Human Settlements Budget Vote Speech 2018/19
BUDGET VOTE SPEECH FOR THE DEPARTMENT OF HUMAN SETTLEMENTS
DELIVERED BY PROVINCIAL MINISTER BONGINKOSI MADIKIZELA
THE WESTERN CAPE PROVINCIAL PARLIAMENT ON 28 MARCH 2018
The Honourable Speaker and the Deputy Speaker
The Honourable Premier of the Western Cape
Honourable Members of the Provincial Parliament
Mayors, Deputy Mayors and all Councillors
Our Human Settlements entities
Our service providers and all our partners in Human Settlements
Ladies and Gentlemen
Madam Speaker, thank you for the opportunity to present the 2018/19 financial year’s budget vote for the Western Cape Department of Human Settlements.
2. Water crisis and response from HS Department
The construction sector is the second largest contributor of GDP and economic growth with R109 billion (4%) in the Western Cape which uses a lot of water, that's why we are very concerned with the current drought experienced in our Province. My Department has come up with innovative ways to heed the call to save water in order keep the economy afloat. We want to thank the people of Cape Town for heeding the call to reduce water consumption in order to avoid day zero which is a reality we are facing due to the worst drought ever this City is experiencing. We also want to thank the farmers from Elgin/Grabouw who offered some relief to the people of Cape Town and donated water from their private dam which slightly increased our dam levels. If we continue to save water as we have done, day zero can be avoided this year.
3. Land reform and housing
Just yesterday, I was in Hermanus in the Overstrand Municipality where thousands of people took to the streets, damaged property and brought the whole town to a standstill protesting for access to land and service delivery. On Saterday I was in Gugulethu to deal with the same situation. In these areas, and many others, the protests are characterised by violence, roads were barricaded and properties burnt down. Madam Speaker we do not condone lawlessness and violence, but we must address genuine issues raised by the people while condemning those who have hijacked these protests for ulterior motives.
Backyard dwellers often feel they are treated like unwanted step-children by municipalities when it comes to housing allocation and the attention is given to shack dwellers. I have repeatedly warned against this and it must be addressed because it undermines the principle of first come, first served on the housing demand database. I have committed to intervene and work with municipalities to address this situation.
Madam Speaker I have no doubt in my mind that these protests were sparked by the EEFs motion supported by the ANC to expropriate land without compensation - with the hope that it will increase their votes in 2019, that's why we rejected that motion because it will not expedite land reform as it is suggested.
Madam Speaker, this government supports and is fully committed to land restitution and land redistribution. South Africans who were disposed and dispossessed of their land must be given back their land. We also want to reiterate the call for land redistribution to be fasttracked which unfortunately has not been the case due to failures of the ANC government and our Constitution.
The Department of Human Settlements is not only building houses, it creates wealth by ensuring that people are part of the property market that is worth 6 trillion Rand in South Africa currently. It is also a conduit for land reform. Since 2009, 91 000 people have received title deeds. This is a very important step to address the injustices of the past for those people who were dispossessed of their land, and since 2009 to date, my Department delivered 166 693 housing opportunities (over 18 000p/y and 348h/pw, 70pd)
Madam Speaker we must make it very clear why the DA is opposed to this motion:
3.1. It is our view, and the views of many sober-minded South Africans, that it is not Section 25 that is stalling land reform in South Africa but the government's inability to implement it. This was confirmed by the High-Level Panel Report released in November last year chaired by former President Kgalema Motlanthe who also cited capacity constraints, corruption and maladministration.
3.2. This motion says all land must be expropriated and kept by the state. This undermines the efforts to economically emancipate black poor people in particular by taking away their right to own property and subject them to state tenancy. What is even more worrying is that the current state cannot be trusted given the fact that almost all state-owned enterprises are mismanaged and running at a loss because of looting.
3.3. Since 1994, 90% of the land recipients through land restitution and land redistribution have sold their land back to the original owners due to the failure of the state to provide them with the necessary skills and finances to make their land productive and liveable.
3.4. According to Gugile Kwinti, the former Minister of Rural Development and Land Reform, when answering a question in Parliament last year, there are more than 6 600 land claims that still remain unresolved by his Department. Some experts are putting the figure much higher than that.
3.5. There are 4 300 government-owned farms that are yet to be distributed by the Government to poor South Africans.
3.6. There is almost 2 million hectares of residential land owned by the government which remains unoccupied (like Youngsfield etc)
3.7. Between the 35 000 commercial farmers, they owe almost R160 billion to banks for the land they currently farm. This will collapse the financial market - no one will want to invest in our country.
