Minister Madikizela delivered his 2016/17 Budget Vote

30 March 2016

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Madame Speaker

Madame Premier

Cabinet colleagues

Leader of the official opposition

Members of Provincial Legislature

Chairperson and members of the Human Settlements Standing Committee, Mayors and Councillors, managers of our entities, our partners in the NGO sector, service providers in various disciplines, all our stakeholders, HOD of the Department, Mr Thando Mguli, Chief Directors, Directors and the entire Human Settlements family in my department, honoured guests, ladies and gentlemen, people of the Western Cape.

Madame Speaker this year we celebrate 20 years since the adoption of our Constitution, and I would like to quote its preamble.

"We, the people of South Africa,

Recognise the injustices of our past;

Honour those who suffered for justice and freedom in our land;

Respect those who have worked to build and develop our country; and

Believe that South Africa belongs to all who live in it, united in our diversity"

We therefore, through our freely elected representatives, adopt this Constitution as the supreme law of the Republic so as to:

Heal the divisions of the past and establish a society based on democratic values, social justice and fundamental human rights;

Lay the foundations for a democratic and open society in which government is based on the will of the people and every citizen is equally protected by law;

Improve the quality of life of all citizens and free the potential of each person; and

Build a united and democratic South Africa able to take its rightful place as a sovereign state in the family of nations."

This, Madame Speaker, must be a constant reminder to those who have made it their project and daily bread to divide our people along racial lines. Racism, subtle or coded, by white or black people must be exposed, condemned and rejected with the contempt it deserves because it promotes violence and is threatening the founding principles of our Constitution.

Chapter 2 of our Constitution: The Bill of Rights, paragraphs 26 states that:

“1) Everyone has the right to have access to adequate housing.

2) The state must take reasonable legislative and other measures, within its available resources, to achieve the progressive realisation of this right.”

Madame Speaker, the country is facing with a leadership crisis - and that largely impacts on the lives of poor people. That's why the leading party in the Western Cape, the Democratic Alliance, adopted Freedom, Fairness and Opportunity as its values at its last Congress in Port Elizabeth. This can only be realised when 8.3million jobless people in South Africa are able to find jobs in order for them to contribute towards their houses. The growing number of people reliant in state assistance is not sustainable because current resources will never be enough and we need to get our priorities right.

Somlomo ndikhuliswe ngabazali ababengathathi ntweni, kodwa baqiniseka uba sinekhaya bengazange bancediswe ngurhulumente. Masingawukhuthazi umkhwa ombi wokuxhomekeka kurhulumente ngento yonke. Sinoxanduva lokuncedisa abantu abazimpula zikalujaca, abangathathi ntweni - kodwa asisoze sokhele wonke umntu indlu yasimahla.

Economic challenges

Madame Speaker, the economic challenges we are facing as a country compels us to re-look at the housing provision approach, guided by this section of our Constitution. For far too long we have given a very wrong impression and raised unrealistic expectations that government has unlimited resources that can provide everyone with a free house - we have to change this mindset. Many competing needs and financial pressures of the country, like #feesmustfall, have resulted in the loss of R3.7billion for the department of Human Settlements nationally, and R424million in this Province.

Our 3 strategic goals

Madame Speaker, I believe that every challenge presents an opportunity to do things differently.. While this is a huge cut, we are working hard to soften the blow by using our budget to leverage more from the private sector and NGOs. In anticipation of these challenges, our three strategic goals, which we adopted last year, will be responding to this;

Our first strategic goal is the focussing on the upgrading of informal settlements, to improve the living conditions of many people in informal settlements who fall outside the qualification threshold of government’s full subsidy and those who are still far from being prioritised on our housing demand database.

My Department is currently “partnering” with a number of NGO’s via the National Upgrading Support Programme (NUSP). Nine NGO’s are actively involved.

The Department has contracted with two NGO’s (Isandla in consultation with Habitat for Humanity) and (CORC) to assist with three projects namely the development of a ‘Provincial Informal Settlement Support Plan’, ‘Rapid Appraisal’ of non-metro informal settlements and an ‘enumeration study’ of seven settlements in the Southern Corridor CoCT. This will assist focused interventions for informal settlements and clarify the roles of different stakeholders in the in-situ upgrading of informal settlements. Short-term interventions, based on community consultation, will be prioritised to improve the quality of life of people living in informal settlements.

