Western Cape Adjustments Appropriation Bill: Department of Human Settlements consideration, with MEC present

Infrastructure (WCPP)

23 November 2018
Chairperson: Ms M Maseko (DA)
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Meeting Summary

The Department of Human Settlement appeared before the Standing Committee to discuss the adjusted estimates of provincial revenue and expenditure.

The Committee asked for clarity on several issues including the Department’s funding going towards specific municipalities regarding Housing Development. Members were interested in the reason why only specific municipalities were chosen for funding while there were many other municipalities with greater need.

Other issues of concern raised by the Committee include the decrease in the percentage of budget spent on housing development, decrease in expenditure trend under, Housing Asset Management, and the removal of funds from financial intervention, incremental intervention and social and rental intervention.

Meeting report

Apologies and Opening Remarks
Apologies were noted from Ms W Philander (DA) and Mr B Joseph (EFF).

The Chairperson welcomed the Department and gave Mr Bonginkosi Madikizela, Provincial Minister of Human Settlements, and Mr Thando Mguli, Head of Department of Human Settlements (DHS), an opportunity to give some opening remarks.

Mr Mguli responded that he would rather get straight to the point of dealing with any queries relating to the Adjusted Estimates of Provincial Revenue and Expenditure.

The Chairperson opened the discussion and allowed Members to bring forth any queries. She urged Members to mention the specific page numbers related to their query.

Ms S Davids (ANC) noticed that on page 181, in terms of administration, there was a decrease of R111 000. Why was there a virement of R111 000? She then asked for an explanation on the roll-over from the previous year as seen on page 183. She also noted that on 184 under sub-program 3.2 for financial interventions, there was a reclassification R17 355 000. She asked an explanation on why this was done. Furthermore, under sub-program 3.3 for incremental intervention, there was an amount of R37 946 000 which was removed and under sub-program 3.4 forocial and rental intervention, an amount of R46 500 000 was removed. What was the reason for these removals? Ms Davids then went on to page 185, which showed that, under program 3 for housing development, there was R17 325 000 to Drakenstein Municipality, R5 000 000 to Oudtshoorn Municipality, and R9 686 000 to Stellenbosch Municipality. She asked why the funds only allocated to these three municipalities. What was the policy or criteria to allocate these funds to them? She added that the budget spent for housing development was only at 46.53%. What was the reason for the under-expenditure? She also asked why the current payment was only at 41%.

Ms T Dijana (ANC) noticed that on page 184, regarding savings on infrastructure and planning due to capitalization of the Human Settlements Development Grant (HSDG), there was a decrease of R 7 846 000. She asked the Department to elaborate on the decrease. She reiterated Ms Davids’ question regarding the decrease on the reclassification of financial interventions, on page 184. She then asked for an explanation on why the percentage spent on housing development was lower than that of the previous year. What is it the lowest of all the programs? Furthermore, Ms Dijana noticed that the total preliminary expenditure on households was R1 946 155, on page 185. She asked for an explanation for this. She then asked for more information on program 4 for Housing Asset Management, on page 187. And finally, regarding the economic classification on page 187, under current payments, what causes delays on the appointments of consultants?

The Chairperson noted that page 187 showed that there was an increase in expenditure trend for the appointment of interns. What were those interns doing? And where are they allocated within the Department?

Ms Davids noticed that page 187, under program 2 for Housing Needs, Research and Planning, it was stated that the increase in expenditure trend can be attributed to the cost of living adjustments and the appointment of interns during the first six months. The same explanation, word for word, was given for program 1 for administration. She asked why they had the same explanation. She also noted that for program 4, Housing Asset Management, the decrease in the expenditure trend can be attributed to the slower spending on municipal services and taxes in respect of properties owned by the Department. The understanding was that the tariffs increased every year. So, why was there a decrease? Lastly, she asked if the Department, or any senior member in the Department, had received any donations or sponsors.

