Department of Housing Budget 2008/9: public hearings

Human Settlements

12 May 2008
Chairperson: Ms Z Kota (ANC)
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Meeting Summary

The Provincial Departments of Local government and Housing (other than Western Cape, who were not present) briefed the Committee on their achievements and financial performance during the financial year 2007/08, and presented their budgets for the 2008/09 conditional grants.  Each of the Departments detailed the numbers of units delivered, the spending and the main challenges. Common themes for the challenges included the funding constraints, lack of capacity of contractors, the limited skills of the workforce and difficulties in getting suitable land for development. The instances of over and under spending were detailed. For Gauteng and Kwazulu Natal, Members also queried the use of alternative building methods, cross border delivery, the issues around access roads. Limpopo province was congratulated by the Department for its good work, especially in relation to farm housing. Members questioned Mpumalanga on the problems around municipalities failing to identify sufficient beneficiaries for the houses that had been built, and noted that the Committee would have to pay special attention to oversight in this Province.  Eastern Cape was criticised for having underspent and therefore having to surrender part of the funding in the 2007/08 year, and concern was expressed that people were still living in emergency housing. In respect of the Northern Cape, Members requested explanations on the blocked projects and spending. The Free State was asked to explain why it was having cuts in funding over the next financial year, and it was noted that the business plan was not sufficient, and that hardly any reference was made to rural areas. The North West was questioned as to why there was no mention of hostel development, and why the houses with only one door had not been modified, as the failure to build according to regulations was not acceptable.

The National
Urban and Reconstruction Housing Agency gave a brief presentation, explaining that this was a Section 21 company which aimed to ensure the availability of bridging finance to small, medium and established contractors building low and moderate income housing and related community facilities and infrastructure.

Meeting report

Department of Housing (DOH) Budget 2008/09: Provincial Departments of Housing presentations
Gauteng Provincial Department of Local Government and Housing presentation
Ms Benny Monama, the HOD for the Gauteng Housing Department, apologised to the Committee Members for not being able to show slides of the presentation as there was a problem with the IT equipment.

The Chairperson indicated to the parliamentary staff that it was unacceptable that the equipment was not in working order.

Ms Monama continued that the expenditure of the Gauteng province was exceeded by 2% and this was inclusive of additional resources. In
developing their strategy the Department recognised that the emphasis of housing delivery in Gauteng and South Africa had moved beyond the issue of numbers to the enhancement of quality and building of thriving communities, as well as trying to turn around the apartheid spatial development patterns that had been inherited since 1994.

The strategic objectives for the financial year of 2008/9 were to consolidate the Department’s efforts towards the conclusion of the strategic plan cycle, and also to d
evelop strategic interventions aimed at optimising performance and accelerating delivery. The Department also aimed to realign the Department’s interventions to the strategy, housing demand, current backlogs, budget and resources available, to develop a basis for the formulation of plans that would be implemented by the Department beyond the current strategic plan, and to eradicate informal Settlements. It would also manage implications of rapid in-migration/urbanisation and mobilise alternative funding models for hostel redevelopment, as well as upgrade 60 hostels. The difficulties in the province included conditions within the environment such as access to well located land, an acute housing demand which was exacerbated by urbanisation and in- migration, severe delivery capacity constraints in supply of material and pressures on the construction industry, as well as the institutional constraints of the State.

Ms Monama also made reference to the realisation of the 2014 vision, and how the Department had identified issues that needed immediate attention. These included reducing the cost of doing business with government, and improving the commitment and upgrade skills of civil servants.

The Department had restructured its organisational structure and design with a view to strengthening its support plan, by fast tracking delivery from an integrated, all-inclusive approach. It was evident that the Conditional Grant allocation had grown substantially over the past two years, as well as into the Medium Term Economic Framework (MTEF) period.
However, the operational budget, which would support the payment towards compensation of employees in terms of new recruits, had not grown in proportion to that of the Housing Subsidy Grant.

Ms Monama concluded by expressing confidence that government was on the right track in crafting mechanisms to ensure adequate shelter for deserving people of Gauteng.

Mr G Scheemann (ANC) asked for a point of clarity concerning the new ground strategy, which was not mentioned in the presentation, and also asked what was happening with Cosmo City. He also asked whether alternative building methods had been used in the Gauteng region.

