DEPARTMENT OF HOUSINGPRESENTATION TO THE SELECT

COMMITTEE ON PUBLIC SERVICES

BUDGET 2002/03 TO 2004/05

08 MAY 2002

Presentation Index1. Aim and Vision of the Department

2. Strategic overview

Housing environment since 1994 white paper

Challenges facing Housing

Linkages to Government Policy Priorities

Housing Policy Programme

Legislative Programme Issues

3. Budget overview

4. Current Budget Perfromance

5. Conclusion

DEPARTMENT OF HOUSING

• AIM: The aim of the Department of Housing is to determine, finance, promote, coordinate, communicate and monitor policy in respect of housing and human settlement.

• Vision: A nation housed in sustainable human settlements

STRATEGIC OVERVIEW• Housing environment since 1994 white paper

– 1.2 m Housing opportunities created, more than 5 m poor people housed

– Focus on quantity, rather than quality housing– Address housing needs and backlogs– Development of policies and legislative instruments

STRATEGIC OVERVIEW• Current challenges facing the housing

programme  – Effect of changing demographics and resource

constraints on housing delivery;– Effect of Grootboom judgement and recent land

invasions; – Moving towards medium density housing as a priority

and integrated development;– Creating higher quality housing and living

environments;– Reducing dependency and promoting a culture of

savings;– Interventions regarding the effects of natural disasters

on housing;

STRATEGIC OVERVIEW• Current policy trends in housing programmes.– Promoting new and innovative building technologies;– Housing Finance Challenges - Contributions required

from Government, the financial sector, the NGO sector and ultimate beneficiaries;

– Extension of the Housing Warranty Scheme through the NHBRC to beneficiaries of the subsidy scheme;

– More emphasis on monitoring of policy impact, expenditure and delivery;

– More emphasis of oversight on housing institutions;– Continued and Improved integration with the broader

Government priorities;

Government PrioritiesHousing-related priorities of National

Government include:Urban renewalIntegrated Sustainable Rural

DevelopmentThe eradication of povertyTransformation and Black Economic

Empowerment

Engendering a culture of saving

Housing Policy programmeFirst national multi-year housing development

plan;Policy on the variation of the subsidy amount;Emergency relief housing policy;Medium density housing:

- Social housing initiative

- Rental housingEnvironmentally sound housing policy and

accommodating the needs of special groups;Housing savings scheme;

Legislative Issues• Disestablishment of South African Housing Trust

Limited Bill. This Bill provides for the Trust=s disestablishment and deregistration and further makes provision for the company=s assets and liabilities on disestablishment

• Community Reinvestment (Housing) Bill. The Bill has been drafted and is on its way to the Cabinet. The Bill is the second piece of legislation in the Department=s community reinvestment programme and follows on the Home Loan and Mortgage Disclosure Act No. 63 of 2000.

Legislative Issues• Housing Amendment Bill amends certain

provisions of the Housing Act, 1997, the Housing Consumers Protection Measures Act, 1998 and the Rental Housing Act, 1999. The amendments are necessary to deal with practical problems arising out of the implementation of the Acts.

• Social Housing Bill will fill a gap in the housing delivery process by enabling poor people to access rental housing stock at affordable rentals while at the same time providing incentives to developers to become involved in the rental housing programme. The Bill will also boost the Government=s medium density emphasis in housing.

Legislative Issues• Prevention of Illegal Eviction from and Unlawful

Occupation of Land Act No. 19 of 1998 requires amendment, inter alia, because the courts and other institutions have experienced difficulty interpreting certain provisions of the Act.

• Regulations – Regulations under the Housing Consumers Protection

Measures Act, 1998 relating to the subsidy only sector; – Regulations under the Home Loan and Mortgage

Disclosure Act. 2000; and– Regulations under the yet to be promulgated Community

Reinvestment Act.

BUDGET OVERVIEW• PROGRAMME 2002/03 2003/04 2004/05

R’000 R’000 R’0001. Administration 54 717 38 740 45 9142. Policy Planning 14 243 13 898 14 9923. Programme Management 216 274 125 701 153 517 4. Housing Performance 177 917 308 527 297 1686. Communication 13 175 10 177 11 7687. Housing Fund 3 768 474 4 166 698 4 375

232 Total 4 244 800 4 663 741 4 898 591 % Growth 11% 9% 5%

BUDGET OVERVIEW• Programme 1: Administration

• Purpose of this Programme is to provide administrative and management support services to the Department

• The key activities under this include the following– Provision of Strategic Financial Management Services– Provision of Human Resources Management Services– Provision of General Corporate Support Services– Provision of strategic support services for the Minister

and Accounting Officer

Programme 1 cont.• Changes in the MTEF

– A real average decline over the MTEF at 5 %– Decline mainly as a result of reduction in Equipment

