Western Cape Appropriation Bill: Infrastructure

Meeting report

The Chairperson made brief opening remarks and welcomed all present in the meeting.

Minister’s opening remarks

The Minister of Human Settlements in the Western Cape, Mr Tertius Simmers, made brief introductory remarks and said that many lessons had been learned over the years. There have also been many triumphant moments for the Department and those moments outweigh the challenges. It has been a pleasure to see the positive impact the Department has had on the lives of residents. The proposed budget for the Medium Term Expenditure Framework (MTEF) period would be presented. There is an allocation of R28.4 billion which will be effectively leveraged with resources provided to the Department to address the diverse needs of the province and the injustices of the past. He also told the Committee that the Department strives to build a Western Cape of the future in all its formats. The budget reflects the province's commitment and prudent fiscal management while prioritising investments that will drive sustainable development, enhance service delivery and improve the lives of all citizens across the Western Cape. He was confident that through strategic planning and collaboration, the Department would be able to maximise every rand spent and ensure that the Western Cape continues to prosper, thrive and remain the best-governed province in the country. He thanked the Standing Committee for its support and constructive oversight role over the years. He referred to the matter involving Cynthia Bes (sp), which the Committee had previously brought to his attention. She would be one of the beneficiaries after the conclusion of the Vredebes Housing Project which should serve to show the commitment that housing will remain a top priority for qualifying beneficiaries of the Western Cape.

Minister Simmers told the Committee that there are significant challenges such as the persistent presence of the construction mafia. Extreme acts of extortion were seemingly on the increase in each financial year and this impedes the execution of the Department's programmes and projects. This has escalated costs and hindered service delivery within the Department. The Gugulethu Project has a budget of R244 million, but the project has been delayed since 2022 due to the construction mafia, with three workers being shot on site and nothing has changed in terms of the criminality aspect and investigations. This has disrupted the flow of implementation. Similarly, what was supposed to be a catalytic project has faced many challenges. The Department was only able to spend R7 million out of R24 million, because the site has been invaded by people who call themselves small-scale farmers however their names could not be placed on record. These incidents underscore the need to focus on combative measures for criminal activities and safeguard the infrastructure measures that the Department has been tasked with. The Department remains steadfast in its commitment to utilise the funds allocated to the Department effectively and with transparency for the benefit of communities. It is also in this spirit that the Minister shares the Premier’s enthusiasm for the advancement of renewable energy within the portfolio of this Department. As the Department continues to pursue independence from a failing Eskom, the development of renewable energy resources plays a pivotal role in diversifying the energy mix and ensuring a more sustainable future for the Western Cape. The new AFR fund will focus on accelerating affordable housing in the province and financing the installation of a further 2 124 solar geysers at an estimated cost of just under R45 million over the cycle. This investment will focus on indigent households in seven provinces across the three districts. Minister Simmers assured the Committee that he would expand on this when the budget is tabled in the legislature. Through innovative projects and strategic partnerships, the Department will harness the abundant economic resources of the province to drive economic growth by reducing reliance on traditional energy sources in the province. The Department will forge ahead in its stewardship and commitment to achieving environmental security to ultimately create a greener future for generations to come. The transport infrastructure is the backbone to ensuring that the Western Cape is the best performing in the country and would see key projects empower a number of SMMEs, thereby creating jobs, upliftment, skills and training opportunities for communities. In his book on leadership, Robert Charmer quoted that “the ultimate task of the visionary leader is to dignify and honour the lives of those he leads by allowing them to manifest their highest potential through the work they do.” It is through investment infrastructure that the Department leads and the vision is to create an enabling environment that will see all residents reflect their highest potential and lead dignified lives. The task is not just a five year cycle, but to reshape the Western Cape into the future.

