L Sisulu: Congress of Master Builders South Africa

10 September 2007

The President of the Master Builders South Africa, Mr Gavin Roberts
The Vice-President, Ms Eunice Forbes, whom I congratulate for being the first
woman President of the Federation
Chief Executive Officer, Pierre Fourie
Officers from the various provinces
Invited guests
Ladies and gentlemen

May I begin by congratulating you having sustained the existence of your
federation, defying all difficulties and challenges, over a very long period. I
have no doubt in my mind, that achieving this feat that stretches from your
birth in 1904 tested the strength of the federation and its vision. I believe
that its tenacity and determination under conditions that would have created
difficulties for the normal operation of enterprises in general have prepared
it well to maximise the use of its resource and capacity under normal
circumstances.

This would, therefore, enable the federation to deliver fully toward its
long-held vision and goal of looking after the interests of its members and
setting standards of excellence in construction. It is this belief that
inspires me to be able to talk about what kind of partnership we can develop
with you. I consider it to have been timely today for you to have extended an
invitation for me to attend your congress.

It is timely that we found each other. It is a critical moment for me. I
sincerely wish this had happened earlier because in truth we should have been
working together even as we crafted our policy. I believe that in that process
your input have been essential. But I am glad that finally we have met. I am
glad that we are here. Our meeting comes at a time when even if you had not
invited me I would have sought you out. I have been, over some time now,
confronted with a situation that we needed to come together. Through your Chief
Executive Officer Pierre Fourie, you are after-all, signatories to the Social
Contract for the accelerated delivery of housing.

Let me then take this opportunity to also thank you for the support you thus
far have provided my Department with in its implementation of the Breaking New
Ground strategy. What we have ahead of us in fully implementing the strategy is
no doubt a significant challenge. We not only have to upscale or accelerate the
delivery of housing but we also have to ensure that standards of excellence are
adhered to in order to realise outputs of quality. This is the reason that we
place great reliance upon the National Homebuilders Registration Council (NHRC)
to help us set these standards in consultation with you and monitor their
implementation. To provide an incentive for compliance it established in 2005 a
grading system that I understand you have been looking forward to for a few
years now.

Whilst overcoming these challenges, we at the same time, are required to
find solutions to the problems of the escalation of prices of construction
materials. I have been happy to read from your annual reports that these
matters concern you too, therefore, confirming that they are issues that affect
not only government but also yourselves. It is against this background that a
working partnership between us becomes important. It becomes urgent when we
consider especially that the country depends on you to not only deliver housing
but infrastructure expectations too and promises related to the 2010 Soccer
World Cup and the successful completion of mega-projects such as the Gautrain
rapid rail link. All of these affect the scarcity of construction materials and
their costs and the quality of outputs that are achievable.

One of the lessons we have learnt is that in housing a working partnership
does not come overnight. It also cannot be commanded or wished for. It demands
actual and conscious work and takes time to be developed. This we learnt when
for two years we successfully negotiated the South African Property Owners
Association the development of an Inclusionary Policy. We had to undergo the
same process when we negotiated with the Banking Council for an injection of
R42 billion into the affordable housing market by 31 December 2008. The two
organisations would be able to attest that the process was not easy, but it had
to happen for we all needed to gain something in order to realise the
partnership we developed.

Therefore, when your Chief Executive Officer, Pierre Fourie, wrote to me to
ask for my participation at your congress and indicated in the letter he hoped
that the 'participation will mark the beginning of a closer relationship'
between your Federation and ourselves, I realised that another necessary
process to create a working partnership would need to take place. It would need
to take place for the benefits to each one of us are indeed immense.

Consider; for example, the fact that consequent to government implementing
policies aimed at assisting the private sector to deliver and thereby removing
bottlenecks that on the way resulted in that for the first quarter of 2005 the
primary sector of which you are part experienced a 3,9 percent growth with
respect to the same period in 2004. At the same time Consumer Confidence Index
revealed surging business confidence in the country as public investment rose
by eight percent in real terms, contributing to a total fixed investment growth
of 6,5 percent.

