Department of Human Settlements 2nd quarter performance; Boards of Community Schemes Ombud Services and Estate Agency Affairs; Mining Town Housing, Bojanala, Rustenburg, Madibeng, Moses Kotane municipalities, Newtown housing co-operative: progress reports

Meeting report

Performance of Department of Human Settlements for July to September 2013
Mr MbuleloTshangana, Deputy Director General, and Ms Funani Matlatsi, Chief Financial Officer, took the Committee through the performance report. The Department achieved 82 out of 118 targets during the quarter. An aggressive recruitment drive was paying off. Information was supplied on upgrading of informal settlements (400 000); the National Upgrading Support Programme; increased provision of well-located rental accommodation; accreditation of municipalities; improved property markets; Development Finance Institutions; Human Settlements Development Grant expenditure; Urban Settlements Development Grant expenditure; support to additional municipalities, and sanitation. The 25% vacancy rate was a challenge.

Discussion
Ms M Borman (ANC) referred to slide 26. There was excitement about the spending of  the Urban Settlements Development Grant (USDG). She was concerned about what had been allocated and what had been spent. She could not see what was so nice about it. She referred to the unspent percentage of the total available. She asked how that tied up with meeting of targets.

Ms Matlatsi replied that there was an attempt to curb cash flow to monitor if there was ability to spend. All metros had spent more than they received in the current year. The provinces got less than they wanted. They were spending money they did not have. Money had to be transferred to Mangaung and Buffalo City. There were still nine months to spend. An accrual system was used. There was a strong possibility that the R87,2 million would be spent.

Ms Borman remarked that there was an improved property market. There were a large percentage of people in the gap market, people were angry about things that did not materialise.

Mr K Sithole (IFP) referred to slide 4. He asked about a time frame. It seemed to him that there was no system in the War Room.

Mr Thabane Zulu, Director General, responded that there was a project management system in the war room, with communication between different provinces and municipalities. There was a dashboard monitoring process. The War Room was linked to the dashboard. The deadline was the end of November.

Mr Sithole asked about Northern Cape targets, and how they got money (slide 8).

Mr Tshangana replied that the Northern Cape was receiving an extra allocation.

Mr Sithole asked about reasons for re-advertisement (slide11).

Ms M Njobe (COPE) asked about delayed filling of vacancies, and where people would be accommodated, once recruited.

Mr Zulu replied that the accommodation issue was financial arrangements with the Department of Public Works (DPW). There was accommodation for some vacancies to be filled. He trusted that accommodation could be managed at maximum staff complement level. The Department was aiming to have no funded vacant positions at the end of the financial year. It was aiming high. The situation was monitored on a weekly basis.

Ms Njobe asked how employers could assist with the housing of employees.

Mr Tshangana replied that employers were being monitored to see what they could come up with.

Mr S Mokgalapa (DA) said that improvement had to be acknowledged, even if it was at a snail’s pace. Improvement was due to monitoring whether there was a capacity to spend. Virements were undesirable. The transfer of funds had to be monitored.

Ms Matlatsi replied that the question was how to balance underspending in one programme with overspending in another. It was not desirable to compromise a moving project to help a weak one. The Public Finance Management Act (PFMA) curbed virements.

Mr Mokgalapa asked about planning. The Department had special projects but there was still too much red tape. It made long term planning cumbersome. He asked why there were priority areas at all if it was wrapped in red tape.

Mr Tshangana replied that planning was always problematic. Timelines could not be short-circuited. The community had to be granted time. It was important to keep a pipeline active, through investment in upstream planning activities.

Mr Mokgalapa noted that land targets had been exceeded, but he could not see units on the ground. It had to be known how many units were on the land.

Mr Zulu replied that work had been done. Some land deals were for rental accommodation. The Department could identify what had been done. There had to be appropriate land. Feasibility studies were done to identify land for development.

Mr Mokgalapa referred to the gap market. The DDG had said that a basket of options could not be offered. But the Finance Linked Individual Subsidy Programme (FLISP) was one of a basket of options. There was a gap market because people wanted to go it alone. Banks were at fault. It was unacceptable to say that indebtedness was the whole problem. People had to be given options. There had to be vigorous promotion and decentralisation.

Mr Tshangana replied that the suggestion about options was fair. The FLISP took care of home ownership. The Mortgage Default Insurance (MDI) had to be looked towards for options.

Mr Mokgalapa asked about accreditation and risk mitigation. He asked what the accreditation issues were that were raised in engagement with the Financial and Fiscal Commission (FFC).

