Gauteng Human Settlements Department turnaround strategy

Human Settlements

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

The Gauteng Department of Human Settlements (GDHS) briefed the Portfolio Committee on Human settlements the challenges that led to poor performance and the turnaround strategy put in place to remedy the situation; and further briefly updated the Committee on the progress of the Friendship Towns Petition.

GDHS Department has been plagued by serial poor financial and non-financial performance as well as institutional weaknesses and deficiencies.

MEC Moiloa gave an overview and highlighted a lack of forward planning and development planning by GDHS. He touched on title deeds and said there was a deficit of townships not registered, in part by the Apartheid colonial system, and now SA is paying the price for that legacy. The Department is working hard to improve this situation.

Some of the challenges identified are that the Department has a history of underperformance, and for the past five years the Department has not been spending its budget in line with the Public Finance Management Act (PFMA) to provide for at least 95% spent on what is agreed upon in the business plan and this has been recurring for the last five years.

The biggest expenditure in recent research in the performance of the Department are that even at the point when the Department was spending 80% of its budget, it was still not achieving its targets, and this non-achievement of targets has been recurring for many years. He submits that this is because of inefficiencies in their system; no forward planning; un-integrated planning; and all of the disciplines required in terms of planning.

By the end of the first quarter, the Department has spent 7% of its budget, because the business plan was not approved for 2019/20; it was approved on 2 June 2019. The Department then developed the turnaround strategy being presented. The Department has been working with the National Department, assisting them to plan better and to present realistic projections with regards to the projects that were hitherto planned for.

The Housing Development Agency (HDA) said its projections for quarter three and four are that it could complete most of the legacy projects in these quarters, or by the end of the financial year.

In total of the R875 million that was transferred to the HDA, it has committed about R257 million to its projects, and is left with a balance of about R337 million, which can be committed to projects if reallocations are made.

One observation with regard to how they contract, going forward the GPF’s experience helped to show them that there was a sizeable amount of investment in planning, designing and conceiving. And at the point of getting to a point where you have to deliver the HDA has a much more aligned implementation and delivery mechanism that is able to get the contract off the ground. But there is a two year lag that they have to learn about, ad consider.

The  Gauteng Partnership Fund (GPF) said the Division of Revenue Act issue was creating a problem of speeding up the delivery of service sites and top structures, however the GPF put some countering measures and the matter has since been resolved, so the GPF did receive the R609 million. Of this R295 million has been dispersed already on Affri Village.

The management between the GPF and the Rand West Municipality has enabled it to speed up the delivery of service sites and housing. GPF are confident that in quarter three and four they will reach their targets of both service sites and housing units.

The National Department said the Department has agreed with the province in that the offices of the Premier together with the MEC and HOD intervention is a short, medium and long term action plan. An issue that needs to be addressed, both from a province together with respective responsibilities is that concurrent to the situation in Gauteng is the issue that there has been a loss of capacity at the municipalities. The reason why there is a skewed nature of the transfer of funds to  respective municipalities is because on assessing the previous three years, Ekurhuleni has only received R43 million whereas the City of Johannesburg together with the City of Tshwane in total have received between R500 and R600 million. The issue is of performance around the funds transferred to City of Tshwane, the same thing that exists with the City of Johannesburg and this it must be dealt with.

In the case of the HDA, the Department have indicated that their legacy performance is satisfactory, the issue is contractual and compliance in relation to the catalytic/mega projects and must be addressed within the next two years. The turnaround strategy is a medium to long term strategy because it is about building institutional stability and therefore it will require patience.

The Committee had a detailed discussion on the submissions made and focused on the backlog prior to, as well as after 1994; the allocation of funds between municipalities; the eradication of squatter camps; and the role of the Red Ants.

Members mentioned that the report itself spoke lvery little to the issue of informal settlements; the units/sites for military veterans; and the impact of the fact that 2018/19 business plans have not been approved.

Meeting report

Meeting Report

DHS Proposed Recovery Framework

Mr Uhuru Moiloa, MEC, Gauteng Department of Human Settlements (GDHS), said challenges faced by the Department included that there was no forward planning and development planning was disintegrated. The Department discovered that the various municipalities were doing their own things. Municipalities have also been ventilated and that might mean that departments were under spending on bulk infrastructure grants, development grants and other grants. He said that there was a general under expenditure.

