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Honourable Speaker
Madame Deputy Speaker
Honourable Premier
Members of the Executive Council
Mayors
Members of the House
Distinguished Guests
Ladies and Gentlemen
Comrades and Friends

It is indeed a great honour to present to this house the Gauteng Housing Budget for the financial year 2001/2002.

The apartheid past is depicted by historic events and policies that significantly shaped the face of our provincial development landscape, and the housing sector in particular. These historical events and policies subjected the majority of our people to squalor, poverty and other appalling living conditions.

The state machinery attempted to thwart the settlement of African people in urban areas. The Group Areas Act zoned residential developments in relation to racial classification, while the Land Act prevented black people from acquiring land, let alone owning it, and the Influx Control Act made it difficult for Africans to settle in urban areas and relegated them to the homeland areas. These were the major influencing factors that have determined the landscape inherited by the present government.

The advent of democracy, which followed the 1994 national elections, ushered
in a period of accelerated growth and development, and indeed a paradigm of
unprecedented social development and transformation.

We are now six years into our new democracy and this growth, development and transformation is evident in most parts of our country, and the Province of Gauteng in particular. We need to constantly remind ourselves of the common understanding of the mandate that the people of Gauteng have given this government. This mandate is clearly articulated in the Election Manifesto of the governing party and the RDP document, these represent unambiguous expressions of our people's aspirations. Our duty is to translate these aspirations into reality, of course within the constraints of available capacities and resources.

Honourable members, our mandate compels us, now even more than ever before, to deliver quality services and accelerated housing delivery, with the emphasis placed on "building sustainable communities".

When the, the African National Congress, was elected in the 1999 general election we committed ourselves to:

* Accelerated delivery
* The provision of quality services to all our people and
* Ensuring good governance in our province

Speed was of the essence in ensuring that the legacy of apartheid that had condemned the majority of our people to homelessness, characterised by poverty and squalor, was eradicated through an integrated development approach. We had to move away from this shameful history that was implemented through deliberate policies and legislation that trampled on the basic human rights of the majority of our population. This resulted in black people being settled on the periphery of towns and cities, thus depriving them of easy access to employment opportunities and basic amenities.

As black people were not recognised as permanent residents in urban areas, and with the systematic implementation and enforcement of the aforementioned policies and legislation, our country and the province of Gauteng now face a housing backlog of massive proportions. The waiting lists are an inheritance of our past and did not start occurring in 1994.

KEY ACHIEVEMENTS

Comrade Speaker, it was a year ago in this very room, when I delivered my budget speech, that a promise was made to deliver housing at an accelerated pace; that projects were to be initiated to focus on sectors of our society with special needs; that the promotion of the involvement of women in various roles in housing delivery were to be promoted; that ways were to be found to increase access to finance by the poor by unblocking alternative funding sources; and that the housing waiting list was to be improved and streamlined.

Despite major constraints and challenges we have achieved phenomenal results. Through the departmental initiatives and also those of our strategic partners:

* We have to date delivered 132 220 RDP houses;
* Through the Incremental Programme, 57 102 stands have been serviced and 16117 houses built;
* The Social Housing Programme has produced 7872 stands and 6752 units.
* A total of 160 000 people have received title deeds and are now owners of houses that they previously "rented" from the state;
* Accommodation for over 80 000 people living in public sector hostels have been upgraded;
* For every new project, 5% of subsidy allocations are reserved for people with disabilities and the aged;
* Relationships have been established with such groupings as Women in Housing and Women in Construction to sharpen strategies for women's involvement in housing delivery;
* A major workshop was held to explore alternative housing finance options, from which a high powered Task Team was created made up of leading bankers and housing finance experts, whose report is currently being considered;
* Internal capacity for the management of the Waiting List has been created, all consultants have now been replaced by this in-house resource, and we are now moving towards introducing a web-enabled (Internet based)
interactive waiting list management system;
* Our internal administrative capacity and efficiency has been improved.

It is as a result of initiatives such as these that more than a million people now have a roof over their heads, clean water, sanitation, access roads and a place they can proudly call "home".

KEY CHALLENGES

Comrade Speaker, Gauteng (according to the Central Statistics Services - CSS) has a population of more than 7.3 million. Of these people, about 3% live in non-urban areas. 19% of these people are aged between 15 and 24 years old. These present a challenge of new family formations over the next 10 years, which works out to about 20 000 new families per year, compounding the existing backlog.