Mr Mokgalapa asked why the figure for upgraded households had increased from 370 000 to 400 000.

Mr Tshangana replied that the Department had started off by looking at basic services and had then decided to look at top structures as well.

Ms J Sosibo (ANC) asked why receipts had not been submitted.

Ms Matlatsi replied that invoices not submitted on time was a problem. CFOs had been asked why there was a lack of follow up. Payment tended to be at the end of December, but that affected cash flow.

Ms Sosibo asked when the eradication of the bucket system was foreseen.

Ms Matlatsi replied that sanitation was being reconsidered.

The Chairperson referred to Slide 18. The Department had not found a solution. If there were challenges, it might be necessary to amend the Housing Act as a whole. The critical issue had to be identified, which was the selling of state subsidised housing. There had to be intervention through amended clauses.

Mr Zulu replied that the Development Finance Institutions (DFI) would be more effective, once consolidated. There were clear policy guidelines, the Department was using a commercial approach. The process would be finalised. Government institutions could compete with commercial ones.

The Chairperson said that the MDI was not to be compromised. The President had announced a R1 billion guarantee. The Department had a responsibility. The Department had come up with the concept of capitalisation, which the Committee supported. Whatever was done, progress had to be according to the directive from the President. It was the baby of the Fourth Parliament. The National Housing Finance Council (NHFC) had applied to the Financial Services Board. A modus had to be agreed upon.

Mr Zulu replied that there were clear marching orders for MDI. The Department would provide a plan of implementation. The MDI could protect the gap market of vulnerable people.

The Chairperson referred to accreditation of district municipalities. Accreditation disadvantaged them because they no longer received the Municipal Infrastructure Grant (MIG). They could not have technical staff due to constraints. District municipalities had to support the municipalities in their jurisdiction.

Mr Tshangana replied that district municipalities were not water services authorities, and hence did not receive the MIG. The best solution would be to extend the USDG. The water service authorities were the ones that received the MIG.

The Chairperson advised that the Department divide their strategies into short and long term. She referred to the Limpopo issue. Non-utilised funds were being returned. There had to be planning with the provinces to direct funds to sanitation. Sanitation had to be prioritised. The bucket system was still operative in formal housing.

Mr Zulu replied that there were technical meetings on sanitation. He agreed that resources had to be utilised. CFOs from the different affected departments were involved.

The Chairperson noted that the Development Finance Institutions performed better than the banks, but the question of interest was a challenge. It was not fair for State institutions to charge interest.

The Chairperson concluded that informal settlement upgrading was a non negotiable.

Community Schemes Ombud Services (CSOS) Board progress report
Ms Sindisiwe Ngxongo, NDHS Chief Operations Officer, reported that the Board had had three meetings since its induction on 22 march 2013. The content and the budget of the draft Strategic and Annual Performance Plan was reviewed. The Board prepared and submitted a Board remuneration evaluation form to the National Treasury for evaluation. The appointment of the Chief Ombud and Chief Financial Officer remained a challenge. The Board was of the view that there had to be a head-hunting process. A R20 million rollover had been approved by the National Treasury for operational funding in 2013/14.

Estate Agency Affairs Board (EEAB) progress report
Ms Ngxongo noted that the Board was appointed on 1 January 2013. The Board appointed a Chairperson and Deputy Chairperson, and a Chief Executive Officer. The EEAB established a provincial panel of inspectors to assist with the inspection of estate agents. National road shows were held regarding the rollout of the Finance Linked Individual Subsidy Programme (FLISP). The one estate agency/one intern initiative was developed, which was expected to create 10 000 job opportunities.
 
Discussion
Ms Borman said that the EAAB report was positive. Injunctions had been taken from the Committee. She asked for an indication of what responses to the road show had been. She asked if there was a positive response. She commended the 10 000 job trainees. The Board had exceeded expectations. She asked about a working plan.

Ms Borman said that the Ombud Service Board report had not been so exiting. It was disappointing. The Committee had asked about the costs involved, but then had to hear that it was not even budgeted for. The Sectional Titles Management Act was supposed to have been dealt with in December 2011. Later the Committee had been told that it would be in April of the current year. There had been no progress. The legislation had to be dealt with.

Ms Borman asked if costing had been done for office space. She asked when people would be put up in offices. She asked about progress with advertising. Only the R20 million rollover was available. Treasury was not easy to work with. Work should have been done earlier.

