Free State & Northern Cape Departments of Human Settlements delivery performance; Gauteng Oversight

Human Settlements, Water and Sanitation

15 November 2016
Chairperson: Ms N Mafu (ANC)
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Meeting Summary

The Free State and Northern Cape provincial Departments of Human Settlements provided the Committee with an update of their performances in meeting their targets for the provision of housing and title deeds for previously disadvantaged individuals and military veterans.

The Free State reported that for the 2015/2016 financial year, they had been allocated nearly R1.1 billion, which had had to be spread between six regions for the delivery of title deeds, units and sites. Mangaung and Thabo Mofutsanyane had been the only regions to overspend on their budgets. Unfortunately, none of the regions was able to reach their site targets. However, it had already overspent its total budget by R17.8 million. The provincial department was being faced with a number of challenges such as the subsidy quantum, which had not yet been revised since 2014, and water shortages that had affected the construction of houses.

The Committee was unhappy that the provincial department had overspent on its budget despite not meeting its targets, and was concerned as to how it would finance its programmes for the remainder of the financial year. It stressed the importance of the delivery of title deeds, new units and the delivery of the military veterans’ houses. The Committee wanted to know if there had been any developments in the mining towns, as this was not mentioned in the report. Overall, the provincial department was asked to prepare another report for the Committee, providing details on the corrective measures the provincial department planned to implement.

The Northern Cape’s provincial department reported that there were seven programmes in the department’s portfolio. It had failed to deliver on its military veterans’ target of 50 houses, and had built only 30. Only six units had been built under the Finance-Linked Individual Subsidy Programme (FLISP) programme. The target for the delivery of title deeds had not been achieved. The budget had been under-spent by almost R10 million. The under-performance on the delivery of top structures had been due to the slow performance by local contractors, who had a limited supply of materials. The first quarter had been hampered by the late approval of the Human Settlements Development Grant business plan, and there had been non-compliance with the National Home Builders Registration Council (NHBRC) regulations on top structures, causing delays in the completion of work. Another challenge was that the registration of title deeds was done in Cape Town and in Vryburg, and not in the Northern Cape. This had impacted the provincial department, because they suspected that the registrations had not been given attention and were probably lying around in offices. As of last week, it had been confirmed that the Kimberley office would be dealing with the registration of title deeds

The Committee was concerned about the slow pace of the delivery of the title deeds, the location of the provincial department’s registration office for title deeds, and why they had not collaborated with the National Home Builders Registration Council, because it had been effective in helping provinces with the delivery of houses.

Meeting report

Free State Provincial Department of Human Settlements

Mr Nthimotse Mokhesi, Head of Department (HOD), Free State DHS, reported that the overall budget for the province was R1.098 billion, and with this budget they planned to deliver 5 026 units and 7 449 sites. These included individual subsidies, social and rental housing and the Finance Linked Individual Subsidy Programme (FLISP). There were six regions in the province where the title deeds, units and sites were delivered. The region of Mangaung had been allocated a budget of R80.8 million for the sites, R314.6 million for the units, and R6.8 million for the delivery of title deeds. The region of Fezile Dabi had been allocated R75.8 million for sites, R132.7 for units and R4.3 million for the delivery of title deeds. The region with the least expenditure, Xhariep, had been allocated R2.4 million for sites, R39.9 million for units and R2.4 million for the title deeds.

The delivery targets for Fezile Dabi were 2491 sites, 710 units and 4 299 title deeds. The targets for Lejweleputswa were 3 208 sites, 1 471 units and 6 378 title deeds. Mangaug had a target of 1 000 sites, 2 073 units and 6 843 title deeds. Thabo Mofutsanyane had a target of 750 sites, 333 units and 9 590 title deeds.

Of the five regions, Mangaung and Thabo Mofutsanyane were the only ones that had overspent their budgets. Mangaung’s budget had been R404.3 million, but the expenditure had been R454.8 million. Thabo Mofutsanyane had been allocated R110.2 million, but had spent R116 million. The Xhariep region had been allocated a budget of R44.6 million, but had spent only R12.5 million. The Fezile Dabi region had spent only R132.2 million of its allocated R212.8 million.

