DHS Q4 2022/23 Performance; Northern Cape and North West Oversight Visit Report; with Ministry

Meeting report

The Chairperson greeted Members on the platform and indicated that the meeting may proceed.

A moment of silence and prayer was observed. 

The Chairperson acknowledged the presence of Ms Pam Tshwete, Deputy Minister of Human Settlements.  

The Committee noted the apology of Dr N Khumalo (DA), who was sick. 

Consideration and adoption of Northern Cape and North West Oversight Visit Report

The Committee Content Advisor took the Committee through the report.

Both Ms M Makesini (EFF) and the Chairperson requested an insertion be made on the timeframe for Lerato Park and to include the issue of the women contractors who had been abused in the contracting process in Mofufutso. 

The Chairperson suggested the Department must relook its sessions with contractors because those sessions directly affected service delivery of houses. 

Mr M Tseki (ANC) indicated that the report needed to be specific on resolutions. Firstly, a report should be forwarded to the Committee on the disabled contractor, whose name was Kopela; Secondly, the Committee also wanted a report on the lady contractor who was abused in the process. It needed to be made clear that the Committee was of view that it was unfair, that new contractors should take the brunt mess up of their predecessor contractors. 

The Chairperson requested to get feedback on those issues in the next meeting. 

The Committee adopted the report. 

Ms N Sihlwayi (ANC) commended the military house construction. She also noted that those houses were often not occupied because they lacked a lot of basic municipal functions such as sewage, etc. She thus called for integrated services to be implemented for those houses.

She highlighted the importance of ensuring a clear beneficiaries list and believed that the digitalisation process would assist in verifying bone fide cases of beneficiaries. 

Ms Mmamoloko Kubayi, Minister of Human Settlements, joined the platform. The Chairperson acknowledged her presence. 

Minister’s opening remark

Minister Kubayi said that the Department was before the Committee to report on its fourth quarter performance report. The presentation will highlight the Department’s weaknesses, challenges, and achievements.

On capacity building, Minister Kubayi reported that the Department was working around the clock to fill in vacancies. Two Deputy Directors-General (DDGs) in the Department were appointed and the appointment of the third DDG would commence thereafter. The fourth DDG who would be responsible for affordable housing was advertised and candidates had been shortlisted. The interview process would begin in the week of 14 June. She explained that the delay in the appointment was due to a request for a transfer. Although the recommended candidate was a good candidate, the Department’s offering package was not to the expectation of the candidate and the transfer did not work out. 

She also reported that the recruitment process of the Director-General would begin soon. 

Minister Kubayi indicated that the Department had made progress in its work, but that will not be shown in this report. She highlighted the Department’s intervention to assist the Human Settlement Department in Nelson Mandela Bay. The intervention has yielded a positive outcome. Although the Department has also helped Mangaung municipality to build capacity and despite the good work that was done by the Department’s deployed official, the political instability in that municipality constrained the Department’s ability to make greater progress. She highlighted that the Department is proactively engaging with provincial legislatures and municipalities to provide assistance. 

Minister Kubayi acknowledged that the Department’s performance is not 100 percent perfect. The Auditor-General’s Office has identified a number of issues, such as consequence management. She reported that some final warnings had been given to officials as per the recommendations of the AG.

Minister Kubayi repeated that the pillar of the Department’s work is ensuring sufficient capacity to do its work at the national and provincial levels. She reported that all Heads of Department were appointed across the country to improve accountability. Monitoring & Evaluation was being done as well. 

Deputy Minister Tshwete highlighted that the Department’s performance depends on the performance of its external stakeholders, which are provinces and municipalities. Some of its partially completed targets were completed and they were shown as partially completed due to the submission deadline. Those targets were achieved after the deadline. 

Deputy Minister Tshwete indicated that the Department had made progress in empowering women and youth. In particular small provinces, those are the ones that are reaching those targets. There are even instances where buildings were built 100 percent by women. 

The Department is also making its bursary as well as job opportunities known to students. 

Briefing by the Department of Human Settlements on the Fourth Quarter Report (Jan to Mar 2023)

Mr Siyabonga Zama, Acting Director-General: Entities Oversight, IGR, Monitoring and Evaluation, DHS, reported that the Department had made many improvements if one compares the performance indicators of Q1 and Q4. The Department is working hard to improve in achieving Access and Participation Plan (APP) targets. The achievements can be backed by portfolio evidence. The Department works closely with beneficiaries in both provinces and metros. 

