Report of the Portfolio Committee on Human Settlements on Budget Vote 30: Human Settlements and the Strategic Plan of the Department of Human Settlements and its housing entities, dated 15 April 2010

 

Introduction

 

 

The budget and strategic plan of the Department of Human Settlements was referred to the Portfolio Committee on Human Settlements for consideration and report.  The Committee had to scrutinise the Strategic Plan of the National Department, Provincial departments as (these are) implementing agents and its entities to establish whether the funds allocated were aligned to the objectives as stated in the respective strategic plan documents. Furthermore, the Committee had to check if there was an alignment to the key government priorities as stated in the State of the Nation Address (SONA). 

 

It is worth noting that the Committee embarked on an extensive engagement process with the department on its outcome-based performance plan and programmes for the 2010/11 financial year, as this was very crucial in informing the Committee’s oversight plan. Subsequent to that a series of meetings were held to reach a final stage of the budget vote process. The Committee also conducted public hearings on the budget and interested stakeholders and members of the public were invited to make submissions.

 

 

2.         Department of Human Settlements

 

2.1        Aim of the Department

 

Although the name of the department changed from Housing to Human Settlements the aim of the department has remained the same, namely to:

 

Determine, finance, promote, coordinate, communicate and monitor policy in respect of housing and human settlements.

 

The additional responsibility within the newly named department is the inclusion of sanitation as part of its mandate, transferred over from the Department of Water Affairs. This follows a mandate of the department to provide Comprehensive, Integrated and Sustainable Human Settlements, of which sanitation, in the form of provision of sewerage and water supply infrastructure is a critical component. The right to access to adequate housing for all, enshrined in section 26 of the Constitution of the Republic of South Africa and the Housing Act (Act 107 of 1997) are, however, still the bedrock for the operational models, as well as spending focus for the department.

 

2. 2       Government Outcomes

 

In relation to the government outcomes for the Medium Term Strategic Framework (MTSF) priorities, against the background of the analysis of trends and emerging challenges in the housing environment, the outcomes of the extensive stakeholder consultative process, government priorities determined at the first post election Cabinet Lekgotla (May 2009), the following macro elements form the pillars of the strategic goal of the human settlements strategy:

·         strategic pillar 1: mandated outcomes

·         strategic pillar 2: coordination and alignment in human settlements development

·         strategic pillar 3:urbanisation and spatial management

·         strategic pillar 4: key services delivery (shelter development) priorities

·         strategic pillar 4: (a) rural settlements shelter and basic services

·         strategic pillar 4: (b) shelter development governance

·         strategic pillar 4: (c) shelter development reforms

·         strategic pillar 5: transformation and paradigm shift

·         strategic pillar 6: institutional re-alignment

 

2. 3       Department priorities

 

The department has set delivery priorities for 2014 as follows:

·         accelerate upgrading of informal settlements

·         upscale development of affordable rental housing

·         assembly land for human settlements - low income and affordable housing

·         develop national settlements infrastructure and

·         facilitate increased supply of affordable housing finance.

 

Even though the department has set service delivery priorities for 2010-14 on its annual plans and targets, further directives are still awaited from the Presidency.

 

2. 4       Programmes

 

The Department of Human Settlements has five sub-programmes as listed below:

 

Programme

Budget

Nominal Rand change

Real Rand change

Nominal % change

Real % change

R million

2009/10

2010/11

2011/12

2012/13

2009/10 - 2010/11

2009/10 - 2010/11

Programme 1: Administration

  167.8

  176.2

  182.4

  190.9

  8.4

-  2.7

5.01 %

-1.59%  

Programme 2: Housing Policy, Research and Monitoring

  72.2

  45.9

  48.2

  50.8

-  26.3

-  29.2

-36.43%

-40.42 %

Programme 3: Housing Planning and Delivery Support

  250.9

  206.8

  173.4

  183.3

-  44.1

-  57.1

-17.58%  

-22.75%  

Programme 4:  Housing Development Finance

13380.70

15598.10

17898.90

18991.60

 2 217.4

 1238.0

16.57 %

9.25 %

Programme 5:  Strategic Relations and Governance

  164.7

  174.4

  180.1

  187.2

  9.7

-  1.3

5.89%  

-0.76%  

 

 

 

 

 

 

 

 

 

TOTAL

 14 036.3

 16 201.4

 18 483.0

 19 603.8

 2 165.1

 1147.8

15.43

8.18

Source: (National Treasury), Vote 30, human Settlements.

