Social Housing Foundation: briefing; Committee Study Tours, Budget hearings, & Fire/Flood Conference Reports: adoption

Human Settlements

15 August 2005
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Meeting report

HOUSING PORTFOLIO COMMITTEE
16 August 2005
SOCIAL HOUSING FOUNDATION: BRIEFING; COMMITTEE STUDY TOURS, BUDGET HEARINGS , AND FIRE/FLOOD CONFERENCE REPORTS: ADOPTION

Chairperson:
Ms Z Kota (ANC)

Documents handed out:
Social Housing Foundation on the Netherlands and Norway: PowerPoint Presentation
Committee Report on the Studytour of Norway and the Netherlands
Committee Report on the Western Cape Visit
Committee Report on the Housing Budget Public Hearings
Committee Report on the Challenges of Fire and Floods in Human Settlements Conference
[All shortly available at
Committee Reports]

SUMMARY
The Social Housing Foundation (SHF) delegation highlighted the objectives and outcomes of its study tour to the Netherlands and Norway. The tour had allowed the SHF to gain an understanding of how the Norwegian and Dutch social housing models operated. The SHF delegation then discussed the status of South Africa’s social and co-operative housing sectors. South Africa faced a challenge in delivering the scale of houses required. SHF also outlined recommendations on how the social and co-operative housing sectors could be enhanced. This included outlining the need for a regulatory body, such as a Social Housing Corporation. Policies and legislation were needed to regulate the social and co-operative housing sectors. Continued supported was required for pilot projects, such as the Cape Town N2 project.

In the ensuing discussion, Members raised various questions and concerns. These included:
- whether the SHF had discussed the proposed establishment of the Social Housing Corporation with the Department or the Minister;
- whether the proposed Social Housing Corporation would be responsible for both the social and co-operative housing sectors;
- whether SHF had proposed that housing pilot projects should receive continued support;
- why the SHF had stated that competition with the private sector could lead to market distortions; and
- how the international conference on co-operative housing would be funded.

A Member was also concerned that unemployment could undermine the sustainability of South Africa’s social housing sector.

The Committee then adopted the Committee Clerk’s minutes of 2 and 10 August, the Committee Report on the study tour of Norway and the Netherlands; the Committee Report on the Western Cape visit; and the Committee Report on the Fire and Flood in Human Settlements Conference. After a brief discussion, the Committee also decided to adopt the Committee Report on the Housing Budget Hearings as an internal report.

MINUTES

Social Housing Foundation’s study tour to the Netherlands and Norway briefing
Mr B Moholo (Social Housing Foundation Managing Director) began by discussing the objectives of the study tour that had been undertaken to Norway and the Netherlands. These included gaining an insight into how these countries approached social/co-operative housing, what policies they implemented around social/co-operative housing; how international approaches related to the situation in South Africa; and what roles the different spheres of government’s in Norway and the Netherlands played in delivering social/co-operative housing. The tour had also been undertaken to strengthen the relationships between the parliaments of these countries and that of South Africa.

Mr Moholo outlined some of the outcomes of the study tour. He noted that it had allowed the SHF to gain an understanding of the operations and objectives of the Norwegian and Dutch social/co-operative housing models. In turn, this had allowed the SHF to gain an appreciation of the extent of government commitment, which was required for the establishment of vibrant social/co-operative housing sectors. It also provided insight into the range of institutions that were required to establish sustainable social/co-operative housing sectors.

Mr Moholo discussed the status of South Africa's social and co-operative housing sectors. He noted that South Africa faced various challenges around social/co-operative housing. These included:
- the challenge of providing large scale social housing developments;
- a lack of suitable governance and management capacity within some social housing institutes;
- the lack of an agency with the authority to intervene and correct the social housing situation;
- financial pressures; and
- competition from the private sector that was causing market distortions.

Mr Moholo noted that policies needed to be developed, which would allow for South Africa’s cities and society to be restructured on a more equitable basis. Policies were also required to increase the range of housing options available to the poor. A number of specific policies had already been proposed, which were aimed at establishing social housing developments in designated zones; financial mechanisms to aid the poor; and gearing social housing to scale. Added to this, a Social Housing Corporation had been proposed in order to serve as a sector regulator and capacity builder. Indeed, the capacity of all the actors needed to be improved, which included government, civil society, and the private sector. Mr Moholo then outlined the roles that these actors should play in delivering social/co-operative housing.

