Public servants doing business with the state & Government Employees Housing Scheme; with Deputy Minister

Meeting report

Opening Remarks by the Chairperson

The Chairperson opened the virtual meeting, welcoming the Members, support staff and all the guest delegations in attendance. The Committee would receive a briefing from the Public Service Commission (PSC) on the report of the public servants doing business with the organs of the state, and linkages to their financial disclosure forms. The Committee would also receive a briefing on progress made by the Department of Public Service and Administration (DPSA) and the Department of Human Settlements regarding the Government Employees Housing Scheme and challenges encountered by public servants in accessing the scheme.

Opening Remarks by the Deputy Minister of Public Service and Administration

Deputy Minister Sindisiwe Chikunga said that many of the public servants are honest, committed, accountable and responsible. Unfortunately, some have been seduced by greed and succumbed to corruption, becoming unresponsive and unaccountable. To address these challenges of corruption and lack of accountability, government has implemented a number of interventions to monitor and enforce compliance of public servants. For instance, the public service regulations of 2016 are one of the legislative frameworks that provide fort the prohibition of public servants conducting business with organs of state.

She was pleased to indicate that part of the outcomes of the report that would be presented in this meeting would be a decrease in the number of public servants conducting business with the state since the criminalisation of such behaviour. The decrease could be attributed to the collaboration between the DPSA, the Department of Justice, South African Police Service, the National Prosecuting Authority as well as the level of public awareness made about the prohibition. This reassures the Department and confirms that it is doing a good job in safeguarding against the misuse state resources.

The Department is also aware that public servants are also personally facing housing challenges, just like the majority of South Africans. The establishing of the Government Employees Housing Scheme (GEHS) aimed to ensure that public servants get to own quality and affordable homes. The Department created a ring-fenced funded project management office, additional to the DPSA establishment, to implement the resolution. However, the uneven progress since the resolution prompted the relook at the scheme and the implementation approach in 2020; the DPSA Ministry approved a new implementation strategy for the scheme. In addressing this, the Department has since institutionalised functions of the scheme within the approved structure of the Department. The reviewed strategy approach takes into consideration the successes, including the lessons learned and challenges that the scheme encountered as well as challenges that have been registered by beneficiaries.

The Department is assessing all aspects of the scheme and a lot of work is currently ongoing internally. The presentation will provide a detailed report on the established partnerships and collaborations in implementing and improving the services of the scheme, rendering a satisfactory and professional service to the public servants as intended. The presentation will provide clarity on the existing benefits and the requirements that the servants should comply with in order to access the benefits. She handed over to the Public Service Commission for their presentation.

Public Service Commission (PSC): Overview Report on the Implementation of the Financial Disclosures Framework 2019/20

Mr Matome Malatsi, DDG: Integrity and Anti-Corruption, PSC, delivered the presentation. He said as part of its responsibilities of promoting professional ethics in the public service, the PSC manages the Financial Disclosure Framework. Particular focus is on members of the Senior Management Service. The financial disclosures of other categories of employees are managed internally by the respective Departments. The PSC assess compliance with the requirement to disclose financial interests by the respective due dates (i.e. establish whether all SMS members in the respective Departments submitted their financial disclosure forms, and whether these forms were submitted on time to the PSC).The PSC then verifies if all financial interests have been disclosed and ascertain if there is any conflicts of interests (potential or actual conflicts of interest). The PSC compiles departmental reports with findings and recommendations, which are submitted to all Executive Authorities (EAs).

Objectives of the Overview Report on the Financial Disclosures Framework

In line with section 196 (6) of the Constitution, the PSC tables the Overview Report on Compliance with the Financial Disclosure Framework to Parliament and Provincial Legislatures. This report enables the PSC to promote ethical conduct, accountability and transparency in the Public Service by reporting on the:

-Extent to which SMS members in the public service complied with the provisions of the Framework.

-Scrutiny findings emanating from the verification of the financial disclosures forms received in respect of the 2019/2020 financial year, and identified cases of conflicts of interest.

-Extent to which SMS members are engaged in other remunerative work outside their normal employment in the relevant Departments.

-Extent to which SMS members in the Departments received gifts and/or sponsorships during the period under review.

-Actions taken by the EAs with regard to identified cases of potential conflicts of interest and/or non-compliance by SMS members with the provisions of the Framework in respect of the period 2019/2020

Compliance with regulation 18 and 19 of the PSR, 2016

As at the due date of 31 May 2020, the PSC had received 9 792 (98%) of the expected 10 032 financial disclosure forms. This is a one-percentage point increase in the submission rate as compared to the 97% submission rate of the preceding financial year (2018/2019). Despite this increase, the submission rate recorded in respect of the current reporting period is still one percentage point less than the highest (99%) that was recorded in respect of the 2016/2017 financial year.

The total number of forms received consists of -

-9 753 SMS members who were in the system prior to 1 April 2020 and disclosed their registrable interests during that period as required by Regulation 18 (1) and (2) of the PSR, 2016;

-15 SMS members who were appointed after 1 April 2020 and disclosed their financial interests during the month of May 2020, thus complying to Regulation 18(4) of the PSR, 2016; and

-95 SMS members who were already in the system prior to 1 April 2020, but only disclosed their financial interests during the month of May 2020.  These particular SMS members contravened Regulation 18(1) and (2) of the PSR, 2016.

-The 2% of the forms that were still outstanding as at the due date of 31 May 2020 is attributed to the State Security Agency (SSA), whose forms were not submitted at all.  Apart from the SSA, there are other SMS members, including five Directors- General and four Heads of Department, whose forms were not submitted to the PSC as at the due date of 31 May 2020

The Directors-General of the following departments submitted their financial disclosure forms on time, but the relevant EAs did not release them to the PSC by the due date of 31 May 2020: Agriculture, Land Reform and Rural Development, Public Enterprises, Transport, Women, Youth and Persons with Disabilities and State Security.

Findings emanating from the scrutiny of the financial disclosure forms

638 (21%) of these SMS members who have interests in companies did not disclose their companies. This is contravention of Regulation 19 of the PSR, 2016. A total of 69 (11%) of the SMS members who did not disclose their interests in companies are repeat offenders.  They have failed to disclose their interests for more than one year in a row.  One of the undisclosed companies in the Gauteng Province was found to have conducted business with two organs of state (viz. the National Department of Basic Education and the Kwazulu-Natal Department of Education).  This is contravention of Regulation 13(c) of the PSR, 2016. It is also a classic example of actual conflicts of interest.  A separate investigation is required to determine how this could have happened, when government has put certain controls in place to prevent it from happening.

Non-disclosure of immovable properties

A total of 361 (4%) SMS members in the public service did not disclose their ownership of immovable properties during the 2019/2020 financial year. Among the SMS members who did not disclose their properties, are two DGs in national departments and two HoDs, one each in the Limpopo and Mpumalanga Provinces. There is in total 19 SMS members who have repeatedly failed to disclose their ownership of immovable properties during the period under review.

