Human Settlements Quarter 4 performance; Urban Settlements Development Grant: Joburg & Gauteng performance; with Deputy Minister

Human Settlements, Water and Sanitation

05 June 2018
Chairperson: Ms N Mafu (ANC)
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Meeting Summary

This meeting of the Portfolio Committee on Human Settlements was attended by the Deputy Minister, Ms Zoe Kota-Fredericks. The National Department of Human Settlements, the Provincial Department on Human Settlements and the City of Johannesburg presented their briefings before Parliament went on recess until 13 August 2018. All three reports showed poor performance, which left some Members of the Committee demanding that the officials had failed the nation and that they should resign before waiting to be fired. Members stressed that housing was such a critical social service that failing to deliver housing opportunities to the people who were living in traumatising conditions in the informal settlements despite having resources was worse than apartheid. The extremely angry Members asked why the Provincial Department of Gauteng and the City of Johannesburg failed to spend the funds allocated for housing and yet the province and the city had the biggest informal settlements in the country with a big influx of people from the rural areas who were attracted by the economy of the region.

Gauteng failed to spend its budgetary allocation resulting in R150 million being transferred to the Housing Development Agency while the City of Johannesburg failed to spend its allocation resulting in R350 million being transferred to other performing cities. Other provinces that performed poorly were the North-West and Limpopo, which brought the total figure of transferred funds to R3 billion. That figured translated into 18 000 missed housing opportunities, which prompted the Members to say that failure to spend allocated budgetary funds for social services should be declared a crime against humanity. There were also calls by some Members of the Committee that engagements with officials from the departments had not yielded any fruit and it was time to elevate the discussion to the political level; and others called for the Province of Gauteng and the City of Johannesburg to be placed under administration.

The service delivery problems were attributed to a breakdown in the working relationship between the province and the city, poor planning and lack of capacity in the departments. The departments were urged to improve communication and collaboration and to establish practical measures that would address the poor performance. The Deputy Minister emphasised the importance of developing workable plans to overcome the challenges and she also urged the departments to ensure that funds transferred to the Housing Development Agency were accompanied by clearly defined plans and programmes of implementation to avoid fiscal dumping and to also ensure that there were regular reports concerning the implementation of the plans and the funds to the Committee.

Meeting report

The Chairperson, Ms N Mafu, welcomed everyone, especially the Deputy Minister Ms Zoe Kota-Fredericks, and disclosed that this was the final Committee meeting as Parliament was going on recess until 13 August 2018 and for that reason it was going to be a difficult meeting. They would start with the national department, then go to the provincial department and finally the City of Johannesburg.

Presentation: Department of Human Settlements

Introductory Remarks by Director General (DG)
Mr Mbulelo Tshangana, Director General, Department of Human Settlements’ (DHS) reported that all the required delegates from the national and provincial departments, as well as the city, were present and the Housing Development Agency (HDA) had also been invited as it was an implementing agency of government. The Department did not delegate accountability, especially when it came to reporting about performance, and that was why the full team was there.
They had three presentations and the first one explained the global picture of human settlements as a whole and the picture did not look good as it had been a tough year. Five entities, namely; Gauteng, North-West, Limpopo, Johannesburg and Cape Town had not performed according to expectation and, consequently, funds were transferred from those entities. The three provinces under-expended funds and in the case of North-West Province, more than R700 million was transferred from the province to HDA to manage the funds as it has been a programme manager for the province for quite some time. However, the Department was worried about transferring funds towards the end of the year. It is desirable to transfer the funds earlier so that those funds can buy what they were intended to purchase. Transferring funds late amounted to dumping in accounting terms. A recommendation was made to MINMAC for the funds to be shifted from those provinces that were under-performing. A recommendation was made to transfer R800 million from Gauteng Province but only R150 million was shifted; a recommendation was made to shift R500 million from Limpopo Province, but less was shifted; and a recommendation was made to transfer R700 million from North-West but only R300 million was transferred. An amount of R350 million was transferred from Johannesburg City to other cities that were performing better and R178 million was shifted from the City of Cape Town. A total amount of about R3 billion was transferred and that was why the picture did not look good.

Presentation by DHS DDG for Strategy

Programme 1: Administration: Compliance to Statutory Matters
Mr Neville Chainee, DDG for Strategy, said under this programme the DHS focused on compliance as this would have a knock-on effect on performance. The targets achieved include: adherence to tabling dates; approval and publishing of estimates of national expenditure; approval and submission of departmental procurement plans; and adherence to the Management Performance Assessment Tool (MPAT) process. The Department was rated fully compliant on the Performance Management and Development System (PMDS), recruitment and retention, anti-corruption and ethics, as well as being SMART in monitoring and disposal management. A total of 93.5 percent of valid invoices were paid within 30 days and the other 6.5 percent was due to invoice discrepancies.

The internal audit resulted in an unqualified report although there was an emphasis on financial and material findings on pre-determined objectives – unavailability of source documentation for title deeds backlog eradication at the time of the audit. There is a need to establish proper systems and processes to collate and verify information. Sometimes provinces were providing inaccurate figures regarding the issuance of title deeds.

