Department’s Annual Report 2006/7: briefing

Meeting report

HOUSING PORTFOLIO COMMITTEE
17 October 2007
DEPARTMENT’S ANNUAL REPORT 2006/7: BRIEFING

Chairperson: Ms Z Kota (ANC)

Documents handed out
Department Annual Report [available at www.housing.gov.za]
Department Annual Report Presentation [Part 1] [Part 2] [Part 3] [Part 4]

Audio recording of meeting

SUMMARY
The Department of Housing tabled a long report on the activities of the Department and its programmes. A number of new pieces of legislation had been drafted in the last year. The overall policy framework was based on the White Paper on 1994 and the Comprehensive Plan for the Creation of Sustainable Human Settlements. The challenges were detailed, and included both external factors, such as rising building costs and interest rates, and lack of capacity in the Department. Key policy developments included upgrading of informal settlements, intergovernmental support, social contract for rapid delivery, collapsing of subsidy categories and increase of the subsidy scope to R7 000 per month income, coordination of planning processes and improvement of quality of houses. The budget overview and performance were tabled. There was 95% spending averaged across all programmes, with underspending occurring in two provinces, and on the Conditional Grant. An unqualified audit report was given, but matters of emphasis were explained. Each of the programmes was then detailed. Members indicated that they were not happy with the report, which showed little difference from the previous year, and did not indicate precisely what targets had or had not been achieved. Questions were posed on the under spending, lack of capacity, disciplinary matters, the tender prices and the figures used, under spending of the funds in Programme 2, enforcement of the National Housing Code, support to Municipalities under the Human Settlement Policy, the internal audit union and gender equity in the Department. It was decided that further queries and discussions would stand over to a later meeting.

MINUTES
Department of Housing (DOH) Annual Report 2006/07 Briefing
Mr Mziwonke Dlabantu, Deputy Director, DOH, briefed the committee on the Department’s annual report for 2006/7, tabling a presentation covering the aim, vision and mission of the Department. The governing legislation was clearly set out. It was indicated that the Housing Amendment Bill, Social Housing Bill, Rental Housing Amendment Act and Less Form Township Establishment Amendment Bills had been drafted during this period.

The overall policy framework was based on the White Paper on 1994 and the Comprehensive Plan for the Creation of Sustainable Human Settlements. There were a number of challenges. Rising economic trends, and the exclusion of about 25.5% of the working age population from the mainstream economy, meant that assistance for housing was needed and the subsidy had to be adjusted to reflect increased building costs. Rising of interest rates posed a challenge on affordability. Bottlenecks in supply of skilled labour and building materials, and the shift away from building of residential dwellings, were further challenges. Key policy developments included upgrading of informal settlements, intergovernmental support, social contract for rapid delivery, collapsing of subsidy categories and increase of the subsidy scope to R7 000 per month income, coordination of planning processes and improvement of quality of houses.

Mr Dlabantu tabled the budget overview and financial performance . There were rollovers for the N2 Gateway Project, R16.2 million for the Western Cape flood disaster and other emergency funding for the Taung North West district. There had been 98% spending across the programmes. The savings resulted from the Conditional Grant under spend, savings declared in two provinces and incapacity of emerging contractors and material shortages, as well as underspending on the operational side. The spending for each programme was tabled. The Department had received an unqualified audit report. Matters of emphasis were noted on assets, material corrections, the human resources plan, internal control issues, the South African Housing Trust investigation by the Special Investigating Unit and the special audit on the N2 Gateway project.

Ms Nelly Letsholonyane, Deputy Director General: Corporate Services, DOH, presented the section on Corporate Services. She tabled the planned activities, and noted the achievements, which included functional desktop management and support solutions, network management, upgraded switchboard, coordination of functions and document classification. She also dealt with human resource management, noting that 95% of posts on establishment had been filled.

Mr Diet von Broembsen, Chief Director: Policy Planning and Research, DOH, presented the section on policy planning and research. Planned activities included a policy for farm worker and dweller housing, a housing land policy, a framework for environmentally sound housing, guildelines on youth in housing, and a programme to align Integrated Development Plans (IDPs) and housing sector plans. A backyard rental plan, special housing needs, and the rural subsidy programme were also being developed. There would be amendment to various pieces of legislation. The policy and programme for farm workers and occupiers had been completed but held over for discussion at the rural housing indaba. The National Housing Code was revised to align it with the Breaking New Ground policy. Features of the Code were described (see attached presentation). The research projects were described in depth

Mr Johan Wallis, Chief Director: Programme Management, DOH, presented on programme management, describing the activities in which this programme was involved. Seminars and workshops were held on the policy, there was a councillor induction programme and training programmes on health, sanitation and hygiene. A scholarship programme had given 23 new awards, and there was training of Housing Practitioners. Training was also given to emerging contractors.

