Western Cape Appropriation Bill: Human Settlements

Meeting report

The Chairperson opened the virtual meeting, welcoming everyone in attendance. Members then introduced themselves. The Provincial Minister, Mr Tertuis Simmers, was welcomed.

Minister’s Opening Remarks

The Minister thanked the Chairperson for bringing Vote 8 to the consideration of the Committee. He said that the dire fiscal climate of South Africa and all its uncertainties are important to consider. Access to housing opportunities promotes safety, well-being and dignity for residents. Everything is for the citizens and to improve their quality of life. There are more than half a million residents and possible beneficiaries in the Western Cape, who are on the system, looking for housing opportunities. Given the various programmes in the Department, not everyone will be allocated a house from the State.

The Minister added that he is excited because the national Minister had announced during the previous week, that Finance Linked Individual Subsidy Programme (FLISP) would now have a de-linked option. The option would come into effect from 01 April 2022. This is something that the Committee, Department and the provincial Ministry have been lobbying for since before 2019.

How will the FLISP be linked? How will it bring more opportunities for the qualifying beneficiaries? It will focus on pension or provident-backed funding loans through cooperative or community-based saving schemes. He said that the stokvel industry in the Western Cape is a multibillion-rand sector. Government-employee housing schemes and other assisted employee housing schemes own revenue and rent-to-own agreements. During the previous year, he wanted the Western Cape’s housing delivery model to be amended. Affordable housing needed to be the core focus. Other core responsibilities, such as social housing, are being dealt with as well. Projects are being carried out outside the area of Cape Town. The Minister also mentioned that there are social housing construction zones that the Department has to consider. Previously, possible qualifying beneficiaries could not gain access to housing due to not being in the proper housing zone. Ways to improve are currently under discussion. There is increased urbanisation in Cape Town, which calls for increased shelter. The upgrading of informal settlements is also allocated in the budget. Innovation and improvement are being considered for the acceleration of the delivery of housing opportunities. ICT systems are being enhanced, digital administration processes are being improved, and there is an increased interaction with the housing app. The housing app has over 10 000 users and will hopefully have more soon.

The Chairperson said that the Department has provided the Committee with infographics that will be presented before any questions or concerns are raised by the Members.

Briefing by the Western Cape Department of Human Settlements

The Acting Head of Department (HOD), Ms Phila Mayisela, went over the presentation of the Department’s budget.

She reported that the budget for programme one, Administration, is coming from the Provincial Treasury. She said that other ways of obtaining funding were “unsustainable” and that this is the first time that funding for Administration came from the Provincial Treasury. Sustainability issues for funding needs to be discussed.

The allocation of funding for programme three has a direct correlation with the various districts. The waiting list for beneficiaries is over R500 000. The biggest share for awaiting beneficiaries is from Cape Town and hence there is a direct correlation with the budget for areas of most demand. The data informs budgeting purposes.

The process involves various municipalities and businesses in the development of projects. Projects undergo a Project Readiness Matrix that informs which projects are ready for development. This is sent to the municipalities and then to the National Department for approval.

There will be two ICT interventions during this year. Knowledge management projects and evaluation studies within the Department and other business processes will be conducted. She added that the payment of invoices within 30 days will be addressed.

Engagement with municipalities will take place. A total of 16 meetings have been set for this year with different municipalities, excluding Ministerial outreach programmes. Additionally, research papers are being written and one of the main ones addresses why SMME contractors are failing. During the previous year, performance has been impacted by termination of contracts due to poor performance. What can be done to improve the challenges for contractors?

Facilities, such as multi-storey BMG units, need to be constructed. Another research paper focuses on this issue.

The papers and findings will be available for the relevant municipalities. The Department has signed an agreement with the district municipalities to provide support to them. Fifty upgrading plans for human settlements have been created for the 800 informal settlements across the province.

The budgets for the programmes enable more job creation for contractors.

Discussion

Mr D America (DA) asked if the houses that were listed included pipeline projects or whether they are new projects that have been specifically identified for this financial year. Secondly, the Department has set aside money for the possession of land. Can the Committee get more clarity on where and what kind of land will be acquired? Thirdly, in terms of informal settlement upgrades, it is laudable that there will be an upgrade for 15 formal settlements. The Department has already identified these 15 settlements, and there is a quarterly target.

With regards to upgrades, what kind of upgrades will occur? Additionally, can the Department give more clarity on interim engineering services and whether municipalities are brought in partnership with regard to the provision of these types of services? The Department has realised that the biggest obstacle to housing is infrastructure. Municipalities do not have the funding or capacity to provide infrastructure for housing delivery. He noted that he is happy with the delinking of opportunities to enable more beneficiaries. Is there a communication strategy that is considered to bring qualification criteria to people? What is being done to create more awareness of the housing programme? Lastly, when will the Department see a permanent HOD present?

