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INTRODUCTION

It is now 8 years since we began with the housing programme which is directed at improving the living conditions of our people. For all practical purposes, implementation of the 1994 White Paper on Housing has been completed and although the basic tenets of the policy are sound, some gaps still remain.

Whereas housing was used as part of the control mechanism of the apartheid government, we have said housing is an essential pillar of our policy to create "a better life for all". We are striving to ensure the progressive realisation of this basic right through the biggest and widely spread spending on social budgets by any government in the history of South Africa. It is at the heart of the transformation and development programme of our country for better human settlements.

Various policy instruments are still relatively new and their impact is still to be felt, especially in rural areas, where development has been retarded on account of tenure uncertainty and capacity constraints. As a result certain policy outcomes have not fully met some of the expectations and the full spectrum of housing needs have yet to be met in the most economic, efficient and effective manner possible.

We have successfully shifted the focus from policy-making of the early years to implementation, policy enhancement and refinement. This is informed by the experience and dynamics of housing provision and the need to improve performance in the housing sector. In future, more attention will be paid to monitoring and performance evaluation to assess the various policies, strategies and programmes.

While housing delivery has reached optimum levels, in so far as the available budget is concerned, we have shifted emphasis to the more qualitative aspects of delivery. Our efforts are more directed at streamlining of procedures, increasing administrative efficiency, ensuring quality housing products, better value for money and broadening choice for our communities. And we are adjusting our approaches to ensure that by contributing their own efforts for their housing, more of our people can benefit more quickly.

Today, as the democratically elected Parliament of the Republic of South Africa debates the housing budget for this financial year, we can rightly say that housing is well on track and is a significant thrust in our strategy to transform and stabilise our society.

GROWTH AND EMPLOYMENT

The preamble to the Housing Act, 1997 (Act 107 of 1997) recognises housing as a key sector of the national economy. Housing is an important contributor to growth, employment creation and wealth generation.

Housing has a low import propensity and its forward and backward linkages to development process stimulate economic activity across a broad spectrum of economic sectors. Low-cost housing, in particular, lends itself to labour intensive practices that provide work for people with relatively low skill levels. For these reasons, and a host of others, housing is a growth catalyst of inestimable value to the socio-economic well-being of the nation.

However, housing is not able to function properly unless prevailing economic conditions are conducive to growth and investment. Unfortunately for us, growth has been sluggish and many negative factors have had to be overcome. Potentially, housing can be a major engine of national and local economic growth.

The use of local labour and small contractors in housing development is one of the guiding principles of the Housing Subsidy Programme which ensured the circulation of wages in local economies and resulted in a local multiplier effect. Correctly designed and regulated, housing can serve the dual purposes of providing living as well as working space for purposes of income generation.

INVESTMENT PROMOTION

Inflation in the building and construction industry, and in housing sector, has been contained to single digit-figures for several years. In this climate of growing confidence and against the background of expectations of accelerated economic growth, the state-assisted delivery segment of the housing market came under pressure as developers and contractors left the segment for the less risky and more profitable middle and high income housing market.

To achieve the objective of sustainable investment in low-cost housing, we aim to introduce measures:

* to improve efficiency in housing subsidy administration, to reduce administrative risk that inhabits private investment.
* to ensure a fair and equitable system of competitive procurement in respect of housing development contracts that emanate from the National Housing Subsidy Programme and
* to promote appropriate training in home building construction and management in order to ensure adequate capacity among emerging building contractors from previously disadvantaged groups, provincial and local government officials and consumer education for low income earners.

RISK MANAGEMENT

Although rent and services and bonds boycotts belong to the past, their legacy will be with us for a considerable time because the scars of consequential impoverishment and entrenched forms of behaviour heal slowly. The normalisation of the housing environment was one of the strategic thrusts of the 1994 White Paper on Housing. We continue with our efforts in support of the normalisation process.

For as long as the situation is perceived not to have been sufficiently normalised, Government will have to manage inherent risks if private investment in housing is to reach desired levels. In mitigation of risk, government is committed to political and administrative certainty. We will continue to consistently apply housing policy and strategy in an efficient and effective manner within the framework of an enabling regulatory environment.

SAVINGS

Our continued assessment reveals that our policy has had an unintended consequence, which is dependency and which negates self sufficiency. Our noble intentions of providing basic shelter to the poor have also promoted total dependency on the state, providing for all.

