Input to Portfolio Committee on Human Settlements
by Human Settlements Minister Tokyo Sexwale
25 November 2010
1. We take note of the fact that the Finance Minister released a statement on Friday regarding mid-term provincial budgets and expenditure reports, wherein he raised some disquiet around the potential of provinces in their totality experiencing various forms of under-spending.
2. For example, the Finance Minister indicated, and I quote: “In aggregate, provinces have spent 33% of their combined capital budgets. This is a decline of 23.5% when compared to the same period in 2009/10.” [The Minister’s full statement is attached as an annexure.]
3. To the same extent, within this context of total provincial expenditure, Human Settlements in particular is experiencing varying degrees of under-spending in provinces. This affects delivery at this medium term stage regarding Outcome 8 as per Delivery Agreement between the Minister and President.
4. It is also noted that the Human Settlements Portfolio Committee’s own mid-term Budget Review has raised some real questions about delivery challenges. This has been noted and is appreciated.
5. At this stage, it is important to share wiht the Portfolio Committee some clearer sense of where we are at this medium-term stage of the financial year with more than 8 000 projects underway across the country as per report before Parliament.
6. Although the average picture is not dissimilar to the observations by Treasury, it is nevertheless noted that some provinces are ahead of the curve. This is much encouraging.
7. For example: the medium term expenditure and delivery in provinces such as Limpopo and Northern Cape are safely above the 50% benchmark. This is satisfactory.
8. At the same time, there is cause for concern in respect of others -- and room for improvement.
9. Although this may be the case, provinces such as Gauteng and KwaZulu Natal – which have much more peculiar problems in view of migration and urbanization – can be later expected to make significant recoveries by the end of this 2010/11 financial year or the end of the term in 2014.
10. All in all, the Ministry stands poised to offer the necessary support and assistance to obviate the situation. Measures will include closer monitoring, provision of technical support and other expertise.
11. The main challenges which all provinces have to confront can be grouped into five categories:
a. Challenges around bulk infrastructure.
b. Problems around project management capacity.
c. Shortcomings in developing an integrated approach to human settlements development, side by side with other government departments relevant to the human settlements mandate.
d. The need for additional funding in respect of a few provinces.
e. And last but not least, the time-consuming and energy-wasting diversion of capacity and capital towards the rectification of shoddy houses and the unblocking of blocked projects.
Working in partnership with the Special Investigations Unit, much work has been done to bring some of the culprits to book. In this regard there will be an increasing focus on syndicates – including those involved in the hijacking of buildings in CBDs and the intensification of anti-corruption measures around the lists for the allocation of homes to beneficiaries.
12. When all is said and done the most serious threat, a real risk, is the challenge of providing bulk infrastructure to human settlements projects.
13. There can be no viable – let alone sustainable -- human settlements without the urgent rollout of large scale electrification projects, the construction of new water treatment and sewage processing plants, including pipelines to bring fresh and clean water to the people. We cannot continue to dot the landscape with top structures without providing bulk services below the ground.
14. In addition, there is the added need to provide roads, storm-water drainage and streetlights.
15. The provision of these infrastructural projects after top structures have already been built brings about massive additional costs. The cart cannot be put before the horse.
16. Living examples of these challenges include Inter alia the following:
i. Human settlements developments south of Johannesburg have almost come to a standstill due essentially to the lack of a sewage plant – the estimated cost of which would be beyond R3-billion. The new Lufhereng project encompassing 24 000 housing units is thus being negatively affected.
ii. KwaZulu Natal’s largest new major project, Kornubia – where 50 000 houses are planned – is hamstrung by the lack of bulk infrastructure.
iii. In the Eastern Cape, the 5 000-unit Thornhill project in Port Alfred – which we launched in April – is at risk. 500 units have been completed and are due to be handed over in two weeks’ time. A lack of bulk services – in this case, major waterworks such as a desalination plant to treat sea water, a plant to clean river water, or construction of a new dam – is delaying the rollout of the remaining 4 500 homes. In respect of our forthcoming visit to hand over the 500 houses in Port Alfred, we are inviting the Portfolio Committee to come and see this success story located within the proximity of these fundamental challenges.
iv. In Limpopo, there is potential for a new town to be built in Lephalale around the new Medupi mega power station. However, although electricity will be readily available, there are serious challenges in terms of other bulk infrastructure services.
v. Overall, rural projects countrywide have got no bulk services to speak of. Limpopo Premier Cassel Mathale spoke for other Premiers when he told our recent MinMEC that the rural infrastructure challenge can only be described as chronic. In the absence of any bulk infrastructure, rural families cannot wait for large-scale sewage and water plants – and have to make do with digging pit latrines.
17. What is even more onerous is that the mandates for the rollout of these critical large-scale bulk infrastructure projects do not lie with the Human Settlements Ministry. Thus the need for a more integrated, planned and coordinated approach across relevant national departments. Hence, as we have reported, the President is seized with the initiative to coordinate a Special Presidential Coordinating Committee on Human Settlements.
18. Encompassing all of these issues, even if more bulk infrastructure were in place, project management would remain a critical challenge. This is something we need to seriously fine-tune – and do so drawing on the project management skills that made such a success of the 2010 World Cup.
19. In addition, increased capacity would still be needed at municipal level. In this case, we have covered a lot of ground in accrediting the major metros, including Johannesburg, Ekhurhuleni, Thekwini, Tshwane and Cape Town, as well as two districts in the Northern Cape.
These municipalities also have challenges in terms of capacity for planning, logistics, management, operations and most crucially finance. All these have a direct impact on service delivery. Consequently, we have established a joint MinMEC with the Department of Cooperative Governance, a critical partner for Human Settlements, to facilitate coordination.
Notwithstanding, as the national Department, we are on top of the situation and we are working very hard to ensure that by the end of the financial year, and also by the end of this term, no rollovers should be experienced because of these capacity problems. Nonetheless, we do envisage that in the interests of overall delivery in the sector, there may be a need for the transfer of funds from some provinces to better-performing ones.
20. In this light, at our recent MinMEC last week in Limpopo, where Outcome 8 service delivery agreements were signed, all MECs without exception endorsed the Minister’s view about the possible transfer of funds if needs be.
21. However, before this can be done, we want to make sure that all support is provided to the provinces to spend appropriately within the ambit of established guidelines in order to avoid fiscal dumping. This will never be countenanced.
22. The agreement by MinMEC, a legislated structure, is premised upon the principle that we all take collective responsibility for the development of human settlements across South Africa. Therefore although there might well be possible under-spending by some provinces, overall there shall be appropriate budget-related spending nationally. That is the essence of good co-operative governance.
23. In conclusion, the Human Settlements Portfolio Committee is invited to note and to interact with this medium term statement, which is elaborated upon by the Departmental report. Constructive comments would be much appreciated.
I thank you.