Department Annual Report 2005/06: briefing

HOUSING PORTFOLIO COMMITTEE
24 October 2006
DEPARTMENT ANNUAL REPORT 2005/06: BRIEFING

Chairperson: Ms Z Kota-Fredericks (ANC)

Documents handed out:
Department’s presentation
Department Annual Report 2005/06 (available at www.housing.gov.za)

SUMMARY
The Department of Housing briefed the Committee on its 2005/06 Annual Report. Information was provided on six core programmes. The Department sought to establish and facilitate a sustainable process that provided equitable access to adequate and affordable housing. Regulations and guidelines were in place to govern policy implementation such as the National Housing Code and the Comprehensive Plan for the Creation of Sustainable Human Settlements. Certain international relations achievements were listed. The Department had joined the Cities Alliance in 2006. Cuban architects and technical advisors were involved in low-cost housing projects. Sound policy would be developed through meaningful research and planning. The measurable objective was to attain adequate housing for all by 2014. The Comprehensive Plan included a policy to upgrade informal settlements. New housing typologies would be developed involving different low-cost housing models. Presentations on housing delivery statistics were made at various international conferences. Legislation would be introduced to assist housing delivery. An effective human settlement information system would be developed. The Housing Subsidy System would be monitored. Detail was provided on the Housing Development Funding Programme and the Housing Equity Programme. Affordable finance schemes would be arranged for low-to–medium income households. Expenditure at the provincial level would be monitored.

Members asked numerous questions including the benefits of the Cities Alliance for local cities, the advantages for poor communities of the presence of Cuban architects, the need to remain focused on rural housing development, a renewed focus on farm workers, finalisation of the typologies of housing models, the incorporation of housing sector plans into local government development initiatives, the impact of the redrafting of the Housing Code, the slow implementation of the Peoples Housing Process (PHP), the need to link housing developments with poverty alleviation programmes, the number of emerging contractors involved in projects and the need to reduce under spending patterns at the provincial level.

MINUTES
Department of Housing presentation
International Relations Achievements
Mr Philip Chauke (Chief Director) listed the Department’s international relations achievements. The South African Human Settlements policy and challenges were presented to the United Nations Council for Sustainable Development. The Department joined the Cities Alliance in January 2006. One programme was to eradicate informal settlements in cities. An agreement had been signed with Brazil related to the India-Brazil-South Africa Tri-Lateral Co-operation Agreement. India would assist the Department in creating models for viable government construction companies. Cuban technical advisors were involved in more than 228 PHP projects. 36 614 housing units had been completed with Cuban assistance.

Discussion
Mr G Schnemann (ANC) asked if South African cities were receiving benefits from the Cities Alliance. He asked how housing delivery could be enhanced. A new group of Cuban architects had been appointed and he enquired what progress had been achieved by the previous group of architects.

Mr Chauke stated that the Cities Alliance provided financial assistance to local cities to support development projects such as informal settlement upgrades. The Alliance also helped municipalities to access money from the World Bank. The Cities would tend to pay 60% of the total cost of projects. The Alliance would help cities to access financial support at cheaper rates. The United Nations was involved in developing 8 cities within Africa. The cities involved met on a regular basis to discuss common problems and receive progress reports and advice. The Cuban architects worked on the Peoples Housing Process projects and had designed low cost housing developments. Provincial Head of Departments (HODs) had acknowledged a difficulty in attracting qualified people to support housing initiatives. The Cubans had provided a service at a reduced rate.

The Chairperson informed the meeting that the Committee would arrange an international conference on shack dwellers in the near future. She asked what progress had been made with regard to the implementation of resolutions reached at the World Urban Forum. Provincial HODs tended to display limited understanding of implementation needs. The provincial executive blamed the bureaucracy for lack of delivery. HODs had to be instructed on development needs to ensure that adequate monitoring occurred at the provincial level.

Ms B Dambuza (ANC) implored the Department to place Cubans in rural areas in addition to urban development zones. Members should be regularly updated on development programmes within municipalities in order to gauge progress.

Mr Schneemann commented on the Cuban-designed structures and commented on their build quality. However, the design was clearly of a foreign nature and attempts should be made to incorporate the foreign design into the local context. Certain areas tended to be neglected in terms of development. Such areas should receive renewed attention. He asked what criteria were used to place the Cuban architects in certain areas.

Mr I Kotsoane (Director-General) stated that the allocation of the Cuban architects remained a function of the various provincial governments. The department would support initiatives to use the Cuban’s skills in rural areas. The architects tended to be used in PHP areas. Attempts would be made to introduce a local flavour to the low-cost housing designs.