Ms Lucy Bele, Chief Financial Officer, took the Committee through the Department’s presentation. 

The presentation covered the Department’s performance in Quarter 4, both financial and non-financial information.

The Department achieved 72% of its targets in the quarter under review. The Department observed that there was:

• A need for improved monitoring of performance related to;
  • Job Creation;
  • Set-asides for designated groups; and
  • Title Deeds.
• Collaboration with sector partners in order to accelerate access to performance information on delivery targets and priorities such as investments in PDAs, parliamentary questions etc.
• Specialised capacity to conclude agreements with mining houses.
• There is a need to improve efficiency on certain processes such as turnaround time on responses to Parliamentary questions and procurement procedures.
• Strengthen and fast-track inter-governmental relations to improve performance on land rezoning.

Provinces

• Poor performance of the 2022/23 financial year is noted however, improvements can be made if:
• Provinces are to deliver in line with the approved business plans
• Provinces avoid transfer of funds late in the year to other organs of state
• The National Department makes interventions early in the first quarter
• Provinces comply with the provisions of DORA
• Provinces update the HSS regularly and with accurate data

Metros must;

• Prioritise service delivery
• Report timeously, especially on serviced sites and title deeds
• Request assistance as and when needed

See attached for full presentation details

Discussion
Mr B Herron (GOOD) asked the Department about the appointment process of the Policy and Legislative Review Team (POLERT) since its term has ended in 2021/22. To fully understand government’s public housing programmed, it might be useful to evaluate what POLERT has achieved, whether a new POLERT has been appointed, what its new mandate is and the policy work which arose from the previous POLERT’s work. 

Mr L Mphithi (DA) expressed his concern about those unfinished houses that remained unoccupied in provinces and municipalities and emphasised that there had to be strategies and measures to understand the extent of the issue and rectify that. In Free State, there are currently 11 000 houses that are not finished and are being unattended to. He can only imagine the magnitude of this issue across the country. It would be a waste money as people were taking bricks, doors, and windows from those unattended houses for their own use.

He highlighted the corrupt practice of people bribing departmental officials to move up the housing allocation list during an oversight visit in Soweto. The Minister herself was part of the oversight team as well. He asked the Department if it had a strategy to curb this trend and suggested the Department collaborate with law enforcement to address the issue. All those corrupt individuals with connections to officials should be dealt with.

Mr Mphithi expressed his concern about the quality of houses built by the Department’s contractors. He called them a major challenge. Housing officials and inspectors approved low-quality houses. He reminded the Minister that she must have seen those examples during her oversight visit. Sometimes, houses crumbled when beneficiaries only moved in for two or three months. 

He sought clarity on the  Khayelitsha issue which had severely restricted the province from meeting its targets and requested the Department to indicate the way forward.

Lastly, he noted a slow pace in the Department’s responses to MP’s questions. He understood that it might take more time for the Department since it still had to source information from provinces and municipalities; he refused to accept that there is no improvement in this regard because Members are publicly elected officials representing their constituents. 

Ms M Makesini (EFF) questioned the Department whether it was time to establish a war room in the Free State Provincial Department. The current state of affairs in that province was embarrassing, with the MEC Mr Makume, unable to do anything and requested for the National Department’s assistance. She was of view about the issue until it arose when the Department presented its Quarter 1 performance, and said it would be costly to the country. 

She was concerned with the underspent expenditures on goods and services and the payment of capital. What is the clear plan to intervene to fully utilise the expenditure? 

She wanted to find out from the Department if any improvement is being made or actions taken to implement the AG’s recommendations on the North West Province. She enquired about the investigation process of overpayments, as highlighted in the AG’s report. She also requested an update on a dispute in the Eastern Cape province.

Mr C Malematja (ANC) acknowledged the improvement which the Department had made and remarked that it is something to be proud of. He commended the Department’s effort in filling vacancies and having appointed all the HoDs, which is a great achievement. 

Further, he can attest to the Department’s work that the Department contracted some women contractors and are hard at work across the country. 

He asked the Department to make improvements to reduce the backlog on issuing title deeds to housing recipients.

He applauded the Department’s preventative approach to detecting and tackling a problem because it became a serious issue.

Ms N Sihlwayi (ANC) emphasised the importance of people having proper housing which was the prerequisite before any other economic activities.

She noted the delayed progress of building the houses and the quality, the delay in lack of formalised regulations on requiring all governmental departments to implement the District Development Model (DDM). She thus asked about the extent to which the Department has implemented the DDM.

