DHS Quarter 1 performance

Meeting report

The Chairperson welcomed everyone present and submitted that in terms of previous resolutions, the Committee was not pleased with the Department for not sending the documents prior to the agreed times to allow Members to go through the documents before the meeting. She lamented that it was not appropriate and the Department needed to refrain from that because it puts Members at a disadvantage when engaging the Department.

She asked Members whether they would allow the Department to present or schedule another day for engagements so that Members can have enough time to peruse the quarterly report and documents.

Members took a resolution to allow the Department present.

Briefing by the Department on its quarterly performance report
Mr Thando Mguli, Head of Department (HoD) thanked the Members for the opportunity to present and apologized for the not sending the documents in time for Members to prepare for the meeting. He informed Members that the targets for the first quarter were not achieved. He indicated that in the public service, departments have 12 months for delivery and there is an anomaly that usually happens. In the first quarter a lot of consolidation takes place involving attending to the Auditor General and closing the books properly for the next financial year. Therefore, when considering the first quarter; he appealed to Members to not be depressed. The Department has a reputation of good delivery and extraordinary governance. However, the first quarter report may create an impression that there was no delivery taking place.

Mr A van der Westhuizen (DA) asked whether the Department did not set its own targets and whether it was not aware that the first quarter would be slow, given the administration that takes place in the first quarter. The Department should know by now its targets for each quarter and it how it has always allowed the slow delivery in the first quarter. He said that he would look at the planned targets for each quarter and if the quarterly targets set for the first quarter were not achieved, that would raise red flags for him despite the explanation provided by the HoD about the first quarter.

Mr Mguli said that in its first programme the Department aspires for greatness because in terms of the performance levels, it aims for level four. Even though the impact issues were not reported on in each quarter, the target is to instil good governance and that is the deliverable Members will see at the end of the year.

The Chairperson interjected and said that Members would engage with the presentation slide by slide because Members did not receive the presentation before hand.

Mr Mguli said there were no targets set for programme one in the first quarter, but that did not mean work was not done to make sure that the Department adhered to the plans.

On programme two – housing needs, research and planning; there were no deliverables for measurement in the first quarter. The Department delivered nine out of six promised deliverables which will be reported in the second quarter.

The Chairperson said there had been a conversation about a high level report being brought to the Committee but it had agreed that the reporting must be narrowed down to ensure that the Committee has a complete picture.

Mr B Herron (Good Party) sought clarity on the number of planned human settlement projects aligned to the Integrated Development Plans (IDPs) (Annual Performance Plan - APP number 2.1) particularly the 15 targeted projects. He said that 15 was a very low number.

Ms Kamiela August, Director at DoHS responded that the planned number is a measurable that applies where the Department looks at a new project. The 15 is reported as new projects and it must be registered on the relevant municipal IDP. It is new projects that align with the provincial projects for the year.

Mr Herron asked whether the target was for the whole province.

The Chairperson stated that it is important to give the information as detailed as possible so that Members can understand.

Ms August said that some indicators are prescribed in the business plan, as is the case with the 15. The emphasis is on planned projects in the IDPs that have been approved. It does not mean that the Department only worked on those 15 projects. It means that the Department added 15 more projects that have been approved for the current financial year. There are close to 70 projects, in total, on the business plan.

Mr Herron said he understood that there were more projects than 15, but he was concerned about that target being 15 approved projects aligned with municipalities IDPs. He said the number was very low and he sought clarity on whether the issue was on poor planning or aligning projects with municipality IDPs.

Ms August said that the Department has an allocated budget but it can only accept and approve projects in its business plan if those projects are funded. There are other projects that account for a large number of deliverables but there is not enough funding. It could be that one of these projects is a large project that upon completion will provide a big yield in terms of planned deliverables. The number of projects is not reflecting the number of deliverables. Some of them could be encompass 50 deliverables and others could be 3 000.

The Chairperson said that the reporting style of the Department throws Members off in terms of tracking what the Department has achieved. The information as presented is not very clear.

Mr Mguli said that the Committee should have asked the Department to present the business plan so that the Members had a complete picture of what would happen over the Medium Term Expenditure Framework (MTEF) period. The Department was now only presenting on the deliverables due in the first quarter for each programme. The business plan would provide a total picture of the Department’s plans and targets. The presentation only contains quarterly progress and it is not providing a full picture of all the activities that are happening.

The 15 sounds very low but the current commitments are much higher than that. The budget is committed to the projects in its entirety.

