Department of Housing Strategic Plan & Budget: briefing

Meeting report

PUBLIC SERVICES SELECT COMMITTEE
9 April 2003
DEPARTMENT OF HOUSING STRATEGIC PLAN & BUDGET: BRIEFING

Chairperson: Ms P Majodina (ANC) [Eastern Cape]

Documents handed out:
Department of Housing Strategic Plan and Budget Presentation

SUMMARY
The Department of Housing outlined the values, mandate as well as the policy framework of the Department as provided for in relevant housing legislation and regulations. The Department presented the strategic and budget overview as well as policy shifts. The Department indicated that its early focus was on the quantity and not quality of the houses built, which was changing. Members emphasised that the design of new houses had to be improved. The issue of rollovers was raised and while the Department presented various reasons for the rollovers, it was agreed that they were not justifiable.

MINUTES
Presentation by Department of Housing
Ms Mpumi Nxumalo: Director General, Department of Housing, indicated that the aim of the Department is to determine, finance, promote, co-ordinate communicate and monitor policy in respect of housing and human settlement. This aim is supported by the vision, which is largely a nation housed in sustainable human settlements. The Department seeks, as its mission, to establish and facilitate a sustainable process that provides equitable access to adequate housing within the context of affordability of housing, services, and access to amenities and economic opportunities.

Mandate and Policy Framework.
The Department derives its mandate from Section 26 of the Constitution, which provides for the right of access to adequate housing. Ms Nxumalo encouraged Members to understand the content of the right given the different interpretations that court judgements have given to this right. The Botshabelo Housing Accord of 1994, the Reconstruction and Development Programme and various housing policies and strategies also guide the Department. The housing development programmes operate within the framework of various regulations, guidelines and legislation such as the Housing Act of 1997 and the Prevention of Illegal Eviction from Unlawful Occupation of Land Act of 1998. The Department is in the process of finalising other legislation to help it implement various policies.

Strategic Overview
The Director General indicated that since 1994 more than 1,47 million houses have been built or are under construction and 1,8 million subsidies have been approved, benefiting more than 5,6 million people. The focus of the Department was to build as many houses as possible and not really on the quality of the houses. This was necessary to address the housing needs and backlogs. The Department also focused on the development of policies and legislative instruments.

The housing programme faces some challenges due to a lack of private sector investment and resource constraints. The Department also faces the challenge of creating higher quality housing and living environments. It has to promote the culture of saving towards housing and in so doing reducing dependency on the government. The Department is also faced with the challenge of effectively dealing with emergency situations resulting from natural disasters. This is important, given the judgement in the Grootboom case.

The Department has realised the need for new policy approaches. This is an opportune time since the government has achieved the target of one million houses. The Department has shifted its focus from the number of units produced to the quality of products and environment. The Department also seeks to promote a sense of social responsibility in terms of which every beneficiary of the housing programme contributes towards the houses being built. The housing activities will now focus on urban renewal, integrated sustainable rural development and the eradication of poverty.

Budget overview
Ms Nxumalo indicated that there are seven programmes that the Department is focusing on. A breakdown of expenditure per programme per financial year was also provided. In total an amount of R4 778 836 has been assigned for 2003-2004. This amount will rise to R5 346 186 in the year 2005/06. The preliminary expenditure results, which show a possible rollover of R20, 500, were also given.

Programme 1: Administration.
Mr Mziwonke Dlabantu, Chief Director: Financial Services, stated that the purpose of the programme is to provide administrative and management support services to the Department. The programme also deals with the provision of strategic financial management services. This programme will also see to the implementation of a toll free number to address public enquiries and help in the anti-corruption initiative.

Programme 2: Policy Planning and Research
This programme was outlined by Mr Ahmedi Vawda, Deputy Director-General: Policy and Programme Management. He indicated that the purpose of the programme is to ensure a sound national housing policy framework. There is a need to audit all legislation impacting on housing. Outreach programmes to provincial departments and local authorities for training and monitoring the implementation of legislation are also necessary. The presenter alluded to the need to develop a medium density housing policy and produce a policy paper on environmentally sound and efficient housing.