Non-disclosure of motor vehicles

A total of 814 (8%) SMS members in the public service did not disclose their ownership of motor vehicles during the 2019/2020 financial year. Among the defaulting SMS members in this regard are four DGs in the national departments and ten HoDs in the provincial departments.  A total of 51 (6%) of the SMS members who did not disclose their ownership of motor vehicles are repeat offenders.

Potential conflicts of interest

Potential conflicts of interest arise where a person has private business interests that if left unmanaged, could conflict with their official duties in the future. In essence, potential means capable of being but not yet in existence. During the 2019/2020 financial year the Public Service had 1 508 SMS members who were involved in activities that could be construed as posing potential conflicts of interest.  This accounted for 15% of all the SMS members, whose forms were scrutinised by the PSC.

Actual conflicts of interest

Actual conflicts of interest involve a direct conflict between a public service official’s current duties and responsibilities and existing private interests. The existence of actual conflicts of interest poses an impermissible conflict of interest with the relevant public interest that a public official has a duty to protect. For example, in the context of the scrutiny conducted by the PSC on the financial disclosure forms, actual conflicts of interest occur where a company to which a public servant is linked, conducts or has conducted business with an organ of state. 11 cases of actual conflicts of interest were recorded in the Public Service during the 2019/2020 financial year.  The national departments had one case and ten were recorded in three provincial departments [viz. Free State with four cases, Gauteng with five, two of whom are the HoD of Human Settlements and the former HoD of Health in that Province, and the Northern Cape with one case involving an HoD (the HoD of Transport, Safety and Liaison). Conducting business with an organ of state has been outlawed in terms of Regulation 13(c) of the PSR, 2016 and section 8(2) of the Public Administration Management Act, 11 of 2014 (PAMA).  A finding of actual conflicts of interest may, in terms of section 8(3) of PAMA, lead to criminal prosecution of the affected official.  It also constitutes serious misconduct that may lead to dismissal of the affected official from the public service

Engagement in other remunerative work

The scrutiny of the financial disclosure forms revealed that 382 (4%) of the SMS members in the public service were engaged in ORW during the 2019/2020 financial year. Only 199 (52%) of these SMS members provided proof that they obtained prior permission to do so in terms of section 30 of the Act.The EAs were advised to take appropriate steps in terms of section 31 of the Act, against SMS members who did not comply with section 30.  For example recover and pay into revenue an amount equal to that of any such remuneration, allowance or reward.  If such remuneration does not consist of money, the relevant HoD must determine the value thereof and recover it from the employee.  If the employee fails to pay into revenue the amount or value, the HoD shall recover it from him or her by way of legal proceedings and pay it into revenue

Recipient of gifts and/or sponsorships from sources other than family members

The scrutiny of the financial disclosure forms revealed that the combined value of the gifts that were received during the 2019/2020 financial year (R4 631 314.21) was 56% less than the R8 221 364.94 recorded in the 2018/2019 financial year. There are SMS members who disclosed departmental sponsorships such as payment for travelling and accommodation. Such sponsorships benefit the departments and not necessarily the officials

Compliance with the requirement to take action and report back to the PSC on the details of the action taken

It has been noted that it is not always possible for EAs to revert to the PSC within the stipulated time frame of 30 days.  This is in view of the internal departmental processes that need to be followed when processing the recommendations of the PSC.  The PSC is continuously inundated with request for the extension of this period. The report on actions taken is based on the feedback received in respect of the 2018/2019 scrutiny process. A total of 146 EAs in both the national and provincial departments were expected to provide the PSC with feedback on actions taken as a result of the scrutiny findings.  Only 30 (16%) of these EAs complied with Regulation 21(1)(e) of the PSR, 2016 by providing the feedback in question.

From the feedback that was provided, the PSC found that - the EAs were satisfied with the responses given by some (260) of the SMS members during the consultation process; a total of 164 SMS members who did not disclose all of their registrable interests and those with potential conflicts of interest were sensitised of the need to comply with the Regulations and to avoid conflicts of interest; and disciplinary actions were taken against 82 SMS members who contravened the provisions of the Financial Disclosure Framework.

Recommendations

-The relevant EAs must act decisively against these HoDs/DGs who do not comply with the Framework, in order to engender the culture of compliance from the top.

-Repeat offenders must be dealt with more harshly when actions are taken against them.

- Ethics Officers must periodically consult the Central Supplier Database (CSD) of National Treasury, to check if companies linked to SMS public servants do not appear thereon and advise the affected employees accordingly about the implications thereof.

- In cases of actual conflicts of interest, the relevant EAs must initiate investigations, for purposes of disciplinary enquiry in terms of the Directive on Conducting Business with an organ of state, which was issued by the Minister for Public Service and Administration in January 2017.

-Where appropriate, criminal cases must be opened with the South African Police Service against the affected SMS members in terms section 8(3) of PAMA.

-In cases of non-compliance with section 30 of the Public Service Act, 1994 as amended, the EAs must invoke the provisions of section 31 of t in cases of non-compliance with section 30 of the Act.

-The PSC is of the view that the Minister for the Public Service and Administration must issue guidelines, detailing which of the sponsorships may not be disclosed for purposes of the Financial Disclosure Framework.

-The EAs must within 30 days of receipt of the PSC’s report at least acknowledge receipt of the PSC report and provide an indication on how the recommendations will be dealt with.

The PSC has noted the slight improvement in compliance with the requirement to submit financial disclosure forms.  It is, however, disconcerting that full disclosure of the registrable interests is still persists.  This poses a serious challenge in the ability to manage conflicts of interest in the public service.  The challenge is compounded by the involvement of some of the HoDs in the perpetuation of non-compliance with the regulatory frameworks.  The EAs need to strengthen their resolve in enforcing full compliance with the regulatory provisions under all circumstances, and to dealing decisively with defaulting HoDs.  This would help in setting the tone from the top

[See presentation document for further details]

Department of Public Service and Administration: Public Administration Ethics, Integrity and Disciplinary Technical Assistance Unit

Dr Salomon Hoogenraad-Vermaak, the newly appointed Chief Director of the Public Administration Ethics, Integrity and Disciplinary Technical Assistance Unit (PAEID-TAU), DPSA, delivered the presentation. He said since January 2017, the DPSA has been monitoring the implementation of regulation 13 (c) of the Public Service Regulations, 2016 and regulation 8 of the Public Administration Management Act, 2014 which prohibit and criminalise public service employees, special advisors and public administration employees from conducting business with the state. Since then, numerous letters were directed to departments, the Portfolio Committee was briefed on the yearly increase in employees identified to be possibly conducting business with the State and a list of departments not investigating possible cases was handed to the Portfolio Committee.

Interventions

To address the list of employees identified in 2020, the DPSA drafted a template and sent it on 30 June 2020 to 28 national departments and all the Offices of the Premier who had employees listed as possibly conducting business with the state.  It was requested that they provide feedback by 15 July 2020. Responses were received from the following national departments: Basic Education, Employment and Labour, Environmental Affairs, Forestry and Fisheries, Government Communication and Digital Technologies, Health, Office of the Chief Justice, Office of the Public Service Commission, Science and Technology, SA Police Service, Statistics SA, Tourism and Trade, Industry and Competition.

