The Select Committee convened virtually to be briefed by the Department of Human Settlements on its 2021/22 Annual Performance Plan.
The Department was requested to make a submission for revising the Medium-Term Strategic Framework for 2019-24 due to changing context and budgetary constraints. On the budget cuts and reprioritisation, the Department indicated that Cabinet introduced total budget cuts amounting to R486.9 million over the 2021 Medium-Term Expenditure Framework period. The compensation of employees remains constant over the expenditure framework period. The compensation cannot be increased or decreased. However, underperformance in year one may affect the final allocation of the following years.
Issues of concern raised included; the reasons, as per the presentation on the strategic framework, for a reduction in housing units and a reduction in social housing; why there were many backlogs on title deeds and the reasons thereof; why there is high usage of consultants and if it is because they are incapacitated as a Department; whether the non-performance of municipalities and provinces is contributing to the cuts that are seen from the Department of Human Settlement in the next three financial years.
The Committee also noted that they see that year in and year out the same provinces and municipalities are not performing well and instead of assisting them, their budget is being cut and transferred to other provinces. Members wanted to know what can be done moving forward so that they look at how they deal with provinces and municipalities for non-performance instead of punishing their residences by taking away their right to human settlement and basic services by giving to provinces that are outperforming.
Additionally, they wanted to know what kind of support that is going to be given to municipalities and provinces in the implementation of the Informer Settlement Upgrading Programme. This is because year in and year out targets are not being met, and some municipalities and provinces are left on their own with no help and, as a result, they do not perform.
Members also wanted to know the breakdown of the title deeds per province – if there are any plans for ratification of poorly build houses. They asked why municipalities such as Buffalo City and Nelson Mandela Bay have not yet received their accreditation since their evaluation in 2014; whether on the urban settlement development grant, the metropolitan municipalities are spending this money to the satisfaction of the community.
The Committee also expressed its concern where provinces are sending money back to the Treasury, like in North West, and not spending the money on housing projects. Members felt like there is no control over that and the people are suffering as a result. They asked why the Department in North West was not placed under section 100(1)(b) of the Constitution, where the administrator will be placed there to oversee the performance of the Department. Members said that this situation is unacceptable when there is a company in the North West that is always all over the news about issues of non-delivery when there are amounts of money being paid to this company. They wanted to know if the Department is aware of this and if it is, why it has not made the necessary intervention.
Lastly, they asked whether, on the municipal emergency housing grants, the Department is satisfied with itself that the money allocated to this emergency service was used for those particular services or not. If not, what are the reasons and issues behind this?
The Chairperson opened the virtual meeting, welcoming the Members, delegates from the Department of Human Settlement (DHS) and the Committee support staff. He received the apologies and introduced the agenda of the meeting, before handing over to the DHS for its presentation.
Briefing by the Department of Human Settlements: 2021/22 Annual Performance Plan
The presentation was done by Acting Deputy Director-General (DDG): Human Settlement Delivery Frameworks, Zoleka Sokopo, Acting DDG: Corporate Services Sindisiwe Ngxongo and DDG: Chief Financial Officer, Ms Funani Matlatsi.
Responses to Prevailing Challenges
The Department was requested to make a submission for revising the Medium-Term Strategic Framework (MTSF) for 2019-24 due to changing context and budgetary constraints. The revision provided an opportunity to ensure alignment of sector strategic plans and annual performance plan. The revised Human Settlements targets were submitted to the DPM accordingly.
Main outputs to be achieved by 2024:
- An integrated implementation programme for 94 Priority Development Areas (PDAs)
- Housing units = 300 000, revised from 450 000
- Serviced sites = 300 000
- Subsidies for Finance Linked Individual Subsidy Programme (FLISP) = 20 000
- Social Housing = 18 000, revised from 30 000
- Community Residential Units= 5 000, revised from 12 000
- A total of 1 500 informal settlements upgraded to Phase three or formalised in terms of the Human Settlement Code.
