Department of Human Settlements 2017/18 Annual Report, with AGSA & DPME and Minister & Deputy Minister present

Human Settlements, Water and Sanitation

09 October 2018
Chairperson: Ms N Mafu (ANC)
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Meeting Summary

Annual Reports 2017/18 

The Department of Human Settlements presented its 2017/18 Annual Report. Prior to the briefing the Office of the Auditor General of South Africa (AGSA) and the Department of Planning, Monitoring and Evaluation (DPME) presented on the audit outcome and the performance of the housing portfolio respectively.

The AGSA reported that in terms of performance, the DOHS had remained constant while the CSOS (Community Schemes Ombud Services) and NHBRC (National Home Builders Registration Council) had regressed. The NHFC (National Housing Finance Corporation) was given an outstanding audit. The status of internal control, leadership, financial and performance management and governance remain unchanged. There was irregular expenditure of R4.6 million and R26.7 million at the NHBRC and CSOS respectively. There was also fruitless and wasteful expenditure in: The DOHS rented vehicles when they were used as Departmental vehicles; the NHBRC on work that needed to be re-performed on an Eastern Cape Provincial DOHS project of 9.5million and the suspension of executives which was 4.9 million; the CSOS value added tax (VAT) paid to entities not VAT registered, flights paid and booked for but not taken, and cancellation of tenders. Irregular expenditure increased from R22 million to R31.2 million which was a 42% increase. R31 million 1% (R0,3 million) of the irregular expenditure was payments and/or expenses incurred in previous years but only uncovered and disclosed for the first time in 2017/18. 99% (R30.8 million) of the irregular expenditure represents non-compliance in 2017-18. R20.7million. 21% of the R 31.2 million represents non-compliance of SCM prescripts in 2017-18. No auditees had findings on non-compliance with legislation on consequence management. There were allegations of financial and/or fraud and SCM misconduct from three auditees. The root causes of these were that management i.e. accounting officers and senior management did not respond in the manner required to emphasise the urgency of the messages about addressing the risks, key controls and improving internal controls.

The Department of Planning Monitoring and Evaluation (DPME) reported that an evaluation synthesis which looks at asset creation and access to the City was used to assess the suite of housing interventions that shaped sustainable human settlement outcomes. The generalised findings have been completed. The Economic Evaluation Affordable housing market policy/programme final report was up for publication. On design evaluation of the urban settlements there is a development grant which has been completed. The Informal Settlements Upgrading Programme had quite a number of successful bidders but has been re-advertised. The Management Performance Assessment Tool (MPAT) assesses key management practices which enable government institutions to deliver on their mandate i.e. people, processes, policies, systems etc. across four Key Performance Areas: strategic management; governance and accountability; human resource management; and financial management. The Department scored better in strategic management at an average score of 2.8 overall. The Departments’ performance for this key performance area has been consistently improving since the 2015 assessment cycle. The Department did not provide any evidence to be assessed in terms of its Service Delivery Plan and Service Charter in line with Section 38 of the Public Service Regulations and thus scored at a L1 since 2015. The Department scored at a 2, 3 for its HR Management area in the 2017 assessment. The overall MPAT results for the Human Resource Management KPA regressed slightly from 2016 from 2.4 to 2.3 in 2017. On the whole the Department scored better in Financial Management at an average score of 2.8. The Department is compliant in all standards except that that it was struggling to pay all their suppliers within 30 days.

Members asked what the Department thought needed to be done in order to elevate performance; in the event targets were not achieved, what mechanisms could be put in place to anticipate delays; what were the problems that were causing the regression in some areas; and what were the problems that were identified for struggling to pay suppliers within the 30 day period.

The Department of Human Settlements (DoHS) reported that 95,6% of valid invoices were paid within 30 days because of unresolved invoice discrepancies, the delay in submission of invoices and system errors in respect of processing the transactions successfully; there was 100% adherence to the schedules of Parliament, Cabinet, FOSAD and Management; there was 81% implementation of the approved Internal Audit Plan; here was 97% implementation of the approved risk management plan; there was 61% implementation of the approved Departmental anti-fraud and corruption plan; there was 82% implementation of the Human Resource Plan; there were 101 students under the Oliver Tambo Scholarship  which consisted of  : 14 doing the Bachelor of Human Settlements Degree,  42 studying Civil Engineering, 19 studying Building, 19 studying Surveying, two were studying Town and Regional Planning, and 01 person was studying Construction Studies; numbers for the National Diploma (ND): Architectural Technology was 01, two for the Bridging Course: Mechanical Engineering and one for Geotechnical Engineering .

In summary some of the delivery targets not achieved included re-zoning of well-located land; Issuing of title deeds (pre-and post-1994 and for new subsidy houses); assessment of municipalities for accreditation; Assessment of informal settlements; Mobilisation of partnerships towards Human Settlements Development; Implementation of catalytic projects; Development of Informal settlement upgrading plans; and Upgrading of households in informal settlements. On the areas that required attention for improved performance, the Department is in the process of consulting with the National Treasury and the DPME to ensure improvement in managing within the current concurrency in budgeting and the planning and performance reporting process. The Department has instituted an improved IGR contracting process with sector partners in order to address recurring audit findings about insufficient supporting evidence for the achievement of the targets, systems and processes to verify the accuracy and reliability of specific reported achievements. The Departments’ future plans included: accelerate the planning and implementation of the informal settlements upgrading programme; and accelerate the issuing of title deeds through the Title Deeds Restoration Programme. In progress was finalising the drafting and promulgation of the following pieces of legislation: Property Practitioners Bill, 2018; Home Loan and Mortgage Disclosure Amendment Bill, 2018 (HLAMDA); Housing Consumer Protection Bill, 2017; Human Settlements Development Bank Bill, 2017; Human Settlements Bill; Prevention of Illegal Eviction and Unlawful Occupation Amendment Bill.

Members asked why there were invoices to service providers that had not been paid within 30 days and  what was the cause of the delay; looking at the time left was it possible for some of the targets to be achieved; why was such a long time taken to undertake suspensions; how best to assist the three provinces who were underperforming; how and when was the situation around housing military veterans going to be sorted out and an explanation for the cost increases in the Oliver Thambo Scholarship.

 A Member from the ANC stated that the AG had reported that there was a lack of consequent management where for example with fruitless expenditure a car was hired for the Minister worth R1 million and no corrective measures or criminal proceedings were taken. Members were curious as to why three provinces were not performing and why the issue of military veterans was an issue that had been on this table for such a long time. A DA member lamented the fact that CSOS and NHBRC had completely broken down and there was a need to have a robust engagement around this so as to make them accountable. The Members also questioned why there was a cost increase for the Oliver Tambo Scholarship and whether there was value for money because  out of the 101 recipients, how many would be absorbed into the Department and its entities to make sure that the investment was profitable. Members were curious as to why the final Annual Report by the Department did not contain any strategies for dealing with informal settlements. Members heard that there were reports that come from provinces after an audit had already been done, while the rest was due to the unwillingness of provinces to deliver required information which made the Department look bad when it was actually performing. The Committee observed that the cause attributing to the failure of the Department was the concurrent nature of managing things in the Department and its entities. The Members noted that some of them might not be here next year and were unhappy about the fact that the Department could not meet the 30% target for tenders to women and youth and they asked what the reason was for this.