On the issue of title deeds, there was a deficit of townships not registered, in part by the Apartheid colonial system, and now SA is paying the price for that legacy. The Department is working hard to improve this situation.

Some of the challenges identified are that the Department has a history of underperformance, and for the past five years the Department has not been spending its budget in line with the Public Finance Management Act (PFMA) to provide for at least 95% spent on what is agreed upon in the business plan and this has been recurring for the last five years.

The biggest expenditure in recent research in the performance of the Department are that even at the point when the department was spending 80% of its budget, it was still not achieving its targets, and this non-achievement of targets has been recurring for many years. He submits that this is because of inefficiencies in their system; no forward planning; un-integrated planning; and all of the disciplines required in terms of planning.

Also because of the manner in which the government budgets for the country, resources are allocated without concrete tested plans. He said that the country would better provide services if National Treasury could base its allocation on the basis of the integrated development plans identified at local government levels. Once that kind of coordination is established, it would be easier for National Treasury to allocate resources in an effective, efficient and economic fashion.

The culture of budgets not being spent in terms of the business plan will have to be a thing of the past. Integrated planning is very critical and the Department has been implementing this.  There is evidence that if municipalities plan with the province and national, better results would be achieved in that regard. The Department is in pursuit of that, and have prepared a budget performance review for 2017/18 and 2018/19 and convened all municipalities under one roof, including various departments (rand water, education, sports and culture, transport and roads), deeds office and other stakeholders and these stakeholders appreciated that it is a better, efficient way of addressing the challenges of human settlements and Gauteng.

He said he has instructed the Department that at the start of 2019, before the SONA and before the Budget Speech, the business plan of Gauteng must be approved by National Treasury. He has also instructed that all new contracts for 2019/20 must have been concluded before the beginning of the year, such that there is certainty and people can plan ahead. The principle of forward planning gives better results in outputs and it eliminates other expenditure and inefficiencies. He said he was looking forward to the 2019/20 financial year demonstrating improvements in that regard.

By the end of the first quarter, the Department has spent 7% of its budget, because the business plan was not approved for 2019/20; it was approved on 2 June 2019. The Department then developed the turnaround strategy being presented. The Department has been working with the National Department, assisting them to plan better and to present realistic projections with regards to the projects that were hitherto planned for.

There is a backlog of legacy projects and among those will be commercial retail units (CRUs) which have good policy but were assigned to inefficient people. Some examples of this are Dube Hospital which is the disappointment of the department, completely ransacked and vandalised because of a standoff between the City of Johannesburg, Department of Human Settlement and the National Policy; and Meadowlands Hostel in which the housing units have not been occupied but have been vandalised.

He said that there has been policy change and interventions that the Committee made and the National Department were beginning to produce improvements in CRUs which now have adopted RDP make-ups. The Minister is visiting Gauteng on the 8th and 9th of November, and they will show her the good and the bad of their expenditure, the projects that the Department have been working on and what the Department think should happen to those.

The National Home Builders Registration Council (NHBRC) agreed that it would send engineers to the Department, to do a structural audit of all of those CRUs and give a report on what should happen with recommendations.

The Annual Report reflects an unqualified audit report for 2017/18 but it will also include in the auditor’s statement that they have transferred funds to agents without approval of Treasury function. There was a huge under expenditure of over R1 billion, but with committed projects to agencies such as the Housing Development Agency (HDA) this needed to be resolved. Unfortunately, National Treasury in terms of the Division of Revenue Act, did not give a letter of consent whilst the DHS had agreed that those funds should be transferred to the HDA because it was committed to projects and in particular the Catalytic/Mega Human Settlement Projects. On that subject, the Department takes responsibility and agrees with Treasury raising it as a matter of concern, but believe there were pressing reason for this happening.

Ms Matilda Gasela, HOD: GDHS said some of the key measures to improve performance included that the Department are ensuring that their norms and standards of Human Settlement Development Grant (HSDG) are aligned with that of the municipalities to ensure expected quality assurance sign-off approval of completion certificates which will allow for more realistic performance.

There has been a lot of misalignment between the Department and the municipalities and this has led to the underperformance evidenced. Contract management has been an issue for the Department; however they are undertaking to improve this. The Department has implemented regular reviews so that where the contractors are not performing as they should, those contractors would be terminated, and those that are doing well would receive an increase in scope.