The following national departments did not respond: Agriculture, Land Reform and Rural Development, Cooperative Governance, Correctional Services, Higher Education and Training, Home Affairs, Human Settlements and International Relations and Cooperation.

To address the list of employees identified in 2020, the DPSA drafted a template and sent it on 30 June 2020 to 28 national departments and all the Offices of the Premier who had employees listed as possibly conducting business with the state.  It was requested that they provide feedback by 15 July 2020.

In terms of the MOU, the DPSA will identify employees registered on the Central Supplier Database with the assistance of National Treasury (as per its mandate), for the departments to investigate and to report criminality to SAPS to investigate.  Where appropriate, SAPS will hand investigations to the NPA to prosecute. SAPS was provided with a list of public service employees possibly conducting business with the State.  On 4 September 2020, SAPS identified 579 individuals on this list to be conducting business with the state.

To assist those departments who received letters, the DPSA arranged two training sessions in August and September 2020, where SAPS trained ethics officers and investigators on how to investigate employees conducting business with the state. On 15 December 2020, the DPSA forwarded follow-up letters to the departments listed by SAPS, to request feedback regarding investigations by 23 December 2020. Those who previously responded confirmed their responses.  The National Department of Public Works and Infrastructure and the following provincial departments from Limpopo also responded: Health, Economic Development, Environment and Tourism, Agriculture and Rural Development and Education.

See presentation document for more details on the status as at January 2021 and investigations

On the way forward, DPSA is continuously following up with those departments not investigating their cases and provides technical assistance for those who require such. The DPSA is in constant liaison with SAPS regarding the referred cases. SAPS should be invited to present on progress regarding the referred cases.

Discussion

Ms R Lesoma (ANC) appreciated the presentation. She said that in 2020, the issue of servants conducting business with the state was also discussed where the Committee asked for details of who was involved in doing business with the state and the progress made with investigations. She was pleased that departments not complying were now “named and shamed”. She requested the information be specifically broken down per department, province and individuals in terms of SMS, and how far these cases were. The Committee was interested in seeing the progress and if there were additional offenders.

She was concerned by public servants who alleged that they were instructed to do certain things by their principals. She also wanted to know if there were officials helping each other conduct business in departments and part of a “trade off”. This must be looked at. She thought the PSC and DPSA should relook at their systems to ensure compliance of the EAs was made easier regarding the uploading of information to the portal.

Can the PSC clarify the cases where public servants were found conducting business with the state but found not to be guilty? Are there such instances? What is the cost of this exoneration? How far is the PSC in the process of configuring its system? The last time the PSC reported to the Committee, there were some departments that were not in the system, yet it is mandatory for all departments to be in the system so that everyone was able use the dashboard to monitor progress. Next time the PSC reports, it should not give round figures, but break those into specific provinces and departments.

The Department is in the right place. Even the ethics unit also will do a very good job in cleaning and assisting, and hopefully by end of this term would have made a mark.

Inkosi R Cebekhulu (IFP) referred to the issue of employees of the state conducting business with the state as the big elephant in the room. It would be hard to stop these employees from doing business with the state because people have many ways of bypassing the system that has been put in place by the Department.

On the state employees using relatives’ companies to access to business with the state, he commented that it might be very difficult for the Department to stop this and asked what plans the Department had in place.

Why do these presented reports not include translators as part of the employees of the state? Some provinces and provincial departments do not simply give what is expected of them; they simply pretend as though that they do not ‘give a damn’ about working cooperatively with the PSC. What is the Department doing to ensure those departments do what is expected of them in order to expose those employees who do not cooperative nor abide by the Department’s expectations?

Dr L Schreiber (DA) appreciated that DPSA is not in a position to actually get convictions or even for some of these departments to respond. The failure by five departments to respond to the templates that are sent out, even when reminders were sent out through letters, is certainly a serious issue. The appeal should go to the Deputy Minister that this is a place where some political unclogging might be necessary. The Minister or the DM should step in and make sure that the leaders of these departments that are not responding understand that it is not optional. This is a legal requirement and the DPSA is trying to get this information from them. The other big concern is the conviction rate referring to either people found guilty in disciplinary processes or the SAPS investigations referenced during the presentation. Why was there only one conviction so far out of all the cases and potential cases that have been identified? Can the Department to give more detail on what the issue is there?

Dr M Gondwe (DA) noted the presentation by the PSC indicated that two percent of the outstanding forms, as of 31 May, should be reportable to the State Security Agency (SSA), because the financial disclosure forms from all the SSA members were not submitted at all. The presentation indicated that PSC did not engage the SSA. There needs to be some political involvement where Ministers need to flag these issues with one another. She said, having served on the Joint Standing Committee on Intelligence, she saw that these disclosures pertain to the individuals and will not compromise the operations of the SSA. Some departments assume they are not required to submit the forms due to the nature of their work.

The presentation indicated that 21% of SMS members with interests in companies did not disclose their companies. Can the PSC elaborate on this? The presentation indicated that 11% of SMS members who did not disclose the interest and companies are repeat offenders. Was there any action initially taken against these who were repeat offenders? People repeat offenses if they know that there are no repercussions or consequences. It is worrisome that they have these repeat offenders and that no action is taken against them despite all that is done is identify them. Perhaps the offenders know that there will be no sanction imposed if they continue committing this offense.

EAs are failing to provide feedback on actions taken - 30 out of 146 provided feedback. The PSC is constantly inundated with requests for extensions. Does the PSC grant the requests for extensions and determine whether to grant an extension? Granting these extensions would not solve matters; it would only perpetuate this culture of noncompliance that is being noted. Is the PSC sharing these recommendations with EAs and the relevant Ministers to express that they have a problem with their department regarding submission of disclosure forms? A solution would be to actually attach the submission to the successful investigations of instances that are flagged to the performance agreements of these EAs. This is to ensure that there is strict compliance due to the considerable number of employees that are not complying. How often is the financial disclosure framework reviewed? Since it is not being reviewed as often as it should be, it is just a framework on paper. It does not have teeth. This was not to take away the improvements that have been there. DPSA should be applauded for the interventions that it has put in place, especially on the interdepartmental team with DPSA and the Department of Justice as well as the conclusion of the MoUs by the relevant DGs.

It is concerning that the ethics officers that were trained only received training from the SAPS. Why were they not trained by the National Prosecuting Authority (NPA), since the NPA is the one that must ultimately prosecute these cases? The ethics officials should be trained by the NPA as well.

It was noted that the DPSA has a discrepancy between the figure that they came up with (484) and the one that SAPS came up with (579). However, both the police and the Department identified these individuals from the same database. The Committee needs clarification on the mismatch and a holistic number out of the 484 cases that have been identified. How many are currently being investigated? In her personal calculations, she said it was actually 265 that are outstanding, and she was not entirely sure about the 264 total that was presented. It is good that the DPSA is in continuous communication with all the departments, not investigating their cases and providing technical support – this is required. The Committee hoped that due dates are being granted for when the investigations should be finalised.

