department appreciated the comments made by Members and had taken notes on the issues of planning, performance and integrated planning. There were a number of areas the Department could improve on and it would work hard to improve on them.
Mr Mbulelo Tshangana, Deputy Director General, DHS, said the Minister had met with mayors to discuss the utilisation of the USDG, and both parties had agreed on how the grant would be managed going forward.
Mr Mamabolo added that they were working on the principle of continuous improvement, and he was confident that there would be improvements in the Department and that there would be a different report for the Committee in the next quarter.
The Chairperson thanked the provincial department and the metros for coming to Parliament at such short notice.
The meeting was adjourned.
Mafu, Ms NN
Baker, Ms TE
Bam-Mugwanya, Ms V
Capa, Mr N
Gqada, Ms T
Khoarai, Mr L P
Mmemezi, Mr HM
Mnganga-Gcabashe, Ms LA
Shelembe, Mr ML
Sithole, Mr KP
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