Budget Vote: Department’s briefing

HOUSING PORTFOLIO COMMITTEE
3 May 2007
BUDGET VOTE: DEPARTMENT’S BRIEFING

Chairperson: Ms Z Kota (ANC)

Documents handed out:
Department of Housing Strategic Plan and Budget 2007/08 to 2009/10 presentation

Audio Recording of the Meeting

SUMMARY
The Department of Housing briefed the committee on its recent activities and strategic objectives for the period 2007 to 2010. There were four main programmes dealing with Administration; Housing Policy Research and Planning; Housing Implementation Support and Housing Development Finance. The total budget for 2007/08 was R8.877 billion, of which 96% was allocated to Housing Development and Finance. The Department briefed the Committee on the purpose, strategic objectives, planned activities for 2007 and 2008, achievements during the past year and detailed budget allocation for each of the programmes. A new Chief Directorate for Policy and Programme Monitoring had been appointed. A new programme on Housing Implementation had replaced the previous programme and two chief directorates, split geographically were responsible for the sub-programmes.

Members’ questions related to the need to address gender equality in the Department, the fact that continual restructuring created new chief directorates, and that there was a danger that responsibilities would overlap. Members requested the new guidelines for environmentally efficient low cost housing, clarification of the monitoring and evaluation process, the testing of the impact of the Department’s programmes, steps taken by the Department to combat the escalation of price of materials and address the quality of building. Further questions related to the need to ensure housing assistance for those affected by floods in the Eastern Cape, progress on the legislation relating to the Prevention of Illegal Evictions, the responsibilities taken over from housing institutions, details of the fraudulent claims currently under investigation, and details of plans to reach disadvantaged people in rural areas. The Committee commented with concern that the Department did not regularly approach the Committee when formulating guidelines, that the Director General had attended very few Committee briefings, and there was a need for the Committee to be fully briefed during policy formulation. Further issues discussed were the unblocking of projects and the funding for this, the responsibility for communication, the steps taken to eliminate the bucket system in formal settlements, steps to enhance communications, alternative building methods, and the impact assessment studies with the World Bank.

MINUTES
Department of Housing (DoH) briefing on Budget Vote 2007/08
Mr Moses Dlabantu, Deputy Director-General &Chief Financial Officer, DoH, gave an overview of the strategic plan and budget for the period 2007/08 to 2009/10. He noted that the four main programmes comprised Programme 1 – Administration; Programme 2 – Housing Policy Research & Planning; Programme 3 – Housing Implementation Support and Programme 4 – Housing Development Finance. He noted that the total budget for 2007/08 was R8.877 billion, of which 96% (R8.523 billion) was allocated to Programme 4 – Housing Development and Finance. Details on all programmes were included in the presentation (see attached document). Priorities for the Department included accelerating the delivery of housing as a key strategy for poverty alleviation, using housing as a major job creation strategy, ensuring property could be accessed by all as an asset for wealth creation, leveraging growth in the economy, promoting social cohesion and improvement of life, and breaking down the barriers to create sustainable human settlements. The trends and challenges were outlined. These included high interest rates, rising cost of housing, scarcity of land, shortage of material, and competition for other work.

Ms Nelly Letsholonyane, Deputy Director-General, DoH, then briefed the Committee on the purpose, strategic objectives, planned activities for 2007/08, achievements during 2006/07 and the budget allocation of the sub-programmes under Programme 1 – Administration.

Mr Dlabantu reported on the purpose, structure and objectives, progress, deliverables and budget of the three sub-programmes under the Housing Policy, Research & Planning. These comprised Housing Policy Development; Research, Industry & Market Analysis and Best Practice; and Management Information Services

Programme 1 included international relations that aimed to engage in international multilateral and bilateral dialogue, and achieve partnerships and joint projects. The Department was part of the Cities Alliance. Memorandums of understanding had been drawn with Democratic Republic of Congo, India, China and Cuba. The Department was working on setting up new partnerships with donors and strengthening existing efforts.

The Planning Directorate was providing impetus to the strategic development of the Department, and preparing annual and quarterly reports. The activities of the Diredtorate of Corporate Support were set out, including security matters. Human Resources Management was working on filling vacant posts, and managing a performance system. Change Management programmes were also being implemented. The functions of the Directorates of Legal Support and Communication were also set out in detail.

