Archive | human settlements

FFC: budget cuts may worsen service delivery

….article dated 20 July 2020…. 

Balance between needs and cuts required…. 

The Financial and Fiscal Commission (FFC), the independent body which reports to Parliament on intergovernmental financial relations (IGFR) in terms of the Constitution, has told MPs of its deep concern that Minister Mboweni’s budget cuts, announced in the Supplementary Budget Bill, may adversely affect the ability of local government to manage service delivery commitments in the coming year.

FFC manager for fiscal policy, Eddie Rakabe, is also concerned that National Government has not given guidance to provinces and local municipalities on IGFR matters and how they should reprioritise their budgets after having chopped them.

Help down the line

Whilst acknowledging the reasons for the cuts because of the unforeseen pandemic, he called for government to recognise that a delicate balance has to be struck between expenditure reduction and the meeting of basic needs. On top of this, the Minister had asked all parties to switch to zero-budgeting  which may not be understood or implemented properly.

FFC Chairperson, Prof Daniel Plaatjies, acknowledged that an adjustment Budget by Minister Mboweni was necessary to mitigate the downsides of responding to the COVID-19 crisis but FFC’s main point was that in making Budgetary adjustments in such a short period of time, it was going to be extraordinarily difficult for all to produce new frameworks that were growth enhancing.

Not how much but how

Eddie Rakabe told parliamentarians that their comments were somewhat critical in the light of the Minister indicating that about R230bn in expenditure will have to be cut over the next two years which appeared drastic and care had to be exercised.

The FFC advises, he said, that a delicate balance must be struck between expenditure reduction and the meeting of basic needs. He was insistent that as expenditure is reduced, there had to be a plan to ensure that critical social services are not compromised.

The constitutional criteria in any Budget consideration had to be on the basis of spending where the basic rights of people are protected, Rakabe noted.  In this respect, the reprioritisation proposed by the supplementary Budget in the view of FFC complied with this criterion, he said.  However, the FFC was deeply concerned about the absence of a framework to guide provincial reprioritisation as a process — provinces having to do the reprioritisation on their own.

A little left and a little right

FFC agreed with the Parliamentary Budget Office, who had reported in the same meeting beforehand, that it was going to take a lot to get South Africa back to its pre COVID-19 position, which was not very strong in any case and the situation was fraught with the threat of collapse of social security plans.

Eddie Rakabe said, “We agree with the Minister that SA’s sovereign credit rating is a major concern since credit rating downgrades affect government’s ability to meet borrowing requirements and that to raise revenue from tax to meet social needs just because of the overwhelming need to meet debt servicing costs is not correct.

All the same, he said, the proposals needed much more care in application. Conditional grants had to be the main focus and whether there was a complete necessity for each.

 All too fast

FFC recommended that government reconsider the sequencing of the phases for managing the Covid 19 pandemic.    It was essential that capacity of provincial and local government treasuries be strengthened to ensure that they promote spending control and enhance spending effectiveness, they considered.

The FFC acknowledged the zero-based budgeting announcement but Rakabe said that he still remained most concerned about the effectiveness of changing the budget structure and the way things had been done for years so suddenly.  He said time and resources were necessary to “ operationalise zero-based budgeting” properly.

Hamba gahle

He warned that there are “a whole lot of issues that need sorting out before  moving full steam ahead with such a complicated financial concept being endorsed for all levels.

He told MPs of the Finance Standing Committee that in the FFC view, there was a great need to outline more clearly on how the un-allocated R19.6bn for job creation allocation is to work and who gets it needs to be  a lot more explicit.  On the President’s Covid-19 relief package, the divisions between national and provincial allocations were unclear, he commented.

Summation

Managing the fiscus through and beyond the Covid-19 pandemic had to be fleshed out in a lot more detail, Eddie Rakabe concluded.

From the meeting it became clear that whilst the FFC believes that  an increase in tax revenues  immediately was not a feasible policy option to assist local government through the COVID 19 period, the Minister’s announcement that future tax increases of R5bn in 2021/2022 year, R10bn in 2022/2023, R10bn in 2023/2024 and R15bn in 2024/2025 were considered as an acceptable necessary alternative.

Posted in Agriculture, cabinet, Education, Enviro,Water, Finance, economic, Health, human settlements, Land,Agriculture, Mining, beneficiation, public works, Trade & Industry0 Comments

Sixth Parliament will debate Expropriation Bill…

Expropriation Bill top subject for new parliament….

sent to clients early Jan 2019….

In December 2018, a new draft of the Expropriation Bill was published by government gazette with a 60-day period for comment.   This means the final document will no doubt become the kingpin of debate in the first session of the new Parliament. It will also form the basis of much comment by President Cyril Ramaphosa in his second State of the Nation Address.

