PRESENTATION TO THE PORTFOLIO COMMITTEE ON HUMAN SETTLEMENTS

BRIEFING ON THE ANNUAL PERFORMANCE OF THE

DEPARTMENT OF HUMAN SETTLEMENTS 2011/12

9 October 2012

PRESENTATION OUTLINE

• Introduction

• Financial Management

• Expenditure vs Performance

• Development orientation

• Accountability

• Professional Ethics

• Transparency

• Good HR practices

• Employment Equity

• Concluding remarks

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INTRODUCTION• The PSC was requested to brief the Committee on the annual

performance of the Department of Human Settlements for

2011/12 and its entities.• The Public Service Commission (PSC):

Was created by the Constitution Promotes and maintains effective and efficient public

administration with a high standard of professional ethics. Has as its core business to investigate, monitor, evaluate and

advise on strategic public service issues.• In terms of the PSC Act, the PSC has oversight over the national

and provincial spheres of government.• The PSC does not have information on the public entities

reporting to the Minister, so an opinion on them is not provided.

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INTRODUCTION• The PSC applied its M&E system in the Department in the 2009/10

evaluation cycle. The information emanating from the assessment

is mostly outdated.• Data used to augment the presentation-

Annual reports for the 2010/11 and 2011/12 financial years Other data available, e.g. PSC tools, DPSA and DPME

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FINANCIAL MANAGEMENT

Entity ‘10/11 ‘11/12 Comments in respect of ‘11/12

Department of Human Settlements

• Restatement of Corresponding Figures

• Material underspending of the Rural Household Infrastructure Grant

• Unaudited supplementary schedulesNational Home Builders Registration Council

The entity did not have an adequate system for identifying and recognising irregular expenditure

Audit opinions by the Auditor General for the Department of Human Settlements and its entities

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Unqualified

Unqualified with findings

Qualified

Not audited by due date

FINANCIAL MANAGEMENT (cont)

Entity ‘10/11 ‘11/12 Emphasis of matter

Social Housing FoundationLiquidation was to wind up by 31/12/’10. The SHF had not closed by 31/3/’12 as instructed by the Minister.

Housing Development Agency

Restatement of Corresponding Figures

Estate Agency Affairs Board of SA

Material impairments to the amount of R20 million as a result of long outstanding debtors

National Housing Finance Corporation

None

NURCHA None

Social Housing Regulatory Authority

Restatement of Corresponding Figures

Rural Housing Loan Fund NoneThubelisha Homes Company is in voluntary liquidation

Audit opinions by independent auditors for the Department’s entities:

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EXPENDITURE VS PERFORMANCE% of budget spent Achievement of targets

2010/11 2011/12 2010/11 2011/12

98% 99% 67.4% 77%

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The following are the major reasons for the underspending on the operational budget in 2011/121:

delays in implementing projects and in securing office accommodation.

moratorium on filling non-critical positions pending the completion of the turnaround process.

Spending was within the generally accepted margin of 2% set by National Treasury.

Although almost the entire budget is spent, the achievement of predetermined outputs is fairly low.

1 2011/12 Annual Report

EXPENDITURE VS PERFORMANCE (cont)

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With regard to reporting on performance information in 2011/12, the AG found that- Targets were not clear and unambiguous. Targets were not specific in clearly identifying the nature and the

required level of performance. Targets were not measurable.

There was no unauthorized, irregular, fruitless and wasteful expenditure in 2010/11.

In 2011/12, the AG found that in respect of compliance with laws and regulations, the Accounting Officer did not take effective steps to prevent irregular, as well as fruitless and wasteful expenditure.

In respect of 2011/12, it was also found that contractual obligations and money owed by the Department were not settled within 30 days or an agreed period. As at end May 2012, all invoices had been paid within 30 days in respect of the 2012/13 financial year1.

1 National Treasury

Upgrading 400 000 housing units in informal settlements.