2. 4.1 Programme 1: Administration

 

The programme aims to provide strategic leadership, administrative and management support services to the Department.

The department projected an allocation of R176.2 million for 2010/11.

 

2. 4.2    Programme 2: housing policy, research and monitoring

 

This programme is responsible for developing and promoting human settlement and housing policies supported by a responsive research agenda. Further, it seeks to monitor and assess the implementation, performance and impact of national housing policies and programmes.

 

The department projected an allocation of R54.9 million for 2010/11.

 

2. 4.3    Programme 3: housing planning and delivery support

 

Programme 3 aims at support implementation and delivery, build capacity, and liaise and communicate with stakeholders for effective housing and human settlement programmes. Coordinate and monitor the implementation of priority projects and the sanitation programme.

 

The department projected an allocation of R206.8 million for 2010/11.

 

2. 4.4    Programme 4: Housing development finance

 

Programme 4 aims to fund housing and human settlement development programmes. Further, it provides financial and grant management services. In addition it seeks to promote investment in housing finance, mobilise and promote financial integrity within housing institutions, as well as managing all matters provided for by the Home Loan and Mortgage Disclosure Act (Act. 63 of 2000).

 

The department projected an allocation of R15.6 billion for 2010/11.

 

2.4.5     Programme 5: Strategic relations and governance

 

Programme 5 aims to coordinate the Department’s mandate within the intergovernmental relations framework, manage international relations, and promote good governance practices within the Department and its public entities. The programme further intends to provide timely and integrated business information to the Department.

 

The department projected an allocation of R174.4 million for 2010/11.

 

3.         Budget analysis

 

The Department of Human Settlements received an allocation of R16 201.5 billion for the 2010/11 MTEF period.  In terms of Division of Revenue Act (DORA) the total allocation for the Conditional Grant for 2010/11 is R15, 026, 763. 

 

3.1 Grant allocations

 

During the briefings by the department to the Committee on the budget, the department reported grant allocation to the provinces as indicated in the table below:

 

Table 1: Summary Grant Allocation 2010/11[1]

 

Province

Funds Allocated R'000

DORA Allocation R'000

Difference R'000

Eastern Cape

1,599,146

1,598,646

-500

Free State*

 

1,300,691

 

Gauteng

3,771,831

3,771,831

0

KwaZulu-Natal*

 

2,714,109

 

Limpopo*

 

1,234,750

 

Mpumalanga*

 

975,863

 

Northern Cape

377,879

273,260

-104 619

North West

1,288,770

1,288,770

0

Western Cape

1,829,000

1,868,843

39,843

Total

8,866,626

15,026,763

 

 

 

3.2 Public Hearings

 

During public hearings, only four provincial departments were invited to present before the Committee.  The rationale for this decision was to embark on a fair and justified process, due to time constraints.  

 

3.2.1 North West

 

The provincial department was led by the MEC, Ms D Mohono, accompanied by Mr M Motlogelwa; Acting Head of Department (HOD). The Department presented the performance plan of the department.  The department informed the Committee that it had managed to build 89 522 houses in the last five years. The MEC also reported that the old stock was still under the North West Housing Corporation.   The department’s performance (delivery of units) decreased due to increase in the cost of building materials.  An amount of R1.1 billion was allocated for the 2009/10 financial year and 99 percent was spent.  The department’s target for the 2010/15 was to deliver 70 000 units.  The allocated conditional grant for the financial year 2010/11 is R1.22 billion. It was reported that the province has a backlog of 400 000 houses.  With the current allocation the department will be able to deliver approximately 14 000 units and to improve on the type of the structure delivered. 

 

It was reported that, service delivery and cash flow agreements have been properly structured.  It was further reported that a commitment has been made by the local service providers that they will donate houses to women and child-headed families.  There was also an agreement that no contractors would build a unit which is less than 45 sqm.  Nevertheless, the department reported that there are challenges relating to geo-tech research and planning aspects.