Ms Julie Bayat, Acting Chief Director, DoH, briefed the committee on the activities of the new Chief Directorate for Policy and Programme Monitoring under Programme 2. A new Housing Code document would be published in May 2007. The Rural Housing Subsidy programme had been revised to align it with the latest land rights legislation and would be implemented during 2007. Other matters completed in the year included the programmes for the support of individual rental housing provision, for assistance to those who lost their guardians and the backyard / private rental programme. Drawing of the manual for the variation of the housing subsidy quantum, renovation of housing stock, evaluation of insurance cover, drafts on Farmworker Assistance, drafts on Land Acquisition and a programme for development had also been approved. Draft guidelines for environmentally sound housing, and the youth plan had been drawn. A number of deliverables were fully listed in the presentation for the period 2007 to 2010. Sector Information Services conducted campaigns by training, support, a database, a library resource centre and web services.

Mr Johan Wallis, Chief Director: Service Delivery Support, DoH, presented the achievements, structure and objectives, budget allocation and planned activities of Programme 3 on Housing Implementation Support. He explained that this was a new programme that replaced the previous Programme 3. Two Chief Directorates (split geographically) were responsible for sub-programmes of service delivery support, the rental housing and the People’s Housing Process (PHP), the sector support, liaison and stakeholder management, and inter-government relations and accreditations. This programme included communication and consumer education, capacity building for housing administration and delivery and managed special housing and human settlement projects. Achievements in the past year included a scholarship programme, beneficiary education, a support programme with Cuba, training, induction of Councillors and provincial capacity building, and sanitation, health and hygiene programmes. The planned activities for 2007 to 2010 were listed.

Mr Dlabantu briefed the Committee on the purpose, structure and objectives, achievements, planned activities, challenges and budget allocations of the two sub-programmes under Housing Development Finance. These related to financial and grant management and housing institutions, housing equity and development finance. Achievements in the past year included annual financial statements, reports to National Treasury, reconciliation of post office receipts to the debtor system, drafting of monthly reconciliations and approved payment schedules. It planned to better financial support and internal controls, manage supply chain management, provide a debtors' system to Provinces and assist Provinces in improving their data systems. It would also transfer and administer funds for housing delivery, and monitor the financial performance of the conditional grant, and monitor compliance with the Division of Revenue Act.

A new Directorate on Housing Institutions was set up in 2006 and a policy on monitoring was developed and approved. Further achievements included the business plans of housing institutions being analysed, targets being met for quarterly performance, a mid term review off housing institutions, and a review framework and governance checklist for rationalization of institutions being developed. Publications had been put out on a quarterly basis, and reports had been made. In the forthcoming year the Unit planned to finalise the Compliance Manual, appoint members o f the Office of Disclosure, provide secretariat in terms of the Home Loans and Mortgage Disclosure Act, profile the Office of Disclosure, manage and analyse information disclosed by financial institutions, monitor the Financial Services Charter processes, promote housing finance equity and establish help desks. It also aimed to approve a governance monitoring framework, shareholder compact and staff migration framework for rationalised institutions. Various reports would be made. Challenges included enforcement of governance issues with institutions, and lack of capacity and skilled personnel in the Unit.

Discussion
The Chairperson commented that not enough women were represented in the DoH and that the issues of gender equality need to be addressed by the Department.

Mr A Steyn (DA) expressed concern that the continual restructuring of the DoH since 2004 had resulted in more Chief Directorates being created and that there appeared to be some overlapping of responsibilities. He also voiced his disappointment at the absence of the Director General and remarked that the DG had attended only two committee meetings since his appointment.

Mr Dlabantu replied that the point that there were too many Chief Directorates was noted. He stated that all the CD’s were subject to evaluation. He said that the Department had been criticised for not being represented enough at ground level. The restructuring process was being implemented over time and changes were made to improve effectiveness.

Mr Steyn asked for details of the guidelines for environmentally efficient low cost housing included in the presentation, as the , Committee was unaware of these guidelines.

