Issued by Ministry of Housing
31 May 2001
Chairperson
Honourable Members
Ladies and Gentlemen.
The last seven years have taught us that there are no fixed solutions to our divergent housing needs. Our objective is not only to find innovative ways to enhance housing delivery but also to produce a housing policy that best suits the conditions of each of our provinces.
It is public knowledge that in the first seven years of office, the ANC led Government housed nearly 5 million people with 1,129 million houses built or under construction. A better life for women has been achieved in the housing sector through the subsidy-housing programme and the transformation of hostels into family dwellings, which will continue to foster safer environments in which to bring up families.
The GEAR strategy acknowledged that infrastructure backlog in 1994 was at R170 billion, since 1994 my department has spent no less than R14, 6 billion, given that this backlog was for all infrastructure including roads and highways, rail, grid electricity, hospitals, schools, pipelines and harbours our contribution to the reduction of this backlog, has been no less than a resounding success.
This success has been as a result of profound synergy between policies and actions of Government on the one hand and the aspirations and active participation of our people in housing on the other. Housing has proven to be one of the most prominent instruments of social transformation.
We have transformed the construction industry through our procedures to ensure maximum participation of emerging contractors and women in construction. We have transformed the quality of our people who have benefited from our programme, including improvements in their health, safety and security, the education of their children.
THE 2001/2002 BUDGET
For the current financial year 2001/2002, my Department has received a total amount of R3 225, 9 million to finance national and provincial housing programmes.
Using our housing budget allocation formula, we have divided the total amount received between the nine provincial governments as contained in Annexure A
Chairperson, because we are constantly monitoring our housing delivery environment, the mammoth challenges on the housing arena almost always find us accordingly prepared. That is why I mentioned in my introduction earlier that no issue in housing is insurmountable, subject to the availability of resources needed to address each issue at hand.
It is this premise that has guided our budget allocations to the different provinces. We believe that each and every province has its unique needs that should be identified to make housing funds more relevant to the conditions of that particular province.
It is this premise that has guided our budget allocations to the different provinces. We believe that each and every province has its unique needs that should be identified to make housing funds more relevant to the conditions of that particular province.
Integrated Land Development
The release of land for housing has constantly been highlighted as the major contribution to integrated well-located housing development. The housing sector in providing guidelines for the reduction of the selling prices of certain state financed serviced sites, intended to release speedily all land in the ownership of housing departments to facilitate development. This however is far from adequate to meet all housing requirements.
A strategy for the speedy release of well located state land for housing could not be more urgent in order to facilitate a greater proportion to what has already been achieved of integrated, well located low cost housing development.
In further promoting integrated development the government seeks an honest agreement with the private sector and with trade unions to channel investment into housing. Through the Presidential Job Summit Housing Pilot Programme, we will focus on developing housing on well located land, with access to amenities, and overcoming the apartheid human settlement patterns based on group areas and isolation of the majority from centres of economic activity. We will also broaden tenure choice through building 50 000 rental housing units over three years.
The integrated land development approach will shift housing delivery from being principal developer driven to being government led through the introduction of procurement procedures in line with Preferential Procurement principles. This will be guided principally by multi year plans formulated by government in consultation with the various stakeholders and communities.
The plans will outline priorities and development principles providing briefs to which developers will respond, in their proposals. This process will facilitate Government and particularly local government and community determination of types and location of projects and therefore housing developments.
Housing for the disabled
Provision has been made for the variation of subsidy amounts to cater for the special needs of differently abled persons. The Department of Housing, in conjunction with the South African disability fraternity, developed guidelines in November 1998 to cater for the special needs of differently abled persons eligible for housing subsidies, entailing an increase in the subsidy amount, depending on the severity of the beneficiary's disability.
FLOOD RELIEF
Although rural people comprise the largest selection of the population in most developing countries like ours, less attention is paid to rural housing in comparison to urban housing. It is often assumed that rural housing conditions are satisfactory. A United Nations report found that most poor rural communities live under leaky, unstable, dangerous structures, vulnerable to storms and floods, as recently witnessed in the Provinces of KwaZulu-Natal, Mpumalanga and Northern Province.
Already, we are working with the private sector, non-governmental organisations, provincial and local government structures and communities to come up with ways that could limit the effects of such occurrences. We have commissioned a study through the CSIR, aimed at determining the best methods to improve and introduce sustainable and quality housing through traditional building methods.
We have recommended various techniques to strengthen foundations, walls and roofs and the use of reinforcing building material and good practices in the design and construction of housing units using traditional methods.
We will further extend this year, the protection of the National Housing Builders Registration Council and the five-year warranty cover to poor communities across the country, for the protection of their properties against structural defects. In cases of poor workmanship communities will be able to lodge complaints to the National Home Builders Registration Council, which in turn will enforce builders to deal with defects on houses in their first five years of occupation or otherwise face, deregistration.
RURAL DEVELOPMENT
Rural poverty is one of the main driving forces of urban growth and major factors are the lack of access to sustainable formal land, population growth, poverty and lack of access to resources.
