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Honourable Chairperson,
Honourable Members.

The housing policy has evolved from a crude and ready instrument to tackle the impending catastrophe of homelessness to a comprehensive instrument that forges meaningful partnerships between communities and government. We still have a long way to go in meeting the task of wiping out the housing backlog and creating meaningful human settlements - but we believe that this year's budget has shifted gears towards the quality of programme we believe our people expect.

Honourable Members, housing subsidies are one of Government's main instruments to address the legacy of poverty and inequality.

The National Housing Subsidy Programme has proved to be very effective in serving as an instrument of social upliftment. On the other hand, it has become a demand-side market intervention to increase the effective demand for housing goods and services. The subsidy has provided an equity base against which to gear private resources in the form of sweat equity, savings and loans.

There is no doubt that the aims of providing subsidy assistance have, within the available resources, largely been met. The National Housing Subsidy Programme, introduced in 1994 on a project linked subsidy basis only, has evolved into a comprehensive instrument providing a wide array of housing subsidies to a broad spectrum of eligible beneficiaries.

The Programme has allowed for a range of tenure options on an individual or group basis in urban areas and was later enhanced to include families in rural areas who have functional security of tenure in terms of the Interim Protection of Informal Land Rights Act, 1996.

Highlights of the National Housing Subsidy Programme as at end of the financial year 2001/2002 include:

* The approval of more than 1.4 million housing subsidies;
* The construction of more than 1.3 million housing units; and
* The government's investment of more than R18 billion, since 1994.

Our change of focus from quantity to quality has managed to produce better housing in many provinces, especially in people's housing projects.

We have always thought that this change in delivery strategy could affect the pace of delivery in some provinces but it has not. We have indeed proved our capability to deliver adequate shelter to the poor. Our delivery rate of 322 000 dwelling units per annum which was achieved during 1997 could have been sustained, or even accelerated, if fiscal constraints did not limit the housing budget to around R3 billion per annum.

The increase in the budget this year and in the next two financial years should help us improve on the quality of our houses.

Owing to the manner in which state functions are currently structured, funds that support housing development are not channelled through a single window, but are appropriated under several votes.

For instance, financial support to poor communities is provided under the Consolidated Municipal Infrastructure Programme on the vote of the Department of Provincial and Local Government, whereas the Water and Sanitation Programme of the Department of Water Affairs and Forestry finances the capital cost of services for which provision is also included under the National Housing Subsidy Programme.

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 especially 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; and

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

PERFORMANCE BY PROVINCES

Four provinces experienced unacceptable under- spending levels during the past year. These provinces are Eastern Cape, Free State, Gauteng and Mpumalanga.

However, amounts of R80 million for Gauteng and R58.9 million for Mpumalanga can be attributed to the funds earmarked for the Job Summit projects whose negotiations at national level between housing and treasury were completed towards the end of the year. These funds are expected to flow during the early parts of the current financial year.

Key reasons for the under spending in the provinces can be given as follows:

a) Eastern Cape

* The province received R508 million and spent R293,2 million. The province under spent by 42,3%;

* The initiative to utilise SMMEs for the construction of houses worth R80 million, on 23 787 sites serviced in 2001/02 has not materialised because of the slow process in transferring the serviced sites into the names of the beneficiaries;

* The late approval of rapid land release projects and adverse weather conditions also affected the timeous payment of approximately R100 million.

(b) Free State

The province received R 251,8 million, but spent only R146,3 million. That means under spending is at R105,5 million, or 41,9%. There are a number of reasons for this:

* Difficulty to obtain title deed numbers to process progress payment P4 and P5.

* A factor contributing to under expenditure is delays at the Deeds Office in registration of title deeds. The national Department is in a process with other government departments, such as Land Affairs, to improve inter departmental communication in respect of matters, which might have an influence on matters inhibiting the execution of housing programmes.

(c) Gauteng Province

Gauteng received R797,9 million and spent R 576,2 million, leaving R 191,7 million unspent. The province under spent by 25%, the bulk of which was money allocated for the Job Summit projects which have been slightly delayed. Other reasons include the following:

* A number of new projects only commenced during the 2001/02 financial year and it was foreseen that expenditure thereon would materialise late in the financial year;

* Most of the newly established local authorities are experiencing capacity problems to manage housing projects as a result of restructuring process; and

* The requirements of the Environmental Management Act delay all new projects with at least three months.