In Gauteng, about 28% of economically active people are unemployed. Of those who are employed, about 50% earn less than R1500 per month. This means that more than 50% of the Gauteng population has limited ability to save and thus lack access to finance.

About 6% of the Gauteng population is over 60 years of age, while about 450 000 people have some form of disability or the other. These present a challenge of facilitating access to housing for the aged and for the people with disabilities. This is over and above the more than 500 000 backlog with regard to those people who are homeless or without adequate shelter in terms of our waiting list.

The current backlog in terms of households without security of tenure is estimated at about 200 000, where the focus will be on upgrading informal settlements that have no formalised access to social and municipal services. The current backlog in terms of households without water and sanitation is estimated at about 300 000. This is besides the estimates derived from the municipal IDP processes with regard to adequate housing and also estimates based on the provincial "waiting list".

Honourable Speaker and Members of the House, the problem is further compounded by the fact that the housing backlog in Gauteng is actually increasing. Close to 50 000 new households are formed every year as a result of the combined effect of natural growth and urbanisation.

STRATEGIES

The Housing Strategic Management Planning process has embarked on an ambitious process of developing detailed Business Plans for all the key programmes of the department over the next three years in particular, this within the context of the 5-year framework implemented from the year 2000.

Through the "provincial priorities" we strive to ensure that all new housing projects occur on "well located" land, and to ensure that over the medium term, all informal settlements are transformed into viable, liveable and vibrant communities.

Comrade Speaker, as it has become quite obvious from the data put before you, that affordability levels are extremely low and it becomes absolutely imperative that we develop appropriate housing strategies in our province. It has become imperative that we develop housing delivery options that are creative and innovative.

Given this reality of diminishing resources and an increasing backlog, our multi-year strategic plan allows us to provide:
* Tenure security to all the people of Gauteng in 3 years;
* Develop municipal and other social services (including upgrading of informal settlements) to 100 000 households over a 3 year period;
* We endeavour to develop at least 20 000 freehold housing units and 10 000 rental housing units per year over the same period;
* Through the Mayibuye Programme, we intend to upgrade at least 30 000 sites this year alone;
* Through the People's Housing Partnership process, and in particular, the partnership with communities, facilitate the development of at least 2 000 self-help housing initiatives this year alone, to be doubled next year and the year after;
* Retain a bias towards the poorest sectors of our society.

The key elements of a holistic approach to housing development include:

* Targeting - this is largely a conscious attempt to segment the target market and, "right size" the delivery option;
* Ensuring that all new projects occur on well located land, consistent with the Gauteng Spatial Development Strategy and the Gauteng Economic and Industrial Development Strategy;
* Initiate a move away from stand-alone "subsidy grants" towards a "co-investment" approach, where both government and the private sector assume an element of risk consistent acceptable returns;
* Integrated development and other strategic interventions in urban renewal and rural developments.

The Department will ensure that housing delivery is accelerated through various tenure options. To ensure this, we will aim to allocate our budget as follows:

1. Formal Housing 50%
2. Incremental Housing (upgrade of informal settlements) 37%
3. Rental Housing 12.5%
4. Other programmes 5%

1. Formal Housing

In order to give effect to the strategy outlined earlier, formal housing projects will be targeted primarily at households earning up to R2 500 per month within the context of development on well-located land in terms of the spatial, economic and industrial development frameworks. These will take the form of mass housing projects and in-fill housing schemes.

These projects shall aim to integrate households of varying incomes within mixed housing typologies, including free-standing houses, flats and semi-detached houses. The key feature shall be the involvement of the emerging contractors and developers and the mobilisation of credit and savings. Together with other departments, schools, clinics, recreational facilities and other amenities will be provided.

Some of the projects already approved, and in the process of being implemented include:
* Cosmo City north of Johannesburg (Randburg)
* Lotus Gardens (Pretoria) in the Tshwane municipal area and
* Tsakane Ridge in the Ekurhuleni municipal area.
* Leeupoort Ekurhuleni municipal area.

This programme is aimed at delivering an estimated 27 000 housing units during the current financial year.

2. Incremental Housing

All the programmes that are aimed at developing adequate housing over a period of time, at the rate and pace shaped largely by the affordability levels of the beneficiaries, have been clustered into one priority programme to be known as the Incremental Housing Programme. This will focus on upgrading and servicing sites in informal settlements, whilst ensuring the provision of tenure security to thousands of people living in such settlements. This will be undertaken in collaboration with local government and will upgrade existing settlements and eradicate any new ones. This is targeted at households earning up to R1 500 per month.