 

3.2.2          KwaZulu-Natal

 

The provincial department was represented by Mr Nxumalo, Senior Manager who further tendered an apology for the MEC.  He informed the Committee that the department will focus on the middle property intervention.  The provincial service delivery was aligned with the conditional grant business plan as well as the Multi-year Housing Development Plan of the Department.  He indicated that most of the budget for 2010/11 will focus on rural development and the target was to build 25 000 houses. It was further reported that the province has 600 informal settlements. Out of 560 000 built in the 2004/09 period, the province has identify 9181 units to be rectified.  In addition to that latter, other nine (9) projects have been identified for rectification, and there are 5 000 units that have to be demolished.  However, 67 percent of that has been dealt with.   The committee was informed that, most of the hostels are still owned by the province; therefore the department has to maintain such assets until they are transferred to the families. The province has developed a policy for financial institutions to assist individual beneficiaries to access housing finance. The department was also assisting municipalities, specifically on the housing chapters planning perspectives.  A certain portion of funds has been set aside to deal with vulnerable groups and the province has also developed a programme to capacitate the chiefs.  During the time of the meeting the province’s Conditional Grant business plan was not submitted to the national department.

 

3.2.3          Free State

 

Mr Mokoena, Head of Department (HOD), accompanied by Ms S Dhlamini, Chief Financial Officer, and Mr O Themba, Chief Internal Auditor presented the performance of the department. A written apology from the MEC was received. He informed the Committee that the department managed to spend the allocated budget for the 2009/10 financial year.  The backlog was at 200 000 while 102 000 households live in informal settlements. The province at the time of the hearing had 147 blocked projects. The province has a target of 19 000 from the subsidy quantum during the 2010/11 financial year. It was further reported that the province has a challenge in monitoring the construction sites. Mr Mokoena reported that the National Home Builders Registration Council (NHBRC) has four (4) staff members serving the two provinces.  The other challenge he raised was the phasing out of Thubelitsha that has left a huge gap in facilitation of projects. At the time of reporting the department was not sure of the number of houses to be demolished and the cost of that effect.

 

In response to the Committee’s query regarding the money recoveries from the fraudulent claims by alleged contractors, the department indicated that it did not have any information but made an undertaking that the report would be forwarded at a later stage.

 

3.2.4.    Northern Cape

 

The provincial department was led by the MEC, K Mmoiemang accompanied by Mr B Swartland, Acting Head of Department (HOD) and other senior officials from the department.  Mr Swartland informed the Committee that major projects for 2009/10 were the accreditation of municipalities amounting to R8.3 million, consolidation amounting to R1.3 million, emergency housing amounting to R1.2 million and rural housing amounting to R5 million.  The total housing delivery for the last financial year was 4 089 units.  Mr Swartland further informed the Committee that there was a decrease in the allocation of funds from R 325 011 million allocated in 2009/10 to R273 260 million in 2010/11. Therefore the shortfall costs the ability of the province to implement projects planned during the course of 2009/10, for example, the province planned to build 3 000 units but due to a decline in funding, it would be able to build only 2 000 units.  However the Minister has committed to provide an intervention to bridge that gap. Bulk infrastructure was also cited as a challenge.  Communities were resisting the provision of VIP toilets and demanding a water borne sewerage system. The province had planned to rectify 3 544 units but due to budget constraints they would only manage to rectify 2 379 units.  The province cited a primary challenge of young people who migrate to bigger cities due to a slow pace of human settlements development, in assisting to reduce the housing backlog in the province, thus affecting the provincial economy negatively.

 

3.2.5 Challenges faced by provinces

·         The increase in building cost material supply  

  • Lack of bulk infrastructure
  • Lack of effective monitoring;
  • Shoddy workmanship,
  • Nepotism and fraud,
  • Intra and intergovernmental challenges to effect proper and desired integration of communities.   

 

3.2.6 Comments by the Committee on Provincial Presentations

·         Provincial and local departments are not complying with legislation on enrolment of projects. These non-compliance results into lack of warranty that will ensure that the houses will be rectified should there be structural defects.  The outsourcing of housing inspectors was also observed as the cause for shoddy workmanship.

·         Out of four (4) provinces that appeared before the portfolio committee only KwaZulu-Natal province admitted that it owed the National Home Builders Registration Council (NHBRC), however that amount owed had already been paid out.

·         The phasing out of Thubelitsha has been a concern to most provinces as well as to the portfolio committee.  It was of the view that there is no alternative system in place to address existing challenges.

·         The four provinces who appeared before the Committee did not cost the rectification and blocked projects.  There was no clear programme on farm worker assistance.