Mr A van der Westhuizen (DA) thanked the officials for the briefing. He referred to page 337. He said that it needs to be pointed out that total treasury funding is only expected to increase by 2.45%. He says that this is disappointing. This is a decrease in monetary value towards the housing project, and it is alarming since there is a huge list of beneficiaries awaiting housing. This indicates that housing is not the main priority of treasury.  Treasury needs to understand that more and more people are coming to Western Cape, and the Department cannot keep up with the demand. The Department can only provide 11 000 housing properties, and targets need to be brought down. The conflict between Russia and Ukraine will lead to increased prices of building material, and transport costs due to the increase of fuel. Can human settlements be re-prioritised by national government, going forward? Based on the data provided, the Department will not be able to provide all awaiting beneficiaries with proper housing.

He referred to page 340. He said that in 2021 the Department was faced with the uncertainty of the wage increases for public servants. The court only recently ruled on this matter. Can the Department be informed on whether the court ruling has already been implemented in the drafting of these figures in the budget? Does the 1.84% decrease really mean that we will have to get by with the fewer employees in terms of the human settlements in the Department?

He mentioned the target for the transfer of the title deeds. There is a backlog that needs to be addressed. More people need to be given their title deeds. Can there be a clarification on whether more than 11 000 houses will be created and on what will happen to the backlog?

He referred to page 342. He said there is a sharp decrease in the Departmental transfers to local government. This has never happened since 2018 – to receive such a low figure. Does this mean that there has been a strategic decision by the Provincial Department to take more housing projects under its own administration? How must this be interpreted?

He referred to page 344, pointing out that there is a significant decrease in goods and services. These are big changes that need to be clarified.

Mr P Marran (ANC) noted that the budget speech that was delivered on the previous day scoped the topic of housing. People want more than just housing; they want integrated human settlements opportunities. He spoke about the new Department that the Premier had spoken about that was set up for infrastructure. He said he wants more clarity on this Department concerning its role and its aims.

He referred to page 345. Is there a list showing how many people will benefit from FLISP? How does the Department seek to achieve more security of tenure when it cuts the programme's core function off the housing property maintenance budget by 56%? Lastly, why is the Department not appointing interns for this year?

He said that one of the biggest payments in this Department is for consultants. Why are these services not insourced but outsourced?

Minister Simmers spoke about the new Department that Premier had mentioned. He said that this new Department will be known as the Department of Infrastructure. There will be a process of consultation that will emanate before the formal formation of the new Department. The new department will incorporate human settlements, public works and infrastructure, amongst others. Last year, the Premier had spoken about changing the way in which the provincial government works in a post-COVID reality. He said that he did not see it fit to place someone in a permanent position when, in the next 18 months, there would be a new Department of Infrastructure that will incorporate this Department. Hence, the executive was informed that the position for HOD will not be performed permanently. Once everything has been concluded and the new Department has been announced and settled, there will be discussion for a new permanent HOD.

He spoke about the drop in transfer to local government. He said this has always been under debate. This Department had had a session with local government and other municipalities more than a year ago, where there was a formal agreement of a hybrid implementation model for human settlements in the Western Cape. Several municipalities have acknowledged that they lack the technical skills and capacity that is needed to be an implementing agent of this Department. How does this hybrid work? Certain municipalities do have the capacity and act as implementing agents for this Department. Those [municipalities] that lack the technical skills and capacity hand over their projects to the Department. Hence, this causes a drop in transfer. There is a budgeted demand for assisting local government with upskilling local government. The hybrid model is to ensure that targets will be met.

Mr America thanked the Minister for clarification, saying that it is completely understandable, under the context in which the Minister has explained. He said that he was duly concerned about the void caused by the vacancy of Chief Director: Human Settlements Implementation. Does the void still exist, or has it been augmented by the staff that may have taken up more responsibility?

He said that he fully understood the lack of capacity in certain municipalities, and he welcomed the Department’s willingness to partner with these municipalities and assist them with the implementation of these projects.

Mr Marran had thanked the Minister for his response. He said that issues with the Catalytic Transhex Housing Project need to be sorted out. Human settlements need to take into account children, their safety and access to certain areas. The roads may be dangerous for them. Some beneficiaries would have to leave their jobs to reside in the areas where the housing is situated.