 

Meeting report

The Chairperson welcomed members of the Committee, officials from the Department, presenters, guests and staff. The purpose of the meeting was to obtain briefings from the Auditor General of South Africa (AGSA), the Public Finance Management Act (PFMA) 2017/18 Budgetary Review and Recommendation Report; Report by the Department of Planning, Monitoring and Evaluation (DPME); and the Department of Human Settlements (DOHS) Annual Performance Report Financial Year 2017/18.  The AGSA were invited to present after which, Members would ask clarifying questions on any issues they did not understand or about which they needed explanations. This presentation was important as the Department would be arriving later in the afternoon and the AGSA would help the Committee to be aware of some of the areas where questions needed to be asked.

The AGSA PFMA 2017/18 Budgetary Review and Recommendation Report briefing

Mr Londoloza Songweru, Senior Manager, AGSA, presented the PFMA 2017/18 Budgetary Review and Recommendation Report and stated that the AGSA had a reputation promise. The AGSA has a constitutional mandate and, as the Supreme Audit Institution of South Africa (SAI), it exists to strengthen the country’s democracy by enabling oversight, accountability and governance in the public sector through auditing. The role of the AGSA in the reporting process is to reflect on the audit work performed to assist the Portfolio Committee in its oversight role of assessing the performance of the entities taking into consideration the objective of the Committee to produce a Budgetary Review and Recommendations Report (BRRR). The annual audit examines three areas: reliability of financial information; performance information; and legislation on financial fair presentation and reliable and credible compliance with key statements for predetermined and performance objectives management.

The AGSA expresses the following different audit opinions; unqualified opinion with no findings which is a clean audit; a financially unqualified opinion with findings; a qualified opinion; an adverse opinion; and lastly a disclaimed opinion. The percentages in this presentation are calculated based on the completed audits of three auditees, unless indicated otherwise. The overall audit outcomes are indicated as follows: Qualified with findings; Adverse with findings; Disclaimed with findings; and Audits outstanding. Movement over the previous year is depicted as follows: green is improved, orange is unchanged and red is regressed. The DOHS movement remains unchanged while the CSOS (Community Schemes Ombud services) and NHBRC (National Home Builders Registration Council) have regressed. The cycle is as follows ‘accountability equals plan plus do plus check plus act’.  On the status of audits outstanding as at 31 August 2018 there is the NHFC (National Housing Finance Corporation). This was previously performed by Nkonki Inc. and was taken back by the AGSA in the current year, and it received an outstanding audit.

On the status of internal control, leadership, financial and performance management and governance remain unchanged.  The required preventative or detective controls were in place. Progress was made on implementing preventative or detective controls, but improvement is still required. Under management and delivery on key programmes there is spending, performance and reporting. Under programme housing development finance, the budget spent was 100% and there were no material misstatements or unauthorised, irregular and fruitless and wasteful expenditure. On financial health and financial management there are two or less unfavourable indicators. There is no indication that the portfolio’s financial health and service delivery may be at risk. There was significant doubt that operations can continue in future and/or auditee received a disclaimed or adverse opinion, which meant that the financial statements were not reliable enough for analyses.

Unauthorised, irregular as well as fruitless and wasteful expenditure decreased over five years. There was irregular expenditure at the NHBRC and CSOS to the tune of R4.6 million and R26.7 million respectively. There was also fruitless and wasteful expenditure in: The DOHS rented vehicles when they were departmental vehicles; the NHBRC on work that needed to be re-performed on an Eastern Cape Provincial DOHS project of 9.5million and the suspension of executives which was 4.9 million; the CSOS VAT paid to entities not VAT registered, flights paid and booked for but not taken and the cancellation of tenders. Irregular expenditure increased from R22 million to R31.2 million which was a 42% increase. R31 million 1% (R0, 3 million) of the irregular expenditure was payments and/or expenses in previous years only uncovered and disclosed for the first time in 2017/18. 99% (R30.8 million) of the irregular expenditure represents non-compliance in 2017-18. R20.7million 21% of the R 31.2 million represents non-compliance of SCM prescripts in 2017-18.

Most common findings on supply chain management indicated that there was fraud and consequence management. No auditees had findings on non-compliance with legislation on consequence management. There were allegations of financial and/or fraud and SCM misconduct from three auditees. The root causes of these were that management i.e. accounting officers and senior management did not respond with the required behaviour to improve urgent action on our messages about addressing risks and key controls and improving internal controls. Adequate reviews to be performed on the annual financial statements and supporting schedules submitted for the audit to detect and correct material misstatements timeously. Management to ensure that adequate and reliable supporting documentation is collected and retained as supporting evidence of all reported achievement of targets. Entity to establish processes to enable the preparation of regular, accurate and complete financial and performance reports that are supported by reliable information. The Department still does not have customised sector indicators to ensure consistency between performance targets and indicators reported on national and provincial levels. This does not enable the performance information to be easily reconciled and consolidated as there is no customised format for sector specific indicators.

Discussion

The Chairperson thanked the office of the AGSA for the in-depth presentation. He said this report is a report to enable Members to arm themselves for the Department who was coming in the afternoon. It gives Members the fighting tools. So what Members would do now is just to ask for questions of clarity if any. Members were invited to give their comments. It seemed that the presentation was very clear and Members did not have any clarification questions. In the presentation, it was mentioned that the NHFC was part of the entities being audited.  It is noted that this entity was done post-auditing i.e. after the auditing time which is past July. Is that by any chance a fault on the part of the AGSA or is it because they came late? This is so that when we interact with them tomorrow we don’t penalise them for something that they did not do. Second is the issue of the indicators. This was mentioned even during the presentation last year which was the fact that the indicators were not customised. In the interactions with the Department - because the finding last year was the same as this year- how does the Department clarify themselves so that there was a clear sense of what was going on?

Ms Connie Myburgh, Business Executive (BE), AGSA, replied that due to the sensitivity of national entity auditing, it was only in April that there were stories in the media that reflected on the ability of the whole auditing process. So it was quite difficult to get capacity and to make sure that the quality of the audit was without any question. So the delay was caused by the AG so as to make sure that the quality of the work was excellent.

Mr Songwero also added that the Department clarified by providing reasons how the national department itself from a legal point of view does not have the powers to instruct the provinces in terms of APPs, and the Department has to apply this to provinces. This always comes back on them. The second one is that the Department then tries to use the business plan to ensure that at least their indicators are taken care of at the provincial level. However, this also becomes a challenge because it becomes very difficult for the national department itself to verify the information. This is partly due to the fact that the Department itself does not know what has to be submitted from the provinces. So it is not just the auditors who have a problem obtaining appropriate evidence from the Department, the Department itself does not get sufficient or appropriate information from the provinces in order to support their actions as per their annual financial report.