Mr P Marran (ANC) wondered why the Department failed to take initiative to bring the full picture knowing that there are new Members in the Committee. The Department ought to know that and the HoD must not solely put that at the discretion of the Committee.

The 15 projects, it has been said, are for the whole year but there is nothing reportable on progress for the first quarter; therefore Members cannot measure the Department’s performance in the first quarter. So does this mean that the outcome could be fewer than the 15? Is there a possibility that the Department could end up achieving less than the 15 planned projects?

Mr van der Westhuizen said the biggest problem with human settlements was not money. The national Minister has always been put in the spotlight for under-spending. The national government has shown the appetite to spend money because the under-spending is a hard percentage in the national department and so it looks for projects which it can fund. So if the Western Cape can show to the national government its projects and show it is spending 100% in terms of budget; he asked whether the national department could perhaps allocate some money to the provincial Department to fast track and complete its projects?

Mr Marran said that the 15 projects reported on had been planned for and budgeted for, but asked whether there are more projects in the housing pipeline which comply with the IDP approval requirements but for which no money is available?

The Chairperson wanted to know how the Department aligned its target of 15 new projects with the support it gives to all the 25 municipalities in the Western Cape? 

Ms Jacqui Samson, Chief Director at DoHS responded that there is a pipeline of projects and the Department’s responsibility is to assist all municipalities with technical expertise to get the projects ready for implementation. The 15 was not just a number that was selected, the team looked at the pipeline and the available budget. So the 15 was put on the business plan.

The technical expertise provided by the Department included the identification of land, bulk services, requirements, environmental authorization and planning and processes precedes the 15 planned target. The 15 is the number of projects that were approved in a given a year and it is attached to a list of ongoing projects as well as a budget. 

In terms of budget requirements, Western Cape always absorbs additional funding and it has been the recipient of additional funding from the national department in the past two years.

The Department is busy with the business plan for next year and the first draft would be in at the end of this month. The Department is already over budget with the projects that are on the books and in the implementation stage. The need is very high but there are limited resources and the 15 projects would not cover the need – the Department can only provide from 15 000 to 18 000 opportunities with 450 000 people on the waiting list. The selection of 15 is part of a scientific approach to identifying an achievable target.

The overall target of 25 is for all the local municipalities in the Province, besides the district municipalities, so it is a pre-set indicator. When the Department said it delivered nine projects, it is already misleading because the Department has have already gone to all municipalities to provide technical assistance on many issues. The Department under-reported on that and in fact visited more municipalities and communities in the past year.

Mr Mguli said the Western Cape Department has a reputation of always receiving additional funding. The Department intends to raise its hands in future as well, when the opportunity comes up to request for additional funding. The budget is over-stretched despite the additions. The Department also received additional money in March this year because the national department knows that the Western Cape spends its money and it can show what it spends it on.

Mr Marran said that perhaps the Department could provide the Members with the details on the 15 new projects and where they are taking place as well as the ones that were still in the pipeline. A list of all these projects should be provided.

On the 25 municipalities referred to, is it  aligned with the current budget or is it not aligned with the current budget?

Ms Samson said that the 25 refers to the number of municipalities in the province. Municipalities themselves have no human settlement function – this is a provincial responsibility. The technical assistance outlined is for the human settlements plans and technical analysis that the Department can assist with, in all 25 municipalities. Technical and skills transfer can be measured when the project is completed.

The Chairperson asked whether the technical support provided to municipalities was to ensure that their business plans were done or it is assistance for the readiness of their planned projects.

Ms Samson responded that there is one planner per region. Leading up to the submission to the Department the team will assist municipalities with technical documentation and information requirements. Secondly, there is a statutory process of planning and environmental authorisation. The Department has relationships with the other relevant departments that must give input to ensure that the human settlements applications are expedited. The Department also assists with planning approval – the planning approvals links to the 15 project target set that Members were asking questions about. That is when the Department would set targets for the implementation. The Department can make a presentation to the Committee to explain the process for pipeline planning and outline the full list of projects on the business plan.

Mr Mguli said on programme three the Department set a target on the number of houses to be provided in terms of the housing codes – the code will make reference to individual subsidies within a certain figure such as where applicants for housing have a household income between R0 to R3 500 per month. On the non-credit link the Department over-performed and produced 82 houses against the 30 planned outputs.

On the number of subsidies in the Finance Linked Individual Subsidy Programme (FLISP), the Department also over-performed by 201 actual output in the first quarter against 96 planned output. The Department under-performed, however, on the number of new sites connected to basic services as part of Integrated Residential Development Programme. Only 46 sites were connected compared to the planned output of 1 000. This was due to the people in the informal settlements who did not want to move, but work has been done.

