Gauteng Report: adoption; Department Work overview

Meeting report

HOUSING PORTFOLIO COMMITTEE
17 November 2004
GAUTENG REPORT: ADOPTION; DEPARTMENT WORK OVERVIEW

Chairperson: Ms Z Kota (ANC)

Documents handed out:
Gauteng Report (Clerk will soon send version with amendments)
Department briefing
Department summary of Parliament Workshop on Comprehensive Housing Plan

SUMMARY
The Committee discussed its Gauteng Report and its various recommendations. Chief among these were improved dissemination of information, payment for land by the Department of Land Affairs and not the Department of Housing, and the creation of a funding protocol. The report was adopted and would be presented to Parliament.

The Department of Housing then presented an overview of its intended activities for the coming year. Members asked questions about the determination of housing needs, the variety of housing products, inter-departmental co-operation and the soon-to-be-completed Housing Charter.

MINUTES

Gauteng report
The Chairperson briefly reminded Members of the findings of the Gauteng Report. Some of these findings included the high concentration of informal settlements in certain areas around Gauteng, the conversion of hostels into residential units, the challenge posed by the prohibitive cost of land to be utilised for housing, as well as urban renewal projects such as in Alexandra. She also referred to the Members' visit to Burgersdal, which had raised concerns about non-delivery after a two-year planning period. There was also the issue of the in situ upgrading subsidy to avoid evictions in cases of non-payment, which had been agreed to in principle by the Minister. The Gauteng visits had resulted in various recommendations being made by the Committee.

Discussion
Mr Steyn asked who would be responsible for implementing the recommendations.

The Chairperson said that they first had to be put to Parliament and then channelled to the relevant departments. The first recommendation was regarding information dissemination.

Mr Steyn proposed that a change be made to the minutes and that this recommendation should read that information "be made available to Committee Members and other Members of Parliament".

The Chairperson said the second recommendation was that of the payment of land not by the Department of Housing, but by the Department of Land Affairs.

Mr Masala asked who would be taking responsibility for taking this recommendation forward.

The Chairperson suggested the Inter-Ministerial Committee. The third recommendation was that a funding protocol would have to be instituted. Burgersdal required a follow-up visit in view of the dissatisfaction expressed by beneficiaries. A transfer of skills was also imperative in order to avoid the exclusive use of outside contractors. A synergy of both would be ideal. |

Mr M Sonto (ANC) agreed that it was impossible to avoid the use of outside contractors and that this could not be made a recommendation on its own, as this clause was already problematic.

The Chairperson agreed that both the transfer of skills and the use of outside contractors be stipulated in the recommendations.

Mr Sonto said that housing should be viewed as a package, which did not only entail houses, but amenities such a libraries as well, in order to promote a culture of learning and reading, otherwise there was also little point in disseminating information.

The Chairperson agreed that housing on its own was not desirable and that additional social amenities were needed. She mentioned the abuse of the system, where those who did not necessarily qualify were getting houses before those who were in desperate need of them.

Mr Masala said that rentals were extremely high. One to two bed-roomed houses cost R1 700 to R2000 per month.
The Chairperson said the report would be presented to Parliament and that it had raised many questions and issues. In certain instances, municipalities would have to be called to account.

Ms M Ramakabe-Lesia (ANC) said that similar crises were occurring across the country and that these also needed to be brought before Parliament.

The Chairperson said that the Committee was not in apposition to gather information from further a field before submitting its findings.

The Report was adopted and supported by Mr Steyn and seconded by Ms Ramakabe-Lesia.

Other Committee business
The Chairperson listed some of the activities the Committee would be involved in the following year. A fire and flood conference would be arranged by Mrs Dambuza, Mr Mabena and Mr Dlhamini. The Committee would be helping to build houses in Mamelodi and Gauteng. The Department's Annual Report still had to be adopted and an amendment would be made to the PI once the Financial Charter was finalised.

Mr Steyn asked for a formal quarterly report.

Department briefing
Mr Vawda, Housing Director-General, said the presentation gave an overview of work in progress. It highlighted the multi-dimensional approach the Department had developed as it had become more needs-driven. Some existing programmes had been adjusted in accordance with this new approach. It had been the result of an extensive policy and sector evaluation process with provinces, municipalities, NGOs and community-based organisations. The Plan would require substantial funding and the reprioritisation of uncommitted funds. The government had committed itself to upgrading informal settlements and building non-racial integrated residential areas. It would entail an expansion of the housing mandate to include the concept of human settlement in a comprehensive and holistic way.