The Chairperson wanted more clarity on the appointment of the HOD. She said that the acting HOD is currently playing two roles, and this may be the problem for the shortcoming within the Department. Instead of the focus being on one area the acting HOD has to juggle different aspects, causing the core area of her focus to lack. How is the Department mitigating to create a balance?

The Minister said that the acting HOD will remain in office until the end of his term. He added that the Department has multi-skilled members, who step up and get things done. Hence, the acting HOD will not have too much strain on her and will focus on her core areas. The Minister will share with the Committee the relevant facts on occurrences within the Department.

The Minister responded to Mr Marran on Transhex. He said that Transhex involves a school site plan. The Minister had explained that his Department had to fully pay for the construction of the traffic circle. With regards to safety, the Department is trying to allocate funds to create a pedestrian bridge. The Department is trying to find ways to incorporate other social services within the human settlements, such as schools, clinics, etc., in the future. Proper planning needs to take place, and the Department needs to look at how government is structured.

Ms Mayisela responded to Mr van der Westhuizen’s questions. She said that the targets indicated in the infographics are for projects that will yield results in terms of non-financial targets; this does not include projects that are in the pipeline. Projects that are under the pipeline are funded through other grants. About 10% of the grant enables municipalities to prepare for projects. The infographics take into account new projects and also the projects that have been carried on from the previous financial year.

She responded to questions about the acquisition of land. She said that there is no allocation for land acquisition, and that the Department has made allocations for the outer years. Fifty informal settlements have been identified for upgrading, and they are a part of the list.

She said that the reason why the Department does not have quarterly targets is that it used to before and it failed to achieve these targets because the upgrading of human settlements is a very complex process. She said that the upgrades within Interim Engineering Services pertain to upgrading the planning process, interim services (shared services), as well as upgrading single unit houses. Internal follow-up sessions will take place soon.

She addressed questions around the contraction of the budget. She said there is a decrease in the compensation of employees. She responded to the question of why there are no interns for this financial year, indicating that it was during the time when the Department split, causing a deficit in compensation for employees. The Department sees to it that the compensation of employees is fully funded. Provincial Treasury needs to assist with funding for the compensation of employees. She said that there is a shortage of the Department's own allocation for compensation for employees, and this is why there will be no interns for this financial year.

Mr Francois de Wet, CFO, said that the 2.45% increase in the allocation is actually a 4.8% increase – which is still very low. There was an additional amount of R53 million in the adjustments budget, that does not carry through to the new financial year. This is the reason for the very low increase of 2.4% during this financial year. Treasury is working on the COE. The outcome of the salary negotiations is a risk for this Department and other departments as well.

On goods and services, he said that R2 million was spent on the 2021/2022 financial year, on minor assets – renovations and modernisation. He mentioned that there is a decrease in the audit costs, in comparison to the previous financial year. He said that the audit was only completed during October 2021. He said that there were additional costs in communication, because many employees were working from home – which involved increased data costs, and so on. Cost-containment measures are being taken for transportation and delivery of goods and services.

Transfers from the Department are decreasing, including transfers made to the municipalities. An increase in administration is due to title deed restoration, improvements and so on. R2.4 million is being transferred to a specific municipality for them to do the necessary restoration of properties. With regards to the spending on consultants, the Department employs consultants every year for projects. Around R20 million is spent on consultants from the budget to aid with proper planning and implementation of projects.

Mr America followed up on the question relating to the upgrading of formal settlements. He asked whether the Committee will be provided with a quarterly report on the progress with the 50 settlements that will be upgraded.

Mr Marran said that he is not sure how the Department will deal with upgrading 50 informal settlements. He says that there might be a backlog.

Mr van der Westhuizen referred to page 340 on the compensation of employees (CoE). He said that he finds it strange that the CoE will be only R170 million for the next financial year and the year thereafter. This either involves a 30% reduction in salaries or it means that employees will be asked to leave. What will occur in the Department to achieve such an enormous saving with regards to the compensation of employees? He asked the CFO for more clarity on the entities that will be forfeiting their transfers. He then referred to Table A1, on page 155. He wanted an explanation as to why there are no allocations for loan repayments and previous expenditure.

The Chairperson asked if the Department is going to empower the beneficiaries in the settlements so that they can qualify for jobs within the settlement, such as nursing, policing, and so on. She said that there should not be a dependence of the informal settlements on the government.

The Minister responded to the Chairperson. He indicated that outreach programmes will be conducted. Housing settlements involve a lot of processes from local government. About 60% of housing plans come from the municipalities. He said that plans are in place – of how the Department can sustain people and workers. Provincial Treasury will cover the shortfall of the Department with COE. The Department has an asset reserve fund that it has generated through its own income, to unlock affordable housing. He responded to Mr Marran on integrated housing opportunities. He said that integrated housing opportunities can only occur when the local government steps up and supports the Department in its projects. He said that the problem of backlogs will be addressed when the Committee and local government step up and collaborate with the Department.