None of the regions had been able to reach their targets on the delivery of sites. The Fexile Dabi region was targeted to deliver 2 491 sites, but it had delivered only 779. The Mangaung region had a target of 3 208, but had delivered only 727. Thabo Mofutsanyane had targeted to deliver 750 sites, but had delivered none. Xhariep had no target for the sites, nor did it deliver any.

Fezile Dabi had targeted to deliver 710 units, but had delivered only 400. Lejweleputswa had targeted to deliver 1 471 units, but had delivered only 1 384. Mangaung had a target of 2 073 units, and delivered only 316. Xhariep had delivered only 96 units against a target of 439.

The regions in the province were given budgets that totalled to R7.4 million for rectification programmes, R2.55 million for the delivery of title deeds, R368.9 for the delivery of units, R10 million for retention and R4.9 million for town planning. Thus far, the provincial department had spent R782.5 million against the R764 668 000 allocated by the national department since the beginning of the financial year in April, which meant it had overspent by R17.8 million.

Mr Mokhesi said that the provincial department’s challenges were relate to budget cuts, although the targets had remained unchanged. With the current budget allocations, it doubted that it would achieve its Medium Term Strategic Framework (MTSF) targets. The subsidy quantum had not been revised since 2014 and there were water shortages, which affected the construction of houses.   

Discussion

Mr H Memezi (ANC) said he was happy to see that the Free State province was optimistic about being able to make improvements in the next quarter. He complained that the report had slides that were missing and the presentation that was presented was different from the one that had been given to the Committee. It was important to alert the Committee of any changes to reports before presenting them. The FLISP programme was intended for middle class individuals who wanted to buy houses, but he budget that had been allocated was not sufficient, because there were a number of teachers, nurses and police men and women who could not afford new houses.

The processes involved in the delivery of title deeds must be improved so that the process could move faster and in doing so, the province should explain how they planned on reducing the backlog, which should also include the Vrede programme. This information would assist the Committee in establishing what the real issues were. The military veterans’ houses in the Free State should be of the same standard as the houses in the other provinces. He was happy to see that the executive in the Free State province consisted also of women.

Ms M Mokause (EFF) agreed with Mr Memezi, saying that having the correct slides with the right information helped the Members when they had to report to their constituencies. She was hoping that the Free State would also have made mention of the on-going fraudulent tender, in terms of how the province was dealing with it, and the processes that were taking place to remedy the problem. These fraudulent processes had affected the delivery of houses in the province, so a plan needed to be devised on to eliminate the loopholes in the tender process.

Mr L Khoarai (ANC) asked that the Free State numbered their slides for their next presentation, as it made it easy to follow the presentation and ask questions afterwards. He was concerned at there being no site targets or actual performance for the region of Xhariep. Was this due to there being no available sites in the Xhariep region?. He asked the HOD to explain what problems the provincial department had faced in delivering the sites, units and title deeds. He enquired about the number of military veterans’ houses the Free State had built, and why it had not made mention of the issues that were currently taking place in the mining towns. He asked for an update on the houses in the mining towns and for the province to explain why it believed that it would not achieve its MTSF targets.

Ms L Mnganga-Gcabashe (ANC) said in only five months the Free State province had already gone over their budget by R17 million, but their outputs did not correlate to the amount of money that had been spent. She asked where the provincial department planned on getting more money for the remaining seven months of the financial year. How much does the provincial department envisage that its deficit would be, and were there any plans to cover the deficit?

The Chairperson said it was worrying that the target to build the military veterans’ houses had not been achieved. The target had been 670, yet the provincial department was yet to build even 100 houses. She asked how they planned to meet the target. The Committee had been told that there were steering committees located in each province to help with the delivery of title deeds – what were their functions? The over-spending of the budget was a matter of concern, especially with regards to delivery. However, she recommended that the ratification budget for the deficit should instead be directed to other developmental programmes in the department.

Mr Mokhesi responded that the problem with the FLISP was that banks in the province had refused to inject money into the programme. At the moment there were projects currently being managed as ‘walk-in-programmes,’ and there was no real commitment to them by the provincial departments. The provincial department had started a process of taking over the servicing the sites so that contractors did not charge them an extra fee for servicing the land. In this way, the provincial department would be able to control the programme and the money.

