Department of Human Settlements Budget Speech 2012

The Honourable Speaker,
The Honourable Premier,
The honourable leader of the opposition,
The honourable members of the house,
Distinguished guests,
Ladies and gentlemen.

In her State of the Province Address last month, the Premier stated that 'Creating the conditions needed for increased economic growth and job creation' is the primary focus of our government.

In Human Settlements, one of our core mandates is the transfer of land ownership, giving people an asset which they can use as leverage to access other financial sources, and through providing security of tenure, people are taking one giant step forward in their individual journeys of economic development.

However, the Premier also said "With a provincial housing backlog of some 500 000 units, it is absolutely pitiful that the regulatory environment makes it almost impossible to deliver low-cost housing on any site in less than 6 years."

Our strategic approach to human settlements delivery is in line with the National Outcome 8 for Human Settlements, especially with our focus to ensure that everyone living in informal settlements, backyards and overcrowded families in the Western Cape has access to basic services by 31 March 2014. Through providing basic services, we will make sure that the people of those 500 000 households at least wait for their houses under more dignified conditions.

To ensure better human settlements delivery, we have taken important steps to work more effectively and better together with all stakeholders within the complex regulatory environment and long time frames, including the appointment of Professional Resource Teams and establishment of a Portfolio Management Unit, which I will address later. However, apart from the complex regulatory environment, our grant allocation structure has changed, and this has had significant implications on our delivery targets.

The actual amount available for top structures and serviced sites has effectively become less, resulting in a reduction of our housing targets. Let me explain a little further.

In 2009, when my term began, the new name of Human Settlements, rather than Housing, was more a statement of intent than a practical shift. We reported on the number of sites serviced and the number of houses built. There was only one conditional grant - the Human Settlement Development Grant - disbursed to the province to fund housing projects.

As I informed this house last March, the Urban Settlement Development Grant was created at the beginning of the 2011/12 financial year by top-slicing 20%, or R502.2 million of the Human Settlement Development Grant and combining it with the Municipal Infrastructure Grant for Cities. This equates to approximately 5000 less serviced sites and 5000 less houses per year, which is roughly the difference between the 2008/2009 targets and the 2010/2011 targets. This grant is disbursed directly to the City of Cape Town. This is the main reason the HSDG for this year is R1,638 billion , and not R2,141 billion, as was projected in previous MTEFs. Austerity measures which have impacted all portfolios to some effect have also played a role.

The servicing of sites in the City is now funded by the USDG. So, in addition to the 10656 sites we will fund from the HSDG, predominantly outside of the metro, the City will service a further approximately 6000 sites under the USDG in 2012/13 and over 9000 sites in 2013/14. In addition, the City will also provide access to basic services on a shared basis to about 2000 backyarder families and 4000 informal settlement households under the USDG in 2012/13. Through working better together with the city, we will accelerate the rate of delivery of basic services.

However, we could not simply transfer targets wholesale from the HSDG to the USDG, because the latter was created, to ensure better alignment between bulk infrastructure and human settlement projects and, to ensure the development of sustainable communities by funding other social amenities as well.

Even today, we report to the national department and treasury on the number of serviced sites, houses and various other programs, like rectification of old stock, emergency and temporary housing opportunities, shared services, social and community facilities and the purchase of land. Three years ago, lumping all of these items under 'other' made sense - they contributed relatively little to expenditure on the grant. But with the shift from housing to human settlements, the focus on ancillary items to create sustainable and integrated communities has increased and so has the proportion of the budget allocated to these programs. For example, this budget year we have spent, amongst others, R181 million on upgrading Community Rental Units in the City of Cape Town and R37 million on Basic Services Provision.

Other departmental programs within our mandate included

• R58m for individual subsidies.
• R34m for the Extended Enhanced Discount Benefit Scheme, in which housing loans to individuals are discounted or written off.
• R11m for land purchase outside the City of Cape Town.
• R15m to the National Home Builders Registration Council to assure the quality of homes delivered.

We set a target of 13 085 serviced sites and 12 640 top structures for the 2011/2012 financial year. The reduction in targets has been previously explained due to changes in the grant structure. As of 31 March 2012, we will have delivered 8004 sites, or 61% of our target, and 10927 houses, or 86% of our targets. There are currently another 2875 houses under construction with progress payments having been made within the current financial year. These houses will be finished in the next few months, and when complete, will bring the total number of completed houses to 13802.

Backyarders and people living in overcrowded houses are also recognised as important beneficiaries. In Delft Symphony and Delft 7 to 9, 2422 backyarders were accommodated. Another 450 backyarders from Langa will be accommodated in the next Delft project. In the Drommedaris project near Paarl, which is currently under construction, 600 out of 1500 opportunities will be allocated to backyarders and people living in overcrowded houses. The Drommedaris project will integrate different communities, with a vision of living better together.

