FINANCIAL AND FISCAL COMMISSION

1
FINANCIAL AND FISCAL COMMISSION

• Submission for the Division
• of Revenue 2008/09
• Presentation to the Portfolio Committee on
  Housing
• 10 October 2007

2
Introduction Submission 2008/09

• Submission made in terms of Chapter 13 of the
  Constitution and Chapter 9 of the IGFR Act.
• Submission comprises FFC observations and
  recommendations for the 2008 DoR
• Incorporating supplementary submissions made
  during the course of 2006/2007 and
• Research currently in progress.

3
Budget Performance of Government Departments

• Fiscal performance and capacity were measured on
  the basis of the evaluative criteria in Section
  214(2) a-j of Constitution e.g. national
  interest, developmental needs, stable and
  predictable revenue shares.
• RECOMMENDATION 2 Policy Prioritized Programmes
  indicated by Above Average Growth of Budgets
• To ensure alignment between policy objectives and
  budgets /spending, identified priority areas
  should grow by a higher than average growth rate.
• Examples
• In accordance with AsgiSA and JipSA, most
  provinces have prioritized infrastructure and
  skills training. Exceptions include FET, ABET and
  conditional grants for health professional
  training.

4
Budget Performance of Government Departments

• RECOMMENDATION 1 Stable Predictable Growth
  Paths
• To ensure stable and predictable allocations of
  revenue shares between different
  programs/categories of spend, national/provincial
  treasuries should aim for stable budget growth
  paths over a 7 yr period - from the recent past
  3 yrs through to the forthcoming medium term
  budgeting and planning cycle.
• Rationale and Examples
• Often with newly established and smaller
  programmes, there is a trend of policy
  prioritization, over-budgeting, under-spending,
  followed by cut-backs in the following years
  budget (or vice versa).
• This is especially true of budgeting for
  infrastructure and skills training which are
  priorities established by AsgiSA and JipSA.
  Particular examples include ABET, FET, ECD,
  welfare, farmer support and road construction.

5
Budget Performance of Government Departments

• RECOMMENDATION 3 Entrenchment of Best Practice
  Project Planning
• The further institutionalization of best practice
  project planning budgeting methods (which
  separate planning from implementation and align
  them to the fiscal year) should be encouraged.
• Rationale
• Under-spending caused by excessive adjustments,
  late disbursements and end-of-year fiscal dumping
  is more pronounced when different spheres or
  departments are responsible for budgeting and
  delivery.
• Treasuries are strengthening the technical
  ability of provinces to undertake infrastructure
  capital planning and budgeting (through I.D.I.P.).

6
Budget Performance of Government Departments

• RECOMMENDATION 4 Reporting on Service Delivery
  Outputs
• Every departmental service delivery programme
  should be defined by and reported in the P.B.E.R,
  according to
• - actual and targeted beneficiaries
• - personnel numbers and budgets by occupational
  skills level
• - current items capital assets used in service
  delivery.
• Provincial departments should report on these
  non-financial indicators on behalf of their
  service delivery agents.
• Rationale
• This non-financial data is required to enable an
  assessment of progressive realization, efficiency
  and effectiveness.

7
Budget Performance of Government Departments

• RECOMMENDATION 5 Measuring Socio-Economic
  Impact
• A methodology to measure socio-economic impact of
  government capital and current spending should be
  standardized across government departments and
  programmes.
• Rationale
• These measures of impact have been pioneered
  through the E.P.W.P. and should require reporting
  on employment generation, poverty reduction,
  redistribution of income and wealth and
  contribution to economic growth.

8
Budget Performance of Provincial Housing
Departments
9
Delivery Performance of Provincial Housing
Departments

• Delivery rate has halved over the past to 10
  years to an average 80 890 dwellings completed in
  FY 2005. Presidential targets unlikely to be met
  at this rate.
• Recent increases in capital subsidy (from the
  B.N.G. policy) may not have counteracted the
  declining real value of subsidy over the previous
  5 to 10 years.
• Municipalities resistant to accreditation because
  of top-ups required to ensure adequate servicing
  and quality of top structure.
• M.I.G. may be split into reticulated and bulk
  components. This could release the housing
  subsidy for top-structure purposes.
• There is limited reporting of non-financial data
  by Housing departments.

10
Financing of Housing

• FFC submission for 2007/08 DoR
• Recommended that the Conditional grant for
  housing should use homelessness as an indicator
  of housing need
• Revised formula dropped the variable due to lack
  of data
• (Stats SA do not collect this data)
• Rapid urbanisation results in homelessness
• Unofficial statistics were being used to estimate
  the number of the homeless
• Homelessness as an important indicator
• Requires good data to be collected
• Internationally countries such as US, Australia
  and UK have designed and carry out surveys that
  are also combined with the census
• Such surveys and the census are utilized to
  inform the allocation of resources for addressing
  housing need

11
Recommendation on Financing of Housing

• The FFC reiterates the recommendation that
• Government should initiate a process for the
  collection of data on homelessness.
• The data be included in the housing formula as
  part of the indicators of housing need in the
  future.