Department of Human Settlements Q2 2023/24 Performance; with Deputy Minister

Meeting report

The Chairperson, Ms R Semenya (ANC), welcomed Members and guests to the meeting.

The Committee Secretariat conveyed an apology on behalf of the Minister, who was attending a Cabinet meeting. She also mentioned that Mr B Herron (GOOD) would not be able to participate in the meeting.

The Chairperson said the Committee was meeting to receive a briefing by the Department of Human Settlements on its second quarter report for the July to September period of the 2023/24 financial year. The Chairperson indicated the intention to invite the Deputy Minister (DM) to introduce the subject matter. The DM was expected to introduce both the topic and the team from the Department.

Deputy Minister Opening remarks

Deputy Minister of Human Settlements, Ms Pam Tshwete, apologised for logging in late due to office network issues, mentioning her inability to show her picture. The Deputy Minister thanked the Committee for inviting them to present the second-quarter report, focusing on the Department's overall expenditure percentages for quarters one and two, which stood at 87% and 86%, respectively. The CFO would provide more details on this.

The Deputy Minister informed the Committee about challenges and efforts to address the backlog in Title Deeds Fridays, expressing optimism about reducing the backlog by the end of the fiscal year. She highlighted concerns about the performance of the conditional grant in quarter two, particularly the informal settlements upgrading partnership grant, during the final stages of the Medium Term Strategic Framework (MTSF) period.

Addressing the 40% set aside challenge, the Deputy Minister discussed measures taken, such as establishing a task team to address procurement delays, policy gaps, and transformation issues related to this allocation. She assured the Committee of ongoing efforts to monitor spending by provinces, emphasising the commitment received from provinces under-spending to utilise funds by the end of the fiscal year.

The Deputy Minister acknowledged concerns about Title Deeds issuance and pledged positive changes following the recent Title Deeds Friday. She concluded by introducing the team of DDGs present and expressed readiness for questions from Members of Parliament.

Department of Human Settlements Q2 Performance as Per The 2023/2024 Annual Performance Plan

Ms Lucy Bele, Chief Financial Officer, Department of Human Settlements, introduced the team accompanying her, including the DDG responsible for Informal Settlements, the DDG responsible for IGR Entities Oversight And Monitoring And Evaluation, and the Acting DG responsible for Corporate Services And Non-Employment. She also mentioned the DDG responsible for Policy And Human Settlement Strategy, along with colleagues from the Minister's office, the Deputy Minister, and the Acting DG's office, noting the Acting DG's absence due to illness.

Ms Bele informed the Members that she would lead the presentation on the second-quarter performance for the 2023/2024 Annual Performance Plan (APP), which will be divided into two parts. She delegated the first part to her colleague, Mr Shaun Mlanzeli from the Acting DG's Office, who would provide information on the initial segment of the presentation.

Programme Performance

Mr Shaun Mlanzeli, Acting Chief Director: Office of the Director-General, Department of Human Settlements, outlined the purpose of the presentation, focusing on the second-quarter performance of the Department of Human Settlements.

The presentation highlighted the Department's budget structure with five programmes: Administration, Integrated Human Settlements Development Planning, Informal Settlements Upgrading, Rental and Social Housing Programme, and Affordable Housing. Mr Mlanzeli explained the performance criteria, where 100% achieved indicated successful delivery of contracted targets, while red indicated targets not achieved, ranging from 0% to 99%.

The overall second quarter performance stood at 86%, with 14% of targets not achieved. Out of 35 targets pursued, 30 were achieved, and five were not. The presentation compared quarter one and quarter two performances, showing a slight drop from 87% to 86%.

Under Administration (Programme 1), targets related to compliance, internal audit plan, anti-fraud and corruption plan, risk management plan, and unqualified audit opinion were achieved. However, the implementation of the human resource plan fell short at 88%, primarily due to two vacancies not on the approved list. Terms of reference approval for the digital transformation strategy faced delays, but they have been achieved as of the current quarter.

