Human Settlements Budget Review and Recommendation Report (BRRR)

Meeting report

The Chairperson said that the Committee had spent the last two weeks assessing and interrogating the Annual Reports of the Department. In this meeting it would be adopting its Budgetary Review and Recommendations Report. The BRRR had already been circulated to the Committee members two days prior.

The Committee went through the report and Members were invited to make comments and propose changes.

Ms M Makesini (EFF) raised title deeds because they had been mentioned in the 2023 State of the Nation Address (SONA) by the President. The Committee identified that the Department did not reach its set target and only managed to issue 25 235 title deeds. She asked that an observation be included that DHS must speed up the issuing of title deeds. An observation can also be included that the Department entities are not doing very well.

The Chairperson replied that those points were already included in the report.

Dr N Khumalo (DA) noted point 6 and asked that the sentence on department achievements include areas of non-achievement as well.

Mr M Tseki (ANC) asked that points 1.3 and 1.5 be rephrased appropriately and he would forward this to the secretariat. The figures in point 8.4 needed to be amended.

Dr Khumalo said that there was inconsistency where the report talked about the department performance compared to the Auditor General’s assessment of department performance.

The Chairperson replied that DHS had explained in the presence of Auditor General South Africa (AGSA) the reason for the low percentage because it had failed to include its achieved targets for Administration. She asked what those suggested changes were.

Dr Khumalo said that the report should reflect the same percentage and not different percentages so as not to confuse those that read the report.

The Chairperson said that it sounded simple but as a committee they are supposed to actually reflect the proceedings. The Department had presented in the presence of AGSA that they had failed to include the achieved targets for Administration. There might be need to confirm with AGSA the reason those achievements were not taken into account and why they chose to do that.

Mr Tseki asked if it would be clearer if it was explained which targets contributed to the percentage. In his opinion Treasury norms should form part of the report that a department is required to achieve in terms of targets and outcomes.

The Chairperson explained that Dr Khumalo's concern was that AGSA's presentation indicated that DHS had achieved 58% but when the department presented after AGSA who were was present, DHS indicated that AGSA assessed the core mandate but had not Administration which were statutory items. If those had been included it would have improved DHS performance to above 60%. Dr Khumalo was suggesting that they include only one figure.

Ms Makesini said that since DHS presented in the presence of AGSA, she agreed with Dr Khumalo on using one figure and that should be the percentage presented by DHS in the presence of AGSA.

Dr Khumalo said that she agreed with the Chairperson that the Committee confer with AGSA to get confirmation. AGSA was in the meeting but there was no confirmation from AGSA on what DHS was reporting at the time.

Mr Tseki asked if Dr Khumalo was referring to the DHS internal audit which was later scrutinised by AGSA as a Chapter Nine institution. After oversight, the Committee seemed to be confused about the percentage. It was interesting how the AG came to the Committee presented a figure and now that audit becomes a source of confusion.

The Chairperson explained the issue again and said that the Committee could confirm with AGSA about the right percentage before the report is placed in the Announcements, Tablings and Committee Reports (ATC).

The Chairperson said that the Committee would have to verify what the target was for the National Blocked Projects evaluation and what had been achieved. She asked that it be included in the report.

Ms Sihlwayi corrected the acronym for National Housing Finance Corporation.

The Chairperson asked if the report included the Committee oversight visits or if that would be a separate report.

The Secretariat responded that the oversight visits are not included in the BRRR.

The Chairperson doubted that and asked the secretariat to confirm this.

Ms Sihlwayi agreed that it needed to be confirmed.

Mr L Mphithi (DA) clarified that the oversight reports are usually tabled separately from the BRRR. The Committee BRRR focuses on the recommendations made by the Committee on the annual reports submitted by DHS and the entities.

Dr Khumalo suggested that the sentence on the targets achieved by the Property Practitioners Regulatory Authority (PPRA) be removed in point 8.5 because in her opinion they had not achieved anything.

The Chairperson agreed and asked that the sentence be removed or the word 'achieved' be removed.

The Chairperson asked that they include an observation on the two provinces and one entity that had unqualified audits with findings. A recommendation should be made that DHS must support them in their audit action plans as they try to improve their audit outcomes.

On Observation 2, Ms Sihlwayi said that the recommendation needed to be more specific by demanding that the National Home Builders Registration Council (NHBRC) having a clear integrated plan that involves other stakeholders.

Ms Makesini said that the NHBRC is involved in the entire process. The recommendation should focus on how to get the organisation to collaborate with municipalities so that the integration is done appropriately.

