Department of Human Settlements on Strategic & Annual Performance Plan, African Position towards UN Habitat Conference 2016, with Deputy Minister

Meeting report

The Deputy Minister of the Department, Ms Zou Kota-Fredericks, made apologies on behalf of the Minister and the Director-General, who were absent because of international travel commitments.

Preparations for UN Habitat III
Ms Monika Glinzler, Director: International Relations Programme, Department of Human Settlements (DHS), presented on the preparations being made for the third United Nations Conference on Housing and Sustainable Urbanisation (Habitat III). Habitat III would produce the major UN policy document on housing, urban development and human settlements for the next 20 years, which South Africa would be expected to implement. It was therefore important for South Africa to play an active role in shaping this new global agenda.  Stakeholders from the National Human Settlements and Urban Development Forum would form part of the consultations to develop a South African position in preparation for Habitat III, including representatives from civil society, local and provincial governments and professional associations. It was proposed that a political steering committee of deputy ministers from the key sector departments oversee the development of a South African position for Habitat III. As part of Habitat III preparations, South Africa would host a conference in April 2016 on informal settlements under the theme: “Leading change in the city: from slums to inclusive, safe, resilient and sustainable human settlements.” The aim of the conference would be to deliberate on innovative solutions to the informal housing situation to be considered for the outcome document of Habitat III.

At a regional level, several working group meetings had been held on a common African position for Habitat III. A preparatory conference for Habitat III was held in Nigeria in February 2016. The current working document on a common African position for Habitat III identifies eight pillars, some of which are: harnessing the potential of urbanisation to accelerate structural economic transformation and inclusive growth; enhancing environmental sustainability and effective response to climate change in human settlements, and enhancing the continent’s global competitiveness through urban and human settlements development.
At an international level, the UN General Assembly has established a preparatory committee to discuss Habitat III. Additionally, a number of thematic conferences would be held leading up to the conference.

The Committee was asked to note the ongoing preparations for Habitat III, support these preparations through consultations with relevant stakeholders to develop a South African position to influence the Habitat III outcome, and to support the emerging draft South African and African position.

Department’s strategic plan and annual performance plan for 2016/17
An official from the DHS presented the Department’s strategic plan and annual performance plan for 2016/17. In preparing the strategic plan and annual performance plan (APP), the Department had consulted closely with the Auditor-General’s office and taken the comments by oversight bodies into account. The Department’s strategic plan priorities, in line with the medium term spatial framework (MTSF), included the finalisation of the Human Settlements White Paper, which would lead to the revision of the Housing Code and the amendment of the Housing Act, upgrading 2 200 informal settlements and creating 35 000 affordable rental housing opportunities. Some of the Department’s strategic plan targets for 2015 to 2020 were to obtain an unqualified audit report, increase the participation of stakeholders in human settlements development, eradicate the backlog in the issuance of title deeds, implement 50 catalytic projects and establish a single development finance institution (DFI). The Department’s 2016/2017 APP priorities included achieving good corporate governance, development and finalisation of the White Paper on Human Settlements and to deliver housing opportunities through a number of different measures. Some of these measures were the provision of technical support to municipalities for upgrading informal settlements and eradicating the backlog of title deeds.

Ms Funani Mahlatsi, Chief Financial Officer, DHS presented on the Department’s budget for 2016/17. The Department’s allocation had been reduced. The largest cut was on the urban settlement development grant, which had been reduced by R1.6 billion for the 2016/17 period. The delivery of bulk infrastructure under urban grants would be negatively affected. There had also been a substantial reduction in the Department’s budget for goods and services that would potentially also have negative effects on the Department’s work, because it was heavily dependent on spending on goods and services in order to carry out its mandate. Despite the budget reductions, the Department intended to maintain the quality of services provided. There had been no decrease in the budget for employee compensation for the year 2016/17, but it was projected that there would be substantial cuts for the years 2017/18 and 2018/19. There were 247 unfunded positions in the Department, which the Department may have to seek funding for from the Treasury, as some of these positions were critical.

