2001 Intergovernmental Fiscal Review Housing NCOP 17 October 2001

Overview Background Budget trends –Housing subsidy grant & Human settlement grant Service delivery –Subsidies & Housing delivery Normalising the housing environment –Access to private sector funding –An integrated approach to housing delivery Financial Management

Background Inherited a disjointed apartheid housing environment characterised by: –Severe housing shortage –Lack of affordability, finance, integrated strategy and capacity Government achievements remarkable if not unprecedented –Contributed to over 1,19 million houses housing over 4,9 million people (Accommodating roughly 1in 8 people)

Budget trends Housing subsidy grant –primary funding vehicle for provincial housing –Spent over R16 bn (funding over 1,3 million subsidies) and excludes over R3 bn CMIP funds –Of this, R11 bn was spent since 1997/98 (real spending -6 % on average since 1997/98) –Real recovery expected for 2001/02 to 2003/04 (1%) –2001 Budget provides for R3,2 bn and is expected to grow to R3,5 bn in 2003/04 –Pace of spending increasing: Rollovers dropped from R2,2 bn in 1995/96 to R519 m in 2000/01

Budget trends

Human Settlement Grant –aims to build urban communities. It addresses the nature and underlying reasons for urban dysfunctionality –R35 million was spent in 2000/01 – Spending is expected to increase to R100 million in 2001/02 and to R109 million in 2003/04.

Service delivery Housing subsidies –over 1,3 million subsidies approved Housing delivery –1,19 million houses since 1994 (accommodate 1 in 8 people) –reduced backlog to an estimated 2,2 million –in general delivery is greater than household formation –strategies explored to further speed up delivery

Normalising the housing environment (1) Poor capacity, lack of private sector participation, inadequate planning retard delivery Access to private sector funding –encourage saving –Servcon and Masakhane Campaign (encourage payment ) –Thubelisa Homes (Rightsizing) –National Urban Reconstruction and Housing Agency (guarantees for emerging contractors) –National Housing Finance Corporation (mobilise funding outside government) –private sector funding remains elusive

Integrated approach –Increased role for municipalities needed This will help with local level coordination and the optimisation of grants and speed up delivery –Sustainable development Housing is not only about building houses, providing water and electricity Basic needs of communities should be taken into account (schools, recreation, clinics, economic activity etc) Normalising the housing environment (2)

Financial Management (1) SA Housing Fund/PHDF’s –Prior to 2000 DOR Act Accountability and oversight problems –2000 DOR Act and beyond Housing subsidy converted to Conditional grant Funds deposited into Provincial Revenue Funds All expenditure on budget (incl. PHDF’s expenditure) National Department of Housing oversight

Financial Management (2) Implementation of the PFMA –Second year of implementation –Appointment of CFO’s 5 full appointments and 4 acting Appointments at Director or Chief-Director level –CFO Forum established build capacity through peer learning shaping best practice improving monthly budget reporting developing risk and fraud management strategies and improving audit practices –Established internal audit units and committees

2001 Intergovernmental Fiscal Review Housing NCOP 17 October 2001