Department of Human Settlements on its Annual Performance Plan

Meeting report

Opening Remarks

The Chairperson mentioned that the Committee expected the Department to talk to the comments of the Auditor-General (AG) in the management letter were and what the Department had been doing in this regard. 

Briefing by Department of Human Settlements

Mr Mbulelo Tshangana, Director General (DG), DHS, said the Strategic Plan and the 2017/18 Annual Performance Plan (APP) had been reviewed thoroughly by him with other significant parties. The AG’s report as per the Chairpersons request would be presented by the Chief Financial Officer (CFO) of the Department.

The budgets for Gauteng, Free State and the Eastern Cape were only approved last week. This was because of the issues which had surfaced in these provinces.  The Eastern Cape had been experiencing cash flow problems which led to the delay in the approval of the province’s budget. The Free State had also experienced issues in its management of cash flow. In an attempt to prevent this from reoccurring in the next financial year, delays in business approvals were incurred by provinces who failed to meet targets in time.  Kwazulu-Natal was said to have done well with its cash flow management throughout the previous financial year. Financial figures indicated that Limpopo had exceeded expectations and was out of the woods, given its previous performance in the last financial year. The Northern Cape did not perform badly and worked well with its budget of R400 million. Even though Northern Cape was underperforming there was no impact on the national level. Issues arose when Gauteng did not perform well. The entire national sector was affected because a large portion of the national budget was dedicated to Gauteng. The Eastern Cape on the other hand had been doing well despite the shortcoming of paying contractors on time. The late payment of contractors was highlighted to potentially be a problem in the future. This further presented a problem for SMMEs as they cannot pay their creditors on time. The Western Cape had been doing well with managing its cash flows and has exceeded its targets of the previous year. In assisting with the restoration of title deeds program, some structures had been put in place by the Minister. An advisory committee has been created to monitor the performance of these provinces and 11 people have been appointed to serve on it by the Minister. The budget for 2017 had been set at R487 million.

Mr Joseph Leshabane, Deputy DG: Project and Programme Management, DHS said that the trajectory of the human settlement plan remained unchanged. By 2050 visible results of the current work will be seen and achieved through special planning systems. The goal was to ensure more people are closer to work and to social services. The Department, by 2030, sought to have attended to matters of re-profiting existing settlements, was providing affordable services in better living environments and realising a more appropriate property market. As per the requirement of the medium term strategic framework (MTSF) of five years, the Department hoped to ensure that poor households have better housing and living environments; the development of a functioning residential property market; and the improvement of institutional capacity and coordination.

The planning process for the implementation of the MTSF was robust. The Department had taken in to account the reviews of the Department of Planning, Monitoring and Evaluation (DPME) and by National Treasury. Similarly, the Department had to respond specifically to how it measured and ensured compliance with policy implementation and in how the Department coordinated. There was a deliberate focus in order to ensure that the APP accounted for all the priorities of the provinces and the Department. As a result, the APPs of entities, municipalities and the Department had to be aligned.

He confirmed that the priorities of the MTSF found expression in the Departments strategic plans to:

-Upgrade 2200 informal settlements in order to ensure that 75000 people benefited from the development;

-Provide 563 000 individual units for subsidy housing markets;

-Allocate 70 000 finance-linked individual subsidies to approved beneficiaries, thus providing 27 000 social housing units and ensuring that 10 000 hectares of well-located land was rezoned and released for new developments which targeted the poor and lower middle income households.

Furthermore, a policy framework for human settlements was developed, comprehensive human settlements legislation provided and a Human Settlements Bank had been established. The plan for 2017/18 was to finalise the Housing Consumer Protection Bill 2017; the Home Loan and Mortgage Disclosure Amendment Bill; the Human Settlement Development Bank Bill 2017; the Human Settlement Bill; the Prevention of Illegal Eviction (PIE) Amendment Bill; and the revision of guidelines for human settlements planning and design.

Mr Leshabane stated that nine municipalities would be assessed for accreditation and eight municipalities in secondary cities would be supported on the implementation of the Human Settlements Master Plan. He emphasised that the Department remained committed to ensuring the following:

-Payment of valid invoices within 30 days;

-Implementation of the approved internal audit plan;

-Implementation of the approved risk management plan;

-Implementation of the approved Departmental anti-fraud and corruption plan; and the

-Implementation of the approved communication strategy.

The Department’s priorities for 2017/2018 are the delivery on affordable/ gap housing; the acceleration in upgrading informal settlements; the improved issuing of title deeds for new subsidy houses on occupation; the eradication of the title deeds backlog by 2019 and the establishment of the Human Settlements Development Bank. On achieving the MTSF targets for 2019, he said the Department had progressed in the years 2014-2016  by completing 64 projects in technical due diligence assessments; finalising inter-governmental relations (IGR) protocols with spheres of government and sector departments; 603 detailed settlement plans were completed; 226 459 households in informal settlements were upgraded. Furthermore, the Departments progressed in this period by issuing 219 249 loans and 60 740 title deeds were registered for new developments.

Ms Funani Matlatsi, CFO, DHS, said the budgeting process started with an internal budget preparatory session which was held with the Department entities. This was followed by a preparatory session held with National Treasury. Following the departmental representation and motivation of the budget to National Treasury, the allocation was approved by Cabinet.

The Social Housing Regulatory Authority (SHRA) restructuring capital grant required R768 715; the institutional subsidy required R660 000; an amount of R2 million was required for catalytic project programs; R3.2 million was needed for Development Finance Institution (DFI) consolidation and capitalisation; R800 000 would be needed to eradicate the Northern Cape backlog; R19 000 would be required for asset verification and an amount of R49 000 was needed for the Government Employees Housing Scheme (GEHS).  