3.8. In fact, the new President of Zimbabwe, Emerson Mnangagwa is warning against that mad idea. We better listen to him as someone who's talking from experience.
3.9. It is still not yet clear which land will be expropriated, who owns it, to whom it will be given and what criteria will be used.
4. Budget cut vs the demand
Madam Speaker, the national Department of Human Settlements has been dealt a severe blow. We have suffered the second biggest budget cut as indicated by the former Minister of Finance, Malusi Gigaba because of other pressing needs of government. Our budget will be cut by more than a billion Rand in the next MTEF in the Western Cape alone, against the backdrop of massive population growth experienced by this Province - which stands at about 2 million people in 15 years, between 2002-2017 according to the Community Survey Report released by Stats SA last year.
Our backlog continues to increase despite our continued delivery, which is a phenomenon across the country. At present our backlog is hovering above 575 000 families, with a budget that only enables us to create about 18 000 housing opportunities a year. That is why we have to innovate and find creative ways to stretch our Rand.
5. Inner-city Development
The Department is working with its partners in the Social Housing sector to make affordable rental housing available to people earning between R 1 500 and R 15 000 in the Cape Town metropolitan area. The result was a credible pipeline for Social Housing stretching from 2018/19 to 2029/30 with the promise of delivering over 26 500 units with a planned budget of just over R 7 billion that will be funded by the Consolidated Capital Grant. Projects are planned in, amongst others, Brooklyn, Ottery, Salt River, Heideveld, Montclair and Zonnebloem.
I am also proud to announce that I have recently confirmed the Department’s support for a development of a project in Pine Road, Woodstock, intended to yield 226 Social Housing units. This will be undertaken in partnership with SOHCO, an accredited Social Housing Institution. The Department will also assist the City of Cape Town in the development of a site in Pickwick, Salt River for transitional housing purposes. It is also worth noting that Conradie is now categorised as a catalytic project and will be providing various types of residential units and forms of tenure. The Conradie project is currently in the planning stage and scheduled to move into construction in the following financial year. Madam Speaker, let me also mention that Belhar CBD is in full swing construction. I must also indicate that the Western Cape Department of Transport and Public Works is implementing the Helen Bowden project.
6. Our Strategic Approach to Delivering Human Settlements in Western Cape
Honourable Members, you will recall that when presenting the Human Settlements Budget Speech last year, I indicated that our Department was strategically moving away from implementing small sporadic housing projects to prioritising the upgrading of informal settlements, unlocking opportunities in the affordable/GAP market and ensuring that attention is paid to the most deserving. In practical terms, this approach meant that we were committing ourselves on an unusual trajectory in delivering Human Settlements in the Western Cape. Within this overarching strategic approach, my Department identified Catalytic and Provincial Priority projects for rigorous implementation.
Furthermore, to achieve the objective as stated above, my Department had already finalised the development of various policy frameworks which, amongst others, include the Human Settlements Strategic Framework (HSSF), Informal Settlements Support Plan (ISSP) and the Partnership Strategy with its primary aim being to harness co-operative relationships.
7. Improving the quality of life of People in Informal Settlements and Backyarders
During my 2017/18 budget speech, I informed this House that the Department concluded the Western Cape Informal Settlement Support Plan (ISSP), a transversal plan which provides a clear roadmap on how to address the challenges faced by informal settlement residents in a systematic way and collectively across sector departments.
True to our commitment to accelerate interventions to informal settlements, we are now pleased to inform you that the Department has since allocated funding for 60 informal settlements to be upgraded under the Upgrading of Informal Settlements Programme across 14 municipalities in the province, including high growth potential towns such as Paarl, Grabouw, Robertson, Heidelberg, Ceres and Mossel Bay.
Collaborative efforts between my officials and the municipalities to turn the tide on the informal settlement interventions have started bearing fruits as some of the informal settlement projects have seen progress from mere identification to packaging and some have even advanced to implementation with contractors on site. When concluded, approximately 100 000 households’ quality of life would have been improved.
Furthermore, my Department has appointed eight (8) Non-Governmental Organisations (NGOs) within the human settlement sectors to assist the informal settlement dwellers with participatory planning. These NGOs have been contracted to assist in conducting social facilitation and mobilisation, community surveys, data collection, skills development, conflict resolution, networking and brokering in the following municipalities: - Langeberg, Breede Valley, Drakenstein, Stellenbosch, Witzenberg, Cape Agulhas, Overstrand, Swellendam, Theewaterskloof, George, Kannaland, Knysna, Hessequa, Mossel Bay, Oudtshoorn, Bitou, Cederberg, Matzikama, Saldanha Bay and Swartland.