In terms of the delivery of the title deeds, a steering committee had in fact been established. The reason why there were backlogs was the lack of co-operation from municipalities, which were responsible for the delivery of the title deeds. The Vrede programme was faced with challenges which were related to alternative building technologies (ABTs) and political party disputes. Thus, the provincial department had taken a decision to source other ways of using ABTs to increase the number of units.

50 additional military veterans’ houses had been built thus far in Mangaung, Vista Park. The provincial department planned to secure 15 sites in the next financial year. The Department of Military Veterans (DMV) was still in the process of handing over the list of military veterans who, according to their evaluations, qualified for houses. If the provincial department were to evaluate the military veterans itself, then a number of military veterans would not qualify. The fraudulent tender processes were currently being investigated by the Special Investigating Unit (SIU). The provincial department had been receiving reports from the SIU, but the unit reported to the Auditor General and not the provincial department.

The rectifications were not based on repetitive work, but rather to matters that dated back to before 1994. The provincial leadership and the Minister of Housing had agreed that the military veterans’ houses should be standardised at 40 square metres.

Mr Mbulelo Tshangane, Director General: DHS, added that the Free State provincial department had a problem with managing its cash flow. He had met with the HOD of the Provincial Treasury, and at the meeting it had been suggested that the provincial department should ask the Development Bank of Southern Africa (DBSA) to assist them with a short term loan. This recommendation had also been listed as part of the agenda for the Ministers and Members of the Executive Councils (MINMEC) meeting on 24 November 2016. The national department wanted to call a meeting with the Mayor, the City Manager and the HOD of the Mangaung municipality to discuss the possibility of the city paying for the servicing of its own sites and the delivery of units. This was practised by other metro cities, like Tshwane, eThekwini and Johannesburg. The biggest challenge in the Free State provincial department was the rectification, which was the biggest contributor to the negative cash flow. It had taken the provincial department some time to get over the 2011 financial crisis, and the SIU investigations had also had a huge impact on the operations.  

Mr Neville Chainee, Deputy Director-General: DHS, added that there was indeed a ministerial steering committee that was handling the delivery of title deeds. Another issue that the provincial department faced was the lack of co-operation from municipal managers, who often refused to sign off important documents for sites to be secured and for the title deeds to be delivered. This had caused a major backlog in the province, and the processes for securing sites had also been affected by this lack of co-operation. The provincial department had appointed a chief director, who would be responsible for the management of the delivery of units, sites and title deeds.

Mr H Mmemezi (ANC) proposed that the Free State provincial department should compile another report that provided specific details on the type of corrective measures they were going to take regarding the budget deficit and the backlogs of sites, title deeds and the FLISP. The report should also have the correct amounts of money that had been spent, because the report that they had presented was unreliable.

Ms Mnganga-Gcabashe also proposed that the Free State provincial department be monitored very closely in the following seven months, and the national department’s chief financial officer should also work closely with the provincial department to monitor and give them guidance with regard to spending their budget. The Mangaung Metropolitan Municipality should also report to the Committee, detailing how they had spent their Urban Settlements Development Grant (USDG).

The Chairperson concluded by saying the Department of Military Veterans and the Department of Human Settlements must work closely with each other and decide who should be responsible for the building of the military veterans’ houses. The provincial department had not mentioned if there were any developments in the mining towns. The Presidency had listed the mining towns as critical areas that needed to be given attention. A report on the mining towns would help the Committee to recognise what the major issues were. It was important that the province devised a strategic plan that would prevent the illegal occupation of land.

Co-operative Governance, Human Settlements and Traditional Affairs (COGHSTA): Northern Cape

Mr Alvin Botes, MEC of COGHSTA, Northern Cape, said the report would focus on the New Breaking Ground (NBG) houses, the restoration of social injustices with regard to title deeds, the FLISP programme and why they have not achieved much under this programme, and the finances of the department.

Mr Denver van Heerden, Head of Department, Northern Cape, reported that the provincial department had seven programmes. These were the Upgrading Informal Settlements Programme (UISP), new individual units, FLISP, military veterans, title deeds (pre-1994 and post 1994) and new development.

