The Committee convened on a virtual platform for a briefing by the Department of Human Settlements (NDHS) on progress on blocked projects. The Minister and the Deputy Minister were present in the meeting, along with the Director-General.
The Department’s presentation gave a provincial breakdown of the number of housing projects in each province and an indication of which projects remained blocked. The major reasons for these blocked projects included poor performance of contractors, land invasions, construction mafias and a lack of bulk infrastructure. The Department provided a brief overview of their process of unblocking these projects and outlined the key interventions where projects were unfinished.
One of the initial concerns raised by Members was the lack of data for the Western Cape and Northern Cape provinces. Members were concerned that through the process of the self-reporting, provinces were not providing accurate information or being transparent about activities on the ground. There were a number of concerning discrepancies between the budgets allocated compared to the number of projects indicated. The Department emphasised that the programme of unblocking blocked projects was a work in progress and, in some instances, it would have to verify the information received from the provinces. Verification had to occur because projects across provinces were blocked due to various circumstances, including a misunderstanding of what blocked projects are. Some provinces paid monies to contractors in phases. So, the information provided to the Committee did not account for this factor. On the existing problem of construction mafias, the Department said it would be working with the Justice Cluster to prevent the intimidation of its officials and disruption of its work.
Members wanted to know what the consequences were for contractors who abandoned their projects, as this appeared to be a major hurdle in process of recouping monies. The Department explained the process of blacklisting abides by the relevant policies and is done through National Treasury for a period of not more than ten years. The Department would also assess the issues in each of the projects to determine what level of intervention was required to ensure the completion of the projects.
The lack of bulk infrastructure was another major issue resulting in the blocking of projects. The Department said that it had approached Treasury to allow it to use 30% of the housing development grant to fund bulk infrastructure – a notable increase from the previous two percent.
The Department repeated its intention to continue monitoring projects across provinces and verifying information received from provinces against the Housing Subsidy System. The delegation reaffirmed its commitment to providing adequate housing for people and to communicate more effectively with communities that faced housing challenges.
The Committee agreed that the Department would return for quarterly briefings on the matter, and the Minister emphasised the need for collaboration between the Department and the Committee on this programme.
The Chairperson opened the virtual meeting, welcoming the Members, support staff, the Ministry as well as the delegation from the Department of Human Settlements. She then handed over to the Minister for her introductory remarks before the Department’s presentation.
Minister’s Introductory Remarks
The Minister of Human Settlements, Ms Mmamoloko Kubayi, provided a brief introduction to the presentation by the National Department of Human Settlements (DHS), on the progress of blocked projects. She said that the Department began its work on putting together the blocked projects in 2021. Provinces were asked to give the Department information regarding the progress of projects, which had come to a standstill, and guidance on how the Department could address these. When these projects come to a standstill, not only do beneficiaries not receive houses, but government also has to account for resources that have been spent. The presentation is set out in terms of provinces. All provinces provide the number of projects. However, two provinces in particular, the Northern Cape and Western Cape, indicate that there are nil projects; the presentation will explain how the Department plans to deal with them. The Department has a list indicating the number of projects, what as well as where the project is based on the list provinces have provided it; it will make this list available to Members once it has been verified. This verification will be done by sending teams on the site to verify that numbers the Department is given are correct in that particular province. The structural integrity of projects is also verified because there are projects that have not been completed due to the lack of bulk infrastructure. The verification ensures that this information is correct and that, if bulk infrastructure is put, the project will be completed. Verification needs to be done to ascertain that the Department’s intervention is effective. In other areas, this work has started, while it is pending in other areas. The work is in phases across the provinces. Where ‘nil’ is indicated, the Department believes that there is a need for verification before confirmation, because there is a misunderstanding of what blocked projects are and where they are.
She then outlined some of the reasons for blocked projects across the provinces. One major reason, for example in KwaZulu-Natal, is what is termed “corruption mafias”, who are stopping projects because they want money. In such cases, contractors start losing money because they have to spend money on security or they end up pulling out of sites. Other issues include corruption as well as incapacity of the contractors. Other reasons vary from province to province. Another problem is when contractors are given contracts specifically for top structures, but then planning is not done properly, and there is either no bulk infrastructure or it is not connected to the houses. The Department has committed and started responding to these issues. It has been agreed that these projects will start to filter into their business plans from the beginning of April 2022 in terms of the financial year 2022/23. The projects will be phased in where the Department has enough data, where it is clear in what needs to be done and where it is clear on how to unblock the projects. Examples of such quick projects where there is no bulk infrastructure or where they do not have connection to the houses and the houses are complete. The houses will be completed so that they can be handed over. In other provinces there are service sites and people are therefore capable of building for themselves, and maybe the houses are already built halfway. In such cases, the Department hands over the houses or sites, and the Department is able to support them. Therefore, the Department is looking at various interventions. This is work in progress.
