Medium Term Budget Statement briefings by: Department of Housing, Land Affairs, Agriculture & Water Affairs & Forestry

Meeting report

Medium Term Budget Policy Statement (MTBPS): Departmental Hearings
Department of Land Affairs presentation
Mr Thozi Gwanya, Director-General and Ms Catherine  Motsisi, Acting Chief Financial Officer, Department of Land Affairs briefed the Committee on the effect of the 2008 Medium Term Budget Policy Statement (MTBPS) on their Department. They firstly set out the medium term sector and Departmental policy priorities. It was noted that after 11 years, the White Paper on Land Policy had to be reviewed to adequately address the current challenges of land reform implementation and that a new policy, the Policy to Regulate Land Access by Non-South African citizens had been implemented. This would create mechanisms for the disclosure of land holdings by non-residents and certain juristic persons and the scope of authority for the imposition of land ceilings and the State’s right of first refusal with regard to certain “controlled” land, most notably, prime land.

The Department of Land Affairs (DLA) had started with a review of the Willing Buyer-Willing Seller Principle and the draft document emanating from the review had proposed various options, which would be researched and analysed as to their potential efficacy, constitutionality and legal viability. It had also commissioned a study on the introduction of a Special Land Tax, which would be aimed at taxing farmers who had farms, but who failed to cultivate these. The Department was also in the process of developing guidelines that would assist municipalities in the implementation of such a special tax.

Insofar as progress in meeting the Measurable Objectives as per the Estimates of National Expenditure 2008, the Apex Priorities and the Millennium Development Goals (MDGs) were concerned, The Ministry of Agriculture and Land Affairs had developed the Land and Agrarian Reform Programme (LARP), which would function as the overarching programme between the National DLA and Department of Agriculture (DoA), and the nine provincial Departments.

The DLA had made significant progress in the spending the budget allocation for land acquisition, but the projected target of 2,5 million hectares would not be met due to insufficient resources, high land prices, capacity constraints, a lack of appropriate funding models and a lack of post-settlement support to new farmers, which had been deemed critical for sustainable land and agrarian reform.

The DLA had failed to deliver on all its projected policy directive targets as it had indicated in its annual report that 150 000 square kilometres of updated topographical data would be captured, but only 47 500 square kilometres had been achieved or covered. In the case of restitution applications, 165 rural claims out of a total of 3 485 had been settled, with 283 991 hectares of land being distributed for land reform out of a total target of 647 125 hectares.

However, it was noted that the DLA had managed to spend most of its budget for the past five years, recording an average of around 90% spending patterns. The financial performance tables showed that between April and September 2008, DLA had spent R1,45 billion on land reform from an allocated budget of R2,88 billion, and R1,77 billion for restitution from an allocated budget of R3,09 billion.

Mr Gwanya then described the adjustment estimates. The DLA had submitted a Memorandum that requested an amount of R2,5 billion, which was intended to fund the Restitution Programme to the tune of R2,2 billion, required R13 million for the implementation of the new Surveyor General Offices in the North West and Eastern Cape Provinces, R102 million for land reform compensation, goods and services and R137 million for Information technology, security, recruitment support and employee wellness programmes. The request had been turned down by the Treasury and would have the result that the finalisation of restitution claims and support services required within the DLA would have to be halted. Although Land Reform had been emphasized as a Presidential Priority, the DLA would not be able to redistribute 5 million hectares of prime agricultural land within the next two years, and furthermore the settlement of 3 800 potential remaining restitution claims would not be met over the three years due to the lack of funds. The shortfall on the baseline allocation for Land Reform of R 3,167 billion, which was intended to ensure that 30% of white-owned agricultural land was distributed to black people by 2014, would not be met.

Discussion
Dr D Gumede (ANC) asked why the DLA had not considered buying land through the normal property market.

Mr Gwanya replied that the instruments that governed land acquisition had been based on certain legislative instruments, which did not enable the DLA to buy directly from the market. Instead, a proactive land acquisition strategy had been developed that would make it possible for the DLA to buy land directly from the market. He said that the Report by the DLA spoke to the reality of the challenge of linking beneficiaries to acquired land.

