Minister of Human Settlements on his visit to N2 Gateway Project and other housing projects

Human Settlements, Water and Sanitation

27 January 2010
Chairperson: Mr M Mdakane (ANC)
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Meeting Summary

Minister Tokyo Sexwale briefed the Committee with specific mention of the N2 Gateway Project. He said that the intention was to create sustainable human settlements. So far 2.8 million housing opportunities had been created; 2.3 million houses had been delivered but that 40 000 of these were going to be demolished or rectified as they were badly built. Contractors had, in the past, taken advantage of government with shoddy workmanship and the use of inferior materials. There were a few good BEE companies but many were bad. The 40 000, when compared to the 2.3 million houses delivered, were considered a drop in the ocean. Ten percent of the Department’s budget of R1.3 billion would be used to rectify the 40 000 houses. Corrupt persons responsible for the inferior houses would be brought to book. Corruption was present in government at national and provincial as well as local government level. The N2 Gateway Project had broken new ground and was a pilot project. However, it only had a 5% rent collection rate. There were structural defects and there was a lack of general maintenance. The Emerald Sky Project at Buffalo City however had a 96% rent collection rate. The N2 Gateway Project was in Phase 1 and plans were in place to address problems. An integrated approach was needed and he would work closely with the Western Cape Premier, Ms Helen Zille. He also hoped that the Mayor of Cape Town, Mr Dan Plato, could become more involved. Projects were visited in order to keep track of where and how funds were being spent. Government was currently involved in 7994 projects.

This was the Committee’s first interaction with the Minister. The government’s figure of 2.3 million houses was questioned. Minister Sexwale agreed to have the correctness of the figures checked. Members were concerned about the N2 Gateway rental collection rate of 5%. The question was whether tenants are able to afford the rentals or whether they were simply not paying? Housing delivery had been plagued with corruption and fraud and what was being done about it? Minister Sexwale said that the first step was to take action against corruption within government and thereafter against others. Members asked what was being done to improve the situation with regard to emerging contractors who lacked the know-how to deliver. Timeframes for the rectification of programmes were requested. The Department was unable to oblige but promised to report back within 6 months. Members were pleased to learn that greater co-operation was taking place between the Department, the province and local government.

Meeting report

The Committee elected Mr M Mdakane (ANC) as acting chairperson due to Ms B Dambuza, the Chairperson, being ill.

Briefing by Minister Tokyo Sexwale
Minister Sexwale thanked the Committee for the Department of Human Settlement’s (DOHS) allocated budget. He raised several issues including lessons he had learnt from his visit to the N2 Gateway Project in August 2009 and also that two bills had been tabled and accepted. The bills had been returned to Cabinet after being sent out for public comment. There were additional issues including the scope of his work, his vision, problems encountered and solutions required to solve these. His interaction at the Cabinet Lekgotla was also relevant. As far as Human Settlements was concerned, the buck stopped with him. Members were invited to view the Emerald Sky Project in the Eastern Cape and the hostels erected in Dube. A third invite was also extended but the Minister preferred to keep it a surprise.

He said the intention was to create sustainable human settlements and that 2.8 million housing opportunities had been created; 2.3 million houses had been delivered of which 40 000 were going to be demolished or rectified as they had been badly built. Contractors had taken advantage of government with shoddy workmanship and inferior materials. There were a few good BEE companies but many of them were bad. The 40 000, when compared to the 2.3 million houses delivered, was considered a drop in the ocean. Ten percent of the Department’s budget of R1.3 billion was going to be used to rectify the 40 000 houses. He was working closely with Willie Hofmeyr to bring corrupt persons responsible for the inferior houses to book. Corruption was present at national, provincial as well as local government level. The N2 Gateway Project was initiated by the former Minister of Housing, Ms Lindiwe Sisulu. The Housing Accord had been signed in 1994 by the late Minister, Mr Joe Slovo, and others. Urbanisation remained a challenge and there was an influx from rural to urban areas. Millions of people were squatting in cities in a situation similar to the displacement of persons in Haiti due to the recent earthquake. In 1994, there were 300 informal settlements in South Africa. At present there were 2629 and the numbers were increasing. The influx to the cities was taking place as people searched for employment, education and amenities. The situation was not a problem created by government. Many farm workers had also been chased off farms when owners had heard that workers were going to be given security of tenure. Hostels were another problem that had not been created by government but that were the brainchild of mining houses. Individuals were moving away from rural areas for various reasons including floods, fires etc.

