SPEECH BY LN SISULU MINISTER OF HOUSING AT THE OCCASION OF THE BUDGET VOTE 2006/7 FOR THE DEPARTMENT OF HOUSING

Madame Speaker;

Honourable Members of Parliament;

Invited guests

Ladies and Gentlemen:

And so we come, Madam Speaker, to the beginning of this, the “autumn” of our lives – the season of mellow fruitfulness, full of promise, full of hope, “conspiring with the sun how to load and bless”.  We have come full cycle and as we stand here we can account for a remarkable year and one that also tested us to our limit.

For the last two or three days the media have carried gruesome stories of the plight of those who would otherwise be dependent on us for shelter.  As the mercury plummets we know fires follow shortly thereafter and tragedy once again plays itself out on our front pages and on our screens, and as though by some vengeance the gods have decided to open up the skies in the Eastern Cape and North West.  And again it is the poorest of us in informal settlements that bear the brunt of this.  We don’t need these tragedies to emphasise the urgency of the challenges that we face.  In a country such as ours it should not be like this.  It is at times like these that I am convinced we took the right decision to set a target to rid ourselves of homelessness, to ensure for the future that it will not always be like this.

We gather here, knowing that due to policies that this government is implementing, we are experiencing the economy’s longest period of expansion and growth, enabling us to respond to increasing urbanisation and increasing homelessness.  The amount of resources the government has been appropriating and spending on the housing vote in the last three years and what is estimated for spending in the next three financial years is an indication of our commitment to deal with this.  Our expenditure has doubled from R4.2billion in 2003 to R9.5 billion in the 2008/09 financial year. 

This increase is remarkable, but the enormity of the challenge, depicted by the backlog and the annual household growth, still remains large and daunting, requiring us constantly to reach out and find ways of working with the private sector, with our communities to ensure that we can shoulder this problem together.  For, while we are mobilising state resources to undertake the task of providing shelter, we also have to rigorously and constantly mobilise the rest of society to take its part.

It was with a sense of real achievement and pride that we co-hosted the very successful Slum Dwellers conference which ended at the weekend here in Cape Town, where we were able to forge a formal relationship with those communities whose daily lives are plagued by the elements, by insecurity and poverty.  Together we forged a new way of doing things and we have formed a partnership, built on an understanding that we, each of us have a responsibility toward changing the fortunes of the poor.  It was a high point of our time in housing.  The message is out – we are in this together.

We have pledged a sum of R185 million, which represents 5 000 subsidies to the South African Federation because in them we have found an ally that will help mobilise our beneficiary communities to understand that they have a responsibility, that they can take up arms against poverty and join government in this crusade, that it is in fact in their interest that they do this.  Together we can do it so much faster.  At bottom we need to create and emphasise a culture of joint responsibility and equally importantly inculcate a culture of saving.

The conference was held close on the heels of the consummation of yet another exhilarating partnership with radio 702.  This courtship between the two unlikely partners – government and the media – has been what, in common parlance, we would call “been going on for some time” now.  We have just successfully launched a pioneering project that was a response to our challenge to build 702 houses.  Between now and December, together with First National Bank, they will have built 702 houses.  We are an amazing nation, I have no doubt about that and I re-discover this fact over and over each time I experience this kind of gesture.  It re-affirms my confidence in us as a people.  With incredible commitment to others, Radio 702, with its sister radio station Cape Talk, have been extraordinarily supportive.  And the cherry on top (not literally of course) is the support that they have brought along in the form of Miss South Africa, herself a student of architecture.

In the budget vote last year we indicated that we would seek to mobilise all sectors of our society around a social contract that would serve as a basis for our collective efforts.  We hosted an exhilarating Housing Indaba held in Cape Town in September, Government, Civil Society, including banks and property developers, agreed to work in concert to accelerate housing delivery in order to address the housing backlog.  A significant outcome of this indaba was the engagement with private developers on a quid pro quo for an inclusionary housing framework. 

Following the Indaba and in the spirit of engaging government’s delivery concerns, SAPOA, the Chamber of Mines, the Banking Association and the Construction Sector entered into negotiations with the Department of Housing.  Combining the goals of delivery and inclusionary housing is the ultimate aim.

This newly formed collaboration resulted in the signatories of the of the Social Housing Contract for Rapid Housing Delivery agreeing to “ensure that commercially-driven housing developments above Rx (an amount to be determined), will spend y% (a percentage to be determined) of the total project value in the housing subsidy category, details of which were to be further explored with the sectors concerned, taking cognisance of international best practices’’ in inclusionary housing.