The payment of invoices has also been a very big challenge and the Department is dealing with the issue on a regular basis. Every Friday, the Department checks where they are in terms of the invoices submitted and to ensure payment is received.

With regard to the status quo of financial and non-financial performance for the 2018/19 HSDG allocation, a summary of performance conducted from the 27th August to the 26th October, showed that in the West Rand, the target of 4 000 sites and 4 050 units to be built was overachieved by the 26th October and 4 086 sites were delivered, however only 613 units were built, thus underachievement in this area.

Sedibeng was given a target of 2 035 sites to be delivered and 2967 units to be built, they have delivered 1094 sites and built 658 units by review date, and therefore underperformed in terms of the target. The grand total of sites to be delivered was set at 12 842 and 29137 units to be completed, however only 6917 sites have been delivered and 9187 units have been completed by the performance date.

The Milestone Performance – Work in Progress is a graphic representation of what has been discussed above in the presentation in terms of work in progress. The foundations have been achieved at 68.2%, wall plates are at 55.7%, roof/finishes are at 39.5%, completed units are at 29.8% and quality assurances conducted are at 22.4%. The reason why the Department met with NHBRC was so that it could assist in quality assurance because the Department has realised that when it comes obtaining quality assurance over the units completed, there were issues discovered, so the Department met with the NHBRC and it have agreed to deploy engineers to the Department to assist in that regard.

She highlighted that the Expenditure Report did not take into consideration the funds that are already at provincial treasury, but not yet been processed. In terms of where the Department is to date, she said that the Department had spent 39% of the available budget.

In terms of gazette funds and transfers for 2018/19 financial year, the Department had budgeted to transfer R68.9 million to the City of Johannesburg, R22.9 million to the City of Tshwane, R294.6 million to the City of Ekurhuleni, R33.3 million to Rand West City and has allocated R609 million to GPF. In total R739 million has been budgeted to be transferred to both GPF and the municipalities.

In terms of the Key Projects Performance List, when looking at some of the Departments’ mega projects there have been improvements. For example in Greenhills Affrivillage, a target of 1000 units and stands had been set but already the Department have over performed and achieved 1594 stands, however only achieved 816 foundations and 256 wall plates. Thus, because the project was doing well, it was one of the projects that the Department would be improving scope for.

In terms of the HDA’s summary performance, the target set was 5 769 housing units and 1 716 serviced sites, however the HDA only achieved 1 319 housing units completed and no serviced site. The HDA have spent R71.94 million of their R755.08 million budget with regards to housing units. With regard to serviced sites, the HDA seem to not be doing too well in that regard.

A summary of performance with regard to legacy projects is that of the total target of 2 409 projects to be completed, only 1 319 have been completed and 1100 have been quality assured, and the Department has spent R71.9 million already on these projects.

A graphic representation of the progress of the legacy projects reveals that 83.4% of the foundations have been achieved, 77.9% of the wall plates have been achieved, 64.3% of the roof/finished had been achieved, 54.8% housing units had been completed and 43.2% of these had been quality assured.

The summary of beneficiary administration showed that out of the 7 961 beneficiaries budgeted for only 3 903 have been approved as it relates to the province and 1032 housing units have been allocated. The Mega/Catalytic projects have not allocated any houses to beneficiaries yet, but the Department will be starting on the 14th November 2018 to do so. Out of the 11 320 total beneficiaries that have been budgeted for only 5 712 have been approved for and 1 032 houses have been allocated.

Some recommendations for consideration were that the turnaround plan presented by HDA be confirmed and supported; the proposed re-allocations from non-performing projects to the proposed ones be approved; the Mawiga and Hlano programme be approved as provincial programmes with dedicated and time bound project management; the proposed analysis and plan contained in must include a medium to long term​ institutional and performance enhancement plan for the GDHS to be drafted and​ presented to the Accounting Officers and Executive Authorities by 31 October 2018; the Accounting Officer and Executive Authority governance oversight and monitoring and oversight arrangements previously adopted, to ensure improved institutional performance and enhancement for the GDHS, is reconfirmed.

​All of the relevant submissions confirming the recommendations are compiled and signed off by the relevant Accounting Officers and Executive Authorities namely the Minister for Human Settlements, the Premier of Gauteng, the MEC for Human Settlements, the Director-General for Gauteng, the Director-General for Human Settlements and the relevant Heads of Department.