 

4.         Human Settlements Entities

The Committee considered the strategic plans of the following human settlements entities: National Home Builders Registration Council (NHBRC), National Urban and Reconstruction Agency (NURCHA), National Housing Finance Corporation (NHFC), Housing Development Agency (HDA); Rural Housing Loan Fund (RHLF) and Social Housing Foundation (SHF). The Committee wishes to report as follows:

 

4.1        Grant allocations to housing institutions

 

During the briefing by the department on the budget, the department reported the grant allocation to the provinces as indicated in the table below:

 

Institution

MTEF allocations (R thousand)

2010/11

2011/12

2012/13

National Housing Finance Corporation

 

1

 

1

 

1

National Urban Reconstruction and Housing Agency

 

-

 

-

 

-

Servcon Housing Solutions

-

 

-

-

Social Housing Foundation

6 621

7 018

7 368

Thubelisha Homes

-

-

-

Social Housing Regulatory Authority

151 772

120 473

86 497

Rural Housing Loan Fund

49 500

49 500

51 975

Housing Development Agency

69 3000

89 100

93 555

 

 

4.1.1     National Home Builders Registration Council (NHBRC)

 

Mr S Mashinini presented the strategic plan before the Committee.  The registration, annual, and manual fees are set at R750, R600, and R100 respectively.   Income for non subsidy housing was estimated at R463.7 million and income for subsidy housing was R143.3 million. He informed the committee that the projected expenditure for non subsidy and subsidy housing amounted to R414.7 million and R86.3 million respectively.  He further informed the committee that outsourced inspectors were used for subsidised housing and in-house inspectors were subsequently                                                                                                                                      used for non-subsidised housing projects. 

 

The Council informed the Committee that a guarantee from the late enrolment was required to be equivalent to the risk, of which some departments were approaching the Council to repair uncovered houses.  The council was proactive in enrolling projects and units, utilising its resources and expecting the departments to pay on a later stage, however they had not received the payment for such a service.  The council was on the verge to cancel such enrolments as there was no cooperation from the departments.  Mr Mashinini informed the Committee that the Council was owed an amount of R123 million by Human Settlements Provincial Departments.   

 

4.1.2     National Urban and Reconstruction Agency (NURCHA)

 

Mr M Pillay, CEO, briefed the Committee on NURCHA’s strategic plans.  He informed the Committee that the agency ensures the availability of bridging finance to small, medium and established contractors, which participate in the building of low and middle income housing and related community facilities and infrastructure.  The agency is in a process of developing a system to monitor and manage projects.

 

Mr S Nxujani, CFO, outlined the financial statements for 2010/11.  He reported that the total assets amount to R616.6 million compared to the 2009/10 financial year.  The provisional financial statement for 2009/10 reflected a deficit of R8 million, compared to a projected surplus of R2.3 million 2010/11.    The agency still continues to provide technical and administrative support to emerging contractors.  The agency has signed a deal with future growth, Department of Human Settlements and the National Treasury.

 

4.1.3     Housing Development Agency (HDA)

Mr Adler, CEO, HDA accompanied by senior officials briefed the Committee on the HDA 2010/11 strategic plan.  The agency indicated that funding is a challenge as it was only allocated R69.3 million for operational expenses; capital funding was not allocated for acquisition of land. Two mega projects, Zanemvula and N2 Gateway protocol agreements have been signed with Nelson Mandela and City of Cape Town, Eastern and Western Cape Province and National Department with HDA. He also reported that a virement of R13 million was approved by the National Treasury for capital funding.

 

The agency has a target to acquire 6 250 hectares of state owned land for development of houses.  It has managed to acquire 1 020 hectares of land in the Western Cape, 1 121 hectares has been transferred and cost R10 million from Transnet via Servcon.  An amount of R101 million was paid by Servcon in land acquisition.  It was reported that it was very rare to find the state land in isolation and that made it very difficult to acquire.  It was further stated that there was no clear inventory or a responsible entity in terms of land assembly and coordination. Therefore it was necessary for the agency to be mandated so that it could be accountable.  A policy or an amendment to the existing Housing Development Agency Act was necessary.

 

4.1.4          National Housing Finance Corporation (NHFC)

 

Mr Moraba, CEO, accompanied by senior officials briefed the Committee on the strategic plan of the Corporation. He informed the Committee that the housing finance environment was considered in terms of recent indication of economic recovery.  Its role was to expand the housing finance activities and it was working closely with the private sector by using instruments such as credit support, etc.  It’s role was also to fund well located and suitable land parcels. In the corporation’s fundraising strategy it has signed a deal with the French Development Agency and  European Investment Bank which has been signed off by the National Department of Human Settlements and National Treasury.