Municipalities are our primary developers and implementing agents, and their performance determines whether or not we reach our targets. The main reason for under performance on serviced sites is that we made a strategic decision not to automatically approve funding for top structures once serviced sites were completed, as was historically done. Municipalities simply did not have pipelines in line with our new strategic direction to meet the demand for serviced site delivery. As such, it is important to detail the performance of each and every municipality, as well as their reasons for under performance.

In the Winelands District,

• Breede Valley. 807 sites were planned, and 300 delivered. 581 top structures were planned, and 581 delivered. 100 % of the R43m allocated was disbursed. The shortfall in sites was due to halting of the De Doorns project.
• Drakenstein. 858 sites were planned, and 293 delivered. 899 top structures were planned, and 169 delivered. 88 % of the budget, or R57m of R65m was disbursed, as R19m was allocated for bulk services. The main challenges lay in procurement delays in appointing contractors.
• Langeberg. 16 sites were planned, and 16 delivered. 188 top structures were planned, and 161 delivered. 100 % of the budget of R13.6m was disbursed. Challenges lie with land availability, staff capacity and housing allocation.
• Stellenbosch. 536 sites were planned, and 250 delivered. 70 top structures were planned, and 20 are being completed. 84 % of the budget, or R16.3m of R19.4m was disbursed. Challenges lay in the appointment of contractors and the provision of bulk services, and R5m was made available from Departmental funds to address this.
• Witzenberg. 569 sites were planned, and 476 delivered. 0 top structures were planned. 100 % of the budget, or R20.6m was disbursed. The number of sites was reduced to 476 due to planning issues on the Tulbagh project.

In the Overberg District.

• Cape Agulhas. 541 sites were planned, and 184 delivered. 125 top structures were planned, and 251 delivered. 159 % of the budget, or R31.2m was disbursed. The municipality was paid in excess of its allocation in order to pay for work completed on site. Challenges lay in the relocation of families to allow the development of the Bredasdorp informal settlement.
• Overstrand. 108 sites were planned, and 108 delivered. 191 top structures were planned, and 191 delivered. 91 % of the budget, or R13.9m of R15.2m was disbursed.
• Swellendam. 105 % of the budget, or R2.1m of R2m was disbursed. Work has commenced on site on the Swellendam Railton Project. Projects were delayed due to a lack of capacity in the sewerage treatment works. The upgrade has now been given environmental approval and appeals have been set aside.
• Theewaterskloof. 138 sites were planned, and 138 delivered. 234 top structures were planned, and 200 delivered. 100 % of the budget of R38.9m was disbursed. Challenges lay in the approval of land purchase in Villiersdorp.

In the Central Karoo District

• Beaufort West. Work has commenced on a new project of 240 sites in Kwamandlenkosi. The reduced budget, of R120 000 for planning, has been disbursed.
• Laingsburg. 39 sites were planned, and are under construction. 100 % of the budget, or R0.7m was disbursed.
• Prince Albert. 60 sites were planned, and 60 delivered. 60 top structures were delivered. 86 % of the budget, or R5.3m of R6.2m was disbursed.

In the Eden District

• Bitou. Work has commenced on the Kranshoek Project with approximately 10% of the 401 sites serviced. 252 top structures in Bitou were planned, and 195 delivered. 100 % of the budget of R16.3m was disbursed. The Kranshoek project had to be fast-tracked, which was made possible by the Departments commitment to assist with bulk infrastructure to the value of R3m.
• George. 1100 sites were planned on the Thembalethu Project, which will only commence in April 2012. 1234 top structures were planned, and 1046 delivered. 100 % of the budget, or R77m was disbursed. Challenges were due to delays in environmental approvals of Thembalethu UISP storm water design.
• Hessequa. 500 sites were planned, and 500 delivered. 32 top structures were planned, and 32 delivered. 150 % of the budget, or R26.4m of R17.6m was disbursed. Construction of houses on the Heidelberg Project has been fast tracked.
• Kannaland. 125 sites were planned, and 250 delivered. 132 % of the budget, or R6.9m of R5.2m was disbursed. The servicing of sites was fast tracked with all 250 completed within the year. I would like to take this opportunity to congratulate Kannaland and our regional team in Eden for resolving the outstanding issues to allow this project to proceed. This is the first year I haven't had to redirect money from Kannaland.
• Kynsna. 500 sites were planned, and 320 delivered. 439 top structures were planned, and 364 delivered. 100 % of the budget, or R63m was disbursed. The challenge is to accelerate the delivery of serviced sites.
• Mossel Bay. 850 sites were planned, and 100 delivered. 284 top structures were planned, and 136 delivered. 84 % of the budget, or R40.6m of R48m was disbursed. Delays on the Asazani project were due to environmental approval delays, including a protracted search and rescue operation of endangered plants.
• Oudtshoorn. 328 sites were planned, and 178 delivered. 178 top structures were planned, and 139 delivered. 61 % of the budget, or R8.4m of R13.7m was disbursed. The challenge is to fast track the De Rust project, the application for which was submitted late to the Department.

