Department Updated Strategic Plans and Budget 2006/07 to 2008/09

NCOP Public Services

17 May 2006
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Meeting report

Presentation to the NCOP and Portfolio Committee on Housing, Departmental Updated Strategic and Performance Plans and Budget 2

17 May 2006

Documents Handed out:
Department of Housing presentation
Department Updated Strategic and Performance Plans and Budget 2006/07 to 2008/09
Department of Housing budget 2006/07 outline on National Treasury website (available at

The Committee was briefed on each of the Department's five programmes with regard to functions, aims, a progress analysis, budget summary and planned deliverables for the current year. The variance of the allocations of each programme between the previous and current financial year in terms of the budget overview were dealt with separately by each programme manager. The allocation of funds in respect of strategic priorities and trends in the budget allocation were also discussed under each programme.

The Committee asked questions on a broad range of issues.

Introductory Overview
Mr Aaref Osman, Acting Deputy Director General, presented an overview of the work of the Department (see document). He made the following additional comments when going through the presentation document:
- In terms of the Comprehensive Plan which had been adopted by Cabinet, the Department should be the department not only for low-cost housing, but also focus on moving from housing to sustainable settlements, thereby looking at all housing amenities to ensure dignity for beneficiaries.
- Housing legislation was being amended to bring it in line with the new Comprehensive Plan.
- The private sector and banks had previously not been involved in low cost housing and needed to be invloved.
- The specific priorities included accelerating the delivery of housing which would also address the increasing backlog.
- The Department faced critical challenges as can be seen in the strategic overview.
- Additional funding has been approved by the Treasury in terms of the Social Housing Program for the current financial year.
- The Department had identified barriers to accessing Housing Finance and one of these were down-payments. There was a subsidy formulated by the Department to address this as well as the upgrading of informal settlements.
- The purpose of the International Agenda under Program One is to improve international co-operation on human settlement developments. The department was assisting the DRC in housing reconstruction.

Programme 1: Administration
Mr Osman took the Committee through this part of the presentation. He noted an increase in this budget in view of increasing costs and additional staff.

Programme 2: Policy Planning and Research
Mr Anton Arendse (Director of Human Settlement and Policy) spoke on Programme 2 (see presentation and budget outline). He made the following additional comments:
- Policy enhancements to be tackled by the Department, include a policy to upgrade informal settlements, which is being implemented through a number of provincial pilots. With the approval of MINMEC, there is to be at least one pilot in each province, such as the N2 Gateway Project. Servcon is to be restructured.
- Other policy areas concern special housing needs, which will look at children and minors who have been orphaned by HIV/ AIDS. Urban agriculture is also on the agenda. An important focus is on backyard and private rental assistance. The Department will not be able to assist all needs, therefore it was essential to look at private enterprise to accommodate these. The National Housing Code needed to be reviewed in order to make it more user friendly.
- The Framework Legislation Team was reviewing legislation during 2006/07 to align it to the Comprehensive Plan. It was in the process of finalising amendments to the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act (PIE Act) which had already been sent to Cabinet.
- Research for 2006/07 will look particularly at rural areas as well as inner city regeneration.