HDA performance summary

Mr Pascal Moloi, CEO, HAD, said that there were three major components behind the figures presented in the report. These are legacy projects; the second one having to do with housing units outside of the legacy projects and these largely being units in the broad category of mega/catalytic projects; and the third component having to do with service sites, both in legacy projects and mega/catalytic projects.

He said the HDA’s projections for quarter three and four are that it could complete most of the legacy projects in these quarters, or by the end of the financial year. He went on to talk about the problems that might be faced with regard to the mega/catalytic projects, which are that although contracts are in place, the HDA still has to go through a process of reviewing the contracts and still has to transfer the contracts so that the processing of invoices can start, and project management can begin.

The HDA has concluded contracts with Lufhereng and Chief Albert Luthuli. These are areas where there is traction and movement. Unfortunately there were contracts with ValuMax and the City of Johannesburg, but the City and ValuMax are currently locked in a discussion for contract extension, and until that contract extension is concluded the process for transferring that contract to the HDA cannot be concluded. The HDA is making a commitment to the turnaround strategy and that the contractual issues would be resolved by the time they enter quarter 3.

With reference to Fort West project, where the HDA have a contract that is not performing, the HDA made a specific request in for the reallocation of funds that were allocated to Fort West to five other performing projects (being the Langaville Ext 4 projects, Balmoral Ext 4 project, Payneville Ext 1 project, Moleleki Ext 2 project and the Palm Ridge Ext 9 project). Although the HDA have a contract on site in Chief Albert Luthuli, there are sections of that project that did not yield desired results, thus  a recommendation was made that a  portion of that project be allocated to the five other projects (as listed previously).

In total of the R875 million that was transferred to the HDA, it has committed about R257 million to its projects, and is left with a balance of about R337 million, which can be committed to projects if reallocations are made.

One observation with regard to how they contract, going forward the GPF’s experience helped to show them that there was a sizeable amount of investment in planning, designing and conceiving. And at the point of getting to a point where you have to deliver the HDA has a much more aligned implementation and delivery mechanism that is able to get the contract off the ground. But there is a two year lag that they have to learn about, ad consider.

The streamlining of different stakeholders helped, in the case mega projects in Gauteng for example, all the agreements are streamlined and this then makes it possible for contractors to get the contracting done as there are not too many middle people.

The Chairperson then requested GPF to, due to the fact that the minor issues with regard to the Division of Revenue Act have been resolved and seem to be working well, to give the Committee a high level report on their relationship with the Department and how they have been performing.

Mr Geoffrey Makhubo, Outgoing Acting CEO, Gauteng Partnership Fund (GPF) said the Division of Revenue Act issue was creating a problem of speeding up the delivery of service sites and top structures, however the GPF put some countering measures and the matter has since been resolved, so the GPF did receive the R609 million. Of this R295 million has been dispersed already on Affri Village.

The three projects in the Western Corridor are the ones that are performing which are Montrose, Elijah Barhayi and Greenhills. In the Lesedi area, the Kwazenzele project is starting to perform. Thus at a high level the Department and the GPF are working well. There are some quality assurance issues that are delaying the GPF and the Department, which are being resolved.

The management between the GPF and the Rand West Municipality has enabled it to speed up the delivery of service sites and housing. GPF are confident that in quarter three and four they will reach their targets of both service sites and housing units.

Mr Neville Chainee, Deputy Director-General: Strategy and Planning, DHS, said, in relation to their current year performance, that the Department has agreed with the province in that the offices of the Premier together with the MEC and HOD intervention is a short, medium and long term action plan.

One outstanding issue that the province has indicated as part of their planning that the Department have their short term measures to meet between now and the end of March 2019 and how are the 2019 business plan will be implemented, the outstanding issues that needs to be dealt with must be put in the institutional turnaround plan.

He said that an issue that needs to be addressed, both from a province together with respective responsibilities is that concurrent to the situation in Gauteng is the issue that there has been a loss of capacity at the municipalities. The reason why there is a skewed nature of the transfer of funds to  respective municipalities is because on assessing the previous three years, Ekurhuleni has only received R43 million whereas the City of Johannesburg together with the City of Tshwane in total have received between R500 and R600 million. The issue is of performance around the funds transferred to City of Tshwane, the same thing that exists with the City of Johannesburg and this it must be dealt with.