In the intergovernmental relations programmes, an overachievement was noted, with 12 programmes implemented instead of the planned five. However, the report on monitoring the set aside for designated groups faced challenges due to six metros not submitting performance information.

Programme 2 focused on monitoring the development of integrated implementation programmes, allocations to PDAs, rezoning of land, and assessment of metro business plans, all of which were achieved.

Programme 3 reported successful achievements in consultation reports, draft policy programmes, and intergovernmental relations programmes, surpassing the target with 12 implemented. Monitoring progress of informal settlements upgrading across provinces and metros was also achieved.

Programme 4 highlighted reports on monitoring the rental housing and CRU programmes, both successfully achieved.

Under Programme 5 (Affordable Housing), targets related to monitoring block projects in nine provinces and the delivery of service sites faced challenges due to insufficient portfolio evidence. The Department committed to correcting this in the third quarter. Other targets were achieved, including monitoring households receiving financial assistance, job opportunities, eradication of asbestos roofs, and mud houses.

Mr Mlanzeli concluded his presentation, requesting that the CFO proceed with the financial aspects.

Financial Performance

Ms Bele provided an overview of the financial aspects of the Department of Human Settlements' second-quarter performance. She began by mentioning that the Department faced a mid year budget cut of R3.2 billion, and for the quarter under review, they reported before the budget cuts, indicating R34.9 billion. The budget allocation and expenditure per programme were outlined, with programmes such as Administration, Integrated Human Settlements Planning and Development, and Informal Settlements Upgrading highlighted.

The Department's financials stood at 39% below the position for the quarter, with economic classification showing compensation of employees at 47%, goods and services at 24%, and payment of capital assets at 19%. Ms Bele explained that goods and services reflected underspending due to early caution from Treasury regarding budget cuts. She anticipated improvement in the next quarter after revising the procurement plan.

Grants and transfer payments were discussed, covering transfers to provinces, municipalities, entities, and specific programmes. Ms Bele emphasised compliance with Treasury regulations on the payment of invoices within 30 days, with 3 073 invoices processed, totalling R140.8 million, all paid within the stipulated time.

She then delved into the performance of individual grants, discussing the Human Settlement Development Grant (HSDG), Informal Settlements Upgrading Partnership Grant (ISUPG), and Urban Settlement Development Grant (USDG). Ms Bele highlighted the impact of budget cuts on the grants and the Department's efforts to address underspending in certain provinces.

The presentation touched on the utilisation of the Urban Settlement Development Grant (USDG) and the Informal Settlements Upgrading Partnership Grant for metros. The need for provinces to submit recovery plans for grants below 40% expenditure was emphasised.

Ms Bele concluded by presenting an overview of the budget cuts, indicating reductions in provincial and local government conditional grants, operational budget, and entities' budget. She highlighted the need for improved collaboration, integrated planning, and continued filling of critical vacancies as areas for improvement.

(see attached for figures)

Discussion

Ms M Makesini (EFF) expressed apprehension about the Department's 14% non-achievement and highlighted concerns regarding problematic provinces, particularly emphasising the situation in Free State. She sought clarity on the Department's contingency plans if provinces, especially Free State, fail to improve and submit necessary documentation by the specified deadline.

Further, Ms Makesini called for a radical intervention by the Deputy Minister, especially in metros exhibiting poor performance. She voiced concern about the potential recurrence of non-performance issues in the following year, emphasising the urgency of addressing these challenges to avoid a detrimental impact on service delivery.

Shifting focus to entities, Ms Makesini acknowledged their reported strong performance in terms of plan submission and target achievement. However, she raised community concerns, particularly among first-time homebuyers, who allegedly face rejection and subsequent challenges. Ms Makesini sought clarification on mechanisms in place to assist individuals, especially those under debt review, to prevent them from losing their homes and ensure a smoother home buying process.