On incremental housing, the planned target was 1 000 deliverables but the Department managed to deliver about 427. This was because of delays by the City of Cape Town (COCT) in issuing compliance certificates for electrical connections and water meters. This is a requirement before units can be handed over to the occupants.

On the transfer of title deeds, the Department issued 1 786 – more than the planned target of 1 500. The Department also achieved its first quarter target towards the number of work opportunities to be facilitated by 31 March 2020.

The Chairperson wanted to know why the Department achieved only 30% on the percentage of the  amount paid to Historically Disadvantaged (HDI) contractors with women representation within the housing sector. Secondly, why did the Department fail to achieve 50% for a change?

Mr Mguli said that it is difficult to achieve the 30% - this translates to 30% of R2.5 billion. The Department is always limping when it comes to achieving the 30%. This was one target that the Department will probably be attacked on again by the Committee. When you look at the construction industry, the industry is predominantly male. The Department attempts to get in touch with construction enterprises that are owned by women. To try and push the 30% to 50% is difficult because even achieving the 30% is intensely difficult. Looking at the country at large, one would ask which province looks after women enterprises? Everyone would say it is the Western Cape. Those that do not get direct work from the Department were not counted in the percentage. Some of them are sub-contractors and if that was counted, the Department would over-achieve the 30% target.

The Chairperson asked what percentage would be attributed to the sub-contractors for women.

Mr Mguli said that he could only give an educated estimate because the rules stipulate that the Department must only take into account those enterprises that it contracts directly. Even if the Department would include those sub-contractors, the percentage would still not amount to 50% but it would be more than 30%.

The Chairperson asked for a report with the number of SMMEs (Small Medium Enterprises) owned by women and to where the Department has taken the initiative to upgrade those enterprises.

Mr Mguli said that the Department would provide that information. Most of the enterprises were initially grade two or level two and the Department provided support which elevated them to level four. This information can be provided to the Committee for Members to peruse.

Mr Marran said on page six, the department under-performed significantly by producing 46 out of 1 000 planned for the number of sites connected to basic services. Are the contractors appointed by municipalities or by the province? Will the Department reach its annual target by the end of year? Money has been allocated for that project.

Ms Phila Mayisela, Chief Director: Implementation responded to say that the way projects are implemented is that there are projects that fall within different categories such as being implemented by the municipality or the Department. In projects that fall within the municipalities, it is the municipalities that appoint the contractors and they are responsible for contract management but the Department would engage with the municipalities and conduct oversight. There are 2 000 such sites that will be signed off in the second quarter.

Mr Marran said that if the contract management happened at municipal level and seeing that the municipality would not deliver the target by the end of the financial year; does that mean because the money is already committed to that project will not be taken away but will roll over? It looks like at municipal level there is no rush to ensure that bulk infrastructure is dealt with and basic services are provided so a start can be made with implementation of top structures. He was concerned about the slow pace of municipalities.

Mr van der Westhuizen asked whether the Department monitored the project development because it seems that the construction is done by private companies. 

The Chairperson said that 46 is the number of completed sites that can be handed over to the beneficiaries.

Ms Mayisela said that the Department monitored municipalities’ implementation programme when they lag behind on their projects even though the contract is between the municipality and the private contractor. There are monthly meetings as well as site meetings and if the Department sees that the targets would not be met, the money will be taken back and shifted to projects that are moving faster even though the commitment to the contract was still maintained.

The 46 sites are counted in agreement with the Auditor General (AG) that it refers to sites that have access to basic services such as water, sanitation, and roads. You would find that there are projects that have not yet been counted because the engineer has not yet signed off on the connected sites based on the AG’s definition.

Mr Marran said if a municipality had a three or five year plan and, in terms of projects, knew how much money they would get from the Department in terms of the allocation, those long term projects would be messed up because if they are not completed by the end of the financial year, the money will be shifted. He felt that this was stagnant.

Mr van der Westhuizen asked whether the numbers reflected projects where the Department is doing the contract management? May there be projects where the municipality may be contract managers that are excluded from this number?

Ms Mayisela said that the number is for the projects which are managed and delivered by the municipalities.

Mr van der Westhuizen said he was concerned about the 46 which was achieved.

Ms Mayisela said that there is work currently in progress. There are about 2 000 still in progress but only 46 could be reported as per AG’s definition.

Mr Herron said that he failed to understand how the money could not be rolled over and the funds made available.

