Department of Human Settlements on its 2015/16 Strategic Plan and Budget

Meeting report

Mr Neville Chainee, DHS Deputy Director General Strategy and Planning, extended apologies for the Director General who was unable to attend due to illness. The Chief Operations Officer was attending another meeting. He was joined by Mr Mbengo the Acting CFO and Ms Buthelezi, Chief Director responsible for policy.

Ms L Zwane (ANC, KwaZulu-Natal) said that the Committee had been unable to engage with politicians in Department of Human Settlements (DHS). She proposed that despite this, they proceed with the meeting.

Mr P Parkies (ANC, Free State) said that in the absence of politicians the Committee expected the Director General to be part of the delegation making the presentation. DHS was putting pressure on the Committee programme if the meeting were postponed. He supported the proposal to proceed with the meeting.

Ms P Mququ (ANC, Eastern Cape) spoke in her vernacular language.

The Chairperson was dissatisfied with the absence of the Director General and the Special Advisor to the Minister. Furthermore the delegation was late. She said the Committee would write a letter to their DHS superiors to take up the matter on behalf of the Committee. She hoped DHS understood the importance of the presentation to the Committee as it had implications on DHS’s budget. She was surprised that DHS was not taking the presentation seriously as, without a budget, there would be no department. She formally opened the meeting and invited DHS to make a presentation

Mr Chainee apologised for the circumstances of the morning. He wished to put it on record that the Department and the Ministry would take up the issues. He emphasised that the importance of the Committee was not lost on DHS. The morning’s circumstances were unfortunate and the Committee’s sentiments would be conveyed to the Minister.

DHS on its 2015/16 Strategic Plan and Annual Performance Plan
Mr Neville Chainee, DDG Strategy and Planning, provided a background to the Strategic Plan. Chapter 8 of the National Development Plan (NDP) outlined the vision for sustainable human settlements. The emphasis in the NDP was on a government led strategy to fast track the development of housing and human settlements whilst at the same time improving the quality of life of citizens. In the delivery agreement signed by Minister Sisulu and President Zuma, a set of targets had been set in relation to Outcome 8 delivery agreements for provinces and municipalities that receive the Urban Settlement Development Grant (USDG).

The Medium Term Strategic Framework (MTSF) for 2014-19 prioritised the delivery of 1.460 million houses which had been rounded up to 1.5 million. The Strategic Plan covered a period of five years. In relation to the NDP one of the criticisms raised against DHS and the government was the inability to radically transform the national space economy. The Strategic Plan and the Annual Performance Plan and the MTSF attempted to correct this criticism by ensuring that there was radical transformation of the apartheid space economy through human settlement. In addition spatial transformation emphasised eradication of poverty, reduced unemployment and inequality.

Mr Chainee said that the delivery approach focused on mega projects of integrated housing mix such as affordable housing for different income levels and needs. This included indigent, affordable housing sector, rental units, social housing and serviced stands as well as ensuring the integration of different income groups and the inclusion of all races.

In relation to macro performance indicators, the strategic plan focused on a clean audit to promote a compliant and well-functioning department and agencies. Emphasis was on a strong administration that lay a good foundation in order to achieve the objectives of DHS. The strategic plan was also emphasising a Revised Housing Act and Housing Code.

Programmes
Mr Chainee said DHS had four programmes which were Administration; the Human Settlements Strategy, Policy and Planning programme which was the basis of DHS; the Programme Management Unit, which mainly monitored the sector institutional capability and capacity to deliver human settlement programmes and projects; Housing Development Finance programme which was a key concurrent responsibility. Nnational government provided funding for the delivery of all human settlements programmes in line with approved policies, planning and strategies. In the current financial year R30.9 billion had been allocated to programme four. It was expected to increase to R33.2 billion in 2016/17 and up to R35.2 billion in 2017/18. The department’s current budget had moved to a lower base line as the budget had been reduced by around R4 billion. In order to achieve the 1.5 million target, the strategic plan had split the overall target into 0.3 million opportunities per year over a period of three years.

Mr Chainee outlined the purpose and strategic goals of each programme (see document).

Delivery agreement targets
The delivery agreement which President Zuma had concluded with Minister Sisulu emphasised providing poor households with adequate housing and a better living environment; supporting the development of a functionally and equitable residential property market; and improving institutional capacity and coordination for better spatial targeting in line with what the NDP indicated. The delivery of 1.46 million housing opportunities over a period of five years was key in terms of Outcome 8. Specifically this entailed upgrading 750 000 households in informal settlements and providing 563 000 individual units for the subsidy market. Also included was the provision of 110 000 loans of which 70 000 were via the Finance Linked Individual Subsidy Programme (FLISP) and 40 000 were through the development finance institutions (DFIs) of DHS. The agreement also ensured delivery of 27 000 housing opportunities through social housing, 10 000 community residential units and 35 000 affordable rental.