Mr Diet von Broembsen, Chief Director, DoH, replied that the guidelines had only just been completed and incorporated in the new housing code. He said that the guidelines were currently being tested in a number of projects.

Mr Steyn asked for clarification of the Government-wide monitoring and evaluation (M&E) process being used to assess the impact of housing in people’s lives.

Ms Bayat replied that the impact of housing on the community was assessed to evaluate to what extent the policies and objectives of the department’s programmes had been met. The assessments were done within the guidelines of Government’s M&E policy.

Mr Martin Maphisa, Deputy Director-General, DoH, added that the M&E process provided outcomes whereby the extent to which people’s lives had been improved and societies had been integrated can be measured.

Mr Steyn asked what the DoH was doing to combat the escalation in the price of materials yet still produce quality houses.

Mr Dlabantu replied that the profit margins for the provision of housing were small. He said that the Minister had engaged with various stakeholders, including the Department of Trade and Industry (dti) to address the challenges. The DoH also attempted to eliminate shortages by improving the supply of materials.

Ms N Ngele (ANC) asked what monitoring was being done to ensure that those people affected by the recent floods in the Eastern Cape were receiving housing assistance.

Mr Dlabantu replied that he could not reply to the question in detail but the Department was aware of the challenges facing the Eastern Cape Province and the local authorities around Port Elizabeth in dealing with the housing shortages in the area. The situation was being monitored.

Mr Steyn commented that the Committee found it very difficult to properly assess the performance of the DoH if it continually changed and re-shuffled programmes and directorates. He asked how the Department assessed its own progress.

The Chairperson commented that the Committee welcomed the restructuring of the Department but that the latter must be kept informed of changes.

Mr Dlabantu replied that he would communicate the Committee’s need to understand the structure of the department to the Minister and the D-G.

Mr Steyn asked if the additional funding obtained for capacity building was intended for the DoH or if it would be shared with the provinces or local governments.

Mr Steyn commented that the R180 million budgeted for the social housing regulator may be optimistic as the bill must still come before the committee.

Mr L Modisenyane (ANC) asked if the Prevention of Illegal Evictions (PIE) Bill was withdrawn and redrafted or if a new bill was being presented.

Mr Von Broembsen replied that the legislation was referred back to the Department of Land Affairs (DLA) in 2006. The amendments to the bill include the DLA’s input. He undertook to forward a copy to the Committee.

The Chairperson noted that the Department had taken over responsibilities from various housing institutions and asked for a report on the current situation.

Mr Dlabantu replied that some of the institutions’ mandates had expired and transitional arrangements were in place to deal with social housing.

The Chairperson asked for a time frame for the submission of legislation planned by the Department.

Ms Letsholonyane replied that the time-frame would be forwarded to the Committee upon her return to the office.

Mr Steyn remarked that the amounts reported as recovered from fraudulent claims were insignificant, compared to the millions of rands that the Committee knew were tied up in the fraud. He asked for a list of fraudulent claims that were currently being investigated by the department.

Ms Simphiwe Damane, Director, DoH, replied that a number of court cases were pending and that an increase in the amounts recovered can be expected.

Mr Steyn commented that risk management and monitoring and evaluation appeared to be handled as new responsibilities when in fact these responsibilities existed before. He again expressed concern that the restructuring of the Department had the danger that certain responsibilities might not being met.

The Chairperson asked for details of the Memorandum of Understanding (MOU) with Norway regarding social housing.

Mr Dlabantu replied that there was a current MOU with Norway, replacing the previous partnership with the Netherlands.

Mr D Mabena (ANC) asked how the Department intended to reach the disadvantaged persons in the rural areas.

Ms Letsholonyane replied that the Department made use of local radio stations to reach those living in rural areas.

Mr Steyn expressed his concern that the DoH did not regularly approach the Committee when formulating policies and guidelines.

Mr Dlabantu replied that the Committee’s request for involvement in the formulation of policies appeared to have fallen through the cracks and the failure to engage with it was an oversight. He said that the Department’s policies were listed in the planning exercise.

Mr Steyn asked for details of the training of the provincial Housing Voice mentioned under Programme 2.