- Title deeds registered = 1 193 222
Members were taken through the strategic plans per programme over the MTEF.
[See the presentation document for a detailed breakdown.]
On the budget cuts and reprioritisation, the Department indicated that Cabinet introduced total budget cuts amounting to R486.9 million over the 2021 MTEF period. Compensation of employees was cut by R188.3 million over the 2021 MTEF period, goods and services was cut by R100 million over the 2021 MTEF period while the reduction of R23.3 million on the Human Settlements Development Grant is to ensure equity in the reductions on compensation of employees. Two provinces, Western Cape and KwaZulu-Natal, utilises the grant for compensation of employees. Social Housing Regulatory Authority: Operational was cut by R13.7 million over the 2021 MTEF period of which R107 000 is on compensation of employees, Social Housing Regulatory Authority: Institutional Investment was cut by R4.3 million over the 2021 MTEF period, National Housing Finance Corporation: FLISP Capital was cut by R89.3 million over the 2021 MTEF period (with a operational cut of R3.6 million), Housing Development Agency: Operational was cut by R56.9 million over the 2021 MTEF period of which R11.5 is on compensation of employees, Community Schemes Ombuds Services: Operational was cut by R4.8 million over the 2021 MTEF period of which R246 000 is on compensation of employees and the Scholarship Programme of the Department was cut by R2.3 million over the 2021 MTEF period
Ms S Shaikh (ANC, Limpopo) noted that when the presentation was on the MTSF, it was indicated that there is a reduction in housing units and a reduction in social housing. She asked the Department to expand on the reasons for the deductions and how this affects different provinces.
She noted that there are a lot of backlogs on the issue of title deeds. She wanted to know what the backlogs are and the reasons for the backlogs, especially in Limpopo.
She also noted the high usage of consultants. She asked the reason for this and if it is because the Department is incapacitated.
Mr I Sileku (DA, Western Cape) wanted the Department to elaborate on the budget cuts. Are the cuts because of non-performance by the Department? Or is the reason non-performance of municipalities and provinces contributing to the cuts that they are seeing from the Department of Human Settlement in the next three financial years.
He commented that they see that year in and year out the same provinces and municipalities are not performing well and instead of assisting them their budget is being cut and transferred to other provinces. He asked what can be done moving forward so that they look at how they deal with provinces and municipalities for non-performance instead of punishing their residences by taking away their right to human settlement and basic services and giving it to provinces that are outperforming.
He wanted to know how they are helping the provinces in terms of pre-emptive rights.
Lastly, he asked what kind of support that is going to be given to municipalities and provinces in the implementation of Informal Settlements Upgrading Programme (ISUP). This is because year in and year out, targets are not being met and some municipalities and provinces are left on their own with no help and do not perform, as a result.
Ms Z Ncitha (ANC, Eastern Cape) asked for a breakdown, per province, of the title deeds.
On programme four, she noted the Department is still developing policy on that. She said that this is a very critical matter that she would like the Department to commit itself with a timeframe. Hence, she wanted to know when they plan to start the programme.
She asked about the ratification of houses that were poorly built and houses that were built before 1994, which have challenges, especially in Buffalo City and Nelson Mandela. She wanted to know if the Department is still prepared to deal with that challenge.
Lastly, on the issue of accreditation of municipalities, especially in Buffalo City and Nelson Mandela, she recounted that the municipalities were taken through an exercise of being evaluated for them to be accredited in 2014 and up today they have not yet received results. She reckoned that this impacts the metro in terms of capacity to be able to deliver as expected.
Ms C Visser (DA, North West) noted that where provinces are sending money back to Treasury, like in North West, and not spending the money on housing projects feels like there is no control over that and the people are suffering as a result.
She noted that the plans all look the same and also the quality of houses differ. She wanted to know if they are any controls in place in that regard.