Ms J Fubbs (ANC) said that the shortfall on the baseline that had been required for restitution was not a financial problem as indicated by the DLA, but spoke volumes of the complexities that persisted within the Department. She added that then-President Mbeki had called for a finalisation of the land restitution process, but it now seemed as that would not happen soon, despite the DLA having access to donor funds that it did not use to its advantage. She said that it seemed that the lack of capacity within the DLA had impacted on its service delivery objectives as this Department had admitted that the 2014 target for equitable land redistribution of 30% would not be met. The Department had also not managed to get a proper asset register and had expressed concern at the fact that foreign owners were buying more land, and yet it did not have adequate funding to buy identified land.
 
Mr Gwanya said that the planning of the administration had been informed by the political direction and not the other way around, and that 30% had historically been a target that had been debated by the ANC, even prior to 1994. The target was subsequently adopted after1994 and had thus informed the policy directives of the DLA.
He added that these policy directives would be informed by the ruling party and that the 30% was thus a figure presented to the DLA, as it had been considered a major policy directive by the ruling party’s political manifesto. It was not based on reports that had been issued to the DLA and that there had no discussion to reduce this to 7%.

Ms Fubbs replied that Mr Gwanya was out of order, as the administration had been tasked to implement government policy and that it seemed that the Department was acting as if it was outside of government. She noted that the DLA should provide adequate responses and not be in denial, as they were part of government.

Co-Chairperson Ms L Mabe (ANC) agreed with Ms Fubbs, and said that policy directives had been influenced by political decisions, and that the DLA had no right to lecture Members on targets as it had been tasked with the implementation of government policy, not with questioning or altering such policy.

Mr Gwanya replied that the DLA indeed considered itself as part of government and that the intention had never been to lecture Members nor to blame a specific political party for the challenges that the DLA faced, but only to highlight the fact that the 30% target would not be met by 2014.

Ms Fubbs noted that the DLA had to be truthful and identify the real constraints to adequate and proper service delivery, and then find options and possible solutions, in conjunction with the political heads of departments, to these constraints.

She added that the DLA’s defeatist attitude and notion that the 30% target for 2014 for equitable land distribution, as emphasised in the ruling party’s political manifesto, had been imposed on them created a feeling that there was no passion and no sense of conviction within the Department. The Department must show commitment to the pertinent policy directives contained in that political manifesto. These directives were critical pillars on which the ANC had been built.

Mr M Sogoni (ANC) noted that the admission by the DLA that it would not meet the 2014 target for land restitution was just another addition to the long list of targets that had to be revised owing to government departments not delivering on their mandates.

He added that there was a duty on Members to perform proper oversight and to ensure that policies and programmes had been implemented before their term of office expired.

Mr M Swart (DA) noted that a couple of years ago he wanted to sell a farm to the DLA, but eventually had decided to sell it to a private buyer as the DLA had lost the documents on several occasions and had failed to communicate with him on this matter. He said that the DLA would continue to receive less money from National Treasury if it continued to perform badly.

He added that the DLA should not mislead the President and the nation on whether it would meet the land redistribution target by 2014 if it had been aware that the target was not going to be achieved.

Mr Mduduzi Shabane, Deputy Director General: Land and Tenure Reform, DLA, said that it was regrettable that Mr Swart had been subjected to this behaviour by the Department and that he would personally “investigate” the matter

Mr C Greyling (ANC) asked whether there would be a review of the willing buyer / willing seller policy currently being pursued by government, and when the process would be finished.

Mr Gwanya replied that that the task team had circulated a draft document and that it would be finalised by the end of November.

Mr Greyling asked why the National Treasury had turned down the DLA‘s request for R2, 5 billion and whether the Department had any contingency plans.

Ms Catherine Motsisi, Acting Chief Financial Officer, DLA, noted that the DLA had exhausted the funds acquired through the National Treasury and that the DLA had run into an overdraft scenario. This led to the national Department having to issue instructions to the provincial Departments of Land to halt land claim processes and settlements. The outstanding claims would be put through on a month-per-month basis, depending on the financial basis. She added that a meeting was held with the Budget Committee within the National Treasury, who gave an assurance, through a Memorandum of Understanding, that it understood the dilemma faced by the DLA and that it would provide the funding. However, this was not done and no reasons were given as to why the request had been turned down.