There is 63 percent implementation of the audit plan and this is mainly due to capacity constraints and there has been 89percent implementation of the approved Departmental Anti-Fraud Corruption Plan. There has been an 81 percent implementation of the Human Resource Plan. Over the Medium-Term Strataegic Framework (MTSF), the Department’s compensation of employees’ budget was cut with the net effect that if all the vacant posts in the 1916/17 financial year were to be filled, there would not have been enough funds to pay the employees in the current financial year. Last year’s personnel budget was managed on the basis of the money available in the current year. Of the 644 posts that are fully funded, 597 are filled.

There was 98 percent availability of HSS Database Systems to provinces and maintenance was conducted as required.

There was 85 percent availability of IT support services and this was due to unplanned excessive downtime from the service provider.

There has been 100 percent compliance with the implementation of the approved communication strategy

Progress on the Development of Legislation
The Minister has introduced the Property Practitioner’s Bill to Parliament. The Home Loan and Mortgage Disclosure Act (HLAMDA) bill was presented to the Department of Public Service and Administration (DPSA) and the Department obtained a preliminary legal opinion from the Office of the State Law Advisor (OCSLA). The Housing Consumer Protection Bill has also been presented to the Technical Working group.

Programme 3: Delivery
This is where the under-performance has been widespread. The DHS had interventions within 22 mining towns providing support on the revitalisation of distressed mining communities. The catalytic projects concerning informal settlement upgrading are at various stages of implementation with 34 of them being implemented.

One area of concern is the registration of title deeds. Provinces reported that 80 000 title deeds had been registered but a verification exercise showed only 41 000 title deeds had been registered. Even on new developments where there was a target of 23 300 title deeds but there was no title deed registered.

There was target of upgrading 75 informal settlement areas but only 9 were upgraded.

600 non-statutory military veterans were supposed to be housed but only 408 have been housed. Regarding preferential procurement, only 8.9 percent of the USG construction budget has been allocated to women and youth constructors. 10.4 percent of the Human Settlement Development Grant (HSDG) budget has been allocated to women and youth contractors. This was considered to be unacceptable and sanctions were being planned, including the possibility of withholding.

Regarding the single Development Finance Institution (DFI), the approval from the Minister of Finance was still being awaited regarding section 66 of the Public Finance Management Act (PFMA).

The MTSF implementation has seen an improvement but it is still below expectation. The overall departmental performance as per 2017/18 APP is that 52 percent of the targets have been achieved, 23 percent have been partially achieved and 25 have not been achieved. The underperformance is mainly due to Programme 3.

Financial Performance
The year ended with a budget that was not adjusted by National Treasury. The year started with R33.4 billion and the Department was closing the books with R33.4 billion. The figures that are represented in the report are the figures submitted to National Treasury and the financial reports have been submitted to the Office of the Auditor General (AG) for auditing. The year closed with 99.7 percent although not all the money that had been transferred to the departments had been expended.
The budget structure has programmes. Under Housing and Development Finance, the transfers are at 100 percent, but not all the money was spent. Programmes 2 Policy, Strategy and Planning and Programme 3 Delivery Support had challenges particularly the latter which only achieved 75 percent spending. This was mainly due to the service providers contract coming to an end and use was made of the Housing Development Agency. Negotiations were still to be done for a new service provider. The variance of 0.3 percent of the total budget that was not spent was equivalent to R107 million comprised a number of programmes.
Understaffing affected the purchase of goods and services. The operational budget of the Department was R783 million and there was a variance of R106 million from the budgeted figure. On transfers, the Department transferred 100 percent of all the funds that were earmarked for transfers. On the Human Settlement Development Grant (HSDG), the whole amount of R19.9 billion was transferred. There were rollovers totalling R343 million involving Gauteng with R43 million, North-West with R192 million and Limpopo with R84 million. These funds needed to be spent by 31 March 2018.

Housing Delivery Targets
In terms of housing opportunities, 77 percent has been achieved. Concerning the financial performance against the delivery of targets, the red flags came from Gauteng and the North-West. The Northern Cape was not too bad with spending even though it did not achieve all its targets. Gauteng missed 23 561 housing opportunities and the North-West missed 7 645 housing opportunities. Only Limpopo improved its performance from last year. The total delivery shortfall was 41 244 units. The target was 177 225 units and the delivery was 135 981 units.

Challenges and Recommendations

  • Slow delivery on MTSF targets
  • Conflicting sources of information in the sector
  • Need to ensure all planned measures have credible verification standards and processes
  • Need for integrated planning, budgeting and reporting
  • Overall performance of the organisation was very low at 52 percent
  • Need to improve capacity in the organisation
  • Insufficient collaboration
  • Need for mandatory standard operating procedures

Mr Tshangana said the overall performance was poor and the challenge was that three major provinces failed to spend their budgets, which was why the year ended with almost R3 billion unspent which meant that communities were denied 18 000 housing opportunities. There were also challenges with procurement processes. Supply chain processes have to be perfected a year in advance. Going out on tender in the year of implementation almost certainly means missing targets. Another area that needs improvement is material supply which is the biggest cost in housing at almost 70 percent.

The Chairperson requested that Members reserve their questions until Gauteng and the City of Johannesburg had finished their presentations so that they could have a general picture of what was happening and then ask questions.


Presentation: Gauteng Provincial Department of Human Settlements,
Ms Matilda Gasela, Head of Department in the Gauteng Provincial Department of Human Settlements, presented the report.