The Department can confirm and agree that, in terms of the Committee and its programme, the Department can present its progress, after every quarter, on unblocking these projects where there are issues as well as its intervention and response. In some provinces, the work of audit has resulted in death of some staff members. For example in the Free State, an official responsible for the audit of these unfinished projects was bumped by a car on the roadside and later the forensics revealed that he was killed. This tends to put fears into the teams working, especially where there are related issues of corruption. In the Gauteng government, the teams have requested that police support them because the construction mafias are intimidating the officials and giving them death threats. This is causing difficulty in unblocking some projects and resolving challenges. This is also the case in KwaZulu-Natal. On unblocking the projects and implementing consequence management, the Department has approached the justice cluster to ask for support so that the Justice Cluster can consistently provide information on threats so that it can protect its hardworking officials in resolving these issues.
The Minister thanked the Committee Members for their patience. The Department believes that this is collaborative work. As the Committee does its oversight through visits to the various provinces, the Department can use its reports to verify information and use the information to unblock projects. She thanked the Committee for the opportunity to make a presentation.
DHS briefing: progress on blocked projects in provinces
Ms Nonhlanhla Buthelezi, Acting Deputy Director-General: Human Settlement Delivery Frameworks, DHS, gave a presentation on the progress of blocked projects. The presentation provides information on blocked projects as of the year 2019.
Problem statement (slide four)
- There are 19 796 projects recorded on the Housing Subsidy System (HSS).
- About 3 255 were initially deemed to be blocked.
- A blocked project covers projects that are slow-moving and have not incurred expenditure after more than 36 months, and projects deemed by the province to be in need of special intervention.
How many projects?
The total number of blocked projects, as provided by provinces by 20 February 2022, was 533. There were 3 522 total projects blocked with no expenditure since 01 April 2019. (See slide five for complete breakdown.)
Common reasons for incomplete work (slide six & seven)
- Poor performance of contractors
- Bulk infrastructure, connector and link
- Land invasions
- Construction mafia
- Projects needed to be closed
National unblocking process (slide ten)
NDHS is developing a National Unblocking Programme Plan (NUPP), which comprises a series of steps.
- Analysis on HSS
- Provincial Action Plan
- Support Intervention
- Final Evaluation and Exit Strategy
Administrative capacity support panels (slide nine & ten)
NDHS has a number of interveners for a specified period to support the administration of the programme including:
- Technical: Experts on work related to built-environment fields in terms of practical, methodological, systems, and step-by-step work involved in human settlements operations.
- Political: Political champions who serve as advisers to executive authorities, with interest in operations and practical human-settlements related matters, who can advise both technocrats and political principals on variety of matters and serve as members of any working groups/sub-committees on various streams of work.
- Social: Social facilitators that can work with communities and engage on operational matters and report accordingly.
Provincial summaries as to be included in the business plans (slide 12)
Notably, for the financial year 2022/23, Limpopo is allocated R 356 183 520 for 8 010 units. Eastern Cape is allocated R276 44 284 for 21 534 units. KwaZulu-Natal is allocated R 71 613 331 for 13 688 units.
Blacklisting & recouping the monies paid (slide 13)
- In the event of non-performance, before proceeding with restrictions the province must have put the contractor on terms to rectify nonperformance – giving them 14 days to rectify nonperformance.
- General terms and conditions of every contract must be applied technically and procedurally.
- Restrictions can only be for a period of not more than ten years.
Ms S Mokgotho (EFF) noted that, based on the budget allocation for the financial year 2022/23, it was stated that Limpopo had been allocated a budget of R356 183 520 for the building of about 8 010 units. Eastern Cape had a budget of R276 844 284, with about 21 534 units to be built. This is a discrepancy, as there is more money allocated for Limpopo for only 8 010 units, yet in the Eastern Cape, more units are built for less of a budget. Why was there a discrepancy? There were also no reasons provided for the blocking of projects in the Eastern Cape and Western Cape. Could the Department furnish the Committee with reasons?
With regard to land issues, in the Eastern Cape, it was stated that there are nine land issues that the Department came across, 27 in the North West, one in the Free State, nine in KZN and one in Mpumalanga. How long was it going to take the Department to resolve these land issues? What were the land issues? Were they the same land issues or did they differ?
There were blocked projects where the Department blocked the project because the contractors abandoned the projects. With regard to contractors that have abandoned their projects, was the Department going to blacklist them? How was the Department going to deal effectively with these contractors? Were they going to be provided with tenders in the future? Was the Department going to be proactive enough to protect all those officials who are doing oversight in provinces where the contractors were being threatened? The presentation speaks of blocked projects within the 2019 financial year until date. But in provinces such as the North West, in Mamusa Municipality, wards six, four and three have houses that were built by contractors in 2015/16. To date, those houses are incomplete. In Moses Kotane Municipality, in Ward 14 and 28 in Ledig area, there are houses that were long built before 2019 that are still incomplete. Was the Department aware of this? If yes, what would be done about this? If not, when would the Department intervene?