In the West Coast District

• Berg River. 82 sites were planned, and 82 delivered. 328 top structures were planned, and 328 delivered. 91 % of the budget, or R13.8m of R15.1m was disbursed. The challenge is to have projects ready for implementation next financial year.
• Saldanha. 978 sites were planned, and 384 delivered. 298 top structures were planned, and 192 delivered. 100 % of the budget, or R41m was disbursed. The challenge is to accelerate the George Kerridge UISP project.
• Matzikama. 388 sites were planned, and 388 delivered. 121 % of the budget, or R10.7m of R8.9m was disbursed.
• Cederberg. 250 sites were planned, and 100 are under construction. 100 % of the budget, or R7.5m was disbursed.
• Swartland. 50 sites were planned on the Abbotsdale Project, which has not commenced. 268 top structures were planned, and 268 delivered. 100 % of the budget, or R14m was disbursed. The delays have been to the widening of the N7 road reserve preventing approval for the Abbotsdale project.

When we realised that some municipalities were not going to perform, the Grant Allocations Advisory Committee recommended that the money be diverted to other municipalities where projects could be accelerated. The revised allocations were gazetted in November 2011 and February 2012.

• Breede Valley received an additional R6m to provide basic services in their informal settlements.
• Stellenbosch has had their allocation reduced from R28m to R19m due to delays in implementation of the Klapmuts project due to disputes over the awarding of contracts and bulk infrastructure challenges.
• Witzenberg has received an additional R2m to accelerate the Tulbagh UISP project, comprising of 476 sites
• .
• Cape Agulhas and Theewaterskloof have each received an additional R5m to accelerate the Bredasdorp Project and the Grabouw UISP, of 1169 sites, respectively.
• Due to planning delays on new projects in Overstrand, their allocation was reduced to R15m.
• In Swellendam, the record of decision has now been issued for the Railton 306 UISP, but work is only now commencing on site. For this reason their allocation was reduced by R4m.
• In Prince Albert, an additional R3m was allocated to accelerate the Klaarstroom project of 60 units.
• George has received an additional R30m to complete the Pacaltsdorp and Touwsranten projects, as well as to provide basic services in Thembalethu, and to accelerate the Thembalethu Project, ultimately providing 4300 sites.
• Knysna received an additional R19m to accelerate the Vision UISP project of 1393 sites, and to provide basic services in its informal settlements.
• Mossel Bay received an additional R7m to provide basic services in the informal settlements.
• The allocation for Oudtshoorn has been reduced by R2m due to delays in a submission of project applications to the Department.
• Berg River received an additional R3.4m to accelerate the Piketberg project, of 328 sites.
• Saldanha Bay municipality is receiving an additional R12.5m for the George Kerridge UISP project of 978 sites.
• Swartland has had their allocation reduced by R7m due to delays in the implementation of the Abbotsdale project of 350 sites.

The Department has a strategic objective to ensure that everyone in the Western Cape has access to the minimum standards of basic services by the end of 2014. We are making good progress; the informal settlements database has been verified and updated, and a needs and cost analysis completed. The plans for the municipalities have been created, housing pipelines reprioritized, agreements have been signed, and projects approved. In addition R37 million was allocated for basic services in the following lead municipalities, which are ready to implement, and which face the greatest need. Breede Valley received R6 million, Stellenbosch R9 million, Overstrand R6 million, George R6 million, Knysna R7 million and Mossel Bay R6 million. We are working better together with all the municipalities to ensure service delivery.

To mitigate the major challenges of human settlements delivery of working with project delivery time frames of 5-6 years, a complex bureaucratic environment, and the reliance on effective, actionable planning from the municipalities, we have several major business process and strategic interventions.

Allocations to municipalities are now based on the readiness of projects, instead of predetermined amounts for which the municipalities create projects in order to spend the allocation.

Service Level Agreements are going to be signed with the Mayors and municipal managers, in which commitments are made to deliver specified numbers of top structures and service sites. Committed delivery targets per municipality have also been tabled in the 2012 Annual Performance Plan.

