Free State and Western Cape on MINMEC 2022/23 Priorities and Budget Expenditure; with Deputy Minister

Meeting report

The Chairperson welcomed all present in the meeting.

She asked everyone to observe a moment of silence for meditation or prayer.

Apologies were heard.

The agenda was duly adopted.

Opening Remarks

Deputy Minister of Human Settlements

Deputy Minister of Human Settlements, Ms Pamela Tshwete, asked the MEC of the Free State, Mr Moses Ketso Makume, to introduce his team and the Members of the Department of Human Settlements in the province.

DM Tshwete said she would support the MEC with the presentation on the Ministers and Members of Executive Councils (MINMEC) priorities and budget expenditure. She listed the main points of the presentation. She said the slow pace of issuing title deeds in all provinces remains a concern. A MINMEC was held the previous week where provinces submitted their performance. The DDG of the Department was working with all provinces to improve the slow pace of issuing title deeds. The removal of asbestos roofs was not as simple as anticipated, and specialists were required to do this. She assured the Committee that meetings were held with Deputy Minister Makwetla on the housing list for Military Veterans, and this also remained a concern. There has been instability in the Free State affecting delivery. The province would report on its budget, whether this would be sent back to the National Treasury and whether the funds would be recovered. There are eight months to the end of the term, and they do not want the funds to be directed back to the National Treasury. The majority of provinces have removed mud houses and have done well on this in Kwa-Zulu Natal.

The Chairperson said that the Minister had promised to intervene in the challenges experienced in the Free State.

Department of Human Settlements

Acting DG of the Department of Human Settlements, Ms Lucy Bele, said that the Department intervened on capacity issues with the management team and procurement. She said they procured a seasoned supply chain management (SCM) specialist working in government. A Town Planner was also secured to assist. The Department decided to have a closer discussion by the end of the first quarter. It was agreed that issues would be separated, and existing projects and contractors would be one of the main focuses including procurement. The province said that its business plans were partially approved, and the Department agreed that it would come up with a timeline. The CFO from the Free State would ensure all procurement has been completed. She said that they also agreed to discuss blockages, and the resolution they came to was to work on the retrospective adjustments of subsidy contracts. Adjustments began on 01 April 2023, and the team decided that all provinces needed to decide on whether to make adjustments. The disadvantage of adjusting projects was potentially missing the deadlines for meeting targets.

She said that the sector had received a proposal from National Treasury to have huge grant cuts. The Department of Human Settlements currently has R3.1 billion. This budget cut would affect all grants, but a counter-proposal would be made, as the plans would be severely affected.

Free State MEC

Free State Human Settlements MEC, Mr Moses Makume, made brief introductory remarks and said the Department was a service delivery Department and played a critical role in creating a better life for all. The state’s failures and slow delivery of services are quickly negatively impacting the citizens. “For this reason, we are redirecting our energy to deliver quality houses for the people of the Free State”, he said. Admittedly, this would not be an easy task given historical challenges. The Free State Department has faced a number of challenges over time due to poor leadership, which has led to the loss of capacity, mismanagement and technical team. As a result, it was challenging for the Department to meet its performance targets. This also affected Municipalities such as the Mangaung Metro. Mangaung is central to meeting targets and the metro was placed under administration, but there are still more challenges to come. The Department has worked on capacity challenges such as supply chain, bulk infrastructure and the removal of asbestos. “We also have monitoring and evaluation mechanisms in place. He handed over the team to present”, he added.

Briefing by the Free State Department of Human Settlements: MINMEC Priorities and Budget Expenditure for 2022/23

Chief Director: Project Management Unit, Mr Thabiso Makepe, presented the Provincial Department of Human Settlements Development Grant and Informal Settlements Partnership Grant Business Pans for the financial years 2023/24 – 2025/26 as well as the Department’s performance on the MTSF (medium-term strategic framework). The presentation covered the conditional grants allocation, financial performance, MINMEC priorities for the 2023/34 financial year, unblocking of blocked projects, progress on housing for military veterans, the eradication of mud houses, employment opportunities for previously disadvantaged groups, the replacement of asbestos roofs, upgrading of informal settlements, delivery of bulk infrastructure, progress of the issuance of title deeds and natural disasters.

Head of Department of Human Settlements in the Free State, Ms Mosa Masimene, said that the picture given to the Committee did not look good at all. It was important to highlight that the recovery plan was in place and was being discussed with the National Department of Human Settlements.

Unblocking of blocked projects

The Free State Province has 231 blocked projects which were not completed due to various reasons:

-Cancellation of contracts due to non-performance and delay in appointment of replacement contractor.

-Lapse of contracts and delay in appointment of replacement contractor.

-Slow process of title deeds registration

Progress to date:

-For the 2023/2024 financial year, the Department has planned to finalise 98 blocked projects which consist of 393 units in all districts.

-Site verification on the number of units which are not complete on each project is almost complete.

-Downscaling of projects to approved beneficiaries is also underway; this will assist in closing projects where all approved beneficiaries have benefitted

Mud houses programme

-In the Province currently, assessment of mud houses has been done in three districts, Mangaung, Thabo Mofutsanyane and Xhariep.

-There is a total of 342 mud houses that have been confirmed for the programme and the process of assessment has not been finalised.

-The Department has planned for 80 units in the current business plan to be done under the Rural Subsidy Communal Land Rights programme

Work opportunities

-The Province annual target for work opportunities across all programmes is 500.

-19 work opportunities were created currently.

-The Province is still in the process of appointing contractors in most of the projects, resulting in a low number of work opportunities created.

-There will be improvement once the contractors have been appointed

Asbestos removal and replacement project

-Contractors for the removal and replacement of the asbestos are already on site across the province.