He said that there is quality assurance and verification that is taking place in relation to the HSS. The Committee and the Department need to be able to concede collectively that Gauteng has never been in the position where it have spent 50% of their budget with commitments up until the end of September for the last four quarters, therefore the Committee must be fair and objective to this as there is still a lot of work to be done.

In the case of the HDA, the Department have indicated that their legacy performance is satisfactory, the issue is contractual and compliance in relation to the catalytic/mega projects and must be addressed within the next two years. The turnaround strategy is a medium to long term strategy because it is about building institutional stability and therefore it will require patience.

Disscussion

Ms M Nkadimeng (ANC) commended DDG for the work that the Department had been doing in assisting the province. She asked with regard to the townships that are not registered, what the Departments’ plan going forward are to make sure that those townships are registered. She asked for further explanation with regard to the fact that the HDA had still not spent any expenditure or built any sites however had budgeted to have achieved 1 716 sites completed and to spend R78.9 million. She asked on the issue of title deeds, i.e. if the Department could make a breakdown of the backlog prior to, as well as after 1994 and how much they have achieved. The Committee would like to see the progress on the issue.

Ms K Hlonyana (EFF) said, addressing Mr Chainee and his remarks that for the first time Gauteng had spent almost 50% of their budget, that it was not a point of celebration as it meant that the other 50% represents the houses that people have not been allocated. She commended the DDG for explaining the allocation of funds between the different municipalities. With regard to the Key Projects Performance List, she highlighted that the targets set are very low for projects classified as Mega/Catalytic projects. She then asked with regards to squatter camps that she did not see anything in the report relating to the eradication of squatter camps. She said that she wished the Department spoke more to this point, as there are a lot of squatter camps in Gauteng. She then highlighted that a lot of corruption and illegal activities occur within unregistered townships. Thus something should be done about unregistered townships and the issue must be dealt with.

She said, by addressing MEC Moiloa that there was an incident where people died because of the Red Ants, when the people were removed from their houses or dwellings on land owned partly by the province. She stated that she hoped such incidents do not happen again and a solution must be found.

Mr L Khoarai (ANC) said, referring to the point raised by Ms Hlonyana that the presentation spoke very little to the issue of informal settlements. He was interested to know about any upgrades and progress happening within these areas. He pointed out that the presentation does not mention anything with regard to the units/sites for military veterans, and is concerned about this issue. He asked if the Department could give the Committee a report on the payment of invoices in terms of the policy that invoices must be paid within 30 days. He asked if the Department was achieving this goal. With regard to the issue of the contractors, the Division of Revenue Act states that 30% of contractors should be youth contractors, however the report presented did not speak to this issue. On the milestone performance of work in progress, he asked whether Gauteng is also experiencing the challenging of not being able to finish/ complete housing units. As he has seen in practice across the provinces, foundation targets are always high however this does not translate into finished units.

Mr M Shelembe (NFP) asked for clarity with regard to the stakeholder engagement. He does not see the role of the Social Compact Agreement, as the non-application of this would mean non-compliance. He further asked for clarity with regard to who the beneficiaries are, because there is no real explanation as to who these people are. Before a project is approved the MEC would look at whether all the adequate housing requirements in terms of bulk infrastructure etc are met, but he has a problem with the fact that the Department is reporting that there is a lack of infrastructure as this would have been raised before the project is approved. On the poor performance by contractors, he asked why it takes a long time to see that the contractors are not performing accordingly.

Ms B Mabe (ANC) commended the Department for their efforts/work done. On the CFO and the R5 billion not yet received, she said that the matter must be raised with the Minister. She asked with regard to the 159 unregistered townships, to what extent the HDA can assist with the registering of townships. Who approves business plans?

The Chairperson responded and said National Department.

She asked for clarity with regards to the impact of the fact that 2018/19 business plans have not been approved. Gauteng is the worst performing metro in the country and she said the Department needs to start performing better and delivering on their targets and people must be held accountable for non-performance.

Mr M Malatsi (DA) started by addressing the MEC’s opening remarks, that government allocates budgets without tested claims. How does the MEC plan to turn around the Department to make sure that it has those tested plans so that funds are aligned to deliverables? He asked for clarity as to what the Gauteng Provincial Governments’ approach is on land invasions because this drives the demand for the allocation of basic services. He asked what the key drivers of the spike in informal settlements, and how does the Department then plan to then provide the services that are needed in those communities, aligning that with the budgetary requirements that the Department has. Lastly, he wanted to know what the frequency of engagement is with the municipalities in Gauteng with regard to their performance when it comes to housing allocations and budget deliveries.