Mr B Herron (GOOD) was concerned that the report seemed to be based on self-reporting, where the provinces were asked to identify the projects that they regard as being blocked. This is why they have ‘nils’ for the Northern Cape and Western Cape. This could not be the reality on the ground. He was trying to understand the discrepancies in numbers where the provinces reported ‘nil’.
The last project listed on the last column on slide five indicates that there were 209 for Northern Cape and 665 for Western Cape, and then the explanation was that the projects needed to be closed. He understood that this to mean that the project was completed but there was some administrative process that needed to be done, which meant that the project was still reflecting as live. Could the Department explain the discrepancies in those numbers and whether they did in fact rely on self-reporting? He said that self-reporting is not a good place to start because there are some provinces that would like to claim to be the best run or well-run; so, there is an incentive to underreport when they are underperforming.
On the national unblocking programmes, on slide seven, where the issues are enumerated: the Western Cape was an example of a deliberate underreport. Why was a project like Siyahlala in Dunoon not reported as a blocked project? There was an informal settlement that was identified for priority relocation and temporary housing in February 2018 because it was built against a freight railway line. Transnet wanted to build a wall, and the train service could not operate. In 2018, it was identified as a priority project. It was, again, identified as a priority project in 2020 when Covid-19 hit. It was one of the Department’s priority projects, given the health conditions in informal settlements, yet there has been no progress made. It is a land issue because the provincial department, through the Housing Development Agency (HDA), purchased the wrong land – land that was zoned in an industrial park. So, how is the province reporting nil and the Department accepting that there are no projects when there are a number of projects that are blocked – one urgent one being Siyahlala. People are still living in those deplorable conditions that were identified more than four years ago as requiring priority intervention, while the provincial department, the HDA, and owners of the industrial park where they bought land to relocate this informal settlement, are all engaged in litigation. The table could not be a true reflection of the projects that were blocked, and the Department needed to do some more scrutinising of what is being reported by the provincial departments and come back to the Committee with a report that truly reflects what is going on in each province, with an explanation as to why provinces were underreporting blocked projects. Was there a mechanism for the Department to intervene in projects that are blocked directly? Was there a way for the National Department or National Minister to intervene where a provincial department was still obviously pursuing the wrong path?
Mr A Tseki (ANC) agreed with the Minister's suggestion that the Committee get a quarterly briefing on the progress on blocked projects. He asked for clarification on the ten year restriction for non-performance of contractors. Did this mean that, when a company had been blacklisted after following all the due processes, it would be allowed to come back after ten years? What was the rehabilitation process post the ten years? Because companies have to be rehabilitated before they come back, with due note the legal challenges that Ms Buthelezi spoke about, which may delay the Department’s finalisation of issues. He agreed with Mr Herron that the numbers under Western Cape and Northern Cape must be verified as a matter of urgency. Western Cape, in particular, keeping in mind their political dynamics, may want to hide something so that their challenges are not seen openly.
Ms N Sihlwayi (ANC) pointed out that this programme had been requested for a long time. It was a very complex and complicated programme. The Department had managed to dig through a programme that is needed in communities to address the issue of adequate and sustainable housing. But what has happened is that the inspectorate division, the NHBRC (National Home Builders Registration Council), had signed out and given beneficiaries the impression of adequate housing. There was a need for consequence management on officials of individual departments and municipalities in NHBRC because it is the Council that has misled the department. She appreciated that the programme was formulated with a budget. One must not be worried about the issue of definition. As the Department and Committee continue to address these issues, they will understand that there is no one definition of ‘blocked projects’, because the concept is complex. She appreciated that this was the start of the process, and commented that patience was needed to conduct the programme carefully yet efficiently, leaving no stone unturned.
Ms C Seoposengwe (ANC) emphasised the importance of communication not only between the Committee and the Department but with the communities too. It becomes a problem if communities do not get an explanation as to why projects are blocked. She suggested the Department try and open the dialogue between those communities concerned.
She said that the matter of title deeds had been raised many times. and it was the national anthem of this Portfolio Committee. A title deed has power for the owner of the property. There were families that have been divided because of title deeds. This issue could not be overemphasised.
On the recouping of monies from those contractors who were unable to perform: it was important for the public to know that the Department was able to recoup a lot of monies from contractors. Blacklisting must be clear and not hidden. The public needed to know the details about blacklisting. On the Northern Cape and Western Cape projects, there needed to be a better understanding of what was happening there.
