ATC200717: Report of the Portfolio Committee on Human Settlements, Water and Sanitation on the Supplementary Budget Vote No 33 of the Department Of Human Settlements, Dated 17 July 2020

Human Settlements, Water and Sanitation

REPORT OF THE PORTFOLIO COMMITTEE ON HUMAN SETTLEMENTS, WATER AND SANITATION ON THE SUPPLEMENTARY BUDGET VOTE NO 33 OF THE DEPARTMENT OF HUMAN SETTLEMENTS, DATED 17 JULY 2020

 

On 8 July 2020, the Portfolio Committee on Human Settlements, Water and Sanitation and the Select Committee on Cooperative Governance and Traditional Affairs, Human Settlements, Water and Sanitation engaged the presentations on the supplementary budget and revised targets of the Department of Human Settlements, Budget Vote 33.  On 15 July 2020, the Portfolio Committee met and engaged on the adjusted budget with related reduced targets over the medium-term as contained in the revised 2020/21 Annual Performance Plan and Strategic Plan and reports as follows:

 

1. INTRODUCTION

On 24 June 2020, Minister of Finance, Mr Tito Mboweni tabled the 2020 supplementary budget and delivered the supplementary Budget Speech. The Public Finance Management Act, 1999 read together with the Money Bills Amendment Procedure and Related Matters Act, 2009 empowers the Minister of Finance to table an adjustments budget, when necessary. The tabling of the 2020 supplementary Budget was necessitated by the impact of the COVID-19 pandemic and the economic downturn in the country.

 

1. THE IMPLICATIONS OF THE COVID-19 PANDEMIC ON THE MANDATE OF THE DEPARTMENT.

The Covid-19 pandemic has required governments to implement a variety of mitigation measures, including stringent lockdowns, travel restrictions and the closure of schools and non-essential businesses. This has negatively affected global economic activity and employment. In South Africa, the number of cases as of 15 March 2020 remained relatively low at 61 cases with no fatalities but were increasing as reported by the Minister of Health, DrZwleli Mkhize. The Minister of Cooperative Governance and Traditional Affairs declared COVID-19 outbreak the National State of Disaster on the 15 March 2020.  The declaration followed the World Health Organisation (WHO) classification of the COVID-19 as a pandemic.  Following the declaration of national state of disaster, the President, Mr Cyril Ramaphosa announced measures to combat the spread of COVID-19 epidemic which, among others, involved restrictions on mass gatherings (closing of schools, churches, ban on international travel to South Africa and any other gathering of more than 100 people); and other standard hygiene measures in line with the WHO notice.  Notwithstanding all these measures, the cases of COVID-19 were increasing, subsequently, the President instituted a Lockdown of 21 days (26 March – 16 April 2020) on the 23 March 2020 and further extended to the 30 April 2020 amid an escalation of COVID-19 cases in the country.

 

The Minister of Finance therefore tabled the 2020 Supplementary Budget on 24 June 2020 along with the Division of Revenue Amendment Bill [B09 – 2020] and the 2020 Adjustments Appropriation Bill [B10 – 2020]. The Supplementary Budget sets out the initial economic and fiscal response from Government to the Covid-19 pandemic. It fast-tracks processes to provide resources to frontline services, provincial and local government, as well as businesses and households, with a specific focus on the most vulnerable South Africans. Furthermore, the Supplementary Budget sets out a roadmap to stabilise debt, improve spending patterns, and creates a foundation for economic recovery.

 

1. ANALYSIS OF THE REVISED BUDGET ON EACH PROGRAM

The Department received a main appropriation of R31.32 billion in 2020/21, compared to R 33.86 billion in 2019/20. By February 2020, the departmental budget declined by 7.2%, or 11.4% in real terms. In the Supplementary Budget tabled in June 2020, a total of R5.495 billion was suspended, while a total of R3.23 billion in additional funds was allocated to the Department for its Covid-19 response. The balance means that the Department’s main allocation decreased by R2.26 billion (from R31.32 billion in February 2020 to R29.06 billion in June 2020).

1. REVISED BUDGET ALLOCATIONS
   1. Programme 1 (Administration)

Programme 1 experienced a suspension of funds to the value of R1.2 million. Although a virement of R5 million was made from goods and services, it was reallocated to Covid-19 purposes within the same programme, meaning that the overall reduction remains at R 1.2 million in this Programme (from R506.4. million in February 2020 to R505.2 million in June 2020). This represents an overall decrease of 0.2% in nominal terms, or 4.4% in real terms.

 

1. Programme 2 (Integrated Human Settlements Planning and Development)

Programme 2 experienced the largest downward revision out of the five programmes, with a total of R5.49 billion suspended from transfers and subsidies. The programme received a reallocation of R2.26 billion for Covid-19 purposes (decreasing the programme allocation from R28.9 billion in February 2020 to R25.6 billion in June 2020). This means that Programme 2 experienced a total reduction of R 3.23 billion, or a decrease of 11.2% in nominal terms, (14.9% in real terms).