We can now happily announce that we have committed ourselves to a pilot project with a private developer who, together with a bank, is willing to test this model for us in KwaZulu-Natal.  This is a very important pilot project for us, because we are convinced it would show any skeptic out there that this is possible.  It will also show us the limits and possibilities of what can be done.  We might also use this pilot project to determine the x and y variables. 

In our interaction during the social contract conference, it became clear to us that from the perspective of the developers, we as government are a major stumbling block towards accelerated development.  We have taken note of this and together with my colleagues, the main culprit being poor Minister Van Schalkwyk with the Environmental Impact Assessments, we are working on this.  He has recently reviewed the EIA regulations to ensure the process is expedited.

For our part in housing, we have established a special Chief Directorate, whose responsibility it is to provide support to the sector to ensure that blockages such as being currently experienced are unblocked.  This is the extent of our commitment, because we firmly believe that we can save the private sector a great deal of money, currently lost in waiting for approval.

We hope that in turn, a percentage of this saving by the private sector can be ploughed back in a mutual social responsibility, which is housing.  We are hopeful that by the first quarter of next year we will be able to introduce a bill that will be based on this social contract and the experience of inclusionary housing in other countries.  In the meantime, we are open to the private sector to come on board as we determine the values of x and y.

Having concluded our policies, we had dedicated our energies to mobilizing support.  We have made significant progress in our work on this front and we hope that for this coming year we will consolidate our relationship with two important stakeholders.  Firstly the religious sector as well as the NGO’s who have been very supportive of our initiatives.  We would like to form a firm partnership with them, with measurable goals, especially around social housing.

The other very significant sector is traditional leaders who are an essential partner for us, especially as we seek to revisit and consolidate our rural housing policy.  The provision of Rural Housing is an important housing delivery process and in order to increase the scale of delivery in this sector, a review of the current subsidy mechanism has been undertaken in an attempt to establish a relevant and appropriate subsidy mechanism that will align the housing programme with the Communal Land Rights Bill. It would be necessary to review the current rural environment and the current delivery mechanisms together with a variety of other issues.  We therefore seek the support of our traditional leaders.  In this quest we will be holding a rural housing indaba with them by the third quarter of this year.  We sincerely hope they will respond positively to our overtures.

On the small but long outstanding matter of the origination of R 42 billion I am happy to announce that the Banks, the Financial Services Council and ourselves have finally reached agreement in terms of the Memorandum of Understanding I concluded with Banks last year. We are on track. I called it the small matter because the Banks and ourselves have agreed that in line with the Financial Sector Charter, we will now proceed to the second phase. The Banking Association has committed to a substantial increase for this phase which amount will be determined in due course.  And of course, true to their nature, this time the Banks are insisting on a number of issues and we are working on these. Finally, we have summited that hurdle!  So, what does this mean for the ordinary South African? It means, if you earn a household income of between R 1,500 and R 7,000 per month, you qualify for the joint assistance of the Banks and ourselves, subject of course to whether your credit rating allows for that.

The Department has embarked on a venture to educate the public on how they can assess whether they may qualify and further, having done that, how they may access that.  I am reliably informed that in fact the banks have already loaned out an impressive amount!  As you can imagine, this is a huge relief for me.  Access to housing finance has been a huge impediment.

This brings me to an important point.  The banks may only sign one Memorandum of Understanding on housing – and that is through me, as we have done, under the auspices of the Financial Services Council.

Madam Speaker, today housing delivery is occurring in a context of an economy whose fundamentals are acclaimed to be well grounded.  The “Age of Hope” the President speaks about is beginning to be felt in the residential market as a result of the contribution we are all seeking to make.  The inflation outlook is projected to be fairly positive, the interest rates have been sustained at low levels, the economy has began to absorb more entrants in the labour market with the Rand Dollar exchange rates being stabilized at within the R6.00 to R7.00 range for a long time in many years, factors which significantly impact on the spending of some of the critical commodities constituting input cost to the basic needs of the household we seek to assist.  All of these factors have contributed to increased disposable household income and increased the affordability levels for access to housing for individuals.  This positive economic outlook should and is being utilised by all role players in the housing sector.

However, whilst beneficial to some, this environment has had adverse effect of raising house prices beyond the reach of low to medium income households.  So the upwards trend one finds in the higher end of the market has not been reflected in the lower end of the property market where prices, in the main, have remained stagnant. One of the ways in which this challenge can be addressed is the provision of housing finance at scale. This will lead to wealth creation through an appreciating and unlocking the lead capital for entrepreneurial purposes.

