SPEECH BY LN SISULU MINISTER OF HOUSING AT THE OCCASION OF THE BUDGET VOTE 2008/9 FOR THE DEPARTMENT OF HOUSING
30 May 2008
National Council of Provinces
Cape Town
The Honourable Chairperson of the National Council of Provinces;
Honourable Members of the National Council of Provinces;
Members of the Provincial Executive Councils;
Chairpersons of the various Provincial Legislative Committees for Housing;
Invited guests;
Ladies and Gentlemen
Chairperson,
This being our last budget vote to this House, I really wish it had happened under a better environment. For me and the department, a better environment would have been a fitting end to four years of hard work with tangible results as I will detail. But there is no escaping this environment – it hangs above all of us. We can only hope that it blows over so that normality can once again return to our country, to ensure our vision of accelerated delivery is attained.
Cabinet met on Wednesday and concluded that government would continue the provision of services in line with the “Business Unusual” theme as outlined by the President. Government accepts that the pace of delivery needs to be accelerated and therefore urges all communities to reject any agitation using genuine concerns to reduce this country into “lawlessness”, thereby dashing the hopes of millions of our citizens.
During the debate on my budget vote in the National Assembly this past Wednesday, I was requested by the representative of the IFP to look into the matter of hostel dwellers and the conditions of their accommodation. In this House, on several occasions, the Honourable Mzizi has raised with me the conditions of the hostels. Again, I would like to report what I said to the IFP on Wednesday. We are concerned about the conditions of poverty of our people in informal settlements, we are concerned about the conditions of poverty of the hostel dwellers and we would like all political representatives in the NCOP and all stakeholders to help us carry this message through. We care very deeply about the conditions of poverty of our people and we continue to do everything we can within the resources available to deal with the matter.
I would also like to convey a message that we care for people who live and work in our country, that they should live in conditions of safety and express regret about what has happened over the past fortnight.
Chairperson, again, I have to repeat what I said in the National Assembly on Wednesday. When I took over as Minister of Housing in 2004, the government had produced 1.6 million houses. An achievement we were all rightly proud of, despite negative comments. Today, four years later, we have produced 2.6 million houses. This means that in four years we have provided 1 million houses. The target that had seemed so elusive, we have finally achieved, not in five years, but in four years. In plain language, this would mean that we have provided houses for people in excess of 5 million in FOUR years!
Today we have provided 2.6 million houses, translating to providing shelter for 13 million people, free of charge. No country has done this anywhere. Our commitment extends to covering another 2.1 million houses.
It is important to note right from the outset that throughout the past few years, the Department’s expenditure patterns have improved considerably, which is recorded at 96% for the past financial year. It would have been good to stand here and boast that we had a 100% spending rate from Provinces, but we had a glitch with delivery in the Eastern Cape and are dealing with it.
Since 1994, our housing budget has increased substantially from R4,8bn to R9bn representing average growth of 23.2 per cent per annum. The housing budget is projected to grow from R9bn last year to R10.6bn in 2008 and R15.3bn by 2010, at an average annual rate of 19.4 per cent.
I would like to inform this house, Chairperson, that excluding provincial adjustments and roll-overs, R8,342 billion was allocated to provinces in the previous financial year. Of this amount, R8,2 billion was spent on actual housing delivery by the provinces. Excellent work I would say. This represents a 98% spending, of the allocations by the National Department during the year. Unfortunately there were glitches in some provinces, therefore the total spent by provinces is 94%.
In the 2007 – 2008 financial year the Provinces performed as followed:
1. The Eastern Cape was allocated R509,5 million, this province spent R396,4 million and delivered 12 684 housing units, complete and in the process of completion.
2. The Free State was allocated R553,5 million, expended R474,4 million and delivered 12 482 housing units which were completed and in the process of completion.
3. Gauteng was allocated R2,542,2 billion, spent R2,612,6 billion and delivered 90 886 housing units either completed or in the process of completion.
4. KwaZulu-Natal was allocated R1,310,6 billion, spent R1,311 billion and delivered 34 471 housing units either completed or in the process of completion.
5. Limpopo province received R651,7 million, spent R632.1 million and delivered 18 970 housing units either completed or in the process of completion
6. Mpumalanga received R676,3 million, spent R 652,2 million and delivered 16 569 housing units, completed or in the process of being completed.