Government had embarked on 7994 projects and there was a need for land. Land belonged to various ministries and the cabinet lekgotla had taken place to come up with a way forward. Human settlements were more than just the provision of houses. The quality of life of individuals had to be improved. Land was needed to build houses, the house then had to be built, bulk services and internal services like water, electricity and sewerage had to be provided. Provision had to be made for social amenities. There had to be proximity to commercial and business environment. Environmental space was also a necessity. Integration was therefore needed. Red tape could sometimes be a problem. The Minister pointed out that the Emerald Sky Project at Buffalo City had a 96% rent collection rate while the N2 Gateway Project only had a 5% rent collection rate. He had undertaken a visit to Diepsloot prior to his visit to the N2 Gateway Project in 2009. He believed that one had to follow the money. Hence there had to be concurrency with the provinces. A MinMEC was held in Rustenberg in order to bring local government back into the fold. An integrated approach was needed. The same applied to the N2 Gateway Project. He was working closely with the Western Cape Premier, Ms Helen Zille and would like for greater involvement from the Mayor of Cape Town, Mr Dan Plato. Projects were visited in order to keep track of where and how funds were being spent. The N2 Gateway Project was in Phase 1 and it was a well known that it faced problems and challenges.

Minister Sexwale asked Ms Julie Bayat, Chief Director DOHS, to provide further insight into some of the Department’s projects. She said the N2 Gateway Project was not just one project and that there were different sub-projects within the project. The Joe Slovo Phase 1 Project  was just one such project. Some of the problems were that houses had structural defects, rentals were not being paid and there was a general lack of maintenance. But the Department was taking steps to address these problems. Affordabilty levels of tenants was being looked at and funding had been made available for maintenance.

In Delft there was a lack of provision of services to residents and maintenance was lacking. The City of Cape Town had been informed. There were also outstanding payments to contractors but meetings were taking place to resolve the issues.

Deep-seated social strain was being experienced at Joe Slovo 3. There were contestations between backyarders and informal settlement residents. It was also the subject of a Constitutional Court Judgement. After the visit, consultative engagements with the community had been undertaken to ease the strain.

Institutional arrangements had been strengthened after the visit to the N2 Gateway Project. The community had agreed with recommendations for higher densities and the Minmec approved the reincorporation of the City of Cape Town into the co-operative management structure of the N2 Project. Correspondence had also been sent to the Mayor of Cape Town. 

Discussion
Mr A Steyn (DA) commented that it was refreshing to have a Minister who admitted that mistakes had been made. He questioned the accuracy of the figure mentioned by the Minister that 2.3 million houses had been delivered by government. According to his own calculations, the figure was lower. The Department’s Annual Report for the past two years had also not reflected the number of houses delivered. The omission had been questioned. He referred to the comment by the Minister that it was not the government who had placed the squatters where they were and said that people would not have migrated from where they originally were if government had done better on service delivery in those areas. Inferior workmanship and materials by contractors had been highlighted by the Committee for years. Guilty individuals had to be brought to book. Why was there a need to reprioritise priorities? If something was a priority then it had to be done.

The issue of bad workmanship at the N2 Gateway Project needed to be addressed as the situation was getting worse. The Minister needed to speed up matters by cutting red tape.

Were consultants not hired to screen possible tenants in order to check on whether they could afford to pay the rentals? If these checks were done why was there non-payment of rentals at the N2 Gateway Project? He also pointed out that houses were being sublet, which meant that the original tenants had not needed accommodation in the first place.

Minister Sexwale said that there was not a reprioritising of priorities. There was a prioritisation of strategic priorities, which meant that priorities were scaled down.

Consultants had screened tenants but in real life things did not work out as planned. SA was in the midst of a recession and people were suffering financially. Many people were unemployed. During his visit he had met individuals who were willing to pay rent but who had been intimidated not to do so by other tenants. The Phase 1 of the N2 Gateway Project was a pilot project and it was believed that the problems would not be repeated during Phase 2 and Phase 3.

It was not government that had pushed persons to move to the cities. It was a phenomenon that was happening worldwide. However difficult it was, the situation needed to be re-engineered. Government hoped to stem the tide of people moving from rural to urban areas by spending more in rural areas. The uncertainty of the correctness of the statistics on the numbers of houses delivered was a concern and he would check on the correctness of the figures.

Mr J McGluwa (ID) said that the presentation was much appreciated but what was lacking was information on the action that was being taken against those companies that had rigged tenders or who were guilty of fraud and corruption etc.