Department of Infrastructure  - Vote 10, 2024/25 Main Budget Overview

Ms Chantal Smith, Acting Head of Department, Western Cape Department of Infrastructure, thanked the Minister for creating an enabling environment for the staff. She said putting together the budget was no small feat. She also acknowledged that the Provincial Treasury and National Treasury had a difficult task in putting together the budget. She acknowledged all Heads of Department for leveraging the budget so that it worked in the current economic climate. She offered thanks and gratitude to the Committee.

Ms Smith made a presentation to the Committee on a high-level overview of the budget and what it consisted of.

(See presentation attached)

Discussion

Ms C Murray (DA) asked about personnel expressing her confusion. She asked about the 77% of posts which were funded. What percentage of the funded posts were filled and what percentage of the posts needed are unfilled? She asked about flood damage and the R350 million allocation instead of the required R850 million and the reasons for the budget cut. She asked about cost drivers and the costing system used for budget allocations.

Mr I Sileku (DA) said he was always concerned that the Department’s performance was always highly dependent on external issues. The issues relating to the construction mafia did not seem to be fixed and he was not hopeful that this would be resolved within the next few years. He asked whether discussions had taken place regarding this during Minmec. Why were the “Äcting” positions not filled? Is the Department still waiting for concurrence from the Premier? On the flooding, Mr Sileku said that one has to appreciate how the Department has bridged roles within municipalities. How will the Department recover the funds it lost that were allocated to the flooding? This matter should be referred to the national government as it remains its responsibility to assist provinces with financing. What plans are in place to recover the funds lost due to unplanned disaster management?

Response

Minister Simmers said extortion was a massive issue and the stance of the Western Cape was clear, that it would not regularise criminality. It demands the devolution of policing for effective policing at source level and for adequate resources to be deployed to the province. A specialist unit should be enforced to deal with extortion as it affects many other sectors such as mining and local government. Extortions now take place under the auspices of community forums. Forums have made demands and stalled projects. The national Minister of Human Settlements and Police was engaged, but the Department is still waiting on a response. The Department has tried to find a coordinated way of dealing with this. The scale of extortion in the City of Cape Town has reached high levels and JP Smith, the City of Cape Town Alderman: Safety and Security, has been engaged. The city has invested in technology and once discussions are finalised, the Department can move on to the implementation stage, but the solution is not something this Department alone can come up with as there needs to be a collaborative approach. The Premier has given his concurrences on the Acting positions such as for the HOD and Deputy Director-General (DDG) and by the end of term, Minister Simmers said that he would like to have a fixed establishment. On the flood responses, R350 million was allocated by the Provincial Treasury and when the Department approached the National Disaster Centre, it indicated that it did not have funds available to allocate to the Western Cape and this was still the case. There are far-reaching implications as there is a vast road network to maintain. Agriculture will also be impacted due to this decision and the Department looks forward to the better implementation of the roads function itself during the Seventh Parliament.

Ms Smith said National Treasury had to use unforeseen and unavoidable funds to cover this. The province was not the only one hit by flooding and disaster. Money also had to be allocated for fires. The funding received by National Treasury was the best risk it could take at the time. The Department submitted applications relating to the flooding, but was informed that it would only receive a response after the floods had been declared as disasters. The response was only received in the second week of December 2023. The Department submitted all the costs, pictures and monthly reports of what it covered. When the disasters were declared, the National and Provincial Treasuries indicated that it did not have funds available to allocate to the Western Cape. In the past, the Department covered flood damage itself, but the flooding was on a different scale. There aren’t any slush or contingency funds only funds for particular projects. Infrastructure South Africa has been engaged and is in talks with National Treasury. The incentive portion received from the National Department of Transport has not yet been received with conditions set by it and conditions are still being negotiated.

Ms Rifqah van der Fort, Director: Management Accounting, said that on filling posts and cost-drivers, the Department normally would not include the cost of posts and learnerships as this is paid from a stipend. Only permanent posts and those on contract are referred to. Considering the filled posts at the time of putting the budget together, it was at 67,6% of the total establishment. Vacant posts amounted to 32% of the establishment and 33% of the vacant posts are in the recruitment process. On Compensation of Employees (COEs), the Department requires a wage agreement and the Department only funds filled posts and those in the recruitment process. In terms of cost drivers, the Department budgets according to a project-based approach and includes grants, ear-market allocations, and sufficient funding for municipal rates and services. If funding is available, applications are made for projects.

