Department of Human Settlements Annual Report 2021/22; with the Minister
12 October 2022
Chairperson: Ms R Semenya (ANC)
The Portfolio Committee met with the Department of Human Settlements (DHS) on a virtual platform to discuss its annual performance report. The Committee had met with the Office of the Auditor-General of South Africa (AGSA) earlier in the day to discuss the Department’s audit outcomes. The Minister of Human Settlements was present, with a team from the Department.
The Minister indicated that as part of the Department’s efforts for internal stabilisation, it intended to fill all its positions for director generals before it went on recess at the end of the year. The boards of all its entities had been appointed and there were increased efforts to appoint permanent people in the acting positions. The Department was not where it wanted to be in terms of its financial spending due to roll-overs and money surrendered to the Revenue Fund. It also wanted to improve its response to disasters by proposing interventions to build capacity within the Department and channel emergency grants effectively to improve disaster responses. The Minister highlighted that a no-nonsense approach would be adopted against non-performance by entities, and efforts to promote transparency and accountability would reinforced.
The Department highlighted that its financial statements were clean, having received an unqualified opinion with no material findings. The audit reflected an unqualified outcome with findings only on compliance. A Member asked why the Department had deviated from supply chain management processes that had resulted in a finding on their compliance. Further, irregular and fruitless and wasteful expenditure was recorded in six of the nine entities. Members wanted to know what was being done to prevent this, such as the irregular expenditure of R2.3 million. The Department indicated that it had disclosed the irregular expenditure in its annual financial statement, flagged it under compliance for the Auditor-General, and hence it was not a material finding. The Department’s internal audit team immediately did an assessment on the issue once it was picked up. Consequence management took place in line with the framework from National Treasury. The Department was also waiting for further recommendations from its internal audit team on its second biggest irregular expenditure, which was related to its internship programme, and continued to work with the team to mitigate risks of irregular expenditure in the future.
Members raised questions on the dismal progress in the re-zoning of priority development areas. They even questioned why it still existed as a key performance indicator of the Department. They were concerned about the state of the housing programme and asked what plans the Department had in place to address the housing backlog. One Member suggested an entire overhaul of the programme and that it be reworked. In this regard, the Committee wanted to know what the outcome of the Policy, Research and Legislative Resource Panel’s work was. The Department agreed that there was a need for a total overhaul of some of the policies and programmes in the current housing programme. COVID had affected a number of the programmes, and the panel had been brought in to help with the processing of policies and frameworks to respond to issues of the housing programmes, including the land assembly framework for human settlements and the macro policy for social and rental housing. The Department was still committed to reviewing its policies and programmes to deliver better services. The removal of the re-zoning target would not address the issue of how township applications were being processed. However, the Department was taking steps, along with the Housing Development Agency, to ensure the speeding up of re-zoning applications. It remained an important target for the Department.
Members were also concerned that the Department did not have sufficient monitoring controls to implement planning and reporting. Concerning the backlog in issuing title deeds, the Department undertook to pick up the slack in two provinces and embark on registering title deeds. The reason behind not meeting all the targets of the serviced sites projects was attributed to provinces not providing the information. The Department had also introduced a ministerial signing off of business plans at the national sphere as an accountability mechanism. It had standardised indicators to undertake oversight, intensify monitoring and evaluation, and hold provinces accountable.
The Committee wanted the Department to elaborate further on plans to stabilise the entity. Members asked why emergency funds could not be freed up and allocated to fund some of the disasters faced in some provinces. The Department responded that emergency housing grants sat unallocated until disasters occurred, and that provinces received new allocations at the beginning of each financial year. Provinces could not tap into the previous years’ unspent allocations the following year, and had to submit roll-over applications.
The Minister assured the Committee that by appointing the right people with the right skills, along with consistently engaging with provinces and municipalities, the stability of the portfolio would improve.
Minister’s Opening Remarks
Ms Mmamoloko Kubayi , Minister of Human Settlements, thanked the Committee for the opportunity to present the Department’s annual performance report, share its reflections on the portfolio and its entities, and the challenges faced by the provinces. She was aware that the Committee had already interacted with the Auditor-General’s (AG) team on the Department’s audit outcomes. The presentation would reflect a number of issues raised and what it was doing to address them. She had given her assurance to the AG to this effect. Notably, the Department appeared before the Committee without a Director-General (DG). Ms Sindisiwe Ngxongo, Acting DG, DHS, had been appointed until the matter was resolved and finalised. The position at that time was that the President had taken a decision to transfer Mr Mbulelo Tshangana [former DG] out of the DHS, and for him to be placed elsewhere. He was still drawing a salary from the DHS and until the process of his placement was resolved by the Presidency and the Department of Public Service and Administration (DPSA), the DHS was not able to appoint a DG. The Department had requested a speeding up of the matter.
Three permanent Deputy Directors-General (DDGs) were present at this meeting: Ms Ngxongo, Ms Nelly Letsholonyane, DDG: Corporate Services and Mr Neville Chainee, DDG: Human Settlements, Planning and Strategy. The other DDG positions were acting positions. The Department had advertised and conducted interviews on three posts, and had approached Cabinet for appointments. There were some delays and concerns for other positions, but the Department started the process with the two remaining DDG positions. The target was to fill all the DDG positions before the Department went on recess this year to ensure stability within the Department.
Concerning the boards of the entities, all boards had been appointed. On the executives, a person was appointed full-time at the Community Schemes Ombud Service (CSOS) as the Chief Ombud. The senior executives at the Housing Development Agency (HDA) had been appointed. For a long time, there was an acting chief executive officer (CEO) at the HDA, but a CEO, chief financial officer (CFO) and chief operating officer (COO) had now been appointed. The Minister was involved in those three entities, and the Department had urged the entities to ensure that the vacancies in others were filled.
In the National Home Builders Registration Council (NHBRC), a CEO who was employed as CFO had been appointed, so stabilisation in the entity was coming along. Stabilisation at the Social Housing Regulatory Authority (SHRA) had taken longer and the Minister was not happy about this, as she thought that by this time, a CEO would have been appointed, but she did have a recommendation from the SHRA which was going through Cabinet. The Department was waiting for the final vetting and once she received the vetting report, she would submit a Cabinet memo to the Cabinet, who could then approve the appointment of a SHRA CEO.
Notably, the board of the National Housing Finance Corporation (NHFC) had been appointed later than other boards on 1 November. The Minister had signed off their advert and started the recruitment process with the hope that they would have a CEO before the recess. This was the Department’s intention.
In the Property Practitioners Regulatory Authority (PPRA), a CEO had been appointed, although the board was still involved in a process where the CEO was suspended and there was an acting CEO. She had urged the board to ensure that they could conclude the matter speedily to ensure stability.
On the entities, the Department was paying attention to stabilising them by appointing people so that they did not continue to have acting positions with no authority or ability to do work.
The Minister admitted that the stabilisation and improvement of the performance of the portfolio had not been easy. There were still a number of areas that remained of concern. Performance in terms of spending was not where it was expecting it to be. On the performance of the Department’s grants, there continued to be roll-overs and money being surrendered to the Revenue Fund. This was due to various reasons. This portfolio was a concurrent function in which it transferred money to provinces, signed business plans, does evaluation and monitoring, but there had been weaknesses in this work and the Department was tightening it up.