Other targets included assessment of 2 200 informal settlements, 10 000 hectares of well-located land would be rezoned and released for new developments targeting poor and lower to middle income households through the Housing Development Agency as well as the provinces and municipalities. In addition 50 catalytic projects would be implemented with 563 000 title deeds issued to new homeowners in the subsidy market. The target for title deeds did not include the current backlog which by DHS’s analysis stands at 900 000. The targets of each Provincial Department receiving the USDG grant would have to be formally agreed and approved by the Human Settlements Department and this had already been done. Provincial Departments had been requested to revise their business plans to focus on the priorities as set out in the MTSF. The targets were 30% of houses to be delivered by women, 1956 houses per province to be delivered in Women’s Month taking into account that about 52% of households were female headed households. In addition 10% of houses were to be delivered by youth in terms of the Youth Brigade Programme. Five thousand housing units would be provided for military veterans. Provincial Social Contracts Forums and Provincial Govan Mbeki awards would be hosted.

As indicated in the Strategic Plan DHS’s budget had been negatively affected by the economic downturn. The department’s total allocation for the 2015/16 financial year was R30.9 billion showing a decrease of R1.9 billion from the previous baseline of R32.8 billion. However the allocation was projected to grow over the 2015 MTEF period to R35.2 billion in 2017/18. Only 2% of the allocated budget constituted the national operational budget of DHS. Grants constituted 93% of the total allocation and 5% of the allocation constituted Transfer payments to public entities.

Budget Allocations over the 2015 MTEF Period
Mr Nyameko Mbengo DHS Acting CFO, said that DHSal budget allocation had moved to a lower baseline from R32.8 billion in 2014/2015 MTEF to a revised baseline of R30.9 billion. The difference in the drop was made up of R261 million in additional allocations and R2.1 billion reduction in allocations.

The additional allocations were made up of allocations to the Housing Development Agency (HDA), National Urban Reconstruction and Housing Agency (NURCHA) and the National Housing Finance Corporation (NHFC). The total allocation was R261 million in the current financial year. In the next financial year the allocation was projected at R200 million and R250 million in the outer year. Over a period of two years the additional allocations would amount to R711 million.

The reduction in allocation on DHS’s operational budget was R81.2 million. Most severely affected item was compensation for employees which was reduced by R54.7 million in the first year. In the second year the reduction in the compensation budget goes up to R58 million and R63.9 million in the outer year.

Mr Mbengo stated that over the MTEF period grants had been reduced by R2.1 billion whilst the operational budget had been reduced by R289 million. The total reduction in budget allocation for DHS was R2.1 billion in the first year of the MTEF and the reduction in the second year was R1.4 billion. He emphasised the reductions to demonstrate that DHS’s budget allocations had moved from a high baseline to a lower baseline and the actual allocation had been reduced by more than R4 billion.

The budget allocation over MTEF by programme was as follows in the first year: Administration was allocated R435 million, Human Settlements Policy, Strategy and Planning was allocated R73.3 million, Programme Delivery Support was allocated R169 million whilst Housing and Development Finance was allocated R30.2 billion (used for all grants and transfers to public entities) .

Mr Mbengo summarised that the net impact of the R4 billion reduction over the MTEF. There was R2.1 billion reduction on grants allocation, a R722 million reduction on the transfer to departmental entities allocation as well at the R289.3 million reduction on the operational budget.

The budget plan also showed allocation over MTEF by economic classification. The departmental allocation in the first year was R690.9 million and the grants and transfer payments amounted to R30.2 billion. Grants alone amounted to R28.8 billion whilst transfers to entities amounted to R1.3 billion. Other departmental transfers which included transfers to households, bursary schemes and UN Habitat amounted to R9.9 million.

The department was supporting three types of grants: Human Settlements Development Grant (HSDG), the Urban Settlements Development Grant (USDG) and the Municipal Human Settlements Capacity Grant (MHSCG). The HSDG was allocated R18.2 billion the grant was split to all provinces. The allocation was based on a formula linked to the last census in 2011. The Urban Settlement Grant was also managed by DHS and transferred to metros. The grant was also disbursed based on a formula and all metros get a portion of the R10.5 billion which was projected to be R11.7 billion in 2017/18. The Municipal Human Settlements Capacity Grant was R100 million in the current year and was expected to remain the same in the next year. In the outer year the grant was projected at R115 million. All municipalities were allocated a portion based on a formula.

