South African Government

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Minister Lindiwe Sisulu: Human Settlements Dept Budget Vote 2019/20

9 Jul 2019

Address by LN Sisulu, MP, Minister of Human Settlements, Water And Sanitation on the occasion of the debate on the Human Settlements budget vote (38) in the National Assembly, Cape Town.

Madam Speaker,
Honourable Members,
Chairperson of the Portfolio Committee on Human Settlements, Water and Sanitation, Honourable Semenya and members of the Portfolio Committee Members of Executive Councils,
Leaders of the Financial Service Sector,
Property Owners and Developers,
Representatives of Civil Society Groups and Non-governmental,
Members of Academic and Research Bodies,
Members of Boards and Councils of Human Settlements Entities,
Public Service Managers and officials,
Ladies and gentlemen

Is it at this point that I am expected to say it is good to be back? Well, it is good to be able to complete what one started, that is certain. It is good to be able to complete the work we started as far back as 2004, be able to take stock of where we are and what needs to be done. And I must confess, with a few interruptions here and there, some of them unfortunately negative, we have done extremely well in this sector. 

This is most probably one of my most difficult Budget Vote speeches, where do I start? We consolidated the policy around housing in 2005. It won us world acclaim and was recognised by UN-Habitat as best practice.

We have been through a golden era of innovation and housing policy. We call it Breaking New Ground and I urge Honourable Members to acquaint themselves with it. This is our policy and this is what we are busy with.

This is our programme of integrating communities that were divided by class and racial lines. This is our programme for providing free housing to all who qualify as indigent and affordable housing for low-income earners. It is a comprehensive policy that is now encoded. What we are dealing with now is ironing out the glitches while rolling out the programme.

We did indeed break new ground in our policy of integration and providing greater variety and better quality. We have been fine-tuning our policies as the need arose and upscaling our delivery and succeeding in some years and disappointing in some years. As we tested our new policy, we created several pilot projects. These  called catalytic projects. Catalytic because, not only did they serve the purpose of providing us with the objects of our policies, while they were also aimed at generating private sector support and partnerships. We used this as a model to build on scale and ensure that all elements of our policy were catered for.

We chose a number of sites, among them Cosmo City, Fleurhof, Olievenhoutbosch and Savanna City in Johannesburg, Zanemvula in Port Elizabeth and Cornubia in Durban. We endorsed them to test our policies,  the market and whether the private sector had the appetite for joint projects with government. The results were simply amazing. Honourable members would have seen in the exhibition area some of the projects we have provided for our people, in particular Cornubia and Cosmo City.

It showcases what is possible while catering primarily for our major client – the indigent at the lower end of the social ladder. We used the concept of catalytic projects because, starting from a low base of resources, we worked to partner with the private sector to fund our projects and to turn these into integrated living spaces, consisting of all amenities required by communities, including business centres and industrial zones.

I believe one of our biggest shortcomings has been our inability to fully communicate our many successes, because if we did, South Africa would know what has been provided in the space of human settlements. These catalytic projects are our cities in the making and in the process we have provided more than 4 million houses and housing opportunities. This consists of more than one million hundred thousand serviced sites (1 167 138) and more than three million two hundred thousand (3 291 891) housing units.

Despite these achievements, we remain with a registered backlog of two million three hundred thousand (2 356 025). I have yet to learn of a government that has been able to provide as much for the poorest of society, with the context within which we have had to operate of an indelible Apartheid spatial pattern and the pressure and expectations from our people. When we delivered our first million houses, we received an award from a disbelieving UN-Habitat, the first developing country to reach that mark in the time we did. And all of this was delivered free by the government. We are a leading country in the development of our vision, our policies and our rate of delivery. However, of course the problem remains with increased urbanisation and the breaking up of households into smaller units. Though much has been done, much still has to be achieved.

South Africa has been instrumental in the conceptualisation of Human Settlements and we have a responsibility to stay ahead in our implementation. It is working for us because it caters for the injustices of our spatial patterns. Success is in sight. Our biggest challenge remains the demand for housing that far outstrips delivery and the stubborn separateness of our past. Our catalytic projects, which are our new cities, cater for that in some measure. In the next five years we have determined to declare 94 priority development spaces for human settlements development, multi-programme delivery integration and spatial transformation & consolidation.