The planned target for units under the UISP was 264, 368 under the new individual units and 50 for the military veterans programme. In terms of the actual delivery of units, the provincial department had been able to exceed its UISP target and had delivered 694 units. They had failed to achieve their military veterans’ housing target and had built only 30 units, and only six units were delivered under the FLISP programme. Also, the target for the title deeds for pre-1994 had been 700, but only 407 were delivered, while the post-1994 target had been 2 800, and the actual delivery was 1 186.

In terms of their financials, R39.5 million had been budgeted the delivery of sites and R34.9 million for units under the UISP programme, and R71.2 million for the new individual units programme. In addition, R13.2 million had been allocated to the military veterans’ programme for the delivery of units, R1.1 million for the delivery of pre-1994 title deeds, and R4.56 million for post-1994 title deeds. However, it had under-spent on their UISP budget, using only R23 million of the total allocation. Also, the military veterans’ programme had used only R2.5 million of the budget, and the title deeds budget had also been under-spent. The provincial department’s expenditure from 1 April 2016 until 1 September 2016 had been R128 million, which was R10 million below the R138 million drawdown for the period. 

A number of challenges had contributed to the provincial department not being able to meet its targets, and for under-spending or overspending. The under-performance on the delivery of top structures was due to the slow performance by local contractors, who had a limited supply of materials, the first quarter had been hampered by the late approval of the Human Settlements Development Grant business plan, and there had been non-compliance with the National Home Builders Registration Council (NHBRC) regulations on top structures causing delays in the completion of work. 

The provincial department was also dependent on conveyancers to effect registrations. The registration of title deeds was done in Cape Town and in Vryburg, and not in the Northern Cape. This had impacted the provincial department, because they suspected that the registrations had not been given attention and were probably lying around in offices. As of last week, it had been confirmed that the Kimberley office would be dealing with the registration of title deeds.

Discussion

Mr Mmemezi said the Committee recognised the difficulties in the Northern Cape, but regardless of the fact the province did not have the resources, this did not mean that one could not plan for the future -- one must plan according to the resources at one’s disposal. The Northern Cape should take planning very seriously, because it was an important element in a provincial department like the Northern Cape’s. He asked what criteria the provincial department had used to select the 15 individuals for the FLISP project. He stressed the importance of the delivery of title deeds, whether this was done in Cape Town or in Vryburg. It gave individuals a sense of hope when they knew that they owned a piece of land.

Ms Gqada referred to the UISP, where the provincial department had targeted 264 units and had managed to exceed this by 340 units. With reference to this, how many informal settlements did the Northern Cape have, and where had the provincial department found the extra budget to exceed their target. She asked what the role of the Estate Agency Affairs Board (EAAB) was in assisting them with the delivery of title deeds. She found it difficult to understand why the provincial department had not made attempts to try and comply with the NHBRC requirements, because it had been effective in helping provinces with the delivery of houses. She was also concerned as to how the provincial department planned on dealing with the deceased beneficiaries.

Ms M Nkadimeng (ANC) asked why the provincial department had set high targets which they were not able to achieve. There had been no mention of the corrective measures the department was planning on taking, and she did not want to see the same challenges in the next financial year. How was it possible that the provincial department was not able to trace the beneficiaries when it was required for the owners to register the beneficiaries before the houses were built.

Ms Mokause said the title deeds office in Vryburg had a number of challenges, one being the housing units that were moved from the North West to the Northern Cape. She asked which corrective plans the provincial department was going to implement, to prevent the situation where a number of households’ title deeds also covered a portion of another property. The non-compliance of service providers must also be addressed.

Ms V Bam-Mugwanya (ANC) asked how the provincial department dealt with local contractors that under-performed with regard to the servicing of sites and the delivery of units. Was their under-performance perhaps not related to the control of principal contractors, who often refused to give them money for the projects?  She added that the delivery of title deeds was necessary for restoring the dignity of those who were previously disadvantaged.

Ms Mngaga-Gcabashe said there had been no mention in their financial year budget of how much money was spent in each month. She asked what the new individual units were, and if they were related to the new low-cost houses. There had been some inconsistencies with last year’s budget, and the provincial department’s CFO had been given the task to try and remedy the situation. The national department was then asked to establish whether the provincial department had succeeded in remedying the situation.