There are already problems of outstanding disciplinary cases in the public service. It is worrisome that they are never ending, and there is no conclusion to these disciplinary investigations that are yet to get a successful prosecution. People should be criminally charged until such a time that they are actually prosecuted and convicted and are thrown into prison. Without this, nobody is going to take these disciplinary processes seriously.

She agreed that SAPS have to be called to the Committee to update on the cases that have been referred to it for further investigation. Until there is successful prosecution and conviction, not much would change. The Committee looks forward to finding out from SAPS if there is a dedicated team that deals with this matter. Perhaps that could also speed up the investigations.

Ms B Maluleke (ANC) commended the admins for encouraging officials or the public servants in their Department to submit their financial disclosure forms. She expressed that she was not happy with the 98% submission, saying that this is a compulsory requirement of public servants to submit their disclosure forms and 100% submission is thus expected. The PSC should engage with departments to ensure that public servants comply with these requirements. Can the PSC recommend to DPSA to come up with measures to ensure that all officials, or public servants, comply with this requirement? The PSC should update the Committee about the successful cases of using financial disclosure forms to prohibit public servants doing business with state. Which successful cases have been identified? What does the PSC do when officials disclose they are directors of companies in the financial disclosure form? What system is used to verify public servants’ profiles to determine whether officials’ companies have conducted business with the state? The Department can say they must comply, and they analyse the disclosure forms, but what is it that they want to get after analysing the disclosure forms? Does the system have any an indication of whether these companies are doing business with the state? What is it that they want to analyse or what is it that the disclosure forms represent?

Mr C Sibisi (NFP) was concerned that from the report, it looks like senior managers, HODs and EAs are failing to comply by not submitting their financial disclosure forms. Are there any follow-ups done to check why they are not complying by submitting their disclosure form?

Ms M Ntuli (ANC) agreed with Ms Lesoma on naming and shaming. Is there a way to regulate suspension without pay? This could be done as a means to enforcing regulations, especially for repeat offenders. It is a serious concern that there are repeat offenders. It means someone did it again and got away without any harsh punishment. It is high time that harsh rules are applied to protect the public service. There is a note in the decline of offenders, but some people keep on defiling and if someone defiles, the Department should respond to such people. There should be elaboration on the schedule too – as to who, how and when. Hopefully this will also not open any loopholes. SAPS could have a special team, and not the national team, to investigate the officials from KwaZulu-Natal (KZN). This would show the seriousness of the matter. The teams could be for each financial year and changed from time to time. The mention of SAPS as one of the offenders is worrisome because those are the people responsible for protecting. She recounted that the Minister said that those that disclosed after the set date or did not disclose at all, irrespective of the Minister being new, they already knew that they were supposed to disclose.

Ms C Motsepe (EFF) was concerned the warning letters do not act decisively; there must be serious action taken in addition. This problem has been repeated from successive administrations. This issue will be dealt with forever; it needs to be dealt with immediate effect. There is need to deal with it so that what was done before was not repeated again.

She questioned whether this was an indication of a policy gap. Is there a need to identify this gap with a view to amend legislation or improving regulations? What led the Department to include the statistics of national departments and to conclude that only 17 departments, down from a possible 29, had employees conducting business with an organ of state?

She requested the overview report referred to by the Deputy Minister.

Responses

Mr Mike Seloane, PSC Commissioner, noted most of the questions asked were mostly related to regulations and the laws. The duty of the PSC is to check and scrutinise if the laws are complied with and report offences, should there be one. There is a need to tighten the regulations to ensure that one should not be able to get the same sanction for the offence in two consecutive years. After the first sanction, they should get a final written warning or suspended without pay. This was an area of agreement i.e. the need to tighten compliance.

On the overview report that was tabled, it was suggested that the Committee should engage with other portfolio committees. They can discuss the issue of submitting financial disclosures; that would allow for holding a department accountable for officials not complying. The report should not only be used by the Portfolio Committee on Public Service and Administration, but all other portfolio committees for them to engage the Ministers and DGs on these issues.

Responding to the question of EAs not submitting to the PSC, he said there was no policy gap in this regard. The possibility of duplication may be the policy gap – the PSC should investigate if there is a conflict of interest but that does not absolve the DGs and the EA from investigating the same conflict of interest. Therefore, there is need to improve the disclosure system to ensure there is no duplication in the work done. There are insufficient resources for the same work to be done more than once. The Ethics Officers (EOs) must be capacitated accordingly to be able to enter into the disclosure system, the Companies Intellectual Property Commission (CIPC) system and be able to scrutinise before a report is sent to the PSC. This way, the Commission is assuring the Portfolio Committee that indeed much work is being done in the different departments.

On the State Security Agency, the PSC engaged with them fully in about two or three meetings. They were under the impression that for security reasons, they could compromise the security of the country when officials disclose their financial interests. It was indicated that the Commission is not interested in those issues of state security per se but is interested in senior managers disclosing their personal financial interests, the houses they own and the companies that they are directors of. It is personal issues and not issues related to the day-to-day operations of employees. They checked with the Inspector-General, who agreed with that they needed to disclose because it is about disclosing personal interest of officials and not state security matters. However, they still did not disclose. That is where the Joint Standing Committee on Intelligence should be able to hold the Minister of Intelligence accountable to say they agreed to disclose but still they did not do that. Collaboration in this regards is going to be more important.

On those that did not disclose completely, he said that it is misconduct in terms of the code of conduct for public servants and disciplinary action must take place. This is what necessitates the tightening up of sanctions so that offenders do not repeat. The sanctions are made more severe. There should be suspension without pay and dismissal if they are not following the law in order to encourage the senior managers to lead by example.

On departments that implement the regulations, he acknowledged that over the past few years, there has been a decline in their offering versus those who are not conducting business with the state. This is an encouraging sign. SAPS need to ensure that officials that violated the Act are charged, put on trial and sanctions are applied against criminal activities. However, it is important to note that even SAPS still have officials that are conducting business with the state. There is bound to be some conflict of interest with some of those police officers that are conducting business with the state having to action against other offenders. There is need for collaboration in order to remove the conflict of interest and to ensure that the officials are taken on board accordingly.

On review of regulations, he mentioned that on the regulations reviewed in 2017, the submission from 2017 upwards was 95% and then in 2018/19 it was 99%, and it has gone down slightly in 2020 to 98%. The review has taken place and the improvements have been put into the Public Service Regulations. Other portfolio committees should help to ensure that the review is done at a regular basis, rather than taking 16 years for the first review, like the one that was from 2001 to 2017. It should perhaps be every five years, but this could be discussed with the Minister.

Mr Malatsi (PSC) responded to the question of having a system to identify DGs and HODs who have submitted to their EAs but for whatever reason the EAs do not release the documents to the PSC. He said that this idea is welcomed and will be put in place.