One of the weaknesses concerned the Division of Revenue Bill (DoRA) regarding the Department’s grant conditions. The Minister had written to the Minister of Finance requesting a review of the DoRA framework and the conditionality to give the Department more authority in terms of ensuring that there was spending, but control, to ensure there was performance and work, as the Department had picked up weaknesses. The acting CFO had been working with National Treasury, including running a workshop to bring attention to the areas the Department was concerned about.
Another performance issue was how the Department dealt with disasters. One problem was that disaster funding sat with the provinces. When another province ran out of what was allocated as an emergency grant within the Human Settlements Development Grant (HSDG), it became a challenge. The Department had proposed centralising the emergency grant so that if one province had a challenge, resources could be channeled there. Another intervention proposed was to build capacity in the Department specifically to deal with disasters, because the lessons from the KZN disaster taught the Department that it was inadequate in human capital and its processes. It was using this as a lesson for it to be able to respond. For example, the Department and the provincial government would have put people in halls and removed them within a particular time period. It had set targets and those targets had passed. The Department had to go back to Cabinet and request a review and appear before the Minister of Finance to request using the emergency grant to secure buildings; this was so that it could take people who were in halls into those buildings as a temporary mechanism while it was building them houses.
These were the lessons it had learned, but the Department also had good stories. For example, the introduction of vouchers enabled it to give to the families with partially damaged houses to repair their houses more quickly. This innovation assisted the Department’s response and was now going forward with alternative technology. If it was able to utilise the resources it had to build more quickly with alternative technologies, it could do so within three days within the time available. The Department had asked the Free State to test to see if it could be done, specifically with the incident in Jagersfontein, as the Department was working and responding to that disaster.
The Minister acknowledged the time it took for government to respond to the disasters was not ideal. It had actually compromised the lives of people, but she qualified this statement by stating she did not mean this in terms of putting people’s lives at risk, so that nobody laid charges against her. Her point was about highlighting and ensuring that the Department could provide quality services.
The Department had tried an innovation to protect funds -- having learnt from the COVID-19 relief sources -- was the introduction of real-time audits. It was a good thing, because the Department did not have money wasted, theft of money or corruption. However, it delayed in turn-around times. Speaking to the AG’s team, the Minister said this was good in terms of accounting, but bad for service delivery. Would she support it going forward? It was hoped that there was a middle ground to be found, because, in addition to the number of days that it would have taken for procurement approvals, for example, there was an additional 30 days or even more because there were no time frames in the process. For example, if somebody was sitting with an application, specifications were done which then had to be approved by someone and then go to the provincial treasury, the provincial office of the premier, then it would come back with the specifications approved, and then one would advertise. After advertising, one did the process, waited, then sent the specifications back to them to see if it was compliant again, and then sent it. This took more time, put more people in the value-chain, and added to the bureaucracy. In future, therefore, she would not support this approach unless it was more service delivery-oriented, because it had left a lot of citizens unhappy.
In performance areas, the Department had to pay attention to balancing between service delivery and the money that had been spent. What it had started to do, for example, during the conclusion of the financial year when the business plan was done, was to have a Ministers and Members of Executive Council (MinMec) that focused on looking at the business plan's structure and interrogating it. It was no longer a question whereby officials would have a business plan they sat on. There was a need to tighten this issue because for projects to be on the business plan, they needed to have a procurement plan in place. What was learnt after looking at the annual report was that some projects made it into the business plan without the procurement process in place. Another example was that only national would be involved when municipalities signed businesses, without the provinces. Provinces were being brought into the discussion to look at the plan and identify issues.
The Minister said that neither the Department nor its entities had an inherent right to exist. Their existence had to be justified. If entities could not improve their performance or service delivery to the people of South Africa, they did not have the right to exist. She would be the first one as Minister to call for their closure. That was where a no-nonsense approach around non-performance had been adopted. For example, the NHFC had been asked to explain to her why bonuses had been paid last year, as she had told them there should be no bonuses paid because they had not performed, yet she saw in their report that they had been paid. Consequence management would be an exercise in this regard. Similarly, this year, as long as performance sat at 50%, individuals at the executive level could not say they were deserving of bonuses when no impact had been seen. These were the things being put in place to ensure accountability and transparency in the portfolio.
The Department had approached the Special Investigating Unit (SIU), to whom it had submitted around three separate requests to look at matters that she, as Minister, felt the Department needed to look into. The issues varied, and she would be seeking full details. For example, as seen in newspapers, there was the issue of where around R200 million had disappeared without service delivery, and the SIU had self-initiated an investigation. In other areas, one heard of the escalation of matters sent to be a whistle-blower regarding land purchases. The Minister also took a file that was available to her to the SIU on the issue of unfinished projects. The Department would need to engage with the SIU on this, and she did not want to be pre-emptive as the SIU would do their assessments if need be and advise accordingly.
The Minister reaffirmed her commitment to ensuring that the Department would not create a conducive environment for corruption and as leader of the portfolio, she remained committed. Accountability, transparency and consequence management were things that the Department was committed to doing. Concerning wasteful expenditure, the acting DG would explain, together with the CFO, the work being done to ensure that things were being corrected.
She submitted an apology on behalf of the Deputy Minister, who had a family bereavement and had not been able to attend work that week.
NDHS Annual Performance Report
Ms Sindisiwe Ngxongo, Acting Director-General, DHS, presented the Department’s annual performance report for the year ending 31 March 2022. The Department received an unqualified audit opinion for the 2021/22 financial year with no material findings, a trend continuing from the 2019/20 financial year. There was an improvement in the quality of submitted performance information. Human resource management remained an area of concern and for a long time, there was no chief director, who has since been appointed.
The Department had irregular expenditure amounting to R2.3 million. An amount of R1.5 million was concerning the Department’s information communication technology (ICT) licence, and procurement which was done without following the supply chain prescripts. Internal audit assessments were conducted, an investigation was concluded, and consequence management would be implemented. R562 000 of the R2.3 million was spent concerning advertisements for internships for which more applications than expected were received. The Department should have asked for a deviation in this regard. A payment of R12 million to the Government Communication and Information System (GCIS) was made before services were rendered and has since been returned to the Department, and the issue of contract obligations has since been addressed. Supply chain management (SCM) was a matter of concern, as five awards valued at R13 million were not published on the eTender portal. Although formal compliance processes were not followed, no money was lost in the process.
The Department achieved 58% of its targets, with 34% being partially achieved and 8% of targets not achieved. It achieved 83% for Programme 4: Rental and Social Housing Programme (RSHP), and 86% for Programme 5: Affordable Housing Programme (AFP). It did not perform well on Programme 2: Integrated Human Settlements Planning and Development Programme (IHSPDP), with 46% achieved. The turn-around time for responses to parliamentary questions was ten days, which the Department had missed due to its reliance on other stakeholders to get responses. This was being addressed with the provinces and municipalities. System errors and negligence resulted in invoices being paid after 30 days, and consequence management was being considered. In terms of fraud and corruption, the Department had met its targets for risk management.
The Department continued to face challenges with submitting applications, resulting in no land being acquired for the Priority Development Areas (PDAs) re-zoned, instead of the 30% target. 3 052 pre-1994 title deeds were registered against the 5 664 target. 12 857 post-1994 title deeds were registered against the 20 758 target. The national Department did not have the mandate to implement title deeds registration, and would contract with the Department of Agriculture, Land Reform and Rural Development (DALRRD) in this regard.