Mr D Mabena (ANC) wanted to ascertain whether the Winterveld region was included in these plans or whether it belonged under the jurisdiction of the North West province. He also asked whether rules had been made so that communities were capacitated with skills, as anticipated in the budget.

Ms Monama, who stated that targets that were mentioned for 2008/9 were progressing well and they had all thus far been achieved. The Winterveld area was covered by the cross-border programme that was targeted by the Gauteng province, and therefore it was one of its targets.

Mr G Scheemann asked about the hostel programmes, and also sport and clinic facilities. He stated that the infrastructure of the province was good, but asked when the other projects would happen.

Ms Monama replied that already 63 hostels existed which housed 12 000 occupants.

Mr Mongezi Mnyama, Chief Operating Officer, Provincial Department, added that with regard to the progress of building schools and clinics there still needed to be some development and the commercial side of this would be taken care of.

The Chairperson asked about Cosmo city and when these plans would be deemed viable. She said that this needed to be a success. She noted that the spending patterns at this Department were too high and that care was needed to ensure that there was not over spending. 

KwaZulu Natal Provincial-Department of Local Government and Housing presentation
Mr Michael Mabuyakhulu, MEC, Kwazulu Natal, and Mr Wayne Evans, Chief Financial Officer, KZN Provincial Department, noted that the
mission statement of this province noted that aim to create sustainable human settlements in KwaZulu-Natal and to manage the implementation of housing in order to create sustainable human settlements characterised by affordable and adequate shelter in this province. The Department further aimed to eradicate slums in KwaZulu-Natal and to provide housing to military veterans and promote home ownership.

The budget allocation for the 2007/08 financial year had been exceeded by R1 million. The Integrated Housing and Human Settlement Development Grant forming part of this budget was also fully spent during the year. The overspending was affected by the construction of Serviced Sites and Top Structures, which was in line with the projections and budget allocations for the year. It was also affected by the contracts for the Social and Economic Facilities programme, which were now in place, and construction had started, after initial delays in the procurement process.

Mr Z Mkhize (ANC) raised an issue of access roads.

The presenters explained that this was an infrastructural issue, which did affect the provincial departments of housing because of related difficulties in transporting building materials from one point to the next.

Limpopo Provincial Department of Local Government and Housing presentation
Mr Leshabe Rampedi, Head of Department of Limpopo Provincial Department, indicated that the g
overnment spending was focused on providing social transfers, human resource development and labour market intelligence, which would enable people to become more mobile and migrate to localities that were more likely to provide sustainable employment or other economic opportunities.

Statistics SA’s Community Survey 2007 showed that formal housing stood at 83.2%, which translated into a housing backlog of 16.8%. Traditional housing was reduced from 20.2% to 9%, and informal housing was reduced from 7.1% to 5.6%. In Limpopo, 15 707 housing opportunities had been created, which included serviced sites, rural and urban housing units, emergency houses, and farm-worker houses. In addition, 7 158 units were at foundation and wall plate stages.

There had been 214 youths trained in construction trades jointly with Umsombomvu Youth Development Programme and the National Home Builders Registration Council (NHBRC) and 3 327 deeds had been processed through Enhanced Extended Discount Benefit Scheme (EEDBS) to promote individual ownership of government houses that were built prior to 1994

Mr Rampedi added that 500 hectares of land had been acquired within the Lephalale Municipal jurisdiction, which was a high growth investment node, to develop different housing typologies and promote integration. There had also been a Housing Indaba which was hosted by the region and the department, which was aimed at setting best practice in the housing sector, both local and internationally, resulting in the Housing Indaba Resolutions being adopted by the Executive Council of the Province.

Despite these achievements there were still challenges, which included the limitations of acquisition of suitably located prime areas that would promote integrated sustainable human settlement. Constraints in delivery capacity limited the ability of contractors to deliver at a large scale.
The Chairperson congratulated this Department for the exceptional work that was made since their last Committee appearance. She also apologized to the MEC that there had been no visit from the Portfolio Committee to this region and promised that this would soon be facilitated.