He noted that Inkosi Cebekhulu identified something very critical where employees bypass the system by using relatives, kids and parents names in which to register companies. The answer to that will be the lifestyle audit, which will follow the flow of money to check what is happening. If money is flowing into a certain account whose owner is retired, elderly and or goes to a child, the system will show that the account has been opened solely for the purpose of circumventing the regulations that are there. This work is in the pipeline. The DPSA is helping the departments to finalise the lifestyle audits. This is the process where they will be able to sift out those trying to circumvent the system.

On the low conviction rate, he confirmed the information is readily available. The low conviction rate can be attributed to problems with the evidence. The PSC is able to reinforce at the disciplinary hearings how serious public servants doing business with the state is and how it impacts on service delivery. If it is not articulated properly before a magistrate or a disciplinary panel, there is bound to be an outcome that is not satisfactory. Many departments rely on labour relations officers, and sometimes just want to get rid of the matter quickly without understanding the impact and the far-reaching implications of such decisions.

On the request for success stories to be shared, he said that there are many officials who registered companies on the central supplier database or registered as directors of companies. However once the message went out that doing business with the state is being criminalised, officials deregistered from companies or disclosed properly. For those who stayed with the companies, appropriate action was taken. Many officials de-registered from companies that listed them as directors. EAs consulted with officials and were satisfied with what was done. In some instances, de-registration was still in progress and had not been finalised by the company registration authority. However, the official would have sent the letter that as a director of the company; they are de-registered and their name should be removed. How the departments handles the matter determines the deterrent effect to other officials who would contravene the law.

Currently, there is an on-going case of a HOD in the North West, who undertook a trip somewhere to India with family but did not disclose that it was funded by the service provider. The evidence is overwhelming – it is in fact corruption and gratification because if a service provider contracted by the department paid for an official’s holiday trip, it is regarded as corruption. The PSC is supporting law enforcement in processing that case before the court in the North West. The outcome from there will be used as an example to other officials who violate the regulations. At times there is no submission is that the employee is on suspension or prolonged sick leave. Departments have been impressed upon that even in these cases, disclosure can be made electronically – nothing prevents the employee from logging to the system and disclosing their interest. The Department has on-going interactions with the ethics officers in the departments; they sometimes convene workshops to go through some of the critical and prominent issues that attention must be paid to.

He agreed that with the need for EAs to act decisively. Labour law indicates that discipline is progressive. In instances where they have repeat offenders, a department will start with a written warning then follows the next disclosure written warning. Then in the third year, they institute the disciplinary action. The Department, however, agrees that there is a need for harsher sentence punishments that will deter others from committing the same offences many times.

On the disclosure of directorships, Mr Malatsi stated that the PSC takes that information and runs it parallel against the payment systems of government to check if there were any payments made to that company; they then take it from there. This is centralised; the data is available in the domain of National Treasury and is shared with the PSC. From there, there is scrutiny of whether it was disclosed or if the person had authorisation to conduct business. Currently, one cannot be authorised to conduct business with the state because that is a criminal offence. One can only be authorised to conduct business as long as it has nothing to do with the state – this is called other remunerative work.

The PSC will continue to engage with other departments to share best practices so that the management of these areas can be improved, thereby improving good governance in the public sector.

Mr Seloane clarified that if an official is involved in other work that is not associated with the state, a call would have to be made whether it is a conflict of interest. For example, the official could be using state resources for private work. This could be time or resources such as computers and cellphones supplied by the state. Departments are under pressure to tightly monitor these officials that won companies which do not do business with the state. This is an area which needs more investigation as state officials should be solely concentrated on their work as public servants and not their private companies.

Deputy Minister Chikunga said that any official who is doing any remunerative work outside the public service has to get permission from the Minister and the Acting DG. The fact is that there are regulations dictating what public servants should not do. The frustration around repeat offenders is justified – this is not because the Department was not doing a good job. The Committee should not have to raise the frustration of repeat offenders as all public servants should be complying with the laws and regulations. Officials cannot say that politicians have instructed them to do wrong as an excuse – the PFMA says that when an instruction has financial implications, it must be done in writing. DGs are the experts and should be advising Ministers and Deputy Ministers. Officials can also inform National Treasury and the AGSA of instructions which have negative financial implications - this is in the law and it must be followed. There are other finance officials that can also provide advice.

She responded to the issue related to the “big elephant”, where officials would use the name of their relatives to register companies, noting it shows the depth of the wrong attitude that exists. Departments are expected to discipline these people. Something serious should happen to the officials who do not follow the law.

She responded to Dr Gondwe’s comment that EAs are not concerned about having an ethical public service – the Deputy Minister believed the Member made this statement out of frustration. The regulations exist and are being discussed today because of the need to improve the public service and eliminating and excluding anything that has the potential to undermine the ethical conduct of the public servants. This is the reason why the Committee invited officials to explain these things and sort them out. The Minister has addressed the DGs on this matter himself in FOSAD. The Department is serious about eliminating these practices so that it does not have to come to the Committee again to talk about officials doing business with the state.

She agreed fully with Dr Gondwe that successful persecution will serve as a deterrent, and that is why there is also that interaction with SAPS, NPA, and Department of Justice to work together. These matters should not even have to reach court as the public servants know what they are supposed to do. Nevertheless, when these issues are taken to court and people are found guilty, the sentence would be a deterrent.

Even if the Minister is new, the officials are not new to a department. When Ministers are new, they are often overwhelmed with information and documents and sometimes they are not sure what to sign or not to sign. While she sympathised with the EAs on this, the officials know better and know what the new Minister must prioritise in terms of deadlines.

Ms Yoliswa Makhasi, Director-General, DPSA, said on the issue of naming and shaming defaulting departments, this information can be shared with the Committee however the Department is not in a position to issue names of people at this stage because these are still allegations. Until the allegations have been confirmed during the investigations by the law enforcement services, there are some constraints in sharing the names. The Department is, however, willing to share any other information related to this.

On the cases of public servants doing business with the state not being found guilty internally, the DPSA was not always provided with the details.

Information can be shared with the Committee on the provincial figures regarding cases and investigations in progress. 

On the issue of the use of relatives, it would be difficult for the Department to be fully aware of this through just the disclosure however through thorough investigation, such as a lifestyle audit, one could track the money.  The SIU’s investigations have shown how PPE contracts are channelled through businesses owned by relatives and this has been widely reported in the media.

There is unwillingness of departments to cooperate which leads to challenges. There are challenges of compliance and perhaps this is attributed to a larger root cause. Perhaps there are too many regulations to comply with but the DPSA has been reflecting on which regulations require further strengthening in terms of their impact.  There are departments that simply do not comply no matter what was done. The DG said she had spoken to departments herself, written many letters and spoken to FOSAD herself but DGs simply did not respond. The next recourse is to take the issue to the DPSA Minister for intervention to speak to the EAs. The Minister now wants to address FOSAD himself.

As an intervention, the Department would be publishing its annual compliance report. The Department hopes that the report will encourage people to comply with the regulations. Surely no DG would want his or her name published as being non-compliant with such critical regulations.

