DEPARTMENT OF HOUSING

1
DEPARTMENT OF HOUSING

• PRESENTATION TO THE SELECT COMMITTEE ON PUBLIC
  SERVICES
• BUDGET 2002/03 TO 2004/05
• 08 MAY 2002

2
Presentation Index

• Aim and Vision of the Department
• Strategic overview
• Housing environment since 1994 white paper
• Challenges facing Housing
• Linkages to Government Policy Priorities
• Housing Policy Programme
• Legislative Programme Issues
• Budget overview
• Current Budget Perfromance
• Conclusion

3
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

4
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

5
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

6
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

7
Government Priorities

• Housing-related priorities of National Government
  include
• Urban renewal
• Integrated Sustainable Rural
  
  Development
• The eradication of poverty
• Transformation and Black Economic
  
  
  Empowerment
• Engendering a culture of saving

8
Housing Policy programme

• First 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 housing
• Environmentally sound housing policy and
  accommodating the needs of special groups
• Housing savings scheme

9
Legislative Issues

• Disestablishment of South African Housing Trust
  Limited Bill. This Bill provides for the Trusts
  disestablishment and deregistration and further
  makes provision for the companys 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 Departments community
  reinvestment programme and follows on the Home
  Loan and Mortgage Disclosure Act No. 63 of 2000.

10
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 Governments medium density emphasis in
  housing.

11
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.

12
BUDGET OVERVIEW

• PROGRAMME 2002/03 2003/04 2004/05 R000
  R000 R000
• Administration 54 717 38 740 45 914
• Policy Planning 14 243 13 898 14 992
• Programme
• Management 216 274 125 701 153 517
• Housing
• Performance 177 917 308 527 297 168
• Communication 13 175 10 177 11 768
• 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

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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

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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

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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

16
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

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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
  2001/02R104m 2003/04 R109m and 2004/05 R116m
• Fairly stable over the MTEF period, increasing at
  4 5 and 6

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BUDGET OVERVIEW The Budgeted for the HSRP amount
for 2002/2005 MTEF
2002/03 R000 2003/04 R000 2004/05 R000
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
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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

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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

21
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

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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.

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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 provinces share of
  total population.

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BUDGET OVERVIEW

• The Budget for the SAHF for 2002/2005 MTEF
• 2002/03 2003/04 2004/05
• R000 R000 R000
• 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

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CURRENT BUDGET PERFORMANCE
PROGRAMME BUDGET R000 EXPENDITURE R000 UNDER-SPENDING (SAVING) R000 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)
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SOUTH AFRICAN HOUSING FUNDPreliminary Provincial
Expenditure
BUDGET 2002/03 R000 AMOUNT TRANSFER R000 EXPENDITURE AS AT 31 MARCH 2002 R000 Under/(Over Spent) R000
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
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TRANSFER PAYMENTS
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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

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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

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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

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Estimated rollover for the 2001/02 financial year
on the operational budget
Programme 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 Total Rollover R 4,812,000
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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

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Thank You