 

4.1.5     Rural Housing Loan Fund (RHLF)

 

Mr J Fakazi, Acting CEO, presented the mandate and the vision of the fund. He informed the committee that the fund was focusing on facilitation of housing credit to low income rural households.  Mr Potgieter, CFO outlined the funds for 2010-11. He informed the committee that the fund will receive an amount of R49, 9 million from the Department of Human Settlements.  He further informed the committee that despite Eskom price hikes and increases in the oil price the fund has been steady in lending from 2005, which amounted to R255 million. 

 

RHLF had an allocation of 49,500 for 2010/11.

 

4.1.6     Social Housing Foundation (SHF)

 

Mr Moholo, CEO accompanied by Mr Higgs briefed the Committee on the strategic plan.  Mr Moholo informed the Committee that due to the decision taken to close the Foundation, its budget allocation was reduced from R23 million in 2009/10 to R6.6 million in the 2010/11 budget as  the entity is at the stage of de-establishment.  The closure plan was forwarded to the Minister and the department for approval.  The establishment of the Social Housing Regulatory Agent (SHRA) was in a process and the business plan has been developed. The regulations on the operations of SHRA were awaiting pre-certification by the State Law Advisers. The SHRA budget allocation for the 2010/11 financial year amount to R150 million.  Project pipeline has been established and technical staff has been appointed.  The assessment of social housing institutions is scheduled to take place in September 2010.

 

5.  Observation by the Committee on human settlements entities

 

·         No capital funding was allocated to the HDA to accomplish its mandate. 

·         The Committee was of the view that the use of intermediaries by RHLF was exploiting the poor as the interest charged is very high. 

·         The long standing process on the appointment of the Chief Executive officer (CEO) was a great concerned.

·         Low enrolment of projects and units by provincial department through NHBRC.

·         Non payments of enrolment fees by provincial department amounting to R123 million.

·         The committee note with concerned the outsourcing of inspectors by NHBRC as it seem to be costly.

 

 

 

6.  The Committee made the following recommendations with regard to human settlements entities

 

·         A capital funding proposal by the HDA should be presented to the Committee for proper understanding of challenges encountered. 

·         A policy or system to manage buying and selling of land between the state departments is required.

·         The filling of the vacant post of the CEO for RHLF should be considered as matter of urgency and the department should report progress to the Committee by end of May 2010.

·         The department should report to the Committee on the allocation of R49 million to RHLF.  It should explain how such allocation will assist poor consumers from paying high interest to RHLF.

·         The department should brief the Committee on the voucher programme.

·         NHBRC to be invited to brief the Committee on the collapsing units.

 

7.  Submissions made by stakeholders and the general public

 

7.1 Financial Fiscal Commission (FFC)

 

Mr B Khumalo, Deputy Chairperson of FFC accompanied by Mr S Mtantatho, Senior Researcher briefed the Committee on the implementation of the recommendations it had made to the Department of Human Settlement concerning the division of revenue for human settlements and National Treasury.  The Commission’s mandate is to focus primarily on the Division of Revue Act.  The following recommendations were reported to have been captured around 2005-2009.  The Commission reported that recommendations made were almost attainable. The recommendations are on delivery, policy and funding.  The following are the recommendations made:

·         The delivery of houses should be done in an integrated and sustainable manner and delivery should be where amenities are available.

·         Accreditation must be given to municipalities with capacity.

·         There should be monitoring of compliance as poor quality implies additional funding or cost.

·         Municipal Infrastructure Grant (MIG) to be linked with new subsidies and local equitable share to ensure allocation and installation. 

·         Due consideration should be given to the indigenous housing technology policy.

·         A sustainable financial framework for rental housing should be developed.

The recommendations were by and large considered and those dealing with policy have not yet been attended to. 

 

7.2 Statistic South Africa (StatsSA)

 

Mr P Lehohla, Statistician briefed the Committee on the progress made in housing delivery since 1996.  He informed the committee that in 2007, housing growth was about 40%, which means that the growth of the number of units was faster than growth of the population.  The inter provincial migration had contributed to a change of demography in provinces like Gauteng, KwaZulu-Natal and Western Cape, which resulted in major shack settlements.  The Gauteng and Western Cape provinces would require the most attention in housing needs and with the upgrading of informal settlements.  It was further stated that the immigrants from neighbouring countries were not considered during the time of the report.  Mr Lehohla informed the Committee that he would be available for further briefing if the need arose.