Ms Mabe said that South Africa could not be compared with countries like New Zealand and Australia, as South Africa had a different background. She added that the DLA could not continue to complain that foreigners were acquiring more land in South Africa, as they operated under the assumption that the new ANC government would stop them from acquiring land. She asked what the DLA itself had done or was still going to do to address this.

Ms Mabe also noted that the DLA had to stop trying to justify their problems and attribute them all to a lack of funding. The real problem was a lack of capacity within the Department.

Mr Gwanya said that the presentation had highlighted that the DLA faced both a financial and capacity problem, but that the lack of funds was the biggest challenge. He said that land had become available but, due to a lack of funding, the DLA could not acquire this land. On the capacity constraints, he added that the Department – similar to the entire country – had a shortage of land surveyors and land valuators that had led to it having to outsource and that for these reasons the Department would not be able to meet its obligations at the end of November.

Mr G Schneemann (ANC) noted that the targets and statistics issued by government departments were used by the Presidency, and he asked whether these targets and statistics had been projected to pacify certain sectors of the community or whether the Department had genuinely believed they were achievable. He supported Ms Mabe’s and Ms Fubb’s stance that the problems could not be attributed purely to a lack of funding.

Co-Chairperson Mr E Sogoni (ANC) said that the DLA Annual Report had painted a very bad state of affairs and that critical vacancies and the lack of a proper spatial planning programme were serious challenges that had to be addressed.

Mr Anton van Staden, Acting Deputy Director General: Corporate Services, DLA, replied that the vacancy rate had been 30% about two or three years ago and that the DLA had initiated a programme then that reduced the vacancy rate to 12%. The DLA had developed a structure that had been approved by the Minister of Public Service and Administration, which would enable the DLA to conduct job evaluations and implement other strategies that would assist in building capacity and skills within the Department. He added that the DLA further had initiated a several projects such as LLB graduate training, and the introduction of a Deeds Training Programme through which South Africans from all walks of life, with a focus on disabled individuals, could access. The DLA had also trained 182 unemployed youths to conduct on-site audits of all State land and these people had subsequently been appointed as permanent DLA staff.

Mr van Staden noted that the DLA had an agreement with the Universities of Kwazulu Natal and the Western Cape to train twenty land surveyors per University, as otherwise South Africa would not have any land surveyors. He added that spatial planning had also become a priority area for the DLA, but that a request for R11 million to drive this programme had been turned down by the National Treasury.

He concluded that an internal skill audit had been conducted by the DLA that addressed the issue of staff not communicating properly with the general public, and that a skills development strategy had been developed in conjunction with Universities of Wits and Pretoria.

Mr Sogoni asked whether the DLA had considered other mechanisms to fast-track land reform and the implementation of a post-settlement support programme for emerging farmers, as he noted that many new black farmers failed to be productive due to a lack of adequate support. Mr Sogoni pointed out that although at first sight the DLA expenditure pattern looked good, with over expenditure of 101 % on land and subsoil programmes, yet constituents still complained about not receiving any funds from the DLA.

Ms Motsisi replied that the over expenditure had been due to unavoidable and unforeseen circumstances, and that the DLA would be prioritising from within to address the shortfall.

Ms Marissa Moore, Director, National Treasury, replied that the money had been shifted from land reform to the pro-active acquisition of land, hence the 101% over expenditure. The DLA had indeed requested the money. However, spending on unforeseen or unavoidable instances could not be included in a budget for a financial year. Funds for unavoidable or unforeseen instances would only be made available if needed for natural disasters or any other crisis, and could thus not be included in a budget as an estimated expenditure.

Mr Gwanya noted that most of the outstanding money related to development grants and business plans, and that the Department of Agriculture had been engaged to assist the DLA with its planning.

Ms N Mfeketo (ANC) said that there was a need for a common understanding of objectives between the DLA and the Government, so that there could be clarity on policy directives and subsequent priority statements emanating from those policy directives.

She added that skills training and acquisition should not only be conducted with tertiary educational institutions, but with the broader society as well.