2015-16 Delivery Targets
Mr Chainee said that for the HSDG and the USDG, DHS together with the municipalities and provinces, various consultative delivery targets had been established. In relation to the Planned Provincial Delivery per programme, targets were set per sub-programme. In terms of sites (water and sanitation) 58 257 projects would be carried out and 102 676 units (houses constructed) would be constructed in the current financial year.

In relation to what was contained in the Division of Revenue Act (DoRA) there were certain ring fenced amounts which included mining towns that had been stipulated, coordinated and managed through the Presidential Intervention on Mining Towns. DHS had outlined the mining towns in its presentation. The mining towns included in Gauteng were, Westonaria, Randfontein and Merafong. Other mining towns were in Mpumalanga, Northern Cape, Limpopo and North West.

In light of the curtailed budget DHS was trying to get better value for money. DHS organisational structure was being revised to ensure that state and government strategy and related planned outcomes were achieved. DHS had reviewed its outputs and targets matrix and was now reporting on 36 strategic objectives that had 96 indicators. The rationalisation allowed for improvement and would bring much needed efficiencies in performance monitoring. An extensive strategic and planning process would be undertaken during the period leading up to the approval of the budgeting to align budgets against strategy. DHS would also make improvements in the alignment of strategies of the entities with departmental and government mandates and strategies.

Discussion
The Chairperson said she could be outdated in terms of planning but why was DHS’s planning as such, because under normal circumstances key strategic objectives would be at the beginning of the plan. Moving forward would be the Annual Performance Plan (APP) with indicators followed by the budget. However DHS’s plan was not consistent with the planning standards. Under the key strategic objectives, DHS should also outline the indicators and amounts to be spent. She asked if DHS had taken into consideration issues raised by the Auditor General about the indicators.

Mr Chainee responded that DHS had tabled the Strategic Plan and the APP exactly in the format the Chairperson had indicated. Unfortunately the presentation was not presented in the same manner. In relation to the APP that had been tabled before Parliament and the Committee there were strategic goals and objectives, the performance indicators and the baseline for 2015/16 and 2016/17. He was not sure if the Committee had had a chance to look at the tabled APP.

The Chairperson asked why that was not part of the presentation?

Mr Chainee responded that it was an oversight on DHS’s part and apologised for the error. He added the APP had been linked to the Strategic Plan. After DHS had tabled its strategic plan and the APP, the Auditor General had commented on the strategic plan and the APP. DHS had been issued with certain recommendations particularly with regards to correcting, amending and revising the Strategic Plan and APP in line with the SMART criteria. DHS was also correcting certain inconsistencies and was working within a time frame to resubmit. By and large DHS had complied with the Auditor General’s requirements however he was not certain if the Committee had sight of the recommendations made by the Auditor General. DHS was undertaking a process to correct that.

The Chairperson said that looking at DHS’s indicators and what the Auditor General had recommended it seemed some of the indicators were still missing. She invited members to engage with DHS.

Ms L Zwane (ANC; KwaZulu-Natal) asked if the DHS had finalised a housing policy for Military Veterans and how the houses would be distributed across the provinces. She asked for verification in terms of DHS’s ability to construct houses as it centres on the municipalities’ ability to provide infrastructure. She thought the accreditation process of metros would have an effect on the delivery of houses. She was not sure if all metros had been given an accreditation and if there was a way to ascertain if the delivery of houses would be fast tracked. She was worried with the plan particularly with the reduction in budget which was not in keeping with the spirit of job creation that the government was talking about. She assumed the APP of DHS was aligned with the NDP and the MTSF. What was the subsidy quantum and was the quality of houses delivered consistent with the quantum? She was aware the quantum had been revised and was the quality of the structures or amenities provided improving?

Ms P Mququ (ANC, Eastern Cape) asked why the DG did not sign the APP as had the other officials from DHS. Did DHS have any mechanisms to monitor projects? The Auditor General had raised a number of concerns about vacancies in key positions in DHS. The Development Planning unit was the most affected; what was happening now in DHS? She asked if there was a monitoring team to ensure that houses were handed over to the intended beneficiaries.

Mr J Parkies (ANC; Free State) asked for clarity on what was meant by space economy and if DHS could better articulate on that. With specific reference to spatial planning ,in terms of the reviews of programmes that DHS was making, there was always talk of transforming spatial planning however not much progress had been made. He asked if DHS could better inform him on the progress in spatial planning. He asked if the backlog in title deeds included municipalities. About six to ten weeks ago, the Committee had visited Hessequa Municipality in the Western Cape where occupants of newly constructed housing projects did not have title deeds and were not even sure if the land belonged to the municipality. The beneficiaries did not know where to go to obtain the title deeds for the houses.

