ATC220517: Report of the Select Committee on Cooperative Governance and Traditional Affairs, Water, Sanitation and Human Settlements on Consideration of the 2022/23 APP & Budget Allocation of the DHS – Budget Vote 33, Dated 17 May 2022
NCOP Cooperative Governance & Traditional Affairs, Water and Sanitation and Human Settlements
REPORT OF THE SELECT COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS, WATER, SANITATION AND HUMAN SETTLEMENTS ON CONSIDERATION OF THE 2022/23 ANNUAL PERFORMANCE PLAN AND BUDGET ALLOCATION OF THE DEPARTMENT OF HUMAN SETTLEMENTS – BUDGET VOTE 33, DATED 17 MAY 2022
Having interacted through the virtual platform with the Department of Human Settlements to consider the 2022/23 Annual Performance Plan (APP) and Budget Allocation, the Select Committee on Cooperative Governance and Traditional Affairs, Water, Sanitation and Human Settlements, reports to the National Council of Provinces (NCOP) as follows:
1. Introduction and Background
1.1 The Treasury Regulations provide the basis for the development and submission of Strategic Plans (SPs) and related quarterly performance reporting. The revised framework on SPs and APPs requires departments to: institutionalise planning, budgeting, reporting, monitoring and evaluation and align the planning process and all the planning documents, i.e. SPs, APPs and Annual Operational Plans (AOPs) with the MTSF, and to describe outputs that are their direct responsibility in the list of programmes/sub-programmes. Any outputs from implementing agencies should be reflected in an annexure to the APP.
1.2 The Money Bills Amendment Procedure and Related Matters Act (Act No.9 of 2009) empowers Parliament to recommend, reject or amend budgets of National Departments and Organs of State. The Act also enjoins Committees of Parliament to compile and adopt Budget Vote Reports, based on interactions with the relevant Departments and entities on their respective Strategic, APPs and Budgets.
1.3 As part of ensuring executive accountability and strengthening parliamentary oversight, the Select Committee had a virtual meeting on 3rd May 2022 with the Department of Human Settlements, to consider the departmental 2022/23 APP and Budget Allocation.
1.4 The main objective of the virtual meeting was to consider the performance and financial information of the Department on outputs, indicators and targets related to programmes and sub-programmes during the current financial year, in preparation of the scheduled Policy Debate in the NCOP.
2. Ministerial Political Overview of 2022/23 Departmental APP
2.1 The Minister for Human Settlements indicated that during the past year, the Department has met with Provincial Members of the Executive (MECs) and Metropolitan Municipal Executive Mayors around challenges in the sector. As a result, the Minister and Members of the Executive Council (MINMEC) agreed to the following priorities for the 2022/23 financial year:
2.1.1 Increasing the pace of provision of title deeds to rightful property owners by prioritising the pre-1994 stock.
2.1.2 Unblocking of blocked projects: by developing the National Unblocking Programme Plan and producing quarterly reports on blocked projects.
2.1.3 Eliminating asbestos roofs across provinces, through the monitoring and reporting by public entities.
2.1.4 Eliminating the dilapidated mud houses, especially in the rural areas by prioritising the elderly and child-headed households.
2.1.5 Digitizing the beneficiary list to make it more reliable, transparent, easily accessible and avoid fraud and corruption.
3. Presentation on 2022/23 APP and Budget Allocation of the Department of Human Settlements
3.1 The Department the Select Committee on 2022/23 APP and Budget Allocation, as aligned with the five-year Strategic Plan and Medium-Term Strategic Framework (MTSF) and 2022 State of the Nation Address (SoNA).
3.2 The presentation focused on departmental Programmes such as Administration; Integrated Human Settlements Planning and Development; Informal Settlements and Emergency Housing; Rental and Social Housing. Each of these Programmes are discussed in terms outputs; outcome indicators and budget allocation for the financial period 2022/23.
4. Programme on Administration
4.1 The purpose of the Administration Programme is to provide strategic leadership, management and support services to the Department. It consists of five sub-programmes: Ministry, Departmental Management, Corporate Services, Property Management and Financial Management.