Mr A Tseki (ANC) raised a question regarding the impact of budget cuts on the Department's expenditure pattern. He pointed out that while there were budget cuts, it seems the expenditure pattern has not changed. He sought clarification on whether, despite the budget cuts, the Department anticipates staying within its expenditure limits by the end of the financial year.

Mr C Malematja (ANC) expressed a mixture of appreciation and concern for the Department's report. He raised concerns about the Department's approach to filling vacancies, emphasising the importance of addressing unemployment rates. He sought clarification on the Department's strategy in this regard.

Moving on, he stressed the significance of having all players on board to achieve planned goals. He highlighted concerns about non-performance, particularly in metros like the City of Tshwane, Ekurhuleni, and the City of Cape Town. Mr Malematja questioned the Department's enforcement and consequence management to ensure improvement in these areas.

On a positive note, he commended the Department for its performance in the self-service provider payment system, encouraging them to maintain this positive aspect.

Shifting focus to provincial delivery, Mr Malematja expressed worry about Western Cape's reported lack of progress. He questioned the Department's intentions and urged them to investigate and address the disparities, particularly regarding informal settlements and housing projects. He mentioned that the province returning funds was meant for informal settlement improvement.

Concerns were also raised about the portfolio of evidence, and Mr Malematja asked about the Department's measures to ensure it does not become an issue affecting performance.

Lastly, he posed a question about the Department's strategy for monitoring and evaluating projects. Specifically, he inquired about the point at which they intervene to prevent project failures or shocks during the evaluation stage.

Dr N Khumalo (DA) expressed gratitude for the Department's presentation, acknowledging the 86% achievement of targets. However, she sought further clarity on Deputy Minister's remarks regarding the strategy to achieve the issuance of title deeds. Dr Khumalo emphasised the importance of transparency in the housing list centralisation process and requested information on when it would be public and transparent.

She raised concerns about vacancies, questioning the disparity between measured vacancies and those listed as targets. Dr Khumalo also inquired about the follow-up process for provinces with designated group-related issues and linked it to intergovernmental relations, questioning the effectiveness of reporting within this framework.

Expressing worry about the Department's 39% financial performance halfway through the year, Dr Khumalo requested information on plans to improve this aspect. She commended the 73% performance achievements around scholarships but expressed concerns about the 41% spending on housing development grants and the 69% housing delivery rate, seeking assurance of improvement.

Addressing the recurring issue of the portfolio of evidence, Dr Khumalo questioned the monitoring process throughout the year, and whether it is reported per quarter. He highlighted the Free State's low 3% delivery rate against the target and sought clarification on the effectiveness of interventions in the province.

Ms N Sihlwayi (ANC) stated that the report clarified various issues related to financial performance and identified challenges and weaknesses in different municipalities, particularly metros with a significant population. She expressed concern about the lack of performance in metros, specifically addressing the informal settlement upgrading in the Western Cape.

Ms Sihlwayi proposed that the Chairperson, along with the Department, should request a presentation on informal settlement upgrading and site development in the Western Cape. She emphasised the need for clear monitoring, suggesting a collective approach to ensure consistency in monitoring activities. Ms Sihlwayi also raised concerns about the performance of block projects and requested a clear understanding of their finances and programmes.

Further, she expressed a desire for a report on the scholarship programme in the next meetings. Ms Sihlwayi emphasised the importance of transparency in the programme, ensuring that all qualifying individuals are aware, and she requested information on the retention process for those who succeed in the programme.

The Chairperson stated that there was a query about the Block project, with the Chairperson asserting that this was the second year, not the first, based on the Minister's statement regarding the three-year programme. Clarity was sought on this matter.

The Chairperson then raised concerns about programmes reported as monitored at 100%, emphasising the need for specific details on achievements. Using job creation as an example, the Chairperson questioned why the report did not provide information on the number of jobs created under the monitored programmes.

Another issue highlighted by the Chairperson was the budget cuts, expressing sympathy for the Department. However, it was emphasised that if Departments were not spending allocated funds, it could contribute to the country's debt. The Chairperson encouraged the Department to work diligently to prevent further budget cuts, supporting Treasury in its efforts to control the fiscal situation.