The Chairperson noted that whilst the housing shortage is very acute in the North West, year-in-year out it has gained momentum that money has to be taken from the province and redirected to other provinces because of non-performance. He asked why the Department in North West was not placed under section 100(1)(b) of the Constitution, where the administrator will be placed there to oversee the performance of the Department. He said that this situation is unacceptable when there is a company in the North West that is all over the news every time about issues of non-delivery when there are amounts of money being paid to this company. He wanted to know if the Department is aware of this, and if it is he wanted to know why they have not made the necessary intervention.
He also said that if money is taken from another province to another, it does not mean that the housing need in that particular province has disappeared, but it is worsened because more people will not have the housing opportunities, as the money would have been taken away. He said that this needs an intervention from the Department and wanted them to respond on this issue.
He said that there is a need to find other ways and measures, apart from state funding, from either private sector funding or even from the Banks, in order to ensure that they also invest in financing housing, especially in the lower segments of society.
More so, he said that the Department is spending a lot of money on the metro municipalities. He wanted to know concerning the urban settlement development grant if the metropolitan municipalities are spending this money. That is, is the money being spent to the satisfaction of the communities? If not, what is it that can be done to address this issue?
On their approach, he said that it is underpinned by the breaking new ground strategy to ensure that they do not only build houses but build a human settlement for good human habitation. He explained that the proliferation of these houses where there are no amenities, hospitals, clinics, etc. amounts to pushing the poor to the peripheries. He admitted that this shows a lack of integration in their approach, and this may defeat the whole purpose of breaking new ground and ensuring that they built sustainable settlements. He wanted to know what can be done to address this issue.
On the municipal emergency housing grants, he said that this was propelled more in the last financial year as a result of the impact of COVID-19. He wanted to know if the Department is satisfied with itself that the money allocated to this emergency service was used to those particular services or not. If not, he wanted to know the reasons and issues behind it.
The CFO, on the issue of consultants, indicated that since they are working on filling the vacancies, they took a view, as a Department, that whilst they were embarking on recruitment there was a need for specialised people from outside to be augmented within their project and programme management department. However, looking at the previous financial year 2020/21 they will notice that there was a slight decrease from the bigger amount they paid in the 2019/20 financial year to the consultants. But this is going to be further reduced, as their contracts are coming to end soon.
On the issue of non-performance from the provinces i.e., on the reduction of budgets, she said that she thinks that this is more because of the fiscus that is under pressure, let alone the fact that provinces are underspending; the penalty also comes into the picture. But from where they are sitting as Department, they intend to optimally utilise the resources that they have so that they do not lose any cent to that effect.
She said that they have noticed that where they have a trend of provinces or metros that are not performing, money is being lost back to fiscus simply because, at the time when Treasury makes a review of all the money that was not spent, other pressing matters arise – such as the hospital issue, the pandemic and health issues, which put much pressure on the funding of government. So, when they think of the money that was not spent in the last financial year, vis-à-vis the challenges that the country is battling with, they have to weigh those options and decide on which one is better. But one will find out that the challenges faced by the government, like the procurement of vaccines, take more weight on the budget. So, they lose more money on so many levels and not only because of non-performance.
However, based on the Department not wanting to lose money within the sector, it had developed in terms of the Division of Revenue Act that it would retain the money and use the money for the benefit of communities in that particular area where it can easily absorb the money, in contrast to taking the money back to the Treasury. They are trying so hard that for the benefit of the country to receive the services that are desired. So, if one province cannot spend, they take the money and give it to the provinces that can. But they do not leave such provinces with the problems that they have, as they do have interventions in place.
She also noted that they have made some partnerships with the banks so that they provide them with information that is related to the home loans that they grant to the categories of the people that make applications to them. Some people do not qualify for the bigger part of the loans and also do not qualify to get RDP houses. Therefore, they do have programmes that assist such kinds of situations. They have asked the banks for the reasons why they disapprove of some of the applications, and why they give some loans with conditions. They then assess the information and if they are quite concerned with some of the reasons provided, they go back to the bank to plead with it because some categories are sensitive, as they also cannot get money under their programme as well.