28 351 Breaking New Ground (BNG) houses of the 52 405 target were delivered. 37 823 HSDG serviced sites were completed against the 39 664 target. 4 223 Urban Settlement Development Grant (USDG) serviced sites were completed of the 55 000 target. All 50 national priority projects were implemented.
Ms Lucy Bele, Acting CFO, DHS, presented on the financial performance of the Department.
There was a 98% budget expenditure on the departmental programmes, with 100% spent on the IHSPDP. There was also a 98% spending on the different economic classifications, which included the compensation of employees, goods and services and payments for financial assets. The biggest spending was 98% on transfers and subsidies. 44.4% of the USDG grant was unspent against the total available funds. 54.2% of the Informal Settlements Upgrading Partnership Grant (ISUPG) in metros was unspent against total available funds.
Ms S Mokgotho (EFF) said the Department did not reach its 30% annual target of re-zoning the PDAs. Could the Department provide the timeframe for reaching this 30% target? The presentation stated that five awards with a value of R13 million had been awarded, even though proper tender processes were not followed. Why did the Department not publish the tender on the eTender Portal, even though it had indicated that no money was lost, because the money had been returned to the Department? Why did it deviate from following supply chain management processes in the first place? How was the Department responding to the AG’s comment on the lack of effective and appropriate steps to prevent irregular expenditure amounting to R2.3 million? How soon would consequence management occur, and could the DHS indicate a timeframe?
The majority of the irregular expenditure was reportedly caused by the Department not following the prescribed deviation processes. Why were these processes not followed? Payments were made before services being rendered, contravening Treasury regulation 188.8.131.52 (c). Non-compliance could have been avoided if compliance was properly reviewed and monitored. How was the Department ensuring that compliance improved in this regard?
Regarding the financial performance for the year ending 31 March 2022, the Department’s total expenditure was approximately 98% of the allocated funds. Why did it fail to utilise the total budget allocated for the year ended 31 March 2022 to improve the poor living conditions of the people? Could it elaborate on an error in the Department's financial statements for the year ended 31 March 2022, which led to it getting an unqualified audit opinion with emphasis on matters raised in the AG’s audit report relating to restatements of corresponding figures for 31 March 2021? There was a growing backlog of housing for much of the low-income population in South Africa, estimated between 2.3 million and 3.7 million households, and growing to 178 000 households annually. What effective plans did the Department have to address the housing backlog?
Mr B Herron (GOOD) said the presentation showed that the current housing programme, as it was designed, was failing the people of South Africa. He was concerned that this was a rigid housing programme that was not responsive to the lived realities of the people of South Africa and their earnings. The housing programme needed a complete overhaul, and he would have liked the Committee to engage with the Minister, Deputy Minister and their team around that because the housing programme was not coming close to meeting a realistic level of delivery in terms of the demand. Part of the problem was the rigid income thresholds which could be seen, for example, in the Finance Linked Individual Subsidy Programme's (FLISP’s) under-performance. To have just 2 900 FLISP or affordable housing applications being approved was really worrying, because that was an earning sector that was squeezed out of the private sector market but did not qualify for the BNG product.
He was concerned about the massive under-delivery on the BNG programme, the HSDG under-performance, perhaps slight, and the grossly under-performing USDG serviced sites performance. The Committee needed to consider how the housing programme was working and whether it was working.
On the research that was done by the PORLERT (Policy, Research and Legislative Resource Panel), its first term ended in October 2021. As he understood, it was mandated to look at whether the housing programme and framework needed an overhaul. What was the outcome of that October 2021 team’s work after they had been appointed for three years? He assumed that it was not the agri-villages and the exemption of holding costs research, because he understood that their mandate was much broader than that. It would be really good if the Committee could understand what the outcome of that first PORLERT team’s work was.
The HDA’s attempted acquisition of the Sea Point building was in July 2021. By the end of the financial year, that transfer had not occurred, if he understood the presentation correctly. Had that now been done and was it still being pursued?
On the performance of the HSDG, where three provinces reported 100% spending, was this a realistic achievement? He asked this because when he was still in the provincial legislature in the Western Cape, he had asked a question about the HSDG's performance there. The Western Cape was allocated R1.77 billion and the presentation claimed 100% performance. That R1.77 billion, in response to his question, asked in the provincial legislature, should have delivered about 10 000 serviced sites and 9 536 houses. However, what was reported in the presentation was that the Western Cape delivered only 3 061 serviced sites and 3 761 houses, so he did not know how it had achieved 100% spending. He had the same question about the two other provinces. Were those realistic numbers, and how did the Western Cape achieve a 100% spend when it did not reach the numbers linked to that spend?
Ms N Tafeni (EFF) said that under fruitless and wasteful expenditure in Programme 2 (IHSPDP), a contributing fact listed for under-spending in the Housing Subsidy System (HSS) budget was that the State Information Technology Agents (SITA) did not provide the required service as per the service level agreement. This reason for under-spending was also presented in the 2019/20 and 2020/21 annual reports. Had the Department engaged with SITA around this persistent challenge and if so, what were the outcomes?
The AG raised concerns during 2019/20 and 2020/21 about internal control deficiencies in the Department. While the AG had found no deficiencies in internal controls in 2020/21, it was noted that the Department did not have sufficient monitoring control to ensure that proper implementation of the overall planning and reporting was improved. What were the reasons for the slow progress with the organisational structure of the Department? This was raised in the previous financial year and appeared to be a big factor in some of the targets not being met.
How could inter-governmental relations be strengthened and cooperation and communication be improved amongst the different spheres of government? About 80% of the 90 staff leaving the establishment during the 2020/21 financial year had left due to their contracts ending. What was the impact of this? Were any of these staff members reappointed permanently? How many were acting positions by the end of the 2021/22 financial year? The cost of suspensions for the period between 1 April 2020 and 31 March 2021 was listed as R3.42 billion, with an average of 730 days suspended. What were the circumstances around this, and why had it not yet been resolved?
Ms E Powell (DA) noted that overall, 51% of targets were achieved, which was one of the lowest performance metrics that the Department had had in some time, and this was starting off at an already low bar. Of great concern was the performance of the entities, and she was aware that that was not specifically under deliberation that afternoon. However, with the Minister present, could she comment on what steps she and her management team were taking to stabilise entities, further to work being done in terms of replacing all of the boards? For example, 71% of targets were not achieved at the HDA, 63% were not achieved at the NHFC, 85% were not achieved at the PPRA, and 67% were not achieved at the Estate Agents Authority (EAA). These were significant failings. On irregular expenditure, there was non-compliance in terms of the prevention of irregular, unauthorised and fruitless and wasteful expenditure being recorded at six of the nine entities.
The annual report and the AG’s report noted that the Department itself did not have sufficient monitoring controls to ensure the proper implementation of the overall planning and reporting process. There had been in-depth discussions about this last year around management controls, and this was now a repeat finding. How was the Department responding to the AG’s comments about the lack of effective and appropriate steps to prevent irregular expenditure? She noted from the AG’s report that entities continued to transgress laws and regulations governing financial matters. There was a cumulative amount of R943 million worth of irregular expenditure, or 83%, which was still not dealt with. She raised this matter of the entities for the Minister’s comment, because while the entities would be coming to present one by one, it was unlikely that the Minister would be able to attend each of those meetings. Often what was found when speaking to the entities themselves, specifically the CEOs and the CFOs, was a repeat of the same information given year after year. There were new boards, so hope and trust would be placed in them, but could the Minister comment on further plans to stabilise the entities?