Additionally, the Chairperson discussed the need for consequence management for non-performance, suggesting that money should be taken from underperforming provinces and redirected to those performing well. There was a call for assurance from the Department regarding the allocation of funds, especially to prevent instances where programmes were changed without explanation.

In conclusion, the Chairperson appreciated the Department's work but urged them to double their efforts to meet all targets. The Department was requested to monitor incidents where programmes were changed mid-year and take appropriate actions. The Chairperson thanked the Department and invited the Deputy Minister and the team to respond to the raised questions.

Responses

Deputy Minister Tshwete began by acknowledging the questions directed towards her but mentioned that she would address them later in the session. She then deferred to the Acting Director in the Office of the DG to respond to the questions related to the Department's performance, monitoring of provinces, support to provinces, filling of vacancies, job creation, assistance to communities, and issues of repossessed houses. Following that, she mentioned that a DDG would address concerns about finances, spending, and the receipt of improvement plans from provinces. The Deputy Minister also indicated that she would elaborate on the title deeds issue and respond to questions about the housing list priorities.

Mr Mlanzeli provided responses to some of the questions raised by Members. He addressed the issue of rejected applicants due to financial constraints. He explained that ongoing consultations with banks, such as ABSA, aim to rehabilitate applicants with heavy debts, making them eligible for housing assistance in the following year. He also mentioned efforts to broaden these consultations with other banks.

Regarding the portfolio of evidence and underperformance, Mr Mlanzeli discussed the Department's quarterly meetings with all nine provinces, eight metros, and entities for peer assessment and accountability. He highlighted an ongoing quarterly performance review session.

Concerning blocked projects, Mr Mlanzeli explained that the intervention emerged from concerns raised by the Minister and Deputy Minister in the 2021/22 financial year. An enumeration study revealed 320 blocked projects, with 51 of them unblocked to date, meaning they are now part of business plans, and funding has been allocated for completion. The unblocking of projects is part of a three-year programme.

Mr Mlanzeli then deferred to the DDG to provide additional insights and responses to the questions.

Deputy Minister Tshwete requested elaboration on the three-year project concerning block projects and the timeline for completion.

Mr Mlanzeli clarified that the three-year programme concerning block projects commenced in the 2023/24 financial year and is set to run until the end of the 2025/26 financial year.

Ms Mathope Thusi, Director: Human Resources, DHS, explained that the Department had to reprioritise positions due to the declining compensation of employee’s budget over the years. She mentioned that the list submitted at the planning stage included reprioritised posts, but as additional vacancies emerged during the year, the list was not updated to reflect the new positions. Ms Mathope Thusi also discussed efforts to fast-track the filling of positions, addressing internal bottlenecks and ensuring timely processing of pre-employment screenings through external stakeholders like the South African Qualifications Authority (SAQA). She emphasised ongoing monitoring and reporting on progress in filling positions, recognising the urgency given the high rate of unemployment.

Deputy Minister Tshwete requested input from the entities, specifically addressing questions related to assisting communities to prevent house loss and their overall goals in addressing challenges raised by Members of Parliament.

Ms Sindisiwe Ngxongo, Acting Director-General, Department of Human Settlements, addressed various questions raised.

The Department focuses on education and outreach programmes to prevent house loss, particularly through the First Home Finance initiative. Collaboration with commercial banks, notably ABSA, plays a crucial role in assisting beneficiaries at risk of losing their homes. System enhancements, such as online applications and immediate subsidy payments upon approval, have streamlined processes. The call centre staff had undergone training to provide effective responses to queries from First Home Finance beneficiaries.

Significant improvements have been made in the First Home Finance programme. Online applications and prompt subsidy payments upon approval aim to expedite the process. The implementation of a Customer Relationship Management (CRM) system allows for direct payments, reducing bond amounts and, consequently, lowering interest costs.