Contrary to this, two glaring truths about our country are apparent. Firstly, thousands of stokvels and societies exist in our communities and are proof that our people are not only capable of saving , but that they indeed do so in very organised and disciplined fashion.

Secondly, the ingenuity of the informal settlements and the building traditions of the rural areas show that our people are ready and willing to contribute their own labour to improving their housing if sweat is the only equity they can afford.

The monetary value we have placed on the beneficiary contribution is R2479. And there will be three ways in which contributions are made :

* Firstly, through a savings scheme, either with a bank or non-traditional savings institutions

* Secondly, in the form of a small or micro loan from a lender

* And thirdly for anyone who has neither the means to save nor the necessary standing with a lenders, the amount can be contributed in the form of sweat equity or work on the house construction as is done in the People's Housing Process

This contribution will become an integral part of our subsidy programme and will facilitate the improvement of the quality of the house to meet the requirement of the Housing Consumer Protection Measures Act through the National Home Builders Registration Council Standards.

There will now be a condition for getting a Government Housing Subsidy. That is a contribution of R2479 from each and every recipient of a subsidy, with effect from April 2002.

There will be very clearly and narrowly defined exception to this rule, which will be applied on a case by case basis. I can indicate, that Government does not believe that it would be fair to expect differently-abled people, pensioners and the indigent to contribute to their housing in this way. Under this new dispensation, these special categories will receive the full amount of subsidy without having to make this contribution. But we still wish to encourage the young and able-bodied to play a meaningful role in acquiring their home.

Housing subsidies, therefore, as currently structured, tend to promote dependency on state support and negate self-sufficiency. Savings and sweat equity contributions by prospective homeowners, which have not been encouraged enough, are now the central thrust of our subsidisation programme. Our aim is to combat dependency and its twin sister disempowerment in favour of self-sufficiency and its twin sister sense of ownership, not only of individual housing but also of the country.

Madam Speaker, Honourable Members, our people can contribute through savings and sweat equity to empowerment and sustainable development. To match this Government has agreed to support their efforts by increasing its contribution through the housing subsidy.

INCREASE IN THE SUBSIDY

Today, I am extremely pleased to be able to announce to the house and to the nation an increase in the housing subsidy of between 28,87% and 57,64 %. This is not only compensation for the inflationary effect on the subsidy but results in real improvement in the houses to be built from this financial year onwards.

This increase is intended to benefit the poor by affording them a better house when combined with their own contribution. It is not intended to line the pockets of developers, builders and material suppliers with more profit. This increase is a deliberate incentive on our part to encourage savings and own contributions.

Today I can announce that the

R16 000 subsidy will increase to R20 300, a 26.87% increase for those earning less than R1 500 income per month,

R10 000 subsidy to R14,900, a 48.8% increase of R1 501 to R2 500 earners

R5 500 subsidy to R 8,200, a 54% increase of R2 501 to R3 500 earners

For the aged, disabled and indigent the subsidy increase is from R16 000 to R22 800 - an increase of 42.5%. The consolidation subsidy will increase by R2 400 from R8 500 to R10 900 - an increase of R28.23% and by R4 900 to R13 400, an increase of 57.64% for the aged, disabled and indigent.

Housing budget additional amount for the increase in subsidy are:

R300m for 2002/2003
R579 m for 2003/2004
R574m for 2004/2005

In December 2001 Cabinet approved the application and expenditure of additional allocations which entails:

* Increase in the quantum if the subsidy - inflation
* A medium density housing programme - R27 000,00 subsidy; and
* Enhancement of quality of houses - NHBRC warranty scheme & own contribution

Details on the allocation of funds to provinces are provided in Annexure A of the copies of the speech.

This is a clear message that Government will to help those who can help themselves and yet create a safety net for those who are truly not able to fend for themselves. It is a message that confirms that housing remains a priority for this African National Congress led Government.

As we move forward in our quest to provide more opportunities for those in need of housing, we are determined that the quality of the individual house, in our towns, cities and villages should improve.

RENTAL HOUSING

From a policy perspective, criticism indicates that too much emphasis was initially placed on ownership. This is understandable when viewed against the background of past deprivation of property rights affecting the majority of the population. However, a more balanced approach is indicated - hence recent initiatives to normalise the rental housing market and promote alternative tenure options.