The Department had under-spent on its total budget by an amount of R720 million, or 2.2%, which was an increase compared to the 0.9% last year. What were the reasons for this increase? Mr Herron had already said that an amount of R51.5 million was not transferred, although it had been set aside to fund the procurement of the Sea Point property in Cape Town. It was noted that the transfer could not be made because the HDA had failed to provide the required Section 38 Public Finance Management Act (PFMA) certificate in order for the Department to process the transfer. Could the Department provide reasons why the HDA failed to provide that certificate? Why was a R51.3 million virement made after the adjustment budget estimate for purchasing the property in Cape Town to the HDA?
The Committee had the same concerns on the programmes of the Department, Programmes 2 & 3 being the most important. In Programme 2, only 41.7% of targets were met, but the Department had spent 99.3% of its budget, which was a red flag. Again, it felt like "Groundhog Day" reading the analysis and the report. There were the same issues that the Committee had raised year after year, and it had been given guarantees before Parliament by the relevant officials and DGs and DDGs that these issues were in the process of imminently being resolved, yet they were not resolved. For example, there had been lengthy discussions last year on the PDAs' re-zoning. She understood that the Department could only do so much in terms of zoning, and the Committee had been given examples of why this target continued not to be met; municipalities did not do what they were supposed to, or they did not have the relevant systems, processes and capacity. Why did the PDA target continue to exist as a key performance indicator (KPI) of the Department if it was not being met year after year? None of the land acquired within the PDAs was re-zoned. This was a 100% failure rate, which was seen year after year. Could the Acting DG give the Committee information as to whether or not this KPI could potentially be removed from the performance dashboard of the Department until some kind of inter-governmental (IG) process with the Department of Cooperative Governance and Traditional Affairs (COGTA), or potentially the Department of Land Reform, was instituted to deal with the capacity challenges municipalities had, because this reflected on the Department’s dashboard as a non-performance?
It was disappointing to note the level of title deeds registration against the targets for post-2014 title and post-1994 title deeds. Indabas, plans etc, were spoken about, but once again the Department could do only so much in terms of title deeds, and an overhaul was needed. Could the officials give the Committee information on the Department's plans to turn this around. Again, this would require capacitation at the municipal level.
24 000 BNG houses were delivered against a target of 52 400, which was less than half. One of the reasons given was that some provinces did not provide information. What were the reasons that some provinces did not provide this information and which provinces were these? On the serviced sites programme, which was designed to cater to the needs of the poorest citizens, it was tragic that only 1 800 out of 39 600 serviced sites were completed using the HSDG. Where were the proper planning, project pipelines, proper engineers appointed and community engagement specialists? There was no excuse for any municipality or province to miss their targets on serviced sites. It was dismal.
On the USDG serviced sites component, 7.7% of sites were completed. What oversight mechanisms were available to the Department to ensure capacity building between the provinces and municipalities? It was important to bring the committee that was charged with oversight back to the [portfolio] Committee’s previous deliberations on the need to have sessions with each of the municipalities to scrutinise them in person. She was aware that the Committee was supposed to have the provinces’ performance reports coming to them, although this had been taken off of the agenda due to the bill. The Committee needed to call the provinces to Parliament to explain why they continued to underperform.
Fourteen of the 130 informal settlements were upgraded to Phase 3 of the Upgrading of Informal Settlements Programme (UISP). The reason given on the analysis was that most informal settlements were multi-year projects and were in different stages of completion, ranging between 50-90%. If this was the case, it was simply impossible to reach the target, but it was progress against last year when it had been 0 informal settlements, and now it was 14. However, why was there a target of 130 informal settlements for the year if these were the rolling targets? Could this not be revised so that the Department did not have a poor performance or unmet targets at the end of its reporting period?
Ms Powell asked the CFO about the grants in the context of the floods in the KZN, pointing out that only 10.49% of the ISUPG to provinces -- R408 million of an available R3.8 billion -- had been spent. The only province requesting assistance with funding to respond to disasters, as noted in the analysis, had been the Free State. The analysis went on to say that the amount of R3.8 million was transferred to KZN as a second tranche after the province had successfully spent their first tranche. An amount of R66.7 million out of an available R167 million was transferred from the municipal emergency housing grant, of which R9.4 million was spent. The Committee was told that the Free State was the only province to request funding in response to the flood disasters. It was understood that KZN had also requested assistance and, from previous presentations, received money from the emergency municipal and provincial housing grant. In light of the under-spending on the ISUP grant in the provinces, what was the reason that that money could not be freed up and allocated to fund some of these disasters?
Could the Committee get details on the informal settlements, and why the UISP capacity assembly programme was not being implemented? There were lengthy explanations given on various metrics around this. Could the Committee get an explanation of exactly what the programme sought to achieve and where the Department was falling short in terms of meeting its targets? Addressing the Minister, she said she understood that there were human resources and potentially legal challenges, so caution may be needed in answering her question.
As a Member of the Committee charged with the oversight of the Minister, she requested the Minister to provide the Committee with material reasons as to why she had requested the DG to be redeployed elsewhere, if the ongoing underperformance of the Department could in part be attributed to the executive management team, and whether there was any consequence management other than the DG’s removal from the Department that was being instituted. She realised this would have to be answered with kid-gloves, but any information on consequence management would be appreciated.
Mr A Tseki (ANC) asked whether the R3 billion transferred to municipalities would be exhausted or committed by the coming three months. If so, what would convince the Committee that it would be committed? The strategic plan showed that 300 000 houses would have been built. It was reflected that only half (154 000) had been built, although the budget was being consumed and finished within the year. For example, the budget spend for this year was 98%, but the outcomes were not reflecting this percentage.
The worst performance was on the title deeds. Could the Committee get a concrete plan for the title deeds? He was losing confidence in winning the battle with the title deeds issue. The portfolio’s five year term would be finished and it had to be known that it was putting risk to the owners of those houses if it did not give them title deeds. With the current state of criminality in the country, people could take over other people’s houses. This was an indictment on him on whether he was building people's houses, or giving them away to criminals. The risk factor of not giving people their title deeds was high, particularly in those houses built before 1994. He had more examples of how this was challenging families. For example, in Soweto the previous week, it was reported that a sibling had evicted a lady who was 75 years old or more. These were the realities, and it was likely that a title deed was an issue. He did not have the facts, but if it was investigated deeper, the issue was also centred on the unscrupulous way of obtaining these title deeds. He wanted to get more confidence from the Minister that what was meant to be done was being done, as he was losing confidence on this matter.
Mr C Malematja (ANC) said that they were dealing with the legacy of the apartheid regime that was meant to ensure that other races did not get shelter or a place called home. In dealing with this, there would be those who would remain known as the beneficiaries of that past government. For example, in the Tafelberg area of the Western Cape, there was very good land that was supposed to go to the needy. Instead, it had been sold to private developers with the pure intention of ensuring that people were not coming near their working places and were driven away from the city centre. These were the kind of issues that the Department should never forget to mention, because people thought it was easy to run the Department.
The AG’s report indicated a number of improvements by the Department that needed to be applauded before one lamented on where it had not performed. People would not know about the good stories if they were not told. One story was that of the stabilised entities which performed when they had permanent board members. This had been achieved and needed to be applauded. The Minister had affirmed a no-nonsense approach to under-performing entities which would lose their existence mandates if they under-performed.