The Chairperson thanked the AGSA for availing themselves to the Committee. Their role according to the Portfolio Committee was to strengthen its oversight role. It was comforting to see in the assurance assessment that there was acknowledgement of the important relationship with the Committee.  The presentation gives Members more information and more power to be able to engage with the Department and the Department’s entities. One can say that the Committee has been given a crash course. The areas that needed interrogation were already provided and the Committee appreciated this.

The Department of Planning, Monitoring and Evaluation (DPME) briefing

Mr Hassen Mohamed, DDG, DPME, stated that his presentation would contextualise Human Settlements within the National Development Plan (NDP), give an overview of performance targets against MTSF 2014/2019 priorities and give MPAT Assessment Results. The NDP 2030 goals pivot on inclusive growth aimed at eradicating absolute poverty from 39% of people living below the poverty line of R419 (2009 prices) to zero; reduce unemployment rate to 6% by creating 11 million more jobs by 2030; and significantly reduce inequality from 0.69 to a 0.60 Gini coefficient through a range of policy interventions. The key levers for implementing NDP 2030 are; quality basic education; a long and healthy life for all; all South Africans feeling safe; responsive, accountable, system-effective, and efficient local government sustainable human settlements and an improved quality of household life; social protection; economic interventions; decent employment through inclusive economic growth; a skilled and capable workforce to support an inclusive growth path; an efficient, competitive and responsive economic infrastructure network; and  comprehensive rural development and food security. There is also: environmental assets and natural resources that are valued, protected, and continually enhanced the capabilities of South African; create a better South Africa, a better Africa and a better world; an efficient, effective and development-oriented public service; and nation building and social cohesion.

On sustainable human settlements and improved quality of household life the strategic intent is in MTSF which directs the MTEF to: break apartheid spatial patterns through improved coordinated spatial planning and investment in the built environment; build and retrofit settlements to offer all South Africans access to adequate housing in a better living environment; and enable a functionally equitable residential property market. MTSF outcome 8 performance targets 2017/2018 on housing Intervention/MTSF Indicators: the first is the upgrading of 2 200 informal settlements where the five year target is to hit 750 000 households. The four year performance as at 31st March 2018 was 555 235 which is 74% with an annual target of 150 000 compared to an actual performance of 89 670. For free hold ownership units with a five year target of 563 000 units, and a four year performance at 31st March 2018 had 370 257 units, and this was 82% with an annual target of 112 000. The target achieved was 86 131. Title deeds transferred amounted to 54% while development finance for affordable/gap housing comprising DFI + Banks which is a re-functional market was at 11.6%. For Integrated Settlement development (land and integrated projects) the MSP had 50 catalytic projects.

For assessing the suite of housing interventions that shape sustainable human settlement outcomes the DPME uses an evaluation synthesis which looks at asset creation & access to the City. The generalised findings have been completed. The Economic Evaluation Affordable housing market policy/programme final report is up for publication. On design evaluation of the urban settlements there is a development Grant which that has been completed. Informal Settlements Upgrading programme had quite a number of successful bidders which was eight but it has been re-advertised. The Management Performance Assessment Tool (MPAT) assesses key management practices which enable government institutions to deliver on their mandate i.e. people, processes, policies, systems etc. across four Key Performance Areas: strategic management; governance and accountability; human resource management; and financial management. The Department scored better in strategic management at an average score of 2.8. The Departments’ performance for this key performance area has been consistently improving since the 2015 assessment cycle. Overall, the Department scored at a L2 for the Governance areas. The Department did not provide any evidence to be assessed in terms of its Service Delivery Plan and Service Charter in line with Section 38 of the Public Service Regulations and thus scored at a L1 since 2015. T Department scored at 2.3 for its HR Management area in the 2017 assessment. The overall MPAT results for the Human Resource Management KPA regressed slightly from 2016 which was from 2.4 to 2.3 in 2017. Overall, the Department scored better in Financial Management at an average score of 2.8. On the whole the Department is compliant in all standards except that due to various reasons, the Department is struggling to pay all suppliers within 30 days.

Discussion

The Chairperson thanked the DPME for its presentation and acknowledged the presence of the DoHS.  Members were asked to provide their comments or ask questions.

Ms P Mabe (ANC) thanked the Department for its presentation. Her main issue was that the DPME should also tell Members what their role was in making sure that departments adhered to quality standards in the work that they did and where there was non-performance, what were the remedial actions that were available. The other issue is on the management assessment plan (MAP) tool which really assists in knowing whether government entities are working or not. The way it has been presented, the format is, for example whether if it can be zoned in to the DoHS. Because if you say they scored 2.3, this is 2.3 versus what? You should change the format so that one was able to engage with the presentation and the Department meaningfully.

Mr Malatse (ANC) thanked the Department for its presentation and his question was along the same lines as that of Honourable Mabe. He was trying to make sense from the presentation especially on the figures in terms of the Departments’ performance. My first question is given that one was at the final stages of the MTS period, so what does the Department think needs to be done in order to elevate performance and two, in the event that the targets were not achieved, what mechanisms can be put in place so that when targets are set one is able to anticipate any delays that may arise? Also, what needs to be done to elevate the Departments performance given the spending trends and it did not seem that resources were a problem.

Mr D Kabini (ANC) stated that while he also sang the song of welcoming the presentation which was very good, however, one is tempted to ask the question on the Outcome 8 performance study, where it seems that there is improvement in some areas and in some there is not. What are the problems that are causing the regression part of it?

Mr M Bara (DA) added that his question was in line with what Honourable Mabe was raising. Specifically he was trying to understand what the Department does. Does it do the assessment at the end or is it done early which would lead to interventions before the end. Is their monitoring by the Department during the period or just the end? The second one is on title deeds where there is poor performance which has also been noted by the AG. What are the problems that this Department has identified as the root cause in this area?  One of the key areas discovered is that the Department was struggling to pay suppliers within 30 days. Have you identified what the problems are?

Mr M Wolmarans (ANC) said that while the questions asked by Members have sufficiently covering everything, it is important to insist on period monitoring so as to come up with better results. Notably, the report of the AG is similar to the Department so while noting the areas of improvement; it still noted that on the whole there was a problem. So in line with that, what are your recommendations on what needs to be done in line with periodic interventions?

The Chairperson noted that the presentation was very good in deed. But what is lacking- and which is something that the Department might want to have- is the impact which refers to the role of the Department. This is because this Department deals with research of information so this information must be useful. A projection was made that the Department is not likely to improve by 2019 in line with the current prevailing situations; one would then have loved to hear some mitigating factors like if anything can be done. This is something we need to engage the Department with and tell them what they should do. This is because we are very interested in solutions.