The Chairperson asked the Director-General why they had started the programme only in 2019 because there were projects left even before that. What would then be a resolve for those people whose projects have been blocked, whose houses have not been finished or were poorly constructed before 2019? How were those houses going to be rectified if the Department has not included any reason why they started in 2019?
Agreeing with Ms Seoposengwe and Mr Herron on the Western Cape and Northern Cape discrepancies, she suggested that Members knowing blocked projects in those areas submit lists to the Department, through the Committee secretary, so that this matter will be resolved. The Committee agreed with the Minister that the Committee must get feedback on a quarterly basis, where it gets an assurance that gaps are being closed, such that the same issues are not experienced again.
On the budget, she asked: was the budget going to be used as allocated, or did the provinces have to prove that they had done certain things before they could utilise a budget? Because, at some point, when the Committee was briefed about rectification programmes, there was a rider that Treasury wanted certain processes to be followed before they could be built. With these long-standing community issues, would it be a normal budgeting process or would provinces have to utilise their own budget? How is it going to be ensured that provinces are pinned down so that they do proceed with other projects, without finalising projects left?
Ms E Powell (DA) asked the Department to take the Committee through the funding process. She reckoned that costs already incurred will not necessarily be recouped. She gave the example of the project in Dodoma Avenue in KwaZulu-Natal, which had been delayed a number of times. If these projects were moving on the business plans again, how would they be funded?
On the slide about administrative capacity support panels, there was a column for ‘political champions’. For the past two and half years, there were National Rapid Response Task Teams (NRRTTs) that have cost the Department millions of Rands; their terms of reference for their contracts were specifically to work on unblocking blocked projects. Could the Department give the Committee some feedback in terms of which projects the NRRTTs were successfully able to unblock? What, in the Department’s view, was the reason that there is still a crisis three years after the NRRTT has been on the ground, with this as their sole mandate. Who were these political champions that have been identified in terms of this administrative capacity support? Did it differ from project to project, perhaps councillors in the local area, or was this going to be a new appointment of specialists? Who would be responsible for the awarding of new contracts, and what oversight would take place in that regard? Could the Department talk the Committee Members through the process of blacklisting? She was aware that it is a very intricate process and there is a lot of confidentiality around it. How many contractors was the national Department aware of having been blacklisted in the past three-year cycle?
Deputy Minister of Human Settlements, Ms Pam Tshwete, said that the responsibility of national was to give money to provinces to build houses. Before COVID-19 there were questions by the Committee asking about the unfinished houses in all provinces, and the Department was given marching orders to come up with a report, which shows what they are trying to do now – to go to provinces, monitor projects and check that they are finished.
She agreed with Mr Herron and reiterated that the Department would go back to the relevant provinces and verify whether what was reflected is correct. She confirmed that there are many projects that are unfinished in the Western Cape, and Dunoon is one of them. In another housing project, there was money spent for the bulk infrastructure and there was preparation to build houses. That was long ago, and there was money spent and the project was blocked. There still needed to be more check-ins with these provinces so that they do not underreport. She said that the legal department should also highlight the blacklisting issue and give the Committee direction. After giving provinces money, it was the provinces’ prerogative to appoint contractors. But the Department would make sure to follow up; it has already started communicating with the provinces. She was in the Eastern Cape for two Imbizo events, and the Department was reporting about houses that were unfinished and giving them timeframes. She admitted that the Department failed to communicate with the communities and that was why communities go to the streets because they do not have information. The Department would make sure that it is monitoring this, and it will inform the communities. The Department will find a way to make sure they report to all communities. She promised Members that it was going to come back with more information and verified information.
Ms Buthelezi said that the Department would be engaging with Northern Cape and Western Cape to give the Department the correct information. One of the areas that they have used as an example was the issue of the bulk infrastructure project. Given the magnitude of the bulk infrastructure in the country, in most of the provinces, there would be limitations.
Title deeds were the last step in building houses, where the Department issues the title deeds to the relevant parties. So, if a province said it did not have blocked projects and it could not provide reasons, at least the two issues provide guidance to the provinces on what needed to be done.
On the land issues raised by Ms Mokgotho, she explained that the problem was invasion. In some instances, cases would have been referred to court, and in some cases, provinces would be required to buy additional land because maybe the settlement would be overloaded with beneficiaries. So, whatever portion of land that they would have constructed on would not be sufficient. In terms of contractors that abandoned projects, the Department’s process was that these contractors would be blacklisted, but the procedure considers what is allowed in terms of policy and prescripts, which is not to restrict the contractor for a period of more than ten years. The Department cannot give jobs during that period because that contractor would be under strict restriction. They would have been blacklisted and put in the database of National Treasury, where each and every department that wants to use that contractor will be able to see that that contractor has done short work and has been blacklisted. Each and every government department is expected to check whether the contractors are in the register of restricted suppliers. This information is available.
