Department 2006/07 Budget and Strategic Plan to 2008/9: briefing

Meeting report

HOUSING PORTFOLIO COMMITTEE
29 March 2006
DEPARTMENT 2006/07 BUDGET AND STRATEGIC PLAN TO 2008/9: BRIEFING

Chairperson: Ms Z Kota (ANC)

Documents handed out:
National Department of Housing PowerPoint Presentation
Minutes of the Portfolio Committee on Housing held on 15 March 2006
Business Plan of the Portfolio Committee on Housing 2006-2008
Programme on the PC on Housing (1st term + Part 2nd term 2006)
Committee Report: Global Parliamentarians on Habitat Forum, Morocco 10-12 November 2005

SUMMARY
The Department of Housing presented its 2006/07 budget and its strategic plan to 2008/9. The nature of the demand for housing had changed, so the Department had changed its focus from individual housing to sustainable human development settlements. Priorities included accelerated housing, utilising housing to create jobs, leverage growth, promote social cohesion, support the residential property market at all levels and develop sustainable human settlements. The achievements and deliverables under each of the Department’s budget programmes were outlined and it was reported that the total budget over the medium-term would increase from R6.8 billion to R9.45 billion with the largest allocation to Housing Development Funding.

Members raised a number of questions on the figures in the presentation and requested further details on the monitoring processes, particularly under the People’s Housing Process programmes. The bursary scheme and the communications programmes were explained. In response to concerns raised it was agreed that the Department must arrange another presentation to provide more details to the Committee on the current budget figures, feedback on previous projects, correlation of figures across the provinces and reports on the guidelines and programmes under consideration at present. The Chairperson suggested that the Committee should be more closely involved in the process to approve policies and guidelines, and should receive quarterly progress reports from the Department.

The Committee adopted the following documents: the minutes of its meeting on 15 March 2006, it’s business plan for 2006-08, Committee Report on the Global Parliamentarians on Habitat Forum in Morocco 2005, and the Committee programme for the first and second terms of 2006.

MINUTES
Department of Housing presentation
Mr M Dlabantu (Acting Director-General, National Department of Housing (NDOH)) reported that the aim of the Department was to determine, finance, promote, co-ordinate, communicate and monitor policy for housing and human settlement. All programmes were geared to ensure that the nation was housed in sustainable human settlements. He summarised the various legislation governing the NDOH. The NDOH was currently dealing with the Housing Amendment Bill, the Social Housing Bill, amendments to the Rental Housing Act and the Less Formal Township Establishment Amendment Bill. The Housing Code was being revised to fall in line with the comprehensive plan. Various guidelines were being drawn up for different sectors. The policy framework continued to be determined by the White Paper. In September 2001, the NDOH had developed a comprehensive plan to focus on the development of sustainable human settlements. Challenges arose from the demand for, and the nature of government assisted housing, arising from the increased number of households, the trend to urbanisation, and populations growing at differing regional rates.

R36 billion had been invested over the past 11 years, which had assisted 1.8 million households, most in the urban periphery. The NDOH had inherited a complex and cumbersome framework and needed to find streamlined processes, and address capacity. The high level of unemployment that affected household incomes, and the backlog of about 1.8 million dwellings challenged implementation of plans. In future the NDOH would engage with the private sector and banks on new developments. The social housing and higher density policy programmes looked to develop quality, well-located, mostly rental housing. Other programmes addressed the quality of living environments. The NDOH aimed to offer more choice to mobile and economically active lower income levels.

The NDOH was involved also with various international programmes, being the Lead Ministry for United Nations (UN) Habitat for Humanity, and presented policies to the Council for Sustainable Development. It was a member of the Cities Alliance, participated in New Partnership for Africa’s Development (NEPAD) programmes and had developed co-operation agreements with Brazil and the Democratic Republic of the Congo (DRC).

Priorities included accelerating the delivery of housing, utilising housing as a vehicle for job creation, growth in the economy and social cohesion, supporting the entire property market, reducing barriers between the first and second economies, ensuring wider access and developing sustainable human settlement.