-Asbestos-roofed houses have already been identified through a previous survey and have been submitted to PSP for scope allocation to contractors

-Contractors will provide storage units for beneficiaries to store household contents before commencing with removal

-The removal and replacement process is estimated to last for a maximum of two weeks per unit provided the structural integrity assessment of such a unit is acceptable

Jaggersfontein disaster progress

-Human Settlements was initially tasked with overseeing the enrollment of new houses to be built through NHBRC and identifying parcels of land through the assistance of HDA, should there be a need to relocate the affected community members. The six parcels of land were previously identified, however due to the length of time it would have taken to develop new parcels of land, the rebuilding is being done in-situ where the disaster occurred with a few exceptions where infill sites were made available by the municipality for the relocation of beneficiaries that indicated that they were too traumatised to remain on the same sites where the disaster occurred. The municipality has identified 47 infill sites which are more than enough to cater for the few beneficiaries who would like to be relocated.

-The non-compliance of NHBRC enrollment processes has a negative impact on beneficiaries.   Under normal circumstances, when enrollment is done prior building of houses, NHBRC inspect the building of houses per milestone until final completion of the houses, thereby providing quality assurance throughout the building process. In the case of late enrollment, NHBRC is unable to provide quality assurance and beneficiaries are robbed of that benefit. In instances where houses are not enrolled at all, the NHBRC warranty cover will not be in place and beneficiaries are left with the risk and financial burden of repairing their houses should there be defects at a later stage.

-Progress on the rebuilding process:

• The contractor is working on 68 houses that need to be rebuilt and 64 houses that require refurbishment, including removal and replacement of asbestos roofs.
• To date, there are three houses completed, one house at wall plate level, 11 houses at foundation level, 22 houses have been demolished, 21 houses are being repaired, 57 asbestos roofs have been removed and one asbestos roof has been replaced.
• The contractor’s progress is slow. The sub-contractors expressed challenges in accessing building materials in Jagersfontein which could be one of the contributing factors for the slow progress of work.

Challenges: conditional grants

-The under-performance recorded was a result of a number of factors such as; The internal restructuring within the various programmes, review of existing contracts which led to some contracts being terminated others being put on strict performance terms; 

- Partial and late approval of the Business Plans (HSDG and ISUP) 

- Lack of capacity within Supply Chain Management

-Procurement strategy implemented did not achieve the desired outcome

-Remedial actions:

• A total of 9 tenders were advertised and closed. The Bid Evaluation and Adjudication committees will continue with evaluations and adjudications, from 11 to 15/09/2023 and will work uninterrupted at an outside venue to conclude the appointment process.
• The Bid Specification committee is currently finalising the drafting of Terms of Reference and Specifications with respect to five other projects that are on the Procurement Plan. The advertising of these projects will also be fast-tracked.
• The appointment of the nine projects will be concluded by no later than 22 September 2023
• Removal of Asbestos programme has commenced and is progressing well.
• Rectification on asbestos-affected houses utilising the Earmarked funding
• Unblocking of the “Blocked projects” under strict performance

The FS Department remains steadfast in its dedication to fulfilling its mandate and contributing to the well-being of our communities. It has taken the following measures to improve performace both financial and non-financial:

-Expedited the procurement process for projects and contractors anticipated to be on site by end of October  ;

-Focused on acceleration of currently running projects and have allocated enhanced budget to these projects;

-Procurement of professional services providers (PSP) through DBSA or the asbestos removal project has been successfully concluded, and the appointed contractors are already on site’

-Prioritised the acquisition of land and Properties in the Mangaung Metropolitan Municipality for inner city development

With the recovery plan proposed, it is anticipated that the entire allocations on both grants will be spent by the end of financial year.

[See presentation for more details]

Briefing by the Western Cape Department of Human Settlements

DM Tshwete said that the delegation from the Western Cape was invited to present on the unblocking of blocked projects, mud houses, asbestos roofs and lessons learned on natural disasters, as the Western Cape was prone to natural disasters, particularly fires. She said that she was a witness to this, as she always assisted with disasters. Building RDP houses in the Western Cape has also been an issue.

Ms Labeeqah Schuurman, DDG, Western Cape Department of Human Settlements, introduced the delegation from the Western Cape and apologised on behalf of MEC Simmers, who was away with Premier on an overseas trip booked some time back. In terms of the context of the presentation, she said it was important to note that the Department of Human Settlements in the provincial government has undergone quite a few changes in the past few months. The Department was no longer a standalone department and became a branch of the newly established Western Cape Department of Infrastructure. She said that the Department had experienced challenges during the Change Management Process which is never easy. There have been quite a few vacancies since April 2022. At the same time, the compensation of employees has been an added pressure. They have managed to have critical posts approved for the branch of Human Settlements, which includes the other Chief Director for implementation and the appointment of at least two directors and some civil engineers.

In terms of capacity, she said that it would be prudent for her to make the statement upfront. A lot of time has been spent on title deeds, implementation and recovery plans for the current year and going into the 2024/25 financial year. In the last six months, they have spent a lot of time with municipalities closing gaps and ensuring that what is on the Department’s business plans for this year and next year is implementation-ready. She said the Department had no inputs on disaster, as this was managed in the provincial disaster unit. If the Committee required any information on this, it could be obtained and sent at a later stage. The team present in the meeting did not provide capacity, but participated in the bigger provincial Municipalities such as the City of Cape Town. 

Ms Kahmiela August, Chief Director: Human Settlement Planning, Western Cape Department of Infrastructure, presented the progress of unblocking blocked projects, the eradication of mud houses, the replacement of asbestos roofs, progress on the 40% allocation of procurement to designated groups, progress on the issuance of title deeds, upgrading of informal settlements, the redevelopment of public sector hostels, and the delivery of bulk infrastructure in priority development areas.

Progress report on unblocking all blocked projects

-The Department has identified 38 projects to unblock over the 23/24 and 24/25 financial year. The PHP unit is closing off all old PHP projects in the second half of the 2023/24 financial year,

-Many projects are complete but require adjustment of details on the Housing Subsidy System,

-Three projects in the Metro, Airport precinct, Ithemba and Welmoed are being delayed due to slow relocation of communities on the sites and intimidation of contractors.

-The Stellenbosch Kayamandi project was delayed due to problems relocating families. However, the project is now progressing.

-The Siyahalala and Fairylands projects in Drakenstein are being completed with houses being built for the last remaining qualifying beneficiaries.