Ms Mayisela said that the City of Cape Town is a level two accredited municipality and the Department signed an agreement which allows the Department to pay it in tranches upfront. It is the City’s responsibility to spend that money.

Mr Mguli said an incorrect impression may have been received by the Members. The Department has to walk with the City in terms of its financial system it has – when the Department gives them the money, they take it and link it to beneficiaries for whom they need to deliver houses. The Department did not take that money away immediately but it was after a while when the Department took the money back. The Department attends to those beneficiaries in another form. The City may be treated differently in comparison with other municipalities due to its level.

The Chairperson said that on the number of outstanding debtors, does the Department foresee that in the current financial year the number will go down?

Mr Mguli said that currently the department was working on all debtors that are difficult, with only certain things that need to be fixed. The Department will be able to push those debtors through. The outstanding number reflected the difficult debtors but the department is putting in the work to solve the disputes and the number might not be existent in the next financial year. There is dedicated staff in the Department dealing with this matter.

Mr van der Westerhuizen asked what database was used before the Department goes out to advertise the people they are looking for.

Mr Brian Denton, Director: Project Administration, DoHS, said that there is no specific database but in terms of the law you have to advertise for two months and then you are obliged to go ahead afterwards.

The Chairperson wanted to know whether the Department could not try work with stakeholders that have access to the people’s information.

Mr Denton said that the Department cannot access that information even though it is the State.

Innovations that align with provincial policy
Mr Mguli stated that 30% of the Department’s housing includes sustainable alternative and innovative technology. Installation of package plants based on a BOOT (build, own, operate, transfer)  model has already been implemented in George and it will be implemented in all other areas with similar bulk challenges.

With regards to higher density sectional title development, in response to high level of urbanisation the Department is implementing extra ordinary high density sectional title developments allowing for studio, 1 bed and 2 bed apartments to be implemented on a number of priority projects.

Mr Herron said on alternative technology, he wondered on the planning whether the Department considered climate change and alternative energy. On the high density, when looking at the pictures he thinks of poverty just like in Delft. He wanted to know about the social impact of creating communities with mixed incomes. How does the Department address social issues on the development of these mass scale apartments and the impact of climate change?

Mr Marran said that Members have seen how residents have complained about how the Department does not plan for the future. On Transhex in Worcester, it seems that the province does not care where these projects are built as long as they are built in numbers. He looked at the Transhex nice picture. It looks nice on the outside but within there are huge squatter camps built within these communities. On the inside the project is a disaster in waiting.

Mr van der Westerhuizen said that the Department should learn from history. On sectional title, he understood the rationale but his impression was that sectional title development owners must be relatively wealthy and sometimes are asked to contribute lump sums for repairs or maintenance of the buildings.

He wanted to know how the Department intended to overcome problems associated with sectional title developments.

Mr A Lili (ANC) said when looking at the high density projects it seems as if the Department was building houses for people who are not going to grow tomorrow. The very same people the province is building houses for will be much older in the future and might struggle to climb the stairs to go up to their tenth floor apartments. He agreed that this might be a recipe for disaster.

Mr Mguli said that there is no intention on creating disaster and the Department wants to be responsive. Land is not elastic and urbanisation is happening at a pace that is not easily surpassed. The future looks bleak if development continues only with low density. The Department needs to respond now because of the high rate of urbanisation. The Department has foresight of the future due to urbanisation – 700 people move to Cape Town every month.

The Department will be respectful of the citizens – there are areas where there is a low density development which means the Department would first push the elderly in the lower density developments and ground floor apartments. The Department has had discussions with the people on these issues and the people agreed and commented and supported the development. The elderly and frail will be shifted to areas where they will be in lower density areas.

Delft is not a problem of human settlement, it is a failure of industry, but sometimes the questions are forwarded to the wrong department. There are organs of State that are supposed to develop industries and the Department released a large piece of land to the Airports Company for the expansion of the airport but that has not happened. If the Airports company did what it was supposed to do and build the factories on that corridor, many of the problems that exist in those areas would be dealt with. In fact, the Department has done very well in Delft with all the necessary facilities that are needed within the community. It is currently creating recreational amenities for children in Delft.

The Department also went on further to release some land for civil society organisations and NGOs to develop.

Mr Marran said that Members thank the Department for thinking forward, but seven stories high is too much – one would like to understand how a person can get up to the seventh floor. If you install elevators or lifts in those buildings, whose responsibility will it be to fix and maintain those lifts when they are broken, because it will be ordinary people living there with limited income.