The Department had gone some way towards addressing the subsidy gap in the income band of R3 500 to R7 500. Deposit taking and rental housing were also issues being reviewed by the Department. It had been found that those falling into the R1 500 to R3 500 income bracket had been unable to make the savings target necessary to qualify for the R25 800 subsidy. This category had therefore fallen away. Those falling into the category under R1 500 would qualify for the full subsidy of R28 279. Mr Vawda said the Department would be looking at ways of enhancing private sector involvement and the banking sector. Mechanisms to mediate between the commitments made by the banks and the Department through the Financial Services Charter would have to be instituted.

Enhancing delivery capacity related to the previous lack of operational arrangements for projects and the delays in payment of emerging contractors and entrepreneurs. The Department had identified a major problem in the secondary market, where loans were not being granted for upgrades or the sale of houses. Current barriers preventing housing trade would be addressed and therefore the Pre-emptive Clause had been reduced from five to two years.

The growth of informal settlements was largely due to economic considerations. Those people coming from rural areas looking for economic opportunities were first generation urban dwellers and currently constituted 20% of urban dwellers. This was much more than had been anticipated. Household structures had been radically altered. Households had grown by 30%, far higher than the normal population growth rate, which meant the need for housing was far greater than had been predicted. Progressive upgrading of informal settlements was therefore another avenue being pursued by the Department and the N2 Project in Cape Town was a good example of this. Integration and planning around rezoning of areas was being done in accordance with international practices.

Despite the fact that 'The Economist' recently rated South Africa as having the second best performing property market in the last ten years, this did not benefit those in low cost housing. The issue of property value needed to be carefully addressed, with regard to location of new housing developments. There was a tendency to place these developments outside the cities and not on prime land. This had the effect of locking people out of the cities and isolating them even more, instead of integrating them and providing the opportunities to alleviate poverty. Public and parastatal land would have to be developed in order to enhance location. Fiscal incentives were going to be introduced by National Treasury.

The quality of the housing product was another concern of the Department and it had undertaken a categorisation of housing, such as social, rural, rental housing, etc. Social housing, in the form of city buildings, which had been bought by the government and were being effectively managed as rental property, was preventing inner city decay and was restoring confidence in the property market. A new financial architecture would be required to monitor these new categories of housing. Farm-worker housing was another situation being addressed by the Department. Consumer education was needed to make people aware of the different products available in housing finance.

Mr Vawda said that the Inter-Ministerial Committee would be involved in co-ordinating various government departments in the Integrated Sustainable Human Settlements project and would fulfil an oversight role. Institutional capacity building was paramount. A Housing Charter would be produced to inform all government officials working in the housing sector. Fraud, corruption and maladministration would be the responsibility of a new investigative unit and a whistle-blowing hotline would be established. Legislative elements would be addressed. Job creation in line with the extended public works guidelines was on the Department's agenda. Suitability assessments were taking place and the possibility of on-site material production was being investigated. Support for small business development would be a collaborative effort in conjunction with housing institutions such as the NHPLC and Nurture. This would include entrepreneurial programmes.

Communication and awareness building would involve housing information centres. Systems for monitoring and evaluation would be reinforced. This would entail recalibrating existing performance measurement mechanisms. Existing systems would be enhanced with Geographical Information Systems.

Discussion
Mr Steyn asked how needs had been determined.

Mr Masala asked which existing programmes had been adjusted.

Mr Vawda said that needs had been determined by various categories, which had initially been offered in the housing sector and the degrees of response to these products. An example of an adjustment to an existing programme was where the saving requirements had been scrapped from an existing category.

The Chairperson asked whether SWEAT equity was also still a possible option.

Mr Vawda said that this was still the case.

Mr Steyn said that variety of product was desirable, but that it was apparent that municipalities were not fully aware of them and that the public was not fully informed of them either. He said that the principle of partnership and co-operation was merely being paid lip service and that departments were not co-ordinating their efforts.

The Chief Financial Officer of the Department said they would be assessing and building capacity as part of the implementation of the Plan.

Mr Vawda that the N2 Project was a good example of extensive collaboration between departments

Ms Dambuza said that she was concerned about the size of houses decreasing if they were no longer required to contribute R2 479. The houses were already small at 30 square metres.

Mr Wallis of the Department said that the size would remain at 30 square metres and an increase in size would mean an increase in the price of R28 000. That would have to be carried by the beneficiary or the government.

The Chairperson said that the matter had previously been raised and that it had been decided that the top structure should be paid for with the R28 000, while local government would carry the infrastructure cost. Obviously this was not being adhered to and prevented the increase in the size of houses.