The Department had an overall budget of R18.3 billion for human settlement development grants for 2016/17. Of this amount, the biggest portion was allocated to Gauteng, followed by Kwa-Zulu Natal. North West province and the Eastern Cape, which were predominantly rural, had received less than they did in the year 2015/16. On the urban settlements development grant, Ekurhuleni in Gauteng had received the largest reduction in funding, followed by Ethekwini in Kwazulu Natal. The programme delivery support programme would progressively receive less funding between 2016 and 2019, as compared to the Department’s other programmes – administration, human settlements policy, strategy and planning, and housing development finance. This would again have a negative impact on the Department’s functions.

Discussion

Ms T Gqada (DA) asked what the the Southern African Development Community’s (SADC’s) position as a regional bloc to influence the African position on Habitat III was.

The Deputy Minister replied that human settlements was an area that SADC was still to looking at. South Africa was participating in the continental preparations towards Habitat III as part of an African Union (AU) subcommittee.
 
Mr H Mmemezi (ANC) stated that the reason for the reduction in budgetary allocations to the Department was under-spending by the Department in previous years, especially on staffing and boosting municipal housing capacity. The Department should not blame the economic situation or the Treasury, because it had failed to adequately spend funds allocated to it in the past. He asked about the steps being taken to clear the backlog of title deeds, since the issuance of title deeds was a pressing need, particularly for township residents. He emphasised the need for the Department to implement its targets and goals. He was impressed by the presentation, but emphasised the need for effective implementation. The Department was commended for taking the Auditor-General’s recommendations into account by creating an annual, performance plan (APP) that complied with the SMART (Specific, Measurable, Achievable, Relevant and Time-bound) framework.

Mr S Gana (DA) asked why the Department had not reduced its targets, especially on subsidised housing in line with the reduced budget. It was undesirable that the Department should appear before the Committee next year claiming that they had failed to achieve their targets because of the reduced budget. Should the Department’s targets not be amended to align them with the reduced budget? The accreditation of municipalities had not been mentioned in the presentation, yet he thought this would have been fast tracked. Another issue that was not mentioned in the presentation was the creation of a housing demand database. The Minister had indicated to Parliament in 2014 that the database would be created, what progress had been made on this matter? Towards the end of 2015, it had been said that the urban settlements development grant policy would be monitored -- specifically the spending of the grants by municipalities. What was the position on this? Referring to the monitoring of lending patterns by financial institutions, he asked the Department to state the concrete steps that would be taken to achieve this target.

Mr Neville Chainee, Acting Chief Operating Office, DHS, said that the Department’s targets in the APP were realistic and in line with the MTSF. The accreditation of municipalities was a priority, but there had been a substantial amount of non-performance by some municipalities. Even the Department of Cooperative Governance had stopped allocating certain funds to some municipalities because they had mismanaged funds. The Department was committed to accreditation and to the capacitation of municipalities despite the challenges around this issue. Municipal capacity grants were not the only means by which the capacity of municipalities was enhanced. For example, there was equitable share funding available to municipalities.

On the creation of a housing demand database, he replied that this was important for the Department even though there had been no explicit mention of it in the presentation. The outcome of the creation of the database was improved allocation of housing, which outcome would be achieved by other targets specifically set out in the presentation. He acknowledged the importance of the database in ensuring that people had certainty about housing allocations, and said that the database was still being created.

A policy on the monitoring of urban settlements development grants had been drafted and had gone through the Ministers and Members of Executive Council (MINMEC). The Department had an internal team under its CFO that monitored housing lending patterns by private institutions in order to assess whether transformation was occurring in private sector funding for housing.

Ms Mahlatsi said that spending cuts might be revealed in the provinces’ operational budgets, but they were not in the Department’s targets, which were received from Cabinet. There was often a disjuncture between the medium term strategic framework (MTSF) and the strategic plans, because the former was a five-year term against a three-year term for the strategic plan. There should be congruence between the budget passed and the strategic framework in force at the time of passing of the budget.

The Deputy Minister said that municipalities were accredited because of their ability to spend funds allocated to them, but the municipalities had failed in this regard. Another important aspect to this issue was the bad relationships between municipalities and provinces, especially in Ekurhuleni and Cape Town.
 
