Committee minutes (Members only)
The Department of Planning, Monitoring and Evaluation stated that the Urban Settlements Development Grant (USDG) was a capital grant that allocated R10 billion per annum to the eight metros. It was introduced in 2011 and replaced the Municipal Infrastructure Grant (MIG) for these cities. The USDG was a fiscal instrument to support existing programmes, in particular the Human Settlements Development Grant (HSDG). The Department of Human Settlements (DHS) struggled with oversight and policy direction over cities in its implementation. There was poor coordination between the USDG and Human Settlements programmes. Except for Johannesburg and Cape Town, there was minimal gearing of funds through the USDG. However, there had been improvement since the DPME evaluation.
In discussion, Members doubted whether the USDG was being used correctly, and whether it had real impact. There were remarks and questions about the improvement plan; lack of coordination and confusion about the grant; lack of cooperation and consensus; money allocated without a clear purpose; the policy framework; best practice; intergovernmental relations (IGR); terms of reference; feasibility studies, and sustainability.
The EPWP creates work opportunities in four sectors: Social, Infrastructure, Non-State, Environment & Culture. The DPME noted that the Department of Social Development (DSD) and the Department of Public Works (DPW) jointly coordinated the EPWP Social Sector. Expenditure was consistently below 50 percent. The full cost of EPWP was unclear. The minimum stipend was R70 per day or R1 517 per month. There was concern about inadequate monitoring and a lack of baseline data on beneficiaries. The stipend reduced food poverty, but could not lift people out of poverty. The growth of the sector was not supported by human and financial resources. There were challenges related to the unique application of the grant to the Social Sector, and the provision of training.
In discussion, several Members felt that the DPW had to be present. There were remarks and questions about expenditure below 50 percent; baseline data on beneficiaries; impact on poverty; inadequacy of the stipend; allocation concerns, and training challenges.
DPME explained the National Evaluation Policy (NEP) framework, approved in 2011, as a government wide focus on policies, plans, implementation programmes, projects and systems. 54 NEP evaluations had been completed or were underway. Eight provinces had provincial evaluation plans. 55 provincial evaluations were planned or underway. There were 29 departmental evaluation plans. The evaluation system was being institutionalised across government. This briefing was not discussed.
Introduction by the Chairperson
The Chairperson asked for a moment of silence for prayer and meditation. It was an important meeting. The DPME would brief on the USDG and the EPWP. There would be an additional report on the National Evaluation Policy (NEP) framework. Findings would assist the Committee MTBPS process, to enable the Committee to make relevant recommendations on how to improve government programmes. Important programmes of government could be enhanced through the impact of the Committee on these implemented programmes. There had to be radical changes in how programmes were implemented. The country was in a phase of radical socio-economic transformation, and radical interventions were needed. Interventions had to be innovative, and had to be done within a short space of time. More had to be done with little. The DPME collected systematic evidence on government policies and progress in programmes like the USDG. Programmes had to be evaluated in terms of relevance, performance, effectiveness and efficiency, value for money, and sustainability. The Standing Committee was concerned about value for money. The Committee had taught her that its purpose was to follow the money. There had to be robust constructive meaningful and fruitful engagement on the major risks.
DPME briefing on the USDG
Ms Matodzi Amisi, acting Head of Evaluations, explained the USDG was a supplementary capital grant allocation of R10 billion per annum to eight metros. It was introduced in 2011 and replaced MIG Cities. It was a fiscal instrument to support existing programmes, in particular the Human Settlements Development Grant (HSDG). National Treasury contributed to policy direction and management of the USDG. The Department of Human Settlements (DHS) struggled with oversight, policy direction, guidance and support to cities in USDG implementation. There was poor coordination between the USDG and Human Settlements programmes. With the exception of Johannesburg and Cape Town, there was a minimal gearing of funds through the USDG. DPME recommended that DHS clarify the grant intent and develop a revised policy framework. DHS and Treasury had to revise the monitoring framework. An improvement plan was being developed and implementation was being monitored.
The Chairperson remarked that the briefing had been short and to the point, and very clear.