It is for this reason that it gives me pleasure to announce that the NHFC has transformed itself to be able to finance homes for low to medium income earners.  A process has been initiated to restructure and transform the NHFC to accommodate this new mandate. The outcome of this should provide the NHFC with an implementation framework and systems that not only serve to support project finance and facilitation but also enable the NHFC to serve low to middle income customers in a housing bank.

In an attempt to stay abreast of technological advancement and to maximise our ability to deliver sustainable housing solutions which will deliver houses within the shortest space of time, I indicated last year I would establish an innovation hub for housing products, with the assistance of the National Home Builders Registration Council (NHBRC) and with the City of Tshwane, who made a number of serviced stands available. Housing Product Innovators and Developers were invited to demonstrate their innovative products as part of a housing product competition.  This project generated considerable interest and some 20 innovative houses, incorporating alternative technologies have been built. 

These houses cover a broad spectrum in terms of sizes and cost, ranging from small units compatible with the Housing Subsidy Scheme target to the bondable houses in the larger and more expensive category.  To ensure that the products are thoroughly evaluated and to test the products against housing needs, the public was invited to express its views in written surveys.  Absa has offered the prize of R250 000 for the winner and his Royal Highness Kgosi Leruo Moletlegi, an architect by profession, served as our adjudicator.  Madam Speaker, we will announce the winner of the competitions at a ceremony arranged for the occasion this evening.  We hope that this concept will generate and sustain innovation in the housing field.  This is an exciting project even if I have to say so myself, which will aim at bringing better quality products and a wider choice of housing consumers.  I invite any who might have a spare moment to visit it and see that we are poised for exciting times in this country.

Madam Speaker, my Department remains committed to accelerating the delivery of quality housing and an efficient service through a National Housing Consumer Education and Training Programme. This Programme was piloted in the 4 Provinces of KwaZulu-Natal, Western Cape, Gauteng and Free State and more than 7 700 beneficiaries underwent training. I am happy to report that we are now ready to implement the Programme throughout South Africa. 

Now, on the topical issue of the N2 Gateway Project, Madam Speaker.  The First Phase of the Project will be completed by end of this month. As you are aware, there have been a number of delays in the completion of the project due to challenges in construction complexities of building such a huge project.

The allocation of the N2 Gateway pilot units is the responsibility of the Provincial Department of Housing. This will be done in line with the database provided by the Auditors Nkonki PriceWaterhouse.

The allocation principles will be in line with a pilot project business plan that is to accommodate beneficiaries, i.e. 30% backyarders and 70% from neighbouring communities. The province will determine the date of occupation without any pressure from either the media or anyone else. Discussions are currently underway with the communities to work the modalities of occupation.

MINMEC has decided that Phase 2 and those phases to follow will be managed entirely by Thubelisha Homes that would operate in the private sector lines and report directly to MINMEC.

Finally, I am satisfied, that despite the hiccups, the N2 Gateway project is a success on a scale that has never before been attempted in the history of housing construction in this country. It was commenced with ambitious time frames with an objective to accelerate service delivery on housing.  It gave us an opportunity to implement the Breaking New Ground Policy and, as a pilot project, has been hugely successful.  And I want to thank the people of Langa for their patience and understanding.  They will not regret having allowed us to build.

Madam Speaker, as you are aware, the National Home Builders Registration Council currently provides a warranty on government subsidized houses for a period of 5 years.  This warranty, however, only applies to structural defects of houses due to, for instance, poor building practice. Many, if not the majority of our housing beneficiaries, are however poor and are not able to afford insurance on their houses.  This has been identified as a critical shortcoming in our quest to promote housing as an asset.  As a result, I have instructed that this matter be investigated, including whether private sector insurers are able to develop to assist particularly lower income earners in the affordable housing market.

And now we come to that other critical requirement for housing delivery: land.

The need for a land acquisition programme for housing arises from the context that land is a finite resource.  It is further acknowledged that current inner city redevelopment programmes will not, on their own, cater for the demand for housing in well located urban areas. It has been acknowledged by the public and private sectors that the current form of acquiring suitably located land, has had an adverse effect on delivering integrated and sustainable human settlements. In view of the fact that the strategy for acquiring land has not achieved expected results, my Department, working in collaboration with the Department of Land Affairs, has put together a framework for a Special Purpose Vehicle for land as a new strategy to facilitate the speedy release of suitable land for housing purposes.