(d) Mpumalanga

The province has a 19,1% under expenditure, the bulk of which is the money allocated for the Job Summit Projects, which have also been slightly delayed.

The rest of the provinces managed to spend all their allocations with some of them even exceeding their budgets. The KwaZulu-Natal province only under-spent by 4,8%.

2 HUMAN SETTLEMENT REDEVELOPMENT GRANT - SPENDING BY PROVINCES

The late approval of business plans of projects prevented provinces from commencing with the implementation as anticipated and consequently it prevented provinces from starting the implementation of the projects as anticipated in the business plans. In view of the aforementioned, it is anticipated that capital expenditure will improve as from April 2002.

The expenditure pattern of the provinces will closely be monitored and if necessary the same approach as followed with the Housing Fund grant will have to be followed in respect of the Human Settlement grant.

THE MOST COMMON REASONS FOR UNDER SPENDING

Conveyancers:

Conveyancers do not diligently ensure that transfers take place as planned. The subsidy implementation guidelines prescribe that top structures be constructed on sites which have been registered and transferred to beneficiaries. The prescribed payments are consequently delayed.

A number of provinces experience problems with conveyancers who are not diligent enough in processing transfers of ownership to beneficiaries. Too often, the conduct of those in the conveyancing profession has been a major stumbling block to the housing delivery process.

Also there is total lack of capacity in some of these professionals to deal with intricate conveyancing process within appropriate legal frameworks, e.g. applications approved in terms of the development facilitation act, act 67 of 1995.

Provinces with such problems should establish a provincial database of conveyancers with demonstrated ability to deliver within the strict time frames prescribed. All applicants will be required to utilise professionals listed on database.

Provincial housing departments should empower municipalities with regard to managing their relationships with conveyancers.

An amendment to the Act to alleviate this problem should be fast tracked as a matter of urgency. The matter is being discussed by DoH, DPLG and Salga. Approval of applications for deviations from policy for deserving cases affected by problems has been made for Eastern Cape and approved by cabinet.

Under performance by developers:

While there have been genuine constraints during implementation process it should also be acknowledged that in most instances under spending happens because of poor performance by developers. There could be a number of reasons for this, namely:

* Poor management of community dynamics;
* Labour related problems;
* Poor planning and management of projects; and
* Availability and accessibility of bulk infrastructure.

Legal technical issues:

One of the legal technical issue detrimentally affecting the process flow in the housing delivery cycle is section 118 of the Municipal Systems Act, and it relates to the issuing of rates clearance certificates in terms of the Act by municipalities, in order to allow for transfer of ownership to be registered by the registrar of deeds. If transfer of property cannot take place, progress payments (P4 & P5) are delayed. Not only the phrasing of the relevant section, but also the interpretation and implementation thereof has had serious delaying effects on housing delivery.

The act requires that all outstanding payments due to Municipalities be paid up before the clearance certificate is issued for the transfer of property. Most of the beneficiaries of the housing subsidy grant (especially the in site upgrading) have outstanding rates due to Municipalities. The Department of Provincial and Local government has undertaken to amend this legislation during the current year.

REQUIREMENTS OF THE ENVIRONMENTAL MANAGEMENT ACT

Some of the requirements of the Environmental Act have affected the speed of delivery in housing projects. Approval procedures for the environmental impact assessment have been very slow. Gauteng is one of the Provinces greatly affected by this legislation. It is a matter that needs to be addressed between provinces and the relevant departments.

OUT OF SEASON RAINFALL

A number of Provinces have experienced persistent heavy rainfalls, which originally were not factored into the planning process. While this led to high demand for emergency shelter, it however had a negative impact on housing delivery.

MEASURES TO DEAL WITH UNDER EXPENDITURE

Inter Governmental Co-operation:

Closer co-operation between the provincial and local spheres of government is critical in order to achieve a realistic housing delivery process. Formalised interaction should occur on a regular basis between municipal housing delivery components and their provincial counterparts. At provincial level political oversight of the delivery processes should be strengthened.