Regarding performance monitoring for designated groups, ministerial outreach programmes cover various service delivery areas. The Department actively monitors the 40% set-aside for women-owned businesses and other designated groups. Provinces and entities undergo performance reviews to assess how budgets are allocated and spent by designated groups. Emphasis is placed on encouraging the inclusion of designated groups in high-budget items, fostering meaningful economic transformation.

Ongoing collaboration with associations and relevant government Departments, such as the Department of Women, Youth and Persons with Disability, reflects a commitment to addressing challenges and enhancing the performance of designated groups. These efforts underscore the Department's dedication to proactive outreach, leveraging technology for efficiency, and promoting economic inclusion in high-budget areas.

Deputy Minister Tshwete acknowledged the questions raised by Members regarding informal settlement upgrades. She directed Mr Zama to address these concerns and emphasised the importance of addressing issues raised during visits, particularly those pertaining to informal settlements in the Western Cape.

Mr Siyabonga Charles Zama, DDG: Informal Settlements Upgrading (ISU) and Emergency Housing, DHS, responded to concerns about informal settlement upgrades and Western Cape issues. He mentioned submitting a comprehensive report on the continuous performance of provinces and metros to Ministers and Members of Executive Councils Meeting (MINMEC), emphasising the seriousness of addressing challenges.

Mr Zama explained that the Minister met with MECs from Free State, Eastern Cape, and KwaZulu-Natal to discuss performance issues. He highlighted challenges where metros and provinces deviated from submitted business plans, leading to implementation problems. To address this, the planning branch would revise the business plan template for better monitoring.

Regarding the Western Cape, Mr Zama noted it accounted for 13% of informal settlements in the country. He provided statistics on expenditure regression, emphasising the need to address challenges. He discussed the R106 million returned to the fiscus and mentioned the performance issues related to informal settlements in Khayelitsha.

Mr Zama detailed the R68 million allocated for various projects including in Khayelitsha, including the human rights package, formalisation, linking in bulk, and engineering services. He mentioned the intervention to ensure compliance with norms and standards for portable toilets and standpipes in the area.

Ms Bele began by explaining the budget cuts imposed by National Treasury, highlighting the reduction of R2.2 billion from provisional grants and R858 million from municipal grants. She emphasised the need for criteria to allocate the cuts and discussed the approach taken.

Ms Bele outlined the criteria used to determine budget cuts, focusing on performance-based measures. She highlighted those provinces performing well, such as Limpopo, Northern Cape, and Mpumalanga, were spared from equal cuts. Instead, the reduction was shared among provinces below 60% expenditure. Ms Bele discussed the impact on Free State, which faced a significant cut due to underperformance.

Regarding consequence management, Ms Bele explained that bilateral meetings were being conducted to address issues of non-expenditure. She highlighted that provinces like North West and Northern Cape were requesting additional funding after bilateral discussions. Ms Bele emphasised the legislative process of stopping and reallocating funds, ensuring transparency and adherence to procedures.

Ms Bele addressed concerns about Free State's recovery plan, acknowledging their efforts in projects like asbestos eradication. She pointed out that the improvement might be visible later in the financial year due to delayed implementation.

In conclusion, Ms Bele emphasised the seriousness with which the Department was addressing non-expenditure and underperformance, aiming to prevent funds from reverting to the revenue fund. She highlighted the impact on the Department's baseline and the need to safeguard every cent.

Deputy Minister Tshwete acknowledged the challenges faced by the Free State due to political instability but commended efforts to address the issues and improve the situation. She mentioned the positive changes seen since the intervention began, noting that work is now being done in contrast to the previous lack of progress. Deputy Minister Tshwete touched on the improvement in housing projects and the reduction of media attention on the asbestos saga.

Ms Mhlongo was then invited to discuss the strategy and progress made by provinces in the MINMEC meeting.

Ms Zenkosi Dumile Mhlongo, DDG: Research, Policy, Strategy, and Planning, Department of Human Settlements, provided insights into the functions related to title deeds, specifying that the Affordable Housing branch is actively monitoring the issuance of title deeds. Despite budget cuts affecting some provinces, efforts are being made to ensure there is not a zero outcome in terms of title deeds.