 

7.3 National Treasury

Ms M Moore, from National Treasury presented a broad overview of the Human Settlements Budget Vote 30 of 2010/11.  She indicated that in terms of the budget the following adjustments were made:

·         R1.2 billion for the provision of sanitation services in rural areas.

·         R1 billion was made available to address the issue concerning the gap housing market (guarantee scheme).  There was no policy on how to disburse the R1 billion.  A proposal of the policy on how to disburse the R1 billion grant was paramount.

 

The Treasury was concerned about the low number of units or houses registered with the NHBRC. Out of 2 700 000 only 7 000 were enrolled with the NHBRC. Treasury felt that the beneficiary list should be transparent and the process to be free of corruption, proper accountability was crucial.  She stated that the Housing Act does provide for zero rating for contractors.   It was indicated that there was no formal policy on how to support the gap market.  It was reported that NHFC has a more funds than NURCHA, yet their impact on the ground was minimal.  NURCHA and RHLF on the other hand have a big impact on the ground but have little funds to operate with.  She suggested that the grant could be spent on the informal settlement upgrading.  She cited that the issuing of title deeds was also a challenge.  In term of blocked projects she suggested that there should be a policy on the supply chain management that provides prescripts and contracts with specific conditions, e.g penalty clause.   

 

7.4 Presentation by Ms Sylvia Hammond, a private citizen

 

Ms Hammond’s presentation comprised the following issues:

·       The concept of nation building.

·       Emphasis on community involvement in the development of human settlements.

·       A need to create a Garden City Movement, which involved the integration of horticultural and garden societies in the development of human settlements. 

·       Permanent utilisation of Temporary Relocation Areas (TRA’s) cannot be regarded as sustainable developments, therefore it was important to be strictly used as a temporary measure.

·       Toilet facilities that are in walk away metres from the house were not acceptable.

·       Unpacking the concept of the community involvement in the housing delivery, she indicated that beneficiaries should not only be involved in the housing delivery project but the communities where the development was taking place, required to be physiologically involved as well.  

 

The committee welcomed and commended the participation and commitment of citizens like Ms Hammond in the community development affairs.  The committee assured her that concepts presented would create a more caring society and hoped that the department had taken note of this.

 

7.5 South African Housing Cooperatives Association (SAHCA)

 

Mr V Botha, Manager informed the Committee that SAHCA is a national umbrella organisation for housing cooperatives. He further stated that the association had studied the budget vote and the submission would be on issues of governance and housing. The association urged the department to establish a unit that would work with it in developing cooperatives on the ground.  The association requested the department to implement the housing cooperatives strategy that was developed two year ago.

 

8.         Comments on strategic plan and budget vote of the department

 

The Committee commended the department for the work done in its strategic planning, especially on sanitation. The Committee was pleased with the progress made by the department in providing sanitation in rural areas.  It however was of the opinion that the plan is bit ambitious. 

 

9.        Observations by the Committee on strategic plan and budget vote of the department

 

·         Based on the submission made during the public hearings and the presentation by the National Department of Human Settlements, it was evident that there was a misalignment between Provincial and National priorities as outlined in the State of the Nation Address (SONA) and of Outcome 8.

 

·         There are unresolved issues pertaining to the transferred function of “Sanitation” from the Department of Water Affairs to the Department of Human Settlements.

·         On percentage terms, the budget allocated for the eradication of informal settlements and the rental stock does not match the target pronounced in the State of the Nation Address (SONA). 

·         Key performance areas, indicators and projected targets are not clearly defined in the departmental Strategic Plan.

·         Some Provinces have not responded to the call by the Minister of Human Settlements on the implementation of the “Rectification Programme”, yet some people are living in bad conditions.

·         The plan and processes to manage a guarantee fund of R1 billion to incentivise the private banking and housing sector has also not been clearly defined. 

 

10.  Other concerns by the Committee

 

·         The department’s budget is silent or does not cater for the disaster affected areas.

·         Housing cooperatives programme is not reflected in the department’s plan. 

 

11.  Recommendations

 

The Committee is of the view that an appropriated approved budget should prioritise the national objectives.  Therefore it finds the deviation by the Provincial Departments inadequate.  The Provincial Departmental strategic plans are expected to align to the national department’s strategic plan. 