Ms Nomazotsho Memani, CSOS Board member, replied that posts for the Chief Ombud and CFO had been advertised.

Mr Mokgalapa said that the Ombud Service had an unfunded mandate. It was not getting off the ground. There were only two office members. The Board seemed to be looking out only for its own remuneration.

Ms Memani replied that the Ombud Service Board had to start operating as an independent structure. A bank account had been opened but there was no money. The Board was frustrated. Minutes were available about remuneration. The board was not remunerated, and stakeholders wanted to know what it was doing. The Board could not enter into lease agreements.

Mr Mokgalapa remarked that the EAAB was a last born who behaved as responsibly as a first born. He asked for figures on FLISP. Assets in the public sector were a problem. The Department of Public Works was in chaos.

Ms Njobe asked from which budget the R20 million would come.

Ms Njobe congratulated the EAAB. She asked about FLISP and road shows. She stressed the importance of outreach programmes. She asked that the rural areas not be neglected.

Ms A Mashishi (ANC) asked about areas covered by the 10 000 jobs.

The Chairperson said that a lot of time had been spent on the two bills. The bills were costed. It was undesirable to have a situation where a bill was passed and not implemented. The Sectional Titles Management Act had been passed and it was just sitting there. It was not the fault of Treasury that funds were not available. There had been no budgeting for the Ombud Service. The CSOS should have budgeted for implementation. R20 million had been approved by Treasury. There was the issue of the CSOS Chief Financial Officer.

Ms Ngxongo responded that the Department had met with the Chairperson. The R20 million was requested by the Department as a rollover. There was no budget approved by the Treasury for the 2013/14 year.

The Chairperson told the Department that they were repeating themselves. The Board had to be assisted to appoint. There could not be a budget until positions were filled. Head hunting had to be done.

Status of mining towns nationally and Bojanala, Rustenburg, Madibeng and Moses Kotane municipalities progress reports
Ms Julie Bayat, NDHS Chief Director: Project and Programme Planning, noted that the process to establish status covered Gauteng, Free State, Limpopo and North West in a first phase, and the rest of the country in the second. Maps were provided to illustrate the need for adequate shelter. Provincial and municipal minerals output were cited. There had been interventions in terms of the Presidential Package. The National Department of Human Settlements would lead a process of integrated development plans for  the mining towns. The aim was to fast track development of infrastructure and human settlements.

At Bojanala District Municipality, there were challenges of lack of water and sanitation; slow pace of delivery by Eskom, and inadequate land for housing purposes. Project managers were appointed to provide technical support for the mining towns. All municipalities had been requested to draft a Human Settlement Implementation Plan (HSIP) in line with the Integrated Development Plans for a five year horizon.

Mr Jan Pieters, Director: Planning and Development, provided a progress report on Rustenburg local municipality. Monnakato project would provide 515 top structures. The Boitekong Extension project would provide 3400 units. The Bokamoso project would provide 4000 units. Lonmin was donating land for housing development. The Seraleng  project would relocate informal settlers from Yizo Yizo to Seraleng. There were progress reports on Madibeng and Moses Kotane local municipalities. Projects running were Sunway integrated development; Madibeng Mamba; Lethabong; Saulspoort Phases 1 and 2; Mmatau 200, and Moses Kotane 1200.

Discussion
Ms Borman remarked that she was exited, and hoped that everything would proceed according to plan. She suggested that the Committee go for oversight to the region.

Ms Borman referred to bulk infrastructure. The Infrastructure Development Bill had been introduced the day before in Parliament. It would help with bulk infrastructure.

Ms Borman expressed the hope that appointed contractors had good track records.

Mr Pieters replied that he would put his head on the block concerning contractors. He had seen good work done by them in the past.

Ms Borman asked about problems with beneficiary lists. She trusted that title deeds would be handed over on completion. She asked about criteria for beneficiary lists. It had to be an open and transparent process.

Mr Sithole remarked that he appreciated the presentation. He asked about capacity (slide 21) and underspending at Moses Kotane.

Mr Mokgalapa commended the presentation. The Committee had let the mining towns local authority appear when municipalities were interacted with. Committee recommendations were upheld. He agreed with Ms Borman that the Committee had to go for an oversight visit. He was worried about infrastructure like water and electricity.

The Chairperson said that she did not foresee a problem with beneficiaries.