Ms D Ndongeni (ANC) referred to the statement on page 7 that there was a risk of the USDG displacing other sources of funding in the smaller metros, and exacerbating grant dependency. Still there had to be planning for small metros to get support, as it was much needed. She referred to the recommendation that an improvement plan for the USDG was being developed. She asked if that referred to big or small metros, and how far the plans were.
Ms M Manana (ANC) declared she was confused. If the USDG was not well thought of, it was because there was no coordination. A revised monitoring framework was recommended. But municipalities and provinces were confused about the grant. It was not clear to anyone from the outset. There was no clear direction.
Dr M Figg (DA) remarked that he shared Ms Manana’s sentiments, not so much about confusion, but there was little cooperation and consensus. Stakeholders wanted substantial money to go into an important need. He questioned the risk of the USDG displacing other sources of funding in smaller metros. R10 billion per annum was granted to 8 metros. He referred to page 4 which stated there was lack of consensus between DHS and Treasury. He asked about progress in resolving the lack of consensus. DPME stated that monitoring was difficult in the absence of a finalised policy. He asked about timeframes for finalising the policy.
Ms D Senokoanyane (ANC) likewise found the grant confusing. She asked how the relation between USDG and HSDG affected the ability to assist municipalities with their Human Settlements programme. There was a lack of consensus among Treasury, metros and provinces. She asked how the grant had come into being. There was intergovernmental tension, and monitoring was difficult at the project level. She asked if the Department had intergovernmental forums. There was poor coordination between the USDG and the NDHS because people were not doing what they were supposed to do. It has been noted that the USDG could displace other sources of funding and exacerbate grant dependence. But smaller metros needed support, they cannot adequately generate own revenue.
Ms S Shope-Sithole (ANC) aligned herself with her colleagues. On the way forward, NDHS, Treasury and local government had to be brought together in the same place. The budget had to be based on what had to be done, and then amounts could be estimated. Money was being allocated without a clear purpose. It was not hard to see why Departments ended up with unspent funds. It had to be corrected at the source. Allocations were made without clear plans of what to do with these. Government could not continue to dish out money when there was still talk about who had to do what. Chapter 3 of the Constitution stated that all spheres of government had to conduct business in such a way that it did not divide the Republic. Departmental managers had ongoing meetings. The question was what they were talking about.
Ms Amisi replied about the risks related to the USDG in smaller metros. Small metros needed more, as they generated less revenue. They could not become completely dependent as long as they were raising revenue. Treasury looked at municipal finances. It was careful with grants so that municipalities did not end up depending on government departments. It wanted relative independence so that municipalities could be responsive to communities. The IGR section of Treasury looked at that. The USDG improvement plan was aligned to the requirements of the national evaluation plan. Departments were asked to decide how they responded to DPME recommendations. She replied to the question of whether the grant was well thought through, saying it was. There was a grant framework. Transfers were not done without a guiding plan, and within a grant framework. There was a period of transition. People were familiar with the MIG and what it was supposed to do and then the USDG was introduced, as a funded portion of the HSDG. Expectations were built up in the provinces, as money was taken from them. The DPME evaluation was done two years after the introduction of the USDG. At that time there was still a hangover from the previous grant. Provinces did not know what the new grant had to do. At that time the policy framework was not yet completed. The policy framework was drafted by DHS and taken through the Cabinet process and tabled at MinMec. With regard to consensus, the grant was informed by a number of things, and there were different interpretations of what it was supposed to do. It was informed by the MIG City and the HSDG. There was a grant framework in place to guide grant transfers to metros. DHS worked with Treasury but there was lack of consensus between the two parties. The relationship between the USDG and the HSDG was such that the USDG was meant to support the housing programmes of the HSDG. Evaluation emphasised that if there was not alignment between the provincial plan and the USDG plan, efficiency was lost.