Ms L Mnganga-Gcabashe (ANC) asked about the service delivery plan by provinces mentioned in the presentation. How would this fit into the national service delivery plan? She asked whether the single DFI timeline could not be consolidated within two years from now, as 2019 was too far ahead. The term of office for Parliamentarians and the Minister was five years, and they should be able to point to achievements made within their terms of office. She asked for clarity on the reference under programme three to a Red Book on housing. Could the Department state the link between the delivery of 2 000 Community Residential Units (CRUs) in the APP, and social housing?

Mr Chainee responded that there should be consistency and linkages between national and provincial APPs. On the single DFI timeline, he said that the Department intended to introduce legislation on this matter towards the end of this financial year, and hoped to have it passed in the first quarter of 2017. The Department was planning to hold a workshop on the incorporation of CRUs, after which it could explain the incorporation of social housing into this.

The Deputy Minister said that the targets for the single DFI timeline were concerning. They had a negative effect on rolling out of the Finance-Linked Individual Subsidy Programme (FLISP). There was a need to revisit this issue because the current pace was not helpful.

Ms Gqada agreed with Mr Gana on the need to align the reduced budget and the Department’s programmes. She referred to page five of the presentation, where it was unclear what the item on the provision of basic services to 750 000 households meant. On the backlog of title deeds, the Department had to capacitate municipalities to fix this problem. The presentation referred to the implementation of 50 catalytic projects -- would these be ready on 1 April? The CEO of the Housing Development Agency (HDA) had stated in a recent presentation that the catalytic projects were still in the planning and consulting stages. On page 8 of the presentation, reference was made to the provision of technical support to municipalities -- how would this be done?

Mr Chainee responded that the reference to 750 000 households ought to be read as ‘ the provision of basic services to 750 000 households in 2 200 informal settlements’. The Department was confident that it could meet its target in relation to the 15 catalytic projects described in slide 19. Provision of technical support to municipalities would be in the form of supporting municipalities with the development of upgrade plans for informal settlements. The targets were based on the MTSF, and if the baseline was lower then there was a need to target more and to target cumulatively.

The Chairperson agreed with Ms Mnganga-Gcabashe’s query on the Red Book issue. Was there a difference between the Red Book and the Housing Code? She asked if there had been any engagement between the DHS and the Department of Higher Education on student accommodation, as this issue was a hot topic of late. On the backlog of title deeds, the presentation had shown that there was a backlog of around 900 000, yet the APP showed that the Department was targeting 100 000. What was the reason for this discrepancy? Referring to the question posed by Mr Gana on the Department’s monitoring of lending patterns, she said she understood that the Department’s finance directorate was supposed to do this. She asked whether the finance directorate’s report could not be presented to the Committee as well.

Mr Chainee answered that the Red Book was the Department’s planning guideline. It guided municipalities on the design and planning of human settlements on matters such as the width of streets, the number of parking bays etc. As such, the Red Book was a tool around the developmental implementation of planning in residential townships. On the other hand, the Housing Code stated minimum housing standards. On the student housing issue, he said that there were a few initiatives in place already between the DHS and the Department of Higher Education in which the Department was supporting the Higher Education Department.

The discrepancy in the backlog of title deeds figures was because there was continual revision of backlog figures. 100 000 was the figure targeted in this financial year because the other levels of government had not paid much attention to the backlog issue. However the Department took the backlog very seriously and to this end, had ring-fenced a specific amount to deal with the backlog.

Ms Mahlatsi said that the Department was assessing the lending patterns of private institutions for funding for housing, particularly to the poor. The Department was interested in the institutions’ reasons for denying applications for funding, and had communicated with the institutions in question to provide reasons. The Department did not simply monitor the lending patterns, they also analysed the patterns as they related to race and gender, among other factors. A report could be presented to the Committee on this issue.

The Deputy Minister stated that she was surprised that the Committee was silent on the issue of housing cooperatives. They had a role to play in the provision of housing. 

The Chairperson thanked the Department for the presentation.

The meeting was adjourned.