The most important element of this programme is the harnessing of community based equity and energy. The output will be the building of capacity of communities and local authorities to engage with People's Housing Processes. The emphasis is on the mobilisation of "sweat equity" in support of housing projects by ensuring that even the very poor and the unemployed also have an opportunity to be provided with adequate housing.

Key Projects include:
* Kliptown (Soweto);
* Palm Ridge in the Ekurhuleni municipal area;
* Diepsloot and Zandspruit (North of Johannesburg);
* The Mining Belt in the Ekurhuleni municipal area;
* Dolomite settlements relocations, Bekkersdal in the West Rand;
* Kanana in the Sedibeng area.

(a) Peoples Housing Partnership Programme

In support of and to encourage community driven initiatives, the Department will establish a number of Housing Support Centres over the next three years. During the course of this financial year we have budgeted for 10 such centres in:

City of Johannesburg
* Orange Farm
* Ivory Park
* Diepsloot
* Alexandra

Ekurhuleni
* Katlehong
* Kwa-Thema

City of Tshwane
* Soshanguve
* Mamelodi

Sedibeng
* Kanana

West Rand
* Rietfontein
* Muldersdrift

The idea behind this programme is to assist people living on serviced sites to build their own homes. We believe that this programme has the potential to harness human resources in our communities and unleash a great drive in quality housing delivery. This programme will be supported through public-private-community partnerships with building material suppliers and communities building themselves. This initiative is expected to deliver 20 000 homes by the year 2004.

3. Rental and Social Housing

In keeping with our commitment to providing various forms of tenure, we have allocated 12.5% of our budget to the provision of rental accommodation.

Focus will be on providing high-density units particularly in the inner cities of Johannesburg, Pretoria and Germiston. Towards this end there are projects already under construction in Germiston and the Newtown Cultural Precinct in Johannesburg.

5000 additional rental units will be provided through the Presidential Job Summit programme, with a subsidy amount of R80 million already been approved for construction in the City of Johannesburg. These projects are earmarked for the Newtown area and Elias Motsoaledi in the Baralink area.

A number of 20 housing institutions will be funded in order to expand institutional capacity to manage rental accommodation. Additional resources allocated from the Job Summit will enable us to increase our capacity to provide rental accommodation to about 25% of our Housing budget in the Province. This programme will deliver about 12 000 rental units over the next three years.

This programme is aimed primarily at beneficiaries earning between R1500 to R3500 per month. The key challenge in this regard is to focus on housing associations and housing co-operatives in order to:
* Build new capacity within the social housing sector;
* Facilitate access to institutional loan finance;
* Regulate and monitor financial sustainability of housing associations.

We have also developed strategies to focus on the Private Rental market. This will endeavour to:
* Assist those who do not qualify for housing subsidies, i.e. single people and migrants from other provinces, possibly including refugees;
* Regulate backyard accommodation in the old "townships".

For the stabilisation of the rental housing market, the establishment of the Rental Tribunal will be established by June 2001 to deal with disputes emanating from this sector.

OTHER PROGRAMMES

(a) Transfer of Housing

The programme provides security of tenure to households in terms of the Discount Benefit Scheme.

Estimates indicate that about 160 000 existing properties will be registered and transferred within the next three years. Houses built by the Houses of Delegates and Representatives in former Indian and Coloured areas will also be transferred to their rightful owners through the Discount Benefit scheme.

All properties owned by the Department that cannot be transferred through the discount benefit scheme will be retained as rental accommodation.

(b) Asset Management:

In order to recover income from both the sold and rented properties, the Department has appointed debt collection agencies. With the assistance of the agencies, we have managed to collect R860 000.00 during the financial year.

The Department has devolved 2 538 units (flats and free-standing houses) to local authorities for the period 2000/2001. Negotiations are currently underway with Tshwane Metro Municipality (agreement already signed - implementation date 1/7/2001), City Council of Boksburg Trading Entity, City Council of Benoni Trading Entity and Kungwini Local Council (Agreement already signed - implementation date 1/7/2001) to devolve a further 4646 units to them. The target date for completion of all these devolution projects is end of June 2001.

(b) Hostels Redevelopment

The Hostels Redevelopment programme is on track. The study to review the strategy has been completed and is currently being considered, but the new strategy should not depart from the key tenets of the strategy to convert hostels into family units. The following hostels, amongst others, are already approved for upgrading and conversion: - Thokoza; Sebokeng; Saulsville; Soshanguve; Meadowlands and Diepkloof.

