Department of Human Settlements Budget Speech 2014

Speech by Mr Bonginkosi Madikizela, Minister of Human Settlements at the Provincial Legislature

In her 2014 State of the Province address, the Premier stated

“Our government had resolved to align everything we do to our overriding objective of combating poverty and promoting opportunities for all, through policies that encourage sustained economic growth; that attract, develop and retain skills and capital; and that drive infrastructure development.“

Mr Speaker, much of the poverty, and lack of opportunities, are an inherited legacy of the apartheid spatial planning policies, which resulted in the distribution of human settlements we see today, and in which previously disadvantaged groups are still living far away from job opportunities, and having to spend precious time looking for and travelling to work.

When we took over this administration in 2009, we had to rebuild much of the ship, as well as spend significant resources in fixing the problems of the past. We also started sailing in a new direction, with a focus on quality rather than quantity, investing in infrastructure and a strategic focus on affordable, or gap housing.

Apart from the consequences of apartheid spatial planning, we also inherited a number of other problems, which are the consequences of previous administrations populist and cosmetic delivery at the expense of quality and due process. These included 46 blocked housing projects, impacting approximately 15 000 houses, and with an estimated cost of R200 million to unblock. Some of the reasons for blockages were:

• Poor planning resulting in  insufficient funds to complete the houses
• Overlapping ERF boundaries
• Maladministration or malpractice by either the Accounts Administrator appointed by the Housing Support Association, or by members of the Association itself.
• No documentation or title deeds proving ownership.
• Houses badly built, structurally unsound, or built of unsafe material.

All these houses were counted as part of the achieved target by the ANC administration. The projects have been or are being unblocked through the services of the SEBRA, the Development Action Group (DAG) and the Professional Resource Teams (PRTS).

In addition to the 46 blocked projects, there were also a number of poorly built, structurally unsafe houses. To date, we have spent almost R43 million rectifying these houses. According to a report presented by the National Department of Human Settlements to the Portfolio Committee in 2012, the estimated national rectification bill is approximately R60 billion.  

Housing delivery is not just about providing a roof over people’s heads. It’s also about addressing the injustices of the 1913 Land Act, where many people were dispossessed of their land. In the process of providing houses, we also have to ensure proof of ownership though the issuing of title deeds. According to an Arcus-Gibb study commissioned in 2011 we found that 86 350 beneficiaries in the Western Cape alone had no title deeds. The primary reasons for the failure to receive title deeds are as follows

• Unopened township register 
• Unsigned sale agreements
• General plans not approved
• Rezoning Issues
• Conveyancing issues (funding shortfall, appointments expired)
• General administrative challenges (Avoidance of Transfer, Swopped property)

This was a clear indication of an uncaring government that did not see the importance of following due processes. The Western Cape Department of Human Settlements is addressing these constraints through the appointment of PRTs to unlock the blockages, and by the end of February 2014, through the issuing of over 26 000 outstanding title deeds this backlog had been reduced to approximately 60 000. In total, this government has issued almost 89 000 title deeds since 2009.

Another problem we found was that there was no standardized method for managing municipal housing lists, leaving them often open to manipulation, corruption and with no integrity of the data. In order to improve the integrity of the housing demand information, the Department introduced the Housing Demand Data Improvement Programme (HDDIP) in 2010. As part of this programme, the Western Cape Housing Demand Database, a web-based platform for use by all 24 non-metro municipalities, was introduced in 2012. The platform provides an electronic system for municipalities to record and manage their housing demand data in a secure setting.

The accurate collection and management of housing demand information is the cornerstone of a fair and transparent beneficiary selection process and essential for future planning. Building on the success of the HDDIP, in late 2012 the Department adopted a Framework Policy of norms and standards.  The framework indicates core principles and mechanisms that municipalities should use to select beneficiaries from their databases.  Some of the core elements of the framework include:

• The need for municipal policy to be systematically inclusive and to avoid unfair discrimination.
• The need to prioritize the elderly and those who have been on the waiting list the longest.
• The need to balance greenfields project opportunities against opportunities created in informal settlement upgrade projects.
• The need for verification of beneficiary information by way of independent information sources.