Mr Mohamed replied by apologising for the fact that in the presentation it seemed as if no recommendations were given. First, on the role of the DPME, it works in supporting the national evaluation system, and developing planning and monitoring capacity. All the Department’s efforts are aimed at addressing the triple challenges of unemployment, poverty, and inequality. Key focus areas and mandates on planning include the NDP and the five-year implementation plan, and the Medium Term Strategic Framework. For monitoring the DPME uses tools such as feedback from citizens, the Department monitors implementation of these plans and attempts to identify and resolve problems. In evaluation, the Department plays a crucial part in championing evidence-based policy-making in South Africa, in part through the Programme to Support Pro-poor Policy Development (PSPPD), which is located within the Department. Together, they aim to develop and support processes of evaluation, research and the use of evidence in policy processes, both in the DPME and in other departments. It also provided recommendations on what areas needed to be worked on. This from Members is what he gathered was lacking from the report – the recommendations on what needed to be done. However there are immediate causes for this. The first is that the Department only deals with the Dhows. The DoHS has national and provincial branches and entities under it. The entities deal with the Department and sometimes when gathering information from the Department it is easy to say that the Department is not performing when one does not have all the data from the entities. So this matter should be approached very carefully. What was done was to highlight the areas that are problematic and give them to the Committee. It is expected that we should engage and find solutions, but first the Committee must ask the Department why it is that they are not performing in those areas. As stated, the DPME does periodical monitoring as per the NDP five year implementation plan and medium strategy plan to make sure that the targets are achieved and where lagging occurs, measures are put in place to ensure that the Department improve on this. The Department will correct the format of the presentation next time so as to make it more digestible in terms of the figures.

The Chairperson thanked the DPME for availing themselves to the Committee. Their role to the Portfolio Committee was to strengthen its oversight role. It is comforting to see that in the assurance assessment, the Department acknowledged the role that it was playing to the Committee. The presentation gives members more information and more power to be able to engage with the Department and its entities. The areas that needed interrogation have already been provided so the Committee appreciated this.

Briefing by the DHS on its Annual Performance report for the Financial Year 2017/18

Ms Nomaindia Mfeketo, Minister of Human Settlements, stated that this meeting was important and that is why everyone including herself was in attendance. She apologised for not coming to meetings regularly and stated that because of her duties she was always busy, even this afternoon there was a Cabinet meeting but she had decided to be here. She hoped that the Department and the Committee would engage with each other meaningfully with a view to coming up with recommendations that would impact positively on the performance of the Department.

Ms Zoe Kota-Fredericks, Deputy Minister of Human Settlements, stated that she too was happy to have found time to come to this important meeting which was the final Annual Report for the Committee. The Department was more than ready to present and engage Members on their performance.

Mr Mbulelo Tshangana, Director-General (DG), DHS, indicated that he would present only on governance and administration and his team would present on their key dockets. Targets achieved in compliance with statutory prescripts included but were not limited to: tabling dates observed and adhered to (e.g. departmental performance reports and annual performance plans; financial Statements developed and submitted as per the prescripts; and adherences to the MPAT process. 95.6% of the valid invoices were paid within 30 days. This was because of unresolved invoice discrepancies, a delay in submission of invoices and a system error in respect of processing the transaction successfully. The Department obtained an unqualified Audit Report with matter of emphasis on financial information and material findings on predetermined objectives. This was because there was an unavailability of source documentation for the title deeds backlog eradication at the time of audit.

There was 100% adherence to the schedules of Parliament, Cabinet, Forum of South African Directors-General (FOSAD) and Management. There was 81% implementation of the approved Internal Audit Plan. There was 97% implementation of the approved risk management plan. There was 61% implementation of the approved Departmental anti-fraud and corruption plan. There was 82% implementation of the Human Resource Plan. The 82% implementation of the HR Plan includes but is not limited to the following activities: Consultation with the DPSA on the proposed organisational structure; develop the migration and placement strategy; a Skills development Committee meeting; implementation of the WSP; conduct diversity awareness sessions; one DBC meeting; and a vacancy rate of 5% which is within the DPSA policy prescripts. There was 82% implementation of the HR Plan. The following activities were not completed by the end of the financial year: the secondment policy (pending approval); Uploading of the approved organisational structure on the PERSAL system; development of the implementation plan on the outcomes of the competency assessments and the skills audit; implementation of the BPCMEP (Batho Pele Change; Management Engagement Programme); and EE (Employment Equity) 201812021 which was only approved in April.

Progress on legislation and policy changes include the repeal of the Housing Consumers Protection Measures Act 95 of 1998 by Housing Consumer Protection Bill, and Estate Agency Affairs Act 112 of 1976 by Property Practitioners Bill. There is also amendments to the following legislation: Prevention of Illegal Eviction from and Unlawful Occupation of Land Act 1998 by the PIE Amendment Bill, 2016; Home Loan and Mortgage Disclosure Act 63 of 2000 by Home Loan and Disclosure Amendment Bill; Housing Act 107 of 1997 towards Housing in Human Settlement Bill after the approval of Human Settlement Policy: Amalgamation of the three (3) DFI's of the Department which are NURCHA, RULF and NHFC to establish the Human Settlement Bank through the Human Settlements Development Bank Bill. Research studies concluded in 2017/18 are: radical economic transformation in human settlements asbestos costing functionality of the residential property market proposal on how to address apartheid spatial patterns; youth brigade policy framework and implementation guidelines

The Guideline for the Human Settlements Planning and Design (Red Book) was revised. An approved National Human Settlements Development Plan for Provinces (HSDG) was approved. The Policy framework for Human Settlements was developed. The Framework to achieve private sector lending was developed. The Human Settlements Grants Framework was approved. The Framework for the improvement of DFI lending was developed. The following programmes in the 2009 version of Housing Code were revised towards developing the Human Settlement Code and presented at a National policy, research and strategy task team with support: Integrated Residential Development Programme( IRDP); Upgrading of Informal Settlements Programme (UISP), Housing Chapters of the IDP; Peoples Housing Process (PHP); Programme for socio economic amenities; Social Housing Programme; Individual Housing Programme; Rural Housing Programme; Finance Linked Individual Subsidy Programme; and operation Capital Subsidy Programme (OPSCAP).

On intergovernmental relations which were coordinated in line with human settlements priorities include: Department of Science and Technology Alternative Building Forum; National Transport Forum; Expanded Public Works Programme Forum; Climate Change Flagship Programme; Portfolio Committee oversight visit; Disaster management; Joint Coordinating Committee for Land Committee; Intergovernmental Task-Team on Pomfret; Ethekwini engagement on Cornubia reprioritisation and funding, critical projects that require funding; Innovative Building Technologies; and Imizamo Yethu. Intergovernmental fora which were coordinated in line with human settlements priorities were: FOSAD Cluster that is social protection, community and human development cluster and economic sectors, employment and infrastructure development cluster; Back to Basics; Joint working committee on the usage of alternative technology and Operation Phakisa tri-lateral. There was also the National Disaster Management Advisory Forum which had a meeting in KwaZulu Natal (KZN) where there was damage assessment and cost verification. There was also sector performance review Sessions.