The Chairperson said that the recommendation should ensure that even as the NHBRC delegates its functions, accountability remains with it. She asked the secretariat to phrase it to encourage collaboration but accountability remained with it.

Mr Tseki agreed that the point was strengthening the NHBRC mandate.

On Observation 4, Ms Sihlwayi asked that the last sentence be changed to include the word anti- before the word 'boycott'.

Dr Khumalo felt that the Committee in that observation should not be pushing for rental stock to become permanent housing as it would not help achieve the purpose of rental stock.

Ms Sihlwayi said that the rent boycott had resulted in DHS thinking outside the box. As much as she agreed with Dr Khumalo, the issue was that policy alternatives needed to be explored and evaluated as people are different. They have to consider what was practical so that is what government should focus on.

The Chairperson said that the rent-to-buy issue must be removed from the report but be reflected in the minutes. The recommendation could perhaps read that the Social Housing Regulatory Authority (SHRA) must work with its subsidiaries to mobilise tenants to pay the rental due and call off rent boycotts.

Mr C Malematja (ANC) asked why Observation 6 was not calling for harsher sentences for construction mafias.

Dr Khumalo asked the Committee to consider being stern about what it wants to see as a result of its recommendation on construction mafias.

Ms Sihlwayi was concerned that the Committee was mixing issues – that of criminality and the DHS mandate to give people houses. There were regulations and policies on how the process should be facilitated for building houses in an area. The Committee was addressing the matter of criminals. There was a clear programme on who must participate and who must get business in a housing development. The Committee and DHS are not able to deal with both criminals and housing development. Perhaps the Committee could focus on its mandate and leave the South African Police Service (SAPS) to deal with the criminals.

The Chairperson said that what the construction mafias were doing was wrong and they needed harsher sentences. This had been raised by one of the provinces that had presented to the Committee. She suggested that for now the Committee had to engage with DHS to tighten the rules so that any person given a contract must employ a certain percentage of South Africans.

Mr Malematja said that leaving the issue to Department of Police was correct only to an extent as the construction mafias exists as a result of construction produced by the DHS mandate. It was not appropriate to treat it as a by-the-way issue which may have negative implications on the DHS mandate. The Committee must consider if the procurement process of the Public Finance Management Act (PFMA) and the tender bidding system does not prompt corruption in construction. The Committee look have to look at the tender system. It must be dealt with in a cooperative governance manner where there is joint effort in working with law enforcement agencies. It was not sustainable to leave it to SAPS alone. This required cooperative governance.

The Chairperson said that DHS alongside the law enforcement agencies should come and present to the Committee on what was being done to deal with construction mafias. She invited the Committee to look at the proposed amendments to the PFMA.

Dr Khumalo suggested that the recommendation could instead indicate that the construction mafias be dealt with in collaboration with the specialised unit on construction mafia especially because they see the Department was overwhelmed and unable to deal with it.

Mr Malematja said that there had been a specialised unit on construction mafias in Gauteng and suggested that the recommendation state that the same specialised unit be empowered throughout the country.

On Observation 1, Mr Malematja said that the Committee had previously agreed that the list of beneficiaries must be at the site office to avoid tampering. Perhaps the recommendation could be amended to read that where there is a list of beneficiaries that this be transparent.

The Chairperson agreed but such a decision must be a council resolution to avoid interference before it is submitted to municipalities and provinces. The Minister had said that DHS would digitalise the beneficiary list to prevent interference. The recommendation should demand the fast-tracking of that digitalisation solution.

Dr Khumalo said that there was not much progress on the digitisation progress. The Committee needed to put in a time frame. The Committee had already been informed of the challenge involved in leaving the decision to councils. They should make it so that no municipality has a choice about the beneficiary list while awaiting digitalisation. Digitalisation is not immediate but a step by step process. She asked that a time frame be the first step and suggested six months.

The Chairperson said that six months may be too short to completely digitise the system so perhaps they should state that the Minister in six months briefs the Committee on the digitalisation progress. But the collection of the beneficiary lists from municipalities and provinces were new issues. The Committee should come up with a resolution that would bring stability in the country as they wait for the digitisation system to be finalised.

On Observation 14 Dr Khumalo suggested a recommendation that what was needed was a register for monitoring DHS-owned buildings in terms of their use.

On Observation 15 Dr Khumalo asked that the recommendation sound more holistic by stating DHS and its entities digitise processes to professionalise operations where possible as opposed to saying that other entities must do it.

On Observation 16 Dr Khumalo said that the recommendation should be more specific in its expectations.