The Framework Policy was approved by Cabinet in 2013.  Since 2012 the Department has provided a range of support to municipalities to assist them with  the design and implementation of the framework.

Under the ANC administration, there was no focus on addressing the plight of the people who are the heartbeat of our economy. These are the people who earn too much to qualify for a free house, yet too little to qualify for a bond. These are most of our employees, and include office administrators, clerks, secretaries, police, nurses, teachers and many others. We have shifted the focus and have thus increased delivery of social, rental, institutional, FLISP and affordable housing units from a total of 0 before 2009, to almost 8000 in the 5 years from 2009 -2014, with a planned delivery of almost another 8000 units in the next 3 years.

The Province has identified 10 Leader Towns for Social Housing development and these are Plettenberg Bay, Oudtshoorn, Knysna, George, Stellenbosch, Worcester, Paarl / Wellington, Hermanus and Mossel Bay. The Province also developed specific criteria for Restructuring Towns and has subsequently submitted applications to the National Department of Human Settlements to approve these towns as Restructuring Towns. Specific Restructuring Zone applications have also been submitted for all relevant towns in the Eden District, while the rest of the towns are working toward submission of these zones by September 2014.

The Department has also recently called for development proposals on 16 portions of land that belong to the Western Cape Government, with the deadline for submissions 31 January 2014. The focus is on servicing the affordable housing sector through partnership and lowering development costs and end user costs through making land available.

The Western Cape has experienced a massive population growth of 1.3 million people from 2001 to 2011, according to the results of Census 2011. Most of this is due to in-migration and many of these people living in informal settlements and backyards.  Although 93% of the human settlements budget is spent on housing programmes aimed at poor people, we are still faced with an estimated provincial housing backlog of more than 500 000 households, Almost R75 billion is estimated to be needed within the City of Cape Town  in order to clear the City’s backlog alone.

Due to the high demand for housing and limited number of housing opportunities, there is inevitable conflict as people compete for such opportunities, and not always within the framework of the law. This is especially the case when informal settlements are being upgraded and communities are required to relocate to make place for construction to happen. Several provincial projects, including Boystown in Crossroads, and Joe Slovo in Langa, which collectively are planned to deliver thousands of housing units, have been blocked or delayed due to community conflict over allocations or the need for individuals to relocate in order to make room for development. We are also faced with attempts by non-qualifiers to forcefully seize housing opportunities. For example, the FLISP units in the Our Pride Project in Eerste Rivier were the focus of repeated forced invasion attempts towards the latter stages of 2013.

Our approach to human settlements service delivery is directly in line with the National Development Plan, or NDP. The impact of the global climate change, particularly on the poor, is acknowledged in the PSO6 through the outcome “optimal and sustainable use of resources”, and the Department is proactively enforcing the use of alternate building technologies, or ABTs. The 1951 unit Delft Symphony Precinct 3 and 5 project, which uses ABTs, is the first project of its kind in the country.

The project makes use of energy efficient materials in an attempt to reduce on-going energy costs to home owners through the superior thermal properties of the ABTS, as compared to conventional brick and mortar.  Some 106 units are already complete, and the project also makes provision for special needs beneficiaries. This reflects the Departments focus for providing for the most deserving beneficiaries, with a total of 55 special needs units to be constructed.

Mr Speaker, this administration has delivered almost 122 000 housing opportunities over 16 programs since April 2009, creating 37 130 jobs and using the services of 147 broad based BEE contractors. This is certified, credible delivery, supported by a portfolio of evidence, as required by the Auditor General, which was not the case prior to 2009, over and above the challenges of false delivery claims by the previous administration. According to the findings of the 2013/2014  FIU report, which investigated the reporting of housing figures under the previous administration, it was concluded, and I quote, that “the monitoring systems in place during 2008/2009 allowed for subjective estimates and lacked robustness” and that “the methodologies, neither individually or collectively provided sufficient information for validation of the sample”. In other words, the previous administration could not provide proof of what they are saying they delivered.

Since 2009, we have spent the following amounts across the province.

