On Wednesday 20 February 2019, Finance Minister Tito Mboweni’s budget speech vividly revealed that austerity measures continue to negatively affect the poorest of the poor, whereas the bailouts for severely compromised state owned enterprises like Eskom continue despite slow economic growth and the need to stabilise national debt. Less is available for spending on social services and as government cuts on social spending, the impact on service delivery is all too predictable.
State funding for human settlements has seen a great deal of budget reduction over the years. R33 billion has been allocated for human settlements in 2019/2020, reflecting a marginal increase from the previous year when the budget was R32 billion. In the 2019/20 budget, there is a baseline reduction within the Human Settlements Development Grant (HSDG) of R1 billion, R2 billion and R3 billion over the medium term. The HSDG previously financed most of human settlements delivery programmes including housing subsidies, title deeds registration and upgrading of informal settlements.
In his budget speech, Mboweni said “government continues to focus on supporting people to own their own homes”. But increased home ownership should focus on provision of housing subsidies for low-income earners, increased access to mortgages for middle-income earners, title deeds registration and most importantly access to well-located urban land. The targets for title deeds registration have been reduced from approximately 170,000 in the last financial period to just over 150 000 for the current financial period. The failure by government to eradicate the title deeds backlog continues to deprive many state housing beneficiaries of security of tenure.
The number of subsidy units completed each year will be reduced over the medium term from 98 000 units to 80 000 units over the next two years. More than R14 billion over the two outer years has been reprioritised to create two new conditional grants for informal settlements. Furthermore, there has been extremely slow progress on upgrading informal settlements in the past few years and the goal of establishing habitable environments for the majority of the population living in informal settlements has slowed.
The announcement in the State of the Nation Address by President Cyril Ramaphosa of the introduction of the Human Settlements Development Bank is a positive step towards supporting home ownership. It is however regrettable that the most recent budget does not mention the bank or funds allocated towards its construction.
R100 million in 2019/20 and R500 million in 2021 is allocated towards accessing mortgages for building self-help houses. This is good news, but what is concerning is that the funding of the self-help programme is set to lower moving forward. More so, the need for self-built houses has not been clearly determined across the nation before the programme is implemented.
The Informal Settlements Upgrading Grant is a positive move to address the problem of informal settlements. The need to integrate efforts between the Department of Human Settlements and municipalities for successful informal settlement upgrades is paramount.
R814 million has been shifted from the Integrated National Electrification Programme to the Urban Settlements Development Grant to enhance informal settlement upgrades in metropolitan municipalities. Although such a move is positive, it will only benefit metropolitan municipalities that have greater capacity to implement.
There is a dire need for capacity building of small municipalities that are struggling to deliver services. It is concerning that over the past four years there has been a reduction in the number of municipalities provided with technical assistance for informal settlements upgrading. The highest target for supporting municipalities with informal settlements upgrading was in 2015/16 with shockingly no support given in 2017/18 and reduced targets set for 2019/20 to 2021/22. The table below shows performance on technical support given to municipalities.
Human settlements delivery is therefore further delayed and especially hard felt beyond metropolitan areas. These national policy and budget shifts will impact negatively upon the Department of Human Settlements objective of creating economically, socially and spatially integrated communities.