-The Grabouw and Riviersonderend projects will be completed by the municipality using new contractors.

-The Gansbaai project in the Overstrand area is being completed after relocation of the last beneficiaries.

-The Yak’Indlu project in Mossel Bay is being completed by the municipality.

-The Saldanha White city project is being completed in the current financial year.

-The Malmesbury de Hoop project first phase is complete. Further phases are commencing in the second half of the financial year

 

Eradication of mud houses

-There are instances where beneficiaries were engaged and indicated displeasure at forgoing a bigger house to get what they viewed as a smaller unit. The Department cannot operate outside applicable norms and standards as provided for by government.

-Department is not aware of any eradication in 2022/2023 and prior to that, but at this stage, the following are planned to be replaced in 2024/2025:

-20 mud houses in Matjiesfontein (Laingsburg); and

-19 mud houses in Bongolethu (Oudtshoorn)

Replacement of asbestos roofs

-The costs will be substantial, for the Western Cape as we are estimating a cost of R8-10 billion and no funds are set aside for this.

-Budgetary constraints, which are set to worsen based on recent media reports, also do not allow us to prioritise the "Programme".

Progress in issuing title deeds

Western Cape Subsidised Projects are mostly done by Municipalities, and they are responsible for effecting transfers to enable the release of title deeds

Shortcomings relating to underperformance with transfers at Municipalities were identified as:

-Personnel Shortages

-High turnover in personnel

-Time-consuming supply chain processes

-Challenges with deceased estates, contestations, absent beneficiary, other occupant, etcetera.

Departmental capacity: The institutionalisation of the Title Deeds function straddled 3 Chief Directorates. Although the title deed team is still under-resourced in the Department, the streamlining of the function resides within one Chief Directorate. The appointment of the Programme Manager is also a recent success.

Title Deed Action Plan: The title deed action plan was designed to drive the turnaround approach to eradicate the backlog. Original Title Deeds Action Plan approved by Minister Simmers in 4th Quarter 2022/2023 and envisaged 4-year appointment of external Program Manager to drive the action plan.

Appointment of Programme Manager effective May 2023. Key short-term deliverables of Programme Manager:

-Revise TRP/Title Deeds Action Plan, best practices re internal processes and liaise with Municipalities, crafting Due Diligence terms of reference to understand the status of title deeds in each municipality.

-Appoint a Data Analyst and an Information Analyst to unpack the HSS and merge with the Due Diligence outcomes.

-Appoint Professional Resource Teams to address the gaps and to render assistance to the Municipalities

Upgrading of informal settlements

-The Department’s approach to informal settlement upgrading is anchored in a transversal and Provincial-wide informal settlement upgrading strategy (driven by the Informal Settlement Support Programme, of which the Department is the custodian), which seeks to enhance, simplify, and accelerate informal settlement upgrading interventions.

-The strategy as the foundation for the effective prioritisation, planning, implementation, and maintenance of interventions in informal settlements has guided the rollout plans across the province. The ISUP-Grant has also ensured that more support and funding commitment is channelled towards UISP projects or related interventions, seeing a total of 45 different informal settlement projects funded in the 2022/23 financial cycle

Redevelopment of public sector hostels

-The Community Residential Unit (CRU) programme is being replaced by the ‘Redevelopment of Public Sector Hostels and Rental Housing Stock’ Programme.

-The revised policy is currently out for comment. The Department provided comment to the National Department on 15 September as required.

-The major challenge facing the programme is the large operational subsidies required to make up the shortfall between the proposed rental revenue from the target group of those earning below R5 500 per month, and the required operational costs for Economic Cost Recovery (ECR).

-The revised policy is premised on municipalities needing to fund the large operational deficits. Most municipalities do not have the revenue or cash reserves to fund these deficits.

-The Department therefore is not able to support the revised policy in its proposed form, until such time as a sustainable financial model is developed. The Department is actively participating in the National CRU Task Team, as part of the consultation process, in a bid to develop sustainable solutions to much needed affordable rental accommodation.

Delivery of bulk infrastructure in priority development areas

-Bulk infrastructure funding in the 2022/23 financial year was through Own Revenue and mainly on projects within the Metro Priority Development Areas.

-The following projects were referenced in the 2022/23 Financial Year: Penhill Bulks USDG Electrical required; Penhill Bulks USDG Civils required; Airport Precinct USDG Electrical required (ISUPG); Airport Precinct Bulks USDG Civils required

[See presentation for more details]

Discussion

Mr L Mphithi (DA) said there was so much to say, but he would try to be brief. He noted that there was no financial performance information in the Western Cape’s presentation, and this was a bit problematic for him. The Committee would like to see how conditional grants are spent. On upgrading informal settlements, he would have liked to see more thorough details on the 45 settlements due for upgrading and the progress on this. Where is this located in the province? This is a fundamental issue and requires a lot of expansion. What is the Western Cape doing about land grabs and the housing projects affected by the construction mafia extortion? What is the strategy that the Western Cape has implemented on the construction mafia?

On the Free State, receiving the presentation on the morning that it would be presented was unacceptable. The Members need to be able to read these reports and engage thoroughly. There are a number of incomplete projects, and South Africans have been denied dignity in this province. Some unscrupulous contractors have failed to deliver on housing projects. The Department must explain the intervention measures against corrupt officials involved in illegally taking houses, stealing houses and illegally occupying houses. For example, over 60% of the Hillside Project has been occupied, by officials inside the Department. This is completely shocking. Community members also stop projects, and this has been raised with the Minister. The Hillside Project is interesting, because the houses were illegally occupied for people to drink alcohol and to have parties while people are living without houses. He found this to be very disgusting. The State Capture Report mentioned the Department of Human Settlements and the R600 million spent to deliver houses that did not happen.