Mr A Lili (ANC) said he agreed with Minister Simmers on the extortion challenges and was sure local communities should benefit from tenders awarded to contractors. In some instances, the Department was not providing assistance locally and some contractors were completely sidelining communities. Some groups were taking money from Somalians and the Department needs to monitor contractors who are reluctant to assist small businesses with extortion. In his view, if money was allocated nationally directly for the purpose of human settlements, the victims of flooding should benefit from this. The Department should consider this as people must be attended to. This was negligence by government and while the blame can be put on the ANC, people must still be attended to. Flooding needs to be considered on a case-by-case basis. There are funds which were allocated to the Department for flooding which were returned to National Treasury. These funds must be used to assist the poor.

The Chairperson said the Department was engaged on SMMEs and communities. The Department deals with land invasion, shack farming and extortion. There are blacklisted communities that cannot access some benefits. On the other hand, some communities use unsuitable land and request services. Shacks are built on such land that is affected by flooding and destroyed. People have refused to move to areas with serviced stands. She suggested that the Committee, together with the Department, should consider what to communicate to municipalities on land use. She was aware that municipalities could not be given directives on this, but services must be offered with open land. Some political parties sell a vision where people believe they will receive houses on land they occupy, but this is not the case. There should be communication between the Department and municipalities on land use. Referring to page 42 of the Annual Performance Plan (APP), she asked about climate change and flooding. There is another department also responsible for cleaning rivers.

The Chairperson reminded the Committee of how it saw in Citrusdal that rivers moved in their own path and that the Department of Infrastructure needed to step in. Referring to page 44 of the APP, she asked how the Department was addressing the deficit of skills. Was there a retainer policy as some individuals were trained and then moved into the private sector. How long would this policy be in existence? Asking about professional development programmes and pilot projects, would the Department champion this? Has the Department changed its organogram given how it is now set up?

Minister Simmers said that regarding land use, the Department of Local Government, municipalities and district municipalities also needed to be engaged to ensure proper alignment in planning and maximise opportunities. The developable land was becoming less due to land being occupied. A portion of roads are vested with the decisions made by local government such as rezoning. Moving forward, the Department was encouraging the optimal use of developable land and continues to encourage densification of the province and other programmes which it envisages. The population increases at an estimate of 150 000 each year and this means taking a realistic approach at a local government level. When dysfunctional municipalities and councils cannot make proper decisions, one will not see development. There was a different mayor every five weeks, so how could the Council be expected to make strategic decisions under these conditions? Concerning flooding and the removal of overgrown reeds, this was outside of the Department’s mandate, but it was engaging the relevant Departments. Upgrading roads and the Ashton Bridge in cases of flooding is a concern, despite this being of superior quality. Minister Simmers confirmed to the Committee that the reeds caused the flooding and this cannot be included in the Department's budget. He was concerned that this would become a vicious cycle given the devolution of functions in local government. In terms of energy, the Department needed capacity and needed to buy in skills which were not part of its rank and file. Phase Two on public works was in progress.

Ms Smith said on engagements with the labour and local communities, the Department had a communication and participation policy and communities were engaged to organise themselves. The Department also undertakes empowerment impact assessments to consider the true potential of leveraging contracts to create opportunities for communities. There is an approach from the Infrastructure Framework 2050 and microgrids are considered with energy. The Department realised that this was not simply an instance to create capacity within the Department, but partnerships were the focus with energy and trying to build skills development with local contractors. There are consultants, but the Department had not worked with consultants from the energy space before. The private sector was regularly engaged including on international benchmarking. Staff and the Department of the Premier have been engaged on the organisational structure and development and a programme is being created. The Department awaits communication on the approach and costs involved. There was also a seal on the compensation of employees.