I also pledged R10m rand to Slum Dwellers International to support the upgrade of informal settlements. Once approved, these projects will include the upgrading of wetlands and community halls, incremental tenure options and “double storey” shacks, Early Childhood Development (ECD) facilities, re-blocking, and informal trading opportunities. Some of what we have achieved through our strategic partnerships are:

Collective decision-making with Community Leaders of various settlements
A reduction in housing backlog through funding from our commercial banks partners; Crime and risk prevention with Metro Police, Law Enforcement and Disaster Management partners.
Well organised communities and shared responsibility for social upliftment through NGO’s such as UN Habitat, Slum Dwellers International, and Development Action Group.

I wish to thank all partners, including those who could not be mentioned in today’s address.

Our second strategic goal is accelerating the provision of houses in the GAP or affordable market by partnering with the private sector, financial institutions, and we are also innovating from our side, to make homes affordable to this income category. One of those innovations is to make land available to the private sector through the request for proposal process. This land is our equity for development in order to subsidise the end-user and make the houses more affordable.

Already two out of three land parcels have been adjudicated and successful service providers are in the process of signing land availability agreements and development rights, these will yield 350 Finance Linked Individual Subsidy Programme (FLISP) opportunities. The remaining one is being finalised and a service provider will be appointed soon. We've also requested the department of Public Works to make other land parcels available for the same purpose. These land parcels have been advertised already and the tender will close on the 31st of March. One of the important conditions on these land parcels is to ensure that between 40% and 50% goes to HDIs, which will yield about 300 FLISP opportunities. This is in addition to 4628 opportunities on FLISP alone in various areas.

Madame Speaker I am happy to announce that my Department has submitted a proposal to the National Department of Human Settlements to increase the Institutional Subsidy from R3 500 to R7 000.00 which will assist people in this category to own homes. These are the people that earn too much to qualify for the subsidised house but too little to qualify for the bond. We are waiting for approval from the National Department in this regard.

The Department of Public Service and Administration has partnered with the Government Employees Pension Fund (GEPF), acting through the Public Investment Corporation (PIC), to provide specially arranged home finance opportunities for government employees enrolled with the GEHS. The Department will play a leading role in providing affordable housing opportunities to the public servants.

My Department manages rental stock in order to ensure that quality and affordable rental housing is available to those who need it. Whilst most of the Department’s budget is spent in providing free housing to those who earn below R3500 per month, the Department also provides for the housing needs of others who are in a different income range and require housing assistance within their available budget.

In order to ensure the sustainable management of the rental stock, it is essential that rent is collected for the properties. While we recognise that many residents have been inhabiting the properties for a long time, the Department has always administered these as rental stock and tenants are fully aware of this. As such there are no plans to turn the stock into privately owned units.

Tenants that are unable and cannot afford to settle their arrears may be assisted on a case by case basis by writing off 50% to 100% of their rental arrears when concluding their new lease agreement. Such write-offs will be based on each tenant’s income and payment history if they approach the Department.

The Department has no intention of evicting anyone in good standing with their lease agreements. Qualifying tenants whose gross household income is below R3 500 per month will be assisted with subsidised housing (BNG units). These units are made available for beneficiaries and families that are unemployed and those who struggle to pay their rent.

However, defaulting tenants that do not comply with the conditions of their lease agreement, for example non-payment, allowing illegal occupation and drug dealing, are committing acts that constitute a breach of contract and this can result in their lease agreements being terminated and legal action being taken against them.

Our third strategic goal is the tightening of screws on the previously skewed housing allocation that prioritised younger beneficiaries and ignored older and the most deserving ones. We have a moral obligation to ensure that this anomaly is corrected, and we are doing this by prioritising those with special needs.

Somlomo, elisebe selinikezele ngezindlu ezingamawaka angaphaya kwamakhulu amane, kodwa kusekho iinkonde neenkondekazi ezisahlala ebugxwayibeni logama kukhona abantu abatsha ababhalise izolo asele benezindlu.

Game changers

During her State of the Province address, Premier Zille spoke about our eight (8) game changers in the province - one of those is the Better Living Challenge.