Non-Financial Performance
The Department planned to deliver 16 965 stands and 32 064 housing units. A total of 7 910 stands and 17 558 housing units were delivered, 47 percent stands and 55 percent housing units. The variance against the annual targets amounts to 9 055 stands and 14 506 housing units.

Financial Performance
During the period April 2017 to March 2018, the Department was originally allocated R5 528 050 000 for programmes and, subsequently, there was a downward adjustment of R150 000 000 and an approved roll-over of R43 705 000. In consequence, the Department received R5 421 755 000 whereas expenditure for the year was R5 302 694 000. Therefore, expenditure for the 2017/18 financial year was 98 percent of the funds received with a variance of R119 061 000.

The housing opportunities created during the financial year are 25 468 or 52 percent achievement rate. National Treasury had not yet responded to the application for a roll-over.

Improvement Plan
Due to the non-performance of the province, an improvement plan had been developed in which areas that needed focus were identified. There were challenges with planning, project management, quality assurance, supply chain management, conducting litigation and IT information management.

Concerning the planning, the idea was to synchronise the provincial planning with that of the municipalities. HSDG and Urban Settlement Development Grant (USDG) alignment has been particularly challenging in the planning. The poor planning also resulted in some projects not being enrolled with the National Home Builders Registration Council. Project managers who have not registered projects would undergo consequence management.

On supply chain management, there were challenges with procurement of service providers. There were also challenges with Professional Resource Teams (PRTs) who were being paid just for spending time on a project. Measures have been put in place to ensure that PRTs are paid for work done and not time spent.

Contract management was also a challenge as there were instances where contractors had remained on site despite the fact that their contracts had expired and it was difficult then for the Department to pay them. The Department was only paying those with valid contracts.

Regarding the payment of contractors, the Department has been paying them within the stipulated 30-day period at a rate of 98 percent. A resolution has actually been made by the department to pay within 14 days instead of 30 days.

There has been some improvement, however, it is not satisfactory. There has also been some resistance within the department to the proposed changes.

Departmental Annual Performance
The province has 5 regions, namely, Johannesburg, Ekurhuleni, Tshwane, Sedibeng and West Rand. Johannesburg delivered 3 549 housing units out of a target of 5 856 with a performance rate of 61 percent. Ekurhuleni had a target of 6 651 housing units but delivered 4 416 units which was a performance rate of 66 percent. Tshwane had a target of 6 912 housing units but only delivered 3 938 housing units which translated into 57 percent success. Sedibeng had a target of 4 258 housing units but only constructed 2 082 which was a success rate of 49 percent. West Rand had a target of 4 425 housing units but only constructed 2 457 housing units. The overall achievement rate was 55 percent.

Work in Progress
The Department found that a lot of money gets paid to contractors at foundation level and in some instances up to 60 percent. This was something that needed to be stopped because the contractors did not have any incentive to continue with the work. In all the 5 regions, 4 041 projects were at foundation level, 6 041 were at wall plate level and 835 were at completion level.

Title Deeds
This was an area where there were serious challenges. The province was given an MTSF target of 12 808 for the pre-1994 housing stock but they had only managed 8 248 leaving a deficit of 4 560. For the post 1994 housing stock they had a target of 152 903 but only managed to deliver 19 522 leaving a deficit of 107 612. For new developments, only 884 had been delivered leaving a deficit of 151 417.

In the issuance of title deeds, some of the challenges include missing beneficiaries, disputes among family members where the initial beneficiaries are deceased and some townships are not yet proclaimed.


The Chairperson said they had agreed that they were going to take all the presentations, so the City of Johannesburg (COJ) was going to be allowed to make its presentations before the questions. To give a brief background, the Committee had interactions with the COJ on 30 January and the Committee was not pleased with what it found. They were informed that there was a 66 percent vacancy rate and that there was absolutely no relationship between the province and the metro, that is, a professional relationship. The Committee gave tasks that needed to be done and among them was that the Head of Department (HOD) in Gauteng Province should meet the Executive Director (ED) of the COJ and that the meeting needed to take place within the week that the Committee was in Gauteng so that outstanding issues could be resolved. The meeting never took place and that needed to be reflected in the report as well as the reasons why this was so. The Committee also made concessions that within the three-month period following the oversight visit both parties were going to come back to the Committee and present a progress report on the findings of the Committee. It was hoped that the report would reflect the progress made since the visit.
Another problem identified was that the spending on the Urban Settlement Grant was extremely poor and, in consequence, certain commitments were made. The Member of the Mayoral Committee (MMC) is new but at the time there was an ED called Mr Moses Metileni. She did not see Mr Metileni and hoped to be informed of his whereabouts.
One of the big issues for her was that the first report by the province has proved that there is poor performance in the Department and it has outlined one of the 5 big culprits which is the three provinces and the two metros. Unfortunately, COJ is one of the two metros. Gauteng Province cannot perform if the City of Johannesburg does not perform. COJ gets the biggest chunk of the budget and how the city performs affects the entire province. It would be important to know the interventions that have been undertaken since the last meeting. During the meeting, a threat was made that when they reported back to the Committee and it was dissatisfied with the progress made, a recommendation would be made to the Minister and the Premier that the city be placed under administration. It was important to give that background.

Before the officials could present, the politicians would be allowed to make some remarks.