In addition, we are in the process of appointing engineers and contractors in those informal settlements which are ready for construction, where the implementation will go to UISP projects which entails serviced sites including a slab and a toilet. To monitor progress, the Department has established a forum which meets quarterly to deliberate on progress.
Over and above improving the quality of life of our people in these settlements, this programme will create job opportunities for local people, decrease diseases associated with lack of proper water and sanitation and eradicate environmental degradation.
8. Unlocking opportunities in the Affordable/GAP market
While affordable housing initiatives in the Metro is continuing, planning for the acceleration of affordable housing outside of Cape Town is gaining momentum. Social Housing Restructuring Zones have now been gazetted in 11 non-metro leader towns. These sites will provide significant impetus within key central rental housing precincts. Municipalities are now focused on establishing formal social housing partnerships which will facilitate sustainable relationships through streamlining access to resources. Fifty-three projects, entailing approximately 11 732 units, are now in the pipeline. The first Social Housing project outside of the Metro, comprising of 360 units, will break ground as part of an integrated development at Dal Josafat in the Drakenstein Municipality within the new financial year.
Recognising that existing property management practices for municipal rental stock is a significant challenge and affects the financial sustainability of Municipalities, my Department in partnership with the Social Housing Regulatory Authority (SHRA) has undertaken a comprehensive analytical assessment of property management systems and policies within non-metro leader towns aimed at supporting Municipalities to move toward long-term development and operational property management efficiencies.
Under the Finance-Linked Individual Subsidy Programme (FLISP), qualifying beneficiaries obtain mortgage finance from registered financial institutions and simultaneously access the FLISP subsidy which results in reduced monthly home loan instalments. Home ownership for our people is thus made more affordable through this subsidy.
Because the success of the Programme hinges on potential subsidy beneficiaries accessing mortgage finance, the Department is in the process of introducing a pilot Housing Consumer Credit Readiness Initiative. The intention of this Initiative is to assist in rehabilitating those consumers who are unable to access bank finance due to impaired credit records. This Initiative uses the period whilst the property is being developed to get the potential home-owner with a blemished credit record, to become “credit ready”. Consumer education on homeownership and housing finance are thus critical components of the initiative.
The general high prices of housing in the secondary housing market and high development costs in the primary market of the Western Cape have put the dream of homeownership outside the reach of most of our people. To address this, the Department is currently exploring different housing typologies in different density settings that would be affordable to the bottom half of the middle to lower end of the housing market. The aim is for the Department to come up with an affordable, incremental starter housing unit in a densified development which comply with all technical requirements of quality assurance bodies and financiers.
In all our mega projects, the Department is implementing FLISP to accommodate the lower strata and the provision of a serviced site for non-qualifiers who are predominantly higher earners but unable to secure bonds from banks. To this extent I am happy to indicate, Madam Speaker, that discussions with individual financial institutions have now been concluded and a formal Memorandum of Understanding (MoU) has been entered into with five banks, namely FNB, ABSA, STD Bank, SA Home Loans Pty LTD and Nedbank Group Limited on 1st March 2018. The purpose of this agreement is to unlock housing finance for the lower end of the housing market. In addition, to assist, support and enable the affordable/Gap market, I have signed a policy for utilisation of non-secured loans to enable beneficiaries to contribute directly through savings schemes, employer assistance and pension-backed schemes.
Furthermore, the Department has enhanced its land release programme and made a number of land parcels available for development. In this regard, the Department has availed 16 pieces of land constituting 133 hectares with a potential total yield of 9 951 housing opportunities which include FLISP, Social housing, Military Veterans, BNGs and open market.
9. Upscaling Catalytic and Provincial Priority Projects
Honourable Members, you will see in the Budget Vote Book that we have made a significant allocation to the implementation of at least seven Catalytic and seven Provincial Priority Projects during the MTEF period ending in 2019/2020. These 14 projects are expected to yield 100 704 houses when completed in 2022. Currently, they are at various stages of implementation which ranges from planning, environmental processes, design, provision of bulk and internal services and construction. These Catalytic Projects are the Southern Corridor Integrated Human Settlement Programme, a joint initiative with the City of Cape Town to upgrade informal settlements near the airport along the N2. This project has huge transformative potential for the informal settlement communities of Barcelona, Gxa Gxa, Vukuzenzela, Kanana, Kosovo, Thabo Mbeki, Tsunami, Lusaka, and Europe, all of which are in the Gugulethu, Nyanga and Phillippi areas. The programme will provide 51 540 housing opportunities, with backyarders in these areas also benefitting from this project. The Southern Corridor is making good progress.
