Department of Housing strategic plan 2008/2011; Social Housing Bill: Discussion around Mandates

NCOP Public Services

20 May 2008
Chairperson: Mr F Adams (ANC, Western Cape)
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Meeting Summary

The Department of Housing tabled the strategic plan and budget for 2008/9. It was noted that the Department had seven strategic areas that underscored the interventions into housing development in South Africa. These included capacity, delivery acceleration, improving understanding of policies, eradication of informal settlements by 2014, sustainable communities, better management of priority housing projects through building closer collaboration, establishing quality housing institutions and greater clarity on rural and urban policies. It was noted that the Department needed to maintain open lines of communication and work on the relationships between all spheres of government. Details of the various programmes were included. The budget of the Department was structured around four programmes, with a total budget for 2008/9 of R10.5 billion. The budget was dominated by transfer payments, which accounted for 95% of the allocation, and the increases were due to transfers to provinces under the integrated housing and human settlement development grant. An analysis of expenditure trends and a detailed analysis of estimated outputs per subsidy instrument were given.

Members sought clarification on the interventions by the Department to curb spiralling costs, expressed their concern that most of the budget was taken up by transfers to the provinces but that they were consistently underspending, and asked about capacity to monitor. Further concerns were expressed by a number of members about the inferior material being used by property developers, the accreditation processes, the tracking mechanisms and what steps were being taken to ensure that contracts were not awarded to those contractors with a poor track record. The difference between the old and new Housing Codes was requested, as also whether the targets could be met in light of the budget, and clarity was sought on the housing rental and backyard dwellers. Other questions related to farm workers housing and evictions, why commitments made by Ministers had not been honoured in the Eastern Cape, the Department’s own vacancy rate and retention policies, and the Joe Slovo community action against the Department.

Members were to discuss the mandates on the Social Housing Bill but there was some confusion as to whether these were negotiating or final mandates. The matter stood over to the next week.

Meeting report

Department of Housing (DOH): Strategic Plan 2008/11 Briefing
Mr F Adams (ANC, Western Cape) was elected as the Acting Chairperson.

Mr Mziwonke Dlabantu, Chief Financial Officer, Department of Housing, apologized to the Committee for the Director General’s absence, as he had been called to an urgent meeting with the Minister.

The strategic plan was tabled before the Committee, and Mr Dlabantu and his team indicted that the Department had seven strategic areas that underscored the interventions into housing development in South Africa. The focal areas included capacity, and gearing-up for delivery acceleration, and the need to improve the understanding of the policies. Practitioners in the housing field across all spheres of government had to understand the changes.  Other focal points remained as eradication of informal settlements by 2014, the fact that housing development must lead the delivery process for community basic services and create and enable communities to live a sustainable livelihood.

The Department needed to explore and adopt alternative approaches to better manage priority housing projects like Zanemvula, N2, and the Khutsong project. The latter was underpinned by the need for an inclusive approach in carrying out the departmental mandate and building close collaboration between both Provincial government and municipalities. This would allow the Department to exercise oversight over and monitor the delivery of housing projects. Finally, the DOH was to ensure the establishment of housing institutions, their accountability and the quality assurance. At the policy level, the Department of Housing aimed to provide greater clarification on the rural and urban housing policy to expedite housing development delivery. It also tried to maintain open lines of communications to improve relations between all spheres of government and engage with other stakeholders in the housing sector.

Mr Dlabantu indicated that the Budget of the Department was structured around the four programmes of Administration, Policy Research and Planning; Housing Delivery Support and Housing Development Finance. The total for budget for 2008/9 was R10.5 billion, and this was broken down into economic classification areas. The budget was dominated by transfer payments, which accounted for 95% of the allocation, and the increases were due to transfers to provinces under the integrated housing and human settlement development grant. An analysis of expenditure trends was given. Finally there was a detailed analysis of estimated outputs per subsidy instrument (see attached document)

Discussion
Mr L Van Rooyen (ANC, Free State) sought more clarification on the nature of the intervention that the Department would undertake to curb the spiralling cost on input in the construction industry. Inputs were driven by supply and demand which was regulated by the market. He also noted that the budget of the Department was predominantly consisting of transfers to provinces but the provinces had been under-spending the grants. He sought clarification on whether the Department had the capacity to monitor the expenditure at provincial level. The Department had had 19% growth in their budget but the housing backlog was serious.

Mr Dlabantu said that property development globally had shifted from a developmental approach to a destination positioning, where countries were building sophisticated and fancy buildings. The focus in the global construction industry was about earning huge profits. South Africa was competing against such interests, hence the escalating prices inputs.

Mr Dlabantu then indicated that the intention of introducing the delivery support directorate was to ensure the provincial support and expediting of housing development at provincial level. The latter was prompted by the engagement with provinces that had checked what were the inhibiting factors to housing development. The Department had had to prioritise Eastern Cape, Mpumalanga and Free State, to minimise the risk of under-spending by those provinces. The provinces were identified due to their high risk and the Department applied Section 100, which allowed the Department to intervene directly at provincial level. In terms of quality assurance, the National Home Builders Registration Council (NHBRC) worked in tandem with provinces in the development of housing and their mandate was to ensure that good quality houses were built that complied with engineering standards. The departmental team admitted that the housing backlog was enormous and the budget was too limited to fulfill all the needs on the ground. For the Department to deliver at full capacity, it would require a concomitant increase to the budget. 

Mr A Watson (DA, Mpumalanga) noted with concern that the housing delivery at provincial level was in a shambles. He was concerned about property developers using inferior material. This meant that the Members were often confronted by community members who were angry at the quality of the houses that were delivered to poor people. He sought clarification on the accreditation process for municipalities to manage their housing development.