Programme 3: Programme Management
Mr Vawda stated that the purpose of the programme is to manage national housing programmes. Some of the key activities under this programme include the implementation of the Human Settlement Redevelopment Programme and the Presidential Pilot Programme. He indicated that traditional building methods and technology need to be improved. He also alluded to the need to produce a report on outcome and lessons from implementation of the Presidential Pilot Programme.

Programme 4: Housing Sector Performance
Mr Camagu Soga, Chief Director: Housing Sector Performance, stated that the purpose of the programme is to monitor and assess the impact of housing delivery, manage housing information, and support housing institutions. Some of the key activities under the programme deal with the monitoring of the implementation of housing policies and programmes. The performance of housing support institutions will also be monitored. Mr Soga also highlighted the need to assess the impact of implemented policies and programmes.

Programme 5: Communication
Mr Dlabantu stated that the purpose of this programme is to facilitate and promote the free flow of information between the Department and its stakeholders. The key activities under the programme include consumer awareness campaigns and facilitation of feedback. Mr Dlabantu also indicated the need to disseminate information to the stakeholders and the development and maintenance of a communication strategy in support of housing programmes.

Programme 6: Housing Development funding
Mr Dlabantu stated that the management of the funding of the national housing programmes was the main purpose of this programme. This programme consists mainly of transfer of payments to provinces in terms of the Division of Revenue Act, as conditional grants and repayment of loans raised by the old housing boards. Key activities under this programme include the management of grant transfers to provinces and monitoring of financial performance for compliance with the Division of Revenue Act and PFMA. Another activity would be reporting of grant performances to the National Treasury, the Audit Office and the Minister.

Programme 7: housing equity
Mr Soga stated that the purpose of the programme is to promote fair lending practices by banking institutions, and to provide for setting of and enforcement of specific minimum targets by financial institutions in lending to the low and medium income households for housing purposes. This programme will also see the Department taking responsibility for the implementation of the Home Loan and Mortgage Disclosure Act, its regulations and the Community Reinvestment Bill when the latter comes into effect.

Conditional Grants
The DG indicated that the Department administers two conditional grants:
(i) Housing subsidy grant.
Tie purpose of this grant is to finance housing subsidies under the national housing programme. In the past three years an average of 235 540 subsidies have been approved per annum. Since 1994 more than 1,47 million houses have been built or are under construction and 1,8 million subsidies have been approved benefiting more than 8m people. Since 1994 the programme represents an investment of R21,309 billion by December 2002 into low income communities. The programmes under the housing subsidy grant have been experiencing a slowdown in delivery in the past two years. This has resulted in an average of 15% under spending due to, inter alia, transformation or restructuring since the 2000 elections and capacity problems in some local authorities. Environmental impact assessment processes are also contributing to the delays. The Department is undertaking a capacity requirement analysis for a new strategy for capacity building processes to address the capacity problems at local governments.

The DG also provided some preliminary expenditure results of the housing subsidy grant. These show a possible rollover of R1,071,291. This amount reflects the total amount of rollovers from all provinces.

Housing Allocation Formula
The DG showed that in allocating funds the Department uses a combination of the old formula that was rural/urban neutral and the current formula that is urban biased. The new formula is expected to be phased in completely as from 2004/5. In deciding how much is to be allocated to a specific province the Department considers the housing needs, households earning less than R3 500 per month and the population size. In determining the housing need the Department takes into account, amongst other things, the number of homeless people and shacks in informal settlements.

(ii) Human Settlement Redevelopment Grant.
The purpose of this grant is to fund projects which are meant to improve the quality of urban environment by addressing the legacy of dysfunctionality. The human settlement redevelopment programme was introduced in 1999/2000. Currently there are 123 projects approved throughout the nine provinces on a multi-year basis with a gross commitment value of R302 million. The current allocations are 2003/04: R109 million and 2004/05: R116 million. The DG indicated that the preliminary expenditure results show no possible rollovers.