On the 22nd February this year we held a press conference announcing the Western Cape Government’s Better Living Model Game Changer, a new approach to inclusive, affordable urban living. This R2.4 billion project will see the Western Cape Government, together with the City of Cape Town and our private sector partners, plan, design, fund, and develop the former Conradie Hospital’s 22 hectare site into a sustainable, and affordable mixed-use, mixed-income and mixed-tenure neighbourhood. More than 3600 residential units will be delivered, of which a minimum of 49% will be allocated to grant-funded housing. This project is now at the planning stages - coupled with consultation process after receiving 76 expressions of interest, it ticks all the boxes of Integrated Human Settlements’ principles.

Extensive public participation process with all interested parties will also take place over the next few months.

Catalytic and provincial priority projects

The Premier again spoke about catalytic projects that will yield just over 105 000 housing opportunities by 2022, beginning in the 2016/17 financial year and at a cost of just over R10billion. These projects include:

the Southern Corridor,
the George Municipality Catalytic Project,
Saldhana Bay’s Vredenburg Urban Renewal Project,
the North-Eastern Corridor,
the Voortrekker Integration Zone,
Breede Valley, Transhex project
Drakenstein’s, Vlakkeland project, and
De Novo
Belhar CBD

After the agreement with the National Department of Human Settlements and MINMEC on the 1st of February 2016, I convened public meetings with communities that will benefit from the Southern Corridor Project in Barcelona, Europe, Lusaka, Gxagxa, Vukuzenzela, Kanana and Kosovo to introduce these projects and our service provider, Community Organisation Resource Centre (CORC) for the first phase of enumeration, which must be completed by August this year. The Department, in cooperation with National Department of Human Settlements, and HDA, are currently in the process of negotiating the purchase of Denell land, which will assist in the implementation of the Southern Corridor project, through USDG funding, as well as awaiting responses from National Public Works with regard to additional parcels of land at iThemba. Meetings with the communities of Thabo Mbeki, Tsunami and other areas will follow.

Construction on the following catalytic and provincial priority projects is planned to begin for the 2016/17 financial year:

George Municipality Catalytic Project, which includes Thembalethu, Wilderness Heights and Syferfontein, is estimated to yield 12 465 housing opportunities at a cost of R2 billion.
Transhex Project in Breede Valley Municipality, estimated to yield 7 300 opportunities at a cost of R1.2 billion.
Vlakkeland Project in Drakenstein Municipality, estimated to deliver 3 260 opportunities at a cost of R550 million.
Forest Village in City of Cape Town, is estimated to deliver 4 600 opportunities at a cost of R730 million, as a contribution to the Southern Corridor.
Phase 2 of Belhar CBD will also commence in the upcoming financial year.

The Department, in collaboration with its partners, will purchase additional land and provide additional funding for bulk infrastructure, in order to fast track these catalytic and provincial priority projects.

Empowerment of SMMEs

Our responsibility as the department is to do three things, if we are to ensure that our values of Freedom, Fairness and Opportunity are realised. They are to:

House
Empower and
Employ,

We are successfully doing that - just look at the gallery.

In order to deal with racism and racial differences in our country we have to - among other things - deal with the structural inequalities of our economy. This we can do by empowering historically disadvantaged individuals and making sure that they become key players in the built industry - my department is doing exactly that. When I took over this department in 2009, about 25% of the total value of our budget went to SMMEs and HDIs. Today, Madame Speaker, about 46% of my entire department's budget goes to these companies.

For the past financial year, the provincial priority projects (this excludes all other projects implemented by municipalities) has created 1 419 work opportunities. This equates to 344 full time employment opportunities, at an average wage of R170 per day, with a total budget of R11 million.

Title Deeds

Our beneficiaries are empowered through the delivery of title deeds, ensuring security of tenure and the opportunity to leverage finance through the use of their property. In the six months from April to September 2015, an excess of 3000 properties were transferred to beneficiaries, and a further 5200 are expected to be complete for the period October 2015 - 31 March 2016.

We have reduced the title deed backlog from 86 350 in 2009/2010 to the current level of 55 000 and will continue to reduce the backlog until everyone has their title deed. A special unit has been established within the Department to unblock all the title deeds delays and to attend to the backlog.

Military Veterans

Madame Speaker the National Department of Human Settlements, in partnership with the Department of Military Veterans, took a decision to provide houses for military veterans. We've made slow progress on this program for various reasons, and I want to stress that this has nothing to do with unwillingness to participate by the Western Cape Government, which is a perception held by some.