Policy, Planning and Research Programme
Mr Diet Van Broembsen (Chief Director-Policy Planning) declared that the programme intended to develop sound national human settlement and housing policies supported by research and underpinned by an appropriate legislative framework. The measurable objective was to attain adequate housing for all by 2014 in sustainable human settlements. Effective national housing policy would be developed. Proposals had been developed for the Higher Density housing policy investigation. Amendments to certain pieces of legislation would be introduced.

The Rental Housing Act would be enhanced to give Rental Housing Tribunals the power to enforce their rulings. The Comprehensive Plan included a policy to upgrade informal settlements. The policy and guidelines had been approved by MinMec and pilot projects had been initiated. A housing land acquisition and release strategy would serve to prioritise the release of public land and the acquisition of private land for low cost housing projects. A policy to assist farm workers and occupiers to access adequate land had been completed. New housing typologies would be introduced. Costing models were presented to Min/Mec. A revision of costing had been requested by Min/Mec. Primary social and economic infrastructure in low income housing developments would be developed. A multi-year housing development planning dispensation was in place.

Dr Sokopo (Chief Director-Research) outlined the strategic objectives for research. Internal and external research networks would be established and a research culture would be fostered in the Department. Presentations on the status of housing delivery in South Africa were made at various international conferences. Research on the Rural Housing Policy had been completed. Research was also conducted on the level of socio-economic and ethnic integration.

Mr Ettiene Raad (Policy Planning) informed Members of legislative amendments and pending pieces of legislation. The Housing Amendment Bill had been submitted to the Minister and approval was expected. The Prevention of Illegal Eviction from and Unlawful Occupation of Land Amendment Bill had been finalised and was before the Minister. The Social Housing Bill had been submitted to the relevant Cabinet committee last week and would be placed before the Cabinet. The Less Formal Township Establishment Amendment Bill had been referred to the Premier of the Western Cape. The State Law Advisors had declared that the matter should be dealt with at the provincial level.

Discussion
Mr Mabena (ANC) stated that a commitment from the Department was needed to correctly implement policy regarding farm workers and occupiers of farmland. The issue of farmers evicting farm labourers had to be addressed.

Mr Schneemann asked whether the pieces of legislation discussed were intended to be presented in 2005/6 or to receive Cabinet approval during that time period. He asked when models of homes to be constructed would be finalised. Timeframes for implementation had to be provided to ensure adequate oversight.

Ms Dambuza noted that housing sector plans had to be incorporated into integrated development plans at the local government level to ensure delivery.

Mr Van Broembsen stated that the farm-worker housing policy had been forwarded to Min/Mec where the ultimate decision on implementation would be taken. The issue had been debated at numerous meetings. The policy would be discussed at an upcoming rural housing Indaba. The Minister wanted a buy-in from all stakeholders regarding a rural housing contract. Three typologies for housing models had been forwarded to Min/Mec. Variable costs for units had to be considered at the Min/Mec meeting. The Technical Min/Mec would consider various build quality types in November. The multi-year housing development planning process would receive funding of R50 million over five years. The Housing Chapter had been developed for inclusion in Integrated Development Plans. Relevant training would be provided to municipal officials to maintain the plans. Certain municipalities had already applied for funding from their respective provincial governments. Municipalities with the greatest need would be targeted and a national plan would be formulated.

Mr Raad indicated that the original intention was for the Bills to be placed before Parliament in 2005/6 but delays had hindered the process.

Mr Schneemann asked what impact the redrafting of the Housing Code would have on housing delivery. He asked when the Code would be completed.

Ms Ngele (ANC) stated that the Department regularly indicated that the responsibility for housing delivery lay with other institutions that adversely affected the ability of Members to monitor implementation.

The Chairperson noted that food provision and agricultural initiatives should not be overlooked when contemplating housing developments. The provision of housing should also seek to alleviate poverty levels. The housing code should hold developers accountable.

Mr Van Broembsen indicated that the current housing code had not been revoked and therefore continued to guide development.

The Chairperson declared that a disjuncture existed between the comprehensive plan and implementation on the ground in terms of the Housing Code.

Mr Mziwonke Dlabantu (Deputy-Director-General) stated that the human settlement plan should be completed by 31 December 2006 and implementation would follow thereafter.

Mr Van Broembsen confirmed that urban greening initiatives remained a crucial component of housing development plans.

Mr Schneemann asked when the Housing Code would be completed. Delays in adoption of certain pieces of legislation resulted in gaps in housing provision and slowed down the overall process.

Mr Van Broembsen noted that the implementation of provisions of the housing code had been delayed due to obstacles in the appointment of service providers. Discussions with provincial Heads of Departments would be held to speed up the process. A distinction had to be made between statutory requirements and guidelines within the code. The code had to be finalised by April 2007.

Mr Kotsoane acknowledged that delays in certain pieces of legislation had a negative impact on housing delivery. Co-operation from provinces was essential to ensure delivery. Further consultation within relevant forums would be facilitated to devise appropriate plans to meet demand.