Mr Parkies said that in the identification of mining towns, why was the Free State not mentioned as part of the mining towns? He was aware that he was not a member of the Committee but none the less he was a Member of Parliament. He had a consecutive view that many government entities were not doing the job they were supposed to do. As such the level of impact that the government was supposed to make on the living standards of the people and service delivery to the people was reduced, could DHS comment on that. What was the sub-market? Could DHS quantify the job opportunities created through its various projects?

The Chairperson asked for clarity on the target for housing opportunities as she had heard in two meetings that the target was two million and not 1.5 million. She asked if the 1.4 million current target was as a result of a decline in the baseline. The grants earmarked to metros had been discussed in previous meetings to consider all provinces even those with secondary cities because of the issue of urban migration. The USDG, MHSCG and even the HSDG were informed by urban migration. She was surprised that DHS had not taken into consideration the Committee’s suggestion to include all provinces. Such an allocation of the grants was widening the gap between the rich and the poor. The Committee and DHS should not meet just for the sake of meeting but rather to influence the decision.

The Chairperson said that the issue of housing waiting lists might not be in the plan but it had been identified by the Committee as an issue and a special meeting had been held to discuss the waiting lists. The corruption issue was a bigger problem now because unfortunately the allocated units being built now were being “sold” by officials. For instance in Mpumalanga if a person wanted RDP housing they only had to pay R50 000 to officials in DHS. Most people can’t afford this. Even those who were on the waiting lists were being removed. Individuals connive with officials and contractors. That was why monitoring was very important. The Auditor General had indicated that DHS’s indicators were not SMART. If there was a person responsible for planning in DHS it was better to get an individual who knew how to plan. The indicators left a lot to be desired. More importantly how was DHS going to report its performance in the next year for some of the indicators as they were not measurable? The Auditor General had also indicated that the indicators were not in line with the strategic objectives. The Auditor General had further said if indicators were not SMART, when reporting, DHS would not be reporting on the indicators on the plan. She was aware that sometimes officials liked to report on a gross report in order to confuse people.

On land matters, do municipalities own land to implement the housing projects? Sometime what delays delivery is lack of land ownership by municipalities. In Mpumalanga an application was made however long ago, the land had been occupied by more than 3000 people. Sometimes the people block the R400 in protest for service delivery. However not much could be done now until the state releases the land to the municipality. Sometimes the land released was not suitable for housing. This questioned the issue of value add.

The Chairperson said that informal settlements in Cape Town were becoming a problem particularly those along the way to the airport as motorists are robbed. On two occasions she had experienced this where stones were put on the road to distract motorists and rob them. Perhaps dealing with informal settlements depended on the competency of the municipality. She added that in Khayelitsha there was a housing project where a family of eight was put in a transit container. Ten transit containers were sharing one toilet which was a hazard. Was DHS aware of this and was it its responsibility? Could DHS take over because the situation was not improving and getting out of hand in Cape Town. She was not picking on Cape Town but unfortunately it was very visible as it was the city of Parliament. Perhaps Cape Town could learn from Mbombela as it had good mechanisms to deal with informal settlements. A law enforcement unit was in place to deal with illegal informal settlements.

Mr Parkies asked if Mr Chainee had ever read DHS’s APP.

Mr Chainee responded that he had.

Mr Parkies said that pages 11 and 15 were contradictory. It talked of lack of access to affordable end user mortgage financing and that financial institutions were reluctant to extend mortgage financing. The document also talked about the indebtedness of the people and lack of capacity to get new buildings. DHS was confirming in its own document the reluctance by finance institutions to give financial resources to people who could not even afford to build their own houses. On page 15 it said the private sector had committed to work with government to improve service delivery in a number of sectors. Why would the banking sector choose where to work with government to make a contribution and be reluctant to be involved where it was needed most by releasing resources for housing development?

Did DHS have a timeline on the use of consultants and could DHS share with the Committee the mechanisms that were in place to build the state’s own capacity? The reality was consultants were devouring government resources as many departments were just procuring the services of consultants without proper plans as to how DHS would manage itself once the consultants concluded their term. Internal capacities and skills should be utilised.

Mr Chainee responded that DHS had committed to construct 6000 houses for military veterans. The time period for completion of these houses was December 2016 and DHS could confirm that in consultation with Department for Military Veterans there were 5854 military veterans who needed to be provided with housing. He said all could agree that those who had contributed to the liberation of South Africa should be adequately taken care of. The Minister had said that it was sad when a military veteran had to be buried moving from a shack to the grave. As part of the business plans with provinces, DHS had indicated that the target for housing for military veterans was not negotiable. In the current financial year R137 million was allocated for construction of houses for military veterans. There were around 2129 houses in various stages of completion.