Mr Marran said that he would prefer if the Department would spend money on settlements that are ready for improvement, instead of money going back to National Treasury. If certain projects are not ready, the money should be allocated to other projects that are ready for improvement and upgrade.

The Minister had responded to Mr Marran. He said that money is not sent back to National Treasury, but rather money gets shifted from one municipality to the next. When a municipality is unable to implement a project, the budget is then shifted to another municipality for their projects that are ready for implementation.

Mr S August (GOOD) asked the Minister what can be done to strengthen the municipalities that do not have the capacity for implementation of projects so that the community does not suffer from the lack of delivery of services.

The Chairperson asked the Minister what the challenges of implementation of programmes were. What motivations can be used for the implementation of programmes? How does the Department prioritise municipalities according to their readiness?

The Minister said that the infographics provide more information on what the human settlement is about and what it is trying to achieve. Funding is going to different areas such as technical capacitation, among others. The Department does various things with the budget that it is allocated. The Department also aids municipalities that are in need, and this comes at the cost of the Department. Judgment calls are made when it comes to aiding certain municipalities.

The acting HOD added that the Department will provide quarterly reports to the Committee. Another issue for the Department is bulk infrastructure. There is a misalignment with the upgrading and allocation of the infrastructure grant. Projects require bulk infrastructure. The Department is trying to do the best it can with the limited resources that it has.

She responded to Mr van der Westhuizen, on the challenges related to CoE. She said that if Provincial Treasury does not come to the party in terms of the COE budget for the outer years, then a third of employees will need to be laid off. This is one of the biggest risks for the Department. The Committee will be updated on this matter by the third quarter. If this is not sorted out by then, then the Department will have to find ways of bringing in the necessary funding.

She responded to Mr August on the capacity of municipalities. She said that the Department is looking at appointing professional resource teams. Technical support will be provided to municipalities, and the Department will ensure a skills transfer. On the implementation aspect, the Department is looking at its implementation framework with regards to the municipalities, to understand where they are struggling and what needs to be done. Assistance will be provided to these municipalities so that they do not lose their funding.

The acting HOD responded to the Chairperson, on the plans of the informal settlement. She said that the Department is looking at how it can support beneficiaries in terms of service sites and expanding the land release programme.

One of the plans is to assist beneficiaries that have been awarded a service site. With regards to questions on the waiting list of FLISP, there is no waiting list, but there will be certain requirements.

Remedies need to be put in place to identify what is creating the backlog with the title deeds. The Department has worked through an operational plan to get through the backlog. This will be provided to the Committee in the next week or two. Changes in the process when the houses are handed over need to take place – for instance, allocating each house to two people who have not signed the agreement for the offer to purchase. Beneficiaries need to sign the relevant documents for the Department to facilitate the transfer of housing.

Minister Simmers explained that, in as much as the executive authority accounted for underspending of USDG, he does not draw up or look at the cities you USDG grant. Only metros see the cities grant. However, the Minister and his Department get the backlash when it comes to issues revolving around the grant. The Department does projects for Cape Town that are funded by HSDG, and the city does projects funded by the USDG and HSDG. The Department does have a fair say with regards to the HSDG projects. Within the projects that are taking place in Cape Town, the Department has to use its own budget to alleviate financial constraints. The problem with the USDG and the way the grant is structured is that it does not only focus on human settlements but focuses on other components as well, such as electricity, sewage, and so on. Human settlements spend almost 100% of its budget whilst other directorates are falling short. There needs to be better alignment with the USDG and HSDG expenditure within municipal jurisdiction. When a metro gives money back it is because they cannot spend it. Metros have strict rules according to how the MFMA is implemented. He added that the Department does notice theft and damage to infrastructure such as sewage plants, pipelines, amongst many others. The provincial government will provide, but the community needs to start taking accountability and ownership because government cannot always do everything for the community. Taxpayers’ money is being used to improve the quality of people’s lives. Vandalism of state assets should not be tolerated. The city of Cape Town is suffering due to millions of Rands’ worth of infrastructure being destroyed, impacting human settlements as well as the people.