Improved co-ordination at national level:

The Integrated Development Plan co-ordinated by the Department of Provincial and Local Government should also focus on housing needs. IDP will go a long way in ensuring that housing delivery happens within integrated planning processes. Problems with bulk infrastructure and community issues are better planned for within integrated planning process.

Improved co-ordination between Salga, DPLG, Land Affairs and Housing should be encouraged with respect to development of policies and legislation working against delivery (e.g. section 118 as mentioned above). National office has intentions to visit under performing provinces twice yearly for close monitoring of expenditure.

PROVINCIAL CAPACITY BUILDING

The main focus of the 2002/2003 provincial capacity building programmes is to ensure that they are aligned to both provincial and national housing priorities. Training should be focused on both strategic and operational interventions to meet the needs at each level. The main emphasis of the intervention is at the local government level.

Each province has been allocated an amount of R1,1 million with the exception of Northern Cape, which has been allocated an amount of R1,2 million. The total amount allocated to all provinces for housing capacity building in 2002/2003 is therefore R10 million. This money has been allocated directly from National Treasury to respective provinces.

The National Department of Housing in conjunction with all provinces conducted the following activities:

* In July 2001, research to determine provincial capacity building gaps was carried out. This was followed with workshops with all provincial housing departments to discuss the outcomes of the research;

* There is a need for an on going impact assessment of capacity building interventions to establish their effect on the delivery of housing. It needs to be mentioned in this regard that the Department developed guidelines for provinces in respect of impact evaluation and all provinces have included Impact Evaluation in their plans; and

* Most of the issues raised above will be addressed in a medium to long-term plan. The Department is at present finalising a Strategy on Housing Capacity Building that will deal with the medium to long-term issues. This report will only focus on the programmes that are to be implemented in the financial year 2002/2003.

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 was required - 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 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 hostel is 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 Institution and generally regulate, inspect and do all things necessary to ensure good governance and sustainability of Housing Institutions.

HUMAN SETTLEMENT REDEVELOPMENT GRANT - SPENDING BY PROVINCES

Following the finalisation of the SIPPs Programme, a need was identified for a Programme to assist municipalities to initiate Human Settlement Redevelopment projects which will focus on correcting imbalances and dysfunctionalities of our human settlement patterns.

In the overall quest for more efficient and productive human settlements, and to move out of the apartheid structure of the past, the aim of the Programme is to improve the quality of the urban environment by addressing the legacy of dysfunctionality in Human Settlements by:

* Addressing the nature and underlying reasons for dysfunctionality;
* Providing a source of funding to correct such dysfunctionality and act as catalyst to gear other sources;
* Co-ordinating sources of development funding to promote holistic, integrated development; and
* Adding value to project which can be funded through other processes and programmes.

The following broad categories of projects are thus considered under the Programme:

* Infrastructure upgrading initiatives to facilitate redevelopment of depressed areas or to improve access to employment and business opportunities;

* Land intervention initiatives to counter spatial distortion and enhance the integration of human settlements;

* Replanning and redevelopment of existing human settlements which could entail slum clearance, acquisition of property, planning of redevelopment initiatives and resettlement of people;

* Consolidation initiatives where previous housing/development initiatives resulted in unsafe, inappropriate or substandard developments that are in need of enhancement;

* The provision of essential community facilities and amenities; and

* Special development needs projects to satisfy Presidential requests that may entail cross-functional co-operation and co-ordination and require extraordinary solutions outside of approved government programmes.

The Human Settlement Redevelopment Programme impacts positively on the lives of people and communities in a physical, social, economic and environmental context. The Programme is judged to fill a major gap in the development needs of dysfunctional, disadvantaged communities which can not be addressed through existing, alternative government programmes, and it is envisaged that it will increasingly.

In conclusion, I have worked today to give you a clear picture of where we are in housing. Some of that picture is not as bright as we would all like it to be.

But there is no reason for despair. As I said in the National Assembly two days ago, housing is not only on track in South Africa, it is meeting the needs of more and more people all the time. We are facing and dealing with the challenges. We are providing more choice than ever before, and we are committed to better quality.

As you know, we have raised the subsidy by anything from 27% to 57%. This is progress we can all be proud of. I call upon you in the provinces to take this progress forward. Forward in the interests of our People!

I thank you.

Issued by: Ministry of Housing, 16 May 2002