The Impact of Government Housing Subsidies in Alexandra-Gauteng: 1995-2012
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The impact of government housing subsidies in Alexandra-Gauteng: 1995-2012 by EDWIN NTWAMPE MOKGWATSANA Submitted in accordance with the requirements for the degree of DOCTOR OF PUBLIC ADMINISTRATION in the subject PUBLIC ADMINISTRATION at the UNIVERSITY OF SOUTH AFRICA SUPERVISOR: PROF P KHUMALO CO-SUPERVISOR: DR M REDDY SEPTEMBER 2018 i DECLARATION I, Edwin Ntwampe Mokgwatsana, student number 7685041, declare that the content of this Thesis is my own work and that all the sources that I have used or quoted have been indicated and acknowledged by means of complete references. _______________ ___________________ Signature Date ii ACKNOWLEDGEMENTS In the first instance, I wish to thank God for giving strength and perseverance to complete this thesis. There were times that were indications both administratively and financially that the study was likely not to be finished; but the Will of the Almighty proved otherwise. My sincere gratitude is directed to the supervisor, Professor P. Khumalo and co- supervisor, Dr. M. Reddy for your feedback, guidance and support. It would have been very difficult to complete without your input. I also acknowledge the University of South Africa (UNISA) for the financial support to enable the completion of this study. To my wife and children, thank you for being patient, encouraging and supporting me throughout the difficult times. I have no words to articulate my appreciation. Finally, I dedicate my work to my mother Gladys and late loving Father, Katedi Mokgwatsana for their unconditional love and instilling self-belief; otherwise I would not have completed my studies successfully. ii LIST OF ACRONYMS ACR - Alexandra Concerned Residents AG - Auditor General ANC - African National Congress ARP - Alexandra Renewal Project BNG - Breaking New Ground CAPI - Computer Aided Personal Interview CSIR - Council for Scientific and Industrial Research CIER - Centre for Integrative Environmental Research DA - Democratic Alliance DEAT - Department of Environment Affairs and Tourism DHS - Department of Human Settlements EPI - Expanded Programme on Innovation EPWP- Expanded Public Works Programme FLISP - Finance Linked Individual Subsidy Programme GCIS - Government Communication and Information System GEAR - Growth Employment and Distribution GFI - Gross Fixed Investment GNP - Gross National Product HBC - House Building Committee HSS - Housing Subsidy System HSDG - Human Settlements Development Grant ICESCR- International Covenant on Economic Social and Cultural Rights IDP - Integrated Development Plan IDT - Integrated Development Trust LED - Local Economic Development MEC - Member of Executive Committee NDP - National Development Plan NHD - National Housing Code NHSDS- National Housing Subsidy Database NP - National Party iii PSC - Public Service Commission PSM - Propensity Score Matching RSA - Republic of South Africa RDP - Reconstruction and Development Plan SACN - South African Cities Network SAIRR South African Institute of Race Relations SAPA - South African Press Association SHRA - Social Housing Regulatory Authority TTTRS Takaaful T&T Friendly Society WHO - World Health Organization iv ABSTRACT The purpose of the study was to investigate and examine the impact of the government housing subsidies in Alexandra, Gauteng, in terms of improving the socio-economic conditions of poor people. The ANC government promised to change the material conditions of people by among other things eliminating poverty when it ascended to power. Access to adequate housing is regarded as a fundamental right in terms of the prescripts of the South African constitution. By implication the government has a developmental duty to provide housing to eligible citizens. A policy decision by government in 1995 to provide housing subsidies to poor households, particularly those earning between R0-3500 rand provided a significant catalyst in the objective to improve the socio-economic conditions of poor people. That is why the study was conducted in the Alexandra Township, given the proximity of the area to affluent suburbs such as Sandton. This also provided a perfect case study to measure the effectiveness of the housing subsidy system and how the system has been managed to maximise the housing delivery impact in terms of outcomes. In terms of research findings, the expectation was that delivery of low cost housing using government subsidies should not have experienced problems on housing delivery backlogs and administrative blockages. The research results revealed that the failure to quickly improve the socio-economic conditions of poor people through providing adequate housing and creating a progressive environment to create and access job opportunities has exacerbated the state of poverty, which perpetuates dependency on state assistance. The research findings further showed that there is no conclusive evidence that many if not all beneficiaries were using their subsidised house as an asset in terms of leveraging it to improve their financial position; and that there is still a high level of dependency on government for assistance even on maintenance of these units, especially after taking ownership. This has exposed a grave lack of knowledge or information on the side of beneficiaries on how to utilise the house as an asset in order to be progressive as far as improving social and economic conditions. The overall research results demonstrated that v the existing low cost housing funding model (in Gauteng) is not sustainable in terms of delivering subsidised housing units; and significantly improving the quality of life and standard of living of poor people. In terms of limitations, the study took to account that the new government needed enough time to translate policy into concrete implementable ideas as far as housing was concerned, hence the period of study was from 1995 to 2012. This study is important because its findings contribute knowledge in the field of Public Administration and housing literature; and also assists the Department of Human Settlements (DHS) to explore recommended solutions to improve the Housing Subsidy System. Most importantly, the study provides valuable data relating to the impact of government housing subsidies, including challenges on housing allocations and subsidies management. The study concludes with recommendations on what an effective government subsidy programme should look like. This provides an opportunity to review the entire government subsidy system, as recommended in the National Development Plan (NDP) 2030 vision. The government of the day needs to urgently review the existing grant and subsidy regime for housing with a view to ensuring diversity in product and finance options that allows for more household choice and greater spatial mix and flexibility. Moreover, government should ensure that state funding does not support the further provision of non-strategic housing investments in poorly located areas. vi TABLE OF CONTENTS DECLARATION .................................................................................................................................. i ACKNOWLEDGEMENTS ................................................................................................................ ii LIST OF ACRONYMS ..................................................................................................................... iii ABSTRACT .........................................................................................................................................v CHAPTER ONE: INTRODUCTION AND BACKGROUND TO THE STUDY 1.1 INTRODUCTION .............................................................................................................. 1 1.2 BACKGROUND AND RATIONALE ............................................................................... 6 1.3 RESEARCH PROBLEM STATEMENT ....................................................................... 11 1.3.1 Research Question ......................................................................................................... 11 1.4 MOTIVATION .................................................................................................................. 12 1.5 RESEARCH OBJECTIVES ........................................................................................... 13 1.6 RESEARCH SCOPE AND LIMITATIONS .................................................................. 13 1.7 THE SIGNIFICANCE OF THE STUDY ....................................................................... 14 1.8 DEFINITION OF TERMINOLOGY ............................................................................... 14 1.9 OUTLINE OF THE STUDY ........................................................................................... 19 1.10 SUMMARY....................................................................................................................... 21 CHAPTER TWO: LITERATURE REVIEW 2.1 INTRODUCTION ............................................................................................................ 22 2.1.1 Fundamental Principles of Housing Policy development and Implementation ..... 24 2.1.2 Meaning of Government Subsidised Housing............................................................ 25 2.1.3 The Effectiveness of Government Housing Subsidies to Address Housing Needs ................................................................................................................ 26 2.1.4 Economic Justification for Housing Subsidies ........................................................... 28