7. The Northern Cape received R231 million, spent R231 million and delivered 8686 housing units, either fully complete or in the process of being complete.
8. The North West province received R875,2, spent R785,5 and delivered 19 945 housing units, completed or in the process of completion, and
9. The Western Cape received R1,177,8 million, spent R1,105,1 and delivered 34,157 housing units completed or in the process of being completed.
Chairperson, of the total allocated to the all the provinces last year, as I indicated, R8,2 billion was spent and 248 854 housing units were delivered.
Chairperson, I am very pleased to inform you that the total amount of the Conditional Grant of R9 852 842 for the 2008/09 financial year was allocated as follows:
1. The largest amount of R2.579 974bn (26.2%) has been allocated to Gauteng,
2. followed by R1.575 586bn (16%) to KwaZulu-Natal,
3. R1.251 018bn ( 12.7%) to the Eastern Cape,
4. R1.203 000bn (12.2%) to the Western Cape,
5. R896.102m (9.1%) to the North West Province,
6. R783.247m (7.9%) to the Limpopo Province,
7. R772.410m (7.8%) to the Free State,
8. R629.210m (6.4%) to Mpumalanga Province, and
9. R161.312m (1.6 %) to the Northern Cape Province.
We are now at a point where we all agreed that we would like to invite the big contractors back to providing housing units for the lower income target group where contractors will be expected to tender for a minimum of 2000 units per project. My MECs and I will continue to monitor the delivery performance so that we can institute corrective steps in situations that could result in under-performance. These measures seek to ensure that we can protect the resource envelope allocated to housing in view of the daunting challenge as depicted by the stubborn backlog confronting us.
Chairperson, although the housing grant allocation has been increased over the 2008 MTEF period, the increase does not fulfil our needs to fund the number of houses that will adequately assist us to reduce our ever increasing backlog. This is borne out by the Financial Model evaluation study of the impact of BNG which was undertaken in 2006 and which concluded that continuing with the current trend in the housing budget would lead to a funding shortfall of R102 billion in 2012, but which would need to be increased to R253 billion in 2016 to eradicate the housing backlog.
In an effort to ensure that provinces do not underspend, I am happy to inform this House that in future, if provinces are likely to under spend their pre-determined unspent funds received from the Integrated Housing and Human Settlement Development Grant, the receipt of further funds for that year will be stopped in terms of the Division of Revenue Act, 2007 and be re-allocated to performing provinces in terms of the provisions of the DORA. We have implemented this approach in respect of the Eastern Cape and the Free State whose rate of expenditure reflected under spending. As a result R500 million, allocated to the Eastern Cape and R100 million allocated to the Free State were stopped and R350 million was reallocated to Gauteng and R100 million to the Northern Cape. An amount of R150 million was not re-allocated and consequently formed part of the roll over allocating process Unfortunately this action is not desirable but, if there is a problem with delivery in one area, it is necessary to ensure that funds are moved to where delivery is being achieved. The intention, however, is to reimburse the provinces that relinquished the funds at a stage when the planning, capacity, and delivery capabilities improve to such an extent that normal delivery can take place.
My Department has also put a number of processes into place to engender closer interactions with provinces and this includes project implementation support and monitoring activities. During February 2008, senior officials from my Department visited all nine provinces to determine the provinces’ readiness to deliver. Importantly, Chairperson, a Branch specializing in rendering assistance to provinces that experience difficulties is now in place and my Department now provides support to assist provinces to compile their five multi-year development plans. It is expected that with the improvement in the planning service being rendered to provinces, they will be able to plan and budget appropriately and that under expenditure will be reduced and eventually be eliminated when the new planning dispensation is fully operational.
In addition support to provinces to unblock slow moving projects will be pursued together with the programme to address emergency situations through the once-off funding of key priority areas that will ensure that we sustain delivery.
In order to ensure that the delivery of housing is facilitated, establishment of the Housing Development Agency is being put into place and while the HDA will not address all our problems in housing development, it will nonetheless be a big step in ensuring that we grapple with the major obstacles that militate against the acceleration of integrated and sustainable human settlements. Through the Agency, we will, inter alia, be able to access suitable land for housing development and consolidate and rationalize functions and institutional arrangements required for housing development. Chairperson, I would like to take this opportunity to thank all the members of the Housing Portfolio Committee and the Select Committee for Public Services in the National Council of Provinces for the efficient manner in which this matter has been dealt with.