Minister Sexwale responded that not only was it contractors that had been corrupt but government officials as well. Nepotism was rife. Action against private persons had not been taken yet as corrupt government officials were targeted first. The assurance was given that action would be taken against guilty parties. Specialised investigations were needed to give integrity to the process. Willie Hofmeyr was leading the process. The Committee would be informed from time to time on the progress of investigations.

Ms M Borman (ANC) asked for timeframes on the rectification programme for the N2 Gateway Project. Who would drive the process for co-ordination between the various departments? The quality of workmanship of emerging contractors was a concern. Were emerging contractors going to be trained up?

Ms Bayat said that the process of rectification was long and involved. The first step was finalising agreements between engineers and communities. Thereafter the tender process would commence. She requested the Committee to allow the Department to return in six months time with a proper report back.

Minister Sexwale said that co-ordination was critical if housing delivery was to be a success. Progress should be checked province by province. He awaited the National Planning Commission coming into place. Once the Commission was in place there would be greater co-ordination. People needed to be held accountable. It was about project management and communities needed to blow the whistle where there was non delivery.

Mr Steyn responded that a distinction needed to be made between structural defects and normal monthly maintenance. He asked Ms Bayat what she was referring to.

Ms Bayat said that she was referring to the rectification of structural defects. Maintenance was different and the cost of maintenance was supposed to be covered by rentals. Unfortunately the rental payment rate was only at 5%. There was also a process in place for maintenance.

Mr R Bhoola (MF) said that contractors who were not registered with the National Home Builders Registration Council were a major problem. What was the role of the Housing Development Agency (HDA) on the identification of land for projects?  He asked the Minister to comment on issues like reluctance of owners of land to sell or whether expropriation would be considered in certain cases. What were the timeframes with regard to the N2 Gateway Project? Would the Minister elaborate on the outcome of interaction with the City of Cape Town and of delivery?

Minister Sexwale said that the National Home Builders Registration Council was a regulatory body and that it was its job to check on things.

Mr Taffy Adler, CEO of the HDA, referred to land availability and said that the focus was on state-owned land being used. Finance had been set aside for maintenance of the houses at Joe Slovo 1. The Western Cape Province and the City of Cape Town were involved as well.

Mr B Dlamini (IFP) was concerned about tenants being able to afford the rentals to be charged given that in the current economic climate many individuals had lost their jobs.

Minister Sexwale said that it was true that assumptions were made that people would be able to afford the rentals. Government could not, however, turn its back on the poor. Solutions needed to be found.

Mr A Figlan (DA) said that he had done oversight visits recently to Tarkastad and that the toilets that had been installed in houses were not working. In addition more than a 1000 houses remained uncompleted in the Eastern Cape. He referred to the 40 000 houses to be demolished or rectified and asked in which provinces were they to be found. Were all the provinces affected? He was not aware of any meetings taking place with the community at the N2 Gateway Project. Minister Sexwale was asked to do a follow up.

 Minister Sexwale stated that everything in the houses must be functional. The poor must not be taken advantaged of. Toilets should also function. He said that the 40 000 houses were inclusive of all the provinces. KZN and the EC had the most that needed demolishing or rectification. The Free State had only a few. The irony was that some of the contractors responsible for the shoddy workmanship now were under the impression that they would be given the work to repair the very same houses. However, the Department was keeping a look-out for these culprits. Provinces had to make sure that data was captured. There were a total of 7000 projects. It was a huge task and an IT programme was in place to keep track of progress. It was to go online in April 2010.

Mr Taffy Adler, CEO of the HDA, referring to the N2 Gateway Project, said that meetings had taken place with Joe Slovo 1 communities as well as with Joe Slovo 3 communities.

Ms V Bam-Mugwanya (ANC) said that many emerging contractors were placed under the wing of big contractors such as Murray & Roberts. The emerging contractors were now being paid directly whereas in the past they had to wait on the big contractors to pay them. Emerging contractors were paid for the work they did. She asked what plan was in place to uplift the rural areas.

Minister Sexwale said that government policy called for work to be given to emerging contractors. It included training and assistance to them. Some of the contractors were good but there were chance-takers as well. These operators lacked business acumen and found it difficult to separate profit from turnover with disastrous results. Many emerging contractors took government for granted and felt that government owed them something. Rural communities had different geographic localities and some communities wished to have rondavels built whereas others wanted township houses. Much depended on the communities involved.

The Chairperson said that the Minister and the Department would, for the next four years, have to answer difficult questions. The Committee would expect accountability. In the meantime the Committee would also undertake oversight visits.

The meeting was adjourned.



 

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