Programme 3: Programme Management
Mr Johan Minnie (Director: Information Management) briefed the Committee on this programme.
- Additional comments were about the new guidelines being implemented for missing beneficiaries and mechanisms to ensure their deregistration. A preventative system is being looked at so that the same names are not being used on a subsidy application. All names of a household have to be on an application form.
- The programme is also focusing on how to provide advice to those people who are building their own homes through the People's Housing Programme (PHP) to ensure the building of a proper foundation, which it is hoped will minimise problems.
- Issues around equity need to be addressed in instances where mostly males are beneficiaries, there are new guidelines for this.
- Guidelines are being looked at specifically in relation to those areas which are prone to floods. This is a mechanism where the province or municipality are able to remove people from danger areas to a place where they have access to infrastructure and proper shelter, and to ensure that they have access to permanent shelter as soon as possible thereafter.
- As part of the skills audit, training manuals had been provided, as well as the provision of housing call-centre training. Capacity building had also been directed at learners obtaining university qualifications in housing-related fields in order to benefit the public service.
- About 35 000 houses had been delivered by the PHP with the assistance of 44 engineers. There has also been the implementation of a radio programme, which focuses on housing education, and housing-related information in six languages.
- The new hostel development programme had almost been finalised. It focused on changing existing hostels into family units, how to change hostels into more formal rental units and how to apply this in the social housing context. However this did not imply that all hostels would undergo this change. The Department would also be providing guidelines on medium density housing and farm worker housing and guidelines.
- Reference was made to the Housing Subsidy Scheme (HSS) of 1995, which had never been re-evaluated in full. A framework had been developed for this purpose which will be finalised within the next three months, with the hope that it would enhance the quantum of the housing subsidy system. On an annual basis, the quantum of the housing subsidy scheme is enhanced based on certain financial indicators.
- The Department is looking at how government can support private rental housing.
- The Rural Subsidy Programme was described as a contentious matter, how to involve tribal leadership in rural areas.
- There was also a need to look at whether the government should involve itself in providing mechanisms for insurance cover.
- A research on Indigenous Technology had been completed with the assistance of the CSIR. It has to be seen how this could be applied within the subsidy scheme.
- The issue of recurrent services cost had been investigated, this would entail assisting people when their electricity is cut off, investigation is being undertaken to determine whether government should be involved.
- The department is further looking at the rectification of defects on RDP houses which had been built before 1994 as well as post 1994, implementation of guidelines in respect of those houses involved looking at how to get the said houses to a certain standard.
- Phase two of the Presidential Pilot Project on Rental Housing had begun and is aiming to obtain between 25 000 to 45 000 rental units.
- In respect of the Sectoral Infrastructure Coordination, the department has been consistently coordinating with its sister departments, such as the department of water affairs and agriculture to ensure that their policies are in alignment with that of the department.
- Regarding capacity building the Department is appointing provincial support units for the running of housing consumer education. Approval has been received to appoint a manager for the Housing Consumer Education Programme. Housing scholarships had been provided to 13 new students who will study for a period of 3 to 4 years and the department is hoping to step up assistance for bursaries to students in housing related fields.
- The Department would continue its support implementation of the Informal Settlement Upgrading Programme, particularly the pilot projects, thereby guiding these projects from a national point of view.
- In terms of the Budget Summary for this programme, money had been set aside for the accreditation of municipalities, because there is a need to empower municipalities to implement housing programmes. The funding was for municipalities to obtain the necessary skills for implementing housing projects.

Programme 4: Housing Sector Performance
Mr Osman presented on this programme (see document). Additional comments were:
- In terms of monitoring and evaluation, there were a number of pilots undertaken dealing with Informal Settlement Upgrading. They would be monitoring these to determine the success rates of these pilots which will inform policy.
- The head count of all housing units that have been delivered was of importance. If a certain amount of money was being given, it was imperative to see delivery at ground level.
- IT systems would need to be in place to promote consumer awareness and to register complaints.
- The budget consisted mainly of transfer payments and contributions to other housing institutions.

Programme 5: Housing Development Funding
Mr N Mbengo, from Chief Directorate: Financial Services, explained that this programme comprised four sub-programmes that deal with administration, grants, interest / redemption and a new social housing programme. Key activities include amending the housing subsidy grant framework. All necessary changes for adoption will have to be discussed with provinces. The new act will have to take into account new developments and a system for maintaining housing stock. Within this programme, the greater portion of the budget goes to the Integrated Housing and Human Settlement Development Grant. Provinces have to submit business plans showing what each intends to achieve and their specific targets based on the housing programmes. Actual amounts will be allocated in terms of these targets.

Mr Mzizi (IFP) asked that the framework of amendments to the PIE Act be elaborated upon.

Mr Arendse responded that there are three broad areas: application, eviction and alignment. The amendments of PIE relate to who should be covered and who should not. The aim is to address the loopholes in the legislation. In terms of the legislation, mortgagees are also allowed to seek protection. The proposal is that mortgages should be excluded. PIE should not be applied in instances where formal agreements have been entered into. For example, if there is a formal rental contract and rent is not paid, PIE would not be able to be used. These are only proposed amendments and final approval is still required. Furthermore in terms of PIE, there is a distinction between tenants who have lived there for more than 6 months and those who have lived there for less than 6 months. A proposal was made that there should no longer be this distinction.

Question: Elaboration was sought on the issue of backyard dwellers.

Mr Johannes replied that the increase in backyard dwelling was a result of a number of reasons such as inefficient budgets. Currently there is a backlog of 2.2 million houses. The Department is only able to build 200 000 houses. This backlog increased as more people move into informal settlements and backyards. There was a lack of funds. As far as the backyard programme is concerned, there was nothing which prevented person living in backyards from accessing subsidies if that person should meet the criteria. The Minister had also mandated that there should only be one waiting list per municipality.