Ms Mhlongo reported on the progress made by the Affordable Housing branch, mentioning a resolution from the September MINMEC meeting that called for the development of a provincial implementation plan. This plan details the number of title deeds issued to municipalities and beneficiaries, with ongoing monitoring to reprioritise budgets for future increases in annual targets.

Addressing concerns about Township establishments, Ms Mhlongo mentioned an ongoing analysis of challenges and the development of action plans linked to budgets and time frames. The team is also focusing on resolving ownership disputes related to late beneficiaries. Ms Mhlongo concluded by mentioning Title Deeds Fridays, a monitoring initiative pronounced by the Minister, and expressed readiness to provide a detailed breakdown of the analysis and progress in a future committee meeting.

Deputy Minister Tshwete mentioned that a MINMEC meeting held on Thursday, 23 November 2023, discussed the performance of designated groups. The Minister mandated the Deputy Minister to conduct round table sessions with all the metros to address the issue of non-performance in meeting the 40% target for designated groups. Deputy Minister Tshwete emphasised the Department's commitment to implementing the 40% set aside and noted that they are ahead of other Departments in this regard.

She also touched on the digitisation of the housing list, mentioning that there were expectations for further discussion on this topic. Deputy Minister Tshwete indicated that letters would be sent to all the metros to make them accountable for the 40% designated groups. She concluded by expressing willingness to address any further questions from the Committee.

Ms Mathope clarified that the digitisation project in question pertains to the internal processes and projects of the Department. The delay in achieving the set target was due to the need to have the terms of reference signed before proceeding with the tender process. In the second quarter, there was a delay in signing the terms of reference because of a circular on cost containment. However, Ms  Mathope mentioned that they had resolved the delay, and the terms of reference had been signed. The Department is now back on track with the digitisation project and will proceed with the necessary processes.

Follow-up discussion

The Chairperson sought clarification on two key points. Firstly, regarding the digitisation of beneficiary lists, there was a previous request for the Department to provide a briefing on the progress made in addressing challenges associated with beneficiary lists. The Chairperson wanted to know how far the Department had come in acquiring a system to address these challenges.

Secondly, the Chairperson inquired about job creation targets. While the DM mentioned that the monitoring of job creation was at 100%, the Committee sought to understand if this meant the targets had been achieved and, if so, how many jobs had been created. The Chairperson requested specific numbers or an acknowledgement if the numbers were not immediately available.

Adv M Masutha (ANC) raised several concerns and follow-up questions. He expressed dissatisfaction with the Deputy Minister's response to Dr Khumalo's question on digitisation, stating that the response did not directly address the specific issue of beneficiary lists. He urged the Department to provide a focused response on the progress made in digitising beneficiary lists.

Adv Masutha also critiqued the CFO's understanding of consequence management, particularly emphasising that consequences should be faced by officials responsible for underspending or inefficiencies. He highlighted that taking money from a province does not directly impact those officials and suggested that true consequence management should involve penalties outlined in the PFMA (Public Finance Management Act). He called for accountability at the DG level, emphasising that the buck stops with the accounting officers.

Further, Adv Masutha discussed the concept of fiscal dumping, expressing frustration with inefficient planning and sudden efficiency toward the end of the financial year. He questioned why the administration could not consistently maintain efficiency throughout the year, stressing the need for a sense of occasion and efficient decision-making.

The Chairperson acknowledged and agreed with Adv M Masutha's concerns, emphasising the importance of clarity in the Department's responses. The Chairperson also supported the CFO's approach to performance-based allocation, emphasising the need for provinces to justify their budget requests and demonstrate improved performance.

The Chairperson then called on the Department to respond to the raised issues, including the need for a focused response on the progress of digitising beneficiary lists, clarification on consequence management, and addressing concerns about fiscal dumping.

