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13 June 2007

Chairperson
Honourable members of the NCOP
Invited guests
Ladies and Gentlemen

And so again, Chairperson, we come to the House to request that you accept and endorse our budget; to account for what we have done with that which you approved last year and to inform you what we intend to do this year with the allocation we hope you will approve. As we begin the cycle of our life, across the length and breath of our country, the inspiration to deliver on the hopes of our people reverberates; awakening in us the spirit of a new nation. It binds us all who so many years ago stood at opposite ends, driven to the common goal of the achievement of a life sustained by that which is most basic to life; shelter, security and comfort. This exciting epoch cannot end until the objective of providing all our people with shelter has been completed.

But for now, the budget

The total allocation to provinces in terms of the Integrated Housing and Human Settlement Development Grant has grown from R6,8 billion in the 2006/07 financial year, to R8,2 billion in 2007/08, at an annual growth of 19,5%, R9,9 billion in 2008/09 and is expected to reach R11,5 billion in 2009/10.

Last year, Honourable members will remember we were allocated R6,8 billion. I am happy to announce that six provinces have spent 98% of their budgets, with the rollovers in the other three provinces being the result of scarcity of building materials and therefore delays in construction and other non-recurrent administrative problems. We have greatly improved our monitoring capacity and we are certain that we will further reduce incidents of rollovers.

A new allocation formula that was approved by Housing Minister and Members of Executive Council (MinMEC) towards the end of 2005 has been implemented in phases with the understanding that the department implements an increase in the baseline allocation at six. This funding framework includes an initiative to top slice funds in order to address national priority housing projects. For the current financial year, Zanemvula in the Eastern Cape and the N2 Gateway in the Western Cape have been identified as national projects. It is expected that the full implementation of this concept will take place during the 2009/10 financial year.

The framework for the implementation of priority projects, including the criteria that will guide project selection, is in the process of being finalised and it reflects that funds are ring-fenced by National Treasury for priority projects. To maximise housing delivery, we would like to prioritise mega projects, such as we have done at the N2 Gateway and at Zanemvula.

Chairperson, this instrument will allow the department to focus on optimising housing delivery while contributing to the achievement of the broader goals of the Comprehensive Plan. This will also allow us to transform human settlements from the dormitory suburbs of the past to truly integrated urban environments that will have a more positive impact in addressing the nation's housing needs.

A right to housing, as interpreted from our Constitution, indicates that it is not only the state which is responsible for the provision of houses, but that other agents within our society, including individuals, must be enabled by legislative and other measures to provide housing.

This is what we have done when in being inspired by the good spirit prevailing within the environment of our Social Contract; we conducted negotiations with developers and other stakeholders over the past year to ensure that we collectively developed the inclusionary housing policy we talked about last year. It was a careful process, somewhat prolonged. At times flaring up in the open, but generally one that recognised that the burden of the dysfunctionality of apartheid spatial planning continues to impact negatively on the poor and that this needs changing with immediate effect.

The policy is now drafted and enjoys the support of all major stakeholders. The policy will be implemented in stages and will culminate in legislative measures by the end of the year.

It is worth stressing, Chairperson, at this point that the policy we have developed is only one instrument and that in order to counter segregationary or exclusionary outcomes of our built environment processes we will need several other tools, to change our legacy.

Last year at this time, reminded of our urgent responsibilities by the ghostly grip of winter, we pledged to fast-track delivery. We have found that the major impediment in accelerating delivery is our bureaucracy and its inefficiencies, coupled with severe capacity deficiencies at all levels, but especially the local sphere.

Research undertaken by, among others, the Banking Association has revealed that perhaps the most serious obstacles to speeding up housing delivery is the time it takes to process development applications for new projects. We have been working towards a solution that would see the streamlining of all administrative processes so that we can cut, by 50 percent, the amount of waiting time. We are greatly indebted to Partners for Housing, a Section 21 company, chaired by Ms Wendy Lucas-Bull and financed by the four major banks. This entity has worked on analysing the processes followed within local authorities. The aim was to help to identify and remove obstacles that cause delays and to define how current processes could be changed to achieve the desired 50 percent efficiency improvement.