Mr Joseph Leshabane, DDG: Programme and Project Management Unit (PPMU), DHS, took Members through the progress on delivery targets. There were eight  provinces and six metros which were supported on the implementation of the PHP policy, that is, Western Cape, Eastern Cape, Kwa Zulu Natal, Mpumalanga, North West, Gauteng, Free State, Limpopo) and City of Cape Town, Nelson Mandela Bay Metro, Mangaung, City of Johannesburg, Ethekwini, and Ekhurhuleni. There were eight municipalities in secondary cities which were supported with the implementation of the Human Settlements Master Plan, those were, Steve Tshwete, Emalahleni, Msunduzi, uMhlathuze, Polokwane, Sol Plaatjie, Rusterburg and Madibeng. There were 99% of projects under implementation which were monitored and verified through sampling (Human Settlements Development Grant (HSDG) and Urban Settlements Development Grant (USDG). A total number of 87 projects out of 544 HSDG delivered projects were verified through project site. During the financial year under review the Department assessed and categorised informal settlements into four groups. Category A comprised of full conventional upgrade consisting of full services, top structure and formal tenure (i.e. formalisation where appropriate, affordable and visible. Category B1 was incremental upgrade with essential services (leading to eventual formalization) where informal settlements sites are viable and appropriate but where formalization/ full upgrading is not imminent. Category B2 was deferred relocation with emergency services for informal settlements sites where long-term upgrade) is not viable or appropriate but relocation is not urgent or possible. Lastly was Category C which involved immediate relocation as a last resort for settlements where there is urgent health or safety threats which cannot be mitigated and where alternative relocation destinations are readily available.

On programme delivery support, the first single DFI operational integration has yet to be implemented. The three entities were not yet integrated into a single Development Finance Institution (DFI) as they were still operating separately as at 31 March 2018. Human Settlements sector Capacity audit was not conducted in full. For instance, the audit did not cover Municipalities and there was no comprehensive capacity development plan for the sector. Four municipalities instead of nine were assessed for accreditation, that is, Lephalale, Makhado, Musina and Greater Tubatse. 10.42 per cent of the HSDG construction budget went to women and youth Contractors. 8.09 per cent of the USDG construction budget went to women and youth Contractors. On revitalisation of Distressed Mining Communities, the Department has provided oversight and management support to the Housing Development Agency (HDA) for the provision of the following on-going planning and support to all 22 municipalities with mining towns. This includes informal settlements upgrading and National Upgrading Support Programme (NUSP); detailed planning and township establishment processes; title deeds restoration programme; local human settlements spatial transformation plans; land acquisition and management; partnership projects with mining companies’ employer assisted housing strategies; development of project pipelines and technical verification of projects; implementation of catalytic projects in mining towns; ring-fenced funding allocations for mining towns for the 2018/19 financial year and this was incorporated in the 2018 Division of Revenue Act (DORA) Framework (HSDG).

Mr Tshangana added that the Department held a successful human settlements consultative workshop with the mining industry. The participation of the industry members was facilitated by the Chamber of Mines and the workshop was attended by over twenty mining companies. The purpose of the consultative workshop was to discuss the following: Policy and strategy coherence between the NDHS and the mining industry; The role of NDHS in the revitalisation of distressed mining communities; Challenges and opportunities for decent housing, living conditions and human settlements for mine workers and communities; Proposed partnership model for housing and human settlements delivery between government and mining companies; approaches to legacy infrastructure and distressed assets; and the challenges and lessons with regard to building the necessary capacity for the delivery of sustainable human settlements. Next is the Scholarship Programme. The total number of students who were awarded a scholarship per discipline is:  Bachelor of Human Settlements Degree had 14, Civil Engineering 42, Building 19, Survey 19, Town and Regional Planning 02, Construction Studies 01, ND: Architectural Technology 01, Bridging Course: Mechanical Engineering 02, Geotechnical Engineering 1. This made a total of 101 recipients.

On findings and recommendations of the evaluation study on the Impact of Human Settlements Development Programmes on the environment it was observed that DHS developments cause impacts to air; biodiversity; noise; social; land and agriculture; and water. Many of the rural projects selected in the sample were exempt from environmental studies therefore environmental reports were unavailable to review. There was also town planning where the study indicates that it is important to consider sustainable designs that responds and takes into account issues of adequate space; waste management; and access to water. Lastly there is the environmental aspects and this included the recommendation about environmental sensitivity, environmental management programmes reports, environmental and public participation and involvement of all the stakeholders’ town planners, (developers, etc.),

Intergovernmental relations and cooperative governance between different sectors, and spheres, are vague, or simply did not exist. Where they exist, the relations are poor. If proper intergovernmental relations exist, collaborative planning that may allow for the consideration and inclusion of many environmental impacts in planning phases may be mitigated. Current EIP indictors monitor general achievements of the goals of environmental management, but not those specified in the Guidelines for Environmental Implementation and Management Plans, which aim to provide measurable indicators for co-operative governance implemented to ensure that co-operative environmental governance prevails. The EIP should allow for consideration of other impacts from sectors which will have an impact on the environment e.g. densification; energy efficiency; water efficiency; access to open/ green space; and the disposal of waste and adequate water and sanitation. With regard to co-operative governance and intergovernmental relations - there is insufficient consideration of occupation phase impacts, which reveals the importance of inter-governmental relations between different sectors and departments to ensure that a human settlements development is sustainable and adheres to the conditions and requirements established in the EIR. The study recommends that the EIP indicators should respond to the Guidelines for Environmental Implementation and Management Plans (Draft 3rd edition). The parties or departments responsible for ensuring that consideration of the EIP indicators are included in human settlements developments are not defined, thus there is no ownership thereof and no action to ensure such items are incorporated into developments.

On the performance criteria used, green indicates the target is 100% achieved, orange indicates partially achieved i.e. 50% - 99% while red indicates remedial action is needed to avoid this/ there is progress, but the target is not yet achieved (0% - 49%). The summary of delivery targets not achieved include rezoning of well-located land; Issuing of title deeds (pre-and post-1994 and for new subsidy houses); assessment of municipalities for accreditation; assessment of informal settlements; mobilisation of partnerships towards Human Settlements Development; implementation of catalytic projects; development of Informal settlement upgrading plans; and upgrading of households in informal settlements.

Ms Funaneng Malatsi, CFO, DHS, took the Committee through the financial performance as at 31 March 2018. On the quality of submitted financial statements the Department received an unqualified audit opinion and the Annual Financial Statements were free from material misstatements however with emphasis of matter on the audit report. The Supply Chain Management Department received no audit queries. Human Resources Management Department received a clean audit (no material audit findings). Quality of submitted performance information: Programme 2, 3 and 4 were selected for audit. Programme 2 and received a qualification due to the reasons mentioned below; Invalid, inaccurate and incomplete information reported in the Annual report e.g. title deeds and Land acquired, rezoned and released for new development. Programme 3 received a qualification due to the following reasons: due to the limitation of the scope of 5 indicators out of 19 (no audit evidence submitted for households upgraded in IS, two provinces did not submit information on individual units for the subsidy market, no evidence for private affordable rental units, two provinces did not submit evidence for CRU's, no audit evidence was submitted for projects that were monitored and verified, and incomplete information was submitted for military veterans. Programme 4 received an unqualified audit opinion. Based on the Audit outcomes of 2017/18 an audit intervention is required for the audit of the performance information. During 2017/18 audit programme 2, 3 and 4 were selected for the audit of predetermined objectives; based on the outcome of the audit programmes two and three received qualified audit opinions while programme four received an unqualified audit opinion.