Mr Swart suggested that the DLA had to discuss and propose concrete recommendations to address the issues highlighted by the Committee, and to relay these back to the Committee in writing. He warned that if this did not take place then South Africa would be confronted with a case scenario that could be worse than events in Zimbabwe.

Mr Schneemann objected to this proposal, and said that the medium term budget statement debate, where the Expenditure Policy would be discussed, was fast approaching. He did not think that this Committee could participate in the debate knowing that the DLA was in disarray. A comprehensive plan was urgently needed that addressed issues such as reprioritisation and institutional matters and that explained how the DLA would implement its policies over the next three years.

Mr Sogoni noted that the incompetence in the DLA had to be addressed, as well as a review carried out on how much the DLA spent on travelling, consultants and entertainment, as it was necessary, in his view, to realign financial priorities and put emphasis on proper and adequate planning.
 
National Department of Agriculture (NDA) presentation
Ms Njabulo Nduli, Director-General, National Department of Agriculture, and Mr Tommie Marais, Chief Financial Officer, Department of Agriculture,  briefed the Committee on the Medium Term Budget Policy Statement and the performance of the National Department of Agriculture (NDA) against measurable objectives for 2008/2009.
The figures for the adjusted budget for 2008/09 were tabled and explained (see attached document). Mr Marais
said that NDA had requested R419 398 million for Extension and Advisory services, Import/export inspections, goat productivity improvement programmes and coordinated job evaluations, but that only R130 million had been allocated to fund these programmes. He added that funds for disaster relief and veld fires, which had been at R148 million and R100 million respectively, had not been allocated.

He said that due to the budgeting constraints brought on by inadequate funding the NDA would not be able to build the Quarantine Station in Durban, nor would it be able to adequately assist areas where a natural disaster or veld fires might break out.

Ms Nduli then briefed the Committee on the performance of the NDA as against its measurable objectives. She said that the agricultural sector had been going through a harsh period due to rising global challenges such as natural disasters and the ever-increasing uncertainty of food security and rising commodity prices. She added that many municipalities did not have the capacity to adequately offer post-settlement support to new farmers and that the NDA’s budget had been aligned in such a manner that it could address the issue of post-settlement support.

She added that the NDA had committed itself to finding solutions and alternatives to pressing issues, such as a substantial increase in agricultural production and enhancing South Africa’s ability to develop vaccines to control the outbreak of diseases such as swine fever, as also its capacity to deal with locust outbreaks.

Ms Nduli noted that in the programmes for Livelihoods, Economics and Business Development, the NDA had intended to provide 7 000 farmers and entrepreneurs with access to financial services, give support to 80 000 Land and Agrarian Reform beneficiaries and to distribute agricultural starter packs to 140 000 households. The NDA had so far disbursed R400 000 to 29 clients in the Eastern Cape, and had completed 127 projects with 3 496 beneficiaries, with 1 924 production packages being distributed in Mpumalanga and 702 in Gauteng.

She noted that the NDA had also wished to facilitate 100 entrepreneurs, to implement three commodity strategies that incorporated Broad Based Black Economic Empowerment (BBBEE) and to establish eight interventionist and support frameworks. To date, the facilitation of the Small, Medium and Micro Enterprise (SMME) Excellence Model as a business skills intervention was still being drafted. The Cotton Strategy had been completed, but facilitation work on the Grains, Potato and Flower industry strategies was still ongoing.

Ms Nduli said that the NDA had specified that it aimed to publish sixteen economic reviews, eight topical reports and six statistical reports, but had only managed to publish one economic review, with another one in progress, and four topical reports were in progress, with four statistical reports having been published.

She said that the NDA had indicated in its Annual Report that it would approve a food safety programme for South Africa, an Agricultural Climate Change sector plan and a Primary Animal Health Care Programme. She added that various stakeholders, including the agricultural industry, had made inputs into the development of the food security strategy and that the report would only be released once it went through a consolidation process. The Draft Climate Change Sector Plan had been gazetted for further comments from provinces and other interested parties.

Discussion
Ms Mabe commented that the Department of Agriculture had painted a rosy picture, yet the reality was that there was a major challenge in the form of a lack of extension officers, especially in rural areas.