Transhex, an initiative in the Breede Valley municipality, will yield 8 873 housing opportunities of which construction of bulk and internal services is currently underway and construction of top structures is to commence soon. Thembalethu, Syferfontein and Wilderness Heights initiatives in George in the Eden region will yield 10 281 housing opportunities and are currently at different stages of planning and construction.
Belhar CBD, an initiative in the City of Cape Town will provide mixed-use high density and different income level residences, yielding about 4 188 housing opportunities and currently at different stages of construction. Vlakkeland, an initiative in the Drakenstein Municipality which will yield 2 653 housing opportunities and construction of bulk and internal services is currently underway.
Firstly, these mega projects are purposefully planned and developed to provide for the housing, social amenities and economic opportunity needs of our communities. Secondly, they will provide mixed housing typologies and security of tenure. To this end, we are currently responding to key elements that must be addressed to ensure successful implementation of our Catalytic and Provincial Priority Projects.
The most critical of these elements is the provision of bulk infrastructure. The bulk infrastructure is required not just for the housing but also for the social and economic infrastructure that makes up a mega project. Another critical element Madam Speaker, that will ensure success in the execution of our projects is the availability of financial resources. I am fully aware of the equally important competing demands on government’s financial resources which impacts on the funding which can be made available for human settlements development. Thus, we are engaging in robust partnership interventions aimed at developing sustainable collaborations with the private sector. We believe that this intervention will generate assistance required to address the government budget shortfall in the provision of housing opportunities.
Madam Speaker, in order to realise this noble, yet necessary ideal, we have since selected 102 potential partners whom we have invited to register on the Department’s Partnership Framework Agreement Database.
11. Empowerment of SMMEs
Madam Speaker, my Department has opened the frameworks for contractors and professional service providers for all and sundry to register and be kept in a database. This process has served as an incubation programme that will graduate construction SMMEs to higher grade and ultimately to become captains of industry in the sector. Currently the Department has 101 contractors working in this province. Since the inception of the 2017/18 financial year, we have utilised 64 HDI contractors and 44 professional service providers with HDI statuses providing services such as planning and professional services.
Similarly, the Department has since the inception of the 2017/18 financial year utilised services of 22 contractors with youth representation and 49 contractors with women representation.
Resulting from efforts made in mainstreaming the historically disadvantaged into the economy, an amount of R1 004 595 921 which constituted 51% of the Human Settlements Development Grant was spent on HDI contractors in the previous financial year, a percentage we hope to exceed in the current year given the Department’s drive to encourage participation of HDI contractors in the sector. Madam Speaker, we have already created 1 552 job opportunities which translate to 454 full-time equivalent (FTE) in the current financial year.
Since 2009 160 HDI contractors, including professional service providers with HDI statuses have been empowered. 11 366 job opportunities translating into 3 495 full time equivalents have been created since 2009. Indeed, the Western Cape Department of Human Settlements has turned the Western Cape into a construction site and it rocks. We practice what we preach.
Madam Speaker, this Department looks after the monies allocated to it very well. Despite the issues raised by the Auditor General on the empowerment indicators during the 2016/17 financial year, the Department still received an unqualified audit which is preceded by the fact that three financial years before (i.e. 2013/14, 2014/15 and 2015/16) the Department received clean audits. The Western Cape Department of Human Settlements also won the Best Performing Province of the Year in human settlements delivery at the National Govan Mbeki Awards.
Madam Speaker, I am confident that our strategic approach and key interventions that I have just outlined will drastically increase our delivery of human settlements to our people over the MTEF period, starting with this financial year. I am confident that we will working together with our partners from all sectors of society, create a better life for all through fulfilling our constitutional mandate to provide access to housing for our people.
Whilst we face many challenges in the Western Cape, our commitment to improving the lives of our people has evidently not wavered.
Madam Speaker, I'd like to thank the Chairperson of Human Settlements Standing Committee, Mathlodi Maseko and all the members for the constructive manner that they continue to work with us. I promise that all the issues that they have raised with us will be addressed.
I also want to thank my Head of Department Mr Thando Mguli and his team for sterling work under difficult conditions, my office team under the leadership of Mrs Elizabeth Cloete, management and all staff and agencies for their hard work and commitment.
Finally, I thank all our local government and private sector partners for co-operating and collaborating with us to form the formidable team of implementers we require to realise the objectives and achieve the outcomes I have outlined in my speech.