What consequence management would be applied, particularly to those officials who slept at work and who tended to deliberately neglect to pay service providers within 30 days? This was indicated in the AG’s report, and it had a bearing on the collapse of SMMEs and ensured a negative effect on the economy. The Department performed very well on monitoring and evaluations. What strategy was in place to deal with the concerns raised by the AG in the report, especially on finances and targets?
The Chairperson said that the DG had indicated that the Department had done well in monitoring entities, but the AG’s finding was that as the Department monitored, it must provide inputs as to what the entities must correct and do. There was no evidence that the Department had followed up on the issues it had requested the entities to address, or those they had addressed. The poor performance of the entities could be attributed to the failure to follow up on whether the issues raised with them were being addressed and implemented. It was a problem for the Department to say it had monitored 100%, and she requested clarity on this.
The Minister had expressed her commitment to trying to turn around some of the issues raised, particularly on coordination within the sector. What would be done to improve coordination, as what had previously been done had not worked? How would the Department make the District Development Model (DDM), which refers to one plan/one budget, effective enough to address its problems? The Minister had indicated engagement at the level of MinMec, but could issues not be elevated to contractual agreements or memorandums of understanding? She was aware that MECs signed contracts with the premiers, but got money from the Department, which was a contradiction on its own. What was going to be done to address these issues and ensure that they worked for the Department, as it could not continue to have provinces take money to do certain things? There was a project in one municipality where the Committee was told the money for the project had been used to pay officials. What was being done in such cases?
In the previous financial year, the AG had visited some projects and raised issues with provinces and the Department. The AG visited the projects again and found that those issues were recurring and nothing had been done. What was the Department going to do to ensure that all the projects the AG had visited would get attention and be concluded? How best could the Department provide feedback on the issues that the AG had raised without losing touch through quarterly reporting, because when the Committee met with the Department quarterly, the issues were being massaged and not highlighted in terms of how they were being addressed. Could the Committee get a commitment that as it got the quarterly reports, the Department was attending to all the issues raised by the AG?
On the issue of consequence management, the Committee met with the HDA on 25 June and asked what it was doing about the investigation into irregular expenditure. The entity had indicated that they had warned the relevant official. What kind of person who committed irregular expenditure received discipline in the form of a warning? Could the system be tightened up so that such things did not recur? A majority of the findings by the AG were recurring issues, and every time the Committee interacted with the Department, there was an indication that it was attending to them, but then at the end of the year, the same issues came back.
Regarding the title deeds, the Committee commended the Department for starting engagements with other stakeholders like the Department of Rural Development. The Committee had met with the Department of Planning, Monitoring and Evaluation (DPME) that day and it had recommended that there should be a summit. She requested the Department’s comment on this proposal, because it could be beneficial.
Ms Bele responded to Ms Mokgotho, being aware of Committee’s meeting with the AG, to put it on record that the Department’s financial statements were clean. She referred to the AG’s report under paragraph six, which stated: “I draw attention to the matter below. My opinion is not modified in respect of this matter.” The matter referred to was the restatement of corresponding figures, hence the financial statements were clean. The AG emphasised for the reader of the annual financial statements (AFS) that in notes 29.1.1 (see slide 9), there was an error in the restatement of the corresponding figures. This error was a result of the Department’s finance leases. The Department has capitalised on finance leases for the past five years instead of expensing them. For all the years that the Department had been capitalising the finance leases, the AG had been conducting audits, hence the error reflected that there was no modification. The Department’s response to that error was to restate the opening balances for its financial year that ended on March 2021. Therefore there was no emphasis of matter.
Referring to slide seven of the presentation, she said that the quality of the submitted financial statement was green, reflecting that the Department's financial statement was clean. The arrow on the quality of submitted performance information was going up, which indicated that it had improved because it had had a qualification throughout the years. This year, the Department had an unqualified outcome on performance information.
The arrow was going down on the risk area of supply chain management. This spoke to items of compliance. On slide ten, it could be seen that the regression in the supply chain was on compliance. The AG had indicated that the current year's audit outcome was unqualified, with findings only on compliance, so there were two findings that the AG had reflected on. Notably, the Department had disclosed irregular expenditure amounting to R2.3 million in the AFS and flagged it under compliance, so the AFS was clean because had it not disclosed it and it was picked up by the AG, the Department would have had a material finding. In the finance department, when it picked up irregular expenditure, it immediately did an assessment. On the notes of the AFS, it could be seen that irregular expenditures were under assessment. Once it had assessed the R1.5 million that the acting DG had spoken about, it did an assessment, taken the file and handed it over to the internal audit team to do the determination test. The internal audit team did a determination test, brought back the file with recommendations, and finance looked at the recommendations. The recommendations were clear that consequence management had to be taken by the accounting officer against the relevant officials. The file was taken to the labour unit because there was a process to be followed when dealing with employees. The labour unit had submitted to the accounting officer that consequence management had to take place. The Department was on the final leg of the matter but unfortunately, the framework from National Treasury had steps. It could not jump to consequence management before doing an assessment. Determinations and investigations had to be made, followed by recommendations and steps provided by the framework.
The second biggest irregular expenditure was on the interns. Finance had gone back and forth regarding how to craft terms of reference, particularly regarding recruitment. When HR was doing its terms of reference, it thought the Department would receive 10 000 applications. It had requested the service provider to provide a cost per application. To mitigate the risk going forward, the Department was not going to request this again, because it thought it would receive 10 000 applications, but it had got 30 000. The finance team did an assessment, took the file over to the internal audit team, and they determined that the process was at its third stage. It was waiting for the recommendations from the internal audit in order to go to the next step. This was what finance was doing to mitigate the risks of irregular expenditure.
Slide 12 of the presentation stated that “five awards with a value R13 524 496 were not published on the eTender Portal.” The important section was “after the successful bidder had been awarded the tender.” So there was no deviation and no irregular expenditure, because if the Department had not published the tender itself on the portal, this R13.5 million could have been sitting with the R2.3 million in the AG’s report. It followed the correct procurement process for the tenders that were worth R13.5 million. However, after it had finalised and awarded the tender to the successful bidder, it was required by the prescripts to go back on the portal and advertise who the tender was awarded to. This was the step it had failed to do, and there were times when the system crashed. The Department had received letters from National Treasury, which administers the eTender Portal. What was learnt and put forward was that the Department had to look at alternatives if the portal was not working -- it could not just sit and say that the portal was not working. It needed to find ways of advertising the successful bidder. The Department was taking accountability for this issue and was going to mitigate it in future by looking at alternatives such as the departmental website or the government bulletin.
On the issue of payments to service providers in advance, government was told that there was a Cabinet memo in past that said when it came to government departments’ communications, they needed to use the Government Communication and Information System (GCIS), as it was its primary mandate to deal with all the communications. However, Treasury regulations state that the Department could not make advance payments. The practice was that the Department would have a submission detailing all the services it required from the GCIS, and then its accounting officer and GCIS’s accounting officer would sign. However, the GCIS had a problem with departments not settling payments within 30 days, so it was running bankrupt. It had gone to Parliament to raise this issue of late payments, and had then proposed the introduction of advance payments. So the error that was made was that of the contractual obligation referred to in 184.108.40.206(c) of the Treasury regulation. What the Department was doing was coming up with an MOU. The Department had decided to go to its legal department and said it needed a contractual obligation. When a meeting was held with the Department’s audit committee, it was told that a memorandum of understanding (MOU) was not a contractual obligation. It needed to go back to look at what a contractual obligation was. This financial year, it had not transferred anything for media buying for communication to the GCIS. The money that was transferred to GCIS was paid back to the Department during April, and unfortunately, this was at the beginning of the new financial year.