Ms Fubbs said that at one stage the DLA had indicated it would train 10 000 unemployed people, yet only 800 had since come through the ranks. She asked whether mechanisms had been put in place to address the issue of extension officers.

This question went unanswered.

Dr Gumede said that the definition of absolute poverty had to be revised, as the NDA’s definition had been in line with that of Bretton Woods, yet the developmental approach to poverty advocated that it must be contextual.
He added that living on less than $1 a day could not be used as a yardstick, as factors such as individual poverty and rural poverty had to be taken into account.

Dr Gumede asked whether the NDA had budget for essential skills acquisitions, as it needed economists, engineers, extension officers, and other vacancies over the next three years.

His questions went unanswered

Ms Mabe asked whether transfer payments from the National Treasury assisted the NDA in achieving its objectives.

Mr B Bopape, Acting Chief Operating Officer, NDA, replied that there was definitely a need for an alignment of provincial and national expenditure, and that administration capacity had to be provided to provinces. Strategic Planning, Monitoring and Evaluation had to be strengthened in order to identify clear and realistic targets.

Mr Schneemann said that much had been said about the lack of support by the NDA for emerging farmers and asked whether the NDA had a comprehensive strategy that adequately addressed this.

Mr Schneemann said that emphasis had been placed on people having to grow their own food due to the rise in production costs. He asked whether the NDA had devised or implemented a policy that would assist South Africans in producing food for self-consumption.

Ms Nduli replied that some of the domestic institutions that supported the critical agriculture had nearly collapsed and that the NDA had to contend with the realisation that agriculture was beset by failures and that a review of allocated finances to the NDA was necessary. She added that at that rural communities were not producing enough crops to sustain themselves during the food crisis. National Treasury had indicated that intervention in food security would not come through a change in policy, but there was a need to ensure that South Africans were able to produce for own consumption.

Ms Mabe asked how the NDA ensured optimum usage of its infrastructure. She had heard of a newly built veterinary clinic that had not been operational as there was a lack of surgeons and other constraints. The staff at the Clinic had indicated that the NDA failed to communicate with them on several critical issues, including what they had must do, as no functions had been performed despite the Clinic having some staff.

Ms Mabe also asked what the NDA intended doing about the inadequate services provided by extension officers in some provinces, if at all.

Ms Mabe asked which entity exercised oversight over the Land Bank, and to what extent.

Ms Nduli replied that The Land and Agricultural Development Bank of South Africa (trading as Land Bank) was a parastatal that had working relations with the Ministry of Agriculture and Land Affairs. The financial statements of the Bank had been reviewed annually by the Auditor General and presented to Parliament by the Minister.

Mr Sogoni asked for an explanation on the Comprehensive Agricultural Support Programme (CASP) allocated budget.

Mr Bayete Ndlaleni, Manager: CASP Programme, NDA,  said that capacity within the CASP programme had been strengthened with forty people on the ground to check projects as well as a team that periodically visited provinces.

Mr Sogoni commented upon the case involving the Department of Land Affairs, where apparently the legal advisers had given an opinion that the case was not winnable, yet R21 million of taxpayer’s money had been wasted.

No specific comment was made on this matter.

Department of Water Affairs and Forestry (DWAF) presentation
Ms Pamela Yako, Director General, Department of Water Affairs and Forestry, noted that the Department of Water Affairs and Forestry (DWAF) had four medium term sector and departmental policy priorities, namely, Administration, Water Resource Management, Water Services and Forestry. In respect of each, she set out the particular objectives and achievements. She did not comment on the administration priority, referring Members to the document (see attached document). In respect of Water Resource Management, she noted that this had been identified as an Apex priority, to ensure that allocated water resources promoted social and economic development. There had been completion of compulsory license processes in five catchment management areas (CMAs) in 2008/09. To date verification processes had been completed in Umhlathuze and Jan Dissels areas.

The Water Services Programme had been conceptualised to ensure that all South Africans had access to a functioning basic water supply facility and a functioning basic sanitation facility by 2014. Between April 2004 and September 2008 just over 5,5 million people had been served with water and over 8 million with sanitation. 162 schools had been served with water, with another 171 being under construction.