4.2 The Corporate Services sub-programme received the largest allocation, to the value of R227.8 million, compared to R228.7 million in the previous year. This represents a real decrease of 4.68%. It is also the sub-programme which experienced the largest real decrease. The Departmental Management sub-programme is the only programme experiencing a real percentage increase (of 6.7%), from an allocation of R86.1 million in 2021/22 to R96 million in 2022/23.
5. Integrated Human Settlements Planning and Development Programme
5.1 The purpose of Programme on Integrated Human Settlements Planning and Development, is to manage the development of policy, planning and research in the creation of sustainable and integrated human settlements, to oversee the delivery of the integrated residential development programme and coordinate intergovernmental partnerships with stakeholders.
5.2 The Grant Management sub-programme received the bulk of the allocation, i.e. R21.6 billion. In real terms it declines with 0.63% when compared to the allocation of R20.8 billion the previous year it receives. All sub-programmes experience a real decrease, except for the Monitoring and Evaluation sub-programme, which increased by 0.25% in real terms.
5.3 The largest real decrease is experienced in the Management for Integrated Human Settlements Planning and Development sub-programme (4.31%). It received an allocation of R3.7 million both in 2021/22 and 2022/23, which means the value of its allocation is eroded by inflation.
6. Informal Settlements and Emergency Housing Programme
6.1 The purpose of Programme 3 is to provide for policy, planning and capacity support for the upgrading of informal settlements, and to oversee the implementation of the informal settlements upgrading programme.
6.2 The Grant Management sub-programme received the largest allocation out of the three sub-programmes, with a total of R8.83 billion. The previous year, its allocation was R8.34 billion. This represents a real percent increase of 1.31%. The largest real decrease was experienced in the Capacity Building and Sector Support sub-programme of 3.65%, from an allocation of R72.6 million previously, to R73.1 million in 2022/23.
6.3 The National Upgrading Support Programme (NUSP) aids provinces and municipalities with comprehensive planning for the upgrading of informal settlements. This includes the systemic improvement to living conditions through secure tenure, safe and reliable water and sanitation and adequate access to social services. An integral part of this Programme involves community participation to enable meaningful engagement.
6.4 Through the Programme, it is planned that assistance will be provided to around 900 informal settlements over the medium-term period, with 180 000 stands that will be upgraded to have access to municipal services. The upgraded stands will be funded from the Informal Settlements Upgrading Partnership grant (ISUP), which receives an allocation of R26 billion over the MTEF period.
7. Rental and Social Housing Programme
7.1 The purpose of the Rental and Social Housing Programme is to promote the provision of affordable rental housing, monitor the performance of the Social Housing Regulatory Authority, and develop capabilities in the rental housing sector through intergovernmental collaboration and evidence-based research.
7.2 As part of efforts to improve the functioning of the rental housing market, the Department expects to provide 18 000 affordable rental units and 7 200 community residential units, at a projected cost of R2.9 billion over the medium-term period. Spending in this Programme is expected to decrease at an average annual rate of 5.6%, from R1.162 billion in 2020/21 to R997.2 million by 2023/24.
7.3 Despite these reductions, the Social Housing Regulatory Authority (SHRA) will continue to invest in the affordable rental housing market. These investments include the provision of R2.4 billion in capital subsidies over the medium-term, through the Consolidated Capital Grant, and operational support grants worth R69.9 million, through the Institutional Investment Grant.
7.4 The Public Entity Oversight sub-programme received the bulk of the allocation under Programme 4. The allocation increases from R857.6 million in 2021/22 to R887.4 million in 2022/23, representing a real percent decrease of 0.98%. All three sub-programmes experiences real percentage decreases.
7.5 The largest real decrease is observed in the Capacity Building and Sector Support sub-programme, which received an allocation of R70.3 million in 2022/23, compared to an allocation of R74.4 million previously, representing a real decrease of 9.58%.
8. Affordable Housing Programme
8.1 The purpose of the Programme on Affordable Housing, is to facilitate the provision of affordable housing finance, monitor market trends, and to develop research and policy that respond to demand and to oversee housing finance entities that report to the Minister.
8.2 This Programme provides housing finance for the Gap-market, or households that earn too much to qualify for a full housing subsidy, but too little to qualify for a mortgage loan. Through FLISP, the Department will provide a targeted of 12 000 finance-linked individual subsidies that serve as lump‐sum deposits to lower monthly mortgage repayments for qualifying beneficiaries.