We have established the Project Management Unit, or PMU. This is an information technology system designed to track projects over their average 5 year lifespan. This will enable us to get a snapshot of all projects in the pipeline, their projected milestones, as well as flagging them when they become blocked. As soon as any milestones are not met, an alarm will sound and mitigating action can be taken.

The lack of planning capacity at municipal level is also a major problem. If a project were to get irrevocably blocked 3 years into its development cycle, and there was nothing to take its place, a lot of time is lost in beginning the planning phase to create another project to take its place. In response, we appointed five Professional Resource Teams, or PRTs, one each for the PHP Unit, the City of Cape Town, Eden District, Cape Winelands and the West Coast. These PRTs are teams of professionals, including engineers and town planners, who will assist municipalities in creating housing project plans that meet Departmental approval standards, as well as assisting them in developing a pipeline of plans which are ready to go in case the primary projects are blocked. This will mean that should a particular project fail to deliver, we will have other options to deliver on our housing and serviced sites targets. I am happy to announce that the PRTs have been appointed and have begun work. The PRTs will help us work better together with all our stakeholders to ensure effective human settlements delivery.

The first outcome of our provincial strategic objectives of developing integrated human settlements is the accelerated delivery of housing opportunities for all, which includes rental, social and gap market housing. Steenberg Phase 2, costing R42 million, will deliver 150 rental housing units. with construction beginning shortly. Construction has begun on the Bothasig project, costing R46 million and this will deliver 120 social rental housing units. Under the Community Rental Unit, or CRU program, 1050 units in the City of Cape Town were refurbished at a cost of R181 million. R1 billion over 5 years is budgeted for the CRU upgrades of 7775 units.

President Zuma, in his 2012 State of the Nation address, stated that a R1 billion guarantee fund will be available for people in the Gap Market, or earning in the monthly income band of R3500 to R15000, to obtain credit to buy houses. The President stated that this fund will become operational from 1 April 2012, and two of our projects, namely Our Pride and Nuwe Begin, already have units available for the market. The City of Cape Town will also deliver in Scottsdene and Pelikan Park. We have arranged an upcoming workshop in April 2012 on affordable housing, which will include invites to all the relevant stakeholders, to clarify the way forward in more effectively servicing the Gap Market.

The Province, together with the National Housing Finance Corporation and major Banks, will be rolling out the Finance Linked Subsidy Programme, or FLISP, to assist households who earn too much to qualify for government "free housing".

Some of the details are as follows.

1. The maximum FLISP household income has been increased from R7000 to R15 000 per month, with the minimum being R3501 per month. The property price has been capped at R300 000.
2. Households in the income group R3 501 to R7 000 may opt to apply for FLISP or to be assisted through the allocation of free serviced stands as their once off subsidy, as part of the Integrated Residential Development Programme (IRDP). If they choose to take a serviced site, they will then be responsible for financing and building their house.
3. The maximum FLISP subsidy amount will be R87 000, and will be applied on a sliding scale, with those earning R3501 pm eligible to receive the maximum.
4. The subsidy will be used as a deposit for a house, and the beneficiary will contribute through repaying a loan over 20 years, plus any legal fees.
5. Discussions are underway for FLISP to be implemented on a project specific basis and/or on a walk-in basis.
6. The National Housing Finance Corporation is expected to enter into agreement with the Provincial Departments of Human Settlements to implement FLlSP. A draft implementation protocol is currently being reviewed which will address items such as institutional funding and administrative arrangements.
7. The R1 Billion Mortgage Default Insurance fund announced by the president will make it easier for people with poor credit ratings to get a bank loan. This guarantee fund will help us work better together with the banks, and is expected to be implemented in October 2012.

We are in the process of accrediting municipalities and the metro to be level 3 developers, which will mean that they will be able to access funding directly from National. Only the City of Cape Town is likely to reach level 3 in the medium term.

In the City of Cape Town, the implementation protocol, which will transfer delegations of functions and agree on processes, is being finalised. It is before the City council for final approval before being signed by Province. The City will begin to package level 3 applications once all its processes have reached level 2 accreditation.

George, Bitou, Knysna, Drakenstein and Mossel Bay are also being considered for accreditation assessment, and the newly appointed Professional Resource Teams will package business plans for them.

Our PHP unit has continued to be a major and successful contributor to the business. During 2010 and 2011 the Directorate developed a revised approach to the implementation of PHP policy in the Western Cape in order to counter corruption, poor quality and maladministration in PHP projects. This includes the registration of all contractors with the NHBRC to ensure quality standards are met.