On mechanisms that will be put by the national department, regarding policy interpretation, the Department realised the provinces are taking the wrong path in terms of interpreting a particular prescript. The Department should be able to guide the province in terms of educating the officials that are involved in a specific project where they interpret how the quantum needs to be applied. This was one of the interventions that would be put in place given that it is a space where the Department has more control. In some cases, it would be where the province has not followed the right prescripts in terms of interpreting some of the provisions.
On this being a self-correcting process: it was agreed that it was indeed a self-correcting process because, if the contractor was allowed to work during the period of the 10 years, it would become more difficult for the Department to track the contractor. Oftentimes contractors change names or start trading under a different name. But the Department had picked up that for most problem areas they would be able to do rehabilitation in regard to the small contractors or emerging contractors who have given explicit reasons as to their lack of performance.
In response to Ms Sihlwayi’s question on the NHBRC, which does quality assurance on all the projects the Department does: she explained that if some work had not been done up to a quality standard, there would be correction that would be done and a report would be issued to the province or contractor to go back and correct what had been identified as being in need of correction on the site. If there are issues picked up after a period of five years, there is a warranty scheme that the NHBRC administers for beneficiaries of houses that are not of the right quality. The scheme advises them to apply to the NHBRC to benefit from the warranty scheme.
The recouping of monies required the Department to be very stringent around what it does. For example, when the Department paid per contractor, it paid according to the value of money that each and every contractor would have done work on. It paid per milestone, like a foundation. If foundations were done and were quality checked, then there would payment in relation to that milestone. Recouping was one of the areas that did not necessarily reflect in the information the Department had since received, given that most of the provinces paid according to their milestones.
On why the Department started the programme in 2019, she indicated that the Department had to start somewhere, given that it is using its HSS system. The system made it easier for the Department to pull a report per financial year and see the expenditure that a project would have incurred. If it was a project that was old, the Department relied on the province to be able to help. For example, the Free State and KwaZulu-Natal were able to provide the Department information on projects as far back as 2011, and they had reflected the challenges around the subsidy quantum.
On the closing of gaps: the Department would be issuing the standard operating procedures for provinces to be able to close their projects because it was often issues of administration where provinces had problems closing projects.
Director-General, Mr Mbulelo Tshangana, on the budget issues raised, indicated that the Department was still busy verifying those figures. It had to reconcile what was being proposed by provinces in the business plan and what was being budgeted for. The Department would be meeting later that afternoon with HOD’s from each province to discuss the business plan because it had to be finalised and submitted to National Treasury by end of March 2022. To reconcile the numbers in the budget, the Department had to look at the unit costs in every project. It may be that, in some projects, work was completed but there was still outstanding work to be done in connecting and linking bulk infrastructure. The Department had to assess the costs associated with this.
On the land parcels: there were quite a number of land issues the Department was dealing with and some were preventing it from issuing title deeds. It may have been that there were no sub-divisions done or township registers opened, and the Department had to do this work before it issued title deeds. Part of unblocking projects was dealing with the land issues.
On the specific examples of blocked projects in the North West: Mamusa is one of them. The Department would go and do verification in all the areas in the North West. On the discrepancies raised by Mr Herron, he said that the Department relied on two sources. It relied on (1) what was in the HSS, which is an official system for accounting for any payment made for any milestone in human settlements, and (2) on the information provinces provided. The verification exercise would help the Department reconcile these two sources. When it goes to province-level verification, the Department would be able to tell whether the provinces were telling the truth or not. So far, provinces had been given the opportunity to give the Department those numbers. For example, in the Western Cape, HSS says 665 projects are blocked and meet the definition of blocked projects. In those projects, there has been no activity since 2019. When an official was asked about these projects, they responded that all that is expected to be done is to close these projects. In other words, they needed to deliver a close-out report on these projects. However, that statement could mean a lot of things. For one, it could mean that a title deed was not issued in those units and a project cannot be closed if no title deed has been issued. It could mean that a project is incomplete or not all the units were delivered. The provinces were responsible for closing these projects. If a project was not closed it was incomplete and in the Department's books, it was blocked. So, the Department had to do the reconciliation between what provinces were telling it and what the HSS issues was telling it. In the HSS, it was stated that the Department had more than 19 000 projects and just over 3 000 projects that were blocked; the next stage was for the Department to do reconciliation. Some of the projects were listed in the draft business plans that have been presented to the Minister. The Department still had to present other business plans to the Minister before the end of the financial year. The chances were that the Minister was going to call a special meeting to discuss all the projects that are in the business plan including blocked projects. The Siyahlala Project could be categorised as a slow-moving project, not necessarily a blocked project because some of the land parcels that were earmarked to relocate people had been invaded during Covid-19. There had been a lot of invasions in that area. The Siyahlala Project is managed by province HDA and the City. There had been some work done but it was moving very slowly and was affecting the west coastline because the intention was to move all of those people out of the west coast railway line – which is linked to many other areas. It thus had an economic impact on Northern Cape and Western Cape. There is an intergovernmental programme, which is chaired by the DG himself in the Western Cape. It meets regularly to discuss not only this project but other projects as well, including the N2 Gateway housing project – because the centre line was also affected. They have been working closely with the Department of Transport to unblock the central railway line PRASA line, and the Department of Transport had made funding available for that. He shared the frustration that this programme is not moving as fast as it should be. The Department would create a matrix of all of these projects that states the activities per project per province, and what needed to be done so the Department can report to the Committee on a quarterly basis. Information on what is happening per project per municipality will be made available, but the Minister wanted to first apply her mind to the Department’s comprehensive list that covers all the provinces and explains the nature of the projects.