Mr T Chiloane said that the Department was carrying out a comprehensive communication strategy to educate consumers and certain banks were sponsoring this initiative. Information had also been published in the Daily Sun newspaper. A booklet had been produced, which was being distributed and the Department would be going on road shows to make beneficiaries aware of the options available to them.

Mr Steyn asked how the role of the private sector would be enhanced.
An official of the Department said that the amendment of the PI early next year would contribute towards this.

Mr Steyn said it had been shown previously that delivery capacity constituted 2.5% of the budget. Would this portion be increased in the future?

The Chief Financial Officer said that it would increase to approximately 3%.

Mr Mabena (ANC) asked what was being done to prevent the invasion of vacant land and suggested the use of marshals from the community.

The Department would be involving the community in the matter and the suggestion of using marshals would be taken up in the planning stages.

A Member asked whether there really was any significant difference between the various categories of housing.

Mr Sonto (ANC) asked what was being done to address the problem of non-payment of rental in the hostels, which had been converted to residential units.

The Chairperson said that in essence non-payment was not really the responsibility of the Department but of the local municipality. It did however impact on the Department since non-payment affected the Department's capacity to build more housing.

PMG sincerely regrets that, due to unforeseen circumstances, its monitor had to leave at 1.05 pm and could only be replaced at 1.40 pm, and thus the intervening time was unfortunately unrecorded.

End to Department briefing
It was important that there was ongoing consumer education on housing finance. The Department was trying to get the youth to use their energies constructively. The youth would participate in house building activities and gain some skills in the process. Participants would receive accreditation recognised by the SETAs. The integration of estate agents, property brokers and sectional title properties into the housing delivery mandate was a new area to the Committee. The Committee would look at the mandate next year.

The Chairperson said that the Committee was pleased about social medium-density housing development. The Committee noted that the issue of management capacity was one of the impediments to the development of social medium density housing. It was encouraging to see that the Department was establishing institutional management capacity. It was important that there was ongoing consumer education on housing finance.

Discussion
The Chairperson asked the presenters to explain what they meant by "youth participation through youth construction brigades".

Mr T Chiloane replied that the Department was trying to get the youth to use their energies constructively. The youth would participate in house building activities and gain some skills in the process.

The Chairperson asked if the house building exercise constituted a learnership.

Mr Chiloane replied that there was a vocational programme that the Minister had instructed the National Home Builders Registration Council (NHBRC) to arrange. The Council would ensure that houses were built according to its standards and that participants in the project received the necessary accreditation.

A Member said that it was important that participants in the project were accredited. He asked if the Council or the SETAs would accredit them.

Mr Chiloane replied that the Council registered all builders who met the criteria. It would ensure that the qualifications received by the participants were acceptable to the SETAs.

The Chairperson noted that there would be co-ordinated budgeting, planning and implementation of projects. She said that the funding protocols should be clearly defined

Mr Vawda said that the point was valid. There should be memorandums of understanding between the three spheres of government.
Mr Steyn said that the Committee had conducted hearings with housing institutions. He was disappointed with the fact that their annual reports did not indicate what they intended to do. Many of their Chief Executive Officers earned exorbitant salaries. In one case the institution made a huge loss but the CEO still received a bonus of 42% of his exorbitant salary. He requested the Department to provide a report on the review of the housing support institutions.

The Chairperson wondered if the bonus incentives were not linked to the employee's performance. Poor performance should have an impact on bonuses.

Mr Dlabantu replied that the Department had conducted a series of reviews and governance was a major issue. The Department also looked at legislation that created the institutions. After a careful consideration of legislation one could establish the roles of directors and other employees. It was concluded that there was a need for a shareholder compact that would deal with the review of performance of directors and related matters. The Department analysed the annual reports and some of them looked like financial statements. They did not show if the institutions were performing their functions efficiently.

The Chairperson said that the Housing Charter should include all stakeholders. She hoped that the Charter would be presented before the Committee next year so that it could make an input.

Mr S Masango (DA) asked if the Department monitored the planning and implementation of projects from their offices or if they went out to the sites and see what was happening there. There were still incomplete houses in some areas. There were also people who had been waiting for houses since 1995 and had not yet received them.

Mr Dlabantu replied that the Department did not necessarily go to the sites. It looked at programmes generally to see if there were problems. It monitored spending and delivery. It also looked at reports on delivery as presented to it. Sometimes the Department would go to sites if there were problems. The Department wanted to enhance its monitoring capacity. Service delivery largely took place at provincial and local government levels. Some governments did not have capacity to deliver. The NHBRC also conducted inspections to ensure that houses were of the correct standard.

The meeting was adjourned.