The budget for the 2013/2014  financial year is R1.959 billion and by 31 March 2014 we will have spent 100% of our budget and met all our non-financial targets, which include targets of 6642 sites and 11 802 houses.

Citizens active in their own development” is another priority area stated in the NDP. In support of this priority area, the Peoples Housing Process, or PHP, is a program designed to provide communities with access to shelter, and the success is contingent on involving the community through the formation of a project support organization.  From 2009 to 2014, the Province delivered almost 23 000 PHP units across 169 projects and with a total expenditure of almost R1.6 billion.

During 2010 and 2011 the PHP Directorate developed a revised approach to the implementation of PHP policy in the Western Cape in order to deal with corruption, poor quality and maladministration in PHP projects. During 2013 the elements and guidelines for the revised approach were further refined, making the programme more acceptable to both communities and municipalities alike. This has also resulted in a marked reduction of cases involving PHP projects being submitted for investigation to the SIU and FIU during the past year than was evident in the preceding years. We’ve also enrolled all PHP projects with the NHBRC for quality assurance.

We also had a Youth in Human Settlements Programme during 2013 in partnership with the CETA where R10 million was earmarked to fund the training of unemployed youth and other members of the community in areas where human settlement developments were being planned. In June 2013 a training course was held for youth in the Ocean View community that focused on Life Skills training and the problem of substance abuse.

A number of Youth build initiatives will also be incorporated into current PHP project approvals in order to ensure the roll-out of the Youth in Human Settlements Provincial Implementation Strategy. This will be focused in particular on rural areas where the skills shortage in the built environment is currently at its highest. We have also continued to focus on Housing Consumer Education (HCE) and in the last 5 years 1090 HCE workshops were held across the province.

Mr Speaker, the Estate Agency Affairs Board (EAAB), which was under the Ministry of Trade and Industry since 1976, was transferred to the National Department of Human Settlements (NDoHS) on 17 May 2012.

The South African Property Sector was worth R4.9 trillion at the time and transformation of the Sector remains a priority, from an age, gender and race perspective, to ensure that all who are interested and capable have access to this economic cornerstone. We want to foster empowerment and support of seasoned practitioners to grow the number of disadvantaged professionals entering and/or already engaged in the Sector.

The Province formally established the Western Cape Estate Agents Core Group, working in partnership with a number of different estate agent and legal institutions. The work emanating from this Core Group is designed to ensure that agents are suitably qualified, are registered with a valid fidelity fund in order to protect consumers in case of fraud or mismanagement, and also to comply with a specific code of conduct, which further supports the professionalism of the Sector.

The Province, with the guidance and support of the organisations mentioned above, convened a dialogue with unregistered agents on 14 March 2014, so as to support unregistered agents to capacitate themselves and to reach legislative compliance by June 15 2015. Through the fostering of co-operative partnerships and legislation currently being developed, it is and will continue to become increasingly difficult to operate in the Sector without becoming a registered agent.

In his 2010 State of the Nation Address, President Jacob Zuma announced that a R1billion rand mortgage default insurance fund would be implemented, in order to assist people in the Gap market with a poor credit record in obtaining loans from financial institutions. The National Department of Finance and the National Department of Human Settlements have been engaging with the Banking Association of South Africa to establish the implementation protocols and institutional arrangements, and we are eagerly looking forward to its implementation, to ensure more of our people have access to home finance and home ownership. The mortgage fund will be administered through the National Housing Finance Corporation, and is expected to target beneficiaries of the FLISP program, who wish to purchase houses.

An Implementation Protocol with the National Housing Finance Corporation (NHFC), which is intended to assist in the roll-out of the FLISP was signed in 2013 / 14, and a standard operating procedure guiding how the relationship will work was also finalised. It is intended for this agreement to take effect in the 2014 / 2015 financial year.

This year has also seen the Province work toward forging a stronger relationship with the NDOHS Office of Disclosure, which monitors financial institutions serving the housing credit needs of communities, and requires financial institutions to disclose information, in an effort to identify potential discriminatory lending patterns. The Office of Disclosure was central in the Provinces’ discussion with Banks, Developers and other role players in identifying obstacles to the accelerated roll-out of Affordable Housing.