A total of R6.8 billion had been allocated across five programmes for 2006/7, rising to R9.45 billion in 2008/9. 98.2% of this was allocated to Housing Development Funding. Additional funding had been approved for the social housing programme, credit linked subsidy and upgrading informal settlements. The first-time homebuyers programme and the Human Settlement Development Programme were being phased out.

The NDOH reported that allocations fluctuated because of the project-based nature of programmes. The programmes and the Medium-term Expenditure Framework (MTEF) for 2006/7 to 2008/9 were summarised as follows:

Programme 1- Administration- provided strategic leadership and administration and management support to the Department and promoted and facilitated information between the NDOH and stakeholders. Increases from the previous year related to increased staff complement, including dedicated management, enhanced cluster corporations and international engagement, and advisory panels to oversee specific areas. The internal audit function would no longer be outsourced. The MTEF allocation was R99 million rising by 18% to R154.5 million.

Programme 2 - Policy Planning and Research – developed sound national human settlement and housing policies, legislation and research to reach the goal of providing adequate housing for all South Africans by 2024. A policy to upgrade informal settlements had been approved by MINMEC and was being implemented in several provinces. Other projects included a housing land acquisition and release strategy for public and private land for low cost housing, assistance to farm workers and occupiers, improved housing typologies, provision of social and economic infrastructure and a social housing and medium density programme. Increases from the past year were mainly due to increased staff for enhanced service delivery. The MTEF allocation was R26 million rising to R45.5 million.

Programme 3 - Programme Management - aimed to manage National Programmes for increased access and to improve delivery by providing official structures and systems with knowledge, skills and training. It involved management of the National Housing Subsidy Scheme, providing support to municipalities and provinces and management of special housing and human settlement programmes. Current focus areas included setting South African Qualifications Authority (SAQA) and Sector Education and Training Authority (SETA) standards, a skills exchange programme with Cuba, education, research and skills audit, and support. Training manuals and modules had been developed for housing officials, and 2987 had already attended training programmes. There were currently 12 scholarships for built environment studies. Objectives for the following year included new subsidy schemes, capacity building in the administration of housing, HIV/AIDS, guidelines and redevelopment of hostels. The allocation had declined from the past year due to the consolidation of the human settlement redevelopment grant with the housing subsidy grant in Programme 5. The MTEF allocation was R69.8 million, rising to R119.7 million, an average increase of 8%.

Programme 4- Housing Sector Performance and Equity- aimed to monitor the performance and impact of housing delivery, and analysed the impact of the NDOH policy and programmes on the construction industry and the financial sector. It would exercise oversight of the Housing Support Institutions and increase the level of private sector finance for affordable housing. The overall allocation depended upon year-on-year change. All targets for quarterly reports had been met. A review of Housing Support Institutions’ roles was undertaken, and there would be changes to Servcon, the National Urban Reconstruction Housing Agency (NURCHA) and the Rural Housing Loan Fund. A new Social Housing Regulation Authority would be formed. Draft regulations had been drawn up for the Office of Disclosure. The MTEF allocation was R196.5 million rising to R147.8 million, an average increase of 2%.

Programme 5- Housing Development Funding - managed the funding of national housing programmes to ensure that provincial and municipal spending was in line with national policy priorities and delivery commitments. Sub-programmes administered payment of the conditional grants and interest payments. MTEF activities would include transfer of funds according to payment schedules, monitoring of expenditure, a more efficient debtor system and amendment of the Housing subsidy grant framework. The MTEF allocation, which included new allocations for Social Housing Programmes, was R6.8 billion, rising to R8.9 billion. The majority fell in the Integrated Housing and Human Settlement Development Grant.

The Housing Delivery Targets, sorted by province, were tabled for the programmes in construction of subsidy houses, People’s Housing Process (PHP) subsidies, informal settlement upgrading, emergency housing, Public Sector Hostel Redevelopment and social and economic amenities.

Discussion
Ms N Ngele (ANC), Mr A Steyn (DA) and the Chairperson commented that they had found the documents extremely difficult to read, and asked that in future they be provided to the Committee in advance so that the Committee could spend more time on questioning. Mr Dlabantu (NDOH) confirmed that in future he would address these problems.

Mr D Mabena (ANC) referred to the PHP and requested more information on how many units had been delivered, and why the process was so slow.

