What it takes to meet housing targets, despite the odds

19 April 2016

Last week I read a story in one of the Cape's newspapers with the headline 'W Cape housing budget slashed'.

I was taken aback, as this was the first I'd heard of an alleged housing 'budget slash'. Had it been true, I would normally have been the first to know through our Minister of Human Settlements, Bonginkosi Madikizela.

Reading the story further, I realised the article gave the wrong impression.

It reported that almost R120 million had been 'slashed' from municipal housing budgets by the province, which manages the grant funding for housing disbursed each year by national government.

This gave the false impression that the province is failing to spend millions allocated for housing, which is now lost for good. This is not so.

What is true, is that every year, projects in various towns progress at differential rates, for a variety of reasons.  So every year, we reallocate budget from projects that are moving slowly (and will not utilise their full budget during the financial year) to those that are moving more quickly and require additional funds.  It is often impossible to predict this when we draw up budgets a year in advance.

This method of shifting funds (through proper legislative processes) ensures that we spend almost 100% of our provincial housing budget every year.

The municipalities cited in the article as having had their housing budgets reduced this year are George (R40 million), Mossel Bay (R20 million), Oudtshoorn (R20 million), Swellendam (R16 million), Stellenbosch (R15 million), Bergrivier (R7 million) and Cederberg (R2 million).

This money was not "lost" to housing. It was shifted to other projects, in other Western Cape towns.  And all the housing projects from which funds were shifted, will have their readiness reassessed in the mid-term budget adjustments. Funds will then be allocated accordingly.

That is the only way we can align budgets to the unforeseen factors that occur in real life, on the ground, during a complex multi-million Rand housing development.

This is how we ensured that we spent almost 100% of the nearly R2 billion allocated for housing in the last financial year, through the Human Settlement Development Grant.

We also exceeded our annual targets, delivering close to 18 000 housing opportunities last year. And we did it with a clean audit for our Human Settlements Department.

This is no small feat for a sector so fraught with obstacles, interminable bureaucracy and complex legislation.

To understand how housing delivery works, one needs to start with the Constitution, and the laws arising from it.  This once again demonstrates how essential co-operative governance is.

Section 26 of the Bill of Rights tasks the state with progressively realising the right to adequate housing through "legislative and other measures".

Provincial governments derive their housing mandate from Schedule 4 of the Constitution, which lists housing delivery as a shared legislative function of national, provincial and local government.

Arising from Constitution is the national "Housing Act", with section 3 (2) vesting the power to set housing policy with the national Human Settlements Minister.

A provincial government's role is then to do everything in its power to facilitate the "provision of adequate housing", but only within the framework of national housing policy, according to Section 7 (1) of the Act.

Municipalities are responsible for including housing in their development plans, providing the basic services needed for housing delivery, and resolving the many community and labour conflicts that may threaten new housing developments (Section 9).

The province co-ordinates planning at all levels of government.  This means that every year, we review our 5 year business plan which includes Project Pipelines for housing. This is a binding agreement with the national Human Settlements Department.

Only the projects included in this rigid 5 year pipeline can be funded through the Division of Revenue Act, and nothing else.

Working with municipalities, we approve housing projects to be included in the local Integrated Development Plans (IDPs) for each area. These are the projects that make up our business plan agreement with national.

As municipalities reach milestones in delivery, the province pays out portions of the allocated money. This also means that if a municipality - for whatever reason - starts  a new housing venture not detailed in the 5 year pipeline plan, it would be acting unlawfully and cannot be given funding to do so.

We track housing projects online using our Project Management Unit in the provincial housing department.

We also have a team of Technical Directors for each region to support municipalities, and bring concerns on project delays to the Grant Allocation and Advisory Committee (GAAC).

In the scenario described in the article last week, our systems had worked to advance projects that were ready to get more funds, while problems were being ironed out elsewhere.

It is also true that in housing delivery, many of the delays the state faces are self-inflicted by a complex web of national legislation and bureaucracy.

Forget the environmental and housing legislation (which create a bureaucratic nightmare in themselves). The finance laws take things to another level.  There is the Public Finance Management Act (PFMA), the Municipal Finance Management Act (MFMA), and the scores of National Treasury regulations and directives for both provinces and municipalities.

We want to promote delivery with minimal bureaucracy.  This means that once the warning lights come on for a project (because it may not be able to use all its allocated funding), every possible intervention is sought by the Grant Allocation and Advisory Committee, in collaboration with the municipality, to fix the problem

If no immediate solution can be found in that particular project, funds are reallocated so they are not wasted. This is how we deliver on 100% of our housing targets and spend our entire budget in a year.

All of this takes place amidst the high demand we face for adequate housing.

It is quite an incredible statistic that between the census of 1996 and that of 2011, the City of Cape Town's population grew by 45%, and new models of innovative delivery are urgently required.

Last year our ground-breaking province-wide Demand Study revealed that we need at least 590 000 houses to mitigate the current housing backlog, which seems to keep on growing.

Resources are limited; therefore we must do what we can within the current financial framework.

And we are innovating in spite of the many restrictions, to focus our resources on large, catalytic projects that will deliver over 105 000 housing opportunities between 2017 and 2022.  But this will still fall far short of the need.

By achieving scale, we can cross-subsidise affordable housing in each development through income from commercial tenants and market rental properties. This is the only sustainable way forward for housing, and the only way we can cater for those in the housing "gap" - households earning R3 500 to R15 000 per month.

The Better Living Model Game Changer, the largest inner city affordable housing project in the country, is based on this innovative approach. It will deliver some 3000 residential units alone in one of Cape Town's nodal business and residential suburbs.

While much reform is needed in the housing sector, it is worth acknowledging the systems and innovations devised by capable governments to meet their Constitutional responsibilities.

This article by Helen Zille first appeared in Inside Government, the online newsletter of the Premier of the Western Cape.