The identification of these areas has already been completed with the initial 58 already gazetted for consultation. Municipalities and Provinces must be commended for embracing and supporting the proposed priority development areas. Those that have not done so, I invite you to engage with the proposals in a visionary and progressive manner.

The transformation and consolidation of our human settlements can no longer be deferred nor excuses be made. We are building new, integrated, functional and inclusive settlements. These settlements may vary in size and complexity, but all share common elements of capable and quality infrastructure, economic production, inclusive and functional property market, families in quality homes within close proximity to the best of social amenities, recreation and learning. In these priority development areas you will not miss communities that are democratically engaged and active in building and securing their urban future and livelihoods.

Instead of Thabazimbi, eMalahleni and Matlosana becoming ghost towns that are distressed from long-term mining, these are perfect spaces of opportunity to be transformed and consolidated as vibrant and thriving urban centers offering the best of 21st century living. Our inner cities of Joburg, Pretoria, Germiston, Durban, East London and Bloemfontein cannot and must not be allowed to decay. These are priority spaces that represent the finest opportunity for spatial transformation and consolidation through renewal programmes and harnessing the inherent economic momentum within the cities.

Similarly our townships that include Khayelitsha, Soweto, uMlazi, Seshego Kanyamzane must be transformed from dormitory settlement status to vibrant economic hubs that point the way towards future city precincts where properly values are competitive in a fully functional property market. We have long accepted that settlements in their variety as villages, towns and cities are and must be centers of economic activity and growth. As we proceed to build new settlements and consolidate existing neighborhoods, we are inspired by the Special Economic Zones and Re-industrialisation programmes that are aimed at economic growth. 

In the development of these priority areas, our partners stand ready to co-invest and see the blending of public investments with private capital and equity to ensure increased and rapid delivery. We are resolute. We are building new neighbourhoods, new towns, new cities. We are consolidating our urban spaces. As we build new settlements we must also renew existing neighbourhoods and precincts that are dilapidated and suffer the ravages of neglect and poor maintenance. Our budget, although limited compared to the housing and settlements needs facing us, will be directed towards our delivery priorities and priority development areas.

We are glad to note that draft legislation on the expropriation of land has already been published and we hope that the process will be fast-tracked. If the Bill is adopted as it currently stands, we would like to take advantage of the following proposed clause dealing with abandoned property, “where the owner of the land has abandoned the land”. We would like this definition to include hijacked buildings. We would like to expropriate these in order to create social housing.

Secondly, where land is owned by the State or State Owned Entities, we would like preference to be given to us to create human settlements and places of employment. We would also like to be given first reference to all state land in urban areas to create human settlements where we will be able to create communal urban areas, including parks, sports centres, multi-purpose centres, and economic areas for small business opportunities.

The expropriation is necessary to ensure that we can create the inclusive growth that we have been talking about. It is necessary to ensure that people live closer to their places of work and to ensure that everybody has access to the facilities offered by cities and towns. The need for the expropriation of land in urban areas is absolutely essential if we are to take advantage of these to build high density housing for our middle income clients and also to ensure that the huge divide amongst race and class are narrowed down.

The draft legislation determines that no land will be expropriated for any other reason, except for the public interest. I cannot see that there is any greater public interest than what we represent at Human Settlements. It should therefore be possible for us to be the first to benefit from this legislation.

In 2009 the Housing Development Agency signed an agreement of alienation of ownership with the Provincial Government of the Western Cape to transfer land that belonged to them to the HDA so that human settlements could be created for the people of the Western Cape. As soon as the DA took control of the Western Cape, they reversed the legal agreement. I am giving notice today that we will expropriate the land that was legally transferred to the HDA.

During my Budget Vote address in 2017 I proudly announced the launch of the Human Settlements Development Bank. The Bank was set up as an apex level financial institution catering to the housing sector needs across the Human Settlements supply chain. Once fully established the HSDB will be central to all financing activities and market making activities across the housing supply chain.

At a wholesale level the bank will participate directly in the risk and funding of large scale development projects and programmes as well as facilitate and fund the requirements of housing finance intermediaries operating in the social and gap markets. The bank already supports a number of specialised asset based social housing finance entities.