Mr Steyn stated that the PHP had been identified some time ago as a problem. He asked whether coordinated and monitoring policies existed, and why they had not improved delivery.

Mr Dlabantu replied that the PHP had lagged behind in the earlier years of the programmes when many of the projects under the PHP programme had suffered from poor quality and slow delivery. More funds had been allocated to the faster project-linked subsidies. The PHP had started to improve delivery when the contributions were restructured, but had not yet reached the targets.

Mr Mabena asked for more information on training and queried why there were still so few graduates. He believed there was a need to encourage more matriculants to study in the field of the built environment.

Mr Dlabantu reported that the bursary scheme was introduced three years ago. There had been a significant increase in applicants over the years and the scheme had been improved. There was now general support to grow skills at undergraduate level to sustain development in the industry. Long term funding was necessary to cover three or four undergraduate years. The NDOH was reviewing the process regularly and assessing the need for funding.

Mr Mabena pointed out that despite the delivery of 1.8 million houses, there were still 1.8 million inadequate dwellings. He requested details of the specific problems and plans that the Department had to address the backlog.

Mr Dlabantu confirmed that the pace of delivery was a challenge. The NDOH hoped to increase the number of houses built by including private partners, but funding and capacity had to be viewed together and available simultaneously in order to address the backlogs properly.

Mr Steyn asked why there appeared to be such large discrepancies between the provinces in the number of units delivered compared to costs incurred.

Mr Dlabantu replied that the figures given in the presentation had not in all cases been analysed fully. Some provinces tended to report on what they intended to deliver, others allocated funds to the phases already completed, others reflected cash flow; hence the lack of standardisation on costs.

Mr G Schneemann (ANC) found it disturbing that inaccurate or unverified figures were presented to the Committee, and that the discrepancies were not properly explained.

Mr B Dhlamini (IFP) pointed out that the figures given for Gauteng differed from those presented recently by the Premier in Gauteng.

Mr Dlabantu noted these comments and stated that in future the NDOH, as it increased its capacity, would be able to verify figures and present them in a uniform way. He confirmed that he would investigate the differences, and convey the verified figures to the Committee.

Mr Steyn asked whether the NDOH monitored only by way of "paper transactions".

Mr Dlabantu replied that in the past the Division of Revenue Act (DORA) required "paper monitoring", but the NDOH was also undertaking some site visits. In the previous year, the NDOH had appointed consultants to visit the provinces but there was not enough capacity to undertake project-by-project monitoring. The NDOH’s housing models would in future utilise Housing Officials, based in areas where delivery occurred, to give guidance and handle problems.

Mr Schneemann indicated that he was still concerned about monitoring. Similar questions had been asked in previous years when an indication had been given by the Committee that paper-based monitoring was not considered sufficient. The NDOH needed to address the Committee’s concerns and state specifically what they intended to do.

Mr Dlabantu noted all the concerns and stated that the NDOH had indeed taken previous comments into account when planning the new monitoring models. However, the monitoring model had to accept that there were various stages and role players involved in the process, such as clerks of the works at local government level and provincial certificates. Other individuals held the responsibility of verifying that the jobs had been correctly completed. The NDOH believed it should be able to rely on their certifications, although there were regrettably isolated instances where problems had arisen. The comments made by the Committee had assisted the NDOH to formulate a proposal that a specialist official be appointed in each province to act as "ears and eyes" for the Department. The NDOH remained constrained in its capacity and could not check every site.

Mr Schneemann noted that policies and guidelines had been improved, but queried why they were never discussed with, nor presented to the Committee. The Committee needed more information so that it could interact on important policy issues.

Mr Dlabantu conceded that the NDOH needed to improve its reporting to the Portfolio and Select Committees and undertook to work on a programme to ensure better liaison. He indicated that the NDOH would be happy to make a presentation, but pointed out that most programmes, once approved, became part of the Code and were therefore accessible to all.

Mr Schneemann asked whether the Office of Disclosure was already in operation.

Mr Dlabantu stated that it was not yet in full operation due to delays in dealing with the banks. Staff had been appointed to develop regulations necessary under the Home Loans and Mortgage Disclosure Act, engaging also with National Treasury and the Reserve Bank. The staff was also developing proper infrastructure. The Financial Services Charter would also require monitoring of banks, so the NDOH was trying to dovetail the staff’s activities to avoid duplication under the different legislation.