• Facilitating the provision of 80 000 affordable social and rental housing units in well-located areas.

• Facilitating the provision of improved housing finance. opportunities for 600 000 households in the gap market (people earning between R3 500 and R12 800).

• Improving access to basic services by providing universal access to sanitation.

• The revision of the White Paper on Basic Household Sanitation was initiated.

The Department contributed directly to sustainable human settlements and the improved quality of household life.

Under spending as a result of delays in the building of toilets.

DEVELOPMENT ORIENTATION

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The % of households that maintained what is described as ‘other’ tenure arrangements increased from 7,7% in 2008 to 15,5% in 2011. These arrangements include living in dwellings rent-free, for example with parents or other relatives, and are a sign of financial stress as households bundle together their living arrangements to save some money on rent or perhaps rates and taxes. It is important to note that these arrangements started to become more prevalent after the financial crisis of 2008 – a time during which an increasing number of households started to experience financial strain.

The highest percentage of households living without toilet facilities or having to use bucket toilets was found in Eastern Cape (17,0%),

Limpopo (7,9%), Northern Cape (7,6%) and Mpumalanga (6,7%).

• 15.5% of households felt that the walls of their dwellings were weak or very weak

• 16.1% felt that the roof was weak or very weak.

Stats SA General Household Survey1

DEVELOPMENT ORIENTATION

1 Statistics South Africa, Statistical Release, P0318, General Household Survey, July 2011 10

ACCOUNTABILITY

2010/11 2011/12 2012/13

Submitted after the due date Submitted on time

If accountability is to be practiced in the public service, EAs and HoDs

should visibly support performance management processes and

ensure that these cascade down to other levels in the SMS. Submission of the PA of the HoD by the due date:

The current HoD did not qualify for evaluation in

the 2010/11 financial year. The submission of the HoD’s PA on time is a

positive indication of the example set from the

top.

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PROFESSIONAL ETHICS

Cases Referred1 % Feedback Received

% Cases Closed Outstanding Cases

113 7% 2% 111

To root out corruption and maladministration, ethics and integrity should be addressed: The Department has a Special Investigations Directorate. Its

mandate is to prevent and detect corrupt activities and to ensure that corrupt practices in the sector are reduced.

A whistle-blowing policy is in place and the Department has implemented an extensive Anti-Corruption Awareness Campaign

However, the feedback and closure rate in respect of National Anti-Corruption Hotline cases is unacceptably low:

1 As at August 2012 12

PROFESSIONAL ETHICS (cont)

1 As at August 2012

Correlation between Official Responsibilities and Private Company

Officials with many companies

Officials sharing Companies

21 6 2

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Financial Disclosure Framework - Submission of FDF Forms by the due date of 31 May 2012

Manage potential conflicts that the senior managers may have between their private business interests and their official responsibilities In the 2010/11 financial year, the PSC found that a troubling 32%

of SMS members in the Department of Human Settlements may have potential conflicts between their private interests and their official responsibilities.

PROFESSIONAL ETHICS (cont)

Departments are compelled to report on finalised financial

misconduct cases to, amongst others, the PSC. However, in the 2010/11 financial year, the Department failed to

submit an input to the PSC. In the 2011/12 financial year, the Department reported 2 cases of

financial mismanagement, one involving an amount of R100

million. However, there was no loss to the State in this case.

1 As at August 2012 14

FYNo of people on

suspensionAverage no of days on

suspensionCost of suspension

(R'000)

2010/11 3 126 R 118

2011/12 0 - -

Manage precautionary suspensions in cases of serious misconduct

TRANSPARENCY

• The Department’s Website is user friendly and most documents are easily accessible.

• However, although provision is made for PAIA, no document (i.e. Manual on Access to Information) could be downloaded.

• The annual report is a key accountability mechanism, but it only serves to promote transparency if it is readily available.

• The Department’s Annual Report for 2010/11 was accessed through the Government information Website, but there is no link to the document on the Department’s own Website.