Ms Bele referred to the departmental expenditure reflecting a 98% spending (see slide 59), indicating that the economic classifications consisted of compensation of employees, goods and services, transfers and the budget. The majority of unspent funds -- R474 million out of R720 million -- was for transfers and subsidies. The biggest contributor was the emergency housing grants, which were a separate schedule. The grant sat unallocated and waited for disasters. She reminded the meeting that this report was for the financial year that ended 31 March 2021, while the disasters Ms Powell referred to occurred during the new financial year. By 31 March, the Department had closed its books and could not return and tap into the R301 million unspent emergency housing grants sitting there. The money had reverted back, and on 1 April, the Department received a new allocation. For the KZN disasters, money was transferred to their provincial emergency housing grant for the financial year that started 1 April 2022. The Department could not release the R301 million in the unspent emergency housing grant. The grant framework that was gazetted clearly stated that there had to be an application, and an agreement by the Member of the Executive Council (MEC) or mayor that there was a housing emergency or disaster. So if the Department was not getting any applications, it could not allocate a schedule 7 grant. This grant was classified the same as the COGTA disaster covered grants, where they waited for a disaster or housing emergency.
Another contributor to the variance was goods and services. COVID had taught the Department that there were new ways of doing business. For example, a whole team from the Department connected to the meeting via Zoom or Teams from Gauteng, instead of travelling to Parliament in Cape Town. So on goods and services, travelling was a saving rather than an under-expenditure, because it could not be justified for the year under review that ended on 31 March 2022 that it had exhausted its travel and subsistence funds when most of the meetings were on Zoom. The same could be said for office and supplies, where things such as telephones and office printing paper were used at the office, but now people were working from home. By 31 March, there had been a 75% return to office according to the Department of Public Service and Administration (DPSA) and the DHS was not 100% returning to office, so most of the expenditure figure was due to this. Therefore, when presenting the performance on the economic classifications, especially on goods and services, they should be considered savings and not under-expenditure per se.
Payments for capital assets were a contributing factor as well. During the first year of COVID, the Department started buying laptops for employees to work at home. It needed to also give them data. Because of the concept of working from home, service providers like Vodacom, MTN and Telkom had started introducing data contracts whereby with R800, customers could get an HP laptop together with data. So instead of incurring double the expenditure, the Department had opted to review its cellphone policy to increase data sponsorship and make working from home easy. With the data sponsorship, the Department would be able to get a data contract, and give employees R1 200, out of which they could get a Dell laptop together with data to enable them to connect and work from home effectively. These decisions were more of savings than under-expenditure regarding goods and services.
Responding to the questions and comments from Mr Herron and Mr Tseki on the USDG, she indicated that the financial year of the municipalities ended on 30 June 2022. By the end of the Department’s financial year of 31 March 2022, it had transferred R7.4 million (see slide 65). However, the expenditure by metros sat at 55.6%. These metros had three more months (April, May and June) to spend the remainder before their financial year ended. Municipalities were working on the accrual basis of accounting, which allowed them to process late invoices until 31 August when they submitted their final figures to the AG and the National Treasury. The Department has been busy finalising the complete picture for the past month. When the Department came for the first quarter presentation, it would bring the Minister of Finance to talk about it during the mid-term budget adjustment. It would then have the final figures, so what was reflected in the presentation were not the final figures for the end of the financial year of the metros.
She said that by 31 March, the Department had not transferred the Sea Point property. The Department was working on a modified cash basis of accounting. It could not accrue. On 31 March, the system closed and it could not process anything. So the only thing the Department could do with the unspent money was to submit a roll-over application to Treasury. The Department did that because the HDA had submitted all the documents it needed. The Department told them that unfortunately the financial year had ended on 31 March 2022, and the funds were sitting unspent and could not be transferred into the new financial year without the approval of National Treasury. A letter was received from Treasury stating that the roll-over had been declined.
Ms Rashnee Atkinson, Acting DDG: Research, Policy, Strategy and Planning, DHS, responded to issues on the housing programmes, PORLERT and land re-zoning.
In response to Mr Herron, she agreed that there was a need for a total overhaul of some of the policies and programmes of the current housing programmes. She agreed that there were delays in the processes of PORLERT, whose contract ended in 2021, but prior to that, COVID had affected a number of departmental processing of policies. Panel members of the PORLERT were also drawn into some of the interventions that the Department had had to undertake in response to COVID, so that had caused slight delays. There were a number of policies, frameworks and position papers developed by PORLERT during the period of 2018 and 2021 that she thought had been made available to Members, but she could make them available at a later stage. They included the land assembly framework for human settlements that was developed in 2020, the informal settlements upgrading policy in 2021, the macro policy for social and rental housing, the human settlement’s ombudsman’s policy framework, the Community Schemes Ombud Service (CSOS) policy, and a number of other policy documents. The PORLERT had been appointed the previous week and the Department was finalising and agreeing on what policies had to be reviewed and what position papers and frameworks had to be developed. These had to go through a process of consultation with the policy task team and were subject to the Cooperative Incentive Scheme (CIS) process at the Department of Performance Monitoring and Evaluation (DPME), which the Department had to respect. The Department was still committed to the process of ensuring that it was reviewing its policies and programmes to respond better and faster in delivering services. Up to then, its policies and programmes had been able to deliver what they had delivered and there were significant achievements, but there were also loopholes in the process of delivery and the DHS remained committed to ensuring that it strengthened what it had in place.
The land re-zoning target was very important, and she noted Ms Powell’s suggestion of removing it from the medium-term strategic framework (MTSF) targets. However she was not certain what this would achieve, as there was a bigger problem that needed to be addressed, which was about how township applications were being processed. Not only the public sector, but the private sector was also role players in the process of finalising township establishments. Land was one of the major triggers that enabled the Department to achieve its outcome of spatial transformation and consolidation, specifically in cities and towns. If the township establishment processes and land re-zoning applications were not addressed and were delayed, the Department would not achieve its outcomes. Interventions were being taken with the HDA to ensure that they were moving fast with the target. The Department had to ensure that it met this target before the MTSF period. The target originated from the land acquired between 2014 and 2019 through the HSDG grant facilitated by the HDA that had to be re-zoned. If the Department wanted to ensure that it was going to make use of what it had already spent on land acquisition and bring value into the housing delivery value chain in terms of the re-zoning applications, it could not let the target go, as it was an important target to achieve.
The Department had engaged with the Department of Rural Development as the primary custodian of the Spatial Planning and Land Use Management Act 16 of 2013 (SPLUMA). Special provisions within the Act allowed the Department to support the municipalities to fast-track applications. One way was for it to act as a representative and participate in the tribunals to fast track various re-zoning applications. Another way was to re-look at the list of land that had been acquired in a period and to prioritise those land parcels, especially those that existed within towns and cities with already existing infrastructure. With existing infrastructure, there would already be a township proclaimed, which made it easier to submit a re-zoning application, whereas with vacant land that was not suitably located, the process would take longer.
A question that had been asked during the meetings with municipalities was how it was that township applications were fast tracked for private sector developers, but when it was the public sector or municipalities trying to drive development and re-zone land, the HDA took longer. There was a need to understand how various stakeholders played their part within the value or delivery chain and what it was that the Department could do to participate in the tribunals and assist in fast tracking applications.