The City of Tshwane volunteered to serve as a pilot site for the project. The results and learnings have exceeded all expectations and have been documented so that we can make the lessons available to other municipalities. We were indeed able to cut by 50%, the housing delivery processes. We will be sharing the re-engineering process with other local authorities.

Chairperson, every time we have been in this House, we have been sensitised by Honourable Members here of the unacceptable standard of work in our low cost housing projects. This has been of major concern to us as well.

Honourable members would be aware that for the delivery of what we then referred to as Reconstruction and Development Programme (RDP) housing, as the state we depended largely on developers and contractors. In the budget statement for the financial year 2005/06 I reported to honourable members that as a result of this delivery framework what the state and the people were provided with was shoddy work and in some instances incomplete houses. Poor communities felt that government was not exercising its powers adequately to protect them against these delinquent contractors.

Coupled with the fact that government itself was negligent of its responsibilities to pay on time, a great deal of shoddy work from both unscrupulous contractors and inexperienced ones became a blot on our record. To put an end to this, developers and contractors will now have to adhere to newly developed norms and standards that came into effect on 1 April 2007.

Effectively this means that Breaking New Ground (BNG) houses would be quality houses, consisting of 40 square metres of gross floor area; two bedrooms; a separate bathroom with a toilet, shower and hand basin; a separate kitchen living area with a kitchen basin; and a ready board for electrical installations. To enable these standards we accordingly adjusted the subsidy quantum from R36 000 to R38 984,00. Also we are in the process of establishing an Inspectorate that would work with and enhance the work of the National Homebuilders Registration Council to enforce the new norms and standards.

Developers will also, as part of the revised National Housing Code, be required to sell to the state houses that they have built whose quality they can vouch for. Henceforth the state will only buy quality!

To enhance quality of life, we are looking into regulating on energy efficient houses. We are in consultation with various departments to work on this. When we have calculated availability of materials and cost factors, we hope we can come here and indicate that BNG houses will, in addition to all the good things we demand, also perhaps have solar energy.

We will support these changes with the introduction this year of the Housing Development Agency that will identify and facilitate the rapid release of well-located land for integrated housing and human settlements. The Bill to establish the Agency is in process of being submitted for consideration by Cabinet.

Further to the introduction of the Housing Development Agency we will introduce planning cycles to ensure greater efficiency in housing delivery.

I am pleased to announce that a more user-friendly manual for the development of sustainable human settlements has been approved by MinMEC which will further facilitate the delivery of housing. This manual provides all the housing policies and the implementation guidelines to ensure that the intent of the Comprehensive Plan is carried out.

New and exciting housing development options are included in the revised Code. The new Integrated Residential Development Programme provides a mechanism for a holistic development orientation, giving effect to the governments objectives to achieve integrated human settlement development. The programme provides for a phased development approach, is based on the entire need of an area or community and facilitates the provision of serviced stands for all the required land uses. The programme will also address the concerns regarding the affordability of residential properties to the low and middle-income categories as it will provide stands for the entire spectrum of the need. The banking sector will also benefit as stands for the new Financed Linked Individual Subsidies will also be provided.

In a major breakthrough this year, and as part of our social contract, we have had very fruitful negotiations with rural stakeholders to create a rural housing policy that would enjoy the support of all.

The Rural Housing Policy was work-shopped at the Rural Housing Indaba held in the Eastern Cape which brought together Contralesa, the National House of Traditional Leaders Chairpersons and organised agriculture to assist to remove obstacles in the delivery of houses in the rural context. A policy which incorporates the input received will be finalised during the third quarter of 2007. A pivotal element of this was the use of sustainable technologies and housing typologies that are in tune with the rural environment.

We want to take this opportunity to thank all the stakeholders who made this workshop the resounding success it was. We anticipate that we will be signing the social contract with our rural partners next year, committing ourselves to certain desired and measurable outcomes.

We know that our input would be meaningless to some members present here, if it did not touch on the sensitive matter of hostel upgrades.