Capital, Prof. And Spec.services and transfer payment to PSETA

– Increase from 2001/02 to 2002/03 at 3.88 % – Reduction between 2002/03 and 2003/04 reflects

reprioritisation and is mainly due to:• Reduction in development costs of the Debtors system;

• Completion of the preparation of the Housing Funds statements, related audit costs and the transformation tenders;

BUDGET OVERVIEW• Programme 2: Policy Planning• Purpose of this Programme is to ensure a sound national

housing policy framework• The key activities under this include the following

– Analysis of national housing policy and strategy– Housing framework legislation– Human settlement policy and integration

• Changes in the MTEF– Effect of restructuring, function shift and reprioritization resulted

in increase of 49 % between 2001/02 and 2002/03– 2003/04 and 2004/05 increase mainly for framework legislation

projects– Fairly stable over the MTEF period

BUDGET OVERVIEW

• Programme 3: Programme Management

• Purpose of this Programme is to manage national housing programmes

• Mainly dominated by transfer payments: 90%

• The key activities under this include the following– Managing of the housing subsidy scheme– Capacity building– Managing of special housing and human settlement

programmes

Programme 3 cont.

• Changes in the MTEF– Experiencing staffing capacity problems – Major Reduction from 2001/02 on the Job Summit

Project from R150m to R75m (2002/03) and no further funding after 2002/03

– Includes the Human Settlement Redevelopment Programme conditional grant to provinces

• From 1999/2000 :R39m; 2000/01: R100m; 2001/02:R104m; 2003/04: R109m and 2004/05 R116m

• Fairly stable over the MTEF period, increasing at 4%; 5% and 6%

BUDGET OVERVIEW The Budgeted for the HSRP amount for 2002/2005 MTEF

2002/03

R’000

2003/04

R’000

2004/05

R’000

Eastern Cape 10 000 11 000 11 660

Free State 7 500 8 500 9 010

Gauteng 23 000 21 000 22 260

Kwazulu-Natal 25 000 26 000 27 560

Mpumalanga 6 000 7 000 7 420

Northern Cape 2 500 3 000 3 180

Northern Province 11 000 11 000 11 660

North West 6 000 8 000 8 480

Western Cape 13 000 13 500 14 310

Total 104 000 109 000 115 540

Growth % 4% 5% 6%

BUDGET OVERVIEW• Programme 4: Housing Performance

• Purpose of Programme is to monitor and assess the impact of housing delivery, manage housing information, and support housing institutions

• Mainly dominated by transfer payments: 82%

• The key activities under this include the following– Monitoring of the implementation of national housing

policy– Managing information for housing and human settlement– Secretarial Support services for policy support

Programme 4 cont.• Changes in the MTEF

– Increase from 2001/02 to 2002/03 by 1.5 %• Mainly as a result of increases in personnel of 38 %, admin

costs at 29 % and capital redemption and interest costs of 13.12% for the SAHT:

– SAHT liabilities allocation to be transferred to National Treasury upon finalization of the disestablishment of the SAHT

– Decreases over the same period relate to reductions in allocation to SERVCON at 7.8% and the grant provided for SHF in the 2001/02

BUDGET OVERVIEW• Programme 5: Communication

• Purpose of this Programme is to facilitate and promote the free flow of information between the Department and its stakeholders

• The key activities under this include the following– Implementation of communication strategies– Public relations services– Provincial, media and local liaison

Programme 5 cont.

• Changes in the MTEF– Currently experiencing major staffing capacity

constraints and it is planned to increase staffing levels to reach 85 % by the end of the first quarter of 2002/03

– Education campaigns and national communication strategy

– Decreases by 6.5 % from 2001/02 to 2002/03 and then stabilizes over the next two years of the MTEF period

– Various ministerial programmes• National Housing Awards etc.

BUDGET OVERVIEW• Programme 6: Housing Development Funding

– Purpose of this Programme is to manage the funding of national housing programmes

– Consist mainly of Transfer payments to provinces in terms of DORA as conditional grants

– Allocation of funds to provinces is based on a new formula which introduces urban bias and will be phased in throughout the MTEF.

- Need of each province as measured by the housing backlog takes into account factors such as homelessness, shack dwelling, caravans, tents, backrooms, rooms in flats.

- A poverty indicator measured by households earning less than R3,500 in each province.

- Indicator as measured by each province’s share of total population.

