Department Budget: briefing

Meeting report

HOUSING PORTFOLIO COMMITTEE
25 February
DEPARTMENT BUDGET: BRIEFING

Chairperson: Ms Z Kota (ANC)

Documents handed out:
Presentation on Housing Department Budget 2003/04 to 2005/06
Housing Budget 2003: Vote 29 - programmes and allocations

SUMMARY
The Department's presentation on their budget focused mainly on the following issues. The Department's strategic overview since the 1994 White Paper on Housing. The current challenges facing the housing programme and current policy trends to implement Department's housing programmes were discussed. The Department provided an overview of the budget for the financial year.

Members were concerned about the quality of low cost housing provided by the Department. They sought clarity on the reasons for the decrease in private sector investment in the Department's housing programmes.

MINUTES
Ms Nxumalo: Director General, Housing, pointed out that the impetus of the Department for the next financial year was to determine, finance and monitor policy in respect of housing and human settlement. They would seek to establish and facilitate a sustainable process that provides equitable access to adequate housing within the context of affordability of housing.

She outlined the legislative framework within which housing development programmes operate. The framework includes:
-The Housing Act of 1997.
-The Housing Consumer Protection Measures Act of 1998.
-Rental Housing Act of 1999.
-Home Loan Mortgage Disclosure Act of 2000. However, the following Bills are currently in the process of finalisation: the Community Reinvestment Housing Bill and Social Housing Bill.

Providing a strategic overview of the Department's work since 1994 Ms Nxumalo noted that the Department's focus has been on quantity rather than quality housing. The reason was the urgent need to address housing needs and backlogs. The lack of private sector investment and resource constraints as well as creating higher quality housing for the low income group were amongst the challenges currently facing the Department's housing programmes. In order to meet the aforementioned problems the Department was planning on extending the housing warranty scheme and focussing both on medium density integrated housing programmes and rental housing. It would try to improve service delivery through increasing capacity building programmes for stakeholders including government and industry.

The budget allocation for the coming financial year would be spread over seven key support programmes. These are as follows:
-Programme 1: support programme on administration.
-Programme 2: policy planning and research.
-Programme 3: programme management.
-Programme 4: housing sector performance.
-Programme 5: communication.
-Programme 6: housing development funding.
-Programme 7: housing equity.

Programme managers for each support programme outlined the purpose and key activities of these programmes for Members.

With respect to programme 1, Mr Dlabantu highlighted that the purpose of this programme was to provide administrative and management support services to the Department. Its key activities include provision of strategic financial management services and strategic support services for the Minister and Accounting Officer.

Mr Von Broemsen pointed out that the purpose of programme 2 was to ensure a sound national housing policy framework. Its key activities include drafting new legislation for the Department as well as auditing all legislation impacting on housing.

Mr Wallis explained that the purpose of programme 3 was to manage national housing programmes. Its key activities include promoting the improvement of traditional building methods and technology and producing reports on outcomes and lessons from the implementation of the Presidential Pilot Programme.

Presenting programme 4, Mr Soga pointed out that the purpose of that programme was to monitor and assess the impact of housing delivery and housing institutions. Its key activities included monitoring the implementation of housing policy and programmes as well as assessing performance of the housing support institutions.

With respect to programme 5, Ms Madida highlighted that the purpose of this programme was to facilitate and promote the free flow of information between the Department and its stakeholders. Hence it was focused on dissemination of information to all the stakeholders and facilitate feedback and as well as facilitate consumer awareness campaigns.

Mr Dlabantu explained that programme 6 was aimed at managing the funding of national housing programmes and transfer payments to provinces.

Mr Vanda said that the purpose of programme 7 was to promote fair lending practices by banking institutions and provide for setting and enforcing specific minimum targets by financial institutions in lending to low and medium income level households for housing purposes. Hence its key area of focus was to take responsibility for implementing the Home Loans and Mortgage Disclosure Act of 2000.

Discussion
Ms Semple (DP) needed some clarity on the background of the purported Community Reinvestment Housing Bill. Secondly, she asked what factors lead to the decrease in private sector investment. Thirdly, she needed more clarity on the housing summit programme proposed last year.

Ms Nxumalo explained that the Department had recently conducted research on the extent of housing support from the private sector and the following observations were made:
-The area which needed more private sector investment was the credit linkage.
-The reason for the decline in participation by the big development fraternity on housing programmes was because of the low profit margin returns in low housing development. Big private developers are more interested in housing programmes that are sales led.
-Big developers seem to be moving way from low cost housing due to the perceived risks in a particular geographical area.