Mr Meshack van Wyk, MMC and member of the African Christian Democratic Party (ACDP), said he had been thrown into the deep end but could not make excuses because the law of succession states that when you inherit something you inherit both the good and the bad. He took over three weeks earlier knowing that it was not a department that did not have any challenges, but the blame cannot be placed on somebody else. He was available with his team to account and when the Acting Executive Director and himself took over they took responsibility for everything that happens in the Department. They have to fix what has to be fixed so that the Department can perform.  


Presentation: City of Johannesburg
Mr Thabo Maisela, Acting Executive Director, said the Mayor shared the same concerns as the Committee and the DHS and he decided to remove both the MMC and the Executive Director. When they assumed office, they discovered that there were some serious challenges and agreed that one way of dealing with the challenges was to take full responsibility for what had happened.

Budget of the City
The city’s total budget was R7.3 billion of which 1.8 billion comes from the Urban Settlement Development Grant (USDG) and about 3 billion comes from loans. Other sources of revenue account for R1.2 billion and Cash Reserve Ratio (CRR) stood at R1.3 billion. The city had so far spent 45 percent of its budget.

79 projects are funded by the USDG city wide with a budget of R1.8 billion and the spending is at 48 percent. Reports submitted by the entities are indicating that by the end of the financial year, which was due to end in three weeks’ time, they would reach 100 percent. This could not be confirmed because there were departments that were beyond his control. He, however, could speak with certainty about the housing department which has 31 projects funded by the USDG with a budget of about R1 billion. The spending was currently at 58 percent and they were certain that by the end of the financial year they would be sitting at 68 percent.

The departments that are funded through the USDG are Health, Housing, City Power, JWater for both sewer and water projects, Johannesburg Roads Agency, Johannesburg Social Housing Company, Johannesburg Parks and Zoo and the Johannesburg Development Agency. The Housing department gets the biggest share of R822 million.

Non-Financial Performance
The number of informal settlements targeted for upgrading with upgrading plans were 10 but zero was achieved. The target for the servicing of sites was 200 but zero was achieved. The target for the transfer of title deeds to eligible beneficiaries was 3000 but only 2345 was achieved.

20 roads were targeted for new paving but only two were achieved; 27 gravel roads were to be built with 25 being achieved; 250 roads were earmarked for rehabilitation but only 115 were achieved and 3 storm water drains were supposed to be constructed but zero was achieved.

2290 water service points were to be installed in informal settlements but zero was achieved and another 2090 households were supposed to be fitted with water connections but only 1400 was achieved.

2260 street lights were to be installed in new settlements but only 781 were installed. The number of additional households that were supposed to be provided with electricity was 810 but 1 191 was achieved which was an over achievement.

12 social amenities like parks, swimming pools, community halls and cemeteries were supposed to be developed but only 1 was achieved which was a sports field.

Performing Projects
Among the performing projects in the city include:

Devland Extension entails the installation of bulk/link and internal services (water and sewer) and upgrading of roads and stormwater management systems. The allocation is R38 271 000 but the expenditure has exceeded that and reached R41 134 580.

Diepsloot Redevelopment Northern Farms New Bulk Infrastructure DIESPSLOOT A H Regional which involves the construction of 1.  porcupine road to Runnymead; 2. Juskei River Bridge; 3 Sewer Rising Main. The budgetary allocation was R134 000 000 and R53 776 532 has been expended.

This is one of the projects where the contract lapsed and the Department did not submit reports for approval to extend the contract. The reports have now been signed and are in the process of being approved. This is what is going to assist reaching the 68 percent expenditure.

South Hills Housing Mixed Development New RDP Houses South Hills which involves construction of bulk and link services. The allocation is R90 000 000 and expenditure stands at R77 310 255.

Concerns of the Portfolio Committee

  • Lack of working relations between the City and Province and Coffee between CoJ and Province proposed
  • Severe Storm Report to be submitted
  • Capacity within the department to be strengthened
  • No procurement plans

Resolution

On better working relations with Province

  • Meeting held between MEC and EM to discuss challenges in the South of Johannesburg
  • Meeting resolved on forming a joint task team
  • Issues of Power of Attorney resolved
  • Discussion with DDG
  • Ongoing discussions with Province
  • Agreements with SHRA and HDA

Hail Storm

  • Acting ED only informed on Friday of the need to submit this report.

Housing Capacity

  • Skills audit to be done
  • Structure to be reviewed against delivery programs and mayoral priorities (pro poor; inner city; site and service and high densities in strategic areas)
  • The review will be used to determine which positions will be prioritised for filling

Impediment on USDG Performance (Challenges in 2017/18FY)

  • Late start on procurement for 2017/18 projects
  • Poor Contract Management (including preparation of contracts and service level agreements)

Implementation 

  • Community unrest
  • 30% on SSME
  • Poor General Management
  • lack of project management
  • Lack of Project Pipeline
  • Lack of Project readiness

Intervention: Mitigation on USDG low expenditure (Non-Performance)

Procurement

  • Department will be following PFMA regulation 32 to procure consultants form JPC panel of consultants
  • Acquisition Plan to be reviewed and finalised

Resolution of MinMEC:

  • National to provide capacity to the City of Johannesburg to assist in improving USDG expenditure

Poor Contract Management

  • Tighten controls on contract management
  • Training and development

Improving Implementation to unlock Expenditure                         

  • AED has signed all reports to EAC
  • South Hills
  • Malibongwe Ridge
  • Fleurhof
  • Diepsloot Riverside

Pipeline

  • Regulation 32 projects
  • Southern Farms 38 000
  • Zandspruit 13 000

The city had also identified some projects that would be implemented using section 32.