Ms Makhasi suggested that SAPS and the NPA should brief the Committee in confidence and perhaps elaborate further on challenges experienced as this was not communicated to DPSA. The DPSA has availed resources, information and capabilities so SAPS would need to explain what was difficult. The Department also asked that there must be a dedicated unit in SAPS that centralises the tracking of the cases. The presence of that unit was questioned however people have been delegated this responsibility and they are in constant communication with DPSA. The Department is however concerned that there are about 78 cases confirmed of non-compliance of SAPS members – out of these, only five or seven are being investigated by the SAPS itself. This was a matter of concern for the Department.

The Department was of the view that the country would not be put in danger by the SSA not disclosing their interests.

She said that Dr Hoogenraad-Vermaak will explain in detail on the training of the ethics officers. SAPS also provided this training because DPSA had to prepare its ethics officers in terms of the work and processes to follow.

Deadlines were outlined to departments – some met these deadlines and others did not.  

Concerning the need for conviction and throwing people in prison, through the engagement with SAPS, DPSA has working to provide examples of why public servants should not be doing business with the state as they might end up in jail. The criminal justice system has its own life and sometimes does not move as fast as it needs to when dealing with particular matters. There is also law that empowers SAPS to do what needs to be done in this area.

Regarding the concern on 98% asset declaration, DPSA agrees the target should be 100%. There are number of departments nationally that are also at 100% but there are other departments that are not at 100%. DPSA has presented to FOSAD the concern of DGs and to give them feedback and ask them to ensure officials declare as the responsibility for declaration rests with the officials. The ethics officers do use reminders once the system is open, send information to officials, but ultimately it is a personal responsibility on the official to create time to go onto the website and declare as required. Commitment by officials is required to ensure compliance – this commitment is missing.

Regarding having a system detecting where public servants are doing business with the state, the PSC does a lot of analysis on the cases and works with parties to verify the information submitted. Suspension without pay for repeat offenders is something the Department would like to take to its legal unit for further advice. As such, the Department cannot give a yes or no on the matter, at the moment.

Dr Hoogenraad-Vermaak thanked Members for the words of encouragement because while strenuous, the work is exciting. Through this, the Department is changing the way the public service works.

On the statistics to look at comparisons, two documents can be made available to the Committee. The first statistical report, which reports from 2019-2021, will be a good overview of the progress made. The second report is an investigation report, where the Department reports on the feedback received from each department – these reports can be made available.

On the cases finalised and found not guilty, this is where it was established the employee was not a public service member, or the person was wrongly appointed on the PERSAL or the person was appointed in an official capacity. The responses provided by the departments were not very detailed regarding these cases. The Department will be changing this going forward so when departments say a criminal charge was laid, a case number would need to be provided. Likewise with disciplinary hearings – this information should also be shared with the DPSA so it can ascertain the veracity of the investigation and outcomes thereof.

He responded to Inkosi Cebekhulu’s comments by saying that there are always means to bypass the system but if there is proper investigation of cases by the police, they will find the cases of fronting and other such practices will be unearthed. Even if there is a lifestyle audit, all other methods and tools of investigation must be used to make sure that people do not bypass the system.

On the conviction rate, if departments do not investigate, then the police cannot begin with the criminal investigations. DPSA already experienced difficulty in getting information out of departments but if this point of entry can be improved, it will positively impact on the conviction rate as SAPS would have cases to convict. 

On ethics officers getting trained, the main focus was on training them how to investigate. The police did an excellent job in this by taking the ethics officers through all the processes. The police provided training on the evidence to look at, how to draft affidavits and the process required. They also touched on the role of NPA thus there was no need to involve the NPA directly as SAPS dealt with this. However he noted the suggestion of Members to involve the NPA in the process going forward.

On the discrepancy of information, in September 2020, SAPS found that based on the 1 539 cases (from the central database) received from the DPSA in 2020, there were 579 they could work on. The 484 is what the Department looked t in January. This means there was actually a decrease from September 2020 to January 2021. This information still needs to be investigated to establish whether these officials actually did do business with the state.

On deadline for investigations, he said the DPSA cannot prescribe to SAPS regarding the time in which to conduct investigations however there were quarterly meetings between the two to look at challenges and how to unblock these to ensure there were good timelines in place and ensure cases were not dragged on. SAPS has dedicated officials that provide regular updates – SAPS would be in a better position to explain its role in the investigation process.

On policy regulations shortcomings that should be looked at, he agreed with Ms Motsepe. The technical assessment unit also has a mandate to look at the norms on ethics integrity in the public service sector. As challenges will be experienced and certain things will unfold, the Department will look at different ways to improve; this will be taken up and included in future regulations and policies to improve the system.

The Chairperson thanked the Members and everyone who contributed to the discussions.

DPSA: Progress made regarding Government Employees Housing Scheme and Challenges encountered by Public Servants in accessing the Scheme

Ms Kelly Mkhonto, Director, DPSA, delivered the presentation. She said public servants are faced with challenges of owning or renting homes just like the majority of South Africans. Home loans are not affordable and there is poor supply of houses in appropriate locations. Government and labour agreed that the historical housing allowance dispensation had not translated into significant improvement in home-ownership among employees.  In 2015, an estimated 70% of employees who were receiving the housing allowance did not own homes, as they found it extremely difficult to access housing loans and housing stock without additional assistance. The GEHS was established in terms of PSCBC Resolution 7 of 2015. The GEHS is designed as an important catalyst to address home ownership and rental among public servants. It does this by introducing an enhanced housing allowance that enforces compulsory saving by employees who are still renting, negotiating favourable terms with both financial and housing suppliers and introducing new services such as debt rehabilitation and debt consolidation for employees in financial distress

The DPSA in line with PSCBC Resolution 7 of 2015, implements the Objectives of the GEHS which are:

-To support, educate and advise employees on housing options and opportunities;

-To enhance employees’ access to affordable housing;

-To promote home ownership and facilitate asset security among employees;

-To assist employees to access affordable housing loans and finance; and

-To assist employees to rent houses with a view to buy and own homes.

-In 2016 the DPSA and the PIC on behalf of the GEPF, signed a partnership agreement to support the objectives of the Resolution.

The DPSA has since inception of the resolution:

-Created a ring fenced funded Project management Office additional to the DPSA establishment to implement the Resolution

-established an enrolment system

-established a call centre

-Provided education and support programmes for employees and departments

-Collaborated with NT and finance institutions

-Facilitated home loans for eligible employees

-Managed and maintained the ILSF

The uneven progress since the resolution, (in terms of interest rates, lower income- missing middle employees, leveraging economies of scale based on funding models, full time and permanent employees, guaranteed deductions etc.) prompted the relook at the GEHS approach and in 2020 the MPSA approved a new strategy for the implementation of the GEHS. In addressing these, the DPSA has institutionalised functions within the approved structure of the DPSA. The functions are:

-Housing Allowance Administration and Individual Linked Savings Facility (ILSF) Management;

-Stakeholder Management, Education and Outreach;

-Client Support Services;

-Housing Finance; and

-Facilitating the Availability of Housing Stock.