Mr Francois de Wet, Chief Financial Officer, DHS, said that the roll-overs of R6 816 000 consists of the R693 000 for furniture. For Public Works, the Department had stopped the modernization of the buildings, therefore the money was not used. The money is going to be used this year. Regarding the Housing Development, there was R6.5 million that was allocated to the Department in last year's adjustment budget for water saving. The Department wanted to allocate it to rainwater harvesting, but the program could not be started. It then requested for the roll over that had been utilized to assist the contractors to have non-portable water on site as the Department was not using municipal water. That had already been spent in the current fiscal year. The Department received another R127 000 from the National Disaster Management center via the National Department of Human Settlement, which was allocated for three houses that were burned down last year. Those houses will now be fixed. Mr de Wet said that the R111 000 virement was for leave gratuity
He explained that regarding the saving on infrastructure and planning due to capitalization of the human settlement, before a project is approved, there is a lot of planning fees that go into that. The Department allocated a budget for consultants. The planning approvals had come through and the Department was capitalizing that cost. So, the Department was taking it from the goods and services to the subsidy items. He then went on to explain, regarding the reclassification of financial interventions of R17 355 000, that the Department needed to allocate a budget for consultants, so money was taken away from the financial interventions and allocated to subsidies. He said that in the main budget, the Department had a budget for social housing. It had re-allocated that money to financial interventions, and that was meant for the purchase of land parcels that the Department purchased throughout the year. Mr de Wet said that, regarding the Housing Development Assessment (HDA), it was the project management fee. It was assisting the Department with a catalytic project and that was the money that the Department needed to pay them. He responded that the R37 946 000 and R46 500 000 was also linked to the social and rental housing sub-program. The money went to the land purchasing. He then said that on page 185, the Department had over-collected on its revenue and had applied for a revenue retention. The R17 325 000 was going to Drakenstein Municipality for bulk electrical services as the Department was busy working on a big catalytic project. The R5 000 000 was going to Oudtshoorn Municipality for Dyssesdorp for bulk infrastructure to unlock housing opportunities there. The Department had not done anything there for the past couple of years. In Stellenbosch Municipality, there was an affordable housing project that needs bulk infrastructure. The Department is assisting the project as it addresses one of its key priorities. Mr de Wet then explained that the households were the beneficiaries, which was the standard classification. The households received the subsidy of R1 946 155. Regarding the compensation to employees, under current payments, there was under-expenditure of 41%, which was up to the end of September. There was also a low percentage on goods and services and that was mainly due to consultants as the money was shifted to the subsidies. The 46.53% under housing development was mostly due to the subsidies that the Department paid out for project. A lot of money is spent in March and municipalities do not want money from April to June due to their budget year. This is in line with the Department’s cash flow projections.

Mr Madikizela said that from time to time, the Department received requests from different municipalities to assist in thebulk infrastructure shortfall in terms of funding. The Department assesses these requests and intervene where it feels there is a need and it would unlock other projects. The Department does this for all the municipalities. The funding is given to different municipalities as the need arises, just to supplement their bulk infrastructure funding which is nowhere near to what they need.

Ms Davids said that there was a lot of development happening in Drakenstein Municipality. However, other municipalities had no infrastructure and people were struggling to even get a tap. She asked why the money was not being given to those municipalities. Other municipalities are in much more need than Drakenstein.

Mr Madikizela responded that Drakenstein was funded because the Department wanted to move with speed and unlock the catalytic projects. The Department had eight catalytic projects across the province and there were 50 nationally. Part of the reason the Department had to intervene was to unlock its catalytic project in that region. Where there are catalytic projects, the Department works with the National Department so that they can move with speed to unlock them. That was the main reason behind Drakenstein. He added that with regard to Stellenbosch, the Department has three strategic goals and one of them is affordable housing. One of the things the Department is doing is to make sure that it unlocks the challenges that exist in affordable housing. The Department intervened in Stellenbosch because of its strategic goal to unlock affordable housing there.

The Chairperson said that the Standing Committee had an oversight in Stellenbosch and the finding was that, in principle, most of the accommodation that is needed is not free housing. The Department was reacting to what the Standing Committee had said.