Despite the set-aside rule, she observed that it is still prevalent in some areas that the Department was appointing contractors as if women did not exist in those areas. She sought clarity on the breakdown of contracts awarded to women, youth and persons with disabilities. She wanted those women to be contractors and not sub-contractors who were taken advantage of in the process and only got to build a small number of houses. 

Ms A Buthelezi (IFP) requested the Department to shorten the turnaround time for building houses for military veterans. 

She noted the gender-mainstreaming content which was covered in the presentation.

She enquired about the Department’s on-site safety plans to curb the loss of building materials due to theft. 

Mr M Tseki (ANC) commended the Department’s work and progress and remarked that it is the outcome of the perfect synergy between oversight and implementation. 

He requested more information about the policy to be shared with the Committee on land acquisition, title deed process and mining towns.

He supported the Department’s approach in refusing to allocate conditional grant to Provinces and municipalities that were not performing and further suggested the Department to institute consequence management measures.

He commented that although 98 percent achievement may seem to be satisfactory, in the case of this Department, the two percent is not marginal and could be R600 million. Given the huge expenditure which the Department manages, the Committee wanted to see a 100 percent expenditure spending. At last, he enquired about the Department’s approach to the District Development Model (DDM). 

The Chairperson commended the Department’s progress from the achievement of 51 percent to 71 percent but reiterated that Members wanted to see 100 percent performance from the Department. The Chair enquired about the Department’s oversight of its entities and asked for elaboration on the 100 percent implementation. She recalled that during the engagement with the AG’s Office, the Department only identified areas of concern and pointed them out to entities but did not follow up on whether those issues were being addressed or not. 

She asked for clarity on the 100 percent implementation of the action plan, whether it was only referring to the Department or its entities. 

Department’s Response

Minister Kubayi confirmed that the Department did remove the POLERT contract; she would comment on that later. 

Ms Tsepiso Moloi, Acting-Director General: Affordable Housing, responded to the issue around the incomplete houses that were left unoccupied. The Department was doing an analysis and would later produce a diagnostic report on the issue, and the cause that led to poor performance of contractors. Sometimes it was due to inflation in building materials, financing issues, and security issues that those projects could not be completed. She noted that vandalism often occurred around those projects. The Department’s strategy was to work with Provinces to identify and group those projects. Those unfinished projects would be included in the business plans and the Department had appointed a professional resource team in every province to unblock those projects.

Ms Moloi recognised that title deeds remained a problem and the Department was developing a set of acceleration delivery strategies. It has also partnered with Vulindlela to understand those challenges. As a Department, a process is put in place to reduce backlog when a business is registered into the business plan. The Department would need to see proof of readiness of those projects such as the bulk of infrastructure, township opened, etc. Those measures ensured that title deeds would be issued when unit houses were handed over without delay.

On the issue of mining towns, Ms Moloi indicated that the Department did not have adequate capacity to deal with the number of agreements which were six. Regarding the two which the Department was unable to meet target, the Department is working with mining houses, municipalities, Housing Development Agency and provinces to ensure that those partnerships are in place. The Department was also adding transactional advising capacity to assist the fast-track process and to ensure that development in those areas would be realised. At the moment, the Department has appointed a Professional Resource Team (PRT) to ensure the transactional capacity and monitoring implementation of those agreements. 

Ms Rashnee Atkinson, Chief Director: Human Settlements Planning, DHS, informed the Committee that POLERT was still continuing and the new one had just been appointed. It was currently busy consolidating the work which its predecessor had started. A number of programmes, such as the land acquisition policy program, township establishment and various programmes, would be prepared for presentation in due course. The work has influenced the policy direction which is under the Department’s review. Other areas that the work covered included the rental policy, IBT guidelines, alternative building technology, Agri-builder villages, etc.

Ms Atkinson commented on the business plans, and implementation and indicated that fast-tracking military housing is an aspect of it. The Department had appointed (PRT) in each province to be responsible for determining what goes into a business plan and ensuring the readiness of those business plans for approval. Those professional teams were responsible for issues such as interrogating project readiness, the availability of bulk, the establishment of the township, the appointment of contractors, and how provinces dealt with non-performing contractors. The Department had made it clear that the reporting should explicitly state how projects protected the vulnerable group, including veterans. She was confident that it would have well-informed projects by the time the Department received adjusted business plans in October. 