What intervention is in place to recover this money and build houses for South Africans? How many officials have faced consequence management in the past two years? A number of projects have been referred to the Hawks. What steps have been taken around those implicated? These issues speak to the HSDG and conditional grant spending, which is at seven percent. How does the Department plan to spend this money when people are in dire need of houses? Why have both grants not been spent? It is unacceptable to say that there is an improvement. But looking at the conditional grant spending, it is unacceptable. About R255 million was spent on asbestos removal and nothing was done. The matter is currently in court. What will be done differently? The presentation indicated that a plan is in place, but there are no different interventions. Officials and contractors benefitted, but not the people and R255 million went down the drain, and no one knows where it is. Everyone benefits, but the people of South Africa. Slide 58 indicates that problems in the Department relate to a lack of capacity, late business plans and procurement strategies which do not work. What is the consequence management of this? He said that he was an official in government before. If people do not submit business plans, there should be consequence management. Recommendations are made in the slides, yet the Department does not say what it will do concerning late business plans. The reason why the Department cannot spend its grants is because it is not implementing consequence management with officials. What is different in the procurement strategy? Slide 59 does not explain how these challenges would be dealt with.

Mr A Tseki (ANC) said that the DG, Acting DG and MEC committed to the interventions mentioned in the Free State, and they promised that things would be different by the end of October. He requested a direct interaction between DM Tshwete and the Committee on changing the status quo. Equally, to further engage, even if this is not physical so that oversight could be intact. The Free State has so many mining hostels – for example, in Welkom, Machabeng, where the mines are within communities, close to the town and townships. Has the Free State engaged with them to change the hostels into residences? Hostels should be changed to be community residences. The rental funding is an issue, but he felt the Western Cape needs a platform to engage. The Western Cape is proactive on issues arising such as rental and recovery of funds, etc. He asked for comment from the DG on this.

He asked about the R3 billion budget cut for the Department and the counter-proposal to be developed. He said that the counter-proposal was still saying that the funds should be redirected and did not indicate what should instead be prioritised. This was a very big statement. He was unsure how the Committee could support the reprioritisation to engage the National Treasury. He referred to the Community Property Association and land claimed by people. What happens when land has to be developed in these areas? The Committee visited Rama City in Tshwane and was told by the community that it was the CPA. It did not want any future court cases by people claiming that they did not benefit from the land. How does the Department engage with the CPA? On bulk infrastructure, where do the funds come from? Is this derived from the Municipal Infrastructure Grant (MIG) or Urban Settlement Development Grant (USDG)? He asked if the blocked projects referred to the number of projects or units.

Military Veterans of 2023 differ from those from 1994 in terms of their economic status. The number should automatically be going down.

He said the Western Cape did not show any pictures of mud houses. He said that the names of development sites should be reconsidered to link to social changes in the country. On Jagersfontein in the Free State, there were counter reports. Some people reported on how good they were and others said they were small and of bad quality. He asked for more information on this. He asked how many times the MEC of the Department in the Western Cape was present at the meetings with the Committee. He agreed with Mr Mphithi that the Western Cape Department of Human Settlements needed figures in their presentation.

On asbestos, he said that when there was a storm, roofs were easily replaced. Asbestos removal has different costs and the Western Cape’s approach was good. On procurement of designated goods, the target was very low and should be upgraded even though they have been achieved.

Dr N Khumalo (DA) asked about the reasons for the Western Cape’s unblocked projects. She asked whether these were the only blocked projects in the current business plan. What is the progress on blocked projects? What is the completion date or would this go beyond the financial year? There is a need to ensure that everything done is achievable, measurable and realistic. On eradicating mud houses, why were no targets set for 22022/23 and is this due to budgetary constraints? What are the reasons for residents declining a new house as opposed to a mud house? In some instance, there are religious reasons in terms of culture. She wanted to understand the vision of the Ministerial office in terms of financial support. She commended the Western Cape on procurement to designated groups as it had over-achieved. They are encouraging all provinces to do the same. She stressed the importance of best practices and sharing information amongst provinces. There are different challenges in different provinces, and finding people with disabilities depends on where the search is. She called on DM Tshwete to establish such engagements amongst provinces and not limit this to ministerial engagements, as there were many issues around procurement. The analysis of data around title deeds was good, and this goes back to being proactive on some of the challenges and seeking guidance. Which informal settlements have been upgraded? What phase is this at, and what has been spent on it in terms of grant performance? The same applies to bulk infrastructure development projects. The reality is that the people of the Free State are neglected in housing provision. There is a need to be intentional on how the situation can be changed, which has persisted over a number of years. There is a need for actions and not just plans.

She said that they should have another engagement with the Free State. She asked when interventions had been put in place. The financial performance was unacceptable. Given the economic status and housing provision needs, it was unacceptable for a whole province to have this type of performance. This was really heart-breaking. If this is what is being done, she did not think any of them deserved to serve the people of South Africa. There is a need to be honest about some of these things. The reality is that most provinces cite poor performance of contractors as an issue. What interventions are in place for this? There have been proposals to have a national system where contractors can be blacklisted. More often than not, contractors are simply recycled and do work in other provinces. She wondered if they would just talk about this year in, year out. There needed to be a proper intervention over and above this.

On title deeds, she asked whether this affected blocked projects or if the project was complete. Once a title deed was in place, the unit could be delivered. She asked for timeframes on mud houses. She asked for an indication of how many asbestos houses have been targeted in the Free State and whether this was included in the current business plan. She wanted to understand the operations and how many asbestos houses were completed. How many informal settlements have been upgraded, and to which phase was this? Many bulk infrastructure projects do not have timeframes. Is the lack of a target perhaps a challenge to delivery? She said the Vista Park II Project had been going on for nine years. She asked about the progress on the other Vista Park projects. She said the lack of targets and timeframes could easily derail whoever was responsible. Will the projects be completed by December? Not much was happening on title deeds. She referred to slide 58 and challenges on conditional grant performance, and wanted to know who was responsible for the business plans and the consequences around this. She asked if the budget was affecting capacity, as this was the one Department that needed to be functional for housing provision. She said the National Home Builders Regulatory Council (NHBRC) was a complete failure. This has been heard and seen across the country. She asked when consequence management would be implemented around the NHBRC and when there would be recourse for citizens who have suffered due to this.