The building sector is experiencing substantial price hikes in the cost of conventional building materials. We are all convinced that if not addressed appropriately, this will pose a serious threat to the sustainability of Government’s interventions to deal with the housing challenge. In order to address this issue, my Department is undertaking investigations in respect of the use of alternative building technologies which will meet all the requisite standards for quality, norms and standards and still facilitate rapid housing delivery have been initiated. The interventions will start with appropriate measures to popularize and de-stigmatise some of the technologies which have now been tested and implemented at scale in other countries.
It is of critical importance that alternative technologies are “bondable” by the banking sector, to ensure an effective secondary market. ABSA, in conjunction with the NHBRC, held the “National ABSA NHBRC Housing Innovation Competition” in 2006 where various developers built innovative housing designs in both the “Affordable” and “Subsidy” housing market.
In view of the success of the previous competition and the overwhelming number of requests by developers to be granted the opportunity to showcase products, Absa , NHBRC together with the Department of Public Enterprises, sponsored by the my Department, is currently planning a Second Housing Innovation Competition in the Western Cape. The competition will be conducted over 30-35 serviced sites and will include (BNG) subsidy and Affordable housing . The competition will be expand to include sustainable energy saving systems to satisfy end users as well as to contribute towards energy saving in this trying time.
My Department is currently investigating the possibility of Government’s intervention to ensure that beneficiaries of subsidised houses have insurance cover for their houses against natural disaster. This excludes any covers currently falling under the warranty cover underwritten by the NHBRC. This may include the possibility of providing a phased assistance programme in which government subsidises part of insurance cover installments for a defined period where-after the beneficiary will sustain the cover.
Chairperson, last year I announced that a national Councilor Training Programme was to be initiated for Councilors who are responsible for housing delivery in various municipalities. I am happy to report that a programme that centers on legislative requirements for effective housing delivery and mechanisms to improve performance at local level has been rolled out nationally. More than 700 councillors have been trained to date.
My Department has successfully registered the first Housing Bachelors degree with the South African Qualifications Authority. This qualification is the first step in the professionalisation of the Housing sector. It is intended for persons who are currently employed within housing departments at national, provincial or local levels including persons who are interested in housing studies as well as for those school leavers and individuals who wish to start a profession in housing. Several Universities are interested in offering this degree from next year and many have started the necessary engagements with the Department of education to facilitate that process.
The N2 Gateway is developing South African jurisprudence, with the BNG development policy endorsed as constitutionally compliant by the Cape Judge President, and now awaiting the opinion of the Constitutional Court.
A pilot project is not measured by numbers alone, but even by this measure the N2 Gateway is starting to stand tall.
· We have built 4500 temporary relocation units, halfway houses, as it were, between informal settlements and dignified homes.
· 705 rental apartments are fully occupied at Joe Slovo.
· Our partner First National Bank is developing an affordable bonded show village at Joe Slovo Phase Two – and another 850 of these homes at Delft.
· Contractors moved onto site last week to begin earthworks ahead of the construction of a BNG show village of 55 homes.
Delft is presently a hive of activity, with about 1000 BNG homes already allocated to beneficiaries at Symphony, where the finishing touches are being applied to 1400 new homes.
The Govan Mbeki Housing Awards are now an annual feature and this occasions honours the role players in the housing value chain, including developers, building contractors, the banking sector, community based organizations, the mining sector, building materials suppliers, professional associations, etc that have committed to partner with Government in building sustainable human settlements and making the millennium development goals achievable by 2014. The process to enter for the awards in this exercise is being widely advertised and we would welcome relevant roleplayers to participate.
Chairperson, we are on track with our objectives, we realize that the road is fraught with difficulties and challenges. However, we must acknowledge that the last 4 years saw marked improvements in housing developments in integrated human settlements. Our approach is correct and contributes to the improvement of living conditions of our beneficiaries. Challenges however remain but we will steadfastly confront them as we contribute to the creation a non racial, non sexist and socio-economically integrated society with the ultimate goal of a better life for all.
I thank you