PRESENTATIONS TO HUMAN SETTLEMENTS PORTFOLIO COMMITTEE – PARLIAMENT

KZN DEPARTMENT OF HUMAN SETTLEMENTS

2010/11 BUDGET AND PLANS

25 MARCH 2010

CONTENTS

Vision Mission Strategic objectives Departmental Programmes Budget 2010/11 MTEF Service Delivery Targets Middle-income Property Market Intervention Key Assumptions Risks

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VISIONInnovative champions of change in the housing sector

to improve the quality of life for all in KwaZulu Natal

MISSIONTo create an enabling environment for the development

of sustainable human settlements in partnership with stakeholders to improve the quality of life for all in

KwaZulu-Natal

Departmental Vision and Mission

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Strategic Objectives

• Accelerating Rural Housing Development;• Eradication of slums in KwaZulu-Natal;• Strengthening governance and service delivery;• Ensuring job creation through delivery of sustainable human

settlements;• Accelerating the hostel redevelopment and upgrade programme;• Creating rental / social housing opportunities;• Building the capacity of Housing stakeholders;• Promotion of homeownership; • Provision of housing for vulnerable groups including those affected

by HIV/AIDS; • Provision of housing for military veterans belonging to the non-

statutory forces; and• Fighting fraud and corruption in order to eliminate wastage and

enhance effective service delivery.• Facilitation of access to affordable housing for the gap/middle-income group

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ALIGNMENT WITH PROVINCIAL/NATIONAL PRIORITIES

National/Provincial Priority Outcomes Departmental Strategic Objectives

Delivery of sustainable human settlements for Social unrest

Outcome 3: All people in South Africa are safe and feel safe

Eradication of slums in KwaZulu-Natal by 2014

Creating rental / social housing opportunities

Promotion of home ownershipImplementation of Financial Services Market

Strengthening governance & service delivery.Fighting fraud and corruption in the Human Settlements environment

Outcome 8: Sustainable Human Settlements and improved quality of household life

Accelerating the hostel redevelopment and upgrade programme

Outcome 12: An efficient, effective development orientated Public Service and an empowered, fair and inclusive citizenship

Outcome 6: An efficient, competitive and responsive economic infrastructureOutcome 7: Vibrant, equitable, sustainable Rural development communities contributing towards

Accelerating housing delivery in rural areas

Outcome 2: A long and healthy life for all South Africans

Outcome 4: Decent employment through inclusive Economic growthOutcome 5: Skilled and capable wokrforce to support an inclusive growth path

Addressing of institutional and systemic constraints

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Departmental Programmes

The services rendered by this department are categorised under4 programmes, which conforms to the generic structure for the Housing Sector, namely:

Programme 1 – AdministrationProgramme 2 – Housing Needs, Research and PlanningProgramme 3 – Housing DevelopmentProgramme 4 – Housing Asset Management, Property

Management

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PROGRAMME 1: ADMINISTRATION

The objectives of this programme are to:• Identify and eliminate bottle-necks, as well as continuously

improve the flow of financial, administrative and management information.

• Strengthen governance and service delivery, address institutional and systematic constraints and identify and address risks in the housing delivery process.

• Fighting fraud and corruption.• The programme has one sub-programme, namely corporate

services (Office of the Head of Department; Office of the Chief Financial Officer; Officer of the Chief Operations Officer; Strategic Housing Support; Corporate Services; Human

Resource Management)

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PROGRAMME 2: HOUSING PLANNING & RESEARCH

The objective of this programme are to:

• Facilitate integrated planning for the creation of sustainable human settlements, including geographic information system (GIS) support.

• Capacitate stakeholders within the housing sector, with particular reference to local government sphere.

• Develop, implement and maintain housing policies and strategies, and conduct research to enhance the delivery of sustainable human settlements in the province.

• Manage and implement broad based black economic empowerment aimed at targeted groups (women, youth, vulnerable groups, emerging contractors, military veterans belonging to the non-statutory forces).

• Provide municipal support and consumer education.

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The objectives of this programme are:• To provide subsidies to qualifying beneficiaries;• To provide support for disaster relief;• To facilitate installation of internal services;• To facilitate construction of houses;• To provide housing for military veterans;• To ensure that disabled people have access to Breaking New

Ground (BNG) housing;• To ensure that the Finance-Linked Individual Subsidy

Programme (FLISP) is implemented;• To facilitate the access to affordable housing for the gap/middle-

income group.

PROGRAMME 3: HOUSING DEVELOPMENT

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The objectives of this programme are:

• To ensure housing assets are maintained.• To ensure efficient and effective transfer and sale of

Housing Assets.• To promote, facilitate and regulate rental housing

within the province.• To manage devolution of housing assets to

municipalities.• To contribute towards the upgrade of hostels.

