Western Cape Second Adjustments Appropriation Bill: Human Settlements

Meeting report

Western Cape Department of Human Settlements

Ms Jacqueline Samson, Head of Department: Human Settlements, reminded the Committee that Department had an adjustment in July based on a response to COVID-19 and the reallocation of funds to other priorities. The Department has prepared a budget which was being tabled that same day.  

The Department looked at projects that are ready for implementation or programmes where the Department has already made commitments.

One of the ways to address the reduced budget is to spread out the delivery programme so that a project is not stopped but rather the implementation plan is extended and the budget is spread over additional years. A reduction in budget means a reduction in delivery and reduced targets. This is what is being tabled today. She said the Department’s Annual Performance Plan has not yet been adjusted.

Mr Francois de Wet, Chief Financial Officer: Human Settlements, provided an overview of the adjustments budget. The Department started with an adjusted budget at the end of July, that gave the Department an allocation of R2.186 billion that included the budget cuts of R202 million. He said there was a cut to the Title Deed Restoration Grant, of R23.32 million.

There is revenue retention of R16 million and this would be used to augment any shortfall that might occur. There is an amount of R25 million of revenue from the 2018/19 financial year, and this is earmarked for the Conradie Better Living Model project, for Bulk Services. The project is progressing a bit faster than was anticipated.

He said the Department was not allowed to amend its Annual Performance Plan (APP) in the earlier round of adjustment, but it has now been amended.

Mr Tertuis Simmers, MEC: Human Settlements, said it was crystal clear that a new norm of delivery will be needed going into the future. The department’s partners in Local Government need to look at the way they do their planning in order to align with the new norm and reality. He said the impact of the budgetary cuts are clear for all to see.

Discussion

Mr D Smith (ANC) said one can understand there will always be a risk of budget cuts, especially considering the time one is living in. He asked if there is no way the Department can develop a more consultative approach, especially in municipalities where projects are 90-95% ready, with only the top structures outstanding.

Mr A van der Westhuizen (DA) wanted to know if the salary budget was based on actual year-to-date figures, or if the posts were funded posts. He wanted clarity on the monies that have been spent at a stage when expenses had not yet been budgeted for.  Many of the budget cuts will lead to job losses at a time when the province wants to rebuild the economy, post-COVID. He wanted to know f he was correct in his thinking.

Mr D America (DA) said the tabulation on slide 2 of the presentation makes it seem that notwithstanding the adjustment, the budget has increased - this is a false perception. There has been substantial reduction in the Compensation of Employees as a result of posts not being filled due to the COVID pandemic. The real impact of the cuts is represented in the adjusted Annual Performance Plans. The reduction in the Title Deed Restoration Grant leaves an amount of R200 000 - what can be achieved with the remaining funds?

Mr P Marran (ANC) said it would be easy to blame national government and the pandemic for our own failures. There was a consistent failure to spend monies allocated for housing. He said he saw a post on Facebook, saying that 58 beneficiaries are due to receive houses on 13 December 2020. He wanted to know why this was being done on a Sunday.

The Chairperson said she had to record her disappointment at the fact that national government has cut the budget for the Title Deed Restoration Project. She asked how the acceleration of the Conradie Better Living Model would affect the department’s planning.

Responses

Ms Samson said the Department consults with all the municipalities when the business plan is drafted. There is a three-stage business plan process. The first stage is in August; the second stage is often aligned with the adjustment budget in November; then the final draft in February. This will then form the APP targets for the year. The municipalities are informed about the principles and how projects must be identified, as well as how targets must be set.

Allocation letters are sent out to municipalities outlining the list of projects and the targets attached to that. The municipality accepts this and agrees to delivery, as the non-financials are linked to the budget that is allocated to a specific project. This consultative process is followed throughout the year.

Mr de Wet said the salary budget is based on actual headcount that is currently being paid for and does not take into account any salary increases. This is a risk that has been highlighted by Provincial Treasury as well as the Minister of Finance. No provision has been made for further increases except pay progression. Bonuses have also stopped. With regards to the monies spent before the expenses were budgeted for, the rollover was approved and was a payment due to a contractor.

There will be no jobs lost due to the current adjustment budget. The initial budgets resulted in about 2 000 job losses, but the Department is looking to make this up through other projects.

He said the cut to Compensation of Employees was R12 million, in July already. The department’s equitable share is not sufficient to pay for its salary account, and contractors are paid through ops cap. Provincial Treasury allowed the Department to shift any savings identified towards infrastructure.

Nowhere in the documents does the Department blame savings on COVID-19. The Department is concerned about its funding model. Any reduction in the grant will have an impact on the salary budget as well. The department has made a concerted effort not to fill any contract positions unless it is really necessary.

He said the R200 000 was not enough. The Department has already spent R900 000 on the programme, but it will be funded from ops cap. The Title Deed Restoration Grant comes from the Human Settlement Grant so it does have an impact on the delivery side.

 The Department will follow-up on monies that were transferred to municipalities for this function in the past and the Department will see how best it can utilise any underspending by the municipalities and get the money back to the Department.

He said the acceleration of the Conradie Better Living Model will not have an impact on the business plan going forward - that was a once-off allocation of R118 million that the Department had committed itself to, via the necessary processes towards Conradie. The Department is actually very excited about the acceleration and the way that the people maintained the jobs and are still delivering at the speed they are delivering at. Going forward, this is a private sector investment and the Department will not pay for the buildings that will be built.  

Ms Samson said the Department has spent 100% of its budget for the last three years. The USDG grant is administered and managed by the City of Cape Town. All metros receive the USDG grant. No monies have been surrendered to national government.

MEC Simmers said there is need for Members of the Committee to accompany the Department on its next round of outreach into the districts, in order to dispel the incorrect notion of underspending that Mr Marran has alluded to.

The Western Cape is the only province which spends 100% of its budget. That is why whenever there is an adjustment, national government always gives the province more money. This is because national government is well aware that the province has the absorptive capacity.

He said many Members, and even the broader community, are misinformed regarding HSDG and USDG grants. The USDG grant is a metro-specific grant, and even though the City of Cape Town has not been able to spend it in the last couple of years, they are still the top-performing spender either way. If one zooms into how the USDG is spent in metros, one would realise it does not just focus on human settlements. It is used for a variety of other department within a specific metro area.

One needs to compliment the City of Cape Town’s human settlement’s leg of that grant expenditure, as it spent close to 98% of that budget. One needs to stop re-enforcing a notion that is incorrect. One needs to empower oneself with facts before engaging the communities, as Members of the legislature.  Facebook is not the correct platform to engage and give corrections to community members. Post-COVID, communities must be empowered with the truth. The disinformation must stop as communities do not need it.

The Chairperson thanked the Department and it was excused from the meeting.

Mr van der Westhuizen proposed that the Committee supports the Vote.

Mr Marran said the ANC would like to express its minority view not to support the Vote and would like this to be reflected in the Committee’s report.

Mr D America (DA) seconded the proposal to accept both the Vote as well as the Committee report on the Budget Vote.  

The Committee report and Budget Vote was adopted.

The adoption of the minutes was deferred to the next Committee meeting due to technical issues.

The Chairperson thanked everyone and the meeting was adjourned