 

Discussion
The Chairperson said what was common to all three reports was poor performance and she asked the Members to make comments or ask questions

Mr L Khoarai (ANC) said the officials need to realise that they were working for the people who have lived sad lives because of apartheid. He wondered why people applied for jobs which they were not interested in or committed to. He asked the way forward on the title deeds since only 41 000 out of 80 000 had been registered. He further wondered why the provinces had applied for rollovers when they had failed to spend funds that they had budgeted for. He asked what progress had been made regarding houses for veterans. Regarding the disputes among beneficiaries, he asked the Department if they had helped to resolve them.

Mr K Sithole (ANC) said there was a need to name and shame officials who were responsible for the failure to reach the target of 23 000 housing units. He asked what plans were in place to address the underspending in the provinces. He observed that the report was also misleading in that it gave an impression that Limpopo had improved and yet their recorded performance could be attributed to budgetary cuts.
On Gauteng, he said the bulk of the money goes to Gauteng because the population of Gauteng was 12 million. The informal settlements that were growing were in Gauteng and yet the City and Province were failing to spend money meant for housing. On the excuse that Gauteng had problems with capacity, he disputed this saying that Gauteng was the most endowed province concerning capacity with plenty of professionals.
He expressed concern about the report from the City of Johannesburg recalling that the Committee went there on an oversight visit and many promises were made. He expressed exasperation that the provincial officials and city officials could not even collaborate.  He implored the Minister to intervene in Gauteng as it was the hub of the country. Even the city of Tshwane was experiencing growth in informal settlements and had never been the case before.

Mr M Malatsi (DA) said his frustration with the presentations was that they were dealing with submissions of people who were not there previously regarding the engagements that they had. In as much as the issues were the same, it was partly unfair on the MMC and the Acting Executive Director of the City of Johannesburg as they were not privy to the previous engagement and could not be in a position to chart a way forward on the commitments that had been made by their predecessors. They were literally back to square one. He believed the Committee had engaged with the city as far as they could and that perhaps the time was right to elevate the discussion so that they could deal with the challenges that were there.
There was a sense of helplessness from the presentations regarding the magnitude of challenges that they faced or the veracity of the situation they were in. It was no comfort to him when there was no sense of how they planned to turn the tide. The problems and challenges were not new and to have a breakthrough, there was a need to have engagements at mayoral level and MMC level. There was a need to be less diplomatic and deal with the political principals that were ultimately accountable in the two spheres of government. This was the second engagement with the administrative component of the City of Johannesburg and there was need to deal with the problems at the political level. The most important thing was improving housing delivery in the City of Johannesburg and the Province of Gauteng regardless of the parties in government and who the personalities are. The Committee had been very kind concerning observance of procedures and those had now been exhausted. It was becoming increasingly uncomfortable for officials and that was why no headway was being made.

Mr M Wolmarans (ANC) said what Mr Malatsi referred to as a comment was actually frustration. The only positive about the City of Johannesburg was that communication was improving with the province. Most of the challenges could have been avoided if there had been proper communication. However, there were still outstanding issues regarding communication because the Executive Director said he had only been notified of the meeting a few days earlier and he was not informed of a certain aspect of the report. There is a 10 percent deficit between what the Department wanted to achieve which was 68 percent and the current position. He was doubtful that it could happen in the 25 days that were left. The City and the province were doing a disservice to the Department. In many respects, the Department was performing functions that were supposed to be done by the province and the city. There was a request that some things should be done and a meeting that took place addressed some of them, including the lack of capacity within the city. On the title deeds, there was mention of a panel that had been constituted to address the problems and he asked what its composition was and whether it had competent people.

The Chairperson interjected and said a project was established called Title Deeds Project.

Mr Wolmarans argued that if the issues regarding title deeds that were identified in the presentation were not addressed, even that project would be hampered. The Department needed to be hard on the implementers of the project. He was coming from a province that was known for section 100 and perhaps they also needed to do a section 100. The Department also needed to go back to the issue of paying contractors a lot of money at foundation level. Most projects were at the level of slabs and there was problem with getting the bricks and mortar up. The money that is disbursed at slab level needed to be reviewed.

The Chairperson said some delegates were wondering, Mr Wolmarans hails from the North-West and that was why he was talking about section 100.