Ms B Dambuza (ANC) asked why the NDOH had given no feedback during the presentation on the projects described last year. She enquired whether the large amounts expended by the NDOH had produced tangible results and value for money.

The Chairperson added that the Committee had expected to hear how the previous budget had been dealt with. She realised that there was insufficient time to deal with this matter properly but would like the NDOH to make another presentation, on a suitable date, to itemise and explain their spending during the last financial year.

Mr Dlabantu stated that there had simply not been sufficient time allocated to deal with all matters, and he had not understood this to be required during the current presentation.

The Chairperson noted that it was clearly necessary to arrange for longer sessions with the Department.

The Chairperson took up Mr Schneemann’s point that the Committee had not been part of the process when several policies or guidelines were framed. She indicated that the Committee could not simply endorse decisions but should engage with the NDOH on policy planning and should give input, since Members were custodians of policies and monitored their implementation. She would like to have quarterly reports presented on expenditure, rather than seeing the figures only at the end of the budgeting process. The Committee also need to receive key performance indicators for the Department.

Ms Dambuza was concerned that some priority programmes, such as informal settlement upgrades, were not mentioned for some provinces, and enquired whether all had submitted plans.

Mr Dlabantu and Mr D von Broembsen (NDOH) confirmed that the Department would welcome the opportunity to give full presentations on this matter.

Ms Dambuza noted that there was no mention of how the emergency housing plans were catered for in the budget.

Mr Mabena noted that there was nothing in the progress report about indigent people, nor was there any mention of how the NDOH had in building capacity dealt with historically disadvantaged individuals, particularly women.

Ms Dambuza commented on consumer education, particularly in regard to the PHP. She queried whether the NDOH had, as promised the previous year, run awareness campaigns and how far it had managed to establish fully fledged offices within the municipalities.

Ms J Bayat (Chief Director: Social Housing, NDOH) reported that the Department was restructuring to deal with consumer education at a higher level. The Director in charge of capacity building currently assisted in education programmes at provincial and local authority level. Awareness campaigns were carried out in various forms, including radio. The NDOH could make copies available to the Committee.

Ms S Sigcau (UDP) asked how long the approval processes took. This question was not specifically answered.

Mr Dhlamini asked whether development of hostels was linked to the subsidies, and whether hostels were being renovated, or changed into units.

Mr Dlabantu stated that the hostels were being remodelled or converted and that task teams were working on these projects as it was clear that the original renovations were not achieving the objectives. The projects included a financing model.

In conclusion, Mr Dlabantu stated that he would be happy to contact the Committee to correct any oversights, to give further presentations, and to arrange for more regular liaison meetings.


Adoption of Committee Minutes
The Chairperson suggested that the number of members to attend the UN Habitat parliamentary session in Canada should be reduced to three members only.

Mr A Steyn (DA) proposed that the visit to Canada should be combined with a visit to another country.

Mr G Schneemann (ANC) asked whether the trip could not be combined with a visit to Nigeria and Egypt, which had been identified as two of the target countries in the World Summit on Sustainable Development (WSSD).

The Committee minutes were adopted with amendments.

Committee Report on the Global Parliamentarians on Habitat Forum, Morocco 2005
Mr Steyn pointed out that very few housing related issues had been raised at the conference.

The Committee noted the report.

Adoption of Committee Business Plan for 2006-2008
The Chairperson reminded members that the adoption of the business plan was subject to the addition of issues related to the accelerated growth initiative for South Africa (ASGISA). As soon as the ASGISA programme of action has been completed the business plan would be adjusted.

The Committee adopted the business plan with amendments.

Adoption of the Committee Programme
The Chairperson said that the Committee would engage with the Department’s budget in May. She would prefer to have all provinces brief the Committee on their budgets as well as their expenditure patterns. She reminded members that the Committee could not be silent on matters related to the N2 Gateway project and other Breaking New Ground (BNG) initiatives.

Mr Schneemann asked whether the Department could give the Committee an update on developments around Cosmos City and other national pilot projects related to the BNG.

The Committee adopted the programmes subject to changes to the parliamentary programme.

The meeting was adjourned.