(d) Rural Housing

In partnership with the National Government, the department intends to finalise the Integrated Rural Development Housing Initiative as part of the Presidential Pilot Projects, along with the Gauteng Department of Agriculture, Environment and Conservation with particular focus on Dinokeng Tsa Taimane Game Park and the World Heritage Site, the Cradle of Humankind, in the West Rand.

(e)The Alexander Renewal Project

The President's commitment of R1.3b in his Opening of Parliament address for the renewal of Alexandra Township over the next sevens is a clear indication of the present governments' commitment to urban regeneration. The Gauteng government has also committed R200 million over the next three years towards this project. An amount of R25 million has been approved for the current financial year by the Gauteng Government. It is also expected that the city of Johannesburg will commit additional resources to this project. An estimated R180m will be spent during this financial year.

The Alexandra Renewal Project is aimed at fundamentally improving the living conditions and thus enhancing the potential within this area by:
* Substantially reducing levels of unemployment
* Creating a healthy and clean living environment
* Providing affordable and sustainable social and engineering services
* Reducing levels of crime and violence
* Upgrading existing housing environments and creating new affordable housing opportunities

During the next seven years:

* More than 50 000 new houses will be built and more than 11 000 households will be relocated to other appropriate housing developments. The de-densification will enable the redevelopment of the old Alexandra
* Edenvale Hospital will be upgraded and become the referral hospital for Greater Alexandra
* Services provided by existing clinics will be better co-ordinated and improved to enhance primary health care services
* All schools in the area will be properly fenced off and facilities upgraded
* Two more primary schools and a high school will be built
* A new police station is currently under construction
* The community policing forum will be strengthened
* Better co-ordinated policing efforts will be geared towards reducing the high levels of crime in Alexandra and the surrounding areas
* The industrial areas of Kew, Marlborough and Wynberg will be revitalised to create economic opportunities for the people of Alexandra.

This will go some way towards reducing the 60% unemployment rate in the area

KEY POLICY INTERVENTIONS

(a) Housing Finance

Comrade Speaker, the principle of contributions by the private sector and communities must be at the heart of the housing strategy. Currently the government contributes 90% to this end of the housing market, making it the single biggest contributor. There are very low savings and credit contributions. It is thus vital that a programme be developed to gear housing finance.

At the conclusion of the Gauteng Housing Finance Indaba held on 17 and 18 August 2000, a task team comprised of public and private stakeholders was tasked to investigate this matter further. The following recommendations have been proposed:

* The department in collaboration with the private sector will develop a broad ranging education programme, designed to inform potential homeowners and users of housing finance credit of their rights, duties and obligations before they apply for finance.
* These include payment discipline and the implications of not meeting this obligation.
* An understanding of tenure options and concepts of personal equity will form a fundamental component of the program.
* A programme in which homeowners will be required to prove that they are capable of equal and regular payments will be established as an indication of their willingness and ability to save.
* The amendment of certain legislation and policies and the development of risk mitigation strategies that have the objective to direct finance from capital markets to direct lenders.
* An urgent intervention for the provision of special risk cover for housing finance to deal with the HIVAIDS pandemic.

(b) HIV/AIDS

For the first time the Gauteng Department of Housing has allocated R1 million for a pilot project aimed specifically at addressing the needs of people living with AIDS and AIDS orphans.

The AIDS Campaign Manager post has been created to run on a sustained basis with the programme. A more comprehensive policy and action plan will be finalised during the course of the year.

(c) Women in Housing

A recent survey has shown that women head more than 50% of the households living in informal settlements. We will thus continue to ensure that women's role in low cost housing delivery is promoted and encouraged. Towards this end, we have committed 10% of this financial years budget for women led construction companies.

(d) Better Management Systems

* Subsidy System

The department has taken steps to improve the management of subsidies in order to:
* improve controls over subsidy allocations process
* eliminate fraud and
* improve payment systems thus ensuring timeous payments to developers

The National Department of Housing is currently developing a new subsidy system. It will be an integrated subsidy, project and financial system which will go a long way in improving record keeping and providing an effective management tool for the department.

During the current financial year, clients will be able to access the waiting list through the Internet. This facility, looked at in the context of the gautengonline.com initiative, will improve access as clients will be able to register wherever there is Internet and email facility available.

The waiting list is of great importance as it will be the only tool for allocating subsidies. Exceptions in cases where there are compelling needs can only be considered and approved by the MEC for Housing upon recommendation by local authorities. Strict adherence to the waiting list will ensure that queue jumping and other corrupt practices are eliminated.

