Discussions and Recommendations on the Housing Budget for 1998

PUBLIC SERVICES SELECT COMMITTEE
23 April 1998
DISCUSSIONS AND RECOMMENDATIONS ON THE HOUSING BUDGET FOR 1998.

DOCUMENTS HANDED OUT
Summary of Achievements (Projects only)

SUMMARY
The minutes of the previous meeting were discussed and amendments were made to the budget figures. The provinces made their recommendations for the 1998 Housing Budget. Gauteng and Kwazulu/Natal Provinces also brought in experts; the Free State gave no input as only one representative was present; the Western Cape was not represented (members were attending the National Assembly elections for Chairperson and Deputy Chairperson of the Constitutional Review Committee.)

MINUTES
The meeting was opened with the reading of the previous meeting's minutes. The necessary corrections were made on the budget figures and suggestions were made for further improvement of the budget.

Gauteng Province discussed the relationship between health and housing. The Housing Department has taken on the responsibility of sanitation and water needs, as well as building houses.

Over commitment and spending were discussed and it was suggested that input from the various provinces would influence the effectiveness and success of the Budget. There was a general consensus that previous minutes would not be accepted without first being checked for mistakes. It was on this premise that Mr Mohammed, the Gauteng representative, called in an expert.

It was stressed that there was no over-expenditure on the budget. The Director- General had reviewed the 1997,not the 1998, budget. Over-commitment, as opposed to over-expenditure, is contractual and therefore is binding. The total budget for 1998 is R1.8 billion (as stipulated in Paragraph 2 of page 2 of the budget). This correction was made by the Gauteng representative who brought to the attention of the meeting that the budget was not R22.9 billion but R1.8 billion. The amount needed for the year is actually R4.7 Billion.

R1 billion has been allocated for salaries and projects on a national level.
Mr. Fisher, an expert from Gauteng, said that over-commitment was a contractual obligation and that the obligation will remain because when spending, the balance always goes back into the commitment. It was agreed that there is a general need to commit over a period of 3 years: 70% for the first year, 50% for the second year, 20% for the 3^rd year.

It was generally agreed that not a single province had spent more than its budget had emphasised. An attorney from the NP, intercepted at this point to say that as a general rule of law, one is bound to perform contractually, whenever entering into a contract. Payment therefore had to be made.

The minutes were then amended and adopted.

Gauteng province was represented by Monty and Mohammed. They agreed that the reality of the homelessness problem was real and needed to be addressed with urgency. The dimensions of the problems facing the landless and homeless are staggering. Twenty thousand people are migrating into Gauteng every month. There is a desperate stream of people pouring daily into the city in search of work and accommodation. 122000 stands and 64000 houses have been provided to date, which is far below the need. To date, Gauteng has built 400000 houses. This includes the provision of water and sanitation by the housing department.

R7.9 billion worth of assets have been transferred to the people, especially in the townships. Gauteng now has a secondary market where people can buy and sell houses. There is ownership of houses in the townships now for the first time in South Africa. Initially it was very difficult to build but this was rectified when the budget amount allocated, shifted from 2% to 5%. The housing backlog will continue to grow if 25000 houses are built in the townships of Gauteng annually. The percentage of houses built will have to increase or else the backlog will prove highly detrimental to the housing demand. It is for this reason that R2.8 billion as an annual allocation for housing is insufficient to meet the demand.
R725 million has already been allocated but the housing budget must be increased by at least 20% annually in order that this serious problem be rectified once and for all.

Regarding funding, Group 5 was mentioned as a major funder for housing projects and it currently going through a decisive restructuring phase. l.t.a. was also mentioned as one of the main funders for housing projects in Gauteng and it was indicated that it recently had to retrench senior managers.

R34 billion must be recovered from contractors, urgently, as another way of recovering funds which can be put back into the housing projects, which are viable. Although money was allocated for the various projects, the money was only realised after some years. Mr Mohammed holds the view that the building industry is capable of creating many jobs for the jobless if well established.
The current budget is well below the 30\40% average allocation needed to secure homes for the homeless.

Mr. Mohammed suggested that the national budget amount be transferred to Housing as it is labour intensive and it creates jobs very quickly. Housing projects are long term but are very frustrating to contractors and people on the grassroots level who do not understand all the bureaucracy that it entails. The reality of this budget is the fact that it will take another 3 to 4 years before money can actually be spent. In this time however the homeless will have to remain homeless and their lifestyle degenerate further.

KwaZulu/Natal province called in an expert, Mr. Yussuf Bhamjee, who was recently awarded for his work done on housing in the province. According to Mr. Bhamjee, 195000 subsidies have already been given to date. R60 million is required every month and projects will have to be put aside because this in not sufficient funding.

The long term projection is 135000 households by the year 2000. This will mean that 4500 subsidies will be granted every year, and since this is well below what is required, it will result in a crisis. This budget will result in a backlog of 12 to 15 years, which cannot be afforded. This budget constraint will, in the long term, be very detrimental.

The following issues were addressed and it was concluded that there be a reduction in the budget expenditure.
*Formula for allocation
*Width and Breadth dimensions to manage out projects in the pipeline
*Need for more lead time to manage projects in the pipeline.
*Need for more serious political; commitment and support for the housing policy.
*Need to stretch time for the meeting of the backlog
*Land invasions and Frustrations to be dealt with soon
*Delivery of capacity and need to take note of delivery capacity being dismantled.
*The CONMIP PROGRAMME
*Hostel programmes and Rural housing
*Unemployment
*Escalation costs

The effect of land on chiefs and traditional owners of land, in regard to ownership and allocation of land to the landless, was addressed.

Foreign Investment by the Norwegians is evident and factories instead of houses are being built. There is a need therefore to look for funding elsewhere.
NFC Funds poured into Housing Fund. However, NFC Funds will no longer be poured into housing in Mpumulanga. These funds will now go into state revenue accounts and not into funding the construction of houses. There is a need for logging between the National Assembly and the National Council of Provinces, before monies can be referred to the state revenue..

In obiter the chairperson encouraged NCOP members to be teachable and united, so that they can better shape the housing policy for the sake of the people on the grassroots level and those in need of housing and land. It was evident that the DG had not consulted with the department of housing.
It was agreed that financial institutions need to be re evaluated. There is a serious need to apply more pressure on the department of housing and on those dealing with the monies allocated to housing.

It was agreed that local government should see to it that housing and public works departments begin to work hand in hand. Land invasion laws must be implemented as soon as possible in the rural areas. It was agreed that the rescheduling of projects now, would create major problems and setbacks. These problems need to be lobbied urgently with the Local government and National Assembly.

The Chairperson indicated that the budget date has been set for 20^th May 1998.