 

Having conducted public hearings with the various stakeholders, the Committee recommended that:

·         The department should draft a national plan or programme that will clarify unresolved issues pertaining to the transferred sanitation function and to present the plan to the Committee.

·         Clearly defined performance areas, indicators and projected targets for 2010/11 financial year should be presented to the Committee before the budget vote debate in order to assist the Committee in conducting its oversight function in a proper manner.

·         Provincial and National department priorities should be aligned to the national priorities outlined in the State of the Nation Address (SONA), and of Outcome 8.  This is paramount and requires an urgent attention.

·         The department should honour the call by the Minister to embark on a rectification programme of units with structural defects.

·         The department should draft a clearly defined plan or policy and monitoring mechanism to manage a guarantee fund of R1 billion set to incentivise the private banking and housing sector.

·         Provinces should respond to the Minister’s call on rectification of stock with structural defects.

 

The Committee requested the Chairperson to consult with the Minister and appeal for his intervention urgently before the budget debate.

 

12.  Departmental response to the above session: 15 April 2010

 

Persuant to the above recommendations made by the Committee, a workshop was held on 8-9 April 2010 by the National Department with the provincial departments to discuss the huge discrepancies between national and provincial targets and a substantial change was reported to the Committee as follows:

·         The department was in a process to set up final Sectoral Delivery Agreements (SDA’s) with the respective core departments.

·         All provincial business plans have been submitted.

·         Progress in rental stock allocation has been made although the provincial estimate indicated lesser targets as set out by the national department.

·         There has been great improvement by the Eastern Cape province on the informal settlement upgrading allocation.

·         It came to light that the Western Cape province targets are far less from the national estimated targets. 

·         There have been great improvements by the KwaZulu-Natal province in the rental stock whereas in other Metro areas the rental stock remains low.

·         In the affordable housing market there were no targets set by the Eastern Cape and  Limpopo provinces.  

·         It was reported that the focus for the Western Cape was to develop 150 000 serviced sites.

·         With regard to the R1 billion guarantee fund the department was in the process of consulting with relevant financial institutions and National Treasury.

·         The progress report with regard to sanitation was to be submitted by July 2010. However there was work in progress.

·         The department was to draft a tool to monitor progress that would require MinMec approval.  A reporting template has been developed with the assistance of the Presidency.

 

A Programme with timeframes on all of the above was submitted to the Committee.

 

The Committee welcomed the report as presented by the department.  Work in progress on the on the annual performance plan 2010/11 was appreciated by the Committee.

 

13. Concerns raised and observations made on the annual performance plan presented on 15 April 2010

·         The Western Cape, Gauteng and KwaZulu-Natal provinces were expected to be the champions in the implementation of informal settlements upgrading programme, because a large concentration of slums are located in these provinces. Therefore the discrepancies in budgetary allocation to that effect raises a concern with the Portfolio Committee

·         Gauteng and Western Cape provinces are low in their rental estimates.

·         Northern Cape province is the worst performing province regarding the rental programme as it has not set rental targets.

·         Limpopo, Eastern Cape and Western Cape provinces still have no targets set for an affordable housing market.

·         Some provinces have set their target estimations but this is a very low figure as compared to the national targets response. 

·         The rectification programme was not estimated by the provinces.

·         The Committee was concerned about the Western Cape strategy to focus primarily on the delivery of 150 000 sites. 

·         The Committee observed that there was a shift on the latest presentation as compared to the original submission on the departmental strategic plan e.g.  performance areas and targets were clearly outlined.

·         The annual performance plan submitted will assist the Committee in its monitoring and oversight function.

·         Some functions were not solely dependent on the Department of Human Settlements; therefore the department is still awaiting approval from the Presidency.

·         The Committee will engage with the National and Provincial Department of the Western Cape to ascertain the rationale behind their plan and on how the strategy is envisaged to accelerate housing delivery and eradicate the province’s backlog.

 

The Committee recommends the adoption of the budget and strategic plan of the Department of Human Settlements.

 

Report to be considered.

 

 


[1] As at 17 March 2010, the Free State, Kwa-Zulu Natal, Limpopo and Mpumalanga had not submitted their final Conditional Grant Business Plans for 2010/11. The allocation was based on the Division of Revenue Act (DORA) allocations only.