Budget report by Director General: Department of Housing

Meeting report

HOUSING PORTFOLIO COMMITTEE
9 March 1999
BUDGET REPORT BY DIRECTOR GENERAL: HOUSING DEPARTMENT

Document handed out:
Explanatory memorandum: Housing budget 1999/2000

SUMMARY
A budget briefing was given by the Director General of the Housing Department. The amount allocated is Rm3 529 827. This figure is 2.74% lower than that of the previous year. The meeting focused on break down explanations of this figure, the reasons for increases in the budget figures for certain sectors and decreases in other sectors.

MINUTES
The chairperson, Ms N.E.Hangana (ANC) opened the meeting by apologising for starting late. She asked the Director General, Ms Mpume Nxumalo, to start her address by providing a brief clarification of the Land Rental Bill.

Land Rental Bill
The Director General explained that the draft Land Rental Bill had been finalised in July 1998 and has been submitted to the Cabinet. Cabinet has made its recommendations which have been considered. Consideration is now being given to public comments. The most important aspect of the bill is the section dealing with the establishment of tribunals and landlord agreements. The department needs this bill as a framework for coherence regarding provincial legislation. This bill needs to be passed urgently since the provinces are already passing their own legislation without national guidance. The Gauteng province has already passed the Land Tenant Act, with KZN working towards passing similar laws. Without this legislation the risk of nine provinces passing nine different non-coherent laws may be unavoidable.

The Chairperson stated that the Portfolio committee also need to take its own position around this issue.

Budget briefing
The Director General gave the departmental budget briefing for the financial year 1999/2000. She indicated that the budget layout has been designed in an explanatory style with the aim of simplifying the comparative differences between the figures of the previous year to the present estimates. The current budget indicates a total decrease in expenditure estimated at 2.74 % or R99 482m (i.e. 1998/99 =Rm3 529 827 vs 1999/2000 = Rm3 629 309).

The budget figure is made up of the following breakdown : (figures in R’000)

1. Administration estimate is R30 483 which indicates an increase of R2 306(8.18 %) increase from the previous financial year budget on the same item.
2. Housing performance estimate = R469 844 (R12 119 or 2.65% increase to previous year figures).
3. South African Housing Fund estimate = R2 971 121 (R61 408 or 2.11% increase to that of the previous year.
4. Communication estimate =R8 723 (R1 126 or 14.82% increase)
5. Policy development = R49 656 (R176 441 or 78.4% decrease from the previous year budget. In spite of increases in all other items, the significant decrease in budget estimate for this item has led to the decline in the total budget figure.

The breakdown of policy development sub-items contributing to this total decrease:
- Due to restructuring within the department, there has been a decline of R80 000 in personnel expenditure;
- A decrease of R70 000 in equipment expenditure as a result of restructuring within the department.
- A decrease of R4 100 000 in professional and special services as a result of internal restructuring.
- Transfer payments decrease of R173 820 000 due to the phasing out the first time home buyers interest subsidy scheme and the state assisted home owner scheme (R33m decrease in housing subsidy), R50m reduction of the housing support expenditure, incorporation of hostel funds into the SA housing funds thus reducing expenditure in the budget by R90m, and a R1m reduction in the allocation to the People’s housing partnership trust.
- Miscellaneous : decrease R3000 as a result of restructuring within the department.
- As a result of printing costs in respect of the National housing code, there has been a R955 000 increase in stores and livestock expenditure.
- An increase in administrative expenditure of R677 000 under this item is mainly attributed to conferences relating to the development of the new housing white paper.

Questions by committee members
An ANC committee member asked for an explanation of the increment of the personnel expenditure estimate which is not accompanied by an increase or proposal for an increase in employment. Secondly, the DG was asked to explain the meaning the concept of "resettlement costs".
DG answer: The increment in the budget estimate is not meant to explain an increase in personnel but a mere estimate for the year. She warned against the confused linking of unlinked issues. If you employ enough personnel you will use all your budget for that item. If you do not employ your full quota, you do not exhaust your budget and there is no crime in returning a surplus to the national fund.

The issue of resettlement costs relates to people appointed who have to be transferred or relocated to other centres with the department paying for the expenses of relocation.

Question from Mr Tsenoli (ANC): If you divide the personnel increase of R635 000 by the number of employees you get R4000-00. Is it correct to say that this increased expenditure estimate is designed to cover R4000-00 salary increases per employee?
DG answer: About the figure of R635 000, this does not refer to the immediate division of among employees in terms of increases. In fact that is not how budgets are drawn. This view is misleading since there are other factors that determine personnel expenditure, aside from salary increases.

Question from Mr Masher, M.G.(NNP):You referred to a decrease in the expenditure on computer software. But these figures indicate an increase more than it reflects a decrease if one interprets them, can you clarify this?

DG answer: Some of the increase in software expenditure refers to our attempts to get all our departments to be Y2K Compliant.

Follow up question: Is there a specific time you can give us when all departments will be completely Y2K compliant?

D.G. answer: Our time frame is July 1999, by then we expect to know who is ready and we expect a very high rate of compliance by that stage. We are also confident that we will have enough time to even complete the testing of this software before the actual millennium period.

Question from Ms P de Lille (PAC): How many individual subsidies have been paid out so far?
Mr Masher of the NNP requested the Chair to rule out this type of a question since it is asks for information that is not easy for the Director General to carry around. The Chair agreed to rule this question out and it was not answered.

Question: Could we have an update on the new housing white paper. Secondly, what will happen to the People’s Housing Trust when the R6 billion trust money is finished?
D.G. answer: We accepted guidelines from MINMAC that a second white paper be drafted instead, in order to highlight the loopholes of the first white paper. The process is still in the hands of departments who still have to make inputs in terms of the new guidelines. The view is that we had to consolidate and improve on the first white paper. The first white paper will serve as the guideline for the next government department.
In a way, we are proceeding on the technical side with the second white paper.

With regard to the second question about the People’s Housing Trust, the view of the minister is that its mandate has to change. The definition of the trust and what it faces has changed. Originally it was envisaged that the trust was to be the implementer of programmes. It turned out that this duplicates and clashes with the job of provincial MECs. The work of the Trust had to be changed from implemention into advocacy while leaving the MECs with the implementation process. We will continue to monitor the process and see how the role of the trust changes over time.

The chairperson asked whether the members support the budget or not. Dr Mbulawa (DP) stated he supported the budget. The NNP indicated that it is procedural to go back to their parties to get confirmation of support for the budget. The chairperson closed the meeting on that note. The committee meets again on Tuesday, 15 March 1999.