Question: On the upgrading of informal settlements, clarity was sought on the R310 million expenditure and whether this would include backyards settlements and squatters.

Mr Osman replied that the R310 million was not only for informal settlements. The financial demands for informal settlements has been realised. The focus is currently on informal settlements, the said amount is only an additional amount that was given by the Treasury, the Department had asked for much more money.

Mr Mzizi expressed concern about Servcon. People had been evicted by Servcon in the past and therefore it had left a ‘bad taste’. How then would this be addressed?

The Department replied that Servcon's mandate for this would be coming to an end. It had to be taken into account that there was 50% shareholding with the Department and 50% shareholding with the bank.

Question: Elaboration was requested on the Rural Housing Indaba.

Answer: Both the NCOP and the Portfolio Committee were identified as critical stakeholders for the Indaba. The objectives for Indaba is to create dialogue, review housing delivery and financing and learn from good practices and policies.

Question: As far as the deregistration of housing is concerned, there are houses that belong to certain beneficiaries. Some people however do not feature on this list. Who should Members approach about this problem? People were at loggerheads with the MEC in the matter of missing beneficiaries.

Mr Minnie replied that there was a proposal that only once the subsidy had been allocated, the house built, and the house registered in the name of the beneficiary, should government pay out to the contractor. The Deeds Office did not just deregister a beneficiary without his or her consent, good cause will have to be shown.

Question: The amount and size of renovation projects was questioned.

Mr Minnie explained that the Renovation of Houses programme only related to repairing houses where poor workmanship was involved and not to an increase the provision of houses. He gave an historical account of the mandate given to the Department from 1996: it was only to provide minimum services and a house of 30 square metres and nothing more than this, part of the subsidy could not be used for anything else. As a result of poor workmanship, the National Housing Builders Registration Council (NHBRC) had been established and a combination of steps were put into place. In terms of the NHPRC, the house had to be 30 square metres or more. The Minister is contemplating increasing this amount to 42 or 45 square metres . However in terms of the budget, if the building takes place in accordance with the prescribed material, the houses would in effect cost R45 000 each, and the question is whether South Africa can afford this amount as opposed to a subsidy amount of R36 000 as well as the budget of the Department. MINMEC is carefully reviewing this issue.

It was noted that a special investigation unit had been created, which members may approach and bring any problems to the attention of the Department, especially when there is no assistance rendered at provincial level.

The following questions were also asked:

The Chairperson asked what systems were in place to ensure the implementation of the National Housing Programme. She also asked what was being done to develop rental housing as far as hostels are concerned.

Question: In terms of the Integrated Housing and Human Settlement Grant, the key problem identified is the incapacity of provinces to spend their grants. How could the Department assist in solving this key problem of incapacity.

Question: Concern was expressed about the N2 Gateway which had been identified as a National Pilot Project. Are there any successes so far and, if not, what are the problems relating to this.
Question: Elaboration was sought on Private Rental Assistance.
Question: Clarity on the Building Technology Programme.

Mr F Adams (ANC) referred to the Department's Progress Analysis and asked whether the Western Cape would form part of this. He asked for clarity on emerging contractors and ways in which this process could be monitored to ensure that third grade material would not be purchased. The Chairperson added that it should rather be asked which provinces were left out of this analysis and what the reasons for this were.

Rev P Moatshe (ANC) asked for clarity on the size of the houses which were to be built and how improvements were going to be made.

Question: The success rate of the Department as far as the development of entrepreneurship amongst the provinces was also questioned, looking at PHP and the problems with PHP.

Question: In terms of Programme Two, the Department was asked to comment on whether the budget of R26 million, and the money allocated for research, should not be used for actual production rather than administration, thereby going to the people themselves.

Question: The Department was asked to comment on what is meant by Quality Housing and what the problems are in regard to land acquisition.

One of the issues of service delivery is to find the right mix of land and the challenge is to find land which has a top structure.

Question: What is going to be done in terms of the norms and standards to avoid the increase of shacks.

Question: When were the blocked projects going to be unblocked.

[PMG did not monitor the rest of the meeting as it over-ran the time schedule. Attempts are being made to provide the responses to these questions: email with regard to this ].


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