Department of Human Settlements 2016/17 Annual Report

Meeting report

Members were unhappy that neither the Minister of Human Settlements, Lindiwe Sisulu, nor her Deputy, Zou Kota-Fredericks, were attending the meeting for the presentation of the Department’s annual report. The Chairperson had advised they were attending a Cabinet meeting.

Ms T Mampuru (ANC) (Limpopo) said the Committee was being undermined. The Ministers had known they were to attend, and otherwise a letter informing the Committee was due. The Department knew this. She stressed their accountability as Membersx of Parliament (MPs) to the people of their provinces.

Ms L Zwane (ANC) (KwaZulu-Natal) said that the Deputy Minister should at least have been present to discuss the budget and what had been done. Political heads should also have been present to answer questions. She understood that the Acting Director General could answer questions, but he was unable to answer political questions. She stressed that the presentation should be allowed to continue, but that the Committee was not happy.

Mr M Khawula (IFP) (KwaZulu-Natal) said the Department lacked procedure.

The Chairperson thanked Members for their input and told the Acting Director General that this was not acceptable. This was not the first time it had happened. The Committee was representing the provinces and with the Minister not being present, the provinces could not be represented.

Human Settlements Department: Annual Performance Report

Mr Neville Chainee, Acting Director General: Department of Human Settlements (DHS) said that
during the previous financial year, there had been a need for an improvement in the relationship between provinces and municipalities. Planning with provinces and municipalities had been streamlined. Provinces provided with support had included North West, Limpopo and Free State. There had been a remarkable improvement in Mpumalanga, but regression was seen in Limpopo. KwaZulu-Natal (KZN) and the Western Cape continued to over-perform.

The issue of finalising title deeds was still problematic. The DHS had institutionalised project support for title deeds in the provinces, with the Auditor General (AG) and Department of Performance Monitoring, in partnership with the DHS, developing customised sector indicators to address the problem.  A project readiness management tool had been implemented to aid provinces in meeting targets. A framework was also developed to help municipalities to deliver mega projects.

Institutional issues included institutional capacity, coordination, and skills acquisition. The focus was put on monitoring mechanisms on provinces to deal with the monthly payment of invoices. The Management Performance Assessment Tool (MPAT) had been a key issue from the Presidency.

Achievements on communication and consumer education were presented. The DHS had taken criticism very seriously. Consumer education had been focused on various platforms by the Department, such as the reactivation of New Ground, a television series on SABC 2.

Progress in mining towns was focused on informal settlements. A total of 338 projects were initiated in mining towns, along with transformational plans.  Project partnerships with mining towns were outlined. The Committee was asked to ensure mining companies were reminded and regulated to meet their requirements with the Department.  It was stressed that the South African government had to assume the burden of housing workers, compared to companies operating in countries such as Australia. The case of Rustenburg was explained, where land had been donated. Government investment was estimated at R170 million, compared to the R10 million invested by Lonmin. This disjuncture between government and mining companies’ investment was stressed.

A summary of policy and delivery targets which were not achieved was presented. The operation compliance target for the human resources implementation plan was not achieved as the DHS’s budget was cut by approximately R3 billion. In the operational budget, R100 million was lost. This ensured that readjustment took place within the Department.

Mr Nyameko Mbengo, Chief Director::Finance, DHS, said expenditure had reached 99.6% (R30.5 billion) of target. The discrepancy between funds spent and available was R 109 125. Grants and transfer payments made up most of expenditure. It was explained that 97% of the total budget was transferred to provinces and municipalities. Programme delivery support was noted at 70%. This under-expenditure was related to the National Academy System (NAS) programme and the DHS subsidy system.

Programmes referred to as financial intervention, involving an estimated R2.2 billion in total, were explained as money being spent for maintenance of old units built prior to 1994, which were bought to provide people with home ownership.  

The Chairperson asked whose houses were being maintained.

Mr Mbengo said they were owned by the government or municipalities.

The Chairperson said the Committee would go back to the issue during deliberation.

Mr Mbengo stressed that the outputs were not only new housing opportunities.

On expenditure by economic classification and transfer payments, 100% of human settlement and urban settlement grants were transferred to municipalities. The Human Settlements Development Grant (HSDG) expenditure was explained to the Committee. During the past financial year, rollovers were estimate at R405 million. The Eastern Cape had in the previous year spent 100% of its allocated funds. Different provinces’ expenditure was detailed for the Committee. Overall expenditure had been 98% for the March 2016-April 2017 period, and provinces that did not spend all of their allocated funds had applied to the Treasury for a rollover.