She commented on the DDM model and agreed with some Members' view that there needed to be some regulatory prescripts which the Department was applying so that it would not exclude projects. And focused on projects that were ready for implementation and impacted the communities. The Department would be taking guidance on DDM from some of the policies that were already in the Cooperative Governance & Traditional Affairs (COGTA)

Ms Nonhlanhla Buthelezi, Chief Director-General: Human Settlement Delivery Frameworks, reported to the Committee that the Department was working with entities closely to ensure their overall improvement in performance. She indicated that those entities either had their own mandates or there were agreements which they entered into with the Department. The Department’s role is to provide support and ensure statutory compliance. Those entities were also expected to submit reports to the Department within 30 days so that inefficiency issues could be picked up in advance. In addition, there was also a forum in which the Department met with the entities regularly to track and monitor progress. 

Ms Bele explained to the Committee that at the time when the AG presented the Department’s audit findings, most CFOs were busy in the process of preparing their financial statements. However, there is a CFO forum which takes place in June. The main purpose of that forum is to review those material irregularities the AG had raised on the whole sector and discuss the action plan to remedy those issues. The Department would provide details of those engagements in a report to the Committee.

Ms Bele commented on the set-aside policy, which aimed to promote the interests and representations of disadvantaged communities. She clarified that the Department did not track sub-contractors but rather directly tracked those contractors that the Department had awarded projects to. For instance, if there was a conditional grant of R30 billion, the Department expected all role players, such as provinces and municipalities, to award the allocation to businesses that are owned by women, youth and persons with disabilities. The Department then requests a schedule from those provinces and verifies ownership information against National Treasury’s central system database. Both Treasury’s policies in its 2017 and 2023 regulations have explicitly required that a certain percentage must be designated for people of those groups. 

Regarding the question of underspending on goods and services, she explained that if there was underspent expenditure, the Department must apply for rollover and present identifiable projects as per s22 of the Division of Revenue Act (DORA). Due to concerns about the safety of guard laptops, the Department decided not to purchase more laptops, resulting in the under-expenditure on capital equipment. The Department has disclosed its reasoning to the audit committee and the explanation was accepted. Further, there was also a grey area of the applicable procurement policy since the Constitutional Court repealed the 2017 procurement policy and thus all procurements made by using that provision became irregular expenditures. The Department had to develop a new procurement policy on its own. 

Ms Bele was disconnected from the platform. 

Mr Zama reported to the Committee that the interventions in the Free State were an ongoing process. 

Ms Mathope Thusi, Acting DDG: Corporate Services, reported to the Committee that the appointment of the Director-General would be concluded next week. The appointment of the Deputy Director-General would be concluded by 13 June. 

Deputy Minister’s response

Ms Tshwete noted Members' input on the slow turnaround time for military houses and explained that the Department depends on the Department of Military Veterans for the delivery of houses. The Department is responsible for building houses but will need to get the list for the Department of Military Veterans before it can start building houses. The Department is prioritising the issue and is working closely with that Department. She believed that the Department would be able to report on the number of military houses in each province in the next quarter. Veterans' requests are more around the quality of houses. She informed the Committee that veterans in the Western Cape complained about the poor state of those military houses. 

Deputy Minister Tshwete highlighted that the District Development Model is helping the sector in monitoring its performance. She mentioned the great example of those houses in Umzimkhulu, where women built houses. She invited the Committee to go to Harry Gwala District Municipality on 26 August where the Department would be handing over houses that women built.

The Chairperson reminded the Minister to respond to the question on the digitalisation of the beneficiaries list. 

Minister’s response

Minister Kubayi reiterated that POLERT was a work in progress and she had regular engagements with the team as well.  

She described the unfinished houses issue as a legacy issue, which is why the National Home Builders Registration Council's (NHBRC) work was important. She reported that she was happy with the work which the NHBRC team had performed in Limpopo. She had written to the NHBRC to instruct them to institute a lifestyle audit on all its employees, focusing on inspectors. During the insourcing process, it was discovered that some inspectors were not qualified and were earning massive pay cheques. She forewarned the Committee that labour disputes might arise from that. She has asked the Council to return with labour to find a solution.

Minister Kubayi acknowledged the rampant corrupt practices in human settlement in Soweto. She had discussed the issue with Cabinet’s security cluster and Minister Motsoaledi, Minister of Home Affairs, suggested that she establish a directorate similar to the one he had set up in the Department of Home Affairs (DHA). That directorate should have certain functions linked to HAWKS as the Department itself, due to the compensation of employees ceiling, and was unlikely to hire more people and it does not have capacity or skills to deal with crime or corruption itself. She was reviewing if the recommended DHA model would be applicable to the Human Settlement Department. 