8.3 Spending under this Programme is expected to decrease at an average annual rate of 6.7%, from R734.6 million in 2020/21 to R595.7 million by 2023/24. This is mainly due to the one‐off debt relief allocation in 2020/21. FLISP accounts for R1.4 billion of the Programme’s budget over the medium-term period.
8.4 The Public Entity Oversight sub-programme received the largest proportion of the allocation under this Programme. Its allocation grows from R492.2 million in 2021/22 to R509.5 million currently, representing a real percent decrease of 0.94%. The largest decrease can be observed in the Capacity Building and Sector Support sub-programme, with a real percent decrease of 20.22%. The allocation to the sub-programme decreases from R92.6 million in 2021/22, to R77.2 million in 2022/23.
8.5 Affordable housing is provided through rental and social housing programmes and affordable housing finance instruments. The Department plans to review and update the social housing policy over the medium-term, and aims to increase the supply of rental and social housing stock. The Department aims to deliver 25 000 affordable rental units in strategically located areas, and 3000 community residential units over the medium term. In order to fund these initiatives, spending in Programme 4 is expected to increase by an average annual rate of 3.6% (from R936.8 million in 2021/22 to R1 billion by 2024/25).
9. Observations of the Select Committee
9.1 The Select Committee observed that the 2022/23 APP of the Department has been aligned with the 2019/2024 MTSF, 2022 SoNA and priorities identified through the consultation processes with the Provincial Members of the Executive (MECs) and Metropolitan Municipal Executive Mayors.
9.2 The Select Committee has noted that the Department has for the period 2022/23 financial year, prioritized increasing the pace of provision of tittle deeds to rightful property owners, unblocking of blocked projects, elimination of asbestos roofs across the provinces, elimination of dilapidated mud houses in the rural areas and digitization of the beneficiary list in order to avoid fraught and corruption.
9.3 The Select Committee has further noted that the Department is focused on processing the Housing Consumers Protection Measures Bill and the Human Settlements Development Bank Bill in 2022/23. The Housing Consumers Protection Measures Bill will support the ability of citizens to take individual household initiative to construct homes. While the promulgation of the Bank Bill is in process, a simultaneous application has been submitted to the Minister of Finance on the exemption of the Human Settlements Development Bank from the Banks’ Act (No. 94 of 1990), as a parallel process.
9.4 While welcoming the 2022/23 APP and Budget Allocations to departmental Programmes and sub-programmes, the Select Committee raised general concerns about the use of consultants; illegal occupation of land; tittle deeds backlogs; unblocking of blocked projects; pit toilets in rural areas; mud houses; lack of progress reports on concerns raised by the Select Committee during 2021/22 financial year on internal audit, risk management, anti-corruption and infrastructure development plans, instability and functionality of the boards.
10. Recommendations of the Select Committee
10.1 Having considered and deliberated on the 2022/23 APP and Budget Allocation of the Department of Human Settlements, the Select Committee recommends to the NCOP as follows:
10.1.1 The Department of Human Settlements should provide quarterly reports on the implementation of the 2022/2023 priorities and expenditure.
10.1.2 The Department of Human Settlements should provide supplementary report on the support provided to communities affected by recent floods in KwaZulu-Natal, Eastern Cape and the North West Province including monitoring mechanisms to prevent fraud, misappropriation of funds, wasteful and irregular expenditure.
10.1.3 The Department of Human Settlements should provide a provincial breakdown list of blocked projects and asbestos assessment plans and reports, including timeframes.
10.1.4 The Department of Human Settlements should provide detail information on the implementation of the intergovernmental relations and operational capital programmes.
10.1.5 The Department of Human Settlements should fast track the process of tabling the Housing Consumers Protection Measures and Human Settlements Development Bank Bills to Parliament, as committed in the 2022/2023 APP.
10.1.6 The Department of Human Settlements should fast track the process of the appointment of members of the boards in order to ensure stability, functionality and corporate good governance and accountability.
10.1.7 The Select Committee should align its 2022/23 programme with the APP of the Department of Human Settlements, in order to monitor through proactive oversight visits, the implantation of the human settlements priorities and targets across the provinces.
Report to be considered.