Housing Amendment Bill: Director-General Comments & Voting

Meeting report

HOUSING PORTFOLIO COMMITTEE
30 March 2001
HOUSING AMENDMENT BILL: DIRECTOR-GENERAL COMMENTS & VOTING

Chairperson: Ms Hangana

Housing Department delegation: Director-General, Ms Nxumalo; Deputy Director-General, Mr M Narsoo; State Law Advisor in the Department of Justice, Mr S Netshitomboni; Law Advisor in the Housing Department, Ms R Banjeeth, Personal Secretary to the DG Ms Z Williams.

SUMMARY
The Director General explained why accountability, transparency and developmental strategy principles have not been served by the Housing Boards. Further she explained how much more efficient advisory panels will be. The Democratic Alliance and the African Christian Democratic Party disapproved of centralising the decision-making powers to the Minister and MEC.

MINUTES
The Director General read through the Bill and after each clause the Chairperson asked for objections to the clause. After the Democratic Alliance (DP and NNP) had indicated its opposition to the first three clauses, the Chairperson asked Dr R Rhoda why they were opposing the Bill.

Dr Rhoda (NNP) said this Bill abolishes the powers of the Provincial Housing Board (PHB) and gives them to the MECs. He said the Democratic Alliance was not in favour of such a move for it will hand power over to the MECs. He said his party was opposing the Bill for a number of reasons which is contained in a document.

The Chairperson asked if their report indicates why the Bill is unconstitutional as the DA’s document talks about taking Government to the Constitutional Court.

Dr Rhoda gave his party's motivation for opposing the Bill:
For the provincial legislature to carry out its mandatory oversight in terms of Section 142 (b) 2 of the Constitution, the provincial MEC has to keep the legislature informed of how he is exercising his provincial executive authority.

By transferring provincial housing state assets from the PHB to the Provincial Department of Housing, this Bill places these assets directly in the hands of the provincial MECs. This creates an extremely dangerous precedent whereby a political figure has the ultimate control and use of the disposal of the state assets.

An argument in favour of this move has been that the provincial MECs are democratically elected appointees and are therefore legitimately in a position to carry out the will of the people.

However in certain provinces where the ANC and IFP share control of the Executive Council, conflict between these two political parties is still prevalent on the ground and so such an argument cannot be valid. An ANC MEC acting alone with enormous powers cannot be trusted to dispose of these provincial assets for the benefit of all.

Dr Rhoda stated that by repudiating the powers of the PHB the National Government effectively deprived the provinces of the right to choose. The Western Cape Province Housing Development Act allows for the establishment of the Board constituting of persons with experience in housing and related fields. The province is not experiencing any problems as the result of having a Board and should be granted the right to choose.

All decisions regarding housing funds should be clear, equitable and explained and an independent monitoring procedure must be established for all public funds. If such checks and balances are not in place and all decisions with respect to the expenditure of public funds for housing are left to the discretion of the head of the department as the accounting officer, this will be contrary to universally accepted principles.

If these decisions are left to the sole discretion of provincial MECs there are no safeguards from housing funds being distributed to communities on a party political basis. This was the case under the Apartheid Government.

To remove the checks and balances that are currently in place and that have taken in the past six years to perfect can only be interpreted as a retreat from the White Paper on Housing. There is a need for a transparent decision making process by representatives with respect to the prioritization of public funds for housing development. This Bill signals the dramatic shift back to the old style government administration whereby such decisions were solely at the discretion of the Minister, the MECs or heads of government departments. Thus the DA opposes the Bill.

Mr Schneemann (ANC) commented that the DA seems to be saying the Housing Boards are effective and they are doing a great job. He asked the Director General if the current housing boards meet as required and how would the new panels operate.

The Chairperson asked the DG to comment on the fact that that a large number of people serve on the current boards while the new panels comprise fewer people in an advisory capacity which means economising on expenditure.

Director General's comments
Ms Nxumalo's response was that she had been tasked by MINMEC to conduct an investigation in various provinces to assess the activities of the PHBs and in particular to assess the relationship between PHBs and Provincial Housing departments. The investigation was carried out in the Northern Province, KwaZulu-Natal, Free State, Guateng and the Eastern Cape. Prior to these investigations Provincial Housing Departments had been requested to submit reports to the National Department on the activities of the PHB, which informed which boards were to be investigated.

Interviews were held with the various housing boards. What the Department picked up was that the boards were not fully operational. Where they were operational, there were problems with funds, particularly with accountability.