 

1. Programme 3 (Informal Settlements)

Programme 3 experienced a suspension of funds to the value of R800 000 and received an allocation of R377.82 million for Covid-19-related purposes. This means that the Programme experienced an overall increase of R377.02 million (from R567.3 million in February 2020 to R944.4 million in June 2020). Programme 3 therefore experienced a significant increase of 66.5% in nominal terms, or 59.4% in real terms, which is the largest real increase experienced by any of the programmes.

 

1. Programme 4 (Rental and Social Housing)

Programme 4 experienced suspended funds to the value of R650 000 and received an allocation of R300 million specifically for the Covid-19 response, which means that the overall allocation to Programme 4 increased by R299.35 million (from R891.1 million in February 2020 to R1.1 billion in June 2020). This means that Programme 4 experienced an increase of 33.6% in nominal terms, or 28% in real terms.

 

1. Programme 5(Affordable Housing)

Programme 5 experienced a suspension of funds to the value of R8.8 million, with an allocation of R300 million, which translates to an overall increase of R291.2million (from the main appropriation in February of R447.5 million to R738.7 million in June 2020). Programme 5 therefore experienced an increase of 65% or 58.1% in real terms.

 

1. HUMAN SETTLEMENTS GRANTS
   1. Human Settlements Development Grant (HSDG)

The HSDG was reduced by R1.73 billion (a 14.1% reduction in real terms).

 

1. Urban Settlements Development Grant (USDG)

The USDG was reduced by R3.36 billion and received a reallocation of R2.26 billion, which represents an overall reduction of R1.1 billion (or 13.5% in real terms).

 

1. Title Deeds Restoration Grant (TDRG)

The TDRG was reduced by R 377.82 million (representing a real decrease of 66.8%), and reallocated to the Emergency Housing Grant in Programme 3 (Informal Settlements) for the rapid provision of emergency housing solutions in areas where existing housing arrangements are not conducive to social distancing.

 

1. OBSERVATIONS AND RECOMMANDATIONS

The following observations and recommendations were made:

1. The Emergency Housing Grant received an additional allocation of R377.82 million. These funds were reallocated to deal with rapid provision of emergency housing solutions in areas where existing housing arrangements were not conducive for social distancing.TheCommittee recommended that the Department should put in place the required capacity to ensure efficient, effective and responsive measures for the roll-out of the emergency housing grant. The Committee should be provided with a list of projects and schedules for project implementation. This must be presented to Committee before the First Quarter of 2020/21.
2. The Committee observed that a reduction of 377.82 million from the Title Deeds Restoration Grant (a decline of 66.8% in real terms) would affect the number of title deeds being issued.And that there was poor expenditure in the title deeds programme in the previous financial year. At the same time, there is a huge backlog in the issuing of title deeds. The Committee recommended tobe furnished with a plan detailing the number of title deeds that would be issued. This plan should consider the title deeds backlog and provide a turnaround plan for the issuing title deeds to the Committee, considering budget cuts. This plan must also reflect on challenges encountered in the issuing of title deeds. This must be presented to Committee before the First Quarter of 2020/21 financial year.
3. The Committee noted that lower allocations to the HSDG and the USDG would result in planned projects being delayed. TheCommittee, having noted the reduction, has mandated the Department to work within the allocated budget. The Committee recommended that the Department closely monitor provinces and Metros to ensure that the budget is used for intended purpose.The Department must assist all the provinces and Metros with their plans. These plans must be submitted to the Committee.This must be presented to Committee before the First Quarter of 2020/21 financial year.
4. The Committee note with a concern the high level of acting in critical positions; the Human Settlements Director General position was noted. TheCommittee recommended that positions must be filled on permanent basis and ensure that acting in positions is reduced. This must be presented to Committee before the First Quarter of 2020/21 financial year.
5. The Committee note with concern that Municipalities were not spending their allocations and not meeting their targets because of a lack of capacity. The Committee recommended that the Department should devise a plan and avail resources to capacitate municipalities.This must be presented to Committee before the First Quarter of 2020/21 financial year.
6. The Committee noted that the Covid-19 regulations prohibit evictions. The Committee condemns illegal occupation of land. However, there was a case of inhumane eviction of MrBulelaniQholani in Khayelitsha who was dragged naked from his shack during lockdown. The Committee was repulsed by the behavior of the City of Cape Town and its officials for violating his dignity.The Committee mandated the Department to investigate the City of Cape Town on this eviction and provide a report.This must be presented to Committee before the First Quarter of 2020/21 financial year.
7. The Committee noted theR300 million set aside to assist people in the rental housing who cannot pay their rent due to Covid-19 pandemic. The Committee also noted the R300 million to NHFC to assist those who cannot pay their bonds due to Covid-19.TheCommittee recommended to briefed by the Department on the framework for selected beneficiaries. The Committee also recommended that the Department providecriteria that will be used to select the beneficiaries.This must be presented to Committee before the First Quarter of 2020/21 financial year.
8.  The Committee noted that the Department did not have a target of job creation on their adjusted budget. The Committee recommended that the Department put target for job creation in their adjusted budget. This must be presented to Committee before the First Quarter of 2020/21 financial year.

 

1. CONCLUSION

The Committee concluded that Covid-19 has had a substantial impact in lives of South Africans. It has forced Departments to reprioritize their plans and targets.  At this juncture, it is critical that emergency housing is prioritized and efficiency is ensured in all programmes.

 

Report to be considered.