In the period your industry reflected the largest percentage increase in
turn-over of 14,2 percent followed by mining and quarry at +9,0 percent and
real estate and other businesses services at +8,7 percent, according to
Statistics South Africa (StatsSA). Furthermore, capital expenditure on new
assets amounted to R144 336 million, reflecting an increase of 3,7 between 2004
and 2005. Again here your industry was the main beneficiary showing an increase
of +79,5 percent followed by electricity, gas and water supply at +19,1
percent. All this happened, of course, as StatsSA figures pointed out
consistent increases in building plans passed in respect of the private sector
for residential buildings.

Between January and September 2006, for example, a 13,8 percent increase in
the value of building passed by municipalities was recorded. Plans passed for
non-residential buildings rose by 31,5 percent, for additions and alterations
by 13,0 percent whilst those for residential buildings by 9,2 percent. The same
results were catalysed for the banking industry through the Memorandum of
Understanding we signed in respect of the Financial Services Charter. The South
African Reserve Bank points out here that mortgage advances increased by a 27,2
percent year-on-year as a result of the implementation of what we commonly
agreed to with the banks.

There are, of course, other organisations and institutions such as Radio 702
and Cape Talk Radio, producers of Motswako and celebrities, the South African
Women in Housing and the Federation of the Urban (and Rural) Poor, whose
working with us showed the value of creating working partnerships in housing.
Your industry finds its main growth in the construction of both residential and
non-residential buildings. Thus, the prominence from those activities of the
income of R33,117 million in 2004 in comparison, for instance to engineering
activities and the completion or renovation of other buildings. Being obviously
buoyed by this positive trend the Bureau of Market Research at the University
of South Africa predicts that in the medium term your output will remain above
three percent.

These are very good news for not only yourselves, but for me too. For if the
projections are correct, apart from attending to issues related to construction
materials and quality you also have capacity to deliver the number of new
houses we need by 2014. And this, in actual fact, is the reason why your
industry would remain buoyant beyond the 2010 Soccer World Cup and the
completion of the Gautrain rail link. To enable these outcomes we are working
hard to ensure that there is available land on which to construct new houses
and are attending to problems caused by lengthy planning process and procedures
including problems related to payments for completed work.

At an appropriate time we will be making announcements in this regard
following findings from a pilot project we are involved in with the Tshwane
Municipality. For purposes of today I would like to assure you however that as
government we are committed to increasing service delivery through working in
partnership with yourselves. In part, the large capital expenditures we have
earmarked for the next ten years which are linked to both growth and
development attest to this. And so are our policies which aim; amongst other
things, to link investments in infrastructure with assistance to strategic
economic sectors such as yourselves.

There are high expectations from our communities to deliver. There are too
high expectations from yourselves that as government we should help sustain and
enhance the upward trends that are visible within your industry. On our part,
therefore, we would like to rely on you in order to deliver to capacity in the
programmes we have. In addition to utilising your congress concretely and
perhaps in a very detailed form identify ways in which your organization could
assist government in meeting the challenges I have outlined I would like to
request that you consider establishing a housing scheme for your employees.
According to StatsSA your industry had in 2004 in its employment about 403 000.
Most of the employees are unskilled fall within the Financial Service Sector
bracket I mentioned earlier as they on average earn per month the amount of R4
200. It would be to increase their productivity to establish a scheme that
would inform them of the comprehensiveness of the package for their well being
that the industry is able to offer.

There are, therefore, opportunities to be realised in housing provided that
we work with purpose through a partnership. The partnership must seek to find
commonly agreed to innovative solutions to what is undoubtedly a key challenge
as our economy continues to grow. With a membership of over 3 000 companies
that I am told includes building contractors, sub-contractors, merchants,
suppliers and manufacturers, there is much to gain by all of us if we were to
work together.

I thank you.

Issued by: Department of Housing
10 September 2007