Mr Von Broembsen replied that the Housing Voice was the name given to a person at municipal level who was identified as a champion of housing matters and who would ensure that the roll-out of the housing programme was kept on the agenda.

Mr Steyn asked if the skills audit was conducted only at national level or at provincial level as well.

Mr Maphisa replied that the skills audit was conducted at the national and the municipal levels.

Mr Steyn asked for details of the partnership with the Department of Science and Technology (DST).

Mr Maphisa replied that a memorandum of understanding was reached with the DST to share research. This MOU was now ready for circulation.

Mr Steyn asked how the Department intended to monitor the performance of the entire construction sector.

Mr Maphisa replied that the Department attempted to measure the performance capacity and resources available in both the private and public sectors.

The Chairperson stated that the Committee must be involved whenever the Department formulated matters of policy and that this issue had been raised on numerous previous occasions. She cited the example of the revision of the housing code without any input from the Committee. She expressed dissatisfaction at the exclusion of the Committee.

Mr Dlabantu replied that there was a need to work out a programme of engagement with the Committee. He said that policies were developed with the involvement of all stakeholders and presented to the Committee once they were ready for approval. He said that the Committee was made aware last year of the policies that had to be developed. He apologised for having to respond to the same issue again.

The Chairperson commented that the issue of the quality of housing was not covered in the Department’s presentations.

Mr Dlabantu replied that the Chairperson’s comments were noted and that the quality of housing provision falls within the M&E framework.

Mr Steyn asked which period was covered by the occupancy audit and where it was budgeted for.

Ms Bayat replied that the beneficiary occupancy audit was undertaken to determine the actual occupancy rates with the information on record.

Mr Steyn asked where the costs involved in unblocking the blocked projects were budgeted.

Mr Wallis replied that there were no additional funds available for the unblocking of blocked projects. He said that each province was responsible for setting priorities and for obtaining funds. The Department had created mechanisms to assist the provinces in unblocking projects but it was on condition that no fraud was involved.

Mr Dlabantu added that there was a need for the Department to discuss this issue with National Treasury. He said that he was aware that most provinces had budgeted for unblocking the blocked projects.

Mr Steyn commented that the responsibility for communication was included in the presentations of two programmes and that there appeared to be an overlap between two Chief Directorates.

Mr Dlabantu replied that communication was budgeted for and fell under the responsibility of Programme 3.

Mr Modisenyane asked if the DoH was co-operating with the Department of Water and Forestry (DWAF) and the Department of Health to address the eradication of the bucket system.

Mr Wallis replied that the DoH provided the full spectrum of services for new housing developments. He said that since the Human Settlement Redevelopment Program was phased out, DWAF was responsible for eradicating the bucket system in existing areas.

Mr Maphisa added that although no MOU was in place, the Department was working with the DPLG in developing projects for local governments.

Mr Mabena asked for details of the media campaigns around the new housing projects.

Mr Wallis replied that a radio show was developed in an attempt to communicate with housing beneficiaries after discussions with the Minister and with ABSA Bank. The 2006/07 budget was only sufficient to develop a radio series in six languages and a new series was aired in March and April 2007 in the remaining five languages.

Mr Dlabantu added that the Department’s required budget of R60 million for communication was based on the need to address past criticism that the DoH was not effective in communicating with the beneficiaries of housing. The budgeted amount included the cost of staff and salaries.

The Chairperson asked what progress was being made with the Department’s involvement with the innovation hub.

Mr Dlabantu replied that alternatives to building with bricks and mortar were being investigated and that the innovation hub was involved with the testing of products so that they could be accepted for the procurement processes.

The Chairperson asked what was meant by the impact assessment study being done with the World Bank.

Ms Bayat replied that the impact assessment study was undertaken with the World Bank to assess the impact of housing on the beneficiaries from informal settlements, and whether they had been informed of the processes. She said that the study was still in an early stage.

Mr Maphisa explained that the World Bank was given a mandate by the President to assist departments with M&E.

The Chairperson informed the Department that the Committee would be visiting the Alfred Nzo Municipality in the Eastern Cape during the week starting 7 May 2007 and would be attending that Imbizo. The Committee intended to evaluate the Department and attend its Indaba.

The meeting was adjourned.