The lack of a comprehensive rental housing policy has been recognised as a shortcoming and a process has been initiated to fulfil this need. The Rental Housing Act, 1999 (Act 50 of 1999), has been adopted and the Social Housing Foundation has been statutorily recognised and mandated to promote the concept of co-operative housing and to assist in the establishment of institutions to hold and manage housing stock on a sustainable basis.

The National Presidential Job Summit Housing Pilot Programme will inform the process of establishing rental housing policy. Various options of providing rental housing , based on a holistic, viable and sustainable process of integrated community development, will be tested. The Department has finalised the drafting of a social housing policy which will constitute a great part of our drive to promoting rental housing.

HOSTEL REDEVELOPMENT

The Hostel Redevelopment Programme will also become a second thrust in promoting rental housing. The programme focuses on providing choice and encouraging the development of family unit for affordable rent. Transformation and redevelopment of hostels are key to the restoration of dignity to this sector of our society , the hostel dwellers. It is intended to reverse the worst kind of discrimination, which forced many of our people to live in overcrowded single sex hostels, denied the right to live with their families.

To add insult to injury, these hostels had minimum or no facilities and were isolated from surrounding communities. We need only recall the bloodshed in the early nineties to know that never again should our people be expected to live under such conditions, robbed of the very basics of their dignity.

SOCIAL HOUSING

A Draft Social Housing Bill was developed last year. This Bill is currently being refined in line with the Social Housing Policy discussion document that has been developed. It aims to establish a sustainable social housing process, provide for the establishment of the Office of the Registrar of Social Housing Institutions and affords statutory recognition to housing Institutions.

This Office will establish accreditation processes and criteria for housing institutions and generally regulate, inspect and do all things necessary to ensure good governance and sustainability of housing institutions.

HOUSING DELIVERY

Eight years since we began the housing programme , we can rightfully point to many achievements. Even by international standards, we can point to an unprecedented rate of delivery which resulted in 1.325 million houses built or under construction and a total expenditure by Government of R18.4 billion, which has provided over 5 million people who previously did not have shelter, a place they call home.

I would be failing in my duties if I did not also indicate the challenges we still face:

* a number of our policy instruments are still relatively new and their full positive impact is still to be felt at grassroots level. This is specially the case in rural areas, where development has sometimes been retarded on account of tenure uncertainty and capacity constraints

* The slow transfer of land and delays in township establishment procedures sometimes due to capacity constraints at local government level

* The re-emergence of the problem of under spending in some of the provinces indicates insufficient capacity at provincial and local government level.

PROVINCIAL EXPENDITURE

The summary of expenditure analysis by provinces reveals that we are again faced with the challenge of under-expenditure in certain provinces. Some of these provinces have been experiencing under spending since the beginning of the financial year 2001/2002. The reasons that have been advanced for this situation are summarised below as follows:

• Slow processing of the transfer of land
• The slow process of accrediting the local authorities
• Late finalisation of new contracts with developers because business plans were not yet in palace;
• In the Western Cape expenditure started very slow in the first half of the year due to high number of projects that were at final stages of completion affected by slow transfer;
• New local government structures that have to take responsibility for approving/reprioritising of projects and delays in decision making processes, and
• Unseasonal/unusually wet weather and floods.

ANTI CORRUPTION CAMPAIGN

A document researched for the SADC on corruption revealed disturbing results from which we as a country should learn. In a survey sampling 2200 respondents conducted between 6 July and 30 August 2000, the research found that beneficiaries of government services in a number of member states have been asked to bribe before they could get a house - with 4% of those interviewed confirming this. The form of corruption mentioned by those interviewed, amongst others, is that of beneficiaries are often asked for a bribe to qualify irregularly when they actually are above the scale set for beneficiaries. I will limit myself here to housing matters only as my interpretation of the survey.

When talking to beneficiaries through my regular radio programmes that I do in various language stations, I have gathered from listeners that:

* Women have been asked to provide sexual favours before they can get a house.
* Individuals not qualifying for a housing subsidy have accessed the subsidy. This constitutes corruption because the subsidy is meant for the poorest of the poor.
* Individuals accessing more than one subsidy assisted by some officials or councillors is a matter to be clarified by the investigation.
* Individuals receiving the RDP house but using the house for the unacceptable activities like brothels.
* People exchanging the RDP houses without following the Pre-emptive clause requirements. If identified, the law shall take its course.