The Chairperson said the new developments had not increased, and added that the slow pace would cause there to be another backlog, which would include a backlog of the new sites and units.

Mr Botes responded that the provincial department had started taking the issue of title deeds very seriously when it had delivered 8 173 title deeds. He believed that it formed part of the restoration of social injustices. The municipalities had appointed a number of conveyancers who had failed to deliver on their tasks. Thereafter, the provincial department had decided to appoint their own conveyancers. The payments to the conveyancers had then been handled differently, in the sense that where the municipality conveyer had failed to lodge the title deeds, the conveyer appointed by the provincial department took over the job and got paid. He reminded the Committee that the lodging and processing of title deeds were two different processes that were handled by different organisations -- the COGHSTA department and the title deeds office. The lodging of title deeds was done by the provincial department, but the production of the title deeds was the responsibility of the title deeds office. It could be said perhaps that the provincial department had lodged more title deeds, but the backlog itself rested in the title deeds office. There was legislation that stated that when individuals owed the municipality rates and taxes, they were prohibited from receiving their title deeds.

He was frustrated at the fact that the department planned only after they had received their budget from the national government, and he suggested that this be changed because the supply chain offices took three months for documents to be lodged. They had also taken over the responsibility from the municipalities in identifying contractors who did not have disclaimers, which would assist with hiring the correct contractor who would complete the project.

Mr Van Heerden said the major challenge with the delivery of title deeds was that the process was managed by the municipalities, and not by the provincial department. There were over 15 000 title deeds in the offices in Cape Town and Vryburg, and they suspected that no one had attended to these title deeds. The municipalities had all been given a budget for the delivery of services on behalf of the provincial department, but they had failed to deliver and had used the budget that was transferred to them for other programmes of their own, unrelated to the purpose the money was given to them for. The department had therefore decided to take over this responsibility. The process of servicing land had become a problem, especially in the city of Kimberley, because the provincial department had found that most of the land in the city areas did not belong to the municipality, but to private owners.

A steering committee had been established to assist the department with the acquisition of land. The provincial department had planned for a housing Indaba in February 2017. This Indaba would be attended by mining companies, and the department would be given a platform to indicate how they intended to deal with the mining houses. He assured the Committee that the corrective measures that they had put in place were enough to limit the many issues that were faced by the department. He suggested that a different analysis of the sites should be made, instead of spending millions of rands servicing a site and then being told that the site was not suitable for building houses. As such, the provincial department would allocate the money to further research.

Mr Tshangane added that the lack of supply of material for the building of units had affected not only the Northern Cape, but also other provinces. He said it had been recommended by the Auditor General that municipalities with disclaimers should not be given the responsibility of handling projects, or to act as implementing agencies on behalf of the provincial department, because the accounting authority lay with the head of department.

Mr Chainee also added that Section 118 (1) of the Municipal Systems Act stated that all subsidised houses did not require a clearance certificate from the municipality. As such, municipalities did not have the legal authority to withhold title deeds from any individual because they owed the municipality money. The Northern Cape was doing fairly well, but their only recommendation was that the provincial department should manage their financial allocations better. The province would be given an incentive.

The Chairperson said she wanted more clarity on the removal of houses from the North West to the Northern Cape.

Mr Chainee replied saying the issue lay with the North West, and not the Northern Cape. The North West provincial department had assured the national department that it planned on meeting with Mr Van Heerden to discuss the administrative issues.

Mr Tshangane confirmed that all incomplete projects had been placed on the agenda of the MINMEC meeting.

The Chairperson said the Portfolio Committee on Rural Development and Land Reform had invited the Committee to a stakeholders meeting tomorrow to discuss the Extension of Security of Tenure Amendment Bill.

Adoption of Draft Minutes

The Committee adoption minutes for the following meetings:

30 August 2016 (proposed Mr Mmemezi, seconded Ms Gqada)

11 October 2016 (proposed Mr Khoarai, seconded Ms Mokause)

25 October 2016 (proposed Mr Khorai, seconded Ms Nkadimeng)

8 November 2016 (proposed Ms Nkadimeng, seconded Mr Mmemezi)

The draft report of the Committee’s Gauteng oversight visit was also adopted (proposed Mr Khorai, seconded Ms Bam-Magwanya).

The meeting was adjourned.

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