BUDGET OVERVIEW• The Budget for the SAHF for 2002/2005 MTEF

2002/03 2003/04 2004/05

R’000 R’000 R’000

Eastern Cape 571 485 627 253 581 876

Free State 283 097 316 064 374 679

Gauteng 801 940 896 830 1 085 699

Kwazulu-Natal 708 759 778 263 727 186

Mpumalanga 242 038 268 228 288 030

Northern Cape 75 809 83 807 86 900

Northern Province 381 767 417 204 359 305

North West 302 001 337 769 409 400

Western Cape 372 778 412 480 433 357

Total 3 739 674 4 137 898 4 346 432

CURRENT BUDGET PERFORMANCE

PROGRAMME BUDGET

R’000

EXPENDITURE

R’000

UNDER-SPENDING (SAVING)

R’000

%

UNDER-SPENDING

(SAVING)

1 Administration 58,029 37,911 (20,118) (35%)

2 Policy Planning 7,247 5,651 (1,596) (22%)

3 Programme Management

274,922 259,261 (15,731) (6%)

4 Housing Performance 175,175 159,767 (15,390) (9%)

5 Communication 14,033 4,742 (9,291) (66%)

6 Housing Development Funding

3,255,555 3,254,023 (1,532) 0%

TOTAL 3,785,013 3,721,355 63,658 (2%)

SOUTH AFRICAN HOUSING FUNDPreliminary Provincial Expenditure

BUDGET

2002/03

R’000

AMOUNT

TRANSFER

R’000

EXPENDITURE

AS AT

31 MARCH 2002

R’000

Under/(Over Spent)

R’000

Eastern Cape 508 011 508 011 293 242 214 769

Free State 251 846 251 846 146 322 105 524

Gauteng 767 877 767 877 576 202 191 675

Kwazulu-Natal 697 647 697 647 664 274 33 373

Mpumalanga 309 433 309 433 250 455 58 978

Northern Cape 65 475 65 475 65 475 0

Northern Province 337 523 337 523 417 541 -80 018

North West 264 940 264 940 275 439 -10 499

Western Cape 325 861 325 861 328 056 -2 195

Total 3 528 613 3 528 613 3 017 006 511 607

TRANSFER PAYMENTS2001/2002 2002/2003

Increase/(decrease)

2003/2004 2004/2005

R'000 R'000 R'000 R'000 R'000Programme 1: Administration 431 1 (430) 1 1 Government motor transport 1 1 - 1 1 SETA 430 - (430) - -

Programme 2: Policy Planning 48 48 - 53 53 Habitat Foundation 48 48 - 53 53

Programme 3: Programme management 262,000 191,265 (70,735) 111,000 121,788 First-time home buyer interest subsidy scheme 12,000 12,265 265 2,000 4,228 Presidential job summit: Housing pilot project 150,000 75,000 (75,000) - - Human Settlement Redevelopment Programme 100,000 104,000 4,000 109,000 115,540

Housing Support Initiatives 2,020

Programme 4: Housing Performance 147,401 144,222 (3,179) 281,001 254,001 NHFC 1 1 - 1 - SERVCON 71,800 67,000 (4,800) 61,000 44,000 SAHT 67,000 77,121 10,121 215,000 210,001 Social Housing Foundation 8,600 - (8,600) 5,000 - NHBRC - 100 100 - -

Programme 6: Housing Development funding 3,255,555 3,768,474 512,919 4,166,698 4,375,232 Interest and redemption of private loans 29,597 28,800 (797) 28,800 28,800 SA Housing Fund 3,225,958 3,739,674 513,716 4,137,898 4,346,432

TOTAL 3 665 435 4 104 010 438,575 4 558 753 4 751 075

TRANSFER PAYMENTS (cont.)• Common Reasons for changes:

– First Time Home Buyers Interest Subsidy Scheme• Increase due to funding requirements for phasing out

– Presidential Job Summit: Housing Pilot Project• Increase due to roll over of funds from previous financial year

– Human Settlement Redevelopment programme• Increase due to increased funding requirements • Previous year was only start-up costs

– SERVCON• Less funds needed for operational costs and interest due to

phasing out

TRANSFER PAYMENTS (cont.)

– SAHT• Winding down cost of the SAHT

– Social Housing Foundation• Reduction is due to funding requirements of the foundation

– NHBRC• Increase due to new mandate for NHBRC

– Interest and redemption of private loans• Reduction in interest rate

– SA Housing Fund• Inflation related increase

CURRENT BUDGET PERFORMANCE • The main reasons for under spending can be

summarise attributed to:– a saving in personnel cost resulting from vacancies– outstanding tenders on various project due to tender

approval progress. – a saving on SERVCON, SAHT and Housing Board loans

are due to a reduction in the interest rates. – a reduction in payments made to the First Time Home

Buyers Subsidy Scheme

Estimated rollover for the 2001/02 financial year on the operational budgetProgramm

e Item Amount

1 Professional and Special Services

R1,173,000

2  Professional and Special Services

R 1,003,000

3 Professional and Special Services

R 1,091,000

3 Transfer Payments R 1,545,000

Total Rollover R 4,812,000

Conclusion• There are many challenges facing delivery of housing

– Capacity problems hence a steady increase in personnel costs– Effect of other Departments on housing delivery– Further interdepartmental coordination on infrastructure capital

grants: DPLG, Land Affairs, Education, etc.– Development of Capacity at local government level

• Key Success Factors include– Improving Coordination at Provincial and Local government

levels– Reducing underexpenditure– Improving access to housing finance and– Enhancement of monitoring processes

Thank You