Not many were expecting a final legislation proposal for comment so soon after the ConCourt constitutional decision on the subject.  Land restitution, as distinct from land reform, is the kind of hot-potato subject that many say should never be debated just before an election.  With the whole issued being overlaid with a tinge of fear, it is also an ideal subject for fake news, they say. 

Read more….Expropriation Jan 2019

Posted in Agriculture, cabinet, Finance, economic, human settlements, Justice, constitutional, Trade & Industry0 Comments

Communal Property Bill assists land reform

Reform assisted on communal property 

communal-land-4…sent to clients 21 Oct….The tabling of the Communal Property Associations Amendment Bill could represent a major advance in bringing order to many aspects of government’s land reform policy. In essence, the Bill will ensure that householders have security of tenure and thus have the ability to raise capital before they enter into any agreement on the management of communal land.

The new Bill focuses on developing the practical and legal aspects of ownership of communal land by a communal property association (CPA) whilst at the same time providing security of tenure with a new initial procedure of naming householders to benefit. The draft has now been approved by Cabinet.

Whilst the thrust of government policy on land reform has always been to bring ownership ofland-reform self-sustaining agricultural land to previously disadvantaged communities, the process has been much bedeviled by conflict over land falling under the control of traditional chiefs; the inability of small farmers to raise finance without title and, most important, for households able to enjoy security of tenure.

Communal confusion

An unintended consequence of the original CPA programme launched by government has been that government has not wished to involve itself, nor has any investing entity for that matter, in the community strife and argument over communal land, a feature of many CPAs. Consequently, the CPA system has demonstrated its inability to involve itself in loans, any state support, or receive the support of agricultural assistance programmes.

community-farmIt might be said that CPAs as a structural system is “off the banking radar”, a fact which MPs in parliamentary committee meetings have complained of a number of times.

As a result, expensive trusts have become the order of the day, banks preferring to deal with such entities and even government itself having to use them because of the informality of a CPA and the inability of loan applicant to show security.

The objective of the Act when it was signed into law was to create a new form of juristic person to allow disadvantaged communities to acquire, hold and manage property in common. A community that qualifies in terms of the Act can therefore, on the basis of agreement contained in a written constitution, form a legal entity (the CPA) and thereby become owners of property, including land, via the CPA.

Agricultural reform

A CPA as it currently stands allows its members to become owners of land which has been “prioritised for the provision of infrastructural support to land reform farmers to enable them to create sustainable jobs and alleviate poverty.”

However, over the few years since CPAs were established, it appears from parliamentary Lesedi traditionalportfolio committee meetings, that things have not gone well. In some cases, traditional chiefs had intervened and gained control of land previously under the aegis of the members of a CPA. Meanwhile, traditional chiefs had complained that CPAs were acting like “chiefdoms” in themselves, the department told parliamentarians.

Tweaking and compromising

Some attempts were made by the Department of Rural Development and Land Reform to persuade CPA members to appoint traditional chiefs on an “ex-officio basis” but the situation remained untenable, not necessarily just because of the problem of traditional control but because, due to shortage of staff, they said, had no ability to monitor the situation and no picture of what land was under CPA control, where CPAs were, and their needs.

In addition, no measurement of outcome of any schemes appeared possible, Opposition members complained. Quite clearly, they said, the NDP land reform programme has not been successful to date. Whilst the idea had been along the right tracks, it seemed the system was patently in trouble.

Green Paper study

After two years of investigation, in 2014 the Ministry, produced a Green Paper on the subject. After creating communal property ownership rights, the new proposal in the Paper was to secure individual tenure to each household beforehand, be it a farm-dweller or tenant, and for each household to own its rights at law before the CPA was formed to lock into this.

land-reform-5As per the Act in force, it would be possible for a community or group of persons to have access to a registered title to land through common or joint ownership with every name included (in a deed of transfer) or through a trust (with title vesting in the trustees) or a juristic person (with title vesting in that legal entity). Once registered, the CPA would become a juristic person – that can sue and be sued. It could acquire rights and incur obligations in its own name, in accordance with a CPA constitution.

In a policy statement, a Bill was proposed along these lines with a CPA constitution as before dealing with sub-divisions, servitudes, the right to encumber with a mortgage, deal with leases and settle disputes – all essential to the development of the area concerned but in respect of nominated persons giving those persons therefore security of ownership.

The bigger picture

The new Bill therefore speaks to a process to align a CPA to the broader land reform mandate in terms of the policy statement. The Bill also says a Communal Propertyland-claims-court Associations Office is to be established which is headed by a Registrar of Communal Property Associations. As a result, CPAs will be better equipped, it is felt, to take part in development; its status is recognised and is known to government; and has a secure system of tenure established as a base for ownership.