Ms Zwane followed up with a question on the specifications for the houses.

Mr Chainee responded that it was a higher specification for military veterans. He reminded members that there was a contribution from Department of Military Veterans who had made the plans. The size of the house was 50 square metres. The specifications were provided by Department of Military Veterans and DHS supplemented.

Mr Chainee responded that when the USDG was established one of the considerations was to supplement bulk infrastructure which was only provided to the Metros in conjunction with Department of Cooperative Governance and Traditional Affairs (COGTA). One of the advantages in the provinces was the ability to straddle between Human Settlements and Local Government which provides DHS with an opportunity to ensure there was sufficient bulk infrastructure when developing business plans. Insufficient bulk infrastructure particularly water and sanitation was a major constraint and some projects had failed to take place because of this. In some cases houses were constructed but could not be connected to water or sewer networks. The issue had been taken up particularly in the metros in terms of policy. When approving, one of the responsibilities of USDG was to provide supplementation for bulk infrastructure.

At the moment eight Metropolitan municipalities except for Buffalo and Mangaung had been accredited with level two. A process had been agreed between the provinces, municipalities and DHS for the finalisation of accreditation level three to improve the capacity of the state as a collective sphere to develop. A full report was available.

The baseline reductions had impacted on DHS. However DHS’s response would be to improve efficiency. DHS had undertaken engagements with Treasury, but still DHS had a responsibility to deliver on its mandate even in the absence of adequate financial resources. However, the impact was a concern on the delivery of service site and housing mandate. DHS would ensure improvements in efficiency of these deliveries and in addition the Minister had stated that the tender procurement process would be revised to prevent further losses on deliveries.

Mr Chainee said that as DDG for Strategy and Planning, he would ensure improvements in the APP and strategic plans. Priority was given to issues of mandate given by Parliament and Committees in relation to SMART indicators would be addressed by next week. Also it was not true that as a bureaucracy DHS had tried to massage issues to work to its advantage. When the DHS stated that it would deliver 1.5 million housing opportunities or 300 000 per annum what mattered was whether these figures could be found in the APP or not. The quantum figures were R110 000 for construction of a house, R6000 for procurement of land and R45 000 was provided for servicing (water and sanitation). DHS had indicated that it should be able to develop a decent product.

The Chairperson asked what was meant by servicing.

Mr Chainee responded that servicing would be bulk infrastructure allowing provision of water and sanitation.

The Chairperson said that sometimes contractors just built a house and leave without connecting water and sanitation.

Mr Chainee responded that was in relation to bulk and linking. Sometimes contractors were appointed to construct houses in areas without bulk infrastructure. DHS had a monitoring and evaluation unit to monitor such issues although the capacity and effectiveness of this was one of the instructions the Minister had given to improve. Results had to be seen for proactive action to ensure that issues picked up by Parliament and various monitoring agencies were addressed. Over a period of time some effectiveness could begin to be seen.

The Chairperson said R45 000 was a lot of money to be used because in some areas the sanitation services were already put in place by the municipality. The occupant might pay a connection fee to the municipality and the contractors were just given that money.

Ms Zwane asked if the R110 000 was just for constructing and roofing the housing structure and R45 000 was an additional payment for services. She asked who paid R6 000 for land.

Mr Chainee responded in cases where land had to be purchased, the maximum amount for purchasing land was R6 000.

The Chairperson said there was a loophole because in most cases the land belonged to the municipality. The land was availed for construction of RDP houses as such the R6 000 did go to municipalities or Amakosi. She could not fully comment on the Amakosi but she was 100% certain that the money did not go to municipalities. If there were no services provided by contractors , this implied contractors were paid R51 000 for no service provided.

Mr Chainee responded that the figures provided were just maximums so that if land was already purchased then that amount did not get paid.

Ms Nonhlanhla Buthelezi. Chief Director Operational Policy Framework, DHS, said that the structure of projects varied. Business plans were presented containing different interventions. Under the financial aid intervention there was a programme which looked at land acquisition. Projects would be released according to where it was in the value chain. If the project required acquiring land then it would start with the acquisition of land. Each and every project (like the number of units indicated as part of each provincial delivery target) would have each project area attached to the amount indicated. If it was indicated there was no need to acquire land as it had already been acquired in the previous financial year, then it would not be accommodated in the current business plan. DHS would analyse the business plans submitted by provinces in terms of checking each and every project to see what the province was looking for i.e. was it a top structure, servicing or planning?