On Observation 18 Dr Khumalo asked that the recommendation state that DHS partner and collaborate with people with disabilities to increase accessibility

The Chairperson agreed but asked that the word 'NGOs' be removed.

Dr Khumalo asked for an additional observation and recommendation on the PPRA performance and the Committee had agreed in that meeting PPRA present quarterly on its turnaround strategy. Secondly, she suggested a recommendation on Blocked Projects particularly providing additional funding to achieve the annual set targets.

The Chairperson said that she agreed with PPRA but did not agree with providing funding for blocked projects. There was a set process on what happens when contractors abandon projects after getting paid including getting the contractors to refund the money received. She insisted that grants could not happen. MinMec had been tasked with resolving blocked projects. Provinces had to use their grants to deal with the mess they had created. If the process outlined by National Treasury is followed then the provinces might be able to be assisted by National Treasury depending on the reason given.

Dr Khumalo asked for the Committee's stance on blocked projects because leaving it to the provinces when their performance is not good was not an option. They also needed to make an observation on titles.

The Chairperson replied that there was already a recommendation on title deeds. On the blocked projects she suggested that the Committee have another meeting where DHS presented on this. She explained that provinces get their grants from National Government and the grants were for a ministerial priority. What the Committee could do aside from the BRRR was to check what yardstick DHS would use to ensure that the provinces prioritise the ministerial priority as the grant is clear and had conditions

The Chairperson said that DHS should also mitigate against creation of new blocked projects in the system and not focus only the projects that are already there. Therefore DHS must strengthen monitoring to ensure there was no new creation of blocked projects. On the PPRA, the Committee had already agreed that it appear before the Committee and present its audit action plan.

On the blocked projects, Dr Khumalo said that the Committee should consider having a recommendation to blacklist contractors who are non-performers and who abandon projects.

The Chairperson reminded them that National Treasury had spoken to the Committee about this previously. Although Treasury had the ability to blacklist those contractors, it would not be easy to do. There are processes and procedures before they can block contractors. MinMec had to deliberate on the matter in the interim with the contractors otherwise it would cause DHS problems.

Mr Malematja said he supported the blacklisting of non-performing contractors where possible. Government departments also contribute to the delay in the completion of certain projects.

Dr Khumalo suggested that they put in an observation about MinMec and blocked projects as suggested. On blacklisting being difficult, difficult did not mean impossible. Therefore a recommendation should be included that the Committee had noted contractors who abandon projects and DHS should present to the Committee solutions on dealing with blacklisting as well as give a timeframe.

The Chairperson informed Dr Khumalo that a decision had already been taken on the issue. However, what they needed to do was to get MinMec to give the Committee a progress update. The resolution on blacklisting was already there.

Mr Malematja agreed that MinMec must come back to the Committee to explain what caused the delay in finalisation of projects before resorting to blacklisting contractors because the cause was sometimes DHS failing to pay.

The Chairperson said that this was the end of the BRRR and called for the Committee to adopt it with the amendments.

Dr Khumalo asked when Committee members could get the amended BRRR because, from past experience, she was not able to assume that everything would be captured accurately. She suggested that the amended report be circulated before adoption.

The Chairperson said that due to time constraints that would not be possible as the adopted BRRR had to be tabled before the Minister of Finance presented the budget review on 1 November 2023.

The Chairperson said that the secretariat would send the amended report and if the Members were not happy then they could write to the secretariat to correct that issue. She moved to close the meeting.

Mr Malematja interjected stating that the report had to be adopted because that was the business of the meeting. The Committee had done a lot of work on the report and he moved for its adoption with amendments made.

The Chairperson said that the Committee did not have time to adjourn and come back to adopt the report. She assured the Committee that the amended report would be circulated and if anyone was aggrieved they were free to call the secretariat or herself. They would make sure that any issues are resolved.

Dr Khumalo asked what time she could expect the amended report.

The secretariat replied that the amended report would be sent by 3pm.

Ms Sihlwayi seconded the adoption of the amended report. As Committee members they needed to trust the leadership and support staff. She was worried about this foreign mistrust of not trusting them to address the amendments. It meant that in all their meetings they would have endless debate because they do not trust each other. Such behaviour should be seen as a foreign tendency. She supported the adoption of the report with the amendments and she trusted leadership will attend to all that had been discussed in the meeting.

The Chairperson reassured Members that they would receive the amended report.

Read: 

ATC231027: Budgetary Review and Recommendations Report (BRRR) of the Portfolio Committee on Human Settlements, 25 October 2023

Meeting adjourned.