Ms Kefiwe Sethoabane, DPME Outcomes Manager: Human Settlements, replied that all questions were relevant. There was an opportunity for the grant to address infrastructure, as the HSDG focused more on construction of top structures. The USDG could support metro infrastructure in projects where not enough was granted for infrastructure. There were challenges at metro level where there was opportunity to look at municipal projects. Slide 6 indicated how different municipalities used the grant according to percentages. It was sometimes used for roads and storm water. She answered Ms Shope-Sithole that Treasury could go into more detail about how amounts were allocated in the various metros.
Ms Shope-Sithole thanked DPME for showing what had to be probed into. The Treasury had to be present. Members would be on campaigning on the street within two years, and people would then want explanations from them.
Ms Ndongeni asked how often DPME evaluated, and whether it was the first time that the USDG was evaluated.
The Chairperson referred to the statement that the budget allocation was R10 billion per year for 8 metros. A breakdown had to be given so that the Committee could follow spending, and see how it was allocated. She asked for an evaluation of the impact of the grant through interventions to support Human Settlements programmes. Metros had to conform to certain Treasury requirements to access the grant. She asked what happened where requirements were not met. She asked about any experiences where funding succeeded. The Committee wanted to use it for its recommendations. It was important in a constrained fiscal environment. The Public Service Commission indicated the week before that the Intergovernmental Relations Framework Act had to be reviewed. The principles of participation and coordination between different spheres of government were not properly understood. The question was if the outcomes approach was working as well as one would like to see. Sustainability had to be talked to. There had to be an ability to project into the future.
Ms Amisi replied that it was recognised in the Division of Revenue Act (DoRA) that the grant included a number of players. The built environment performance panel reviewed applications from municipalities. Work was done there to attempt to coordinate the grant with others. There was a problem with the impact of allocations for lower to medium households and settlements. The grant was necessary. Work with DHS showed that when investment in housing went together with local government infrastructure, people could be leveraged out of poverty. Over time it could be used for other resources. Alignment between investments could produce impact.
The Chairperson asked if there was indeed impact.
Ms Amisi replied that USDG impact could not yet be evaluated. It was looked at through the lens of a grant that provides money to supplement existing programmes. The Intergovernmental Relations (IGR) framework had not been looked at from a USDG perspective solely. DPME worked on coordination challenges. A further briefing could focus on that. Challenges were related to how training systems worked. It was difficult for departments to plan as a sector. It did not mean that the outcomes approach was not working. Departments were thinking about the outcomes they produced, and how to work together in an integrated government system. The same applied to other programmes. On the basis of work done, the USDG was sustainable. It could have an impact if it was better targeted and aligned with the programmes it supported.
Ms Sethoabane referred to best practice. It was her job to monitor the performance of departments. Based on evaluation it appeared that there were metros that used the grant to close infrastructure gaps. The question was asked which metros used it correctly. Metros like Erkuhuleni did so. Some used it almost like petty cash. The performance of the metros was being observed. Among the metros there were a number of rollovers in the first year. There was an inability to use the grant according to the National Treasury plan. The grant was meant to assist them, but they were not ready to use the grant. The last report to Cabinet in the previous week showed that the grant was still not being used in terms of desired percentages. The percentage of USDG was low. A certain percentage of the HSDG was meant for informal settlements. Metros were slow to use the grant. There were metros who did not budget the required percentage for informal settlements although the conditions prescribed that. She agreed with Ms Shope-Sithole that DHS had to come and say how the grant was being used, and how many rollovers there were, and how each metro had used the grant since its inception. DPME and Treasury had a performance dialogue the week before, to address intergovernmental relations. CoGTA and Treasury made presentations. DPME realised that there was duplication. Systems were overlapping at the local level, and playing in each other’s space. Intergovernmental issues had to be corrected, before it could be known who was supposed to be requesting what kind of information. At a follow up meeting, DPME, Treasury DHS, CoGTA and the South African Local Government Association (SALGA) would unpack what emerged from the performance dialogue. Provinces and metros would be invited. Intergovernmental relations challenges had to be picked up, especially around funding. With regard to outcomes, the grant could not only be driven by Outcome 8. Outcome 8 encompassed other functions that contributed to Human Settlements. Treasury could say more about sustainability. It had to be based on policy, challenges picked up would be addressed, and policy drafted by all stakeholders, including Treasury, DHS and DPME. The question was who would own the grant and take accountability for it.