Ms Pat Jenniker,  Director of CIE under the EPWP, said on professional development that all candidates were employed in the Department and taken for professionalisation processes. These candidates were not required to pay back the funds and this was investment into these individuals becoming professionals. The Department also did not expect bursaries to be repaid, but instead expected bursary obligations to be worked back within the Department or host companies. If a learner drops out, the money should be paid back.

Ms Melanie Hofmeyr, Specialist Engineer: Transport Infrastructure, said the Department was providing training to ensure that there were consultants and contractors that could deliver services. The focus was to train people in a unique fleet. We must understand that training professionals and OSD staff were all candidates and Artisans who were on contract and were not permanent staff.

Ms Murray asked about the difficulties in formulating the organogram and the budget on the wage bill. She asked for clarity on the filled positions which are at 67 and the funded positions which are at 77. She asked about funding for flood damage and disaster risk given that National Treasury indicated that it did not have funding available for this. She said it implied that there was funding for other provinces which was concerning. The reality was that more and more disasters would be seen with climate change which would require more money. Has an inter-governmental dispute been declared for disaster funding? This was not a need which would go away. To what extent does the Department need to reallocate funds to help the affected municipalities?

Mr Sileku said he was concerned about the rollover from municipalities and the funds allocated. He was concerned that the Department would find itself in the same situation due to a lack of capacity relating to title deeds and expenditure. How would the Department assist municipalities with titled deeds? He asked how projects would be affected in municipalities where there was a change of leadership. Has there been conversation about this with local government? On the EPWP, how can the Committee ensure that this is successful and has a positive impact? The EPWP funding has been used by coalition governments to appoint young people to do political work, but this is at the expense of the grant provided by the government. This continued on a daily basis, and nothing was being done. What would  ensure that the grant is used for its intended purpose to make people who are unemployable employable? How does the Committee ensure municipalities have an exit strategy as per the EPWP? Currently, young people are being exploited by the EPWP and during elections, one would see all the EPWP staff working for political parties.

Mr Lili asked about extortion and the building of houses. He said the number of houses built per annum did not even reach 2000. Noting a development in Macassar which he applauded, he felt the project was not enough as a lot of funds would have to be returned. He felt 10 000 houses or more should be built per annum and land should be purchased with the funds. He asked whether the Chief Director post was advertised.

The Chairperson asked about maintenance issues and the needs of tenants. She asked why there was red tape over building maintenance which was concerning. She asked about rental stock and whether this is being fixed before it can be relinquished and wanted to know whether the Department provided the funds for this. What was the process that was followed? She said there were dysfunctional municipalities and the funds should instead be paid directly to the service provider as opposed to being given to the municipality in question for management. She asked how such municipalities are identified and wanted to know whether the Department was empowered to do this. There was a lot of confusion and underperformance relating to audit performance on title deeds.

Minister Simmers said some municipalities caused a lot of stress on the system. The N2 in Bitou Municipality in Plettenberg Bay was closed down three times due to one human settlements project and protests about this. He engaged with the coalition government of Bitou Municipality to take a council decision to give back the projects. Council agreed to this as it cost R10 million per day when the N2 was often closed due to protests. Governance also collapsed in Oudtshoorn in 2013, and the Council made a resolution to allow the Department of Infrastructure to pay service providers directly. On the EPWP, Phase Four of the current version will conclude and Phase Five will commence soon. The Department has successfully lobbied for certain government focus areas at MinMec. Phase Five will launch on 1 April 2024 and there will be a lot of provincial and government focus. He said that he was looking forward to the presentation which would be made to the Committee in this Seventh Parliament. He said there wasn’t a shortage of developable land within the City of Cape Town, but the issue was around the exorbitant prices which people demanded for the land. The Department also needed to engage the City of Cape Town on this, but when people became aware that there were ongoing engagements, they would suddenly invade the land.