Mr A Steyn (DA) asked about the actual and the projected expenditure and asked what type of housing was referred to on page 10 of the presentation.

Maite Nkoana-Mashabane, MEC for Housing in the province, gave a detailed response on the expenditure, explaining the figures on the slides.

All C
ommittee Members were in agreement that this province was on top of the issues, and complimented the Department for its successes with the beneficiaries, including those who also had housing subsidies.

Ms B Dambuza (ANC) further complimented the department for its good work with regard to farm housing.

Provincial Department of Local Government and Housing presentation
Ms Banthialo Mojapelo, Chief Director of Housing and Technical, Mpumalanga Provincial Department, noted that old projects were still the first priority in the province and the informal settlement upgrade programmes in Emalahleni Municipality, Emsagweni and Enkanini Mkhondo Municipalities were of core concern.

Problems faced included rental stock and the hostel upgrade programme. Similar to other provinces, Mpumalanga also had a problem in the acquisition of land for integrated human settlements. The province acquired a considerable amount of land that they could not use as a result of geological problems relating to dolomite and other factors that precluded continuation of development in this area.
The projects affected by wetlands, dolomite, flood line and double allocations would have to be closed off and new projects identified.

There were also problems with the NHBRC, who were still moving too slowly in the registration of projects. Other problems were encountered
where insufficient numbers of beneficiaries were approved by the municipalities, resulting in unoccupied houses, or houses occupied illegally with no proper beneficiaries identified. Where the number of beneficiaries was less than the number of units allocated to the project. These projects will have to be reduced to the number of beneficiaries approved and closed off.

Some of the dormant projects had problems that could not be resolved, and these would also need to be closed off and new projects identified, subject to the municipalities identifying the beneficiaries.

Mr Mojapelo concluded by saying that in the light of all the problems that they have faced, this Department had resolved to intensify the involvement of the NHBRC.

A Member noted that it had been
brought to the attention of the Committee that fraud cases had also slowed down the development in the region. The illegal occupation of completed housing units was another area of concern.

Mr Cyril Dlamini, Acting HOD, Mpumalanga Provincial Department, pointed out that there would have to be an intensive decentralising of project managers, and that this would hopefully solve the issue with the lack in progress in their department.

A number of Committee Members expressed their dissatisfaction with the comment that there were beneficiaries who had not been identified, primarily in block projects.

Mr Steyn pointed out that there was a problem with block projects that were being funded both provincially and nationally. It was unnecessary that a project be funded twice, and it was also of great concern that even after this had happened, the progress was still limited.

Mr Schneemann added that another problem indicative of recklessness in this department was the purchase of a huge amount of land that ended up not being used because of the geological factors and the dolomite problem. He asked if sufficient research had not been done regarding the land prior to its purchase. He also pointed out that people in the region were already living in similar areas, affected by building on dolomite, and he asked whether it was intended to move their houses or compensate them.

The Chairperson also queried the cash flow projections of the Department. She noted that specific attention needed to be given by the Committee to oversight of this Province’s progress and change.

The Chairperson also tendered apologies for the fact that the Committee had not yet been able to conduct an oversight visit, also in the light of the floods that had recently affected the region.

The Chairperson noted that this province had a lot of work to do, and their presentation was overall not satisfactory.

Eastern Cape
Provincial Department of Local Government and Housing presentation
Mr Toko Xasa, MEC for Housing, and Ms Nandi Sishuba, HOD, Eastern Cape Provincial Department, noted the challenges for this province. There remained insufficient housing in the rural areas even though funding was being offered for housing subsidies. In the last financial year, 6 432 fully serviced houses were completed but there was still a problem that the houses were completed without the plans for services.

It was noted that these challenges existed in the year of 2007/8, and this would be addressed by implementing new measures focussing on the development of housing and quality. Ms Sishuba noted that these measures would use established contractors within the province and the Department would also engage the NHBRC as part of the housing construction. Their capacity and involvement would speed up the progress.

Ms Sishuba added that the national department surrendered part of the allocations in 2007/08 and the allocation decreased from 76% to 68% in the revised budget allocation. The NHBRC had indicated that it was not happy with the progress.

Ms Dambuza pointed out that the figures showed how the Department was attempting to function with R34 million on just the rectification projects.

