1. PRESENTATION TO THE PORTFOLIO COMMITTEE ON HUMAN SETTLEMENTS BRIEFING ON THE ANNUAL PERFORMANCE OF THE DEPARTMENT OF HUMAN SETTLEMENTS 2011/12 9 October 2012

2. PRESENTATION OUTLINE Introduction Financial Management Expenditure vs Performance Development orientation Accountability Professional Ethics Transparency Good HR practices Employment Equity Concluding remarks 2

3. 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. 3

4. 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 The information emanating from the assessment is mostly outdated.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 4

5. FINANCIAL MANAGEMENT Entity‘10/11‘11/12Comments in respect of ‘11/12 Department of Human Settlements Restatement of Corresponding Figures Material underspending of the Rural Household Infrastructure Grant Unaudited supplementary schedules National 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 5 Unqualified Unqualified with findings Qualified Not audited by due date

6. FINANCIAL MANAGEMENT (cont) Entity‘10/11‘11/12Emphasis of matter Social Housing Foundation Liquidation 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 FundNone Thubelisha HomesCompany is in voluntary liquidation  Audit opinions by independent auditors for the Department’s entities: 6

7. EXPENDITURE VS PERFORMANCE % of budget spentAchievement of targets 2010/11 2011/12 2010/11 2011/12 98% 99% 67.4%77% 7  The following are the major reasons for the underspending on the operational budget in 2011/12 1: 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

8. EXPENDITURE VS PERFORMANCE (cont) 8  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 year 1. 1 National Treasury

9. 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 9

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

11. ACCOUNTABILITY 2010/112011/122012/13 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. 11

12. PROFESSIONAL ETHICS Cases Referred 1 % Feedback Received % Cases ClosedOutstanding Cases 1137%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

13. PROFESSIONAL ETHICS (cont) 1 As at August 2012 Correlation between Official Responsibilities and Private Company Officials with many companies Officials sharing Companies 21 62 13  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. 2008/2009 0% 2009/2010 100% 2010/2011 100% 2011/12 100%

14. 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 FY No of people on suspension Average no of days on suspension Cost of suspension (R'000) 2010/113126R 118 2011/120--  Manage precautionary suspensions in cases of serious misconduct

15. 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. 15

16. GOOD HR PRACTICES 16  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 Rate 1 Average period in months of post vacant % post of filled additional % of posts filled out of adjustment Prof & ManagersRest 30.82%17.96%24.1824.93%26.46% 24.4% 1 DPSA’s Public Service Management Watch as at June 2012

17. 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 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. 17

18. EMPLOYMENT EQUITY 18 1 2009/10 2 2007/08 Designated Group PSC M&E report for the ‘09/10 cycle 2011/12 Black people 82% 1 93.5% Women Target: 50% at SMS level by March 2009 39% 1 36.4% People With Disabilities Target: 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.

19. 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 19

20. 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.

21. 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. 21 CONCLUDING REMARKS (cont)

22. PSB Website: www.psc.gov.za National Anti-Corruption Hotline for the Public Service: 0800 701 701