* Internal Controls

A new Sub-Directorate for contract management has been established under the Legal Services and Contract Management Directorate with effect from April 2001.

One of the Objectives of this Sub-Directorate is to ensure that the nature of needs and requirements, as well as the extent of such requirements are clearly identified before contracts for consulting work are put out to tender.

All existing contracts entered into since 1994 between the Department and Consultants and Contractors are being reviewed to ensure that the interests of the Department and the Government are fully protected. The contracts review process being undertaken will also review contracts concluded for the purpose of skills transfer and capacity building. Where these priorities are not clearly indicated in the contract, contracts will be revised or addendums made to the contracts made to highlight the priorities.

The Sub-Directorate is establishing a filling system that will ensure that there is complete, relevant, accurate information on all contracts. This system will be implemented by 1st July 2001. It will ensure that payments are made only when performance objectives of consultants/contractors and outputs are met, and that payments made are in accordance with the contract agreement.

In line with the recommendations of the Public Protector, an internal investigations unit has been established. In general, the establishment of this Directorate will give the department the capacity to eliminate fraud, corruption and ensure value for money through better management of contracts.

* Capacity Building

For the past three years, the department has in collaboration with the Wits P&DM School provided capacity improvement courses for the department and local government authorities and this year we have allocated R1 million for this purpose.

NHRB

The National Department of Housing obtained Minmec's approval to apply the requirements of the Housing Consumers Protection Measures Act with the aim to improve the quality of these housing products. New projects and housing products in the subsidy only market must conform to the specifications as determined by the National Home Builders Registration Council (NHBRC).

This Act provides for all homebuilders to be registered under the National Home Builders Registration Council and gives homebuyers structural defects warranty for five years.

The implementation date is planned for 1 April 2002.

This initiative will support the Department's objective to place more emphasis on the quality of the housing products.

CURRENT BUDGET

The total allocation to Budget Vote 7: Housing for this Financial Year is R849.3m. The funding allocations to different Programmes are as follows:
* Management and Adminstration: R 38.0m
* Policy, Planning and Communication: R 61.5m
* Housing: R532.9m
* Tenure and Assets Management: R216.9m

TOTAL: R849.3m

Included in the above allocations are the following amounts with regard to capital expenditure:
* Formal Housing: R312.3m
* Incremental Housing: R142.2m
* Rental/Social Housing; R143.3m
* Other projects: R111.9m

TOTAL: R709.7m
Operational Expenditure; R139.6m

CONCLUSION

Comrade Speaker, this budget is not about facts and figures, but about how on a daily basis we can make the lives of our people better. We have gone a long way. However, the challenges facing us will require close partnership between the government, the private sector and communities.

The strategy in which government is responsible for 90% of affordable low- income housing is unsustainable. We need to move speedily to unlock private sector funding for this housing market segment.

We will have to learn from experiences of other countries such as China and Malaysia, where affordable low-income housing is provided through cross-subsidisation by private sector initiatives financed by banks. This strategic shift is critical because it integrates low and high-income housing developments. It also creates an environment to provide quality affordable housing to the broadest possible sections of our communities.

This is the route we have to take. The creation of viable sustainable communities requires private/public partnerships.

We believe that the Budget presented here today reflects the positive steps that we will be taking in the coming year to meet the challenge of combating homelessness, thereby contributing to the improvement of the lives of ordinary people.

Everyday a brick is laid, a water tap is installed, brings hope to thousands of people who are desperately waiting. Together with them, we shall strive to make this dream a reality. Together, we shall build sustainable communities.

Lastly, let me take this opportunity to thank honourable Mohammed Dangor, Chairperson of the Housing Standing Committee and all Members of his Committee. Your continued regular engagement with our Department has been most fruitful.

Let me also thank the HOD, Sibusiso Buthelezi, the Chief Directors, Willem Odendaal, Carien Engelbrecht, Malindi Nembambula and Yasmin Coovadia, and all other managers and the entire staff of the Department. These are dedicated and competent men and women without whom I cannot succeed in my work. I am indeed grateful for your effort and wish all of you success in your difficult tasks.

Let us continue the partnership with our people to bring about sustainable communities. As they say, "a journey of a thousand miles begins with a single step," we have taken the first.

Thank you very much.

For more enquiries contact: Delca Maluleke (Gauteng Department of Housing), 082 493 3844

Issued by the Office of the Premier, Gauteng, 29 May 2001