Ms K Hlonyana (EFF) said she was going to give the department a break but she wanted to speak about the Gauteng Government. She was not happy when they informed the Committee that on the title deeds they were not having any beneficiaries as that did not make sense. The Department should just concentrate on finding these people.
On the targets and deliverables, it was scary when they themselves set the targets and then achieved zero and that did not make any sense. She was going to tell them what she said to the North-West Province when they appeared before the Committee that if they were going to fail to deliver services to the people it was better to resign so that other people could take over and people get their expected services. Housing was the most important social service and the more they failed the more they put people in shacks. She could not understand how they could come and show their targets and show zero performance. What did they expect the members to do? The Gauteng Government had not just failed but failed dismally. Zero! When you realise you are failing the people of South Africa just go and get another job. The City of Johannesburg was given a development grant and even failed to spend half of it. She did not know what the Department should do in this particular case. The Department gave the city money and the city failed to spend it so what was the Department supposed to do?
She understood that the MMC was new but the rest of the staff were not new. It was a huge problem as Johannesburg was host to the largest informal settlement. It is true that Joe Slovo had been electrified but the rest of the people had no services. Some people have been given title deeds and the mayor has been parading those title deeds in the media. She wanted to give an example of the new flats that had been built in Devlin and they were a disaster as people started breaking windows. She could not understand their system of placing people. There were people striking and they ended up destroying the properties that the city had built. The flats had been standing unoccupied for a long time and she could not understand what was happening with their list because people should have known who was going to reside in those flats. There was now a crisis in Ward 24.
She warned the MMC that the Red Ants, who were the reason his predecessor ended up leaving, were not wanted by the EFF in the city of Johannesburg. The Red Ants had killed people and there was still no news about how their families were going to be compensated in Lenasia. She was issuing a warning to the city of Johannesburg to stay away from the Red Ants. There was still no news about the city official who approved the Red Ants without the city’s permission. There was still no report as to what exactly had happened to that official. She wanted to know whether the official was still employed by the city. She implored all the departments to pull up their socks as the conditions in which the people were living was traumatising, but the officials were fine because they lived in nice warm houses. Parliament was not going to beg them to do their jobs. It was better for them to leave rather than be fired.

Mr M Shelembe (NFP) said there was a perception that the relationship between the COJ and Gauteng Province was not good, and he asked the national department whether that relationship was worsening or improving. On the budget re-alignment by the province of Gauteng and information that funds were being shifted to performing projects, he asked what would happen to the communities where projects had failed, and funds had been diverted elsewhere because budgets were drafted based on the needs pf particular communities. What would happen to those communities that had been promised services and what would be the implications for local government elections? There was no information as to what would happen to those failed projects and whether there were any turnaround strategies being put in place. Moving funds from non- performing projects to performing projects was not sufficient.
The DHS had also indicated that working on informal settlements to provide services was proving to be a challenge because the Water and Sanitation Department was moving very slow to service these areas. He asked whether there were no prior arrangements to avert the delays.
On the missing beneficiaries, it was not just an issue for Gauteng as it was happening in all the provinces and there was information that Gauteng Province was in communication with the Department of Justice to address this problem. He asked whether a uniform system to address the problem of missing beneficiaries as being devised for the whole country.
 On the zero achieved targets, he asked which informal settlements were involved so that they could understand better what was happening in Gauteng.
On contracts, it was important to provide information on when contracts were signed and their duration so that delays could be identified, whether they happened at the stage of advertising tenders or during a stage in the implementation process. Reports just indicate how much has been spent without information on the stages.

Ms B Mabe (ANC) said she would quote the preamble of Mr Khoarai that the people could not wait anymore as they had been kept waiting for too long. They had the capacity and resources to deliver but it was not clear if there was a will from the department and provinces and city. Listening to the presentation by the Department, it sounded like a newly established department, yet it was established 24 years ago. The report was depressing with challenges regarding basic matters like compliance and legislation. The Department should have long gone past that. The Gauteng Department should lead by example as they claimed to be a smart province. They needed to plan in a smart way and implement in a smart way.
One of the issues that was lacking in the Department was thinking outside the box as they were married to the old style of service delivery. She wondered how they could complain about project management when they had 8 universities in the area. They could easily make use of so many unemployed graduates in Gauteng.
 A burning issue was the distribution of land without compensation which the Department had not reported about it in the presentation. Service land was among the most vulnerable and targeted land when there were land grabs. She advised that their policies needed to address that challenge.
She advised that Parliament needed to move towards declaring the failure to spend budgets as a crime against humanity because it was the worst form of injustice. It was worse than apartheid.
Addressing the Deputy Minister, she said they could not afford rollovers. The departments needed to be realistic in the requests they were making for funding. If they were unable to spend money, they should not ask for that money to be sent back to them.
She appreciated the intervention by Parliament, especially on COJ. She suggested that this be considered as a pilot project and then address other cities like Ekurhuleni and Tshwane in the same way.

Having listened to the COJ presentation, the main issues were just management issues. The other municipalities needed to be given the opportunity to air their frustrations. On work programme focus areas, she was not sure whether the programmes were ordered in terms of priority. She wondered why they chose planning as the first challenge and then have institutional capacity as number 7. For her, everything revolved around institutional capacity and that was where the problems were coming from and that was where they needed to start if they were to address the challenges constructively. One positive thing though was that they were considering aligning the budget with the IDP and it would ease a lot of tension on the ground. She requested the Chairperson to facilitate political engagement with the assistance of the Deputy Minister. Aligning the provincial budget with the IDP would be helpful.