Mr Moholo highlighted some of SHF’s recommendations around social and co-operative housing. He noted that SHF would be promoting legislation and a policy framework for co-operative housing. The Memorandum of Understanding between South African and the Norwegian governments should be renewed in order to facilitate pilot projects, capacity building, and sector promotion. Black Economic Empowerment should be an integral part of the provision of co-operative housing. Added to this, an international conference on co-operative housing should be hosted in South Africa. There should also be continued support for sustainable models, such as the N2 housing project. He added that legislation such as the Social Housing Bill needed to be promoted.

Discussion

Mr G Schneemann (ANC) asked who had proposed the establishment of a Social Housing Corporation. In addition, was the SHF discussing the proposal with the Department or the Minister?

Mr Moholo replied that the Social Housing Foundation had recommended that a Social Housing Corporation should be established. Its proposed role would be to deal with capacity building and regulation in the social/co-operative housing sectors. Nonetheless, the SHF was already undertaking capacity building initiatives. Some people felt that SHF should establish a regulatory arm in order to meet the recommendations that were outlined in the Social Housing Policy. In this manner, the SHF would be incorporated into a Social Housing Corporation. Parliament would need to pass specific legislation to allow for the establishment of a Social Housing Corporation. The SHF had engaged the Department around the possible establishment of a Social Housing Corporation. However these discussions were only in the initial phases and nothing had been decided upon.

Ms O Crofton (Social Housing Foundation: Research and Development Division Head) added that the recommendation that a regulatory body, such as a Social Housing Corporation, be formed was not unusual. Indeed, the Netherlands, Britain, Canada, and Australia all had regulatory bodies. These had been considered as possible models for a South African Social Housing Corporation. However, some of these bodies also provided guarantees for loans in the social housing sector. If a South African Social Housing Corporation were established, it would not be a guarantor of loans. There was a debate about whether the Social Housing Corporation should be a stand-alone institution, or whether it should be part of the Department, or whether it should be part of a capacity builder.

Mr Schneemann asked whether the proposed Social Housing Corporation would be responsible for the regulation and capacity building in both the social and co-operative housing sectors.

Mr Moholo replied that if a Social Housing Corporation were established, capacity building would be one of its core focus areas. Without capacity, few houses would be built. Mr Moholo and Ms Crofton added that the Social Housing Corporation would be responsible for the entire social housing medium-density sector. This included dealing with social housing institutions and co-operative housing initiatives in designated zones. There was an ongoing debate around which institutes should be responsible for dealing with social housing developments and co-operative housing initiatives outside of the designated zones.

Mr Schneemann observed that SHF had recommended that the N2 project should receive continued support. He enquired whether this meant that just the N2 pilot project should be supported.

Mr Moholo responded that all pilot projects should be supported, which included the N2 and Cosmos City projects. Ms Crofton added that projects, such as the N2 pilot project, formed part of the Memorandum of Understanding between the Netherlands and South African governments. Through this, the Netherlands government would be assisting with social housing developments in South Africa.

Mr A Steyn (DA) enquired whether the SHF had the knowledge to address the lack of suitable governance and management skills in the social housing sector.

Ms Crofton replied that the Department had compiled a report on the governance, management, and tenant problems that were experienced in the social/co-operative housing sectors. SHF would provide a copy of this report to the Committee.

Mr Steyn asked why the delegation believed that competition with the private sector could distort the market. Surely, the private sector needed to be involved in the provision of social housing?

Ms Crofton responded that private companies, such as Trafalgar, were providing rental accommodation, without subsidies, to people earning below R3 500 a month. However, many of the social housing institutions were moving out of the subsidised market. Indeed, they were beginning to target people who earned between R3 500 and R7 000 a month. This raised the question of why private companies could provide low cost rental housing with no subsidies, when the housing institutes were battling to so? As a result of this situation, it was felt that the private sector should be involved in delivering social housing. They would then also receive some benefits and support, although not on the same scale as that offered to social housing institutions. Added to this, public private partnerships would be explored.

Mr Steyn was satisfied that the private sector would be involved in social housing. The Chairperson commented that the private sector needed to be involved in social investment. This would assist in closing the poverty gap. Indeed, the private sector had shown commitment by pledging R45 billion. Nonetheless, the private sector’s involvement in social housing needed to be properly regulated.

Mr Schneemann noted that many private companies were developing buildings in city centres for the high-income market. He asked whether the private sector should be compelled to incorporate a percentage of low-cost housing units within these developments. The Chairperson added that such an initiative would allow for the integration of communities.

Mr Moholo replied that legislation existed in the United Kingdom, which stipulated that a percentage of units in any private development had to be set aside for social housing. In South Africa, guidelines should be implemented, whereby the private sector would need to include social housing as part of any development. Added to this, a social responsibility clause should be extended to any private sector development. Ms Crofton added that the Social Housing Policy had a financial instrument that made it attractive for private developers to develop mixed income buildings.