Our partnership with the Social Housing Regulatory Authority (SHRA) continues to flourish, culminating in the Western Cape being recognised and awarded as a 2013 “Leading Social Housing Province” by the SHRA. We recognise the SHRA and thank them for their willingness to constantly engage with the Province and their support in helping us drive approaches to different thinking.

We are also ensuring that the mistakes of the past are not repeated, and that beneficiaries are guaranteed to receive their title deeds timeously. The Department is thus putting in place a policy aimed at achieving the transfer of title deeds to the beneficiaries soon after the housing units are completed, and will only provide funding for projects that have planned for title deed administration and transfer. To ensure housing construction continues smoothly, however, the Policy will be phased in over 12 months. 

Western Cape farmworkers are another important beneficiary grouping who require housing assistance, yet due to the cost of installing infrastructure in rural areas, and a limited access to social services, farm workers are most often best housed in developments with the urban edges. The Department has also worked closely with municipalities in developing their Integrated Development Plans and Human Settlements Plans, taking cognizance of the needs of farm residents. 

During 2013, the Department developed a Municipal Guideline for Farm Residents’ Housing, aimed at promoting the integration of farm residents’ housing needs into existing municipal planning processes. The Guideline provides clear steps for municipalities to follow to ensure that farm residents are registered on the housing demand database. It further suggests a process for including a quota for older farm residents in the municipal selection policy. The Guideline has been well received by municipalities as a resource to assist in achieving integrated and sustainable planning. Some projects where farm residents will or have benefitted, are the Diazville PHP project in Saldanha Bay Municipality, Drommedaris Project in Drakenstein, the Malmesbury Abbotsdale project in Swartland Municipality, De Doorns in Breede Valley, Op Die Berg in Witzenberg and Erf 2124 (Koelpark) in Stellenbosch.

It’s essential that we deliver for everyone who needs houses, including the backyarders. We have not forgotten about the backyarders, and two projects will be delivering opportunities for backyarders in the next few months. Erf 8448 in Gugulethu, and Mau-Mau in Nyanga, are each to deliver 500 opportunities by July 2014. In addition, the City is ensuring that backyarders have access to shared services, according to the national standards, while they wait for housing opportunities. In addition, the Our Pride Project in Eerste Rivier also delivered 600 BNG opportunities for backyarders.

Over the last 5 years, my Department has consistently received unqualified audits, which is a clear indication the Department is being run efficiently. In addition, The Department has also won multiple awards, including two Golden Key awards in 2012 from the South African Human Rights Commission (SAHRC) in partnership with the Open Democracy Advice Centre (ODAC). The awards were for the Best Performing Provincial Department, and for the best Deputy Information Officer, Mr Stiaan Moolman.

Currently the Department and the City are in the process of drafting an Executive Assignment Agreement, in order to accredit the City as a Level 3 Housing Developer. It is envisaged that this Executive Assignment Agreement will be signed within the next three months.

The Assignment will ensure better alignment between the City’s IDP, the Five Year Housing Plan, the National and Provincial Human Settlements Plans and performance on the ground. The City will be responsible for the full administration and project management functions, which will improve performance management. After the Assignment of the City, the Department will continue to play oversight and monitoring roles.

The assignment of the City has implications for the amount of funding available for human settlements development across the rest of the province. The indicative allocation to the respective provinces are now based on the 2011 census results, and resulting from this, the National DoHS and the National Treasury earmarked R1,350bn of the R1,914bn provincial allocation for 2014/15 to the City in anticipation of the accreditation of the City. This was done in January 2014 without consulting with the Province and without taking the Provincial Business Plan into account. By implementing this, we’ll have to decrease the current R800m allocation to non-metro municipalities by R240m in the 2014/15 financial year. We have requested a phasing in over the 3 year MTEF period to ensure that contractual obligations of non-metro municipalities can be honoured and committed projects can be completed. The final outcome is not yet known as further discussions on the implications of such a drastic step still needs to take place.