This model is not new. In the not so distant past Building Societies performed much of this work and provided much of the mortgage requirements and contributed to a savings base pursuant to mortgage. This provided for much of the liquidity needed to extend into mortgages and the building of new homes. We will follow this enhancement to our work. The approach ensured much needed focus and support for housing. Today our people our confronted on the streets of the townships and cities with branches belonging to micro lenders. This has created a culture of consumption borrowers and spenders at a great cost to themselves and the economy. The HSDB will play an active role in developing the models for Housing Banks that will address these challenges at both national and locallevel.

We are attending to the challenges of the SA residential market with its dualistic form. One part functioning and well-resourced, the other dysfunctional. This is the township housing market with its nearly 4 million houses, undervalued, underleveraged economic assets. While much work is being done towards the vision of a single residential market in the future, an immediate, underscored opportunity lies in the potential of this township housing market as a key economic lever and catalyst of the township economy. At a replacement cost of approximately R350 000 per unit, the total market value of the township housing market is approximately R14 trillion. This is what we have contributed to the economy! This is the value we could leverage.

To illustrate the enormous benefit of the construction industry we could refer to the 2007 Global Financial Crisis. Contrary to the debilitating effect that the global economy experienced following the 2007 Financial Crisis the South African economy was largely unaffected. The main contributory factor being the investment in infrastructure supporting the 2010 World Cup which not only averted a financial crisis in South Africa it created tens of thousands of jobs in the construction sector and attracted billions of rands of foreign investment.

We could use our catalytic projects to stimulate local economies and create job opportunities for local residents. We might not reach the infrastructure layout of 2010, but, hey, we have a huge asset here and a huge potential. Having reached this point, we want to take a different direction from what we have concentrated on in the last fifteen years. Now that Parliament agreed on the need for expropriation of land and a draft Bill was published, we are hoping for accelerated delivery. Alongside accelerated delivery, the spin-offs will be putting land to more productive use, creating a do-it-yourself culture amongst the able-bodied and making sure every able-bodied person entitled to a house is able to do it by themselves. We want to help South Africans to pull themselves up by their bootstraps.

The project where people build their own houses is called PHP, which is the People’s Housing Programme. We have decided that we will name programmes so that they are self-explanatory and not just obscure terms. This one will henceforth be called “Zenzeleni”, which means do-it-yourself. We believe this is a much more empowering tool and will bring greater yield. What’s more, this is the answer so many have been waiting for.

As part of this approach to encourage people to take up the “do-ityourself” concept, I urge people to come together to assist each other to build a house. It has occurred to me that in most developing countries where, unlike us, the state does not play a role in providing housing, a number of innovative ideas have been tested and used. I was therefore excited to come across the use of the stokvel idea – a traditional Black urban practice of pooling resources for particular purposes to build houses.

I was pleasantly surprised to read in the media that there was at least one such stokvel in the country, although there could be more. The one I read about is the Masakhe Ladies of Phillippi, Crossroads, Khayelitsha and Strand, who have established a stokvel to build houses. To encourage others to find a way to build houses themselves, we will meet the Masakhe Ladies and fund them.

The Fourth Industrial Revolution will assist us overcome some of the problems we have. We will for instance embrace this to ensure that through satellite technology we can monitor the growth of informal settlements, invasion of land and also provide us with on-time inspections of our construction sites. Designed for purpose, we can measure the quality of the work on our projects, and we will be able to reduce the incidents of bad workmanship that has taken so much of our time and resources in rectifying badly built homes.

I am therefore establishing a fully-fledged and skilled and capacitated ICT Management Unit with the required innovative software and technology to monitor projects. This will enhance our delivery and cut down on time to ensure that our structures are solidly built. In this unit all the vital delivery information will be gathered on a real-time basis that would improve the focus, productivity, prioritise initiatives, forecast delivery trends for effective coordinated planning, track identified risks with their mitigation plans, and guide our decision making to fast-track the delivery for houses, water and sanitation to our people.

Within the next year we will ensure that we have digitised our entire platform of projects in order for persons to access the relevant information. We will ensure that we place the details of beneficiaries in the public domain, in a similar way in which matric results were announced in the past, so that the process is transparent and it removes any possibility of corrupt allocations of houses. The lists will be available for scrutiny from any public office designated for this purpose.

We would be able to cut down on our turnaround time by 50% if we increase the use of technology. We want our municipalities to be responsible to issue notice of illegal invasions. They have a responsibility to deal with and report any invasion within 48 hours to law enforcement agencies and act within the shortest possible time after receiving and eviction order. However, I urge all municipalities to be sensitive to evicting families during winter.