Ms Nxumalo assured Members that a legislative framework and support institutions have been put in place to deal with some of the aforementioned problems.

Mr Schneemann (ANC) asked for further details on the envisaged integrated development plan for housing development.

Ms Nxumalo said that this plan allowed both the national and provincial government to identify land and invite tenders and then prescribe prerequisites for developers to meet government objectives on housing.

Mr Schneemann (ANC) asked if the provinces at local government level had sufficient capacity to meet government's objectives on housing.

Mr Motsitsi (ANC) needed more clarity on the proposed Home Loan Mortgage Disclosure Act.

Ms Kota was concerned about the quality of low rental housing. She noted their lack of internal wall divisions and the consequent, indirect infringement on the right of beneficiaries to privacy.

Ms Nxumalo said that as a Department they were confident that local government had sufficient capacity to meet government's objectives on housing. However, problems could arise on the question of assigning different roles and avoiding duplication of duties.

In reply to the question on the quality of low cost houses Ms Nxumalo pointed out that the Department was currently in the process of finalising a regulatory framework in that regard so as to fulfil the objectives of the Rental Housing Act. Chief among the provisions of the purported regulatory framework will be the requirement to provide high quality houses at low cost level and that would mark a shift towards medium density houses. The issue of open houses without wall divisions was an option for beneficiaries so that they could get much more bigger houses and later establish the internal wall divisions at their own expense. That in itself provided for beneficiary participation and more flexibility and innovation.

Mr Schneemann was concerned about the Department's national expenditure increase on personnel. He asked if that was because the Department had been understaffed. His second concern was the Department's increase on special services. Did the Department not have the capacity to perform those services?

Mr Motsitsi (ANC) asked what the motivation was for the establishment of the National Home Builders Registration Council (NHBRC) under programme 3. He asked why the saving schemes proposed last were not yet in place.

Ms Semple asked what was done by the Department to ensure that Provinces spend their budgets for housing. She proposed that there was a need by the Department to provide a detailed report on the Presidential Pilot Programmes.

Ms Nxumalo said that the NHBRC under programme 3 were established to provide warranty to Department's housing programmes.

With regards to the saving schemes, she said that the Department was currently in the process of developing the envisaged saving schemes.

On the question of provincial budgets, Ms Nxumalo pointed out that there were monitoring and evaluation plans in place, which require Provinces to report on a monthly basis.

Mr Schneeman (ANC) asked whether transfers of payments under programme 6 were done on the basis of a Province's housing plan. Secondly, he asked if the trend of fewer housing developments in the rural areas was not going to impact on the integrated rural development.

Ms Southgate (ACDP) asked how accurate the Department' statistics was on the proposed consolidated programme, which focused more on quantity rather than quality. How was the Department planning to apply the purported consolidated programme?

Ms Nxumalo pointed out that transfer payments to provinces were allocated on the basis of their population, salary scale of the beneficiaries and the number of people owning houses in a particular province. The above formula had been revisited and revised to be more urban biased more particularly because the focus in the rural areas had been more on service delivery rather than a lack of shelter. However, that did not mean that the Department was going to totally negate rural housing development.

The Department's focus for the next financial year would be on providing houses rather than maintaining quality houses due to the current housing backlog. Maintenance of houses was not really getting the sense of urgency it deserved. In dealing with the housing backlog, Ms Nxumalo pointed out that diversified strategies were currently put in place to clear the housing backlog and to facilitate processes that would enable people to gain access to housing. For example, multifaceted strategies such as skills development and job creation.

Mr Schneemann asked whether there were any plans in place by the Department to counter the problem of beneficiaries converting their houses into business activities such as spaza shops or hair salons.

Mr Wallis (Department) noted that there were some components in the Department's policy initiatives for housing to provide for business activities. The Department's policy framework was moving towards second generation houses that would encourage beneficiaries to fully develop and maximise their houses for economic activities.

Ms Kota (Chairperson) proposed that there was a need for a detailed report probably during the course of the year on the progress made by the support institutions so as to determine whether they were achieving the necessary results.

Ms Nxumalo said that the Department's support institutions were mainly focusing on areas where the Department could not fully meet its targets for certain housing programmes. These support institutions were effectively carrying out their mandates. However, the Department was currently performing an oversight role on the activities of these support institutions as well as redefining their mandates so as to prevent duplication of functions.

The meeting was adjourned.