In relation to money allocated to municipalities in rural areas, such projects would only look at building top structures and not service delivery as the areas varied. The bottom line was that when looking at projects, different projects had different dynamics. In terms of planning, DHS was able to unpack exactly what was being bought. If the plan indicated construction of 120 units with a top structure which would require servicing, the money would be allocated for construction and servicing. Within servicing there was an applicable standard which had to be adhered to. However, municipalities were not the same and might have different grade services. Grade A service level was higher and Grade B service level was where there was a classic hole. The issue was around the packaging of the entire project looking at the housing value chain to understand how far each project was to determine what had to be done.

The Chairperson said that perhaps another discussion would be required as this was an important issue. The manner in which DHS had responded left her even more confused. What figures were used to plan for units as the figures varied? The rural housing projects were a concern because DHS indicated that they did not budget for servicing. She asked what was meant by that. DHS might have to do some investigations to find out what problems were there because some contractors were paid the full amount even if servicing was not done. In urban areas, services were paid for by municipalities.

Mr Chainee responded that DHS would be happy to present on how the subsidy programme worked, as well as the processes of the business plans so the Committee would have a better understanding. In terms of monitoring and evaluation, the National Home Builders Registration Council (NHBRC) undertook all inspections in relation to units and compliance. In addition as far as the responsibilities of building regulations, municipalities had the responsibility to sign off building plans and ensure they were in compliance.

On the space economy, looking at the NDP and the Diagnostic Analysis, DHS was aware that in terms of radical spatial transformation the country was not where it should be. The Minister had requested a master spatial plan which was basically spatial restructuring to ensure spatial equity and integration. DHS would be able to transform the spatial economy through the master spatial plan that DHS had initiated in conjunction with the Housing Development Agency. The initiative would give a clear picture of where the investments needed to be placed, how they needed to be placed and what the impact of the spatial interventions would be. In order to deal with inequality, unemployment and eradication of poverty then the spatial economy, particularly in relation to investments in space and how the investments were made, should be addressed.

Adv Menzi Simelane, Special Advisor to the Minister of Human Settlements, said that in relation to the master spatial plan and space economy issues, the important thing to note was the challenge of current responsibilities within departments was more or less the same. DHS was trying to come up with a plan that would ensure that one department would drive the transformation process of the space economy. The master spatial plan was moving away from the notion of just building houses. It was also aiming at mega projects whereby houses as well as schools and hospitals would be constructed in the same areas. From now going forward the Minister had engaged with MECs specifically in Gauteng to no longer submit plans to build houses only, as such plans would not be accepted. The master spatial plan was aiming at building towns and houses should number at least 10 000 units. An example was Vaal River City in Gauteng where such a mega project was being implemented. It was hoped other provinces would follow suit. At a higher level it was hoped that Urban Planning would be under Human Settlements as it was currently outside it.

Mr Chainee said that the backlog figure given for title deeds was the current backlog. The target was 900 but the backlog was 970 which included municipal backlogs. It was a total for all backlogs for the subsidised housing sector which DHS was responsible for managing.

In relation to the mining towns, some of the mining towns in the Free State had been included in the national mining interventions. The amounts had been ring fenced as per the DORA.

Mr Parkies asked if the Committee should believe that because the Free State had not been included in the planned delivery for mining towns.

Mr Chainee responded that there were mining areas in the Free State which had been included in the bigger picture but for the Human Settlements interventions there was no specific allocation. However, detailed plans for the Free State investments in relation to Human Settlements were being made in those towns. He added that it was important for Members, based on their constituency responsibilities, to understand that allocations were being made.

The Chairperson said that the difference between this Select Committee and the Portfolio Committees was that this Committee was representing provinces.

Mr Parkies said that he was originally from the Eastern Cape, however where he came from there was not a single RDP house. He had always wondered why that was the case. Traditionally the people there were used to building their own houses. Perhaps in the future DHS could implement a special housing project and engage the municipality to put up RDP houses.

Mr Chainee responded that given the current responsibilities the issue would be taken up. Ultimately prioritisation in terms of funding allocated was with the MECs and provincial departments. However the point raised by Mr Parkies was taken. He said the secondary market refers to the market after the initial house had been fixed and refers to all spheres of income, low middle and high.

Mr Chainee responded about job opportunities, saying there were figures available. DHS had a model which projected the number of jobs created per house constructed. The model also calculated the overall contribution in primary, secondary and induced incomes. For example an induced number could be calculated as a result of construction of a house.

Mr Chainee said that in relation to the two million versus 1.46 million target, he said he could not comment on what was placed before the Committee. However DHS and Minister had been consistent with the target as 1.5 million even in the budget speech. He clarified that the actual target was 1.46 million which was rounded up to 1.5 million. He was not sure who had raised the two million figure but it would be taken up.