PROGRAMME 4: HOUSING PROPERTY MANAGEMENT, ASSET MANAGEMENT

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2010/11 MTEF BUDGET

Summary of receipts & Payments

Table 1: Summary of receipts and payments

Audited Audited 2007/08 2008/09 2010/11 2011/12 2012/13

Provincial allocation 210,295 224,107 243,265 243,265 263,704 279,647 293,974 Conditional grants 1,310,555 1,622,053 2,330,448 2,330,448 2,847,909 3,149,500 3,327,629

Integrated Housing & Human Settlements Dev. grant 1,310,555 1,622,053 2,180,448 2,180,448 2,714,109 3,149,500 3,327,629 Housing Disaster Relief grant - - 150,000 150,000 133,800 - -

Total 1,520,850 1,846,160 2,573,713 2,573,713 3,111,613 3,429,147 3,621,603 Total payments 1,522,181 1,876,146 2,573,713 2,570,713 3,111,613 3,429,147 3,621,603

R thousand

Outcome Adjusted Appropriation

Revised Estimate

Medium-term Estimates

2009/10

Summary of payments & estimates by programme

Table 2: Summary of payments and estimates by programme

Audited Audited 2007/08 2008/09 2010/11 2011/12 2012/13

1. Administration 90,547 103,507 93,538 93,435 118,405 124,720 121,285 2. Housing Needs, Research and Planning 19,391 20,761 25,699 21,299 26,392 27,842 29,251 3. Housing Development 1,206,383 1,492,561 2,206,420 2,204,982 2,823,814 3,131,865 3,366,049 4. Housing Asset Management, Property Management 205,860 259,317 248,056 250,997 143,002 144,720 105,018

Total 1,522,181 1,876,146 2,573,713 2,570,713 3,111,613 3,429,147 3,621,603 Unauth. exp. (1st charge) not available for spending - - - - (9,303) (9,303) - Baseline available for spending after 1st charge 1,522,181 1,876,146 2,573,713 2,570,713 3,102,310 3,419,844 3,621,603

Revised Estimate

Medium-term Estimates

2009/10 R thousand

Outcome Adjusted Appropriation

Summary of payments & estimates by economic classification

Table 3: Summary of payments and estimates by economic classification

Audited Audited 2007/08 2008/09 2010/11 2011/12 2012/13

Current payments 283,613 312,276 298,605 299,964 312,234 330,397 317,544 Compensation of employees 127,339 138,797 155,368 155,699 173,880 182,443 191,980 Goods and services 156,274 173,479 143,237 144,265 138,354 147,954 125,564 Interest and rent on land - - - - - - -

Transfers and subsidies to: 1,222,601 1,521,454 2,191,037 2,189,678 2,723,004 3,021,831 3,295,659 Provinces and municipalities 319,711 257,730 362,093 348,593 314,240 365,505 350,730 Households 902,890 1,263,724 1,828,944 1,841,085 2,408,764 2,656,326 2,944,929

Payments for capital assets 15,617 42,201 83,971 80,971 67,072 67,616 8,400 Buildings and other fixed structures 10,780 36,407 77,477 77,477 60,000 60,000 - Machinery and equipment 4,837 4,219 6,494 3,494 7,072 7,616 8,400 Land and sub-soil assets - 900 - - - - - Software and other intangible assets - 675 - - - - -

Payments for financial assets 350 215 100 100 9,303 9,303 -

Total 1,522,181 1,876,146 2,573,713 2,570,713 3,111,613 3,429,147 3,621,603 Unauth. exp. (1st charge) not available for spending - - - - (9,303) (9,303) - Baseline available for spending after 1st charge 1,522,181 1,876,146 2,573,713 2,570,713 3,102,310 3,419,844 3,621,603

R thousand

Outcome Adjusted Appropriation

Revised Estimate

Medium-term Estimates

2009/10

Equitable share allocation per programme

Equitable Share AllocationR263 703

Programme 1R118 405

Programme 2R26 392

Programme 3R56 047

Programme 4R62 860

Conditional grant allocation per subsidy instrumentI

Integrated Housing and Human Settlement

Development GrantR2 847 909

IndividualsR70 000

Operational Capital R30 000

RectificationR73 749

Social and Economic FacilitiesR60 000

Other (NHBRC & IDP Chap)R31 861

Financial InterventionsR264 610

Incremental HousingR1 189 388

Integrated Housing – Serviced Sites

R225 189

Integrated Housing – Top Structures

R514 549

Peoples Housing ProcessR58 645

Emergency HousingSubsidiesR159 400

Social and Rental HousingR355 530

Community Residential Units

R280 000

Institutional SubsidiesR75 530

Rural HousingR958 239

Planning and Top Structures R958 239

Property ManagementR80 142

EEDBSR40 142

Property MaintenanceR40 000

IRDPR157 948

Other (ISU & Consolidation)R73 657

BUDGETARY COMMENTS (1)

• The annual growth rate in equitable share funding (2006/07-2010/11) has been 6.8% while that of the conditional grant funding grew annually by 29% .