These audit opinions were based on the usefulness and reliability of the planned and reported performance information as per APP and APR. The AGSA concluded on the opinion that some of the planned and reported performance information in programme 2 and 3 were not reliable. Programme 2 - indicators were affected and were the reasons that lead to qualification. Figures reported by the provinces did not agree with the figures verified by the Head office during verification process. Splits of the achievement of the two indicators of title deeds were received late which lead to the AGSA being unable to audit the submitted information. Reported figures directly from the provincial departments Annual Performance Reports are different from what is reported to the DHS. Provinces that had not or had submitted information after the AGSA due dates are Kwazulu Natal and Gauteng. The two provinces that submitted past the AGSA deadline’s information was not audited by the Office of the Auditor General which led to the limitation of scope of this indicator. Certificate of acceptance/happy letter were not signed in the reporting period and are therefore  valid for the year ending 31 March 2018. Some of the evidence (certificates of acceptance/happy letters) was provided in respect of the houses delivered. Furthermore, no evidence was provided that the beneficiaries are indeed military veterans for the sample provided to management. Some achievements were reported not accurate against listings provided in support. The above deficiencies lead to the indicator being qualified.

On the areas that require attention for improved performance, the Department is in the process of consulting the National Treasury and the Department of Planning, Monitoring and Evaluation to ensure improvement in managing within the current concurrency in budgeting and the planning and performance reporting process. The Department has instituted an improved IGR contracting process with sector partners in order to address recurring audit findings about insufficient supporting evidence for the achievement of the targets and systems and processes to verify the accuracy and reliability of specific reported achievements. To achieve improved delivery targets, the Department has instituted the comprehensive review process of performance information in response to the Auditor General auditing process. The Department has consulted provinces and municipalities on the 2017/18 audit findings in order to ensure the submission of credible, reliable and useful performance information.

The Departments’ future plans include: accelerate the planning and implementation of the informal settlements upgrading programme; accelerate the issuing of title deeds through the Title Deeds Restoration Programme; strengthen Human Settlements public entities and position them as a key force in driving the human settlement expansion; drive a robust campaign with the sole intention of unlocking land to house South Africa commencing this year with the Multiyear Land Assembly Plan; and  fast-track the implementation of catalytic projects including Finance Linked Individual Subsidy Programme (FLISP). There is also a plan to design and implement an Incubation Programme for Small Contractors, especially women and youth contractors re-transformation and 30% allocation of USDG and HSDG budget; Enhance the Department's responsiveness in relation to human settlement-related disasters; strengthen the monitoring of grants to ensure that transferred funds are used for intended purposes; provide technical support to other spheres of government, particularly where there is underperformance before invoking provisions of the Division of Revenue Act. Lastly, there is a plan to fast track completion of the Organizational Structure Review and Alignment including considerations around reducing personnel costs through benchmarking on a Shared Services Model for some of the transversal job categories.

There is lastly the finalising the drafting and promulgation of the following pieces of legislation: Property Practitioners Bill, 2018; Home Loan and Mortgage Disclosure Amendment Bill, 2018 (HLAMDA); Housing Consumer Protection Bill, 2017; Human Settlements Development Bank Bill, 2017; Human Settlements Bill; Prevention of Illegal Eviction and Unlawful Occupation Amendment Bill.

Discussion

The Chairperson noted that the Departments’ presentation was very detailed. It tried to cover everything so that Members did not ask too many questions. But nevertheless she emphasised that Members had questions. She welcomed comments from Members noting that there was no need to raise hands as everybody was going to speak.

Ms M Nkadimeng (ANC) thanked the Department for their very elaborate presentation. Her main concern was with the invoices to service providers that had not been paid within 30 days. What was the cause of this delay? On the areas that were acknowledged as having a shortfall, the DG spoke about acceleration of achievement of targets but did not elaborate on what it is the Department would do to accelerate things. There seems to be no coordination of programs and there is a need for this to be addressed.

Mr Bara stated that they all welcomed the report. But he thought that looking at the report and considering the presentation, there is a sense that there is nothing new. This is because some of the things that were presented the last time are the same, for instance upgrading informal settlement programs. These are the same issues that had been raised throughout the period of reporting to this Committee. The Committee was now almost at the end of the term. Looking at the time, was it honest to say that some of these targets will be achieved? The AG earlier reported to us that there is lack of consequent management. An example of fruitless expenditure based on the AGs report where a car was hired for the Minister worth R1 million. If you look at it no corrective measures or criminal proceedings were taken. What is of interest is how does one do that with no consequences? Also this fruitless and wasteful expenditure is something that should have been known by any senior government official. This rise in fruitless expenditure speaks to the Department itself by rising from R3 million to R14.3 million. Also with the example of The Community Schemes Ombud Service (CSOS) why do you take a long time to undertake suspensions? The same goes for title deeds. The last time the DG had told the Committee about the plans they had underway to take care of title deeds and today again the Committee was told the same thing.

Ms Mabe stated that she only had comments and no questions. During the presentation her mind had wondered back to 1994 when the Department was formed. She looked back and pictured the South Africa of then and compared it to the South Africa of today. She looked at all the achievements and challenges faced by the Department. She was saying this because she would never sit in this Parliament again.

The Chairperson stated that they were.

Ms Mabe asked when.

The Chairperson said ‘before elections’. (Members shared in the laughter)

Ms Mabe continued that what changed her mind was soccer as there was a time when Bafana Bafana had reached the last hurdle and gotten into the World Cup and all they needed was one goal but they failed to score it. What will you do? She was in that situation and wants to compare the Department with her team that has lost and could not save the final goal of the World Cup. Her only observation was that the system of management that is in use is not user friendly. Given the short period of time that was available to do things, human settlement is compromised. This is because it takes everything head on. They keep transferring people to provinces and once there they do not have control over them. The Committee understood when the Department did not get clean audits. The other thing is that the targets that were set were not realistic. The Department had said itself that they were very high targets. The Department was wiser now. The targets are not achievable. She said that in the future achievable targets should be set. Do not trouble yourselves sending large sums of money to provinces that are not going to deliver. This is because it is a barrier to your performance.

Mr L Khoari (ANC) stated that his issue was with the three provinces that were not performing. Many times the Department has been here before but things are not changing. How best can we assist these provinces with this challenge that they have? The issue of military veterans is an issue that has been on this table for a long time. When is this situation finally going to be concluded? This report by the DPME states that the Department delayed funds of all suppliers. This is contradictory to the report of the Department that said 95%. Why is there this difference?