The expansion of the two grants to secondary towns was in the process of being approved by the Minister as per directions and recommendations received that the USDG should be expanded to secondary towns and cities. Initially when the USDG was created it included 12 towns but after discussions with Treasury it was limited to eight. DHS had now included four cities Rustenburg, Msunduzi, Polokwane and Mbombela. DHS agreed with the Committee’s sentiments that the grants should not be limited to Metro cities as there were aspirant metros which would come about and would need to expand. The policy included the ability to redirect money to other areas if money was not being utilised.

The Chairperson asked if the four additional cities were secondary cities. She added that the cities were not included in the document. She did not want a situation where these cities would only be considered if money was available. Rustenburg was one of the fastest growing cities and as such it should be included in the grants allocation. The money should be shared with the metros and secondary cities. The issue had been raised in the last reporting period with the aim that secondary cities would be included in the current planning period. When the Committee raised issues, DHS should take into consideration what was agreed on.

Mr Parkies said next time DHS should have figures about job opportunities to hand in the meeting. The country was facing a challenge of unemployment. Thus all resources deployed should create jobs for the people whether permanent or temporary.

Ms Buthelezi wished to highlight the engagements which DHS was having with Treasury because the caption of the USDG and the allocation of the USDG was from the Mid Term Funding which was combined with the HSDG funding. Current policy included a clause which said it was the intention of government to extend the grant to secondary cities. The part that the DDG had talked about was around the underperformance of agencies. Should the agencies underperform, the money would be shifted to the metros and even to district municipalities. Part of the engagements that she was talking about was that DHS still needed to engage fully with National Treasury. Hence there was a transition for additional funds from the [inaudible] to cover other secondary cities.

The Chairperson said she wanted to do away with the notion of some cities being more equal than others, for example, Cape Town, Durban and Johannesburg. The Committee was aware of this. Further, KwaZulu-Natal gets a lot of money but this should be re-aligned as some parts of this area were extremely poor. It should be borne in mind that the sector was dealing with people. If it were up to her the money would not be given to metros in attempt to narrow the gap. Metros generate money and in places like Johannesburg the Metro made more money than the province.

Mr Parkies said perhaps metros were given more money in order to attract investors.

The Chairperson said that all provinces should be treated equally as they were equal members of the country. She said this was partly the reason why the Committee wished to have the Minister present.

Adv Simelane replied that to respond to the questions that Members were asking, a political office bearer was needed. The eight metros approved to be dealt with in this way was largely due to the accreditation programme. In essence there was no accreditation for level three assignment. The Minister and the MECs agreed to share accreditation three. In essence, assignment really meant the powers of the MEC would move to local.

The Chairperson said that as long as DHS understood that it had to provide equal support to all provinces.

Mr Chainee said that the buck stopped with him in regards to the SMART indicators and from now onwards he would take responsibility. A land development agency had been appointed as an entity and as part of the business planning processes there were allocations made for land. Consolidation of the land acquisition budget was being followed so as to know how the land was purchased and when was it developed. This was about improving the capacity of the HDA and this was done as could be seen in the budget.

The issue of value add was not a debate but rather a given that all agencies and departments should address the market failures and be held accountable. Part of the strategic planning alignment process was to ensure that agencies were consistent with the mandate of DHS and did not act outside of that.

Adv Simelane added that agencies were doing what they were supposed to do however DHS was of the view that they could do more to be more visible. The Minister had instructed, and this was also announced, that the Development Finance Institutions should be consolidated. By the end of June these would be a part of the NFHS. The challenge with NFHS was financial capacity. It had not had capitalisation and DHS had been asking Treasury for more. However Treasury had disagreed to capitalisation until such time when there was capacity then Treasury would inject more money. The Minister was trying to leverage more money in the market. When the budget was allocated to the USDG and the HSDG, the money went directly to provinces who took longer to spend the money and some was kept in accounts to earn interest.

The Minister was arguing for Treasury to transfer the money to DHS account so that DHS so that interest earned could be used for further activities. This was the re-alignment that DHS was trying to achieve. In respect of the projects which were falling apart DHS would like more details so that officers could be sent for inspection. There were projects which had been done by provinces and municipalities without reporting as per requirements. As a result DHS was going to spend aroundR2 billion for classification otherwise the money would have been re allocated in DHS. The entities were getting re-energised to respond so that the concerns raised were correctly addressed.

Mr Chainee responded that to deal with informal settlements DHS had emphasised with provinces and municipalities in terms of the USDG and HDSG was to ramp up so that those households could also receive the benefits. Even in terms of the delivery agreements the number of households to be impacted was 750 000. He agreed with the Chairperson about settlements on road reserves. He said the problem was with some municipalities who chose to deal with informal settlements selectively particularly households that were leaving on road reserves or flood plains. These were provided for and there was money. The issue was the ability to monitor, implement and ensure what needed to happen. Mbombela and Tswane were good examples for dealing with land invasion.