In response to Ms Sihlwayi on consequence management: he reminded the Committee that, in cases where the NHBRC had not done what they were supposed to do, the Department issues a warrant for every house that it builds. If there was any structural problem that affected that particular project, then the NHBRC could activate the warranty – if the Department was convinced that the fault was by itself. In some cases, the NHBRC had caused a problem and the Department had to go and find the warranty and assist for those houses to be completed. Sometimes, there was inaccurate reporting, and the warranty was issued on the wrong houses by NHRBC. This had happened before in Nelson Mandela Bay Metro, where the Department approached NHBRC to correct the problem and the Department also wrote to the board and asked them to execute consequence management, as both the province and NHBRC have inspectors. This was indeed a complex problem. In financial terms, they would say they are 'throwing good money after bad’. The Department’s motivation was that it needed to deliver to the beneficiaries because in the books of provinces if a project was not completed and the beneficiaries are linked to that project, it would mean that those beneficiaries had received their subsidies – even though they had not been given the houses. The Department’s commitment was to make sure that the beneficiaries get houses.
On the question about blacklisting, he explained that blacklisting is highly regulated by National Treasury. On the Treasury website, there is a list of blacklisted companies. The rule is very clear: National Treasury may restrict suppliers who commit fraud, misrepresent facts, breach their contracts or engage in poor performance from doing business with the state. This means that the action of National Treasury is triggered by the instruction or request from the accounting officer of the particular department. In the Department’s case, the request would come from the provincial accounting officers. This is because blacklisting starts with contract management and a demonstration that a department has managed the contract but the service provider did not deliver on the contract. On the list, it is shown that there were a number of provincial departments that had done well in managing their contracts. The provincial DHS had not done a good job at managing active contracts because there was blacklisting, meaning the province has satisfied itself that they have done everything possible to manage that contract with that particular service provider. If the blacklisting process is started without contract management then there may be deep trouble. The process is as important as the outcome sought to achieve.
On the question by Ms Seoposengwe about communication, he responded that, in everything the Department did, communication was extremely important – especially to the beneficiaries who were affected by these blocked projects. It was important to communicate to beneficiaries as quickly as possible so that they knew that the Department was solving the problem.
On Ms Powell’s question on the NRRTT, he said that the NRRTT was not administrators of the Department, and the standard operating procedure for the NRRTT members was very clear that they will not operate outside the work of the accounting authority in the province because the executive authority in the province is the MEC. So, whatever they do, the first stop had to be the office of the MEC. Most of the work that they were doing was not administrative work; it was about troubleshooting where there were problems or community issues – for example, they were in Masiphumelele in the Western Cape when there were fires. The Department could share the report with the Committee of the work the NRRTT members had done for the Department. The responsibility of blocked projects lay with provincial HODs and MECs. Those were the people the Department liaised with to get projects unblocked. The Department was likely to come back to the Committee to present the 2022/23 business plan within which there is a list of projects that are blocked and provinces have budgeted for. It was still in the process of verifying and discussing the figures relating to projects.
The Chairperson said that the DG did not respond to the question asking what informed the 2019 start date of the unblocking programme.
Mr Tshangana said that the Department was indicating the status of the projects as of 2019, and not starting from 2019. The system was able to show the list of all blocked projects going as far back as 2008. If the project was not closed, it would be reflected in the HSS, as no project can be budgeted and paid for if it was not registered on HSS. So, the Department could choose a year, such as 2019, and look at how many projects there were and how many of them were blocked. The year used in the presentation was just to establish a baseline.
Ms Mokgotho asked whether the Department was proactive and doing enough to protect the officials that are doing oversight in provinces, where there are construction mafias or where they are being threatened when they are doing their work effectively.