Mr E Mthethwa (EFF) said that he agreed with Members' comments and questions, and was covered by this. He could not agree more. The Free State had a general under-performance, and this was not acceptable. Everything done in the institution is institutionalised and not personalised. Next year, there would be a different MEC, and officials always had to bear the brunt from political heads. On procurement, he said that, without proper diagnosis or analysis of the challenge, this might just be a cosmetic solution unless there are other details on the cause. He had also worked in government and noticed from the Office of the former President, Jacob Zuma, and the Hotline that getting signatures from individuals was a challenge. People would simply be told that the person who needed to sign was unavailable. This was unacceptable. Find a diagnosis on the challenge around procurement. He was reminded of what Zuma had said on policies which were made – that “if they cannot help, we must find a way of working around them or change them”, he said. Everyone complains that policy does not allow them to do something, instead of finding ways around it. He asked what kind of leadership interference was being referred to in the Free State’s presentation. He asked what had been reconfigured from before that had not worked, and how this was changed. No details were provided on this.

What impact did the Western Cape’s reconstruction of the Department of Human Settlements into a branch have on consistency in government? What lessons can be learned from this strategy to better other provinces? He was not convinced by the information provided on the replacement of mud houses. It seemed that the Department did not want to do this. Given the culture of our people, they are very appreciative. And it seems unlikely they would deny this and want to live in a mud house. What happens to the budget allocated? There is an unwillingness by the Western Cape to change the injustices of this country. He was disappointed and hurt by this. This was unacceptable. They always knew that this caused lung cancer.

Ms Tshepiso Moloi, Chief Director: Corporate Support, Free State Department of Human Settlements, said that at no point did their presentation indicate anything of interference.

The Chairperson asked for clarity on the report from the Free State and the recovery plan. The technical team informed the Committee that it could not assist the Mangaung Metro, as the environment was not conducive to this. On consequence management, she said this should be elevated and people should be dealt with. The presentation had clear targets, but without capacity, how would the Free State implement this? Some people were messing up the system by not accepting the support offered by the Department. The Minister had the authority to set priorities. And if the person dies before receiving assistance, this would be in the hands of the Minister.  

She said that the Department should reprioritise. It could not request National Treasury not to increase the Department of Human Settlements budget when provinces continually prioritised other things. Approving the budget without the business plans of the provinces was a mistake made by the Portfolio Committee. At some point, they have to be very strict and not pass a budget until provinces have submitted real targeted business plans which target the priorities. She did not understand the reason why there were no funds. The Committee was not aware that the Western Cape had raised the capacities of municipalities. The Western Cape has given the same municipalities contracts to build houses when it does not have the mere capacity to restore dignity with title deeds. In the Drakensberg, they had said that the municipality had lost the ERF number. There is an issue with the pre-1994 titled deeds.

Due to improper selling of RDP houses, most owners do not have title deeds. Often, most occupants are deemed illegal. In some instances, they will call it illegal occupation. These are things that delay title deed issues. The Western Cape’s budget for title deeds was a conditional grant which went back to the National Treasury several times, because the provinces did not spend it. She thought that the Department should get its system in order. In her view, it was supposed to be the opposite, because Human Settlements were larger than infrastructure. The Department must plan human settlements that are integrated and sustainable with community amenities. The Western Cape has done this the other way around, because when talking about roads, one is talking about things within the human settlements. Mr Mthethwa was asking about the effect this would have and whether this would hinder the Department of Human Settlements as an organisation in the Western Cape.

She said the Free State should engage on its recovery plan cited in the older presentation. The Department should work with the Free State and assist the province in providing targets that actually address the priorities. On upgrading informal settlements, she said that the Free State was doing a good job but needed to consider how to integrate its work with other Departments. They realise that the USDG given by National Departments is not prioritising capital projects. The money that was allocated is not being used where it should be. How could the sector deal with this issue in totality? If R1 billion was allocated for infrastructure, what would the municipality allocate?

She said that Tshwane, for example, when allocated a budget, was able to be strategic with its allocations. The Western Cape and Eastern Cape have projects that have spanned over nine years. The question is: how do we monitor these ADG Departments and National Departments on the multi-year projects, including the Free State, given the timeframe of the Free State? There are construction budgets around May, June, July, August, September, and October. And November is the danger zone in other provinces. In the Western Cape, this is May, June and July, because it will be rainy days which cause delays. How can they ensure that they consider this in terms of their planning? If procurement still needs to take place for the Free State, there might only be three months left of the financial year, which may not be possible. The recovery plan must be honestly scrutinised so that, when we assist and intervene to build capacity, we do not end up losing money by putting money back into National Treasury, as this will affect the baseline”, she said.

The Committee wanted a report on the measures put in place on the recovery plan of the Free State before the end of the financial year to monitor its finances.

The Western Cape said the municipality implemented the majority of projects in the province due to capacity issues in issuing title deeds. She said this was a contradiction, and asked for clarity on this. If the people cannot implement their constitutional mandate, the Western Cape gives them other responsibilities. She asked if the Western Cape thought this was why its projects spanned over nine or ten years in the system. Mr Mphithi spoke about the construction mafia and said that one of the MMCs was alleged to be part of the mafia. They have spoken about the fact that officials become problematic in the systems because there is no quality management. Unfortunately, in this case, this is a colleague who is a member of the mayoral committee. How do we ensure that we clear the system that we are dealing with and that this is not the mafias within the state, but the mafias outside the state?

The Chairperson said that the Western Cape presented on its finances and only had to report on their targets. Mr Herron mentioned that the Department of Human Settlements in the Western Cape still needed to respond to the Committee on some issues. The previous presentation by the Western Cape included its finances, and there was the expectation that targets would be presented at a later stage, which is why the presentation was accepted at that stage. But targets have still not been shared with the Committee. Considering the removal of asbestos, the Western Cape was not saying exactly what it planned to do in the current financial year, and these issues should be addressed.

There was an issue relating to a Knysna bungalow. She asked what the Western Cape had done in this area as it was not prioritised. The conditions those people were living in were really horrible. There was a person in a wheelchair, who could not access the flat without being carried in and out by family members. The Department is requested to prioritise this person and remedy the situation.