Mr N Gcwabaza (ANC) noted that the grant targeted the funding of projects already funded, so as to cover shortfalls. There were metros that could fully fund most of their projects. R10 billion was being given to metros and they had to decide what to do with it. The grant was being used for things other than its purpose. He did not agree that it was used like petty cash. It was used, but not in a structured way, guidelines were not followed. If guidelines were not followed it could lead to dumping R10 billion that could not be followed. Metros could not be allowed to do as they pleased.
The Chairperson noted that it had been said that some metros did not use the grant correctly. There had to be a breakdown of the eight metros in terms of allocation, spending pattern, performance and compliance.
Ms Ndongeni asked how often evaluation was done. One year was too late, and every six months was too often.
Dr C Madlopha (ANC) remarked that the questions were maybe not relevant. DPME was not the implementing department. DHS and Treasury were more relevant. The Committee felt stressed if the grant was used wrongly, and when the direction of the grant was not clear. It had to be corrected, it was not like a conditional grant, to be used on projects. There had to be clear terms of reference for how the grant was to be used. It was relevant how often DPME evaluated.
Ms Manana noted that DPME, DHS and Treasury were formulating a framework. She asked if it was only for local government, or whether problems at both provincial and municipal level were included.
Ms Amisi replied that DPME did not decide how often the USDG was to be evaluated. It provided guidelines to departments on the need to plan for evaluation. Departments included in the national evaluation plan submitted when DPME sent out the call. But the departments planned how often there had to be evaluation. DHS had a Monitoring and Evaluation and Impact Assessment (MEIA) framework that specified how often evaluation had to take place. The Division of Revenue Act (DoRA) specified that evaluation had to take place in the first year.
Ms Amisi explained that it did not appear from the evaluation that money was not spent according to plan. The USDG had to be integrated with existing planning processes. All projects funded by the USDG would have gone through the DoRA and the Municipal Systems Act, and Council would have approved it. It was there to fill a fiscal gap, within the category of projects that could be funded by the USDG. The USDG funded projects previously funded by the MIG. In initial years the metros had plans in place for the MIG City. When a city planned bulk infrastructure, it planned over several years. The USDG funded projects initially funded through MIG City. Over time, changes would become visible in the spending and allocation patterns of the metro. Data about allocation was available from 2013/14. Johannesburg, eThekwini, Erkuhuleni and Cape Town each had about R1.5 billion allocated. The figure for Mangaung, Nelson Mandela Bay and Buffalo City was R1 billion. DPME looked from 2014 onwards to understand the USDG spending pattern. Over the preceding two or three years, a breakdown could be provided of how much of the capital budget was drawn from the USDG. An expenditure breakdown showed that expenditure for the USDG was sufficient. The evaluation report showed that inefficiencies were not because of the grant. The amount of time needed to get a project approved affected the USDG. There was currently more clarity on spending. Since evaluation the grant had done better. People were clearer about the grant. Provinces battled with what role to play during transfer. The built environment performance plan was not well aligned as an instrument, but there had been improvement over the preceding two years. Planning could be better in some areas. Evaluation findings were taken into account. There was a new policy in place that provided better clarity than when the evaluation was done. The evaluation was done two years into the grant, but currently there had been four cycles. The grant framework was informed by evaluation and by DHS. There was currently more clarity.
Ms Manana asked about the evaluation report.
Ms Amisi replied that it was currently public.
The Chairperson asked that it be sent to the Committee Secretariat. The report was about DHS and DPME. She asked what happened to DPME recommendations. DPME had to track recommendations adopted and implemented. A feasibility study had to inform the application of the grant. She asked what a feasibility study focused on, and what the targets were.
Ms Amisi replied that no feasibility study was found. DPME struggled to find documentation. It could be seen from the evaluation report where information was drawn from. Recommendations were in terms of the national evaluation plan. Once Cabinet endorsed recommendations, it was relatively binding to a department. Before it was sent to Cabinet, there was an opportunity for DHS to respond through the Director General, as there were sometimes differences between the Department and the evaluation steering committee. The improvement plan would show how the Department responded to recommendations. The Improvement Plan was tracked by DPME, which asked twice a year for reports.