Mr Mguli said that with regards to the concerns on the informal settlements, the Department was attending to this on another program with the informal settlement support plan. The Department was running a program for informal settlements upgrades. It had identified a string of informal settlements in the Western Cape, where the Department needed to do an upgrade program and it was doing it in cooperation with those people in those informal settlements. Hence, the Department had already employed some NGOs to do community engagement and stakeholder engagement. The Department was also sending sector professional enterprises to do the engineering investigations to work with the communities. So, informal settlements have already been covered under that program. The Department was targeting approximately 60 informal settlements, but it was already working on 71.

Ms Davids said that the Department could upgrade but if there were no bulk services or storm water pipes in the informal settlements, there will not be basic services. Therefore, there is a need to focus on bulk services in areas where there are informal settlements.

Mr Madikizela said that each Department has different responsibilities. The bulk infrastructure was not the responsibility of DHS. Municipalities use their allocation to deal with bulk infrastructure. The Department supports where there is a need. The Departments takes from its own revenue, the funding that the Minister must use to assist municipalities from time to time. However, it is the municipalities that must prioritize the areas in terms of spending their mid-funding to unlock bulk infrastructure challenges.

Mr de Wet responded to a previous question and said that no member in the Department had received a donation. The Department had made one donation of R100 000 to the South African Planning Institute. He then explained that the Department had two types of interns, the graduate interns and paid interns. The graduate interns go through a program in which they assist the Department. The Department has taken on a lot of graduate interns and the program will be driven further.

The Chairperson asked if the Department was retaining a certain number of interns or if it was the first time the Department was doing the program. Was it going to check after if it had retainer for the interns?

Mr de Wet replied that once the interns had gone through the program they could apply for candidacy. The Department had advertised for four candidate engineers and planners. The interns were welcome to apply for the vacancies that might arise.

Mr Mguli said that there are both built sector interns and administrative interns. These are young graduates employed in the Department. There are posts that are locally advertised, which are predominantly meant for internal employees of the public service. A graduate intern would be deemed to be an internal candidate and they would get an opportunity to be absorbed. They, therefore have an edge over a person who was not an intern in the Department. The Department is already spending resources on them, they are trained, exposed, and are doing real work. The Department is therefore working to make them move from graduate intern to permanent employees.

Mr M Mnqasela (DA) said that the R38 million is not going to waste. He mentions that the mentality of working in silos is old, and the fact that government is all working in the same direction is positive. For the past three years there has been a problem with storm water drainage. However, he supports the projects DHS is undertaking.

Mr T Simmers (DA) thanked the Minister for the R 5 million that was going to his constituency. The community is going to appreciate it.

The Chairperson said that there is a problem with funding for bulk services in the Cedarberg. The implementing agent needs to be held accountable. She mentioned that this will be the final meeting for some Members who will not be returning in the new year. It has been a pleasure working with the Department this year. She invited Ms Dijana, a long standing Member,  to give some closing remarks.

Ms Dijana thanked the Minister for leading the Department so far. She also thanked the HOD, the CFO and other members from the Department for the information they made available to the Committee and for assisting the community of the Western Cape with whatever problems they were having. She urged the Department to keep up with the good work.

Mr Madikizela said this was one Department which did not play politics. He appreciated the Members of the Committee who grill the Department. Members raise issues that affect the people, and not necessarily playing politics. He appreciated the oversight and support that the Committee had shown to the Department. In some cases, the Committee brought to the Department's attention issues that it might not have been aware of. And as a result, the Department was able to attend to those issues. He thanked the members of staff who were the heartbeat of the Standing Committee and are not always appreciated for the work they do. He mentioned that this was likely to be his last meeting with the Standing Committee. Ten years was more than enough to be in one Department. He appreciated all the lessons he learned. He said he would continue to be the servant of the government and the people. It was a great learning experience to lead this Department.

Ms Jacqueline Samson, Chief Director of Human Settlement Planning, DHS, gave her closing remarks. She thanked the Chairperson and Members. She agrees with the comments by Mr Madikizela, and has observed growth in many Members. She appreciates the way the Committee has provided oversight and the Department has learnt a lot from the Committee.

Tha Chairperson thanked the Department and Members.

The meeting was adjourned.



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