Mr D Kabini (ANC) asked for clarity on the R1 billion which was transferred to HDA by the Department, i.e. a breakdown of how that money was used, or how far has it been spent.He further asked for clarity with regard to the deeds in Project Mawiga and whether the credit and non-credit links have been initiated in the programme as it relates to Gauteng. On the backyard dwellers, he asked whether there is a programme established to eradicate this problem.

Mr M Bara (DA) said that the one key issue was around the relationship between the province and the municipalities within Gauteng. He asked whether this has improved. He commended the MEC for highlighting that forward planning is a critical function and said the Department must avoid and discourage land invasion. He asked whether there are any measures in place that can be jointly taken up to ensure that land invasion does not occur because they reflect badly on the province. Committee Members must be responsible leaders outside and discourage activists that are stifling progress in the communities.

The Chairperson commended the Department for the improvements made in their performance. She said the turnaround strategy of the Department does not speak to the challenges outlined by the MEC in his opening remarks of poor communication between the Department and the municipalities and the lack of forward planning, and the strategy needs to be increased to speak to these issues. It was important  to know with regard to the turnaround plan, what the Department was doing to make sure that they are taking lessons from what the GPF is doing well, to improve the overall performance if the Department. On the milestones work in progress and around the roof/finishes that need to be completed, she asked whether the NHBRC has committed to assisting in making sure that these move towards being completed. The Department should inform the Committee when they need assistance from them. In relation to the HDA performance and the summary of the Gauteng legacy performance, the actual expenditure of R71.94 million under summary performance and the Gauteng legacy performance total expenditure of R71.94 million - these numbers are the same. Does this mean then that the HDA is only working on legacy projects and nothing else? Her understanding is that they are working on mega/catalytic projects and other things and she asked for clarity. The Department and the HDA could do better in terms of performance. She asked for further clarity as to how out of the R833 million budgets allocated to the HDA, only R71.94 million only has been spent?

MEC Moiloa replied by agreeing with the Chairperson that the turnaround strategy should address the issues that they are dealing with, what is it that they are putting in place to deal with the issues that were identified. The Department has clearly instructed that the contractors that are not performing be taken out of the system and those that had been just residing in the department must be reallocated or also terminate. They have indicated that contract management is their weakness in the Department and they are working on improving this. 

On the Red Ants, he said there are members in society, some of them representing certain political formations that encourage land invasions. The consequence of this is that the Department then has to divert grants towards security to prevent these Red Ants and other threats. Thus money that should be used for building houses for the poor is rather being redirected to paying security companies. Then National Department says that the Departments’ mandate is not to manage security but rather to build houses, so the Department then has to withdraw from that engagement and the consequence of this is that is proliferation of informal settlements, compounded by configuration of political power players in the province. He suggests that the issue should be tabled as a national policy matter, because they are signators to international protocols on an inclusive basis as a country, immigrants are flocking to SA. So he suggests that the issue be tabled for national discussion and debate so that it may be agreed as to what should be done about the issue.

He said that the Department welcomes the Chairperson’s comments.

In response to Mr Kabini, he said he was quite delighted and very happy when the Minister of Finance, last week, made the public pronouncement about Vaal Rivers’ Water System. It was a culmination of Parliament at work. The Department has elevated this issue to the level of the Inter-ministerial Committee, where the Premier attended. Through these interventions Model 6 is going to be completed by the end of the financial year, and that is going to unlock the potential for the whole of Johannesburg south leading to the Vaal River City.

He said that the Department has proposed to the Committee that the portfolio should work with the Department of Water and Sanitation and COGTA to ensure that there is coordination even at a parliamentary oversight level, so that a common approach is developed with regard to helping the Department to work achieve synergies with regard to issues that really matter. He further highlighted that the Department has started a programme called Rapid Land Release where the Premier of Gauteng had instructed them to identify land, service the sites and give people the sites to build houses for themselves and he thinks that this programme will discourage backyard dwellers.

Ms M Gasela replied to the registration of townships, and said it was an issue that the MEC was dealing with. The MEC had written a letter to the municipalities and asked them to try and relax some of their requirements as this forms part of the reason why townships are not registered. Another reason why townships are not registered is because of the Slums Act and it has various stringent requirements for townships to be registered. These are the discussion that the Department have been engaged in and are hoping that it would lead to results.