On the spending on the priority development areas (PDAs) plans, they were not funded by the Department. The 47 plans that were achieved in the previous financial year were funded through the provinces and municipalities. Most of them were projects managed by the HDA.
Mr Neville Chainee, Acting DDG: Affordable, Rental and Social Housing, DHS, agreed that the target and the performance of the provinces around the issue of title deeds had been dismal. To address this, during the course of this financial year and within the last three months, the Department had undertaken to pick up the slack that the two provinces (see slide 30) had not been able to deal with, in particular the Mabopane, Winterveld and the Ga-Rankuwa areas, where there were approximately 11 000 unregistered title deeds. In almost 20 years, nothing had happened. The Minister had issued a directive that this issue would be a priority, which meant that the national Department would be taking over and would be undertaking the process of registering those title deeds. This would lay the basis to allow the Department to pick up the slack and demonstrate that in terms of regulation and compliance and as a Department, it acted in the best interest of the citizens. The directive arose from a situation where there was a substantial amount of tension which could have led to violence, amongst other things, so this had given the Minister the impetus to take over so that in terms of legal and compliance issues, the Department did not find itself wanting, given the concurrency. The Department had segmented the backlog of title deeds into five main categories: deceased estates, family disputes, townships not opened, title deeds not distributed and title deeds not registered. Through the office of the Minister, the Department had signed off as a target together with the HDA, the establishment of 498 townships. There were 498 townships in and around the country that had not been opened, which would allow approximately 400 000 title deeds to be registered. The Department was eating this elephant one bite at a time. The Minister was in the process of dealing with the issue of deceased estates.
One of the blockages that households faced was that when they went to the Master of the Supreme Court, they got shoved from pillar to post and there was inconsistency on how an estate had to be registered. Notably, they did this themselves because most of the households concerned were poor. In some instances, in the same Master’s office, households were given different requirements to fulfil. Sometimes, it took up to a year for a household to open up a deceased estate to be settled and disputes resolved. The Minister had been asked to discuss this issue with the Minister of Justice, to set up a team to allow the Department to address the issue.
On the question of monitoring, there had been an issue the previous year where MECs were signing off business plans without the Minister seeing them and not being able to account for them, which was a system flaw. Now there was ministerial sign off of business plans at the national sphere. When a business plan for any of the grants was finalised, Ministers met with each of the MECs and mayors. They confirmed the correctness and implementability of those business plans. They were signed off, and minutes could be provided . This was an accountability mechanism. Previously, the Department did not have standardised indicators but now, together with the DPME, it has them and they could be found in the Department’s APP and strategic plan. These standardised indicators could also be found in each of the provinces. This allowed the Department to undertake the oversight and reporting role Members had raised concern about.
As part of reporting and monitoring, each indicator had a validation process. Once the report was submitted to the Minister, there would be the first quarter report for this financial year. Members would see a concrete result of how the Department was intensively monitoring, evaluating, reporting and holding provinces accountable for what they say. Where there were discrepancies, the provinces would have to answer to them; if not, there would be consequences regarding the audit findings. This was done for 13 indicators to yield accountability.
In response to Mr Tseki’s concern on the title deeds, the Department was in the middle of its five year period, and it had indicated to the AG that there was a lag in relation to housing construction and serviced sites. But the Department had to be at 50% on the houses constructed, and delivery was also at 50%. Money had been expended, but only some of the money had gone into house construction and the servicing of sites. A lot of the money went into planning. The Department had also put the brakes on to ensure that provinces had to demonstrate that the planning translated into a house or serviced site.
On the acquisition of the Sea Point building, notwithstanding the financial issues that Ms Bele had mentioned, the HDA would be able to confirm that the building had been acquired and that it had used internal funding to allow for the procurement of the building, because the South African Broadcasting Corporation (SABC) had put pressure on them.
Dr Zoleka Sokopo, DDG: Informal Settlements Upgrading (ISU) and Emergency Housing, DHS, responded to the question on why the Department had not changed the PDA indicator while knowing that ISU was multi-year and the Department had adopted an incremental approach. It had done this for the 2022/23 financial year. It had changed the indicator to reflect exactly what a national department did. The Department focused more on supporting implementation, issues around planning, supporting the planning with regard to informal settlements upgrading, and ensuring that it did project level monitoring and reporting. The Department did not want to lose information on the number of informal settlements in different phases of upgrading, and it would still collapse this information. However, it would not be reflected as such in the indicator, but as part of its monitoring report. The report indicated several informal settlements in various phases of upgrading, with 307 being in phase three, and by the next year or two, the Department would know that it would have met all the necessary requirements to leave phase three. For example, some would have water and sanitation facilities and not electricity, so they would be waiting for all the other three aspects of the site development. The Department was also checking the pipeline from phase one to phase two, and was tracking that in the 2022/23 financial year.
Ms Mathope Thusi, Director: Human Resources, DHS, admitted that it had taken the Department long to conclude the process of the organisational structure. This was mainly because the macro structure at the managerial level had been approved and implemented, and the Department was given time to finalise the structure at the other levels that were non-managerial which had caused delays. This was a priority for the Department, and it was anticipating that it would conclude the process soon because it wanted to align the structures, both the macro and the micro, to the budget structure in order to function properly.
Regarding the acting positions, at 31 March, there were 12 officials in acting positions. The recruitment processes had already started on these positions and as the Minister stated, the Department was at an advanced stage of filling some positions. Other positions were at different stages of being filled. The Department was limiting the periods of acting positions to ensure that officials were not acting for long periods. It ensured that when a request for an acting position was submitted, it insisted on the documentation to start the process of recruitment and selection to start with the recruitment process and finalise the filling of posts timeously.
Of the 72 contracts that had been terminated as at 31 March, 36 were interns, but they were reflected as contracts because the Department appointed them for 24 months in terms of the directive from the DPSA. When the internships came to an end, they appeared as contracts expiring. The other contracts that expired were when the Ministers’ terms of office expired. The Department had to give officials in the ministry one month’ notice that they served, which was also regarded as contracts expiring. Other contracts were the task teams that were established to do work for the Department and as their work finished, their contracts expired.
On the official suspended, it was one official who had been suspended and that suspension had since been lifted. The official was back in the Department, but this did not mean that the case had been finalised. The case was still ongoing because of technicalities, postponements and other issues with the hearings. Some dates had been scheduled for this case, including October.
Ms Ngxongo said that the consequence management process for the R1.5 million in irregular expenditure was ending. The only leg left was the implementation of consequence management by the supervisor. She assured the Committee that the process would be completed by the end of the month because the supervisor was on leave. Regarding the comment by Mr Malematja on officials caught sleeping on duty, the Department would continue to implement consequence management where appropriate, because this resulted in poor management.
On the serviced sites, title deeds and the restoration programme, a MinMec had since approved that when serviced sites were issued to beneficiaries, the process of title deeds had to commence immediately so that by the time the houses were being handed over, they would be handed over together with the title deeds as they were linked to the sites, not the four walls built. On the need for the Department to do follow-ups on its monitoring, these follow-ups were done, but had not yielded the required results, and it took note of the Committee’s inputs in this regard.