Ms Seoposengwe said that there was a perception that the current government has not done anything, is corrupt and is useless. It was very important that successes were communicated because people mostly get negative noise but the positive noise is never heard. The Department needed to be more aggressive in communicating its successes, not by sugar-coating, but by communicating what it has been done. This programme was going in that positive direction. The Department should not only be able to look at the negatives but look at the positives while being fair on what is actually happening on the ground.
Mr Tshangana acknowledged the important issue of protecting officials because they had experiences where the Department’s officials were chased away and, in some instances, killed because they were doing project-level verification investigations. The Department’s job can be very dangerous at times because it has to uncover certain things. The Minister had taken initiatives to deal with this matter. She had approached the Justice Cluster to get some assistance, and some proactive measures had been taken to deal with it. This matter was extremely important because, as the Department embarks on the verification process and tries to verify what was in the HSS, and what information provinces are giving it, it would be stepping on the toes of people whose interest was to cover up all the bad things that have been happening. The Department was mindful of the challenges that it would be facing, and the Minister had taken some proactive measures to consult with her counterparts in the Justice Cluster. The Department was aware that the DGs in the Security Cluster has been dealing with the issue of business forums, and they were demanding 30%. Interventions are working in some provinces, while there is a slow pace in other provinces. Because there is crime intelligence involved in dealing with these matters, the Justice Cluster will not advertise on the work they are doing – although it was known that they are doing work in this regard.
On communication: he said that it was fully agreed that it was important to communicate the good work that the Department was doing. For instance, if the Department was going to take drastic steps to blacklist some companies that did not do the work that they were supposed to do, it went a long way to communicate that decision because it is considered consequence management in the area of supply chain. Around 2013, the Department used to make media statements and communicate decisions that it had taken around blacklisting and some of the work they wanted to do around rectification. It can still do the same. There was a lot of work it could do in this respect, and Ms Seoposengwe’s comment is well received.
Mr M Masutha (ANC) acknowledged that, in the construction space, the Department was not alone in dealing with not only the construction mafia but also genuine community grievances. For example, concerning the Magistrates Court in Mamelodi that had finally gone beyond 70% completion, all that was due to the community that took a stand; without their involvement that construction would not be completed. Even the very Security Cluster that the Department was hoping for support from had its own experiences, and the issues cut across many other line function departments that were in the construction sector such as road and communication infrastructure. The complexity and reach of this challenge were thus acknowledged. In his understanding, the unblocking process sought to mitigate in the interest of speedy delivery to beneficiaries, regardless of what were the underlying circumstances that could be causing the blockage. To put in additional funds to actually ensure that a project was either reconstructed or completed, who bore the financial responsibility, in light of the split responsibilities between the three spheres of government? Who contributed what? The same thing applied to issues of bulk infrastructure: it was not clear as to who ultimately took financial responsibility and pumped in money. Who took financial responsibility to make sure that the bulk infrastructure that probably did not exist was created, maintained and owned by somebody who would take responsibility for ongoing maintenance and run it will all the associated costs? He did not fully understand the meaning of the word ‘project’. What was a project? Was it a unit? Was it a contract issued that involves the construction of a set of units or several sets of units? Quantitatively, in number of dwellings, if one says 19 000 units are blocked, did the Department mean 19 000 housing units or 1 million units that are broken down into composite units that amount to about 19 000?
Mr Tshangana said that the 19 000+ is the number of projects the Department has in its housing subsidy system. The number of units was about 55 000+, although this was not the exact figure. The best definition of a project, which comes from the professional body of project managers, is complicated. In this case, the Department listed every housing project that has a number of units per project, and that breakdown would be given to the Committee.
Regarding bulk infrastructure, he said that the Department should not be dealing with this challenge because bulk infrastructure is part of planning. The fact that people started building without ticking all the infrastructure readiness boxes clearly shows that planning was not done properly in that project. The good news was that the Minister had approached the Minister of Finance and Treasury, requesting that in areas outside metropolitan municipalities, provinces should be allowed to use a portion of the Human Settlements Development Grant (HSDG) to fund bulk infrastructure. Treasury had granted this request that, for outside metros, up to 30% of the HSDG budget could be used. In the metros, there is the Urban Settlements Development Grant (USDG), and metros can use about 50% of the budget to fund bulk infrastructure. If the use of the HSDG was granted, infrastructure needed to be prioritised. In many cases, there was a debate that outside of urban areas people knew how to build houses for themselves, and the Department should not be building houses for people in rural areas because they have been doing it for centuries. What the Department should be focusing on is bulk infrastructure and then support them with materials so that they can build houses for themselves; that will also create jobs. The Department said that the programme will not come to a halt because it does not have access to bulk. The new frameworks and instruments that Treasury had approved will assist the Department in dealing with bulk challenges. In the past, it was only allowed to use up to two percent of the HSDG for infrastructure; now it is allowed to use up to 30% of the grant outside of metros for infrastructure. The Department would work closely with municipalities on contribution because they have the Municipal Infrastructure Grant (MIG). It is not significant but it can assist.