Programme Management
Mr J Wallis (Chief Director-Programme Management) outlined the planned activities for 2005/6 such as public sector hostels, farm worker housing, subsidy dispensation for women and child-headed households. Other planned activities included an investigation of recurrent service costs, shared accommodation guidelines, amended national norms and standards and the Expanded Public Works Programme (EPWP).

Achievements included the enhanced phasing out programme, the human settlement redevelopment programme and a new procurement regime. Gaps in the housing delivery system were identified and steps taken to address shortcomings. Poorly constructed houses would be rectified. An accreditation framework for municipalities would be developed. A skills audit would be conducted in municipalities. Bursaries would be provided to students that sought to develop housing-related skills. The National Home Builders Registration Council (NHBRC) Warranty Cover had been extended to all subsidy mechanisms. However, warranty cover could not be provided for houses built in the PHP process. Twenty four billion rands had been transferred to provinces in terms of the Human Settlement Redevelopment Programme. Missing beneficiaries of houses had been deregistered. An accreditation framework had been completed. Guidelines for unblocking projects had been developed and submitted to Min/Mec. Operational expenditure budget guidelines had been completed for provinces. Thirty-one Housing Policy Workshops had been held.

Discussion
Mr Schneemann proposed that a comprehensive workshop be arranged for Members to cover the vast range of operative policies and activities in greater detail. He asked why the development of HIV/AIDS guidelines had not been completed.

Mr Mabena sought clarity on the PHP programme that he described as sound but characterised by slow implementation. He asked if contractor-driven PHP was covered in the new PHP guidelines.

The Chairperson concurred that the alignment of infrastructure policy remained a challenge. An alignment of relevant departments was required to address demand and improve implementation.

Mr Wallis supported the notion of a workshop for Members and declared that the Department would participate and provide the necessary information. The HIV/AIDS policy guidelines had not been completed as the policy stipulation requiring the treatment of orphaned children could not be addressed adequately due to funding shortfalls. In terms of the NHBRC agreement, the provision of warranties for houses required a particular procedure in terms of inspections. Builders had to be registered in order to ensure a warranty. Houses had to be built in proper soil conditions and foundations. The NHBRC provided some form of assistance to PHP projects by inspecting soil quality and other technical issues in order to ensure a better quality house. However, warranties could not be provided to PHP houses. The alignment of relevant departments had fostered much debate. There were problems over the targets of the monthly income of beneficiaries. A problem remained the variance in subsidy allocation targets for housing. Norms and standards at the level of delivery also varied. The Interministerial Committee on Human Settlements and Project Consolidate would seek to achieve better alignment.

Mr Schneemann asked if the Presidential Pilot Project on Rental Housing had been completed.

Mr Mabena reminded Members that the managed PHP remained contractor-driven. He asked whether the new PHP guidelines catered for the continued presence of contractor-driven programmes. Managed PHPs were not community-driven.

The Chairperson asked how the Department would address low-cost housing that had been built prior to 1994 and needed rectification urgently.

Mr Wallis replied that pre-feasibility studies on approved projects were underway regarding the Presidential Pilot Project on Rental Housing. A public-private partnership approach was needed to ensure that targets were reached. Guidelines had to be followed regarding the pre-feasibility study process. Manager-driven PHP projects were no longer allowed. Previously, provincial governments had appointed unregistered contractors that did not comply with regulations. Beneficiaries had, therefore, not received any warranty due to the lack of registration. Legislative amendments now ensured that all contractors had to be registered. A new plan would be submitted to Min/Mec next week regarding plans to upgrade pre-1994 houses.

Housing Sector Performance
Mr William Jiyane (Directorate-Industry Analysis) stated that the programme sought to monitor policy implementation processes through an effective data bank and human settlement information system. The provision and maintenance of the Housing Subsidy System was a core objective. Publications would be developed to advise management and stakeholders on delivery. The housing construction and finance sectors would be effectively monitored. The performance of Housing Support Institutions would be monitored against the Breaking New Ground (BNG) Housing Plan. Reports on the impact of the Housing Subsidy Scheme on beneficiaries had been produced. A Housing Management Information Handbook had been compiled and published. A Study Report on Urbanisation had been published. A database for the Waiting List project in Cape Town had been developed. The Housing Subsidy System would be upgraded. A Housing Indaba Conference on the Social Contract for Rapid Housing Delivery had been held in Cape Town in September 2005. A Housing and Economy publication had been produced focused on housing delivery activities. A new Social Housing Regulatory Authority had been established to replace the Social Housing Foundation.

Discussion
Mr Schneemann asked whether the resolutions adopted at the Housing Indaba regarding a social contract had been implemented.

Mr Jiyane replied that task teams had been established at the Indaba and a policy would be developed in the next financial year.

The Chairperson enquired on the status of memorandums of understanding regarding international engagements with foreign governments such as the Netherlands. She asked if the process to establish the regulatory authority pertaining to the social housing policy was on track.

