Articles

Response to National Development Plan

by Ralph Freese


Brilliant analysis – Lets get practical

In these, the best and worst of times, we face a crisis of mammoth proportion. The project of transforming SA is heading for the rocks. Globally, solutions are being sought for failures of governance and regulation brought about largely by rampant greed on the part of the powerful. Short term measures of success apply in every sphere. No vision, too little humanity, no soul.

In this globalized world SA is swept along seemingly helplessly, yet we have the aspirations, skills and tools to reset our vision and, in many practical ways, transform our future. Jobs, a large injection into the economy and houses "for all" are what we need. To achieve these we need a purpose that galvanises the nation utilizing the intelligence and experience distributed through our society to address this crisis.

This is my shot at it. I assume that everyone reading this will disagree with parts, see faults in my reasoning and find factual failures. Record them and respond. I hope, also, that ideas and possibilities will worm their way into consciousness. Write down these ideas and contribute them to shaping an open source solution - constructed by all, owned by no one. If it takes root and grows it will be unrecognisable when we harvest its fruit.

Jobs, homes and nearly everything.

Bill Clinton apparently had a catch phrase he referred to whenever he dreamt about changing his world: "It's the economy, stupid!" We might do well to bear this in mind. Stay with me through these numbers.

  • 2,5 million “RDP” houses at R100 000 each = R250 bn transferred to the poorest South Africans.
  • 1 house takes 10 people 1 month to build. Add 2 for delivering roads and services and we have
  • 12 jobs for 1 month to deliver an "RDP" house. That means every house delivers one job lasting one year. If delivered over 5 years that's 500 000 jobs each lasting 5 years for construction.
  • when we were writing the RDP 20 years ago it was held that delivering two houses produced one permanent non construction job. If we were half wrong and it requires four houses per job, that still delivers 625000 permanent non construction jobs (in services, finance, municipalities, manufacturing etc). This adds up to one million one hundred and twenty five thousand jobs!

The multipliers

  1. Using a conservative economic multiplier of 5 this would translate into an injection of R1,25 trillion into our economy. This spend creates assets and stimulates economic growth.
  2. Housed families are healthier - less spend on health.
  3. Housed, healthier children do better at school - better return on our education spend.
  4. Solar water heaters on each roof. Locally manufactured and installed by SMME's. (We can think of other opportunities)
  5. Employed people pay tax.
  6. Implementation will limit the effects of the coming global depression (as did the World Cup).
  7. Culture of work.
  8. Success will transform - directly - the future of one third of our population and, indirectly, build a better home for all.

Source of funds

  1. Government's debt target for 2013/2014 is R1,4trillion. Add 0,1 for the first R100bn.
  2. The current Human Settlements spend is R27bn a year. Giving R160bn over six years.
  3. A focussed tax rate increase of 1.5% per annum for individuals earning more than R300 000 and all businesses will help repay the loan at R20bn per annum. This special wealth tax should go some way to redressing apartheids legacy and should cease after 6 years.
  4. Sources of the debt could be prescribed investment into a defined bond from local pension funds and other global sources.
  5. Many interest groups are punting pet projects which they hope will be funded by government debt or increased taxes. This mindset must be resisted. Consumption (or wages) should not be on the list of debt funded projects.

What stops us?

We believe that there is no land, no money, it's too big, too complex, no capacity, regulations are too onerous, no political will, no leadership, material suppliers will drive up costs, too corrupt, etc, etc. None of these are real. The answers are available if only we all contribute to thinking this through. A platform can easily be created to facilitate that thinking.

  1. Land. A number of land audits have been done though not all published. Reasonably located, state owned land (military, state owned enterprises, municipal, road and rail reserves) could provide the first two thirds of what is needed. Recently the Dept. of Public Enterprises has transferred land to Human Settlements - the mechanism exists. Five years ago government planned a "Rapid land release programme" which could be used with minor modification. Private land (at reasonable prices) can provide the balance.
  2. Money. See above. Our Minister of Finance said, "money is not the problem"!
  3. Capacity. Check out the stadia and other infrastructure built over the last four years. The global economic contraction means that many construction managers are desperately seeking work.
  4. Scale. It is a big idea but it can be managed as a large number of separate projects. Enable nationally (plan, govern, enable legislation, drive practice etc) and act locally. Communities and municipalities, supported from the center should be the drivers. How do you eat an elephant quickly? Share it with many.
  5. Complex. Yes, but we have managed worse - remember the first election? As a nation we have the answers. We have to bring the dislocated experience and skills distributed through our society together. A self imposed "Marshall plan"!
  6. Regulation. Managing EIA's is the big one. Lets examine the values and objectives of the EIA process, distill the essence, cut the time frames (only for this project - the rules stay the same for general developers) and reframe the regulation and governance of those practices. Zoning etc can follow this route. Intelligently utilized "cut and paste" will save time and money.

Collating existing experience and wisdom will define and measure the problem then catalyze a solution. We can do it.

In Conclusion

No one person, group or organization has all the answers. Collectively we do. The first task is to build the plan. We can do this with great leadership, skillfully facilitated open source planning and cultivating the solidly based belief that we can and must.

Within one year we can research and document the plan with a high degree of detail. Within two years the first pilot projects should be near completion. Within ten years we can transform the future of the country and reshape the urban landscape.

 

P.S.
What do we consider to be a house? The fact that we have a Ministry of Human Settlements helps. A formal structure housing people in a community is a fair start. We have built more than two million already. Unfortunately many are too far from social services, work etc and are of shoddy workmanship. Well located, mixed value, medium to high density communities, served by public transport, schools, health care, close to job opportunities, trade etc are ideal targets.

The Infrastructure Plan. Of governments current plans this is the one with most to offer to the medium term developement of our country. The spend is on hard assets with long term impact and it will make possible significant economic growth. The two plans complement each other and execution should overlap in time. For a developmental state to be successful we have to consider infrastructure for humanity as directly and practically as infrastructure for the economy. We have to deliver on the vision we built for the people during years of struggle - employment, housing, decent health and education systems. In achieving those we have to build the physical and social infrastructure required by development. It is my understanding that a "housing focused" route will deliver more jobs in the short term and have an immediate impact on the economy and should be implemented ahead of the Infrastructure Plan which is essential for our medium to long term success.

Material supply ripoffs. The logistics, manufacturing, procurement etc of building materials will have to be controlled carefully. Low, negotiated profit margins for large volumes do not seem unreasonable.

Corruption. National government should enable and guarantee the financing of this project. The responsibility for execution should lie with a new agency - a parastatal (?). It should be governed by a board of carefully chosen, honest and superbly skilled individuals from business, government and civil society. Every action should be audited continuously and all meetings, minutes, tenders, financial reports etc should be available for public scrutiny on the web at all times. Lets not accept the fantasy that corruption is an ANC or government monopoly. Our society suffers high levels of corruption in all spheres and only the tightest controls and harsh punishment can protect an undertaking such as this.

Government’s role. This should not rest in one ministry. Human Settlements, Finance, Land Affairs, Public Works, Public Enterprises, Planning and the Presidency itself should be engaged as a new cluster.

Civil Society. The role of civil society (by which I mean organisations outside of government and business) has been minimized in SA since 1994. The ANC took on this role as it went into government. A mistake all of us must take responsibility for. Civil society has skills and functions outside of government that need to be respected. Modern society can only be governed by a "three way dialectic". The tripod providing stability to the state consists of the political (parties and parliament etc) the economic (business, finance) and civil society. Weaken one and the governance of the state falters. Funding sources in support of civil society have to be facilitated.