The National Department allocates funds to PHBs through a formal process but the authority accountable for these funds is none other than the Head of the Department. The critical issue was how the Head of Department (who in law is made accountable for these funds) has then the responsibility of allocating these funds held by the PHB that in law is not accountable for those funds?

Secondly, it was found in all provinces without exception that the officials of the Provincial Housing Department are responsible for receiving, screening, evaluating and presenting project applications submitted to each province. So all the administration work is actually done by the Provincial Housing Department.

The Board meets on a regular basis, some instances twice a month, other instances once a quarter to take decisions on projects presented by the officials of the Department. Thus Board meetings are where Board officials make recommendations.

Clearly what this proves is that the role of the PHB was never to administer because the departmental officials do the administration.

Under the current circumstances, the issue of transparency is at question. The Department’s argument is that this process is less transparent than it would be if it were subjected to procedures led by the Department and under the control of the MEC.

It is not clear how a decision is reached except for the province of KwaZulu-Natal where they have a particular methodology that they have adopted for rating projects. Thus it is unclear as to why the Board adopts Project X as compared to Project Y except for the motivation of the department official. With this process, there can never be a guarantee that a certain project is unlikely to "benefit" the official.

Our belief is that the procurement system in housing should be subject to the provision of Section 217 of the Constitution where there is a clear tender adjudication process and where departmental officials formally adjudicate and recommend on the basis of an established administrative system of approving a project.

The main issue is secure application. Prior to the Housing Amendment Act of 1996 the Board members were appointed on the basis of sectoral representation (a minimum of three people per sector with most Boards constituting eighteen people).

During the investigation Board members were asked if they reported back to their sectors about decisions taken at the Board meetings and how many of them were mandated by their sectors to take a particular decision. After interviewing more than 30 Board members, it was found that, except for one exception in Gauteng, none of them reported back to their sectors. They were appointed by their sectors but had no line of accountability for reporting back.

Thus not only was the system of decision making by the PHB never clear but more important it was never transparent.

But this process of recommendations by a Housing Board prevented the Provincial Executive Committee from influencing prioritization of the Housing Development Fund in line with the province’s development strategy. There was never an opportunity for an MEC to say that the Executive Committee has identified priority areas. The result was housing development was at a disjuncture and not in line with development priorities of provinces.

The Housing MEC has no ability to say, "I want housing in that IDZ corridor" despite those areas having being identified as housing priority because the process of project approvals is actually held by a private group.

The DG said the real issue is, "Can government funds be entrusted to a group of individuals that are neither elected nor representative. Can you continue to place the responsibility of decision making in the hands of private individuals that have no direct contact with the Department?"

"But more important, by creating an advisory panel we are suggesting that the participation of private individuals or professionals to assist MECs broadly on policy matter will continue. But what we are removing in this process is the responsibility to sign for the expenditure of the Department."

Ms R Southgate (ACDP) said that the Bill was centralistic and the ACDP believes in a federal structure. It believes that the PHB can administer this more effectively. They can be held to account for decisions and transparency. For one person, the Minister/MEC, to appoint and terminate membership of the panel is too much power in an individual.

The DG replied that what the Department was doing was to establish a mechanism to provide additional capacity to advise the Minister/MEC on matters related to housing. They will have various professionals and experts to provide advice.

She said the Department’s experience is that they need to target more the work of the disadvantaged. The Department envisages a panel of people who individually or severally will be available to the Minister/MEC when they are needed rather than people coming to a meeting and it ends there - this has been particularly prevalent with the PHBs. For example two people out of six specialists could be called on to do particular work around developing policy. They will get paid for the hours they have put in. They will not be paid for when they are at home doing nothing.

The Department does not envisage advisory panel meetings. Intially, these panels will meet to establish the rules of how they work and to meet the Minister. After an initial three months period, for example, they would be called back when tasks are there for them to perform and only then would they be paid. They are avoiding paying exorbitant fees for attending meetings where they may not contribute a single word yet get paid.

In doing that they consider it appropriate for the Minister to determine the period for which she and the MECs would hire these professionals. "Because it is really about providing advice," she added, "there aren’t any statutory functions."

If after two years the Minister feels she has exhausted all the expertise in the constituted panel and feels she requires expertise in other areas she may dissolve it.

Voting
The Bill was read and adopted with one amendment to Clause 7 adding the phrase "other than creditors in respect of credit linked subsidies" to Section 10B(1).

The NNP voted against the Bill and the ACDP abstained. The DP, UDM and IFP members were not present.