Mr Pieters replied that the beneficiary process was transparent. There were clear guidelines about who would receive first. People were informed about criteria. Madibeng set the tone for how beneficiaries would be obtained. There were challenges in the mining areas, because various salary groups were represented. There had been a door to door investigation in Rustenburg. A lot of people did not qualify in terms of minimum standards for a house. Immigrants were occupying houses. Sometimes 2000 people were moved, and only 1000 houses were available. Every attempt was made to be fair, and to get people houses they earned.

Ms Borman remarked that it was a sensitive issue, to be handled carefully. She asked if compiled beneficiary lists were put up somewhere to be seen.

Mr Tshangana replied that lists were also given to ward councillors to see. The bulk of the land belonged to tribal authorities. An area based development list was based on the beneficiary list. It was then possible to prioritise and to see who qualified.

The Chairperson congratulated the presenters.

Newtown Housing Co-Operative Project progress report
The Chairperson asked the Department to bypass the background and to concentrate on recent developments. Background included the establishment and subsequent liquidation of Cope, an NGO, which was to promote housing co-operatives in Gauteng. Management instability led to the liquidation of Cope in 2006.

Mr Siegfried Mogane, Head of MDI, NHFC, noted that the Newtown housing co-operative was established in 1999. Loan repayments became infrequent during 2003-2004. The National Housing Finance Council (NHFC) intervened and faced challenges of factionalism within the Newtown Co-operative Board and membership, and co-operative members not honouring financial obligations. One faction “hijacked” the Newtown property. Members who refused to pay “rent” to factions were evicted through force or violence. The NHFC sold the Newton property to Johannesburg Housing Company in 2009, for R25 million. The JHC gave occupants enough time before evictions to find alternative accommodation. A court case on Newton was heard by at least five judges. NHFC’s lessons learnt was that there was a lack of understanding of the co-operative housing model, and no support for co-operatives in crisis. The Norwegian co-operative model was not the one best suitable for South Africa. A South African co-operative model had to be developed.

Discussion
The Chairperson told the Department that they had not done their work. She had expected them to say that they had developed a South African model. She asked what had been done to develop such a model.

Ms Njobe said that there was a tendency to put people into programmes and processes they did not understand. People wanted to own property, they did not accept the co-op. Zambia tried to use the Swedish model. They even built a college to train people, without success. Lessons had to be learnt from Zambia. It had to be asked what happened to cause the model not to work. She agreed with the Chairperson that it should have been clear long before that the model was not working at Newtown.

Ms Njobe noted that R14 million had been retrieved. She asked where the other R11 million was.

Mr Mogane replied that the building had been sold for R25 million. There was a legal process to distribute the money among creditors. There was no liquidation process.

The Chairperson said that it was not an overnight issue. There had been red lights long before that people would be evicted. The Department had been advised to intervene. South Africa was constitutionally governed. People had to be involved to settle issues amicably. The South African cooperatives umbrella body, SACA, had to be recognised as an umbrella body. It had to be recognised.

The Chairperson asked about an assessment of hijackers. A building had been bought for a specific task and then sold again.

Mr Mogane replied that facilitators were sent to look into factionalism. There was an attempt to bring factions together. Trafalgar employed some co-op members. The Department needed to deal with a representative body.

The Chairperson asked why the Department had run away when the crisis was looming.

Mr Mogane replied that to consider the situation from a finance point of view, people had to be brought before the Portfolio Committee.

The Chairperson said that there was 2005 legislation that referred to the establishment of co-ops. A South African model had to be developed. The Committee did not condone people who did not pay. But the Department had taken advantage. It would not do to hear only the Department’s story. The people also had to be heard. One could not blame people without listening to all inputs. The Committee had gone to Lenasia and listened, and did their own analysis. The information from the Department did not assist the Committee.

Mr Mogane replied that there was no corruption in the co-ops. Property was bought with government subsidy and top up money from Norad (Norwegian Development Agency).

Mr Zulu asked if the Committee wanted the Department to bring the original Coop Board to them

The Chairperson said that the Committee wanted the South African cooperatives umbrella body, SACA. Coop Board had failed dismally.

Ms Njobe stressed that participants had to be trained.

Mr Mogane replied that a board of directors of co-ops had been trained. There was a visit to Norway. 351 people were trained. There were meetings with communities. People said that the process was complicated and that they preferred sectional title.

Ms Borman asked if beneficiaries got back the R800 000 they had lost.

Mr Mogane replied that if one paid a deposit and failed on payments, the bank took the house back and one lost money. If in liquidation, beneficiaries could submit claims to the liquidator.

The Chairperson adjourned the meeting.