We will partner with the private sector to assist where land is available for people to build their own houses. This will ensure that the programme is properly managed and that due skills assistance and training is given to people who are willing and able to build their own houses. This is a programme we would like to work on on an urgent basis to assure we can make it an attractive option, especially for military veterans. We also want the municipalities to take responsibilities for the monitoring of building regulations in such projects.

We want to renew our social compact with the Banks to revitalise the FLISP programme, which has had very little uptake. The Minister of Finance has suggested that we should use more friendly language for our programmes, so that people know what we are talking about and he has suggested that this programme should be renamed “help me buy a house”. This is largely meant to assist first time buyers and will benefit government employees, a sector much in need of our support.

The Human Settlements Development Bank should be part of the Banks supporting the housing market. The HSDB has been failing in its responsibility and I give them six months to ensure that the bank is fully accessible to for those who require loans to build or buy houses. Just a few days ago I went to hand over title deeds at Cornubia in Durban and I resolved that my Deputy Minister and I will spend every Friday as a special day to hand over title deeds. I am sure that we would be able to clear the backlog in the next two years. After the event on Friday I received a message through social media that has helped me to refine my thoughts around title deeds. The message was that it would be important for people with title deeds to be assisted to write a will to ensure that this asset is not one which families go to court to fight over, because our courts are not the correct platform to resolve family disputes.

For now, we want to make it clear that the houses we give is for the benefit of the women who are the primary caregivers of the family. The handover of title deeds will ensure that we are able to unlock much of the dead assets that the house represents. Alongside giving out the title deeds must be the constant education of beneficiaries of the asset value. This is the reason that we have a clause that forbids the beneficiaries from selling the selling the house, except under stringent conditions, not before a period of eight years has elapsed. We have to develop mechanisms of monitoring the adherence of this. We will require Councilors to be involved in the process of monitoring the sale of these houses before the prescribed period.

These are our successes. We have had serious failures, fraud, corruption. You read about these on a regular basis. We are daily experiencing protests. This is where we need your support to help keep us constantly accountable. Because of the huge pressure we have around housing our people, that flares up in sporadic protests, we are determined that we will seek Cabinet’s approval for legislation that will give us and the construction industry the kind of advantage that we had when we were building the 2010 Soccer World Cup stadia and bind Treasury to a fixed budget allocation for this urgent need.

Should the Minister of Finance need to trim the fat, hopefully the legislation will protect our much needed resources. I thank you 

Concluding remarks

This budget speech is delivered when the government is required to improve government programme prioritisation and performance. Such an approach is required to ensure that we are able to meet the targets and outcomes required of the human settlements and housing sector; to improve the capabilities of South Africans to advance social transformation and to build safer communities, fight corruption and promote integrity. As a sector we continue to make a contribution to the social wage as well as economic growth.

The belt tightening exercise and focus on achieving value for money for funds allocated to the Department has become more acute. This is if we are to achieve the required targets and outcomes in this term of office. This is a critical period in the history of South Africa given that in the immediate past, we operated on a fiscal surplus and SA had managed to reduce its inherited budget deficit. Unfortunately the current period is engendered with tax cuts, credit down rating, weak economic growth and review in SOE infrastructure investments which dictates that the Department has to refocus its priorities and do more with less. I want to thank the staff working in our entities.

I have not yet had the opportunity to interact with them since I arrived back. I know some of them have experienced severe setbacks, but I want to assure them that they and the work they do are a vital part of our delivery. I pledge to meet with each one of the entities to convey my gratitude for the work they are doing and to assist them to resolve the challenges some of them are experiencing. For now, thank you for the hard work. 

We should not tolerate corruption in our space. The funding we have been given is in the name of the most needy, the indigent. We cannot tolerate any that steals from the poor. We urge that a minimum sentence should be set for theft from the poor. The Department of Human Settlements is a fairly stable, well run department under the very capable leadership of the Director-General, Mr Mbulelo Tshangana and his entire leadership team. Together with the staff of the Department of Human Settlements they have delivered on our mandate and I wish to thank them for their hard work and commitment to provide housing for our people.

Bringing together the two departments of Human Settlements and Water and Sanitation will make our work so much easier. A huge number of our projects have been blocked as we waited for water licenses. This should be behind us now. Streamlining the work of these two departments will be a priority.

I thank you