The Department's delivery of poor projects, as was highlighted by the AG in its report and quarterly reports, was due to a lack of coordination in the sector. One of the remedies was that the Department needed to start planning and aligning its processes correctly and quite early, because the sector was quite complex and huge. This would allow projects to take off in the next financial year. It also required an improvement in the IGR, as was highlighted by Ms Tafeni, and an enhancement of the implementation of the broadcasting digital migration (BDM) through the DDM, with the help of every actor in the portfolio.
On the strategy to deal with the AG’s findings, the Department had consolidated all the findings, with Ms Bele running that portfolio. It had allocated roles and responsibilities and managed the process monthly. It also had a steering committee that included colleagues from AGSA to address the findings that had been identified in the past.
The Minister said that there were quite a number of issues that had been raised that she wanted to address at the end.
Mr Tseki said that the Committee wanted to see that when someone received a house, they got it with a title deed. Was the Acting DG saying that that was what was happening? Was that currently active today, or was it a wish that it should happen?
The Chairperson said that Mr Tseki’s question was a follow up question. If he wanted to
raise a follow-up question, he would have to wait for the Ministers comments, because other Members might have the same follow-up question.
The Minister acknowledged the comments made by Members on the performance of the Department as reflected in the report of the AG. She noted that the Department would have to make an action plan list and come back to the Committee regularly, as it did its quarterly reporting. Even the entities had to include the quarterly reporting of the AG’s action plan list so that the Department could track what was happening.
She reiterated the need to be cautious when dealing with labour matters in the public domain, as she did not want to find herself in a situation where she had breached the process and the government was prejudiced. In terms of the levels of authority, there were things she could not respond to because the appointment or dismissal of a DG was not her responsibility as Minister; it was that of the President. What was expected of her as Minister in terms of corporate governance was to ensure that the entities had boards, executives and accounting authorities to which the board accounted to regularly. The boards had been appointed and the Department had put in place what needed to be done, including quarterly meetings expressing the need for an improvement in performance within the entities.
Recently she addressed all their strategic plans and gave feedback. Since she had arrived, she had not received a single request from the Social Housing Regulatory Authority (SHRA) saying they were able to open a product or facility that the entity had concluded. There was engagement with the entity and the board, but there was also a need to balance her involvement to avoid encroaching on its affairs. There was a need to allow the accounting authority to exercise its authority of providing oversight. She was comfortable with what the boards were doing and it seemed like they were on the right track. There was a bit of concern regarding the turn-around in the SHRA.
The Department had a number of concerns regarding the HDA, but there was some level of improvement in the work they were doing in the provinces. The HDA had to be reminded regularly that they were not banks, to keep money for the provinces. There had been a clarification of its mandate because there were talks of a primary and secondary mandate, yet the Housing Development Agency Act did not provide for such. The Department had clarified that there was one mandate of the HDA, though broken down into various parts.
There were efforts to rebuild skills and improve the services at entities such as the NHBRC and NHFC, and work was being done. The suspension of the CEO of the PPRA had had effects. For example, the CSOS and the PPRA got a lot of emails from stakeholders complaining about various issues. The experiences of these entities from its customers helped to guide the portfolio on what it had to do.
She committed to concluding the matters around the review of the grant system for the Department to perform better. There was further commitment to consistent oversight from her side as the executive authority in terms of provinces. For example, a MinMec this month specifically focused on performance. There was a focus on performance and holding each other accountable.
The Chairperson had put it well when she said that the performance sat with the national department, but the performance agreements were signed between MECs and premiers. This included deciding how money was spent. The national Department did not have much of a say and once business plans were decided on, there was still the need to go to Treasury for permissions. The Department was therefore requesting a review of the grant system to allow it to hold provinces accountable as expected while respecting the separation of powers. Her performance agreement with the Presidency reflected all these issues, but the implementation was at some point.
There were efforts to review a number of the issues, including the issue of the beneficiary list. In this regard, digitisation and centralisation were important to ensure delivery. The issue with disaster management was that when municipalities faced a disaster, they had to apply for emergency funding. They had not known that they needed to apply or how to apply. The Department had had to run workshops to orientate them on what needed to be done.
On the issue of title deeds, she did not want to mislead or lie to Parliament. The Department was not doing well, and she believed that the performance in this regard could improve drastically. It was trying to test a system with the old stock to unlock those title deeds, and see how it could best deal with them. The ideal situation would be that if a person was registered to move into a house, they would move with the title deed. Initially, there was a database of people allocated to projects as they were started, after which they would then have the houses. The issue was that with the blocked projects, people were waiting for a house for a long time, even though it was said that a house had been allocated. What had changed was that allocations were made as the projects were concluded. This delayed the registration of title deeds and was an issue the Department was dealing with.
The issue of the stability of the portfolio in terms of leadership could be addressed by having the right people with the right skills who were committed to working. She was concerned about municipalities, especially metros with coalition governments that were constantly changing, which meant that their priorities would change, including their people and how they did things. It also meant that they needed to be taught what needed to be done and the framework of the grant because without leadership, there would not be the level of oversight needed in the municipalities. The Department was consistently engaging with them to finalise these issues.
Follow up questions
Mr Tseki said that the Minister had clarified his concern about the title deeds.
Mr Herron thanked the officials for their responses. His question about the HSDG had been unanswered, however. The acting CFO had answered as if he was questioning the USDG. He was asking about the 100% expenditure or claim that 100% had been spent on the HSDG by three provinces and whether that was a realistic figure, given the discrepancies according to the answers to questions he got when he was still in the provincial legislature in the Western Cape. The discrepancies were between the number of units delivered in terms of completed houses and serviced sites, using the HSDG. He had used the Western Cape as an example because he was there, and it had been allocated R1.577 billion and they had claimed 100% of it had been spent, but the number of units that were supposed to be delivered as reported by the Department was less than what R1.577 would have delivered as the target in the business plan for the province. So, was that an accurate report on those three provinces that had reported 100% spending of the HSDG?
Ms Bele apologised for missing Mr Herron’s question. The HSDG did not only buy the sites and units. What first needed to be looked at was what the province spent the R1.7 billion on. Secondly, most of the time there were units that were still classified as work in progress. There was a possibility or a reality of 100% spending on the HSDG even if they did not deliver 100%, with some units still regarded as work in progress. This was because when the HSDG was being reported on, it reported on all programmes. For example, 5% of the HSDG of the 1.7 billion for the Western Cape was utilised to procure capacity. So from the R1.7 billion, 5% was not to be utilised for the units and sites -- it was to procure capacity, and this was allowed in the HSDG grant framework. Looking at the Housing Code, the HSDG procured a lot of programmes. The Department would have to go back and look at what exactly the R1.7 billion had been used for. It would be able to submit that particular report to the Member. Most of the time, there were other programmes in the business plan that the province had budgeted for. There were many contributing factors that would reflect 100% expenditure, although there would not be 100% expenditure on the sites and units.
The Chairperson welcomed the commitment by the Department to make sure that the issues raised by the AG were addressed to avoid repeat findings. Entities and provinces had to be monitored in that regard as well, to ensure that there was progress. The portfolio was stuck with unqualified issues but needed to move towards clean audits.
She thanked the Minister and the team from the Department.
The meeting was adjourned.
Semenya, Ms MR
Herron, Mr BN
Kubayi, Ms M
Malatji, Mr T
Malematja, Mr C N
Mokgotho, Ms SM
Powell, Ms EL
Tafeni, Ms N
Tseki, Mr MA
Tshwete, Ms P
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