Follow-up responses

Deputy Minister Tshwete acknowledged the concerns raised by Adv Masutha and provided some context to the decision to allocate funds to provinces that are performing. She highlighted that the decision was made in the MINMEC, not solely by the Office of the Minister. The discussion focused on preventing funds from going to National Treasury when provinces had completed their projects and needed additional funding. The concern was for beneficiaries and communities that would suffer if the funds were returned to the Treasury.

The Deputy Minister expressed agreement with the raised issues and emphasised that efforts were made to support provinces, hold them accountable, and address non-performance. She acknowledged that some provinces were not fulfilling their responsibilities, and steps were being taken to address this.

In response to concerns about digitisation, the Deputy Minister mentioned that it was a recurring issue, and she expected the Department to provide information on the progress made. She then deferred to Ms Mathope to address the questions raised by Adv M Masutha.

Ms Mathope explained that the Department had faced challenges in progressing with the digitisation of the beneficiary list. Initially, the Department had to comply with the Treasury practice note, which stipulated that the State Information Technology Agency (SITA) was responsible for developing the system. However, due to difficulties with the existing housing subsidy system managed by SITA, the Department requested an exemption from this practice note.

SITA presented a generic and inadequate plan for the new system, lacking details such as cost, resources, and essential components. After receiving feedback, SITA requested a government order before providing the required information. The Department found this response unsatisfactory, leading to an escalation of the matter to the Minister, who would engage with the Minister of Communications and Digital Technologies to seek an exemption and expedite the process.

Ms Mathope acknowledged the delay and expressed the Department's commitment to resolving the issue for effective digitisation of the beneficiary list.

Ms Bele addressed the issue of transferring funds to provinces, particularly focusing on the Free State. She emphasised that as a national Department, they act as the transferring officer for the grant and are responsible for working within the legal framework. She highlighted challenges faced by the Free State, such as officials on suspension and ongoing legal processes.

Ms Bele explained the consequences faced by provinces with underperformance, including material irregularities, investigations by the SIU, and cases going through the legal system. She noted that funds previously transferred to the Free State had reverted to the revenue fund due to challenges in expenditure.

She discussed the dilemma of transferring the full R858 million to the Free State, considering the impact on the Department's baseline and the recent budget cut of R3.2 billion. Ms Bele mentioned the legislated process of stopping and reallocating funds, emphasising that the decision is not taken lightly and involves a thorough assessment of provinces' performance, ongoing projects, and their capacity to absorb additional funding.

The goal is to prevent fiscal dumping, and the Department requests recovery plans from provinces to ensure commitment and effective spending of allocated funds. Decisions are challenging, but the Department aims to avoid leaving funds in provinces where they are unlikely to be spent, leading to reverting to the revenue fund and negatively affecting the sector's budget.

Adv Masutha interjected to express frustration with the repetition of information that did not directly address the specific questions raised. He clarified that the key concern was understanding the consequence management measures taken by the Department, particularly at the MINMEC level, in dealing with provinces that were not performing. He also emphasised the need for a report on how each province has addressed transgressions, without necessarily disclosing names but providing information on the numbers involved.

He further commented on the issue of digitalisation of the beneficiary list, noting that the Department should have started with the SITA issue to provide a clearer understanding of the challenges faced. Adv Masutha suggested inviting SITA to the Portfolio Committee to explain their challenges and interventions.

Deputy Minister Tshwete suggested that the information regarding actions taken in provinces be submitted in writing to all Members of the Portfolio Committee. This approach would provide a detailed and comprehensive overview without the need for repetition during the meeting. The request aimed to streamline the communication process and ensure that members receive thorough documentation on the matters discussed.

The Chairperson emphasised the need to formalise and clarify the correlation between the spending of provinces and the commitments they have made. The focus was on understanding the relationship between spending patterns and the outlined plans, particularly regarding conditional grants. The Chairperson also acknowledged the challenges faced by provinces and suggested that the Portfolio Committee would address these issues. Furthermore, the Chairperson expressed the intention to engage with SITA and National Treasury regarding the hindrance to digitisation.