The funding for the provision of bulk services remains a challenge and is at present only partially addressed at Metro level by the Urban Settlement Development Grant (USDG) funding that had been made available to these municipalities. According to the Bulk Infrastructure Master Plan for Western Cape, August 2011, the estimated cost for installing the required water and waste water treatment infrastructure is R11.1 billion, and when the cost of roads, stormwater, electricity and landfill is added, the figure will be an estimated R20 billion.

An intention to extend the USDG to also include some of the other municipalities has been given by Treasury some time ago, but it is still to take place, and unless the backlog of bulk infrastructure is addressed, we will simply be unable to continue with many planned developments.

Our focus to ensure that everyone in the Western Cape living in informal settlements, backyards and overcrowded families has access to basic services by 2014 is yielding positive results. To ensure this right, we committed to develop a Province-wide plan for in-situ upgrading when this administration took over governance in 2009. An Informal settlement database was compiled in 2010 and completed in 2011, and the Access to Basic Services programme, which is a Province-Wide plan for in-situ upgrading was launched in 2012.

According to the Census 2011 results, 93.4% of households in the Western Cape have access to electricity for lighting, 99.1% of households have access to piped water and 96.9% access to toilet facilities. The Access to Basic Services Programme was embarked upon by the department during the 2012/13 financial year and is aimed at providing access to water and sanitation to residents of informal settlements outside the City on a shared basis. Under this programme, we have delivered 2548 toilets, ensuring an extra 12 740 families have access to sanitation. We have also delivered 1110 water points, ensuring an extra 27750 families have access to clean water. It is envisaged that, by the end of March 2014, these would have risen to 3381 toilets and 1267 water points.

We use municipalities and the City as the primary developers of housing projects, yet we remain accountable for housing delivery in the province. We have taken numerous steps to capacitate municipalities, such as the appointment of PRTs for the regions, the creation of the Portfolio Management Office, the HDDIP, and the development of a pipeline of projects that are ready to go. Through the Portfolio Management Office, we have implemented effective monthly and quarterly reporting and evidence collection procedures for projects. The improved reliability of monthly  performance information has   enabled the Department to take decisive action where needed, and through the Grant Advisory Allocations Committee, timeously shift funds away from non performing municipalities to those who can deliver. These interventions are reflected in the improved performance over each of the last three years, and have laid a strong foundation for the years ahead.

The subsidy quantum continues to rise, yet the budget allocation stays fairly constant. The new quantum will be in the region of R125 000 per house, as compared to the current average of R85 000. Mr Speaker, it is obvious that the number of houses we can deliver with the money we have gets less and less each year, while the need grows greater. The provision of housing as we currently do it is simply not sustainable, and looking to the future, we will need a continued focus on rental, institutional and GAP market housing, as well as the  leveraging of private funding in the low income and affordable market, in order to provide for all of our people.

Looking ahead, there are some exciting developments to expect. After the completion of existing projects forming part of the N2 Gateway’s first phase, some of the areas that had originally been identified to be accommodated under the N2, namely Barcelona, Europe, Kanana, GxaGxa, Lusaka, Vukuzenzela and Kosovo, and which are located opposite the airport adjacent to the N2 highway,  will still not have received houses. The majority of the land on which these settlements were established is located on previous refuse dump sites and can only be formally developed after extensive and costly land rehabilitation. It is estimated that more than 15 000 families of these settlements would have to be relocated to receive permanent residential accommodation.

The Department, in collaboration with the City, has identified suitable land for decanting people from these areas, and is in the advanced stage in planning developments to accommodate significant numbers of families from these source areas. The developments are expected to include mixed used developments consisting of low income and affordable housing, retail and business opportunities and high density developments.  Funding is being sourced from the National Department of Human Settlements for the initiative and the planning processes will be carried out per identified land parcel to enable implementation to be carried out over a number of years. A more detailed announcement will be made in due course.

If we are serious about changing the apartheid planning spatial patterns, we have to shift our thinking on how we approach housing delivery. We have to focus broadly on improving the lives of our people, rather than embarking on a box ticking exercise. We’ve got to invest in infrastructure, provide services, upgrade informal settlements and increase our focus on the rental and affordable market, while we continue providing free subsidized houses for those who have fallen through the cracks.

I thank you.