-The DPSA is implementing the new strategy going forward

Progress on GEHS housing allowance

Government employees on salary levels 1 - 10 are eligible to receive a monthly housing allowance of R1 456.00 if they are homeowners or living in rented accommodation.  Employees who are not owning nor renting any accommodation do not receive the housing allowance. Employees who are home owners receive the full housing allowance as an addition to their monthly salaries. The housing allowance amount is adjusted annually in line with the average Consumer Price Index (CPI) of the preceding year. Employees who are on middle management and senior management levels (11 – 16) are on Total Package Salaries and therefore do not receive a separate housing allowance. However, they are able to access other services of the Scheme, such as education and counselling, housing loans and housing stock facilitation, and enrolment.

Employees who are living in rented accommodation (tenants) have their housing allowance or a portion of it (depending on their date of employment) saved in the Individual Linked Savings Facility (ILSF), which is co-managed by the DPSA and National Treasury. Employees employed before the conclusion of PSCBC Resolution 7 of 2015, on 27 May 2015, continue to directly receive the R900 (old allowance amount), and have a difference of R556.00 saved in the ILSF. Those employed after the Resolution, have their full housing allowance saved in the ILSF. Employees who are living in rental accommodation are only able to withdraw their savings from the ILSF for the purpose of acquiring home-ownership, building, or improving a home. Most of these employees use their savings to cover for upfront costs such as house deposits, transfer and bond registration costs, and building on acquired land

In September 2018, an amended Determination and Directive on Housing Allowance for Employees in the Public Service was issued and provided for the de-linking of the payment of housing allowance for spouses and the definition of Permission to Occupy (PTO) to enable ease of implementation. Employees are assisted throughout all the stages of securing home-ownership, and to be counselled and educated in order to improve their financial wellness. They are also able to obtain affordable home loans and other government subsidies where they qualify. The number of employees receiving housing allowance as home owners increased from 692 503 in June 2020 to 710 173 as at 31 January 2021. As at 31 January 2021, the number of employees receiving housing allowance as tenants decreased to 240 194 as compared to 259 399 in June 2020.  Accumulated savings shall be held in an interest-bearing facility until such time as the employee is ready to access the funds for the purpose of acquiring home ownership, building and improving a home. These savings shall only be accessed for the purpose of acquiring home ownership, building, and improving a home.

In terms of clause 4.1.2.1 of PSCBC Resolution 7 of 2015, the GEHS has to enrol, counsel, advise and educate employees. Clause 4.4.1 provides for employees to enrol with the GEHS in order to access these services. In support of the above an enrolment system which enables the profiling of employees to inform housing choices and/or solutions, maintenance of a comprehensive database of demand for and supply of housing is used. The DPSA is engaged in a process to ensure a systematic link between the enrolment system, call centre, mortgage origination and access to finance and housing supply within the new implementation strategy and operating model of the GEHS. As at 31 January 2021, 341 838 government employees enrolled on the GEHS system. Of which, 135 537 have house title deeds.

Mortgage Based Products: As at 30 December 2020, 18 252 GEHS –linked home loans to the tune of R12 318 964 651 (R12 Billion) were advanced through the processes with SA Home Loans.

Non-Mortgage Based Products (GEHS Housing Access Loan): As at 30 December 2020, 1 069 non-mortgage loans to the tune of R189 955 841 (R189 million) were advanced through the processes with SA Home Loans

See presentation document for more details on the GEHS programmes

Challenges

-Delays in incorporating the GEHS as a functional unit within the DPSA exacerbated by budget cuts.

-During this reporting period 217 090 employees were not receiving the housing allowance. This comprises of employees who do not qualify to receive the allowance because they are neither owning nor renting any accommodation, and therefore do not meet the requirements of a definition of a homeowner or tenant.

-It also includes employees who have not applied for a housing allowance.

-Employee transferred across multiple systems e.g. Oracle (SASSA), PERSOL and PERSAL causing duplicate profiles at the GEHS system, resulting in challenges in withdrawing savings from the employees’ old profile.

-Transfer of employees between systems is currently done manually which poses risks.

-More than 35% of employees who are receiving housing allowances are not home owners.

-This is due factors, ranging from poor financial health, which leads to failure to obtain housing loans.

-Also, as home loans are not affordable and there is poor supply of houses in appropriate locations many of these employees are finding it impossible to find housing stock which is priced within their affordability range

-Workshops are conducted on a continuous basis, wherein employees, HR and Finance practitioners are provided with information on the ILSF. (The Covid-19 social distancing measures impacted the outreach programmes in areas where virtual reach is a challenge).

-There is, therefore, a need to explore modalities on how to facilitate access to affordable housing in appropriate locations.

-HR Practitioners do not capture employees on time or provide employees with the relevant documents when they exit, leading to Employees not receiving their savings before the system locks them out.

-GEHS is trying to resolve cases where employees who have exited the Public Service or died without accessing housing allowance saved in the ILSF.

-According to the latest report 17 442 employees were declined loans, with reasons ranging from garnishee orders, no deposit to low credit scores.

Addressing the challenges

-Finalisation of the institutional form of the GEHS within the DPSA structure.

-The GEHS supports HR and Finance practitioners in all National and Provincial Departments on the administration of the ILSF deposits and withdrawal applications from employees

-The turnaround time to resolve employee enquiries is immediate or five days depending on the nature of the enquiry.

-Some enquiries require HR interventions in Departments, which may take longer than the stipulated turnaround time.

-The team assists clients through telephone, e-mail and face-to-face interactions

-Processes for consolidating and integrating the Enrolment System, Mortgage Origination and Access to Affordable Housing are underway.

-A business case for mortgage origination has been prepared. The operating model, the housing finance solution, the introduction of pension-backed home loans, the implementation of mortgage origination and the modalities of facilitating housing supply are all the areas to be addressed going forward.

The access to and provision of decent housing is a national imperative and the DPSA is acutely aware of its role in acting as a catalyst for disrupting the status quo. It is envisaged that the new implementation strategy, operating model and functional location of the GEHS within the DPSA and support from Labour, partners and stakeholders will contribute to addressing the foregoing challenges.

Discussion

Ms Lesoma appreciated the presentation and but was discouraged by the way it was presented: “We say we are a caring government but the way this issue is treated makes it seem like one of those by-the-way matters.” She was concerned that the way the presenter presented the item was as if it was for the first time. She was worried that the presenter used the phrase “If it kicks starts” and questioned what that meant.  

The scheme was responding to the “missing middle” public servants but the presentation did not seem to speak to this. What happened to those that did not meet the credit score threshold? Public servants are very much indebted and belong to the “missing middle” where they could not afford decent shelter but also did not qualify for an RDP house. She was not encouraged by the progress made so far.

The financial institutions mentioned have very high interest rates. She thought that the housing scheme would address this and prevent public servants becoming even poorer. She also thought the Department would speak more to how it is assisting the missing middle.