Monitoring Mechanisms
The DG stated that the Department has developed specific and targeted monitoring frameworks for monitoring the grants. Monitoring is performed in accordance with the requirements of the Division of Revenue Act on a monthly basis. Provincial reports are presented to MinMec and head of department meetings on a quarterly basis. Structured quarterly provincial visits take place targeting especially provinces that show low expenditure.

In concluding Ms Nxumalo alluded to the fact that access to housing credit by the low-income group should be improved. There is a need to improve governance and deal with non-adherence to prescripts. She furthermore stressed the importance of improving the capacity to fight corruption.

Discussion
Rev P Moatshe (ANC) [North West] asked for an explanation on the state of the backlog. He asked whether the Department was moving slowly or quickly in eradicating the backlogs.

The DG replied that the backlog stands at about R2 million. It is difficult to eradicate backlogs, as experience across the world has shown. Singapore is the only country that has managed to eradicate backlogs, largely due to its population size. Hence the Department has not set the eradication of backlogs as a target. The aim is to achieve a significant reduction of the backlogs.

Rev Moatshe also inquired into the state of the houses that have been built. This question was necessitated by the fact that the Department indicated that its early focus was on the quantity and not quality of the houses built.

The DG indicated that the Department is not saying that every house built is of poor quality. All the Department was trying to show was that there was no proper monitoring of the quality of the products delivered.

Rev M Chabaku, (ANC) [Free State] was deeply worried about the massive rollover that the Free State Province has been accumulating over the years.

Mr V Windvoel (ANC) [Mpumalanga] was also worried about the massive rollovers. He asked if there is any justification of the rollovers whilst people are still homeless.

The DG replied to these questions by stating that the issue of rollovers is made worse by migration. The Department has realized that people apply for houses in their home provinces and thereafter leave to another province in search of jobs. The Eastern Cape Province is carrying rollovers from previous years largely due to the late arrival of the rollovers. The province also has a capacity problem, hence the rollovers. She agreed that the rollovers were unjustifiable and intolerable.

Rev Chabaku asked the Department to do something about this. She also asked the Department to improve the design of the houses since, according to her, they have some racist connotations. She also asked the Department to give an indication of the number of women and youth who have benefited from the housing schemes.

The DG indicated that women make up 39% of the beneficiaries. It is Department policy not to prioritise the youth unless they have dependants. This is largely due to the fact that they are expected or assumed to be accommodated in some educational institution's residence, or to be residing with parents.

Mr Windvoel found it problematic that every beneficiary under the housing scheme has to contribute something towards the house. In his opinion this requirement is unfair to those who are unemployed.

The DG indicated that monetary contribution is not the only contribution a beneficiary can make. For example, a person seeking employment with the company that is building the houses could also be seen as a form of contribution. Any form of contribution is necessary, given the fact that recipients of free houses are more likely to sell the houses. The feeling is that if the recipient has contributed something towards the house, maybe they will not sell them.

Mr Windvoel asked the Department if it blacklists the companies that are found guilty of fraud and corruption in relation to the housing schemes.

The DG indicated that an Anti-Corruption Task Team has been established to investigate the issue of corruption. The Department is succeeding in disciplining the people involved. In the past the Department had a problem concerning blacklisted companies, in that they would cease to exist and the same people would create a new company with a new name. However, this has since been overcome by ensuring that the people who are running those companies are blacklisted themselves.

Mr R Nyakane (UDM) [Limpopo] was concerned with a number of houses in the Limpopo Province which have remained unoccupied for years. Some of the houses are vandalised in the end. He encouraged the Department to do something about this matter, which he sees as a waste of the taxpayer's money.

The DG replied that the Limpopo Province also has a migration problem. Some of the houses are only occupied in the months of December and January. This is largely due to the fact that the occupants work in other provinces.

The meeting was adjourned.