Mr Dlabantu indicated that accreditation of municipalities to undertake their housing development had been slow, due to the lack of capacity at municipal level to undertake this responsibility. It was difficult to devolve the powers in such a situation because the municipalities were not ready. In terms of quality assurance, he repeated his remarks about the NHBRC. If houses had been built that were sub-standard, the NHBRC had demolished such houses.

Rev P Moatshe (ANC, North West) sought clarification on the Department’s project tracking mechanism, the impact of rising input cost against the housing development and the difference between the old housing code and the new housing code.

Mr Dlabantu responded that the project mechanism allowed the Department to track the progress of projects at the provincial level. This arm of the Department had not been strong enough, due to lack of internal capacity, hence the introduction of the delivery support directorate to facilitate better monitoring by the Department. The Department had revised the Code because the previous code was introduced in 1990 and it did not work in the interest of development in South Africa. The old Code was depicted in the development approach of RDP houses. The new Code was based on integrated human settlements and it was responsive to the developmental approach that the government was now taking.  

The Chairperson enquired whether the Department managed to meet its targeted outputs in terms of the strategic planning against the available budget. He also sought the views of the Department on the housing rental and backyard dwellers.

Mr Dlabantu said that for the Department to deliver fully, it would require a larger increase in the budget. The issue of backyard dwellers was a controversial and complex matter in the housing development arena. The research that was undertaken by the Social Housing Foundation revealed various dynamics ion the matter, one being that there should be distinction between backyard dwellers and backyard rentals. The owners of the houses used the backyard dwellers to generate revenue, and the more dwellers they had the better the revenue. The serious challenge confronting the Department was the fact that planned township development was allocated a certain infrastructural capacity. When additional dwellers moved in, the capacity became stretched beyond what it could carry and was thus overburdened. The approach the Department had taken was that both the dwellers and rentals must be on the demand management database, to ensure that they had equal access to housing. The Department would share the research undertaken by the Social Housing Foundation and the results.

Mr Van Rooyen enquired about the progress made by the Department with regard to the farm workers’ housing development policy, which was supposed to mitigate the problem of workers being evicted by farm owners. He also sought information on the vacancy rate in the department.

Mr Dlabantu indicated that the policy development was at an advanced stage, and the commitment of AgriSA has been secured, as had that of other critical stakeholders.

Mr Dlabantu said that the vacancy rate was on the decrease and the Department had completed its restructuring, so there was more stability in the department.

A Member indicated that he had been struggling to get the NHBRC report on the provincial housing developments to assess the projects that had been approved by the Agency, and the basis of the approval.

Mr Dlabantu said that the real problem lay with the provinces in regard to housing development, because the provinces would receive grants from the National Department. Often provinces did not plan jointly with NHBRC, nor did they inform the Agency of the housing development project. Joint planning would allow the agency to attach capacity to the project and ensure ongoing monitoring of quality. The engineering standards did not change but monitoring systems were an inhibiting factor. The Department had commissioned investigations into a lot of projects in the country, and would be prepared to prosecute where discrepancies were found. He admitted that the poor quality of houses was a signal of intergovernmental problems. The Department was not entirely pleased with the capacity of staff who undertook the work. As a result of the Departmental restructuring it was hoped that the situation  this kind of work. As result of the departmental restructuring, and with the involvement of NHBRC, this situation would improve.

Ms H Matlanyane (ANC, Limpopo) also expressed similar concerns. She enquired what mechanism that the Department was applying to deal with the land problem.

Mr Dlabantu replied that the Department would where possible use the land owned by parastatals and the State, but the Commission for the Restitution of Land Rights handled land resettlement. 

Ms M Olifant (ANC, KwaZulu-Natal) expressed concerns at the inability of the Department to fulfill the commitments undertaken by Ministers in the imbizo. For instance, in the Thabo Mbeki project in Quakeni, Eastern Cape, the Minister promised the community that this project would be completed before the end of 2007. The buildings were still incomplete. Ms Olifant also sought clarification on the under expenditure problems in Eastern Cape and KwaZulu Natal.

Mr Dlabantu noted that the commitments that were made by the Minister were supposed to have been fast tracked by the Province, and not the national Department, because the Province would have received a grant to undertake such projects. There was a perpetual problem of under-spending at provincial level, and this was one of the reasons that the Eastern Cape had been identified as a high risk area and prioritized. The Department would still also continue to support the provinces that had not been prioritised; there was still risk here too but the extent of the risk was less.

Ms Olifant complained that the provinces continued to grant housing tenders to construction companies that had no capacity, and that were known to have previously used inferior materials to build houses for communities.

Mr Dlabantu said that the Department had compiled a database of contractors in the construction industry and once they had been found to be involved in unethical conduct, they would be blacklisted.

Ms Olifant also sought information on whether the Department had a retention strategy to keep the senior and skilled staff, commenting that there was a high turnover of staff.

Mr Dlabantu said that the Department had a retention strategy, using the public sector parameters, but was competing against the private sector all the time. The approach was to work smarter and create a vibrant environment to retain highly skilled staff.

The Chairperson sought the views of the Department regarding the Constitutional Court case by the Joe Slovo community, asking whether the Department was ready to deal with the consequences if the Court were to rule in favour of the community.

Mr Dlabantu indicated that the delivery policy of the Department was, by and large, fair and was one that sought to embrace the Constitutional mandate of the country. The Department had a plan for any court outcome.

Social Housing Bill: Final Mandates
There was some discussion between Members whether what was being presented were negotiating or final mandates.

The Committee came to the conclusion that there had been a procedural oversight in the processing of this Bill, which had led to confusion in the meeting. After the negotiating mandates, there had not been discussion of the amendments proposed by the different provinces. The nature of the amendments to be included in the Bill was not certain.

It was decided that the matter stand over to the following week for further discussion.

The meeting adjourned.

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