They have also made some partnerships on the employer assistant housing whereby they have also negotiated with the likes of Sasol, Pick ‘n Pay and Checkers. This was because some people fall under the private sector and they may not be in the position to get the employer assistant housing programme from the Department. So, they are asking the private sector if it can provide them with an assistant housing programme or any other programme that could assist them because whilst the Department is trying, it cannot reach all.
Mr Joseph Leshabane, DDG: Programme and Project Management, DHS, indicated that the details of the title deeds and backlogs in provinces or per municipality will be made available to the Committee.
When they receive the list, the Committee will see that the biggest lagging activity is that townships are not formalised, so there is no surveyor-general planning in some cases. Therefore, they cannot register or transfer the property. In some cases, they have the reality that the very township establishment process is not being concluded whether due to the absence of engineering service certificates or municipal outstanding charges and accounts. But they will certainly make that breakdown available.
On what support is given to metros and provinces to implement the informal settlement upgrading, he said that they can confirm that in 2009 they introduced a national upgrading support programme, which was aiming at supporting practitioners in provinces and municipalities to better respond to informal settlement upgrading but also understanding what the policy is and what the strategies are. The Department also went a step further and assisted the provinces and municipalities by undertaking visibility assessments of all the informal settlements to prepare the upgrading plans. However, the Department have had instances where these municipalities and provinces have received these upgrading plans and have not implemented them. They have then taken a step further this year and introduced the stand-alone informal settlement upgrading partnership grant, which goes to provinces and metros, and they have assisted each province and metro to put together an implementation plan that this grant is funding. They have also realised that they must still go deeper and a step closer into that space and help provinces and metros to get contractors, in order to be able to deliver the actual upgrading interventions that are required.
In so far as ratification is concerned, particularly in the Eastern Cape, he indicated that Minister has made specific approvals for ratification interventions by approving a portion of the grant to be directed towards that so that the houses can be ratified. It is going rather slowly but it is not because of the absence of policy or funding but it just comes down to executing.
On the quality of housing, he explained that it is policy that every house that is built must have been enrolled with the National Home Builders Registration Council (NHBRC). What the NHBRC does is to look at the soil conditions, the design of the foundation required, and inspect the construction at every milestone. He confirmed that this control mechanism is in place; they can track and easily pick up when there is non-compliance. So, if it is enrolled and there are problems, the warranty cover is then activated to rectify the house.
On the issue of the incomplete projects where projects are implemented but there is a portion that is then left incomplete, he remarked that this is the cancer that they face where they find that the contractor sometimes gets liquidated or runs into other problems and they do not complete that which they were contracted for. Before bringing another contractor they then have to do due diligence and look at all the work that is left to be completed and they have a programme that seeks to intervene and assist provinces to complete those projects.
On the emergence grant granted to municipalities, he said that he can confirm that in so far as the expenditure of this grant and the purpose to which it is allocated, they have not picked up any problem in that regard. However, the problem they have faced is the slowness with which the municipalities who have received these grants implement and complete the projects. They have also picked up that the municipalities then struggle with procurement and other matters, but the funds remain intact. This is why, in due course, they will come and explain how they are repurposing the grant once the approvals are in place.
On the North West scenario, he indicated that a decision was taken to intervene in terms of section 100(1)(a). But through the intervention, it was decided to separate Human settlements from local governance, which was noble because effectively Human Settlement is quite a massive portfolio. However, in that separation, the bulk of the staff i.e., the finance was left on the other side of COGTA, and Human Settlement was left without competence in that regard and several areas went wrong. This is the reason why the province could not reconcile expenditure at the time with delivery. They also found that the Project Management Unit (PMU), i.e., sourcing the capacity to support programme implementation, did what it was assigned to do but the real trouble is that it was not managed well leading to it not being optimally utilised. But the PMU’s contract has now ended and therefore they are advising the Department to rather focus on building its internal capacity so that when they bring external capacity, they are better able to manage it.