Mr William Jiyane, Chief Director: DOH, dealt with the section on Housing Sector Performance, which monitored the implementation, performance and impact of national policies. Subprogrammes included policy and programme monitoring, information management, industry analysis, development finance analysis, performance of housing institutions and housing equity. The planned activities for each subprogramme were set out. The first draft monitoring, evaluation and impact assessment framework had been done, based on objectives of the Comprehensive Plan. There was publication of information on the National Housing Programmes. A review of the role of housing support institutions had resulted in disestablishment of Servcon, extension of the mandates of Thubelisha and National Housing Finance Corporation, establishment of the Social Housing Regulatory Authority and disestablishment of the Social Housing Foundation and the Peoples Housing Partnership Trust.

Programme 5 on Housing Development Funding accounted for the bulk of the Department’s spending, and consisted of transfers through the Integrated Housing and Human Settlement Development Grant subprogrammes. Spending of 95% was achieved. 166 523 subsidies were approved, and 271 219 housing units were completed.

The main challenge in the Department remained as lack of capacity..

Discussion
Mr G Schneemann (ANC) criticised the report, saying that it was no different from the previous year’s report.

Ms B Dambuza (ANC) asked the department if it had Internal Auditors.

The Department replied that these were in place, and they were functioning well.

A Member questioned the Department on the under spending in some of its programmes, particularly the Eastern Cape.

The Department representatives noted that the problem was lack of capacity.

Ms Dambuza noted that the Department of Housing indicated that there was a problem in the vacancy rate. She asked for further clarity on what that was, and which areas were affected.

Ms Letsholonyane responded that the Department had been going through a restructuring process since 2004, and thus could not fast track the filling of the posts due to the processes that were taking place.

Ms Dambuza asked if there were any cases of suspension in the Department and, if so, what was the duration of those suspensions?

Mr Dlabantu confirmed that there had been three suspensions that he could recall. Two were dealt with very quickly and had now been concluded. One out of the three cases was still pending because of the number of issues that needed to be taken into account.

Mr A Steyn (DA) noted that the Department had spoken about an increase in the tender prices, and asked what the increase was.

Mr Dlabantu replied that the increases were not far from those of the standard indeces used by the building industry, and the Department would largely use these index figures to determine tender prices.

Mr Schneemann went back to the issue of the vacancies and asked the department when if planned to fill the vacancies that were open.

No representative of the department replied to this question in particular, but Ms Letsholonyane stated that the Department was busy with an HR plan.

Mr Schneemann asked why Programme 2 only spent 62% of the funds it had been allocated, which he would regard as worrying.

Mr von Broembsen said that the under spending was because of the delays in the announced projects which fell under the programme.

Mr Dlabantu added that the money that was not spent related to two provinces, Eastern Cape and Mpumalanga. The Eastern Cape struggled to spend its budget because of a lack of capacity and that the province was going through a restructuring process.

Mr Schneemann requested that the Committee be told what was achieved and what was not achieved in terms of the planned activities.

Mr von Broembsen said that the achieved activities were in the report. Insofar as lack of achievements was concerned, he said that this resulted from lack of capacity in the department.

Mr Schneemann asked when would the National Housing Code become enforceable.

Mr Von Broembsen replied that the Code had already came into effect earlier this year, when it had been approved by the Minister.

Ms Dambuza asked, in respect of Human Settlement Policy and Integration, how the Department had managed to do this successfully, as she found many problems with Municipalities having to implement the policy.

Mr Von Broembsen replied that the Municipalities were supported by the Department and that they had put certain tools in place in order to achieve what had been stated.

Ms Dambuza asked if the Department had internal audits within the department, and, if so, if they were functioning well

Ms Letsholonyane replied that the Department of Housing did have internal audit processes in place. The Internal Audit unit had developed a strategic plan and had conducted internal audits and done reviews of the processes within the department.

Ms Dambuza then asked if the Department had personnel responsible for gender equity within the department?

Ms Letsholonyane replied that the Department had a Chief Director for Transformation, who would deal with gender matters.

Mr Schneemann asked when would the Home Loan and Mortgage Disclosure Act regulations come into place, and be implemented.

Mr Johan Wallis replied that the banks were already obliged to disclose the information under the Act. However they could also apply to the Minister to be exempted from disclosing this information.

Ms D Mabena (ANC), asked what the gender ratio was with regards to the scholarships the Department had awarded.

Mr Wallis responded that he was not entirely sure of the figures, but that they were more or less evenly balanced across the genders. The Department had criteria for the selection of the recipients of the awards.

The Chairperson asked that the Committee engage with the Department on another day, because of shortage of time, in regard to issues not discussed in the meeting.

The meeting was adjourned.