DPME briefing on the EPWP: Social Sector
Ms Amisi said coordination and leadership of the Social Sector was shared by the Department of Social Development (DSD) and the DPW. Expenditure was consistently below 50 percent. The full cost of the EPWP was unclear. One DSD coordinator per province had to coordinate at least five provincial departments. The minimum stipend was R70 per day, or R1 517 per month. There was concern about inadequate monitoring and a lack of baseline data on beneficiaries. The stipend reduced food poverty but did not lift people out of poverty. The growth of the sector was not supported by human and financial resources. There were challenges related to the unique application of the EPWP to social services, as opposed to infrastructure projects, and the provision of training.
The Chairperson noted that DPME was not accounting to the Committee, it was sharing information for the Committee to use for its oversight.
Dr Madlopha commented that information was incomplete. The DPW had to be there. The social sector was discussed, but the EPWP was intended as an intervention by government for poverty alleviation and skills development, as more work was being done by machines. The programme was coordinated by DPW. In the social sector the Departments of Education and Health all reported to DPW. Social Development was not the gist of the whole social sector. The grant was received where labour intensive projects could be implemented. The DPW reported that implementing agents did not get reports through in time to them. The DPW had to be invited to explain how the programme worked. The social sector could be dealt with afterwards. The DPW had to be called to report on how they worked.
Ms Manana agreed with Dr Madlopha that the DPW had to be there. It was a good programme but it was being hijacked somewhere.
Ms Senokoanyane commented that it was scary that expenditure was below 50 percent. The programme was established to address poverty. For human resource allocation, there was one coordinator for five provinces. She wondered how it was expected to function, if only one person was assigned to it. To facilitate training was a full-time job. She asked if only R849 paid per month was rife, or restricted to certain provinces. R1 517 was already very little. There was no baseline data on beneficiaries. She asked how it could be obtained. In terms of outcomes, the impact on poverty seemed minimal. People were appointed and dumped when the project was over. On the other hand, people sometimes protested that the same people were kept on.
Dr Figg also supported the proposal that DPW get called in. It would not be asked to verify information, but to take action. He agreed with Ms Shope-Sithole that the money had to be followed, and with Ms Manana that the briefing was a true reflection. He referred to the statement on page 4 that expenditure was consistently under 50 percent, and that the full cost of EPWP was unclear. It was not possible to see where the money went. The money had to be followed and found. He asked how the Full-time Equivalent (FTE) below the R50 000 target was calculated (page 6). It was stated on page 7 that the minimum stipend was R70 per day. It was a serious concern. People sometimes had to spend as much as R50 on travel. It was noted that other stipulations (such as UIF and COIDA) were not prioritised. It was a matter of legislation not complied with. He asked about information on households below the food poverty line. He asked about Rand values related to the lower and upper bound poverty lines. He referred to the conclusion (page 10). The DPW had to be asked about allocation challenges. There was reference to training challenges. He had never seen any training. People picked up papers by the roadside and stood in groups conversing. He asked if whatever training there was led to certification. He asked if the report was up to date.
Ms Amisi replied that comments about the relation between Social Development and the DPW were valid. The DPW was the overall authority. The social sector was coordinated by the DSD. The DSD was accountable for social welfare, not the DPW. There were challenges related to anti-poverty measures and skills development. Systems had to be in place. One director could not look at training. The DPW had some HR resources allocated to management, but financial resources sat in the Department of Higher Education. It could not be left to one coordinating department. A number of departments were responsible. Officials had challenges with the Sector Education and Training Agencies (SETAs), besides with departments. Money was not coming out of the Skills Fund. The question was who was held accountable for training. There were sometimes other players besides the DPW that could impede progress.
