Chairperson, hon Minister and Deputy Minister, hon members, distinguished quests and the public at large, I want to make a public deal with the hon Minister. If you speak about the not-so-good things in the department next year, I will sing the praises of the department. But, for now the roles are unfortunately reversed. On Thursday it would have been exactly one year ago that I indicated during the 2010 budget debate that it may be too soon to pass judgement on Minister Sexwale and Deputy Minister Zoe Kota, with regard to the creation of sustainable communities.
Since then, the Minister in particular has had many opportunities to show that it was not business as usual. I gave him the benefit of the doubt then, but I am afraid, hon Minister, that you have now come to a crossroads as the political head of human settlements. The decisions you make in the next few days and weeks will determine the legacy you will leave behind as Minister of Human Settlements. We know, and it has been confirmed in budget debates over the last few days, of the chaos and almost disintegration of, among others, the Department of Education, Home Affairs, Health and Co- operative Governance. Besides the regular reporting on suspected corruption within the delivery of houses, this department appeared to be functioning relatively well, and I have to admit, hon Minister, that in my personal interaction with you, you have indicated your good intentions and emphasised on every occasion that you wanted to be different ... [Applause.] ... and were not going to tolerate acts of corruption within your department.
Similarly, in interactions with the Director-General, or DG, and many senior officials within the department, the same message seems to come through, often unfortunately without tangible results. It therefore gives me no pleasure to stand here today and say that the Department of Human Settlements is no different from the others mentioned, and that the department is in a crisis. I say that the department is in a crisis and members from the governing party will probably disagree, much like mayor Amos Masondo did with the billing crisis in the Johannesburg Metro earlier this year. [Interjections.] Why do I say this, hon Minister? Well, let me tell you, and let the people in the gallery and the public out there be the judge of my statement.
Successive housing Ministers have been at pains to trumpet the number of houses built by the state since 1994, although no definitive proof could be provided. I have almost on every occasion - when I had the opportunity - queried the actual number of houses delivered as reported. In the run-up to the 2009 election, the department erected huge billboards proclaiming that some 2,4 million RDP houses had been built. Recent documents claim that in excess of 3 million houses were built up to 2010, notwithstanding that countrywide no more than 230 000 units are claimed to be under construction or built on an annual basis.
Following on the state of the nation address in 2008, Minister Sisulu told us that good news is essential for the soul because it gives hope, and I do agree with her. The good news that the hon Minister was referring to was that the department had produced 2,4 million houses. She continued and said:
Our good news is not just the numbers, but this important fact: That we have broken through the backlog barrier and have produced more houses than there are people in our backlog. This in effect means we are now over the apex. This is the first time in our history that our backlog has been less than the number of houses produced. Put differently, we have housed more people than those needing houses.
Chairperson, my response then was that the Minister neglected to tell us that once you have reached the apex, there is only one direction to go, and that is downhill. Little did I know how prophetic those words would turn out to be, a mere three years later!
Allow me to explain why I say that the Department of Human Settlements is in a crisis. In a recent presentation to the portfolio committee by the National Home Builders Registration Council, NHBRC, the following statistics were shared with us: They estimated that approximately just over 3 million houses were built between 1994 and 2010. Please note that there is no mention of incomplete or blocked projects and, with the exception of houses delivered in rural areas and through the people's housing programme, all subsidised houses since 2002 were supposed to be registered with the NHBRC. Despite this, we are informed that only 409 100 units, ie 13% of the supposed delivery, were actually registered with the NHBRC.
Alarm bells should have gone off a long time ago. Why were subsidised housing projects not registered by provinces, as required by the legislation? Knowing that there should have been an annual delivery, why did the NHBRC, as a regulatory body responsible for the quality of houses, not ask questions about the non-enrolment of projects? Therefore, is anybody in the provincial departments, the national department or indeed the NHBRC going to be held accountable for this noncompliance? I doubt it, hon Minister.
In their calculations for the rectification, the NHBRC assumed that just over 409 000 houses that they claim were registered are all in good order and are therefore excluded from rectification. The private sector, who has dealt with the NHBRC, will probably contest this because there are many nonsubsidised houses that, despite being monitored and inspected by NHBRC or not, as the case may be, are not in good order and also need rectification of some sort or another. They therefore estimated that 40% - ie just over a million - of the remaining 2,6 million houses, will need rectification to some degree, and 20% - ie about 609 000 - will have to be demolished and rebuilt completely.
They calculated the total cost to be R58,7 billion at current prices. Adding enrolment and professional fees to that escalates the costs to R64,4 billion. But hold on, this is not a crisis yet. What has been left out of the equation is the cost to relocate and house the beneficiaries whose homes have to be either rectified and/or demolished, provided that suitable land close to these projects can be found. The Chairperson of the portfolio committee recently joked and said: "If this trend continues, we may have to call the department the 'department of rectification'."
Last but not least, the hon Minister has indicated that there is R1,3 billion available in this financial year for rectification. This means that it could take the next 40 years to just complete the rectification, provided that all future houses are up to standard. When one adds the escalation to the current cost of R64,4 billion over the next 30 to 40 years, the total projected cost of R70 billion for the controversial arms deal looks like a basement bargain by comparison. What hasn't been factored in is the lost opportunity cost for those 1,6 million beneficiaries who should have been housed, but now have to wait - probably indefinitely - for adequate shelter.
The hon Minister spoke earlier about the possible sunset clause for subsidised housing due to its unsustainability. While I agree with the sentiment under normal circumstances, how can it be morally entertained when the current backlog, which we supposedly surpassed in 2008, have just doubled due to the fact that we have to reinvest scarce resources into something that has been paid for already? Naturally, the delivery of new subsidised houses is bound to decline as it must be done in parallel to the rectification of existing houses, and it may very well become impossible to ever catch up with the backlog.
It is also inevitable that we may find more and more approved beneficiaries reaching the golden age of 100 years and still on a waiting list, such as we have recently experienced, or people who die waiting for their promised home.
What the department's strategic plan lacks is a coherent strategy to address this problem. While provincial business plans indicate different amounts allocated for rectification, there does not appear to be a well- thought-out approach to plan and implement a strategy that will systematically deal with the rectification of existing stock while simultaneously providing new homes for new beneficiaries. In this regard, I wrote to the chairperson of the portfolio committee on the 13 February, requesting that the Minister appear before the committee to share with us how the department intends to address this travesty. I trust that this will happen in the very near future.
The lack of sanitation, particularly in rural areas, has been recognised and Treasury established the Rural Household Infrastructure Grant to be administered by the department. A total of R1,2 billion has been allocated over the 2010 Medium-Term Expenditure Framework, MTEF, period, with R100 million for the past financial year. Of this, only R47 million has been spent. As usual, there are many challenges that have been cited, some perhaps legitimately. However, one reason for this poor performance is the fact that one service provider, the Independent Development Trust, IDT, a government agency, was given a 60% lion's share of this contract, yet they spent only 38%. The strange thing is that the department acknowledged that the appointed service provider does not have sufficient experience in implementing sanitation projects, but they still went ahead and gave them the contract. To date, no action has been taken against them to terminate their contract. Is it surprising, then, that they failed to deliver? Once again, it is the poorest of the poor who carry the brunt of this ineptitude. Ladies and gentlemen, I dare say we have a crisis on our hands.
I wish to take this time to thank the Chairperson and the members of the portfolio committee for the manner in which we have worked together. I also wish to thank the Minister, the Deputy Minister and the senior officials for their co-operation with the committee. Not withstanding all these problems, there is co-operation from them, but I just wish there would be more action from them. I thank you. [Applause.]