Regarding the concern of pumping money into projects already paid for, there were rules of engagement when unblocking blocked projects. If the process was not followed, the Auditor-General was going to come hard on the Department. So, the first step was to get condonation of whatever had happened, although there would be no condonation without consequence management, which had to be demonstrated in cases where there had been wrong-doing. Once the condonation process had been managed and disclosed all the way to Treasury and the Auditor-General, the money could then be spent. The process is known by Accounting Officers; they have implemented it in the past in the area of rectification. The rules were there to guide the Department.
Ms Buthelezi confirmed the numbers on the presentations. There were 533 projects, and when Northern Cape and Western Cape are added the figure stood at 1 407 projects. When the Department does bulk infrastructure in future, they may be classified as projects on their own. The definition of project varies and gets complicated when technicalities such as turn-key projects are explained, which is where an entire settlement is finished and includes planning and engineering services.
Ms Sihlwayi said that the matter of rural people not getting houses because they had their traditional way of building houses needed to be debated. It was an issue when government says it is not going to build houses for those in rural areas. This spoke to the rights of individuals. Citizens need a house or access to a decent house. This issue had to be debated because it excluded other people. The other issue was a house had been built but was not inhabitable because of many challenges that had happened for years. The government was responsible for that house because, regardless of whether the contractor had left the site and other issues occurred, the government had to come back and build the house so that the individual had access to a decent house. There needed to be strong processes of capacitating municipalities and provinces to ensure that they do not have the problem of blocked projects again. Additional funding had to be identified for projects that have been funded and money that had left with contractors.
The Chairperson said that the DG was referring to the fact that metros have the grant to provide bulk infrastructure but rural municipalities do not have that grant. Therefore, the Minister had engaged with the Treasury with the argument that, in rural areas, 30% of the HSDG should be used to provide bulk infrastructure. The DG was not implying that a person in the rural areas would not get a house. In rural areas, individuals who have applied for houses are given houses like any other citizen that applied in townships, particularly on their own stands.
In the Zoom chat, Mr Tshangana said that the person in Lusikisiki must get her house.
Deputy Minister Tshwete thanked the Committee for the opportunity to present. All the concerns and comments that were made were noted, and the Department had every intention of following up on all issues raised. She thanked the DG and acting DDG for answering the questions. Sometimes, if the Department made mistakes, the Committee was able to correct it. She assured the Members that these mistakes were not intentional, and the Department would always correct them.
The Chairperson said that, when Members see blocked projects in their constituencies, they must submit their concerns to the Committee secretary so they can be passed on to the Department. This is so that, when it comes back on a quarterly basis, the Committee will get answers on those blocked projects. She thanked the Department.
Draft Report of the Portfolio Committee on Human Settlements on Gauteng Oversight Visit, dated 02 March 2022
Mr Sabelo Mnguni, Committee Content Advisor, took Members through the report.
Mr Tseki said that the report should be adopted and should be taken as a working report. At some point, the Committee needed to invite the Gauteng department to respond to the issues in the report, through the National Department.
On the title deeds, he proposed the addition of a line that says that there needs to be a special approach on elders, especially pre-1994. The challenge was that, as they pass away, children remained behind and fought for property. The Chairperson had been very consistent on the issue of beneficiary lists, and the Department must come to Committee and explain specifically how they deal with this issue.
There were some common issues across all the projects, which should be taken as work in progress. This includes the problem of projects starting and earmarked to end on certain dates, budget, beneficiary lists, and social amenities.
On the first item that refers to blocking, it was also highlighted that some of the projects were not necessarily blocked because people went there and stopped the project, but were stopped because of lack of social amenities. When the projects were signed, all these social amenities should have been signed as well as a collective form of the success of the project. Other challenges such as invasion seem to be common across the board. He proposed the adoption of the report.
Mr Malatji said that the report was a true reflection of what the Committee had seen in the oversight process, and said the Committee should use the report as a tool to measure other provinces. The Committee should call in the MECs of various provinces to report on their turnaround strategies to resolve their challenges.
Ms Seoposengwe said that she was not at the visits, but she appreciated the report. She encouraged the Committee to do such visits regularly, keeping in mind the Committee’s budget.
The report was adopted.
Consideration and Adoption of Committee Minutes
The minutes dated 12 November 2021 were considered. Members had a lengthy discussion on a contradiction by the entity contained in the minutes. However, it was determined that the minutes were an accurate reflection of the discussion that was had. The Committee decided to defer the adoption of the minutes.
The minutes dated 1 December 2021 were considered and adopted.
The minutes dated 24 November 2021 were considered and adopted.
The meeting was adjourned.
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