As indicated in my Budget speech last year, Servcon has completed its mandate.  We will be approaching Cabinet with a request to transform it into this Special Purpose Vehicle for the acquisition of land.

The public will have been informed that Cabinet has given its consent to the disposal of land by the State Owned Enterprises under the Department of Public Enterprises.  I can now inform you that housing is the major beneficiary of this move.  We are now working on acquiring suitable state land in the hands of the Department of Public Works.  The late Minister Stella Sigcau worked tirelessly in her last month in office to ensure that such land as we identified as suitable, can be transferred to housing, through the Special Purpose Vehicle.

During 2005, an intergovernmental agreement was reached with SALGA and municipalities to adopt a moratorium on the sale of municipal-owned land. Through this moratorium we will ensure that we delay the alienation of municipal owned land assets with a view to meet the sustainability requirements of integrated development. We note and congratulate the many municipalities that have passed Council resolutions to freeze the sale of municipal-owned land. We must appeal to the remainder of municipalities to act responsibly by delaying the sale of land assets and prioritise housing development that supports our vision of truly integrated human settlements.

The MECs will ensure further consideration of the Moratorium on the sale of Municipal-owned land at their respective Premier-Mayors Co-ordinating Forums with a view to secure provincial specific action in this regard.

The Department of Housing has undertaken a number of initiatives to provide support to small housing enterprises. These initiatives have been undertaken in line with the government priorities of promoting Black Economic Empowerment and gender mainstreaming. A Framework for Emerging Contractor Support has been developed based on extensive consultations with stakeholders in the construction industry and housing.

Flowing from this framework a support programme has been developed, initially focusing on training of emerging contractors.  A budget of R10 million has been set aside through the National Home Builders Registration Council to develop a pool of housing entrepreneurs who will enhance the delivery of low cost housing.

The initial funding for the programme of R10 million has been approved and tenders for the CETA accredited service providers. NHBRC has to date trained 1740 emerging homebuilders of which 610 (or 35% of the totals) were women emerging contractors.

Furthermore, the NHBRC has committed R7 million on training the youth on the National Youth Service (NYS) project. The project aims to support nation-building through involving young people in the delivery of crucial government services. This year the NHBRC will train 100 youths in Limpopo.

NHBRC has been involved in the construction of houses at Modimolle.  This Ministerial Special Project, which will comprise of 500 units and are all 50sq meter houses when completed, was initiated to complement the emerging homebuilder training. The training is targeting 200 learners. Currently, 65 learners have been trained on the project.      

To improve the access of women contractors to housing projects, the Department of Housing has ring-fenced 30% (increased from 10%) of each provincial housing department’s allocations to projects undertaken by female developers/contractors. During 2005, provincial government departments allocated a total of 288 housing development projects to the value of 1,9 billion country wide to emerging female contractors in the sector.

After concerns were raised, last year, by Honorable Members about the credibility of the housing waiting list I resolved to ensure that the matter was attended to. As reported, last year an audit company was appointed in this regard. The task of auditing the list has now been concluded and I can proudly announce that the waiting list for the Cape Town metropolitan area has been completed and using the lessons learnt in this pilot we are ready to commence with other municipalities. We have set out the criteria with the communities and the web-site for this is up and running. You, as Members of Parliament, would be called upon to help your constituencies verify their details on the site and ensure that those who are not registered are assisted to do so.

The present has the responsibility to fulfill the promise of fundamental palpable change in our lifetime.  We will achieve that.  When the history of this period is written, this government and its achievements will be writ large. By then most of us here will perhaps have retired and will have the advantage of distance and will, I hope, be graceful enough to acknowledge that we did indeed record remarkable achievements.

We have committed ourselves to removing all those blockages that impede progress, most of them sadly our own creation.  We are building communities and I cannot imagine that anyone would have chosen for themselves a more onerous challenge.  But it’s a challenge which, if we succeed, will lead to the society we dream of, with a new culture forged out of real shared experiences.  Perhaps one day we can talk of a national community, which you all know does not exist.  We have the opportunity to create it.  What greater transformation can we hope for?

Each one of us must be willing to actively participate in this.  I believe the rich have a responsibility and I have consistently called out to them.  But importantly, the poor have a responsibility too.  If each were to give, our national community is at hand.

The challenge has invigorated me because I have been called upon to conquer this crisis.