Ms Yako noted that the key output for Forestry had been to ensure the sustainable management of all forests, woodlands and plantations through the enforcement of the National Forests Act and associated legislation and regulations. The DWAF had developed criteria, indicators and standards for the sustainable management of indigenous forests and commercial forestry that would ensure environmental and social responsibility whilst promoting economic viability.

Ms Yako said that the MDG target, to halve the proportion of people without sustainable access to an improved water source and sanitation by 2014, had been exceeded as 3 684 204 people had been served with water as at March 2008 and 2 741 437 had been served with adequate sanitation.

Ms Yako moved to discuss the expenditure trends in the Department, tabling detailed graphs and noted (see attached document).

She then highlighted the challenges. These were serious, and included water quality issues, water losses, the impact of land reform on commercial forestry and the capacity of local government to deliver on service delivery directives. 

Discussion
Ms Fubbs asked whether the DWAF’s expenditure woes would continue into the new medium term budget. She was interested to hear whether there was an integrated approach to service delivery between the Department of Water Affairs and Forestry, Education (DOE) , Housing (DOH), Land Affairs (DLA), Provincial and Local Government (DPLG) and Agriculture (NDA).

Ms Yako replied that the issue had been raised with the South African Local Government Association (SALGA) and that a forum had been proposed where the DWAF, DPLG, SALGA and municipalities could decide on the best way forward, and that input had been given as to how best to revise the current system that was riddled with institutional and capacity constraints.

Ms Fubbs asked why the DWAF had under-spent and whether it had budget for retaining critical skills.

Mr Onesmus Ayaya, Chief Financial Officer, DWAF, said that the DWAF would continue to have a vacancy rate if the issue of funding was not resolved.

Dr Gumede asked how the DWAF balanced the needs of competing forestry enterprises that led to dry river beds and as a result deprived some communities, especially poor and rural communities, of water for domestic consumption, irrigation, watering holes for animals and fishing.

Dr Sizwe Mkhize, Deputy Director-General, DWAF, said that in the future there would be no single purpose dams and that communities living close to water resources such as dams and rivers had to benefit from those resources, rather than these communities suffering while farms kilometres distant did benefit.

Dr Gumede asked whether the DWAF had a plan that would ensure that underground resources would be protected from the rise in mining activities.

The question went unanswered.

Mr Schneemann said that the DWAF had a major problem with water infrastructure and asked to what extent the DWAF had interacted with the Department of Provincial and Local Government (DPLG) and with municipalities on this matter.

Mr Schneemann also expressed concern at the high vacancy rate and asked when these vacancies would be filled, and whether these vacancies were affected by the allocations under the MTBPS.

Mr Sogoni said that when the National Council of Provinces (NCOP) visited the North West, it noted that  several municipalities had problems in delivery water services and he said that engagement with the DPLG was necessary to determine who was actually responsible for water service delivery.

Ms Yako replied that the DWAF had supported municipalities on many levels where water infrastructure had been concerned, and that a Municipal Indaba had been held to address the issues raised by municipalities. The outcomes of the Indaba would direct the DWAF on what had to be done.

Mr C Wang (ANC) asked for the background to the SAP accounting system, and how and when it would be implemented and whether this would be a national or provincial competency.

Dr Mkhize said that the SAP had been operating within DWAF since 2003, and was used as a mechanism to monitor and assess the reporting requirements of water trading entities and the main exchequer account. This SAP was installed in all provincial DWAF offices and that R240 million had been spent, since its installation and implementation, on the hardware licensing, systems support and other related priorities.

Ms Mabe said that many rural areas had reported silt-filled dams and that the DWAF had indicated that it would be too expensive to rehabilitate such dams. She stated that the DWAF had to come up with other alternatives, especially in terms of job creation. She further added that the information provided by the DWAF on the success of installing taps should be questioned, as the mere fact that taps might be in place did not necessarily provide access without the necessary research on the quality and sustainability.

Ms Yako said that the sustainability of water supply had been a critical policy issue for the DWAF and that other sources of supply included an extension of the water mix and the desalting of seawater in seaside towns. She added that this came down to an issue of costs, and that the impact of alternative sources of supply on the nation was also taken into account.