Mr Malatsi stated that he would start off where the Honourable Mabe finished in terms of intergovernmental relations. The three provinces that were spoken about had been engaged with several times. If he could recall there was even this one time when interventions were put in place both at the provincial and HOD level with the DDG in terms of regular interaction. There have been no positive results. It is important for the Committee to be given insight into how far those interventions went or not. It is also important so that when the Committee interacted with the entities it was aware of what it needed to ask them and the three provincial departments. There is also CSOS and NHBRC where it seems there is a complete breakdown; there is a need to have a robust engagement around this so as to make them accountable. What interaction has the Department had with these entities? Also there is a cost increase for the Oliver Thambo Scholarship award but there is no explanation for this. Is this scholarship giving us value for money? Out of the 101 who are under it, how many will be absorbed into the Department and entities to make sure that the investment made a positive yield. Also this issue of procuring of a vehicle was in last years’ report which talked about the fact that the same mistakes are been made again. There is a need for an explanation of this and who is at fault.

Mr Kabini added that he did not want to sing the same song and he welcomed the presentation.

The Chairperson joked that he knew he could not sing. Members shared in the laughter.

Mr Kabini stated that this was the final annual report by the Department yet he had not heard about any strategies in dealing with the informal settlements. What is the Department doing in terms of this? Also not to appear provincialised, he did not hear his Province KZN being mentioned. There could be achievements there and there could be failures, he did not know. On municipalities in terms of challenges that they faced, some of them do not have capacity and this affects even the houses that they built. How is the department committed to helping them so as to better service delivery to the people? This is because most of the time when disasters strike like floods and houses are swept away; it is the people who suffered. The other issue relates to some of the areas the Department has stated that there are challenges but is has not been explained. There is also no maintenance program indicated here whereas there should be a maintenance program that will assist the Department.

Mr Wolmarans started by welcoming the detailed presentation. He however agreed with Honourable Mabe that some of the issues that were in the report were matters that had been with the Department sin the beginning. But he would only speak to the most glaring of the issues. The first was on military veterans where the figures being presented now are the same figures seen in November last year. So there has not been much movement. This is a challenge that could not be sorted out in the next coming months with the capacity that the Department had. There is need for a customisation mechanism so as to make sure that reporting standards of provinces and the Department are streamlined. This is because next year the Department would have the same report. It would be better if something was done about it. There are also reports that come from provinces after an audit has already been done, while the rest is about the unwillingness of provinces to deliver the required information. This makes the Department look bad when it is actually performing. Also on contracts and tenders to women and youth, the set percentage has not been met. What is the reason for this? Women and youth should be given more tenders. The report is a summary of what the Committee has seen before.  Next year the same song will be sung if this is not corrected.

The Chairperson added that it was true from Members’ submissions that one of the causes attributing to the failures of the Department was the concurrent nature of managing things whether in Departments or entities. This sought to guide the Department so that when it planned for the coming term, it would be in a position to meaningfully correct the mistakes of now and yesterday so that it could do better to manage these problems. This reminded him also that the Human Settlement Bill is not done yet and there is need to fast-track this because whoever is dealing with it should be aware of how important it was for this country. It will also speak to some of these gaps that everyone has raised so it would assist in promoting better working relations with provinces. Some of the Members might not be here next year but most of the people in the Department will be. It had entities that seemed to be sliding down. What is it in intervention that the Department is undertaking? The AGSA said the Department had indicators that are not customised. The same was raised last year. The AGs office said that after interaction it was noted that the indicators are customised at the business plan level but when it came to the APPs, there seems to be a problem.

There is need to define this for it to be known what exactly the problem is or if there is a lack of clarity, both parties are here to explain themselves aptly to the AG. Also on the challenges facing the Department, when the Committee talked to the DPME they stated that there was an acceleration plan between them and the Department to help solve some of the problems. Could the Committee be informed of this plan to see whether it is working? On the equity target, he was not happy to be told that the target of 30% of women could not be met. . What is it that is making this meeting of the challenge so difficult? Does the Department understand the gravity of this issue? It talks to women in general. I am happy that you yourselves have highlighted some of the provinces with problems. There is a time they used to be the worst performing but the Department intervened and they started becoming the best performing province. This talks to what is it that can be done better to support provinces so that they improve? Also in all that has been covered. There has been nothing covered on student accommodation. In the last financial year there was no such plan but he just wanted to know if it was something that falls somewhere else or under this Department. This is so that when the Committee interacted with the Social Housing Regulatory Authority (SHRA) tomorrow it could ask them.

Mr Tshangana thanked the Chair and Members for the questions and noted that they would assist the Department in some of the challenges moving forward. He decided to start with the last question which talks to the DoRA. When the business plan was amended it was based on the cash flow projections to provinces, was it expected for the Bill to be amended and submitted to Treasury for it to amend the cash flow projections? That’s a requirement of the DoRA. An implementation protocol was signed with the provinces, HDA and GPL and the Treasury did not have a problem with that. The mistake that was made was in not communicating the same because only an addendum to the business plan was done and this was not done with the Treasury. This is because when one was changing a business plan one was amending the disbursement of cash. When provinces amend their business plans they must submit that to the provincial treasury who in turn would submit it to the returning officer for the officer to transmit it to the National Treasury (NT) so that the cash flow can be changed. We should have closed the loop and written to the NT to tell them there was an amendment to the business plans and the cash flow projection has changed. On the three provinces, it is important to state upfront that there was a study that was done by PSC and which this Committee might want to look at. It says there is a positive correlation between the lifespan of the MD in a department and the performance of that department. In fact even in our own sector you will notice that those provinces that are not doing very well are provinces that had instability at HOD level and at entity level. Gauteng and North West had five HODs and now have six which created instability in the management of those provinces.

That is one part that we need to resolve. The HOD in the City of Johannesburg for example has had no permanent head several times and the city has not performed for the last two years. There is instability in the Johannesburg environment. The same applies to the City of Cape Town. It has never used 100% of its allocation. They have changed the executive director several times. There is a limit to what can be done as a Department. At the end of the day these entities first had to be stabilised. Business plans from the provinces have four programs but some have five. The first is administration, second is policy, three is housing delivery which was the bulk of what goes into the business plan. So this is the reason the Committee requested r the business plan because it allows for the forecasting of housing delivery indicators so that it can be said what will be delivered in a year as household opportunities. The three provinces with problems if one took their business, plans their programs were not clear for example Gauteng. As for CSOS and NHBRC, the Minister will speak to that because she has managed within a short period of time to put her foot down on them. On the equity of tenders and contracts to women and youth, we have made significant changes in the last two years. The Minister who was there before tried first running with the current program and he met fierce resistance to the program especially from the three provinces. It is a strategic national program not targeting any specific province. Further Chair without fear of contradiction this Department is the only department that has achieved 80% of its set 30% target in the DoRA. The provinces who were not meetings their set targets were named and shamed.  And the AG should point out to other departments because remember one is not supposed to spend that 30% on anything else apart from women and youth programs. So if any of this is not adhered to that is breaking the law. The Department of Women is in-fact using the Dora to force other departments to do the same. Mr Neville Chainee, DDG Strategy and Planning, stated that on the customised indicators the issue is that they published those indicators and provided them to the DPME and the National Treasury. However the problem is that neither the Minister nor the DDG has the power to force entities to incorporate these customised indicators into their BPPs. On the question on student accommodation the budget speech announced that it would be dealing with the incubation process of this. What the Department can indicate is that between it and the Department of Higher Education it was quite excited when the two Ministers would make that announcement. On the military veterans settlements it has been communicated to the provinces and they said that if given the names, they will build them. The problem is the Minister and the DDG are not in charge of the list. That is a list that is under control of the Department of Military Veterans DDG. The Department tried implementing without the list and ran into trouble because provinces started putting up military veterans not on the list in those programs. Lastly, the Department has written to the Housing Development Agency (HDA) to come up with a land assembly plan that will then enable the Department to ensure that there is control over the land within the current framework. The last thing is that whatever the Department did had to be done within the legal framework. So even if it encountered problems in provinces and municipalities it had to act within the confines of the law. Members knew that when the Department took over in 2014 it was in a real crisis, for example in Nelson Mandela Bay, and the Department managed to stabilise that in terms of human settlements. In places like Gauteng, the problems that were in existence in 2016 are the same problems only that now they have exacerbated.