• As at 1 October 2012, the 2011/12 Annual Report of the Department was not available on its Website, as it should have been.

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GOOD HR PRACTICES

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A human resource plan was not in place, as required by the Public Service Regulations.

As at 31 March 2012, the overall vacancy rate within the Department was 21.1%, which has increased to 24.4% as at June 2012.

The vacancy rate in respect of Professionals and SMS members is very high, whereas it takes the Department on average over 2 years to fill posts.

Vacancy Rate1

Average period in months of post vacant

% post of filled additional

% of posts filled out of

adjustmentProf & Managers Rest

30.82% 17.96% 24.18 24.93% 26.46%

24.4%

1 DPSA’s Public Service Management Watch as at June 2012

GOOD HR PRACTICES (cont)

• A high % of staff is held additional to the establishment, which could be attributed the implementation of the revised approved structure following the finalisation of the turnaround strategy referred to in the Department’s Annual Report. In this case such a situation is in fact commendable.

Extract from Public Service Regulations

An EA may employ persons additional to the approved establishment where-(a)the incumbent of a post is expected to be absent for such a period that her or his duties cannot be performed by other personnel(b)a temporary increase in work occurs(c) it is necessary for any other reason to temporarily increase the staff of the department

• Contract appointments used strategically can be of benefit to the state in terms of savings as well as providing an opportunity to assess talent and potential without any commitment beyond a contractual obligation.

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EMPLOYMENT EQUITY

181 2009/10 2 2007/08

Designated GroupPSC M&E report for

the ‘09/10 cycle2011/12

Black people 82% 1 93.5%

Women Target: 50% at SMS level by March 2009

39%1 36.4%

People With DisabilitiesTarget: 2% to be achieved by 31 March 2010

2,7%2 0.3%

Public administration must be broadly representative of South African people, with employment and personnel management practices based on ability, objectivity fairness and the need to redress the imbalances of the past to achieve broad representation.

• The PSC’s overall impression is that the Department has over the years made serious efforts to improve its management and administration practices. It has sustained a sound record of financial management and improved spending.

• Although its public entities have also, for the most part, sustained good financial management, the decline to a qualified audit opinion by the National Home Builders Registration Council is worrying.

• The management of performance information needs attention, as without clear, unambiguous and specific indicators that are measurable, outputs are hard to achieve.

• It is important to note that while (from a public management and administration perspective) things are improving in the Department, it faces serious challenges in meeting South Africa’s daunting housing and sanitation needs, a challenge it does not seem to be meeting particularly well. It would seem that greater innovation and creativity are required.

CONCLUDING REMARKS

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CONCLUDING REMARKS (cont)• The Department’s turnaround strategy had a negative impact on

spending and the achievement of targets. • Most notably the lack of capacity in the Branch: Housing Policy,

Research and Monitoring was cause for concern. • The DG has acknowledged the need for the establishment of

adequate monitoring and evaluation capacity at provincial and local government level.

• Such M&E capacity should not simply take a compliance and accountability approach but should facilitate reflection and learning that should help to unleash the kind of creativity and innovation referred to above.

• The PSC is concerned by the need for the Department to be doing more to actively and aggressively manage its integrity system and for it to be relentlessly follow up on and closing cases of corruption.

• This is particularly true of a department like this one which handles large sums of public funds and which addresses such an absolutely critical human right.

• Senior management in the department has also improved compliance through the timely submission of the PA of the HoD and the 100% submission of Financial Disclosure Forms.

• However, there is a need for the EA to monitor and deal with potential and actual conflicts of interest.

• There has been poor performance in terms of compliance with good HR practices and EE targets. This can probably be attributed to the turnaround strategy.

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CONCLUDING REMARKS (cont)

PSB Website: PSB Website: www.psc.gov.zawww.psc.gov.za

National Anti-Corruption Hotline for the Public Service: 0800 701 701National Anti-Corruption Hotline for the Public Service: 0800 701 701