Ms Bele reiterated her points regarding fiscal dumping, emphasising that the Department has been vigilant in avoiding such practices. She also addressed the situation in the Free State, noting improvement in their performance and financial situation. Ms Bele concluded by stating that she believed she had adequately responded to the follow-up questions.

Deputy Minister Tshwete apologised for any shortcomings in their comprehensive response to the questions. She acknowledged the concerns raised by the Committee Members and committed to providing a detailed written report on consequence management for each province. She mentioned that the Minister had expressed dissatisfaction with SITA's performance and had even considered alternative measures if improvements were not made. The Deputy Minister thanked the Committee for its support and urged them to continue holding the Department accountable. She also extended holiday wishes to the Members and expressed a willingness to return if needed.

The Chairperson expressed concern about the Department's reporting, especially regarding monitoring programmes and targets. The Chairperson emphasised the need for the reports to provide more meaningful information, such as the actual outcomes of the monitoring, rather than just stating that it has been done. The Chairperson suggested that the reports indicate progress towards targets, identified issues, and corrective measures taken.

The Chairperson raised specific examples, such as eradicating asbestos and mud houses, where the reports lacked the necessary details for the Committee to assess the effectiveness of the Department's actions. The Chairperson stressed the importance of providing information that allows the Committee to understand the impact of the Department's interventions and proactively address potential challenges.

Adv Masutha sought clarification from the CFO regarding fiscal dumping, emphasising that he understands the difference between virements and fiscal dumping. He requested assurance that no fiscal dumping was occurring and urged the Department not to be overly defensive, especially when issues lie at the provincial level. Adv Masutha encouraged the Department to report on provincial challenges to help the Committee hold provinces accountable.

He also raised questions about the definition of mud houses and the type of mud houses targeted by the programme. Additionally, he questioned whether the initiative aimed at addressing mud houses was focused on emergency response or part of a broader rural development strategy.

The Chairperson discussed the challenges and distinctions in defining and eradicating mud houses. She emphasised the need for clarity on what constitutes a mud house, especially regarding its quality and condition. The Minister's prioritisation of eradicating mud houses was highlighted, and the Committee stressed the importance of realistic targets.

Additionally, the Chairperson urged the Department to provide evidence and specifics on the issues they monitor, emphasising that simply stating that monitoring is done does not offer sufficient clarity. She encouraged the Department to bring forth evidence to help the Committee appreciate the Department’s work and enhance mutual understanding.

Finally, the Chairperson thanked the Department and concluded the discussion, releasing them and allowing for the adoption of minutes.

Adoption of the draft minutes

Minutes dated 08 November 2023

Dr Z Mkhize (ANC) requested an amendment to his initials, and then he moved to adopt the minutes. Ms Sihlwayi seconded the motion, and the minutes were duly adopted.

Minutes dated 15 November 2023

Ms Sihlwayi moved for the adoption of the minutes.

Mr Tseki seconded the motion.

The minutes were adopted.

Minutes dated 22 October 2023

The Chairperson mentioned that the minutes were duly adopted with the amendment made by Dr Z Mkhize. The adoption of the minutes was moved by Ms Sihlwayi and seconded by Dr Mkhize. She asked for the official title of Members to be “Honourable”.

Ad-hoc Matters

The Chairperson also acknowledged that the report is not yet ready and will be deliberated in the next meeting.

The Committee Secretariat mentioned the upcoming meeting on Wednesday from 9:00 to 10:00 for the adoption of two reports—the Indaba report and the Committee Annual Report.

The Chairperson agreed to the timing if the reports were circulated in time.

Adv Masutha requested follow-up on the undertaking made by the Deputy Minister, regarding a consolidated report on consequence management in cases of serious transgressions resulting in non-spending by various provinces.

The Chairperson agreed, and the Committee Secretariat was tasked with writing a letter to the Minister to request the report within seven days for distribution to Members.

The meeting was then adjourned.