On the 40% allocation, she said this was not placed on women or 15% on youth, and 2% on disability. The 40% was represented as the entire previously disadvantaged, which misinterprets the policy. The Department of Human Settlements should do more on women, because most of these projects are headed by male contractors, but women contractors did the job diligently. She believed there were female contractors in the Western Cape. “If we do not have them, we have to create them, because all that you have in the system has been created”, she said. For the previously disadvantaged, they have to come up with a programme to deal with that. The Free State has not provided any of these details nor mentioned whether it has employed women.

She said that construction had the responsibility to contribute towards job creation. Whether it is temporary or permanent, there is a need to contribute towards the job creation in the country. She asked what Human Settlements, as a sector and not a Department, contributed to job creation.

She said that the eradication of mud houses in the Western Cape had to be addressed, referring to comments made by Mr Mthethwa and Dr Khumalo, who believed that the Western Cape did not want to do this and that provinces needed to work together. In some provinces, mud houses were left as storage facilities, but posed a risk as someone could die if the house collapsed. It would also pose an issue for the Department of Human Settlements. They have to strengthen the appreciation and elevation of these issues. The eradication of asbestos is not a new project. They were not given focus and they continued to build houses and leave those in areas with problematic asbestos. She said that Mr Mthethwa raised the scientific aspect of this and that there was just cosmetic revamping of asbestos. If it is scientifically proven, then the Departments can learn from each other. The Department of Environmental Affairs should be involved with this, because this is an environmental issue. Without enough budget, one can scientifically prove that asbestos must go. They need to be able to protect citizens from sickness. She said that the pictures presented in the presentations were very good and hoped they would be as good in reality. She emphasised the need for engagement between provinces. 

What is it that VBSA is doing with removal of asbestos? There should be engagement between provinces to learn from each other. She asked them to raise these issues at MINMEC. One of the things that they have learned with metros is that they had taken the initiative when Buffalo City demolished big houses near the airport. With Tshwane, they learned that the province applied for a blanket court order so it could immediately implement evictions. These things should be shared among provinces so that Human Settlements do better. The Committee is addressing these issues not to problematising anything but rather to assist, because the Department’s performance gives Members of Parliament credit. If a mud house collapses, it reflects poorly on Parliament. She said they are raising these issues to communicate that Departments should reflect on how they perform. This is one of the things that she wanted to request MINMEC and the Deputy Minister to look at. She was not sure if government officials were afraid of implementing consequence management. They do not actually deal with people who are polluting the system. “Maybe at some point, we have to look at the efficiency of the performance management system”, she said. She recalled people getting bonuses even though they had not met the targets. How does one get a bonus when they have not met a target? They called National Treasury to account for the process of blacklisting contractors and but Treasury said this was not an easy process. She said that the Department of Human Settlements could not rely on National Treasury to solve its problems and could be proactive while National Treasury considered how to deal with policy issues.

In terms of sharing, in the MINMEC, one could say that these are the contractors that cause blocked projects and share amongst themselves, and then the MECs will go back and say these contractors must not be given houses in the province. Find a way of alienating them from the system without pronouncing it. “We cannot wait for the policy of National Treasury, because the system becomes polluted in our presence”, she remarked.

Mr Tseki asked about the mud houses used for storage and the yard sizes of those identified. He asked because most mud houses were in rural areas, and one would find enough space to build a house. According to your observation, what sizes prevented the houses from being built? A woman in the Free State said that the Department demolished her house. When they brought the material, they built a house next door. This was in the media and was quite bad. They can provide the Department with the relevant information.

MEC Makume said he wanted to declare that the Free State was as concerned as everyone about its performance. The province was aware that its performance had not been optimal. That is one of the reasons why they have resorted to the recovery plan and intervention. He would explain this at a later stage.

Responses from the Department of Human Settlements

Ms Moloi said, on why the Department had not spent the allocated funds, that it had reviewed programmes and processes internally. The Department has a number of challenges. Human Settlements is an infrastructural department, and they have few of the built environment professionals and lawyers being posted at various positions. One then has to restructure internal policies which cannot be done in six months. A skills audit was requested. She said they are not dumping people, but they wanted to encourage people to line into the professions that would assist the Department. One of the interventions in terms of bursaries was to encourage students to study programmes in the built environment.

On internal capacity and supply chain, she said that they allow other Departments to come in and capacitate. There have been a number of disciplinary hearings and suspensions in terms of consequence management. On contractors who pose issues, she said that they request forensic and engineering audits, and these reports will lead them to consequence management. Officials are alleged to be implicated in one of the projects handed over to the Hawks. The Department will implement the recommendations once it receives them. Some projects have been handed over to the SIU (Special Investigating Unit). The Department is in talks with the head office which has appointed an internal investigator. They are in the process of outlining the information that they need from the Department.

In the past, the Department tried to eradicate asbestos internally using its own capacity. It appointed contractors based on their experience across the country. She indicated that they had competent contractors who specialise in removing asbestos. The Department calls them professional service providers. They have been allocated across the Free State and began work at the start of August. The Department expects to have 200 by the end of the financial year.

On blocked projects, which are part of the recovery plan, the Department went out and evaluated resistance on the projects that could not be finished. Those projects are ready to be implemented. The Department would analyse the sites so that the contractors could simply complete the houses. She said that they decided to look for a bigger contractor for a number of reasons. They advertised 2 000 houses. They realised that they did not have much time and that contractors should have capacity and experience to come in for a minimum of four months. Smaller contractors would ask for financial assistance and would sometimes not finish the projects. The current sites were considered, and a few were identified to be a focus area. The national Department of Human Settlements has offered assistance on supply chain, and the provincial Department has worked well with this employee. All contracts that should be adjudicated have been finalised. It is critical to highlight that they will go out on the database to prepare for the next financial year.

The state is trying to recover the funds that have been lost, and some have been liquidated to assist with the informal settlements.