• The equitable share budget of the Department was further cut by (4.2%) over the 2009/10 MTEF period.

• A further cut of R9m effected in both 2010/11 and 2011/12 – this being a first charge prior years over-expenditure of R18m.

• Of the Department’s operational budget R173m (68%) is committed to personnel expenditure.

BUDGETARY COMMENTS (2)

• Capacity challenges within the Department may not be addressed, unless other funding avenues are explored.

• Department has had to stop/delay implementation of a number of programmes (stakeholder capacity building programmes) due to financial constraints within the Province/Department.

• Allocation per subsidy instrument informed by the priority programmes of the department.

• This makes it extremely difficult for the Province to be able to service its conditional grant and therefore Operational Capital Budget Programme (OPSCAP) policy is being reviewed to allow more flexibility in allowing provinces to use it to support conditional grant spending.

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SERVICE DELIVERY TARGETS

2020

Alignment of Service Delivery Targets with other departmental plans.

The Service Delivery Targets presented have been aligned with the final 2010/11 Conditional Grant Business Plan as well as the Multi-Year Housing

Development Plan (APP) of the Department .

The SDI contained in the Budget Statements for the 2010/11 MTEF is based on the second draft conditional grant business plan and MYHDP and are therefore not aligned with the final plans as result of the following:

• Misalignment of planning processes between the National Department of Human Settlements and that of the Treasury.• Late additional budget allocation. • Late finalization of the subsidy quantum at the National level.

Provincial Treasury is aware of this misalignment which will be adjusted in the 2010/11 Adjustments Estimate.

Programme 2: Service Delivery Targets

Outputs

Provide training to municipalities on housingNo of training workshops provided to municipalities n/a 12No of visits executed to support municipalities n/a 100Provide training to housing consumers No of housing consumers trained 7309 10000Amakhosi training on housing deliveryNo of amakhosi trained 0 140 Home gardens educationNo of housing beneficiaries trained on benefit of home gardens 7309 10000Assist municipalities to develop Housing Developments PlansNo of housing development plans reviewed 51 51Development of policy guides for Housing programmeNo of policy guidelines developed 5 4ResearchNo of research projects conducted 3 2Establishment o housing componentsDistrict and /or local municipalities with housing components 0 7Innovation and technologyInnovation hub established 0 1

2009/10 Estimates

2010/11 Target

Programme 3 & 4:Summary of Service Delivery Targets

Subsidy Instrument Performance Indicator Estimated Actual 2009/10

Target 2010/11

Number of properties transferred

6 974 5 500

Number of beneficiaries approved

20 283 23 435

Number of sites serviced 5 224 8 001

Number of houses completed

20 050 25 002

All Subsidy Instrument

Programme 3 & 4: Service delivery targets

Individual Housing SubsidiesNumber of subsidies approved - Credit Linked 52 120 - Non credit linked 550 480 - Finance Linked 200 2 000Extended Enhanced Discount Benefit SchemeNumber of properties transferred 6 974 2 750State Maintenance ProgrammeNumber of maintenance contracts completed for rental stock 4 000 3 000Rectification PgrogrammeNumber of units rectified 1 500 830Social and Economic AmenitiesNumber of facilities completed 10 6Accreditation of municipalies Number of accreditation business plan 7 7

2010/11 Target

Subsidy Instrument / Output 2009/10 Estimates

Programme 3 & 4: Service delivery targets

Opscap Number of contracts 8 6NHBRCNumbe of projects to be enrolled (15 500 housing units) 50 78Housing Chapters of IDPNumber of chapters reviewed 50 50Project Linked SubsidiesNumber of beneficiaries approved 12 750 8 100Number of sites services 6 600 5.262Number of properties transferred 9 100 2 457Number of housing units completed 7 300 6 816Intergrated Residential Development ProgrammeNumber of beneficiaries approved 1 970Number of sites serviced 1 319Number of housing units completed 212Peoples Housing Progrcess Number housing units completed 850 977

Subsidy Instrument / Output 2009/10 Estimates

2010/11 Target

Programme 3 & 4: Service delivery targets

Informal Settlement UpgradingNumber of beneficiaries approved 1 820Number of sites services 555Number of housing units completed 710Consolidation SubsidiesNumber of housing units completed 500 254Emergency HousingNumbe of housing units completed for household needing temporary assistance