Dr Mkhize noted that the filling of dams with silt was one of the side effects of erosion and that the DWAF had to ensure that people on the ground did what had been expected of them in order to avoid this or to minimise the impacts. 

Mr Ayaya added that water service entities were not allowed to supply water of bad quality and that they monitored the water quality on a continuous basis.

Ms Mabe asked why the DWAF only had agreements with academic universities and not with universities of technology.

Ms Yako replied that the DWAF had a learning academy where technical skills were taught, and that measures had been implemented to attract scarce skills. The Working for Water Programme had covered thousands of hectares as well as providing employment. These statistics would be forwarded to the Committee.

Ms Mabe said that she failed to see why certain entities had been granted water rights, despite water inspection reports indicating that the water quality was generally poor.

Ms Yako replied that the DWAF had experienced problems with ongoing maintenance and asset management, and that the weakness had been in the monitoring system that dictated compliance. She said that at the moment the DWAF did not conduct the monitoring.

Ms Yako added that water allocation had been closely aligned with land reform as the DWAF had to assist emerging black farmers, but that more scrutiny was necessary to prevent water rights owners from selling those rights separately after they had sold the land to the NDA. DWAF had a standing agreement with the NDA and DLA that it would report suspicious selling of water rights.

Mr Sogoni asked to be briefed on what the DWAF had done to address the issue of sanitation, and whether the policy had been drafted in consultation with the Minister of Environmental Affairs and Tourism.

Ms Yako said that the DWAF had been looking at the issue of sanitation and that clean sanitation facilities had to be environmentally friendly.

Department of Housing (NDoH) additional presentation
The Department of Housing had been asked by the Committee to return to brief the Committee specifically on certain further issues identified during the first meeting.

Mr Itumeleng Kotsoane, Director-General, NDoH) gave the performance indicators. He said that during the 2008/09 financial year 113 761 houses had been completed or were in the process of completion, as compared to the target of 226 471. No units as part of the rental programme had yet been completed. It was noted that that the outcomes had been in line with the projections by the National Department of Housing. He referred Members to the more detailed information on performance indicators (see attached document).

In respect of the comments around inadequate housing and Millennium Development Goals (MDGs), Mr Kotsoane noted that it would be difficult for the NDoH to reach the MDGs as 2,2 million South African households lived in inadequate housing. The problem had been exacerbated by capacity constraints, rapid urbanisation and migration, lack of resources and delivery output.

Mr Kotsoane tabled a graph giving figures of the housing backlog. He noted that the NDoH had indicated that it would need R102 billion from National Treasury to clear the housing backlog by 2014, and that it would also need at least ten years to clear the housing backlog, if figures remained static.

He tabled a further information giving the expenditure and financial information (see attached document) and spoke briefly to it.

Mr Kotsoane then detailed events in the Eastern Cape. Due to maladministration and other problems, the Housing function had been taken away from the Eastern Cape Department of Local Government and Traditional Affairs. An amount of R5 million had been allocated for the purpose of ring fencing the process. A national team of experts that consisted of engineers, project managers and planners had been deployed to the Eastern Cape to address administrative capacity and other issues.

Discussion
Ms Mfeketo said that there was no uniformity in terms of the allocation of funds for rectification programmes. She asked who made the decision as to where and to whom funds were allocated, as well as who determined the amounts, and asked how the Department dealt with the Northern and Western Cape, who had not submitted any details on why the funds were needed, yet still received an allocation.

Mr Kotsoane said that it depended on the different levels of rehabilitation required and dynamics of structural problems per units, and that this was emphasised by the various amounts needed by provinces such as Limpopo where 200 units would be rectified at a cost of R16 million, whereas the Northern Cape planned to rectify 494 at a cost of R12, 6 million.

Ms Mabe said that the Northern and Western Cape had received a combined R82 million for rectification programmes and yet she reiterated that they did not indicate how the funds were going to be used. She said that this illustrated just how the Department and National Treasury failed to exercise proper oversight over funds allocated to provinces, amongst other problems.

Dr Gumede asked why the Housing Development Agency (HDA) needed R33 million. He also proposed that the Thubelisha Agency could be merged with the HDA to save the State R60 million.