Responses from the Free State Department of Human Settlements

HOD, Ms Masimene, said that there are 161 informal settlements in the Free State, all of which have been categorised. So, the Department is aware of which ones are properly located and which ones should be re-categorised. Currently, there are 51 informal settlements which have been upgraded to Phase Three. 53 informal settlements are currently being upgraded in Phase Two. About 55 informal settlements are currently in Phase One. She would share this information with the Committee Secretariat.

The Chairperson asked her to explain the phases.

Ms Masimene said that phase three related to infrastructure, water and sewer projects and upgrading the informal settlements. Phase two related to the formalisation, and phase one related to preplanning and categorisation of informal settlements.

There were delays in procurement for the top structure. There is an informal settlements upgrading forum in the province that functions very well, as it meets regularly. The forum consists of other municipalities and Departments. The biggest challenge is that the main players remain the Department of Human Settlements and the Department of Electricity. They have found that other departments do not necessarily upgrade or construct those social amenities, which results in sites earmarked for social amenities being invaded. Municipalities then subdivide those sites. She said they have found that sister departments are reluctant to play a key role in informal settlements. The majority of municipalities have indicated that where informal settlements have been invaded, they will no longer advocate for upgrading and special amenities.

The Department said, on Jagersfontein, it played a support role because the community members indicated that they did not want the BMG houses. The Department coordinates and takes over the role of the HDA and the NHBRC. The Department could do internal services on the land allocated by the municipalities.

The allocation of previously disadvantaged groups has not been included in the presentation. Having realised this was not being implemented, the Department consciously decided to allocate houses to women, which is 100 out of 400. It undertook to communicate that this was a pilot project and allocated some houses, after which the rest would be allocated. The Department was sitting at 24% and would catch up when contractors were sent.

Mr Makepe said, on unscrupulous contractors, that the Department has decided to go with higher capacity contractors. This will ensure that they bring muscle and capacity. Construction mafias are not only in the Western Cape, and the Department has approached the local police to assist with this as local business forums would sometimes demand employment due to their skills.

On the question relating to State Capture, this was currently in the courts.

On late business plans, he said this was not submitted late, but some of the business projects sited had not been procured, which poses a risk to implementation.

Mr Makepe said that the hostels in Machabeng were converted into community residential units (CRUs), and this is the approach used.

Mr Makepe said a portion of the Human Settlements Development Grant (HSDG) could be used for bulk infrastructure from two up to six percent, with motivation. Most projects would not be undertaken as municipalities do not have the capacity to build bulk infrastructure.

On the standard definition of a blocked project, 231 have been identified. Only a certain amount can be applied in a year. A title deed project would also be considered a blocked project, as the Department is unable to transfer. They have experienced problems with the beneficiary lists, and they believe that this number will go down. Some units did not necessarily engage the NHBRC.

He said there were houses where a structural integrity issue may not be picked up on. In this case, they hoped they would not have to replace an entire unit, but the roof. When temporary accommodation has been sorted, they can redo the roof, which would need to be approved. They may also have to demolish structures where there are structural issues. In most instances, they can build one house next to another without having to move the beneficiary.

The presentation indicated that projects would be completed by December 2023. However, due to issues picked up, the completion date has to be revised. The new date would be December 2024.

MEC Makume apologised that the Committee only received the presentation in the morning. He said that he picked up errors and asked that it be redone. He assured the Committee that it would never happen again.

On matters of principle, he said that the recovery plan was trying to address this, and they do not need to discuss the plans but to act. There are a number of things happening in the Department and the sector. They have tried to commit to the recovery plan and ensure that they act to avoid the mess that has happened in the past. She said that they agreed with the Minister that they would receive a fortnightly report from officials deployed to reinforce capacity in the Free State. The report will speak to the commitments made in the MINMEC. They were here three weeks ago, when they arranged a meeting with the Minister, and it has only been three weeks since they decided on the practical intervention. Other issues relating to the historical legacy of 2010 brought a lot of issues in the Free State. The women who have been in the space were awarded an advance, and the majority of them were not correctly capacitated, making it difficult to detect whether they have met the requirements of 40%. They are trying to move away from the legacy of advancing money to assist contractors in doing the reconstruction. The Department also needs to meet policy requirements to move away from catering for emerging companies as part of the problem being resolved was caused by emerging companies. They need to strike a balance. They will put measures in place to ensure that the ultimate beneficiaries benefit, and they hope that the picture will have completely changed when they come back in October. He assured the Committee that the province would improve the situation, moving forward.

Responses from the Western Cape Department of Human Settlements

Ms Schuurman said that she could not speak to the impact of the decision, as it was still very early days, and the Department of Human Settlements in the Western Cape was a new Department formed on 01 April 2023. She could speak to the intention of the Western Cape government in prioritising infrastructure and, within this priority, expanding on the subsectors and how they work together as a whole. Traditionally, in government they look at the social and economic sectors. The Western Cape Framework intends to look at the subsectors of social infrastructure, and economic and technological infrastructure. They then consider how to look at the space in short, medium and long term to establish what the space should be like. This helps to leverage the benefits of what is happening in the economic, energy and technology space. This is a hybrid model of municipalities implementing themselves. They spend a lot of time providing capacity and support to municipalities in plans for emergency funding. They have increased engagement with municipalities and have one-on-one sessions. The third session will be held soon, and municipal managers are starting to come on board and participate themselves. The second round informed the business plan, and there is complete synchronisation between what municipalities are saying and the Department's adjudication process. The third round of engagements will prepare for 2024/25. When projects get stuck, they look at all the red flags and start working with the municipalities on this. The best example is a project which took almost five to six years to start the project and build houses.

Ms Schuurman said that she worked with the municipal managers and both teams who began work before 7am in the morning. Within four months, houses were built. Where there are blockages, they work intensively with Municipalities. On Knysna Bungalows, she said that she and her team were on site a few times with national government. They have an upcoming Steering Committee meeting and have finalised things with the Housing Development Agency (HAD). This includes information of 124 bungalows, of which 79 are privately owned and the Knysna Municipality owns 45. Twenty-two beneficiaries have been prioritised for urgent intervention and relocation. The Department has allocated funding for this in its 2023/24 business plan. She said that the Department could provide additional information on blocked projects, asbestos, mud houses and informal settlements to the Committee. This will include updated information on the phases. On the target for women, she said there is an individual indicator for women and youth.