She noted the mega scheme in Pretoria that the President talked about, which was launched in 2020. She would be pleased if government could talk to how public servants can benefit from that as government had invested in that infrastructure. The Rwandan model spoke to what government was trying to do.

She also asked about the pension-backed home loan, noting that while it involves the GEPF and is a guarantee, it is also encouraged employees to tap into their pensions even before they retire. She asked why this was opted for.

On another note, she requested the Committee receive a progress update on the Steinhoff saga and the recouping of some of the GEPF funds.

She asked about the members of the advisory council and the legal requirement that members come from PSCBC.

The presentation talked about offering counselling, advising and educating the employees on the scheme. Why are some then reluctant to own houses and prefer to rent as a personal choice? She noted that the presenter said that the DPSA is unable to interact with the HR practitioners of other departments. She would have preferred if there was an appreciation for the fact that the scheme started before COVID19. She was concerned about who benefitted from the interest.

Ms Lesoma asked if there was an increased uptake in the scheme after the introduction of the strategy that intended to boost these numbers. Why are employers reluctant to join the scheme, especially those that are investing in it through the GEPF?

Ms Lesoma noted she would pose further questions in writing. Moving forward, she said government should be seen as having an interest in public servants owning houses and having decent shelter as they are part of the “missing middle”. One cannot create unintended homelessness due to over indebtedness.

Ms Motsepe asked how the Department was assisting with debt counselling and debt rehab. She noted that employees who do not own or rent homes do not receive housing allowances and asked what criteria are used to determine this, because these are also public servants yet they do not get these allowances? She asked if spouses received equal benefits if they were married.

She recommended that the Department should make necessary arrangements for amending some legislation to qualify all employees for housing schemes and loans because having a house and working in government is what makes the employees feel secured. The housing allowance was too low and did not allow state employees to own a house. Worse, not everyone received the allowance. To get a decent house is not a privilege; it is a right.

Dr Gondwe pointed out that on 31 January 2021, the number of employees receiving housing allowances (tenants) decreased. What caused the decrease in the number of employees receiving housing allowances as tenants? Is the decrease linked to the increase of employees receiving housing allowances as home owners? She asked for confirmation of the total number of employees that qualify for housing allowances. How many of these employees are currently receiving the housing allowance either as tenants or as homeowners? She understood that approximately 700 000 people are receiving housing allowances as homeowners and approximately 240 000 are receiving housing allowance as tenants, while 217 do not receiving housing allowances either way because they are not owning or renting a house. How many employees are actually making use of the scheme and how many qualify? It was mentioned in the presentation that 35% of employees receiving house allowances do not own houses - what is the Department intending to do about that and what are the recommendations for improvement? One of the objectives of the scheme was to promote home ownership and facilitate asset security amongst government employees - if there are 35% of employees that qualify for the scheme and not making use of it, then that defeats the purpose.

Responses

Deputy Minister Chikunga responded by saying that there will be and there are challenges in a scheme such as this one. However the happiness lies in the fact that the scheme is being implemented. The Department is dealing with the challenges of implementation. She agreed that there are shortcomings here and there but assured Members that the DPSA was working on them. The Department is having meetings with the Public Investment Corporation (PIC) and with National Treasury looking at everything, including the contract itself, and everything else in the scheme. This is done to ensure that the public service does achieve all of its objectives and address the problem of public servants constituting the missing middle and therefore do not qualify for government RPD housing, but also cannot gain loans from the banks because of their indebtedness. The Department is already working on it even with the unions to get feedback and attend to the questions.  However the scheme exists and the Department is working every day to improve it.

Ms Mkondo responded to the question about the total number of government employees that are supposed to get housing allowances indicating that there are over 700 000 employees. There are over 249 000 receive the allowance as tenants. This number has increased and speaks to the good news that more government employees own houses. They have accessed the funding from ILSF and have also qualified for the FLISP subsidy. They also access their savings and managed to get a subsidy from FLISP which assists with putting down a deposit.

Ms Mkondo confirmed the number has increased in terms of home ownership. When the tenants decrease, the number of home ownership increases.  

It is important for government employees that fall within that band of level 1-10 to apply for housing allowances however most are not applying to take advantage of this allowance and benefit there from. The Department is investigating whether this is because state employees are not interested or are unaware or what the cause is.

On the question about the pension-backed allowance, she explained it acted as a guarantee so that if the employee defaulted on a payment, there is a backup while not getting into the pension funds. It also assisted in negotiating better interest rates for some government officials as some banks need guarantees.

Ms Makhasi (DPSA DG) responded that the housing strategy presented was only approved three months ago but it is already being rolled out. There are engagements with the unions and the EA on these matters. She clarified the scheme is a benefit which meant it can only be accessed if the government employee owned a house – the current dispensation made it clear all employees must own the property to activate the benefit. If one became a government employee today and rented a house, that employee would not be able to enjoy the benefit as it is for home owners. Under the previous dispensation, those who rented a house did benefit. For the level 1-10, it is open for all the employees but they have to activate it.

She agreed on the need for a dedicated awareness programme. The reality is that some employees are not aware of programmes and rely on their HR to provide information. The Department would use the HR units to run awareness campaigns on the government employees housing scheme. The Department is affected when the HR units are ineffective.

On the question around what the Department is doing about those who are declined by the system, she explained that there is an ongoing programme relating to counselling, support, financial management etc. Beyond that, the activation of a pension-backed home loan capability is to ensure that it acts as a support to bring credibility to those declined by the bank. DPSA is in communication with Treasury on how to tap into the savings in order to ensure opportunities are created for financing mechanisms and ensure government employees get preferential rates etc. No conclusion has been reached yet but the research and work is ongoing. The money used for the scheme belonged to the state employees so the Department must ensure the scheme allowed these employees to qualify for housing with a fair interest rate.

The advisory council would advise on these matters and track progress. The council is mainly constituted of representatives from the Department and labour.

Regarding the question of ownership vs. rental, she said some state employees choose not to own property or do not have the capability to buy at a particular point. The Department continuously encourages ownership instead of renting, and taking advantage of the benefit, but it is also a personal choice.  

There is an increased uptake of those participating in the scheme and the Department will continue encouraging this.

The Department noted the proposal to amend the legislation to ensure all government employees qualify for the allowance.

Ms Makhasi requested to respond to Dr Gondwe in writing as she asked very specific questions regarding numbers.

Regarding those not qualifying for the allowance, there was ongoing counselling and engagement with these employees. The Department was looking at guarantees to assist these employees e.g. through savings or pension-backed guarantee. There were engagements with Treasury in this regard but no finality.

Ms Mkondo responded to the question of spouses noting they get equal amounts – previously it was one allowance per household but now if both spouses were government employees, there would be an equal amount each.

Ms Ntuli commented that the scheme is good news but it is not benefitting the unskilled workers such as cleaners who work far from their places of residence. She asked the Department how these workers could be accommodated so they could also benefit, even if they do not want to purchase houses near their workplaces.

The Chairperson thanked the Members, Committee support staff, the Deputy Minister and all the delegates for attending the meeting.

The meeting was adjourned.