The Department had received an unqualified audit opinion. This was due to an error in transferring the funds of the DHS. It was explained that when transferring money to a public entity, it should be reported of a recapitalisation, and not a transfer. The Department had listed the recapitalisation of the National Housing Finance Corporation (NHFC) as a transfer payment. The Auditor General (AG) had asked for these numbers to be changed. 

The Department had developed an action plan on performance information. The AG’s committee had requested that the action plan be tabled and monitored. The Department and the AG had discussed customised sector indicators which would be used to assist monitoring the performance of all provinces.

Tables in the annual report provided an indication of concrete inputs, outputs and targets of provinces. It was indicated that there had been overlaps in which the Eastern Cape and Free State were compared. Regression and improvement were reported. It was reported that the Free State, Gauteng, Limpopo and North west were still “in ICU.” There had been remarkable progress in Mpumalanga. eThekwini  was cited as the top performing municipality, along with Nelson Mandela. Buffalo City’s performance was deemed satisfactory. Two municipalities where issues were raised were Ekurhuleni and Cape Town, as they had not spent the funds allocated. The City of Johannesburg, Cape Town and Ekurhuleni had under-spent on theHSDG, while eThekwini continued to perform in terms of service to poor households.

Discussion

Ms Zwane said that the Committee was aware of the challenges faced by the DHS. During the presentation, percentages were indicated of funds that had not been spent, and Nelson Mandela Bay was one of the metros. The amount of money unspent was not acceptable, and the Department had to do something about it. She questioned where the problem was -- poor planning or lack of resources? Funds had been allocated, people were waiting, and metros were not delivering. The City of Johannesburg and Cape Town had been pointed out among the metros. Why was the Department not monitoring this?

She questioned why only 70% had been spent on programme delivery support. Regarding bursaries, she asked what was happening at Mangosuthu University of Technology. She questioned how the United Nations Habitat funding was being used. She also commented that the Department had not included anything about houses for war veterans.

Mr Khawula said the issues presented were very confusing, especially the discrepancy of when books were closed in March, compared to June. These figures had not been presented to the Committee in past years. The report stated that the framework was being developed only at the current time. He wanted clarity on what had been done since 1994, and why frameworks were being developed only now. In the presentation it was stated that a “significant number of students were being aided.” He wanted to know what constituted “significant”. He recalled that there were not more than 20 mining towns, so he did not understand how there could be 338 projects being implemented for so few towns.

Financial targets for implementation were not achieved. The Department was aware of its capacity constraints, so why had it set these targets when it knew they were not achievable? He intended to question the Deputy Minister on the under-performance experienced in the Western Cape.

With the USDG, Ekurhuleni, Johannesburg and Cape Town were under-performing. He said that other cities were being side-lined. He asked when the Department would begin to listen and “spread the cake” beyond the metros. Under-achievement was an albatross for the Committee. In KwaZulu-Natal, there were three aspirant metros that were not benefiting. This was not fair, as the population density was second to Gauteng, yet only one metro received grants in the province. He asked the Department to reconsider their approach, as cities that were not metros were being disadvantaged.
 
Ms Zwane agreed that the allocations should be revised. Rezoning was touched on. She noted the amount of land acquisitioned had been three times the target, but was worried that it was too slow in “roll-outs”. She asked how the DHS put pressure on local government to ensure efficiency.

Ms T Mampuru (ANC) (Limpopo) said she was very confused, as there had been no accuracy in the presentation. The national departments needed to come up with a plan, as provinces did not spend money.  She agreed with Mr Khawula on focusing on population density rather than metros in grant allocations. She asked if the Department had been monitoring the economic growth of provinces and if they had attempted public/private partnerships to stimulate growth. She asserted that the backlogs of title deeds were due to not following the movement of people. A focus on provinces and closer work with municipalities was stressed. She said Cabinet reshuffles were proving a challenge, and she wanted to know how the DHS was going to deal with the instability they created. 

She questioned the over-performance of some projects, as this meant that other projects had suffered financially.

The Chairperson said something was not right, and requested a rework on the presentation to include the issues Members had raised. Included in the rework should be an explanation of the different financial years between the Department and the metros. She stressed that Members did not want to guess, they wanted accuracy, and that they wanted accuracy in end of the year report. The rework was also to be compiled into one document.