On municipal infrastructure, she asked whether they had the capacity to trace how funds that had been transferred were utilised. A lot of municipalities were in a financial crisis and there was a risk that the funds could be diverted to pay for other commitments such as salaries. She asked how those funds could be recouped in case of misapplication and whether the Department received periodic reports about the utilisation of the funds. She asked whether they had times frames in which the transferred funds had to be spent. The reason why there were rollovers was because the utilisation of the funds was not being monitored

Mr M Bara (DA) asked why out of the 75 informal settlements planned for upgrading only 9 had been completed. He asked the reasons behind this. On the 600 military veterans, 408 are not yet housed and he asked what challenges the Department was facing.
Regarding Gauteng, he wanted to know the purpose of the rollover and what forms the basis of approval in a province that has failed to spend. There is a task team by the national department to assist Gauteng deliver housing and he asked if it had made any progress. The COJ took the easy route of the change of guard without diagnosing what the real issues were. Removing people does not necessarily mean a problem is resolved. The new people that have come in will still have to deal with the problems that were left behind by the former officials. He sensed that Gauteng Province was taking ownership of the problems. Success of the COJ translates into the success of the province at large so the province needs to own the problem. The finger cannot be pointed at the national department because they are doing their best, but they are let down by the provinces and the metros. Listening to a presentation that was looking for excuses was not helpful because the province was not taking ownership. They did not offer solutions but just gave a list of challenges. It is either there is a lack of political will from both Gauteng and COJ or they are unable to deliver the projects that have been entrusted to them.

Ms M Nkadimeng (ANC) sought clarity on the provinces that were doing well and those that were not doing well. The DG reported that it was Gauteng, Limpopo and North-West that were not doing well but information in the presentation also indicated that Limpopo was doing well and the Northern Cape was not doing well. The issue of the title was an old one dating back to 1994 and there was a need to make progress and the false reports about registration of the title deeds by the provinces was alarming. She asked which provinces gave false information and the consequence management plans that were going to be effected on the erring officials. Gauteng was underspending and yet there was a huge influx of people moving from the rural areas to the province because of its economy. Even more serious is the transfer of the funds to HDA very late in March. She asked what they expected HDA to do in the short space of time. She expressed disappointment that COJ officials and Gauteng Province officials failed to meet to iron out their problems and collaborate more even after the Committee had requested that they do so.

The Chairperson raised a concern about monies that were being transferred to HDA because it was being used as a dumping ground. It is true that HDA is an implementing agency, but it was being abused. Gauteng reported that they had projects that were not registered with the National Home Builders Registration Council (NHBRC) and they were dealing with the issue. It is such a grave matter that should not be glossed over because it was evidence of lack of compliance. If that matter affects Gauteng then it means the COJ is also affected. She asked how big the problem was.
The Committee was uneasy concerning the performance of the Social Housing Regulatory Authority (SHRA) who informed the Committee that the biggest number of social housing projects was in Gauteng and they indicated that the number was 47. She requested the Department to give an indication of how this matter was going to be resolved. When the budget vote took place, information received was that the bulk of service providers were not being paid within 30 days. She asked whether they were being told lies because they just reported that they were doing well with paying of service providers. One area of lies that has been confirmed is that of title deeds where it was disclosed that provinces gave the false figure of 80 000 registered title deeds against the true figure of 41 000.
Concerning performance, Gauteng achieved 52 percent of its targets, which includes the COJ, but expenditure was at 98 percent. The reason is because even the money that was transferred to HDA was considered as expenditure which was tantamount to hiding information. Indicating that performance was at 52 percent then stating that 98 percent of the funds had been expended did not tally. The manner of reporting needed to be changed so that accurate information was reflected.
The ED of Johannesburg had indicated that communication is starting between the province and the city but the HOD of Gauteng reported that one of the major problems that they had was the implementation protocols with the metros that have not yet been signed which was impacting on projects negatively. What is the real status regarding the protocols. The Committee was not interested in rosy stories but hard facts.

City of Johannesburg reported that it was not possible to appoint using the regular tender procedures for some projects, so it was going to use section 32. Pipeline planning was the best. The Department had earlier indicated that it was not approving business plans of provinces without pipeline planning. One would expect that to continue and yet COJ is going ahead with section 32 which was praise worthy. When section 32 is used it means someone has not done their job from the beginning. The city of Johannesburg reports that it will achieve 68 percent performance from 52 with the remaining 25 days and we are meant to be happy? She asked why they were taking the Committee for granted. She expected the DG, HOD and ED to explain how they expected to turn things around and not just to explain problems.
She agreed with Mr Malatsi’s suggestion that the problems of Gauteng and COJ need to be elevated but that they would have to work out the modalities later and that if it was up to her they would both be placed under administration. The Committee needed practicalities of how to turn things around. The people were suffering and the officials were making it difficult for the politicians to campaign in Johannesburg by their ineptitude. The officials were people earning big money for doing nothing. She asked what the politicians should tell the people of Johannesburg during the campaigns. That money was given to the city, but they failed to spend it? No! She urged the officials to wake up because they were in trouble in Gauteng. She asked them whether they were doing things deliberately. She asked the DG to respond.

The Deputy Minister, Ms Zoe Kota-Fredericks, interjected joking that she wanted the DG to be given time to breathe. She said she welcomed the new team in Johannesburg and declared that Thabo Maisela and she did a course which was organised by National Treasury with the Gibbs Institute and she hoped that this would help him do the work of government. One of the things that was practical regarding problematic situations was the importance of developing a plan ensuring that the Province of Gauteng and the City of Johannesburg get out of the cobweb they were caught in. The issue of the improvement of relations could not be postponed. Building houses without public participation would result in lost beneficiaries. It was crucial, therefore, that there was a cordial relationship between the city and the province and she hoped they would improve the relations because they had verbally committed themselves to doing so.
Money dumping was a concern because if the money sent to HDA was not properly defined, then it was fiscal dumping but if there was a clear programme of implementation then that would be fine. There would also be need for regular reports to the Committee about how the money transferred to the HDA was being applied. It was also important to establish timeframes for projects for both Gauteng and COJ. She did not understand the request from the HOD of Gauteng for a rollover when they had failed to expend money provided for their budget. The request did not sound right and there was a need for clarification.