Minister Kubayi indicated to Mr Mphithi that the Department’s responses [to MP questions] have improved. It did not get 100 percent on this in the performance indicator because the Department had missed one or two deadlines. It was not because the Department did not respond. 

Minister Kubayi discussed in length about the interaction between the Department and the City of Cape Town on the re-allocation of informal settlements in Khayelitsha, which Mr Mphithi had raised. 

Firstly, she explained the normal process in government for allocating resources. At the beginning of the financial year, municipalities plan their budget and submit business plans for the Department’s approval. A mid-term review was done by both National Treasury and the Department. They would look at those non-performing areas and reallocate funds during this process. On 31 March, the allocated amounts to municipalities would be on the Gazette. Before making the allocation, the Department would also have engagements with provinces and municipalities. 

Then, she explained the Khayelitsha story in detail. In February 2022, there was a protest in the informal settlement area where residents complained that there were no toilets. Soon after, a team from the Presidency was brought in and looked at how the City responded to the community’s needs. The Department immediately engaged with the City and requested business plans to be included. Soon after that protest, the Department received a Memorandum, which was signed by 16 informal settlements and the Department agreed that a process needed to be established to resolve the matter. During the whole process, the Department consistently engaged with the City urging it to take action to remedy the situation. The Department was at a point where it almost wanted to refuse to sign any further allocation to the City, unless the City attended to the needs of those communities. She highlighted that this is a Human Rights issue as the South African Human Rights Commission was also involved urging the Department to intervene. Throughout the whole process, the City complained about its lack of funding to build those toilets. Upon getting that indication, the Department agreed to source funds to support the City. A re-allocation was requested and done during the mid-term review. As soon as the City got the fund, it did not use the funds for what the funds should have been spent on. The City complained that those people had built those informal settlements by the PRASA line and the City did not have the resources to reallocate those people. So, it requested a re-allocation from the Department again. The Department was committed to the cause and did reallocate the funds to the City. But the Mayor said that the City would not be able to accept the allocation with the conditions.

Minister Kubayi said that she could not understand it because the City itself requested the money. The Department held a meeting with the City last week and the City provided various excuses such as one) its procurement system was not in place; two) the CFO was not aware of the funds coming; three) it was the negligence of PRASA that did not protect the rail line and the City would not be involved. She reminded the Committee that PRASA did not have any responsibility or any role to play in terms of human settlement. The National Department wrote to the City and expected a council resolution on the issue. She pointed out that the City had begun some services on the informal settlement, which violated the national policy. The policy clearly states that the ratio per toilet and house should be one to five, and the City made it 1:15. The Department viewed such an arrangement as being detrimental to the health of people. She said that the City of Cape Town deliberately created a narrative in the public that the National Department was forcing the City to act illegally, which is untrue. She clarified that the national Department fulfilled its obligations as it had always allocated the budget of the City on time.

Minister Kubayi acknowledged the challenge that the Free State faced since most staff members were either on DC or under investigation with the HAWKS, and their laptops were confiscated. The Department had taken some levels of intervention in Mangaung and the assistance would be provided to the provincial level shortly. 

Minister Kubayi admitted that the digitalisation of the beneficiaries list had been delayed and highlighted that should the digitalisation process be in place, it would have solved half of the problems around corruption. 

Minister Kubayi informed Members that those awarded contracts were responsible for protecting the site. 

Minister acknowledged the need to fast-track the Department’s work on mining towns. 

To improve audit performance, the Department does follow-ups with the AG’s Office through quarterly engagements. 

That concluded the Department’s interaction with the Committee. 

Mr Tseki noted the Minister’s input that the City of Cape Town was unwilling to spend the budget and suggested an oversight visit to see how best the Committee can assist in dealing with the issue. He emphasised that the point needed to be included in the Committee Minutes.

Mr Mphithi welcomed the Department’s implementation of the lifestyle audit for housing inspectors. He requested to know what the timeframe would look like once that plan started to take place and get some sort of report on the lifestyle audit. 

Minister Kubayi said that she would need three months to look at the lifestyle audit for housing inspectors and produce a report on that and then report to the Committee. 

The Chairperson adjourned the meeting.