Mr D Mabena (ANC) noted that some people had been living in emergency housing since 2001, which he considered to be completely unacceptable. It was of prime importance that people should have sufficient housing and that their needs must be taken care of.

A Member enquired when the separation of departments would take place.

Ms S Sigcau (UDM) asked for clarification on projects where houses were already supposed to have been built.

Mr Schneemann (ANC) also drew attention to the national funding. He stated that the Committee need reassurances with regard to the remaining amounts and would have to be satisfied that it would be used well in the 2008/9 allocation. He said that it was unsatisfactory that not all funds were spent when the funding was intended for improvements.

Northern Cape Provincial Department of Local Government and Housing presentation
Mr Jacobus van Wyk, MEC for Housing and Ms Renita Soodeyal, Executive Manager, Northern Cape Provincial Department, noted that the allocation of funding in 2007/08 was R231,036 million, and that there had been 99.99% spending by 31 March 2008.The province was able to provide 2 464 houses, 5 116 fully serviced sites and 1 793 title deeds. With the additional R100million granted, the additional 1 377 houses and 1 120 sites were made available.

Ms Soodeyal explained that the transfers and expenditure showed variation, but there were reasons for this. The problems encountered included contractors who had died, encountering of very hard rock, which led to the changing of the normal foundation to a rock foundation for the houses.

Mr Steyn noted that the budget shortfall of around R31 million would either have to come from another province or from the national level and he asked the department what the plans were. There was also indication of a backlog in the presentation, but there was no evidence of this on the figures presented.

Ms Soodeyal noted that the budget shortfall of 2008/09 was due to incorrect budgeting, and that it was hoped that the Department would have received more funding either at a national or provincial level.

Ms Dambuza asked for an explanation on the blocked projects referred to in the presentation.

Ms Soodeyal gave an explanation of the backlogs.

Free State Provincial Department of Local Government and Housing presentation
Malefetsane Mafereka, MEC for Housing, and Ms S Dhlamini, Chief Financial Officer, Free State Provincial Department, noted that the challenges that were faced by the Free State included the fact that the township registers were not in place in municipalities, there were several different contractors, there had been bad weather condition and there was bad management of the beneficiaries that they had. This was to some extent being addressed by the Department having entered into servicing agreements with the municipalities before allocations were made. The Department had started intervention programmes in the major six towns to eradicate bad management.

Mr Schneemann asked about the contrast in spending which would effectively change from being R4million to only R200 000. He asked why this Department was having cuts in the next financial year.

Mr Steyn doubted whether the Free State would be able to spend its entire budget because it did not seem that they had much of a business plan. He asked when it came to light that certain municipalities were unable to spend all their allocated funds, and whether there could be the assurance that this would not happen again. He also noted that hardly any reference was made to the rural areas.

Mr Mafereka maintained that infrastructural development had been taking place in places such as Qwa-Qwa and Thaba Nchu. People in the region were also being given incentives such as job creation and being trained in the building sector to combat unemployment in the area.

North West Provincial Department of Local Government and Housing presentation
Mr M Iqbal Motala, HOD, North West Provincial Department, noted that this Department aimed to
focus on grant allocation, completion of houses, planned and approved projects in the previous year of 2007/08 and that the Department would further supply a summary of the plan for 2008/09.

He outlined the challenges faced as including bulk infrastructural difficulties and not enough funding from the municipalities. As a result the Provincial Department had used R100 million from next year’s grant allocation to fund development and internal services.

Mr Mabena drew attention to the fact that there was no mention of any hostel development.
Mr Schneemann also mentioned how the houses in the Winterveld area had only one door, which was contrary to municipal regulations. This should already have been rectified.

The Chairperson concluded that this area had to be addressed and the failure to do so was not at all acceptable.

National Urban and Reconstruction Housing Agency (NURCHA) presentation
Mr Cedric De Beer, Managing Director, Nurcha, gave a brief presentation in which he primarily brought attention to the aims and goals of Nurcha. Nurcha was a Section 21 company which aimed to ensure the availability of bridging finance to small, medium and established contractors building low and moderate income housing and related community facilities and infrastructure.

The meeting was adjourned.

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