In terms of the backlog, it is huge, for pre-1994 the number of properties that do not have title deeds is just over 12 000 and for post-1994 the number is much higher at 231 000, the total number is therefore about 244 000.

The Department has prepared a briefing at a very high level, and hence why a lot of the issues mentioned have not been included in the report. In terms of the upgrading of informal settlements, there are 63s units completed in quarter one and 2 464 units in quarter two. The point the Department was making when they referred to the 50% spending is that it has been able to spend 50% of the budget in September, so there is still spending which is yet to happen and as mentioned some of those amounts have been processed.

In terms of the targets for Mega/Catalytic Projects, the Department agreed with Ms Hlonyana that some of the targets are low, and she said that it is a problem for the Department as well however, the Department targets in terms of the budget allocation that they have been given, hence why it is so low. Further there are other issues, such as legacy projects that they are also dealing with and therefore also need a portion of the budget. On the military Vveteran units, they have 610 units that the Department will be building during the financial year and on the 8th and 9th of November the Minister and the MEC will be issuing 200 completed units to military veterans. There are projects that the Department is working on and there are sites being established.

In terms of the payment of invoices, the Department is not where they should be. She pointed out that some of the invoices that the Department submits sometimes have to be sent back because of challenges. The Department does have problems in Gauteng with respect to foundations and it has found that the foundations were being paid at 50% or 40% of the actual subsidies and therefore there was no incentive for the contractors to complete their work. The Department has stopped this and has said that foundations should be paid at 20% to incentivise the contractors to complete their work and milestones occur. In the Departments’ discussions with NHBRC it has asked them to look at uncompleted projects and the Department then would make a submission to the National Department to see how it can assist them in completing these abandoned projects.

With regard to the issue of stakeholder engagements, the MEC has identified this as a very big problem in the Department and it is very poor in the Department. However the MEC has had summits with all the municipalities, except Tshwane due to various issues. In all their projects the Department ensures that there are projects steering committees so that they are able to discuss the committee involvement.

With regard to the frequency of engagements of municipalities, she notes that things have improved in this regard and they have seen improvements as a result of this. The Premier is dealing with Mawiga and Hlanu. There is money that has been set aside and processes that are going through to deal with the issue.

Similarly with regard to the non-credit link individual subsidies, the Department has 250 beneficiaries. The Department is taking lessons from and is working together with GPF and acknowledges the good work that GPF have done. The Department has realised that it has to invest in planning, which is why it has established a dedicated team of planners

She said where the Department would want the assistance of the Committee; they will send a report to Committee for assistance. The NHBRC has committed to assist the Department but it is also deploying engineers to the Department to assist them.

Mr Funani Matlatsi, CFO, DHS, on the appointment of designated groups, said the Department is sitting at 4% however in terms of the Division of Revenue Ace it is specified that designated groups should be allocated 30% of the work awarded by the Department. The HOD and the Chief Director of Supply Chain Management gave the Department an instruction that for the balance of the financial year, the appointment will be revised towards these targeted groups such that they up their appointment of these groups and ideally by the end of the financial year they should have met this target.

In terms of the issue of paying service providers within 30 days, the Department is not at an ideal situation. However, in terms of the Gauteng Provincial Treasury they do keep records of the Departments’ performances, with regard to the 15 days target set by the Premier the Department is around 86% and with regard to the 30 days target the Department is at 95%.

Some of the challenges that they experience in the Department are the time at which it takes claims from the regions to be submitted to HOD, and the Department is considering instructing all the service providers to submit their claims at head office where that will serve as the first point of entry and then they register the claim on their CMS and thereafter they allocate it to the relevant project manager to attach all the relevant documents for them to be paid.

The Chairperson’s closing remarks highlighted that engagements between the Department and the Committee should occur more often to help the Department can perform better.

She further asked for an update on the Friendship Town Petition.

Ms M Gasela replied that the Department has appointed a firm of attorneys and that there is work that has been done and that they are almost at the tail end of the process. She further indicated that the Department needs two weeks to compile a report on the matter.

Consideration and adoption of minutes

Minutes dated 4 September and 9, 10, 18 and 23 October was adopted without amendments.

The meeting was adjourned.

 

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