The acting HOD added that the city’s human settlements component only gets 46% off the budget. The rest is split amongst the other directorates. Human settlements need to have a say on what happens with the money that is surrendered by cities, before it gets lost to National Treasury – given the scheduling of the grant and its conditions, attached by the National Treasury, seeing that it transfers it straight to the city. More robust engagement between all roleplayers is needed. This is a constant work-in-progress. Money that is lost to National Treasury cannot be gained back. Human settlements have an agreement that it had signed that sets out the process that it follows for applying for funding for projects. There are engagements with cities, and there have been agreements that the Department will issue the city with a priority list of where the Department wants the investment for projects, working jointly with the cities and other roleplayers. More can be done with additional funding.

The budget towards human settlements should be increased because the projects that it is undertaking at times have financial constraints. Human settlements need to be prioritised on the SDG base.

The Chairperson asked if the police are taking any measures to cut down the criminality that is affecting the Department. She further asked about the Inclusionary Housing Framework. Are we motivating it into the municipalities or is there an ideology that it is going to be introduced to the municipality to have a look at that? If it is already there, which municipality has implemented this? When it is implemented, the Committee can get an idea of what it is about the inclusionary housing framework is about. This will answer questions of how it engages, what benefit it brings, and so on.

The Minister said that the Inclusionary Housing Framework focused on the planning aspect, not the implementation aspect. Inclusionary housing aims to break down the barriers of the past that were created by Apartheid. Hence, it aims to create an inclusive environment for all citizens. Once this framework becomes a formal document that can be processed through the legislature then local government will see how it can adapt it into. They are planning the processes. Local governments have the power to determine where things can be built. The Western Cape local government has its inadequacies and areas where it requires assistance.

The Minister spoke about shack farming. He said that people do shack farming in communities. Communities need to stand up within the rule of law and monitor farming within their areas. Communities should not allow shack farming.

The acting HOD added that the only way to enforce the issue of shack farming is through an upgrading process. She said that, once they go into a settlement and start upgrading, they have to enumerate and collect data, and this is when they pick up that people are actually shack farming. In those cases, these people are excluded from the programme. When the fires had broken out in Cape Town, the team could only assist 800 out of the 1 300 residents. The reason for this is the team had picked up that there was shack farming.

Mr Marran wanted more clarity on the floods that had taken place in Zweletemba and the lack of a four-way traffic circle.

The team responded that, when the traffic circle at Transhex was designed, there was a traffic impact analysis was done. It said that the service road that runs along the R62 needs to be kept in place. This is because the circle and the road itself do not accommodate for very large or abnormal loads - it caters for normal abnormal loads where persons will give notice in advance. But if there are unusually large truckloads then the service road, especially the cars that are traveling in front of the truck, needs to be there in place. Therefore, the circle only goes three ways - on the R62, in two Transhex and the railway line on the other side of the track.

Mr Marran said that the community of Zweletemba has spoken to the Department about the temporary entrance being placed as permanent.

The Chairperson added that the temporary road is currently used regularly and most likely will be permanent because, if there is any breach in the future, the residents of Zweletemba need access to that road to travel to those areas. How can the Departments go about making this road permanent?

Closing Remarks

The Chairperson thanked the Department for its engagement. She said that there need to be more conversations on how many more jobs can be created that enable people to build themselves houses, rather than solely focusing on how many houses the Department and build for them. This will be empowering for communities. She added that the Department can spend over R100 000 on a house, and the beneficiary can sell it for R20 000. Communities need to see the value and cost of what the Department is doing. Therefore, the Department needs to have engagements with beneficiaries, explaining to them the worth of their housing. She said that the Department will have an engagement with the Minister during the quarterly period to see if the APP is carrying out what it had said it would. The Department appreciates what the Committee does for the community and its engagement. Finally, she added that title deeds need to be delivered to beneficiaries.

The Minister thanked the Department for its engagement and the deliberation of Vote 8. He said that a lot of emphases has been placed on the role of local government – its failures and the impact thereof on the ability to deliver. The Committee is seeking to assist councillors through the infographics to understand the Human Settlement Committee better. Perhaps, in the future, there will be more involvement with the two standing committees to influence this even more. The Committee is trying to unlock finance for affordable housing in the future. The Department plays its role through oversight visits and the way in which it views human settlements being local government.

The Minister thanked the Head of Ministry, his MLO and private secretary. He said that this will be the Head of Ministry’s last session with the Standing Committee because she will be departing to a new province. The Head of Ministry started as an intern in Department and has worked for 15 years, serving the Department. The Committee and the Department wish her well and thank her for her service.

Committee Report on Vote 8

The Committee went over the draft report.

The DA moved for the adoption of the report in support of Vote 8.

Mr A Lili (ANC), in terms of rule 90, did not support the Vote.

Mr August seconded the adoption of the report.

The Chairperson thanked the Committee Members and the support staff.

The meeting was adjourned.