Mr Herron said that his point on Delft was that if you build 5 000 houses that are Breaking New Ground (BNG) housing with people living with an income of R3500 or less per month, that creates a suburb of poverty regardless of whether the Department put schools and infrastructures within those communities. The larger the scale of these projects, the more is the concern on creating a suburb where everyone is poor. The Department should be focusing on in-fill sites for social sustainability which speaks to how the country is developing. You cannot expect industries to come and build factories within communities that have social ills.

The Chairperson suggested that that is where inter-governmental planning comes in. The Airports Company came and showed the Committee the model of the communities and housing projects that will be built.

Mr Mguli said that none of the developments underway are meant to be for a sole income group. The idea is mixed use, mixed income and mixed groups. The Department has left all the commercial aspects of the developments purely for the business sector and it has made those sites affordable because the Department has already financed the bulk infrastructure. The Department does a lot of work to enable business to come and build and partner with the Department.

On sectional title developments, the Department will give R1 000 per unit up-front which must go into the body corporate trust account which will be kept in order to grow the income saved for maintenance of the buildings. People will then need to learn to contribute towards the body corporate a minimum amount of R30 per month. Buildings do not usually require maintenance within the first two to three years, so that money will be kept for that purpose. Members need to also understand that the sectional title developments will only be applicable to households earning at least R3 500 per month; it will not apply to the zero-earners.

People who are rock bottom poor will be accommodated in areas where they would not have to pay anything.

Ms Mayisela said that with regards to climate change, in the 2014/15 financial year the subsidies were increased to cater for the approval of the thermal properties of houses. The current subsidy addresses the issue. With the drought challenges last year, the Department went back to the units that were built to put on devices to reduce tap flow and it tried to put in rain harvesting water tanks. The Department would have liked to continue to provide solar water heating but the national department responsible for energy discontinued that programme.

On the service only sites, the team working with the municipalities has reviewed the policy because it is not going to work. It will be converted to a built form.

Mr D America (DA) sought clarity on the payment of premiums for densification.

Ms Mayisela said on the sectional title model, when the Department opted for the option of high density, government realised that there is a premium to pay for densification and going multiple stories. So the national department revised the subsidy to go to four stories. The Department has challenged saying that on the revised quantum there is no provision for the line item for maintenance and levies. Now that has been reviewed to be incorporated.

Secondly, the Department has requested some form of exemption for the households earning between zero and R3 500 if they are living in sectional titles.

Challenges Associated with new programmes being implemented in terms of the Department’s strategic plan
See document for challenges and mitigating measures.

Mr Lili said that he agreed with the Department asking for land parcels from the national department. Have the land parcels that the provincial government has all been used? Because there is no point in the Department asking for more land parcels if there are some land parcels that may be available to be used by the provincial Department. The Member of the Executive Committee (MEC) for Housing has said publicly that there are parcels of land available but they are not enough. He also wanted to know whether the Minister of Public Works and Infrastructure agreed to release some land parcels.

Mr Marran said that he has heard the Premier speak on the issue of land and the Premier said that they will engage the national department on the land but the province will release land if the national department has released land. There should be willingness from the province as well and the people cannot be held at ransom by the province – if land is available, the province should release it.

He also noted that land parcels should be made available for small scale farmers as well, and the focus should not only be on housing.

Ms Mayisela said that the provincial Department of Public Works has released land parcels to the Department and she would obtain the exact number. The project alluded to in the presentation in Ottery was handed over to the Department by the provincial department of public works.

She suggested that she could provide the Members through the Chairperson an account of all land parcels that were released to the Department.

The Chairperson agreed and said that the list of the projects should also be provided.

Ms Samson said that the provincial department is currently using its land optimally and that is registered with the Department.

The Chairperson asked for the percentage in future.

Ms Samson in order to utilise human settlements properties optimally, the Department has two forums – one with rural development which looks at land claims with a joint committee with national and provincial public works as well as major municipalities where land claims have been lodged. On a provincial level, there is another inter-governmental approach that looks at integrated development where the teams look at other uses for publicly owned land as well.

Mr Marran said with regards to the illegal occupation of units – is there a way for the province to respond quicker to the applications so that the municipalities can move on faster with their processes?

The Chairperson said that sometimes during oversight, municipalities would say that they do not have the list of the beneficiaries and they are waiting for the province to provide the list. When the project is done there is usually a Steering Committee on that project and they can tell you what is happening with that particular project. More issues would be dealt with in the next meeting.

The meeting was adjourned.