The establishment of Rural Housing Loan Fund is an unparalleled achievement that has radically changed the lives of rural dwellers. RHLF has started a rural movement to empower rural dwellers by affording the m an opportunity to build assets and provided too much needed resources. In addition, RHLF has established a rural market as the only organisation that has partners who do cash collections; others prefer payroll deductions.
The RHLF has made significant strides in its bid to try and understand its market by embarking upon a focussed and targeted consumer education.
NATIONAL SAVINGS PROGRAMME
The savings level of our country is very low. The ratio of gross saving to gross domestic product remained at the comparatively low level of 15.5% in the second quarter of 2000. Private sector saving deteriorated in the second quarter of 2000, but there has been a positive contribution to the gross domestic savings by general government to the national savings effort for the first time since 1991. Further progress in this area would boost gross savings even more, and add to a high investment ratio, which could lead to higher rate of economic growth and development.
Chairperson, I want to announce that we will soon be launching our savings campaign in conjunction with our partners, community organisations and the private sector. Our National Savings initiative has the following main objectives:
According to the findings of a research recently commissioned by the National Housing Finance Corporation it was found that there is a considerable ability to save towards housing, with as much as two-thirds of prospective housing buyers saving 10 percent of their monthly income aimed towards their future house. On average the saving period is in excess of two years with an average amount of R8 700 saved.
For this I would like to commend the National Urban Reconstruction and Housing Agency for their contribution in this programme in mobilising the financial institutions. Although support from major banks has not been forthcoming, the programme has received much support from the alternative financial institutions.
Through this savings initiative we have seen the development of over 800 housed in Oukasie in the North West. Saving as little as R50 per month saw the lives of the people of the North West change. Through this national savings programme we have seen 1 600 families and women take ownership of quality and much bigger houses that they built themselves.
This project has seen most women join the building industry as a result of the skills they access through this project. This year we want to see more savings scheme develop throughout the country which could add on our efforts to create job opportunities for the poor, women and the youth.
THE ERADICATION OF INFORMAL SETTLEMENTS
Like other developing countries, the African continent suffers from the phenomenon of informal settlements which arise from a number of causes including rapid urbanisation and population growth, unemployment, a skewed distribution of wealth, natural disasters and low economic growth.
In South Africa, informal settlement were further exacerbated by scarcity of affordable land for development of low cost housing and the occurrence of informal settlements on undevelopable land in flood plains and riversides such as Juskskei river in Alexandra, dumping ground and dolomitic land. The result is that upgrading of some informal settlements is not always possible in situ and necessitates acquisition of new land and relocation of communities.
South Africa is following global trends to relocate people from disaster prone areas and I want to emphasise that this can never be compared to apartheid's forced removals. Contrary to popular but ignorant belief, it is intended to remove people from dangerous areas and provide them with better housing in safe and secure areas.
I am happy to report to this House, our informal settlement upgrading programme has borne fruit, in the Free State no less than 43 projects benefiting about 28 000 families, in KwaZulu-Natal, a total of 83 projects benefiting 57 000 families, in Gauteng 52 projects, benefiting about 102 000 families, in Western Cape 9 projects, benefiting about 5 000 families are being implemented. In the Eastern Cape, 17 projects, benefiting 11 000 families, in Mpumalanga, 3 projects benefiting about 2 500 families, North West, 10 projects benefiting 4 400 families and Northern Cape, 76 projects benefiting about 20 000 families are being implemented. In a total of more than 1 million houses, close to 232 000 in 293 projects have had their house in an informal settlement converted from a shack to a proper home countrywide.
In response to the President's prioritisation of the urban renewal programme the Department has led the way with the implementation of the Alexandra Urban Renewal Programme with R3,5m used for feasibility study and planning work, and KwaMashu in excess of R20m has been allocated for redeployment over two years, through its Human Settlements Redevelopment Programme.
Our approach in dealing with this is an inclusive one and is highly dependent on strengthened consultation ties between the three spheres of government, the non-governmental organisations and most importantly, the communities affected. The main challenge is to clearly define the role of each sphere of government in the eradication of informal settlements, and ensure that new informal settlements are effectively prevented.
The government cherishes a process that will assist our planning towards the eventual eradication of informal settlements by giving clear definition of the responsibilities of each sphere of government.
THE ROLE OF HOUSING IN THE ECONOMY
The Government housing programme strives to meet the goals of economic growth, job creation and poverty alleviation for the poor. It forms part of the larger framework of the Construction sector and the impact of government investment in housing through the jobs created and sustained in the construction of houses and the growth of industries involved in the production of building material and related industries. It also contributes directly to the Gross Geographic Product across our country and particularly the much needed small business development.
Housing is one of the key aspects in generating growth, employment and wealth. The Government's low cost housing programme does not only support the use of labour intensive methods, but also employs local labour and emerging contractors.