The survey I am talking about does not put South Africa in a desperate state because I think this government is determined to deal with corruption.

Madam Speaker and Honourable Members, I have the pleasure of announcing that the investigation task team tasked to investigate fraud, corruption, maladministration and mismanagement is now fully operational. It will operate in collaboration with the Special Investigative Unit, Director of Public Prosecutions, Office of Serious Economic Offences, the Auditor-General, the South African Police Service and the National Anti-Corruption Forum.

HOUSING FINANCE

Interest rates express the cost of capital employed in the housing development process as well as the return on capital invested, either as development capital or home loan finance. Accordingly, interest rates influence both the price of housing and the ability to consumers to pay rent or purchase instalments.

Fortunately, interest rates have declined sharply in recent times. For example, mortgage interest rates declined from a peak level of 24% per annum, approximately three years ago to a current level of about 14,5%. Comparable global rates in developed countries with low inflation average half of that - a situation to which South Africa must continue to aspire, if any impact whatsoever is to be made on the housing backlog.

Current interest rates are, however, still too high for the average housing consumer - hence state assistance is still required by almost sixty percent of the population, if access to adequate housing is to be obtained. The solution to this dilemma is twofold - in the first instance, interest rates must continue their downward trend and, secondly, job creation must be stimulated so that people can afford to pay for their housing.

We have scrapped transfer duties on houses valued at under R100 000 to reduce the inherent cost of buying a house to first time home buyers and making housing more affordable to lower income earners. This, together with a moderate interest rate, means more people can afford a new home.

Financial Institutions

For as long as I have been Minister of Housing, we have been in discussion with the major banks about their role in developing and creating opportunities and choice in the housing market. We established no less than three housing institutions to normalise lending and establish risk management and mitigation measures. We have indeed bent over backwards to be responsive to legitimate concerns of financial institutions.

However, home loan finance is still not sufficiently accessible. Banks, in particular, have failed to adjust to the needs of a changing housing marketing and look beyond inappropriate traditional mortgages, as others in the financial services sector have done. We have, in turn, often encountered good will and a desire to respond to the country's housing needs from within the banking sector but the response has not swelled to the chorus of resounding support that we would have liked to hear by now.

Community Reinvestment

As a result, in year 2000, we promulgated the Home Loan and Mortgage Disclosure Act to assess lending patterns and this month we have published the sister legislation, the Draft Community Reinvestment Bill for public comment prior to submission to Parliament.

I would like to encourage all role-players, including community organisations to actively participate in the formulation of this very important piece of legislation, which can only be of benefit to our people and the transformation of financial services industry.

We commit ourselves to increase choices available to our people and will work toward a system of beneficiary participation where most people assisted by the Government with their housing, can further contribute through accessing credit, or contribute savings or their sweat equity.

Vuk'uzenzele, Letsema!

INTERNATIONAL ENGAGEMENT

It is important to place housing in its wider context as part of a strategy to develop and sustain human settlements, and also in line with international good practice. There is much that we can learn from but also much of our own experience that we can share with other countries particularly in the developing world, especially Africa.

As confirmed by the Executive Director of UN Habitat in her opening statement I consider it important for Africa to acknowledge that the region is entering the urban millennium and will experience the highest urbanisation rate of all the world's regions in the coming years. Our continued engagement in international fora and particularly in NEPAD has the potential to improve the living conditions of millions of the people in our region through raising the profile of the requirements for sustainable human settlements. Through these engagements, we can also enlist the technical and financial support which we need in the region to provide basic services and shelter to the burgeoning urban masses.

This is demonstrated by our active involvement in the World Summit for Sustainable Development process to promote human settlements and development. Through human settlement promotion, housing is pivotal in the link between various levels of government and various national departments. In support of the Habitat Agenda and the notion of Water is Life and Sanitation is Dignity, Housing will continue to provide these basic services through our subsidy programme.

Our aim is to achieve effective co-ordination between ourselves, the Departments of Provincial and Local Government, Land Affairs, Water Affairs and Public Works and our counterparts in the international arena, so that the benefits of international fora are not lost to sectoral approaches.

It is my pleasure to inform this house that there is only one way for housing, FORWARD !!!

Forward with sustainable development!

Forward with the subsidy increase!

Forward with the Housing Programme!

Forward with the African National Congress led Government! Forward!

I thank you

Issued by the Ministry of Housing, 14 May 2002