Ms Amisi said the DPW reporting system received narrative reports by all departments. It was complemented by the DSD. When the DPW data management system was evaluated, challenges could be seen. The Incentives Grant was awarded on the basis of performance. If the information system was problematic it could cause an entity to be penalised, even if it had performed. There were questions about baseline data. One could end up with a bulky information system. Baseline information was needed. When application was made, it had to be decided if it was for the right beneficiaries, or whether there was other help available. It had to be asked if there was a real need. Information was collected as the EPWP was entered. Baseline information was collected on entry.
Ms Amisi explained that the definition of work opportunity for the Full-time Equivalent (FTE) was according to a global formula. Number of hours worked was used, rather than work opportunity. One did not know if the work opportunity would be two days or one week. It could not tell much. Hours worked was more important for people in the sector, as it told something about the length of the work opportunity. The social sector was different. Some volunteers had been there for 10 years. It was different to those employed on infrastructure, where projects came to an end. There were ethical considerations about the amount of money paid to people who had been in the programme for so long. The EPWP was meant to be an anti-poverty programme. The social sector grappled with problems. There was more impact on the food poverty line, which was about R700 per month. The lower bound poverty line was roundabout R1000 per month. The programme could have an impact on poverty. Food poverty was an important measure to show protection against food vulnerability.
Ms Amisi said some training was not determined by the EPWP but by the department. The Early Child Development (ECD) training was determined by the DSD. Where norms existed it was easier for the EPWP to provide training. The norms were there. Without norms, it was difficult to determine what kind of training to give. There was an interplay between ECD and Grade R training. Grade R was still on the ECD level. Grade R teachers were paid much better. It was leveraged out of policy but there were negative implications for ECD. People were trained and had to leave the sector without reaping benefits. Poverty intervention did not yet play in the space of social delivery.
Dr Madlopha proposed that the DPW and the DSD had to be brought together in one room with DPME.
Ms Shope-Sithole agreed with Dr Madlopha. National Treasury also had to be included.
The Chairperson asked for a comment from the Parliamentary Budget Office (PBO).
Ms Nelia Orlandi \, PBO Deputy Director: Policy, remarked that DPME evaluations were valuable. The PBO monitored expenditure outcomes throughout the year, and also on an annual basis, especially for conditional grants. The PBO found shortcomings in the grant. There was duplication of data collection. The role of DPME was to ensure that there were quality plans that provided for quality information so that the evaluation could conclude about achievement of outcomes.
The Chairperson noted that the next presentation, an overview of evaluation, would help the Standing Committee to know which departments to invite.
Overview on evaluation
Ms Amisi explained that the National Evaluation Policy Framework was approved in 2011. It was government wide, and focused on policies, plans, implementation programmes, projects and systems. There was partnership between departments and DPME. 54 NEP evaluations had been completed or were underway. Eight provinces had provincial evaluation plans. 55 provincial evaluations were planned or underway. There were 29 departmental evaluation plans. The evaluation system was being institutionalised across government. A list of evaluation achievements was provided, ranging from 2011/12 to 2016/17.
The Chairperson remarked that there was not to be interrogation. She thanked DPME for sharing important information. The Committee took the decision to obtain the information for quality intensified oversight. The current term was the first phase of the implementation of the National Development Plan (NDP) Alignment of the budget with NDP priorities had to be evaluated. It had to be asked if there was progress in the implementation of the NDP. DPME had to provide monitoring and evaluation to assist with that. More had to be done with limited resources to achieve the 13 NDP goals. There had always been planning, monitoring and evaluation units in departments, but they were not doing what they were supposed to do. It could be that people in the units did not have the necessary or relevant skills. DPME had to train them. It had to start with departmental units. They also had to account about what they were doing. They had been there since time immemorial with no result to be seen. The Committee would invite DPW and Treasury. DPME had to come and listen.
Adoption of minutes
Minutes of 8, 9, 10 and 11 November were adopted with minor technical corrections.
The Chairperson asked Members to nominate four departments out of a possible sixteen, to decide which had to appear before the Committee, in line with the MTBPS.
Members nominated Public Works, Arts and Culture, Office of the Chief Justice, and Communications.
The Chairperson noted that the study tour would be dealt with in the next meeting.
The Chairperson adjourned the meeting.