Mr Roy from the Department of Human Settlements in the Western Cape said on land invasions and the construction mafia, that the two were distinct from each other. The construction mafia had its roots in a more sophisticated underground movement. This was foreign to the human settlements sector, and they have discovered that most of these elements are associated with nightclubs. The nightclubs were closed for quite a long time. So, they sought other means to get the money, which is how they landed up in the space. He said that they were requested to develop a strategy on how to deal with the construction mafia, but they unfortunately could not. Instead, they developed a response with police oversight and Law Enforcement of the City of Cape Town to encourage contractors, who are affected, to open cases. A key element of the construction mafia is extortion, and people are aware of where the contractors are from. Contractors are willing to pay the extortion fees as opposed to opening cases. The Department had a huge number of land grabs post-COVID-19. But this has dissipated, and the new phenomenon is to invade projects where houses are being built. He said that they have security and have contained this, though it comes at a large cost to the state in cutting down on invasion projects. They are trying to deal with this more appropriately, but it is a difficult space.

On rentals and the willingness of the province to work towards affordable rental units and the conversion of hostels, Ms August said that rental is a big part of this country’s future. The province is 100% committed to finding a mechanism to unlock affordable rentals in this country. She referred to an example of a place available for rental. On the second day of the listing, it had 67 applicants. He said that they could not begin to understand what was happening in the market for low-income.

On lost title deeds, before she started working at the Department, it had moved three times. There was a fire at the storage depot, and title deeds were missing. So, they are beginning a lost title deeds project and doing an inventory. This is an expensive project, and they need to ensure that the title deeds will be safe. The Western Cape has drawn up a Standard Operating Procedure (SOP) for Construction and Project Managers. The title deed becomes part of finishing the project for a Construction Manager. They are trying to use the SOP to get them to improve. And when the happy letter is signed, the offer for purchase can take place almost immediately. This is a whole mindset that needs to be changed, but the SOP is already in place in the Department. In the last financial year, they asked their research team to identify historically disadvantaged and small contractors. They really want to find a way to empower women, youth and disabled contractors. They cannot survive if they are not getting paid on time, and they have done some research to guide that.

DHS responses

Ms Bele said that she would sum up the responses. Guidelines on cost containment related to the R3.1 billion were received on Monday. Throughout the years, the state has been struggling and borrowing, but has been unable to pay back its debt. The budget cuts are across all Departments, and Human Settlements is waiting to hear what percentage of its budget will be cut. The reality was that the Department needed to come up with this money by looking at the obvious. Other provinces are not doing what is expected. The leadership will propose that it have a R2.9 billion or R2 billion cut as opposed to R3.1 billion. Both the Free State and Western Cape were not doing well as of 31 August 2023. The resolution from the MINMEC was that every province sitting under 30% was at risk. The Department will be sending letters to provinces that are affected. They are scrutinising recovery plans and they began with the Free State. This is a difficult year with zero probability of getting a rollover. The last time they met with the Committee, there was concern over whether developers were really implementing the projects. The revised Accreditation Framework was approved at the previous week's MINMEC. They are not leaving anyone out of the new criteria. The MEC of Gauteng said that this must be locked before getting accreditation status. Job creation is on the Department’s APP (annual performance plan), though it did not meet the target. The issue of contractors has been taken into account. There are no separate funds for the eradication of asbestos. Provinces should consider funds from their HSDGs for prioritising mud housing and asbestos. The issues being raised are important and need to be taken into account when formulating policies.

Mr Tseki said that the organisation should be considered broadly. The issue was not only about the Western Cape and Free State. “We should be able to deal with the issues before us and be above board”, he said. He requested that an area in the Free State should be visited, as invasions were common. When invasions are on the outskirts, it is dealt with differently.

DM Tshwete said that provinces should submit presentations to the Committee two days prior, and this should delay not happen again. The illegal occupation of houses is due to delays in handovers. People will occupy houses because they are vacant. Military veterans should have houses by now, but the numbers are growing. The list is being considered, and they have realised that some on the list are not military veterans. She said it hurt her that emerging contractors could not be given work, as the majority of them were women. Sometimes, it was difficult to have a meeting with the MEC. Women complained that MECs sometimes did not make time to meet with them. When she did roundtables for all provinces, the provinces did not recognise this. They have to work together. They need provinces to say that the 20% set aside is being implemented. They are not telling provinces who to employ, as that is their choice. She admitted that they are not always right, and said that the Members’ comments are taken into consideration. She emphasised that late submissions of presentations should not happen again.

Closing Remarks by the Chairperson

The Chairperson thanked the delegation and gave brief closing remarks. She said it was important for political heads to attend the meetings when requested by the Committee, as Members were not trying to be impossible but wanted to understand the frustrations and what was being dealt with. They can then confront the issues together. She now understood the problems encountered by the metros. Any policies that are impediments should be discussed in the MINMEC. If these issues are not raised, legislation would not be implemented. She asked the Free State to work with the Department of Human Settlements to report good progress to the Committee by October. She stressed that the Committee supported the Free State and needed to focus on Mangaung. She considered how people are given rights to become contractors when they do not have capacity, or employees such as Engineers. The municipalities work as adjudicators, and they must be able to monitor the work when they award tenders.

She said the Western Cape had handed over a house to a disabled person, but the environment was not conducive because this was a flat which required the person to climb stairs. Beneficiaries should also be verified so houses are not allocated to the same people. There will be more engagement on rentals in Cape Town, Johannesburg, Mangaung and Polokwane. The majority of people went to towns following economic activity, but they did not want to stay there and wanted to rent. SHRA will report that people do not want to pay rent, but there cannot be a blanket approach. A system should be developed where people are removed if they do not pay rent. She said that she received a letter from someone in Johannesburg, who had been removed from social housing for skipping rental payments for a month. She advised that people should make payment arrangements instead. There are many people who need such help, so this cannot be disregarded.

She thanked the Members for attending the meeting and all the guests for appearing before the Committee.

The meeting was adjourned.