The DG, Mr Tshangana, acknowledged that all the questions were relevant, and they understood the concerns of the Committee and that they were extremely frustrated themselves because their job was to ensure that they fix everything. South Africa was the biggest economy on the continent and yet they were complaining about capacity. Gauteng had the biggest contractors and the biggest number of professionals, and the question was where was the capacity issue coming from?
Regarding the question of what should be done about the problems, the Department had tried to do an assessment and realised that part of the problem was strategic at the decision-making level which was why they had presented to MINMEC that there was a need to deploy as a matter of urgency highly capacitated individuals both to the provinces and the metros as all of them were struggling even though Johannesburg is the most affected. A resolution had already been presented to MINMEC and the MEC for Human Settlements in Gauteng was present. They were convinced that they did not have the right technical people within the Department.
Synchronising the working relationship between the national, provincial and municipal level was important. The Department of Human Settlements in Gauteng had more staff than any other department with more than 1000 people. The problem could be resolved as long as the right people were placed in the right positions. The right programme and project managers were also important in the regions to help run the projects. For the majority of projects in Gauteng, the contractors were on site. The biggest risk is always when you start a year and the contractors are not on site then it means you are still spending time on procurement issues. In Gauteng last year and this year, the majority of contractors were on site. In the past, they used to target contractors with high capacity, that is, those that had cash flow. Contractors that have financial muscle and could work on risk were better for the purpose of having uninterrupted projects as they could use their own resources and then be paid later.
A projection was made at the MINMEC meeting that Gauteng was not going to spend R800 million and a recommendation was made that the province needed to scale up on those projects. When big contractors are on site they could be asked to do the work and the legal departments could be asked to have addendums to the existing contracts done to scale up the work so that money was not lost. Implementation protocols have been signed on some the big projects with the HOD and ED. There was no capacity problem in the province.
On the title deeds, the AG had flagged the issue and the Department became guilty by association. What the AG said is that what is reported in the annual report by the Department is different from what the provinces report. Somebody was misleading somebody else. The Department decided that they would not report without audit evidence.

Ms Matilda Gasela, HOD, Gauteng, said to pretend that there were no problems would be a serious mistake. There were serious problems of lack of performance, and problems which date back as far as 2014. The province has not been performing since 2014. She maintained that there were problems of institutional capacity in the province. There are hospitals in human settlement areas without medical personnel like doctors and that was a fact. A skills audit was done in the Department and 80 percent of the people in the Department do not have the skills in the built environment. Unless this was addressed, the Department was not going to turn around. A service provider has been engaged to help with this process because they cannot just move people around because some have risen through the ranks and even served for as many as 20 years. They have established a timeframe that by August 2018 they must have completed the process.

There are also serious problems with the regions regarding alignment. A resolution was made to do away with some of the regions because they have been problematic. They have also been working on enhancing their planning because it has been a challenge in the Department. There have also been service providers in the Department who have had Evergreen contracts who themselves are not performing because they have been associated with the Department for so long. Some contractors have had contracts with the Department since 2002 and they have multi-year contracts which keep on being renewed.
What was needed in the province was a comprehensive intervention strategy. It was not sufficient to just deal with the capacity of officials. There are also issues of bulk infrastructure where it is difficult for the province to account for all the houses that have been built. Those issues are connected to planning and sometimes buildings are erected when it is not ideal to build. A project readiness matrix is now being applied so a project that is not ready is not approved.
On the rollover, the fact that the province was not able to pay by the end of March did not mean that the money was not committed. There were service providers that should have been paid and were not paid. There was going to be a situation where accruals were going to increase if the rollover was not approved. There were accruals in the Department like in the area of security which have already been highlighted.
The relationship with the City of Johannesburg has been a disaster. Before the appointment of Mr Maisela, the person who was ED never responded to the attempts by the province to communicate.

Mr Thabo Maisela, Acting Executive Director, acknowledged that communication was a problem and that they had undertaken to improve relations. Regarding regulation 32, it was something that the city itself frowned upon but because of the inaction it was decided to pursue that route because going through the procurement processes would have taken a very long time. The city was aware that it was right at the end of the financial year, so these were interventions that were not just meant to assist the city to improve expenditure, and with accruals at most they would spend only about R2 million. It was a move meant to assist the appointment of contractors on the ground to avoid further delays for the coming financial year. The one comfort was that they were not going outside the city with this panel of contractors. There is an entity in the city called the Johannesburg Property Company which has a panel of contractors that the city will tap into so they were not going outside the city to acquire these resources. On the achievement of 68 percent performance, it was the only realistic figure because it was impossible to spend more money to reach the 100 percent target with the short time that was left in the financial year.

The Deputy Minister said they would work hard to ensure that things improved in the Department.

The Chairperson thanked everyone for their presence and contributions and wished them well.

The meeting was adjourned.

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