DHA said the plan was to clearly establish the connection between the land itself and those who live on it and depend on it for agricultural income. With more clearly established security and a need to register for compliance, it is hoped that a CPA structure will present a more viable face to the investing world.
Previous articles on category subject
New approach to land reform – ParlyReportSA
Restitution of Land Rights Act reversed – ParlyReportSA
Land Holdings Bill joins state acquisition trend – ParlyReportSA

Posted in human settlements, Justice, constitutional, Land,Agriculture, LinkedIn, Special Recent Posts0 Comments

Informal settlements: lack of progress queried

 

Minister has catch-up job on settlements…

IY2With a budget of nearly R31bn to be spent this year on human settlements issues  to improve the lives of South Africans in the area of housing and more recently sanitation, the department of human settlements (DHS) says it has to come to grips urgently with the situation regarding informal townships in South Africa.

This is according to parliament’s own research team when briefing the new portfolio committee on human settlements on the housing backlog under its new ANC chairperson, Ms Macwene Semenya.

The briefing also touched on government’s plan to achieve eradication of sanitation backlogs by 2014, set at one year prior to the target specified by the UN’s millennium development goals.

Good track record

These and other major problems add to the catch-up pressure upon the new minister of human settlements, Connie September, who has a long-standing relationship with Parliament serving in the past on the trade and industry, water and joint rules portfolio committees and who has played an important role in the development of COSATU.

The portfolio committee was told that DHS worked to a difficult framework in terms of various policies, constitutional and legislative aspects, to assist and enable municipalities to manage housing developments within their areas of jurisdiction.

DHS does not build houses as many assume, they said, but attends to the finance in terms of appropriations transferred to 250 municipalities through provincial government on an accredited basis to make this happen, parliamentarians were told.

Finance for municipalities

Within three years of finance being received from DHS in terms of the Municipal Finance Management Act (MFMA), each municipality has to plan, implement and maintain housing in the terms of a national integrated plan but first the municipality plans had to be perused and accredited by DHS in order to receive funding.

This is a complex process that needs long-term projects, major reforms and needing a strong political will, the committee was told.   It is here that DHS is experiencing its main problems, or “challenges” as put by the parliamentary briefing expert, Leepo Tsoai.

The Financial and Fiscal Commission (FFC) was reported as having noted in a report which went to the cabinet that the increases in the human settlements budget are not linked to increases in delivery on the ground, a fact which had been the responsibility of the outgoing minister.

Not straightforward

The FFC had also noted that the effectiveness of the many human settlements grants to municipalities, over and above standard appropriations, were diverse and “segmented” and there was a serious need for “alignment and sequencing”.

Also the Auditor General, although having given an unqualified report on DHS for the 2012/3 figures and again for this year, a note was added by the AG that the vacancy rate on professional and skilled staff within the department is far too high, indicating a large vacuum where it is most needed despite funds being available.   Also far too many staff were “acting”, reported the AG, indicating that their posts remained unsubstantiated.

Lack of skilled staff was therefore one of the main reasons, said the parliamentary profiler, for the slow rate of approvals aside from the lack of skills at provincial level.

Nevertheless, the current target for DHS remained to accelerate the delivery of household opportunities and upgrading of 400 000 households in informal settlements so that there was access to secure tenure and basic services.

Back to finance problems

In this regard, DHS was also responsible for a subsidy programme for households unable to find mortgage finance or should their monthly income exceed the maximum income limit for a government free basic house.

It was noted in the parliamentary briefing, however, that many strides in terms of accelerating access to water and on sanitation matters had been made, with some 3m South Africans gaining access to adequate sanitation services since 1994, although 2.2m were still without water, bringing SA close to non-alignment with UN goals.

Also it was noted that DHS also had a target to establish a mortgage insurance guarantee scheme to deliver 600 000 housing finance opportunities.

Committee members were briefed on the two Bills passed last year; the Sectional Titles Schemes Management Bill and the Community Scheme Ombud Service Bill – the Rental Housing Amendment Bill being withdrawn but now re-introduced. In the pipeline were the Consumer Protection Measures Bill and Housing Development Property Bill.

Backlog title deeds

Insofar as the previous government was concerned, the legacy report of the last committee was reviewed which had asked for a total review of DHS funding models on projects and programmes and a way of regulating for the registration and issuing of title deeds for state subsidised houses.

Also, the legacy report stated, there was a major problem on the issue of “backyard dwellers” in urban areas to be dealt with.

As far as budget allocations were concerned the briefing showed that budget for 2013/14 was R20.2 billion, increasing in 2014/15 to R30.5 billion, with projected increases thereafter to R32.8 billion in 2015/16 and R34.4 billion in 2016/17.

At the end of the last financial year, DHS administration had under-spent 74% of budget at the end of the financial year, a major factor contributing to this the inability to fill senior management posts with the right qualifications.

At the time of this report, the committee was awaiting the annual strategy report from DHS prior to the budget vote.

Other articles in this category or as background
//parlyreportsa.co.za//justice-constitutional/spatial-planning-bill-ends-long-journey-in-the-parliament/
//parlyreportsa.co.za//human-settlements/sexwale-details-new-housing-loans-programme/

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