3 600 2 100

Institutional SubsidiesNumber of beneficiaries approved 290 80Number of sites services 865Number of housing units completed 767Rural HousingNumber of beneficiaries approved 9 200 8 890Number of housing units completed (and planning) 9 500 13 800Community Residential Programme 4 000 4 000

2009/10 Estimates

2010/11 Target

Subsidy Instrument / Output

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Middle-income Property Market Intervention

The Department has signed Memoranda of Understanding with the following Financial Institutions:

• ABSA in 2007

• FNB in 2009 and

• Standard Bank in 2010

Currently the Department is finalising Finance Linked Individual Subsidies with ABSA for 48 individuals amounting to R 903 999.00, and with FNB for 136 individuals amounting to R 2 380 107.00

Going forward, the Department envisages signing the MOU with Nedbank this year. Nedbank is financing part of a Project  in Empangeni  called Imbali Ingwelezane with 150 units reserved for the middle income group. FNB is also involved in this project and is financing 500 units in the middle income bracket.

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Middle-income Property Market Intervention (2)

FNB has further confirmed the following projects:

• A project in Umgungundlovu which has 1200 units reserved for the middle income group;

• An integrated housing project in Hayfields in the Msunduzi Municipality comprising of 5000 units;

• A project in Thornhill comprising of 2000 affordable housing units;

• A project in Driefontein comprising approximately 6000 affordable housing units;

• A project in Mbozamo comprising approximately 425 affordable housing units;

• A project in Kwadukuza comprising approximately 2500 affordable housing units;

• A project in Umhlatuze comprising approximately 450 affordable housing units;

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Middle-income Property Market Intervention (3)

Standard Bank has recently launched the Woodmead project which is a fully integrated project, of which 40% is reserved for the middle income bracket. In addition, there is a project planned in Sunnyside Park, Amanzimtoti, consisting of 1100 units, of which 40% will be reserved for the middle income bracket. Standard Bank has also been appointed by Ethekwini Municipality to develop affordable housing on 3 land parcels in Kwa Mashu consisting of 2500 units and 4 land parcels in Chatsworth. 

The Department will partner with the financial institutions to ensure that the planned projects are successfully executed for the affordable housing market in line with the President's programme to assist this market with the National Guarantee Fund. 

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KEY ASSUMPTIONS

The key assumptions that underpin the plans of the Department are summarised below:

• The budget and service delivery indicators are based on a subsidy for a minimum of a 40m2 house for new projects (i.e. projects approved from the 2007/08 financial year onward);

• The National Housing Development Agency which will assist the department in dealing with the challenges relating to the availability of suitable land for housing development;

• Adequate funding will be made in order to meet the 2014 clearance of slums target from within the baseline;

• Human resource is the key component to achieve the desired outcomes of the Department. As a result, there is a need to budget sufficiently for personnel in terms of the newly approved structure, which takes into consideration the added responsibilities of the ‘Breaking New Ground’ (BNG) concept in housing and inflationary wage adjustments; and

• Funding for the bulk infrastructure and basic internal services will be made available within the baseline (where required).

KEY RISKS

Key Risk Impact Risk Level Risk Management Strategy

Poor service delivery Capacity building programmesSocial unrest Establishment of housing components

Overcrowding of communicty residential units

Mushrooming of slums 5 CRU policy to be reviwed and implemented

Distortion of marketsLimited commitment of subsidy funding

Multi year development planMunicipal Sector PlansPremiers Flagship Priority programmes Sustainable Human Settlement StrategyMulti year development planMunicipal Sector PlansPremier Flagship Prioity programmes Sustainable Human Settlement Strategy

Implementation of Memorandum of Agreement with the financial institutions

Inablility to accelerate delivery in rural arrears due to infrastructure challenges

Inability to deliver human sustainable human settlements

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Lack of integrated planning Inability to deliver sustainable humans settlements

5

Limited Capacity of housing stakeholders 5

Limited access to credit finance 5

KEY RISKS (2)

Key Risk Impact Risk Level Risk Management StrategyAudit on existing slumsSlums Clearance Framework in placeEPWP frameworkPHP prorgramme

Unavailability of suitable and affordable land Limited implementation of projects 5 Housing Development Agency

Appointment of unsuitable/incompetent Implementing Agents

Shoddy workmanshop and housing construction 4

T ightening up of the implementation, monitoring and oversight of SCM procedures.Strengthening relations with NHBRC to ensure quality and compliance.

Fraud and corruptionPoor Service Delivery and wastage of resources 4

Establishment of tight monitoring and oversight systems.Disciplinary actions against perpetrators.Prosecution of perpetrators.

Inadequate funding to increase the number of jobs through housing delivery

High level of unemployment 3

Ineffective legislation to ensure eradication of slums

Inability to to achieve the eradication of slums within 2014

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Thank you