A military veteran is defined as:

“rendered military service to any of the military organisations, statutory and non- statutory, which were involved on all sides of South Africa’s Liberation War from 1960 to 1994 ;
served in the Union Defence Force before 1961; or
became a member of the new South African National Defence force after 1994; has completed his or her military training and no longer performs military service, and has not been dishonourably discharged from the military organisation or force”.

Approximately 6 000 veterans have been identified nationally via a database supplied by the Department of Military Veterans, of which approximately 500 reside in the Western Cape. Consequently the department has initiated a project in the Blue Downs, Nuwe Begin and Kuilsriver areas which could ultimately house approximately 250 families. The project is currently at procurement stage (ie. tender evaluation). The project will be implemented in phases based on the number of approved beneficiaries.

Greenville launch in Fisantekraal, Durbanville

Madame Speaker, through our strategic partnerships with private developers, on Thursday 17 March 2016, the Premier of the Western Cape, Ms Helen Zille, myself and City of Cape Town MAYCO member, Benedicta van Minnen, officially launched the Greenville housing project in Fisantekraal near Durbanville.

This development will eventually accommodate over 16 000 homes, along with schools, community facilities and public spaces on 767ha of land. Greenville has been planned to accommodate a variety of housing types and will become home to first-time buyers, low and middle income citizens, and qualifying recipients of Breaking New Ground (BNG) homes. Innovative technology will be used in this project.

The event was marked with much elation where some deserving beneficiaries received their new homes.

Last financial year's achievements

The Human Settlement Grant for 2015/16 was R1,975Bn, and set the target of just over 18 000 opportunities. There were 181 active projects in the 2015/16 financial year and by 31st March 2016:

100% of Human Settlement Grant of 2015/2016 of R1.975 Bn will have been spent.

6277 sites against a target of 6277 will have been met, if not exceeded.

The target of 10 240 units will also have been met or exceeded by the end of the financial year.

Municipalities are our primary developers and implementing agents, and their performance determines whether or not we reach our targets. I want to thank all the municipalities for their cooperation and excellent work. These achievements were not going to be possible without you.

The process is currently underway to determine the City of Cape Town’s readiness for being assessed for assignment.

We are also ensuring that we account for every cent spent, and for the 2014-2015 financial year, the Department obtained a clean audit for the second consecutive year since 1994, utilising its entire Human Settlements Development Grant (HSDG) of R 1 934 936 000 directly on delivering housing opportunities.

Madame Speaker, let me now turn to the anticipated expenditure of the 2016/2017 to 2018/19 Medium Term Expenditure Framework (MTEF).

The 2016 Division of Revenue Act (DoRA) Bill over the 2016/17 to 2018/19 MTEF period indicates the department will have an HSDG allocation of R2.001Bn, R2.461Bn and R2,620Bn over 2016/17, 2017/18 and 2018/19 respectively. This allocation will yield the following opportunities summarised below:

In 2016/2017 a total of 19 664 opportunities will be delivered with a budget of R 2.001 billion.

In 2017/2018 a total of 22 638 opportunities will be delivered with a budget of R 2.461 billion.

In 2018/2019 a total of 23 714 opportunities will be delivered with a budget of R 2.620 billion.

The MTEF total spend and delivery is R7.082 billion and 66 016 housing opportunities.

Looking ahead, we are also involved in shaping Human Settlements Policy to better reflect the challenges and needs of our delivery environment.

The National Department of Human Settlements is currently undertaking a process to develop a Human Settlements White Paper. This is an important policy moment for us as we reflect on the approaches we have taken over the last two decades to support poor households and meet their human settlement needs. We are well aware that the current delivery model is unsustainable and bold policy decisions need to be made to ensure that housing recipients are not merely beneficiaries of housing, but also partners and contributors in the process of building sustainable neighbourhoods.

The Western Cape Department of Human Settlements has facilitated a number of consultative engagements to feed into the White Paper process, including workshops with our government and non-government partners. A number of valuable recommendations have been garnered. There is a need to shift away from government driven supply-side mechanisms and towards approaches that put beneficiaries at the centre of making trade-offs about the standards and location of their housing, and draw upon the resources made available for housing. Rental and rent-to-buy models of delivery are also seen as critical.

The Western Cape will make a written contribution to the White Paper process in the coming months, where we will recommend how, practically, we can overcome the past challenges and move towards the vision of developing sustainable human settlements.

I would hereby like to thank the Department and the entire staff.

Madame Speaker I thank you, baie dankie, enkosi