In order to ensure a better life for workers the Housing Department will continue to monitor the activities of the home building industry to ensure the transformation of the industry through the constitution and such laws as the Labour Relation, Basic Conditions of Employment, Employment Equity and Skills Development Acts.
Despite the efforts of Government, the poorest of South African households earn less than 10% of the total income earned by all South Africans, and the richest 10% earn more than half of the total income. With this, access to finance still remains the greatest challenge to low cost housing development. As part of the restructuring of Financial sector with the Promulgation of the Home loan and Mortgage Disclosure Act in December 2000, we are currently drafting the Community Reinvestment Bill aimed at increasing access to finance by poor communities.
We aim to promote and attract adequate investment for growth and development for both the established and emerging sectors, to match ever-expanding government expenditure on social and economic infrastructure. We need to align investment strategies of the privates sector with those of increasing the Fixed Domestic Investment to promote social equity and reinvestment in marginalised areas.
The repo rate has dropped steadily from its level of just under 13,5% since September 1999 to its present level of 11,75%. This has had a very positive impact on housing development particularly in the higher income groups who benefit from credit. It has also created stability in the housing market, which is to the benefit of low-income groups as confidence in property as investment has been re-established.
This means that as incomes improve many people in the R2500 - R3500 income groups either improve on their houses or move out to better housing making more stock available for the poor to purchase using the housing subsidy. However, the lack of available housing stock in the R60 000 to R100 0000 has impacted adversely on the potential growth of the secondary housing market for both lower income and lower middle-income groups. I hereby challenge the private sector to build houses for this category of earners, particularly in the face of the most favourable interest rate climate yet seen.
This climate of confidence is further confirmed by the trends in total building plans passed and building completed. The real value of building plans passed for dwelling houses increased by 17% from the first quarter of 1999 to the first quarter of 2000.
Housing policy has as one of its key cornerstones, the principle of labour intensive building methods and employment creation and/or sustaining existing employment opportunities. Fortunately, the nature of housing delivery projects is such that it has s relatively high labour component. Even more positive is the fact that the major part of the employment opportunities provided through housing projects is for semi-skilled or unskilled labourers.
It is estimated that the approximately R3 billion which Government spends annually through its housing subsidy programme, sustains 45, 000 direct employment opportunities in the building industry. Linked to this are about 43 000 indirect job opportunities in the building materials and component markets which the Government's housing programme sustains.
We are enhancing in consultation with the Department of Public Works, the empowerment of emerging contractors. Emerging contractors tend to make use of more labour intensive methods and therefore create more jobs than the more capital-intensive larger construction companies. Their increasing involvement will therefore not only serve in their own development, but will also increase the job creation potential through the housing delivery process.
THE ROLE OF LOCAL GOVERNMENTS IN BUILDING NON-RACIAL COMMUNITIES
Chairperson, our housing policy provides access to housing opportunities to the poor on a non-racial basis. It is through the spatial planning at local level that our own housing projects can help integrate our communities and effectively undo apartheid planning to the benefit of our communities and the nation building process.
In certain instances it is part of our communities who refuse to be integrated merely because of perceptions of property devaluation. But areas like Dainfern, northern Johannesburg, which has one of the highest property values, remains a prime area in the country, and yet is located adjacent to an informal settlement. Local governments must ensure that our housing projects integrate communities and specifically deracialise our towns and cities.
Honourable members, we have made great strides towards integrating racial groups such as Briardene and Burnwood housing projects in Durban and the housing projects in Newtown, Johannesburg.
We do recognise, however, Chairperson, that whilst housing delivery is proceeding at a significant rate, it is generally not occurring in areas which contribute to the restructuring of the former apartheid cities and the building of non racial communities. The prohibitive cost of land in many of these areas has undermined the viability of constructing affordable low cost housing.
EXPENDITURE PRIORITIES FOR 2001/2002
In the budget allocation for this financial year we have identified a number of National Expenditure Priorities, approved by MinMec in December 2000, which inform our delivery strategy and guides Provinces (Annexure A of your copies of this speech), in their allocation of funds to projects, which include the following:
All provinces will be expected to expand their allocation in line with the above priorities and in accordance with their housing development plans in the future. Our national integrated housing development plan will therefore be a consolidation o f provincial plans, which are in turn informed by local development objectives and budgets, drawn up in an integrated manner by all relevant stakeholders.
This unique character and the size of the needs themselves should inform allocations of housing funds to the provinces. But should also ensure that there is that balance between the identified needs and the national priorities as set out by the State President.
As we look forward to the ongoing challenge of housing the nation, we have renewed our commitment to providing housing at scale whilst focussing more on qualitative aspects of housing delivery compared to the previous term of Government. Our efforts will ensure better planning and budgeting in the context of the MTEF; to promote efficient financial management to eliminate maladministration, mismanagement and prevent subsidy fraud through improvement of subsidy administrative system.
Having thus shared with you what lies ahead of us, we have once again rolled up our sleeves for another year and are already hard at work to provide shelter to the homeless in our country.
Thank you.