Mr Steyn asked how the international conference would be funded. Would international donors or governments provide funding?

Mr Moholo responded that SHF would be undertaking a fund raising initiative around the conference. Added to this, participants would perhaps be required to pay a conference fee. A Norwegian donor was also likely to aid with conference funding.

Mr Steyn commented that the success of social housing in Norway and the Netherlands was due to a low default rate. Due to high unemployment in South Africa, it was likely that the default rate would be much higher. This would impact on the viability of social housing in the South Africa. Mr Steyn stated that the Committee should highlight the need to create employment, in order to make social housing viable, in its recommendations on the Netherlands and Norway social housing study tour. The Chairperson added that communication and consumer education was vital in ensuring that there was a low default rate.

Mr Moholo responded that research had been conducted on the sustainability of social housing. The Department could provide this research report to the Committee. Ms Crofton added that the National Credit Bill would have an impact on social housing initiatives: it would make it easier for people to gain access to social housing. Local authorities also needed to become involved in consumer protection and education. The Social Housing Corporation would possibly include an indirect consumer protection element. Mr Schneemann commented that he hoped that Mr Steyn was not attempting to smuggle the issue of job creation into the Committee’s Report on the study tour to Norway and the Netherlands. It was not necessary to include this issue in the Report, as it was already one of the government’s main priorities. He hoped that Mr Steyn was not implying that job creation was not a government priority. One should rather focus on the employment opportunities that could be created through social housing developments.

Mr Steyn stated that was upset that he had been accused of attempting to smuggle employment creation into the Report. He stated that he merely wanted the recommendations to acknowledge that a low default rate was necessary for the sustainability of social housing projects. The problem of unemployment would impact on the default rate.

The Chairperson noted that the Committee had gained a great deal of knowledge from accompanying the Social Housing Foundation on its study tour to the Netherlands and Norway. The Committee was in the process of formulating recommendations, which had arisen out of the study tour. The Committee would make a copy of these recommendations available to SHF.

Report on the Western Cape Provincial Visit
After a brief discussion, the Committee adopted the Report.

Report on the Housing Budget Public Hearings
Mr Schneemann noted that the Report had been compiled in a question and answer format. He felt that it should rather contain a summary of the issues and recommendations that were raised during the hearings. He therefore suggested that the Committee adopt the present Report as an internal report. Another report, with a summary of the issues and recommendations, could then be sent to the Announcements and Tablings Section for publication.

The Chairperson suggested that the questions raised by each of the institutions, and the answers they received, could be summarised. This, along with the Committee’s recommendations, could then form the basis of a report that could be published. However, the Committee still needed to pass the present Report as an internal report.

Mr Steyn enquired whether such a summary would have to be considered by the Committee.

The Chairperson responded that the Committee would not consider the summary; it would rather be forwarded to the management committee. Nonetheless, Members would receive a copy of the summary.

Mr Steyn proposed that the Report should be adopted as an internal report, and Mr Z Mkhize (ANC) seconded this.

Mr Steyn commented that various departments still needed to report back to the Committee on the issues that were raised during the hearings. The Chairperson added that Servcon also needed to report back to the Committee on certain issues. Specifically, Servcon had been mandated to provide an alternative to housing evictions, but this mandate was due to end in 2006. As a result, Servcon needed to explain whether they would be receiving a new mandate, or whether they would be shut down, or whether they would be absorbed into another entity. Mr Schneemann stated that the National Home Builders Registration Council also needed to provide an update on the establishment of a housing institution.

Report on the Challenges of Fire and Floods in Human Settlements Conference
After a few minor amendments, the Committee adopted the Report on the Challenges of Fire and Floods in Human Settlements.

Mr Schneemann stated that the Report should be sent to the management committee. They could then identify any outstanding issues relating to fire and floods in human settlements. The information that would arise out of this process could then be sent back to the Committee. This would aid the Committee in formulating recommendations.

The Chairperson responded that the Report would be sent to the management committee. Once that process was complete, the report and the Committee’s recommendations would be sent to the Announcements and Tablings Section for publication. The House would then hold a debate on the issues that surrounded fire and floods in human settlements.

Report on the Study tour of Norway and the Netherlands
The Committee adopted the Report on the Study tour to Norway and the Netherlands.

Committee Clerk’s Minutes
The Committee adopted the Minutes of 2 August and 10 August.

The meeting was adjourned.

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