The existing Public Sector Hostels Upgrading Programme, which was used to effect only cosmetic improvements to dilapidated hostels, has been revised and is now called the Community Residential Unit Programme. This Programme provides a holistic, integrated development approach towards residential units and, in addition, provides more appropriate funding mechanism and tenure arrangements for turning around hostels

Our sincerest gratitude too is extended to another important partner the European Union (EU). The Social Housing Policy, as well as the guidelines for the implementation of the Policy, has been approved for implementation. To date, 52 776 social housing units have been provided in collaboration with the European Union and as the EU's involvement comes to a close, I want to express our sincere thanks to them for their assistance with this programme. Importantly also, Madam Speaker, we note that the Social Housing Bill is now the subject of the Parliamentary process.

A Housing Beneficiary Education Programme, which was initially piloted in four provinces during the 2005/06 financial year, has now been rolled out in all the provinces. More than 1 200 field trainers have been trained who are building the capacity of housing beneficiaries and communities on aspects such as their roles and responsibilities in owning a house, tenure matters, how to gain access to government's housing subsidies, etc. This programme will continue into the 2007/08 financial year.

In view of the important role municipalities must fulfil in increasing the delivery of housing, the department has embarked on a programme to build the knowledge and capacity of municipal councillors on housing related matters. A tabletop handbook, as well as training material for this purpose has been developed and the training of councillors will commence in the 2007/08 financial year.

The accreditation of 16 priority municipalities involving the devolution of the housing function to these municipalities has already been preceded by elaborate capacity enhancements and institutional restructuring. To date, all 16 municipalities have received Level 1 Accreditation and are gearing up to Level two and three accreditation, depending on the outcome of capability audit.

My department has now been restructured and a dedicated unit will focus on the Service Delivery Support function by supporting provinces and municipalities with the upgrading of informal settlements and supporting provinces in the unblocking of housing projects. The upgrading of informal settlement projects and the unblocking of blocked projects has become a priority as part of our delivery strategy during 2007/08.

In respect of local governments' requirement to develop credible Integrated Development Plans (IDPs), and specific to the creation of sustainable human settlements, there is the need to align housing delivery plans at all levels, and these should form the basis for accurate targeting and budget allocations.

It is therefore worth noting that the department in response to both the needs expressed on the ground and the directive issued in the comprehensive plan has now developed a programme for the development of municipal IDPs. In addition, the department has approved a new Housing Planning Dispensation that, in essence, seeks to provide a strategic plan at provincial and national level in respect of housing development planning.

The comprehensive plan places a fair amount of emphasis on demand responsiveness as opposed to supply-driven state-assisted housing. In order to respond to demand and provide sustainable human settlements, proper planning is required. More specifically, the comprehensive plan requires the development of housing chapters of municipal IDPs to include, among others, a municipal housing needs assessment, and a link to provincial multi-year implementation plans; we expect that these should form the basis for accurate targeting and budget allocations.

The rapid release of well-located land for integrated housing is one of the cornerstones for the success of the Comprehensive Plan and the creation of integrated communities with convenient access to social and economic opportunities requires well-located suitable land.

As mandated by Cabinet resolution of August 2006, the department has begun a process to establish a Housing Development Agency to inter-alia facilitate the acquisition and management of land on behalf of provincial housing departments and municipalities.

During this financial year the rationalisation of the housing entities will be finalised. The PHPT will be closed together with Servcon. However those in the employ of these entities will be rationalised into new entities.

In addition, the mandates of all three housing finance institutions, i.e. Rural Housing Loan Fund, Nurcha and the National Housing Finance Corporation (NHFC) will be reviewed in terms of the National Treasury Development Finance Institutions review process.

Now for the crunch of the budget, the following is our allocation to the provinces for the 2007/08 financial year: the Eastern Cape gets R1,052 billion; Free State R653,3 million; Gauteng R2,197 billion; KwaZulu-Natal R1,310 billion; Limpopo R651 million; Mpumalanga R526,3 million; Northern Cape R130,9 million; North West R766,8 million and the Western Cape R948,5 million. The total allocation of these amounts is for housing for the financial year is R8,238 billion.

As per allocation formula Gauteng province still remains the highest in the allocation receiving R2,2 billion with Northern Cape province being the lowest at R131 million.

I want to thank the Chairperson for his support and for putting on the agenda the very important discussion that happened here in the House on the Constitutional responsibility of the national and provincial governments, ultimately to provide guidance on policy and its application.

I thank you.

Issued by: Department of Housing
13 June 2007