He also indicated that, in terms of provinces and municipalities, they have an elaborate programme of interventions and support. However, support has limitations, especially where accountability and responsibility meet. They can support to a point, but they also have to be realistic and accept that sometimes those who are responsible and accountable must then deliver on that accountability.
DDG Ngxongo said that, in terms of the appointment of the boards, there are vacancies now and the process from the Department has been fairly completed; the boards are now en-route to the Cabinet for concurrence. This is in terms of the Department of Public Service and Administration (DPSA) handbook on the appointments of persons, which expects them to seek concurrence with Cabinet.
DDG Sokopo explained that the reason why Members are seeing that there has not been integration is not because of a lack of policy; they have also observed the same thing in lack of amenities in some areas. What they have to do is to ensure that they have better integration in terms of planning and in terms of ensuring that there is an integration of budgets and development. They have also looked at the integration of infrastructure and communities. The 96 areas that they have declared allows them to achieve these various forms of integration and they are now forcing and ensuring that the development plans are emerging from the municipals with the assistance of provinces. They are also ensuring that the National Departments, be it Transport, Health or Basic Education, all understand that these priority development areas are organising tools for government to ensure that there is integration. Therefore, the investment of government is directed towards those areas so that if there is a need for a school, for example, they start early and not realise latter once there is a development that there is a need for school. So, it comes at a planning stage so that they can coordinate all the processes of planning, i.e. budgeting and ensuring the infrastructure is sequenced properly.
On the issue of the pre-emptive clause, she said that there is an eight-year pre-emptive clause and they have realised that there is no system that they are putting in place that is at the municipal level, where somebody can walk in and say they want to sell their house and have someone to assist them. So, they are establishing this kind of support centres and those centres will provide a range of services, and the locations might be at the municipal level or any other area that is accessible to communities; this will include assisting in buying and selling of the properties.
Ms Nonhlanhla Buthelezi, Acting DDG: Human Settlement Delivery Framework, DHS, spoke on the policies that they develop, the first one being the rental policy. She said that when looking at the plan it looks like they are not doing anything; the fact that they have it as a target does not mean that they are not implementing it currently. They still have programmes that they regard as rental interventions, e.g., social housing programmes and the community residential development programme. There are so many emerging rentiers, and part of the reasons they are revising policy is for them to be able to be responsive in terms of the current environment and make sure that they have instruments that are functional for them to provide housing in the form of rentals.
On the plans that they have, which look like they are the same: she explained that this also forms part of the policy and if they look back to their earlier housing scheme, they had houses measuring 16 square meters, which have now changed significantly to 45 square meter house. They also provide 50 square meters for the military veterans' houses, although the additional 10 square meters is funded by the Department of Military Veterans as a top-up. They also try to build disability-friendly houses to cater to those who are disabled. The standards, therefore, change every five to seven years, so the plans may look the same outside but inside they are not.
On accreditation and capacity building in the Eastern Cape, she indicated that they have two metros that have been earmarked to be given a phase-two accreditation, which means that they are transferring the housing function on a small-tie basis; that municipality will be responsible for administering the funding and will be hiring its own practitioners and contractors for developing. The programme is still there, not halted, and it has been applied to the majority of the province. But for them, it is about having the certainty that the municipality can carry its functions and will be able to carry out the additional function of housing, which comes with additional responsibilities. If the municipality is not doing very well with its affairs it then becomes difficult because they have specific tools they use to assess which municipality is ready for such a level of accreditation.
Mr Mbulelo Tshangana, Director-General, DHS, indicated that they will share, with the Committee, the breakdown of the performance of the metros over the last three years.
He noted that Mangaung Municipality is the only consistent non-performer, and they now need executive intervention by COGTA and National Treasury so that they can deal with the challenges. The constant performer in spending the budget is Buffalo City in the past four years.
The meeting was adjourned.
Download as PDF
You can download this page as a PDF using your browser's print functionality. Click on the "Print" button below and select the "PDF" option under destinations/printers.
See detailed instructions for your browser here.