Ms Smith said that the context of climate change was important, and the entire country was dealing with this. She said that the Department did not want to fight about everything and choosing its battles was important. The strategy needs to consider how to accelerate delivery together with working with the Department. She emphasised that strategy and partnerships are key to achievement. Sometimes showing teeth or shaking hands works, however the Department just needs to know which is appropriate for its approach.

Ms van der Fort said the establishment had 2552 staff members and 1 725 posts were filled. This amounted to 67,6% of the filled posts. There are 274 posts in recruitment and this has a difference of 10%.

Ms Murray asked why the difference was so high as 10% seemed rather significant. Was this a normal figure for recruitment? Are there any extraneous variables that have come into play, such as mass retirement or staff leaving when they are unhappy?

Ms Smith said the new structure for roads was in the process of recruitment and was finalised in 2020 which was when the discussions on the wage bill began as well as the capping of compensation for employees. Most of the positions in roads are for road workers which means it was a low-level post, and as a result, there were 50 000 applications. This process was quite lengthy and the Department had to deal with police clearance. Most positions currently in recruitment are with roads.  

Ms Kaamilah August, Chief Director: Human Settlements Planning, said the issue was not just capacity but also that people saw this as the elephant. Beneficiary verification is an aspect of title deeds as is someone else owning the land. Planning needs to be approved and the Department has prepared a readiness matrix for how much money will be spent and the details around verification. If land rezoning is done, the money for title deed registration is not necessary. Once approval is given for title deed funding, the money is paid to a municipality to enable it to appoint whoever is needed. If no evidence of beneficiary allocation is provided, the Department has the right to withhold the money to be reallocated.

The Chairperson asked if this was verification for new projects or if the backlog was being referred to.

Ms August said there was a set quantum for verification so if one could not find the owner or the person that was on the deed of sale, the transfer could not take place. If someone was in the property and they were verified, the transfer could take place with a conveyancer.

Ms Smith said a panel of specialists would be appointed for conveyancing and a policy position would be developed and signed off by the Minister to address some of the issues.

Mr Lili said the HOD should account to the Committee as the Ministers would.

Minister Simmers said he would provide the Committee with a detailed written response by 25 March 2024.

The Chairperson asked when people could build on serviced stands because when someone becomes a beneficiary of a serviced stand, their name is removed from the database for housing in the Municipalities.

The Chairperson said when dignity oversight was done, the Department said it was waiting for the go-ahead to let people know they could build on the serviced stands.

Mr Brian Denton, Director: Project Administration, said beneficiaries should be differentiated. If the Department gives a serviced site to a Breaking New Ground (BNG) group that was earning below R3500, the Department would not remove the name from the database as the person would not have received the house. Technically, there was no subsidy as it would not be a serviced site. If the Department offered an enhanced serviced site, the municipality could not build within a period of three years, but it could get back to the Department to build top structures. There are also instances where persons can purchase a serviced site and once purchased, the name would be removed from the list. The municipality needs to give approval for building plans. Some municipalities were not keen on offering serviced sites. Drakenstein was one of the first areas where serviced sites were offered, but the municipality was unwilling to allow people to put up informal structures.

The Chairperson said it was important to consider people’s dignity, particularly when people were raising children and they could afford to build.

Ms Smith thanked the Committee for their engagement, frankness and respect with which they treated officials from the Department. She said this was appreciated.

Minister Simmers thanked the Committee for their constructive questions. He said that given the size of the Committee, only one aspect of the Department was covered, but the type of questions that would arise in the Seventh term of Parliament may be interesting given the current discussions. He thanked the Committee for their oversight and the entire team from the Department for their hard work. He emphasised that partnerships were key, particularly with stakeholders within communities. It was important to consider how to leverage partnerships with money becoming less and opportunities growing.

The Chairperson said she hoped that one day, people would be able to speak about the jobs created for building houses. 

She thanked the Committee for their engagement.

Meeting adjourned.