Mr Kotsoane replied that the funds that had been allocated to HDA would be utilised to establish the operational and other structures that would facilitate the establishment of the new institution, and that it was thus a once off amount.

He added that the money allocated to Thubelisha had been to conclude the issue of due diligence as well as meeting legislative requirements, and pointed out that a substantial amount of money was involved when an agency closed down.

Mr Schneemann said that minimum standards had been set for the houses and that the Director General had made an announcement in 2007 that this set quantum should be used. He questioned what was now happening.

Mr Kotsoane replied that the overall structures of units had changed substantially and that more work had been put into delivering adequate housing.

Ms Mabe noted that the delivery of housing should also be cost effective and of quality. She said that she failed to understand why the NDoH had allowed contractors to deliver houses of bad quality.

She added that the NDoH had also failed to acquire prime land for housing delivery, and relayed a story of how the Rustenburg Municipality had sold off prime land that could have been used for housing delivery to the private sector.

Ms Y Mbane, Acting Deputy Director General, National Department of Housing, said that after 1994, due to difficulties in the government still having to “find its feet”, there had been a lack of proper coordination and policy guidelines, which gave rise to poor workmanship. This then resulted in the NDoH having to allocate more and more money to rectification programmes. Some houses had even been built directly under electricity lines.

She added that the NDoH had tried its best to acquire prime land and that the newly established Housing Development Agency would be tasked with the responsibility of identifying and acquiring prime land. She said that the NDoH had discussions with municipalities urging them not to sell prime land to private buyers before approaching the State.

Ms Mabe asked again why the NDoH had not targeted universities of technologies to bolster its skills base, especially for building up the pool of building inspectors.

Ms Mbane replied that the NDoH had made bursaries available to young matriculants who wished to pursue a career in a specialised field such as building inspectors. She said that when these graduates finished their training then they would be required to work for the NDoH for a certain amount of time.

Ms Mabe noted that the NDoH had planned to complete 900 rental-housing units for the 2007/08 financial years and yet none had been completed.

Ms Matlatsi, Chief Financial Officer, NDoH, said that her office had instructed provinces not to sit on funds, and that a stringent policy would be followed to redirect the money.

Mr Kotsoane noted that Section 100(a) had been invoked in respect of the Eastern Cape due to maladministration of funds and lack of policy implementation. The capacity would be strengthened in the newly established provincial Department of Housing in that province. He said that a national task team had been established that would visit provinces to ascertain what the problems had been, and to find solutions.

Mr Sogoni asked what role the Municipal Infrastructure Grant (MIG) played in the relationship between the NDoH and housing delivery.

Mr Kotsoane said that the MIG had been intended to fund bulk infrastructure and was thus multi-sectoral, whereas housing delivery was a single-issue function. The NDoH had not yet engaged the DPLG on how best to maximize the MIG, as municipalities had to plan for bulk infrastructure where houses had been built.

Mr Sogoni said that the Minister of Housing had said that the NDoH would deliver “homes” and not “houses” in future, in light of the disparities that were found to exist between rural and urban built homes.

Ms Mbane said that the NDoH had given several loans to rural people to beautify their houses, and that the reality had showed that people tended to build much bigger and better quality houses with these loans, despite the fact that they were limited to around R3 000 or R4 000. She added that she was happy to see that some rural communities had been very creative in building and financing their own homes, in a manner that was not utilizing a great deal of money. 

Mr Kotsoane said that the target had been to upscale housing delivery to 500 000 units per annum, and that research had been conducted two years ago that assessed whether South Africa would meet the Millennium Development Goals. His Department had been fully committed to the eradication of informal settlements.

Mr Sogoni asked how the NDoH had reached the 21% figure for inflation.

Mr Kotsoane said that the 21% inflationary figure came from the Building Construction Index.

Mr Sogoni said that many municipalities had indicated that they had the capacity to deliver houses. He asked whether the NDoH had considered and discussed this with municipalities.

Mr Kotsoane replied that the concurrent function between the provincial departments and the National Office had to be addressed first, and that redirecting housing delivery to municipalities would be a policy issue as many municipalities did not have the capacity to fulfill this function.

The meeting was adjourned.