Compensation of employees was further reduced by R20.6 million over the medium term expenditure framework (MTEF). The goods and services net increase over the MTEF was R22.2 million, but this can be attributed to the R31.7 million that was re-allocated from the Institutional Investment managed by SHRA to fund Department programmes and project management activities as well as monitoring, evaluation and reporting. The reduction of the 2017/2018 Human Settlements Developmental Grant (HSDG) resulted in the following allocation reductions in each province; Eastern Cape (-R121 289); Free State (-R63 950); Gauteng (-R311 105); KwaZulu-Natal (-R200 370); Limpopo (-R71 337); Mpumalanga (-R72 711); Northern Cape (-R21 515); North West (-R100 421); and the Western Cape (-R128 302).

Discussion

Mr C Hattingh (DA; Worth West) asked for clarity on the backlog highlighted in the presentation. He also asked for clarity on the issue of the title deeds as it appeared that the number of title deeds was far less than the number of houses.

Mr M Khawula (IFP; KwaZulu-Natal) said that there was a failure on the part of the provinces and the different metropolitans in accounting adequately for their financial performances which have made it more difficult to keep track of any backlogs. He asked why the four metropolitans had performed poorly financially, why some provinces had low expenditure and why some provinces were managing their cash flow better than others. Concerning the military veterans housing, he asked where the Department got its figures since the APP provided no background figures and targets for the provision of these houses. He also asked that the mining towns which were mentioned in the presentation be listed by name and if mining towns in KwaZulu-Natal had been included on this list. The Urban Settlement Development Grant (USDG) was wrong in the way in which it was calculated as it was based on population. KwaZulu-Natal versus Gauteng was disproportional since smaller towns did not receive the benefits of this grant even though they experienced the consequences thereof. The manner in which this grant is calculated and distributed is just not fair.

Ms P Samka-Mququ (ANC; Eastern Cape) inquired about military veterans housing and the Human Settlements Bank. The Committee needed a briefing on the progress of the Human Settlements Bank from the Minister. There was an advert on radio regarding the new Human Settlements Bank where the speaker seemed to be not properly informed about the bank. She even struggled to follow what the advert was conveying.  The presentation was general and did not speak to the Committee.

Ms T Mpambo-Sibhukwana (DA; Western Cape) said that there should be a time frame to each of the Department’s on title deeds. It is important as it assisted the people when borrowing money from the bank. There had been progress in the military veterans housing. Across all nine provinces there are people with children, who live in the backyards of their parents’ homes. She wanted to know how many backyarders per province would be prioritised. There have been some houses built that remained unfinished in the province of Western Cape. In Drakenstein there were unfinished houses, but the contractors had been paid. She asked how inspectors could overlook the lack of electricity and sanitation in those unfinished houses. On RDP houses, she asked when the government could implement another program which did not instill dependence in the people.  In the future perhaps the government should develop a plan in order to meet the people halfway, such as providing electricity. In the next 10 to15 years she said the government should consider incorporating this sort of assistance so as to reduce the costs that are weighing the country down economically. The problem of “double-dipping” had to also be addressed at some point as some people stay in more than one province.  

Mr D Stock (ANC) asked how the bank would assist in the delivery of houses. The recommendation at the end of presentation for the Select Committee was inappropriate.

Ms T Mampuru (ANC: Limpopo) appreciated the good work that had been done by the Department. She proposed that when the Committee meets with the Minister, a breakdown was provided of the shortfalls and the strong points so that the Committee was able to understand what is happening in each province.

Chairperson said that at some point in the year they would need to have a sitting with all the provinces and the Department of Cooperative Governance and Traditional Affairs (COGTA). She suggested that the information be presented in provinces in the following meeting for engagement. Concerning title deeds, she said that it did not help to build houses for people but to not give the people ownership of the houses by way of title deeds. Something major had to be done in this regard. She asked when the Section 74 bills would come. The Committee wanted to know the backlog for military veteran housing. Concerning the management of cash flows, she wanted to know why those provinces were overspending and what happened to that money.  There must be action in Mbombela with the issue of the HSDG and the USDG, because there was a large influx of people going to Mbombela, impinging on the availability of houses. She recommended that the provinces facing difficulties with cash flows must resort to budget cuts as it seemed there was a problem of overspending. In the next meeting the DG provinces will solve this problem.

Responses:

Mr Tshangana acknowledged that there was a failure in the report to look into provincial specifications. He explained that the radio presentation concerning the bank was done by someone who could speak isiXhosa and who was available to do so as he was busy preparing for this presentation.  He committed to updating the Committee next week with a more detailed report that looked specifically at the provinces and military veteran housing.

In response to the question on the Human Settlements Bank, he said the bank was not a commercial bank and relied heavily on public sector participation. In future there should be more collaboration with the government and private actors to assist with meeting targets for the Department. On the pressures of rural-urban migration weighing on the different metropolitans, he said Treasury also had a part to play to ensure that adequate funds are set aside to address this issue. The Department has scaled down the rate of building RDP houses and has worked on increasing, rather, the provision of basic services. Regarding the handing over of title deeds, he explained that this was a matter that required the interaction of a number of departments to address the shortcoming at hand.  He concluded by reiterating that at the next meeting a more extensive report with more specificity will be presented.

The Chairperson highlighted another issue that needs to be considered in the next report. Many people apply for RDP housing that ended up demolished months later and this showed that people are seeking plots to build their houses and the Department has to look into addressing this.

She thanked the Department and the meeting was adjourned.