Ms Funaneng added that as a Department they had contracted to achieve 100% in terms of the PFMA and the DoRA. On the invoices that were not paid on time, the 4% that was not achieved was related to the fact that some of the invoices had issues which were instrumental and the Department is taking disciplinary action to look into those who contributed to  invoices not been paid. Some of this is attributed to the fact that when the Department came in some of the officials did not understand the relationship between the Ministry, the Department and the PFMA. But the Department made sure that it was understood that an invoice was payable within 30 days. Going forward the Department was going to change this. While on the non-consequent management and the lack thereof in relation to the fruitless and wasteful expenditure, there is a need to point out that at that stage the Department had not commenced consequent management. This is because for this one needs to have first undertaken an investigation. The DDG instructed an internal audit to commence and which came to the conclusion that this was fruitless and wasteful expenditure. The Department then communicated with NT on this transaction but also disclosed it in the financial accounts in line with regulations. It was otherwise the same expenditure last year only now it is reflected again for purposes of book keeping. To the Department’s surprise the letter it received from NT disclosed that this was non-fruitless expenditure simply because in terms of the Ministerial handbook paragraph 9, it is not regarded as part of the Department’s financial management regulatory framework under section 86 of the PFMA. With regard to the car that was leased, the Deputy Minister is currently using it so it was not a fruitless expenditure. In terms of the Oliver Tambo Scholarship, the Department accepted that during the year, there were a number of beneficiaries who did not provided an indicator for the cash flows and unfortunately costs were incurred. The amount that was approved was less and the Department needed to dish out an extra amount above and over what was approved and that is why it is regarded as an extra expense.

Mr Leshabane engaged Members that what they had not said on title deeds was that the business plans have to be submitted to the Department. However, the real issue admittedly is that the Department had not designed the program to do what it wanted it to do and as a result last year, the program was reconsidered. The Department will be more than happy to come back to the Committee with the full presentation on all of those issues like when it was presenting the first quarter report. The Department now knew which towns and beneficiaries had to be formalised. On the government employee housing scheme the modalities of that phase and the Ministers of both departments have been concluded and once there was a conclusion of the same it would be notified to the Committee.

The Deputy Minister stated that she only wanted to comment on two aspects. One is the issue of maintenance which was raised by Members. In government subsidy housing, maintenance was not done by the Department. This is the responsibility of beneficiaries to look after the houses. The other thing to note is that the Department’s work is to only build houses. It is the municipalities work to give them out. When the Department spoke about maintenance it meant the rental stock. Key to this is putting in place management that knows how to deal with the rental stock. Lastly, with regard to military veterans, it is true that the Department of Military Veterans (DMV) leadership had a negative attitude to this program but the issue of databases is very critical. Many veterans are vulnerable because they might not be in the database but are in need of assistance which means those issues must be resolved within the Ministry and the NSE to ensure they put them back into the database. Lastly, it is important to note that when couples are getting divorced, it reflects that they have property and yet they have no property.

The Minister first thanked Members for all their questions noting that they were very good as it was important to always gauge where one was heading. She hoped they were all documented and could be used even in other meetings to always mitigate coming back to the same questions. Many of the questions have been responded to but as was said, it is something that one must always remind oneself about. One would always be in this situation until such times as one was able to think out of the box. It is always difficult to do this as when one is in the executive where one was forced to become a bureaucrat and be guided by all those things that one did not didn’t even sign. This is because when one talks about title deeds, municipalities and provinces that were really dragging one down was the things that have been inherited. She remembered the time it was said houses were going to be delivered within five months and the officials screamed that it cannot happen. But the Department managed and it knew that it had three different sets of rules as government. The Department formed something called the M3 All-Over Provinces and everyone was committed to having those houses in six months’ time and this was accomplished and the Department even got a clean audit for it. The Department used everyone including its DDG and lawyers so that it made sure that it did not break the law. What she was emphasising was that this was something that had to be discussed. If it was said to think outside the box on title deeds, or what the provinces were doing, what was it that everyone had to do to get a clean audit?

On the question of Military Veterans, the Department was really walking a very tight rope as the Deputy Minister said as it was not involved in the verification as it just received a list from the DDG of Veterans and that was the list that had to be implemented. In some provinces where houses have been built veterans were not taking occupation because most of the time they were not the right people. So sometimes the Department received phone calls from people saying that they had lists of military veterans and these lists needed to be verified. And honestly this was one area were the Department had really performed well because it had housed most people. On the question of entities the problem was that one appoints the board and there was an Act for doing that and also overseeing their work on all particular areas of the entities. The Department had to walk on a tight rope to make sure that it did not do what was not allowed by the Acts. Even in intervention, one cannot simply intervene as one needs to look at various aspects including the law. The two, namely CSOS and NHBRC, the Department only got to find out about them luckily this year because the media was writing about them. Immediately after the Department called the CEOs to ask them what was happening it was clear that they did not want to admit what they had done, but when they articulated what they had done the Department handed it over to the Board to say that the consequent management that was talked about was not the responsibility of the Department.  They said yes but did not handle it for some time which allowed her then to legally go and intervene according to particular Acts. At the moment CSOS is under investigation. The Department had appointed their investigator but by the time it went to them it was found that they had already appointed somebody who was investigating them even though she had asked them not to do it. But it is good because both investigators will be able to report their findings. They were given eight weeks and the report was expected by the end of this month. On the National Home Buyers Registration Council (NHBRC) the problem was that the managers were in bed with the executive instead of managing them but the Department had taken the necessary intervention measures.

The Chairperson stated that the Committee welcomed the informative engagements that were held today and the Committee expected the Department to take all suggestions and recommendations into account so as to improve their performance. The Committee is convinced that today’s engagements were constructive and while sometimes uncomfortable questions were asked, the Chairperson emphasised that it was in the context of coming up with a housing plan that would assist the country in transforming the lives of its suffering citizens. The Committee has worked out the issues that had arisen that required further consideration and a date would be set up for discussion with the Department. The Minister, Deputy Minister, DDG and the team and other presenters and guests were thanked for having come to the meeting.

The meeting was adjourned.

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