In this financial year, 15 new PHP Projects have been approved along with 15 facilitation and establishment grants, approximately 3795 units (30% of the APP target of 12640 units) have been constructed and an amount of R255m spent.

161 Housing Consumer Education workshops were held across the Province reaching more than 3828 housing consumers participating in housing projects.

6 women contractors were trained, went on site on the 11th of February 2012, and by the end of March 2012 they will have successfully completed 10 units each.

In a partnership with South African Women in Construction, a priority PHP project has been identified in Philippi where women contractors will be contracted for the construction of 400 units over the next 2 financial years, helping us to work better together with the community to deliver the houses people need.

In partnership with various organizations, we have provided housing and improved shelter for various communities and individuals, and I would like to thank any organization that has worked with us to help those people in need. Through contributing to the Comprehensive Rural Development program, local community members have been trained to fit and maintain solar powered water heaters in an old age home in Dysselsdorp. The Dysselsdorp initiative is in line with our mandate to provide improved living conditions for the poor and elderly.

We have developed a residential/incremental densification policy to provide more sustainable, dignified settlements; quality housing opportunities and choices by making effective use of limited resources.

The positive spin-offs of the residential/incremental densification policy envisage reducing our carbon footprint, promoting social cohesion and economic efficiency among the beneficiaries, enabling savings in land acquisition, of approximately R10 000 per unit, and a reduction in the cost of infrastructure per person.

In January 2012, the Western Cape Department of Human Settlements successfully established the Western Cape Housing Demand Database that is provincially synchronised. By 07 March 2012, the housing demand data of the following municipalities had been uploaded onto the database:

Swartland, Matzikama, Bergrivier, Cederberg, Saldanha, Beaufort West, Prince Albert, Laingsburg, Witzenberg and Langeberg.

Over the next few months, the new database and support strategy will be introduced to the remaining municipalities in the Western Cape. The database will ensure the integrity of housing demand data, make the data tamper-proof and reduce allegations of corruption and fraud stemming from manipulation of the list.

To deal with the challenges of fair beneficiary selection, and achieve the outcome of municipal beneficiary selection that is fair, transparent and effective, the Department has developed a new beneficiary Selection Policy Framework, which builds on municipalities' desire to formulate their own local approaches to selection, but in a guided fashion. The need for housing is greater than the government's current resources to deliver, and this requires housing opportunities to be allocated in a fair and transparent manner, across all municipalities, whilst prioritizing those with special needs. Such a provincial approach should also generate innovations in the field of beneficiary selection. Municipalities have been given the option to develop their own policies or use a model policy as a starting point to develop their policies, provided that they adhere to a provincially defined set of selection elements.

In January 2011, the Western Cape Premier gave the instruction that 1000 matriculants be given the opportunity to work in the Western Cape Government to obtain work experience and training, and in response, the Department of the Premier set up the Premier's Advancement of Youth, or PAY Project. We have just appointed our quota of 30 interns, who started work for a 12 month period on 15 March 2012. The interns consist of 6 African females, 3 African males, 7 Coloured Males, 8 Coloured females, 3 White Males.

We have also engaged the youth through hosting the Provincial Youth Summit held on the 19th and 20th March at the Cape Town International Convention Centre. Over 140 youth organisations representing a wide range of interests were invited to the summit. Some of the resulting resolutions were:

• Integration must speak to the needs of the specific community , and include, amongst others, employment, shelter, health, clothing, entertainment and education.
• To engage with FET colleges to contribute to skills development of youth.
• Internships and other similar programmes should be flexible to the specific needs of youth with disabilities.

Finally, I am optimistic about the upcoming 2012/2013 financial year. We have a budget of R1 725 180 000, and a three year MTEF of R5 265 430 000. Our non-financial targets for 2012/2013 are:

• 10 615 service sites and 15 567 top structures. This includes 4 468 PHP units. Another 5974 serviced sites will be added in the City of Cape Town through the Urban Settlements Development Grant.
• An increased focus on access to basic services which will result in another 7 731 households benefiting from these services.

I believe the new and innovative measures we have put in place as a Department will enable us to deliver services better together with all stakeholders involved in human settlements. This will ensure that everyone who needs a housing opportunity is provided for, including backyarders, informal settlement residents, people living in overcrowded houses, Gap Market members and those requiring rental units.

Finally, I would like to thank all the staff of the Western Cape Human Settlements Department for their professional and dedicated work this last year, often under demanding and rapidly changing conditions. The upcoming Govan Mbeki awards will formally acknowledge and reward excellence for the role our Department has played amongst the multiple stakeholders in human settlements delivery. I would also like to extend a special mention of thanks to the Head of Department, Mbulelo Tshangana, for his competent operational leadership.

Thank you.