Mr Jiyane replied that the memorandums of understanding related to social housing. The relationship with the Netherlands remained. Norway had initiated a change in their policy approach to supporting social housing projects. Discussions were underway to realign the current agreement. The process continued to create a regulatory authority.

The Chairperson asked whether the Social Housing Foundation was engaged in the process.

Mr Jiyane acknowledged that a level of engagement was in place with relevant foreign governments and local stakeholders.

Mr Schneemann asked how many emerging contractors were involved in the pilot development-training programme in conjunction with the NHBRC.

Mr Jiyane said that the requested information would be forwarded to the Committee in due course.

Housing Equity Programme
Mr Dlabantu (Deputy-Director-General) stated that the programme would seek to eradicate discrimination and unfair practices regarding access to house finance. The level of private sector finance would be increased by R42 billion by 2008. Appropriate partnerships would be developed between lending institutions, government, housing support institutions and other lenders. Affordable housing finance instruments should be provided for low to medium income households. The Home Loan and Mortgage Disclosure Act would seek to identify possible discriminatory lending patterns to low to medium income households. Regulations would be finalised to implement the Home Loan and Mortgage Disclosure Act. Infrastructure to monitor implementation would be established. Disclosed information from financial institutions would be captured and analysed. Draft regulations had been developed and discussed with the Reserve Bank and the Minister of Finance.

Discussion
Mr Schneemann said that the Home Loan and Mortgage Disclosure Act had been passed in 2000. However, regulations were still not in place. The legislation had significant benefits for the community. He asked why the process to implement the legislation had taken so long.

Ms Dambuza asked how consumer education would be conducted at the local level if municipalities lacked sufficient housing capacity.

The Chairperson asked if the Department would engage in a co-ordinated approach to consumer education. She asked if the Home Loan and Mortgage Disclosure Act was necessary given the delay in implementation.

Mr Dlabantu replied that the Home Loan and Mortgage Disclosure Act was intended to encourage the industry to participate in the housing delivery sector. A pilot project was in place to facilitate consumer education on housing finance. The Department would monitor the performance of the industry.

Housing Development Funding programme
Mr Dlabantu stated that the Integrated Housing and Human Settlement Development Grant was intended to assist in housing finance. The grant would fund current business and new pilot projects across the country. The programme intended to disburse funds for housing delivery in compliance with the Public Finance Management Act (PFMA) and the Division of Revenue Act to ensure that expenditure matched annual delivery commitments. The programme would acquire funds to implement the development of sustainable human settlements. Expenditure would be monitored at the provincial level. The Housing subsidy grant framework agreement would be amended. Detail on provincial allocations was provided. A summary of the housing delivery targets for the provinces was discussed. The number of serviced sites completed and housing projects approved was presented.

Discussion
Mr Schneemann asked whether information existed to clarify how many approved projects per year were completed. He asked how underspending patterns could be reduced. Underspending trends at the provincial level had to be detected immediately and dealt with as a priority. He asked if mechanisms were in place to address underspending at the provincial level.

Ms Dambuza asked who had the final authority over project budgets. Housing Boards continued to exist in certain provinces and not in others. She asked if the process could be compromised by a lack of standardisation in approval procedures. The lack of adequate capacity at the municipal level would adversely impact on consumer education initiatives.

Mr Mabena referred to approved projects in the Eastern Cape of 2189 and asked what steps the Department envisaged to ensure that Departments submitted their business plans on time.

Mr Dlabantu noted that information on the completion of approved projects would be supplied to Members. The approval process was time-consuming. Under spending trends at the provincial level were identified and analysed and corrective measures were in place. Funding to deal with the accreditation of builders was granted in the present financial year for the first time. No under spending would occur in the present year. Project approvals in provinces occurred in line with the PFMA. Provinces had to submit business plans on housing projects for the first time in the present financial year in compliance with the Division of Revenue Act. National Treasury had appointed consultants to assist in the process.

Mr Wallis stated that Housing consumer education consisted of a number of elements. Radio was utilised to a large extent. Certain municipalities were using community development workers to assist with consumer education. The Department would continue to focus on all municipalities.

Mr Schneemann acknowledged that consultants had been appointed to assist provinces with business plans. He asked what steps had been envisaged to reduce the reliance on consultants. Proper capacity had to be created within provincial departments. Information technology could be used to assist in the training of councillors.

Mr Kotsoane declared that the Department had made substantial progress in addressing issues arising from the Standing Committee on Public Accounts. Timeframes would be met in terms of cases to be investigated. Proposals on amnesty issues would be developed. The internal audit capacity within the Department would be strengthened. A national workshop had been arranged with the provinces to assist the project approval process and the business plan. Business plans had to be submitted timeously.

The meeting was adjourned.