She noted the final inputs from Ms Zwane and Mr Khawula, and said that when the Department came back, the Committee would not support its budget. There were 17 secondary cities, or “aspirant metros” -- why were the metros underspending? Perhaps money was being given to metros and areas which did not need it. The Department should have compared internal metro budgets. If money was not going to be “spread”, the Committee would not support the DHS’s budget. Under-achievement and over-performance needed to be balanced, as money was being taken from one province to another, which was not sustainable.

The Chairperson questioned where military veterans were in the presentation, and what was happening with the programme. The standardisation of veterans’ houses in the Free State was a problem, as there was a discrepancy between the sizes of provinces’ houses. Was one group of veterans better than another?  Veterans had also asked how they were going to pay for services and houses, as they could not work when staying in rental housing. It was not just a matter of “dumping” veterans at houses, they needed to be assisted. Military veterans illegally occupied many houses. This had to be addressed. Why it had taken more than 20 years? The planning of the Department did not make sense.

The Department funded bursaries for young graduates, targeting students who came from poor families. She observed that Members who represented provinces had closer ties with constituencies and would be better equipped to choose children, rather than National Assembly MPs.

Ms Zwane asked which universities formed part of the programme.

The Chairperson said it was only Nelson Mandela University. She requested that two bursaries per Member be given by the Department.

Metros that were not performing, such as Nelson Mandela, were compared to the Eastern Cape province, which was overspending, and she asked how the Department was balancing the budget. The need for control by the Department was stressed. 

Regarding inputs and outputs of new housing, maintenance was not just for maintaining but for making money. This had to be included in the report, to better reflect inputs and outputs.

She requested that the report be bought back, along with the bursary requests.

Mr Chainee said all the questions would be answered in the new report. In addition, a presentation per province would be provided on military veterans, along with where the 338 mining projects were. The first quarterly report had not accurately reflected the numbers, due to the time difference. The report would elaborate the expenditure and what the deficiencies were.

He agreed with the Committee on the funding of non-metro cities, saying that pressures were extreme in these areas. Rustenburg was said to be the fastest growing area in the world. There had been requests to move money to the areas in question, but the fiscal framework did not allow this. The Department appealed to the Committee to change this. Only 2% of funds were allowed for non-metros to aid in bulk infrastructure. The Department recognised this as a big issue.

Ms Zwane interjected and asked why under-expenditure was taking place.

Mr Chainee said poor planning and under capacity, along with changes in management, led to under-spending. These were issues that the Department had identified and required intervention. It was desirable for the USDG framework to be looked at. The administrative reshuffles in Gauteng had  seen five Heads of Department in four years. The instability was impacting on performance due to the lack of continuity. Johannesburg was suffering from under-expenditure.

The Department had established a research chair at Nelson Mandela University and at Mangosuthu University of Technology. Mangosuthu had been chosen due to its indigenous human settlements focus, which fed into policy and capacity building for the Department. The Department wanted to establish a programme that allowed students to be trained.

The funds for UN Habitat were spent on membership. The membership had aided in the improvement of policies, such as the “backyard policy”. 

Mr William Jiyana, Acting Deputy Director General: DHS, said there was strict regulations on the standardisation of veterans’ houses. The Free State had gone out of their way to increase the housing with smaller units. A new order had been signed to go back to the standardisation of houses. The Free State had not built a house in the past two years due to these issues, which it hoped would be resolved soon. Military veterans were not uplifted as a Departmental programme, and due to emphasis within the Department, it would be reported as a separate issue.

Mr Mbengo explained that outputs did not refer to a physical unit. The focus was not on how many units were built. Money was being spent on different outputs, such as maintenance.

Mr Chainee elaborated on the bursaries, saying the focus of the programme was to work with the National Student Financial Aid Scheme (NSFAS) and the sector education and training authority (SETA) to aid children from poor households. If a full bursary was not provided, a large dropout rate was seen, due to the lack of resources. The Department would make a written commitment on involving the Committee, as requested by the Chairperson.

Mr Jiyana said the July UN Habitat summit was to discuss resolutions of the UN’s global agenda. The DHS was coming into line with the implementation of the goals. Its membership had been used to learn and provide feedback to the country. A regional meeting with the African Union and UN Habitat on the process of implementation would take place on Thursday. The Department would be participating extensively.

The Chairperson thanked the Department for the briefing and asked for the report in two weeks’ time. A joint meeting would be requested with National Treasury, along with other relevant committees.

The meeting was adjourned.