The standards that were being applied indicated that that was not the ideal. The ideal was to have in the informal settlements upgrading programme on site one house with water and sanitation. This was something that DHS was passionate about and it resonated politically as well.

Ms Buthelezi added that in terms of accreditation 28 municipalities were accredited with level one and two. She said that DHS had a Fraud Prevention unit where cases such as those of officials in Mpumalanga selling RDP houses were supposed to be reported. In terms of the waiting list there was a national register which was deployed in five provinces. It was work in progress in terms of ensuring that it was also available in Municipal offices for operational agreements. Call centres would be set up soon where the national registers would be deployed and beneficiaries would be able to go to for issues of housing needs.

Mr Mbengo agreed that the use of consultants was not a welcome practice. The difficulty around it was a cut in employee compensation budget. DHS found itself in a situation of less employee compensation budget and work that had to be done. As such DHS ended up using consultants. DHS was looking at ways of how best to get things done, plans implemented without the use of consultants. However with less employee compensation budget DHS found itself in a difficult position. DHS was engaging with Treasury and had put some proposals to enhance the compensation budget so that more people with skills were employed as this was critical.

Adv Simelane said the point on the use of consultants was well taken. One of the things that should also be looked at was the capacity of municipalities and provinces. Some of the interventions that were being enforced at a national level should have been done at the Municipal and Provincial levels. Municipal and Provincial capacity was part of the accreditation programme. DHS was trying to balance from not intervening and when it did intervene it had to buy some of the service. DHS did not want to create a structure for purposes of engaging in provinces and the local level.

In Nelson Mandela Bay municipality the role of the entity when it was contextualised in legislation the HDA was supposed to be a developmental state but it never had the capacity to do such kinds of interventions. Since taking over DHS the Minister had re-emphasised national policy in this regard by letting the HDA to buy land or get land from DHS, SOE or the municipality and development agencies. Nelson Mandela Bay municipality was going as an implementing agent which would carry out human settlement projects on behalf of the city for the city so that some of the problems could be assisted with. Planning was done in the normal course and handed over to the Provincial and national governments to do the contracting. This would be difficult to be done in Cape Town because…….[inaudible] there were different dynamics in Cape Town.

The role of the HAD was that where ever there were challenges in delivery there was a state institution that could assist instead of getting contractors to manage a project and save a lot of money.

Adv Simelane said that selling of RDP houses was a major problem which required solutions because those who get RDP houses were people without money and those with money were taking advantage. For instance a house could be sold for R10 000 or R50 000. These houses were sold informally as there was an eight year mandatory period before the house could be sold. RDP houses could be found for sale on gum tree for various prices. The favourite house was a corner house which could easily be turned into a Spaza shop. The issue was what happened to the people after selling the house. Some believed they could apply for a house again; however the database had been used to block such people from reapplying for a house. These people went to informal settlements which increased the demand for services. DHS was struggling in managing the problem specifically as how to educate the beneficiaries on the value of the house. Moreover if indigent it was not wise to sell the house but rather to pass it on to the next generation or hand it over to the government. If handed over to the government it was difficult to buy back the house as most people would not have the money to do so. As such DHS would spend more time on consumer education on the net worth of the house which was an asset that could be used to obtain a loan from the bank. This challenge was affecting the human settlements programme making it more expensive and difficult to manage. DHS would also appreciate assistance from the Committee in dealing with the problem.

A study would be conducted to better understand the size of the phenomenon as DHS was reluctant to allow free market forces in the sector. The vulnerable were worsening their situation. Furthermore selling of RDP was fuelling xenophobic sentiments because the people who could afford to buy such houses were foreigners who had money. The study would determine if the houses were sold to improve poor people’s circumstances.

The Chairperson said the study would assist a lot because there would be information as to whether those who sold houses really went back to the housing queue or not. If they do join the housing queues again they use relatives which made it difficult to identify such people.

She thanked DHS for the presentation and engagement. She hoped DHS would improve the plan. She re-emphasised the seriousness of the DG’s absence as the Committee had been assured that the DG would be available. She said next time the Committee would not allow DHS to make a presentation and DHS would not have a budget. It was a problem when the Minister was not available for the whole year. The Committee understood the Minister was busy but at least twice a quarter the Minister should be available. She added that the Committee had made a decision that if there was not at least one politician available in the meeting DHS would not be given a chance. Extra ordinary measures had been taken in order for the day’s meeting to take place because of the pressure in the programme.

The meeting was adjourned.