1. DEPARTMENT OF HOUSING VOTE: 29 BRIEFING TO THE SELECT COMMITTEE ON PUBLIC SERVICES 09 APRIL 2003 STRATEGIC PLAN AND BUDGET 2003/04 TO 2005/06

2. Presentation Index 1.Aim, Vision and Mission of the Department 2.Our Values,Our Mandate and Policy Framework 3.Housing Legislation and Regulations 4.Strategic overview and policy shifts 5.Budget overview 6.Conditional Grants 7.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 Mission: To establish and facilitate a sustainable process that provides equitable access to adequate housing within the context of affordability of housing, services, and access to amenities and economic opportunities

4. OUR VALUES Our values, based on the constitution, are: –Human dignity,equality, advancement of human rights and freedoms; –Non-racialism and non-sexism; –Supremacy of the constitution and the rule of law; –Accountability, responsiveness and openness.

5. OUR MANDATE AND POLICY FRAMEWORK SA CONSTITUTION –Section 26: Access to adequate housing a basic human right; Govt. to ensure environment conducive to the progressive realisation of the right –Schedule 4: Housing is a concurrent national and provincial legislative function Policy Framework –Botshabelo Housing Accord (1994) –(RDP) – set out framework and principles for sustainable development –Policy framework as determined by the White paper on a new housing policy and strategy for South Africa, 1994

6. HOUSING LEGISLATION Housing development programme continues to operate in the following legislative framework. –Housing Act 107 of 1997 –Prevention of Illegal Eviction from and Unlawful Occupation of Land Act No. 19 of 1998 –Housing Consumers Protection Measures Act 95 of 1998 –Rental Housing Act 50 of 1999 –Home Loan Mortgage Disclosure Act 63 of 2000 Currently in process –Community Reinvestment (Housing) Bill. –Housing Amendment Bill –Social Housing Bill

7. REGULATIONS AND GUIDELINES National Housing Code National Norms And Standards For Permanent Residential Structures Guidelines For Human Settlement Planning And Design (“Red Book”) Guidelines For Environmentally Efficient Low Cost Housing

8. REGULATIONS AND GUIDELINES Regulations under the Housing Consumers Protection Measures Act, 1998 relating to the subsidy only sector have been drafted; Regulations under the Home Loan and Mortgage Disclosure Act. 2000 should be finalized shortly; Regulations under the yet to be promulgated Community Reinvestment Act: to be developed during the current MTEF.

9. STRATEGIC OVERVIEW Housing environment since 1994 white paper –More than 1,47m houses have been built or under construction and 1,8m subsidies approved benefiting more than 5,6m people –Early focus was on quantity, rather than quality housing to address housing needs and backlogs –Focus was on development of policies and legislative instruments – Introduction of the Housing subsidy scheme consisting of seven subsidy instruments –Special subsidy dispensation for the disabled –Procurement regime compliant to constitution

10. STRATEGIC OVERVIEW Current challenges facing the housing programme –Lack of private sector investment and resource constrains –Creating higher quality housing and living environments –Reducing dependency and promoting a culture of savings –Need for interventions to deal with emergency situations resulting from natural disasters and other incidents - Grootboom case.

11. STRATEGIC OVERVIEW Current policy trends in housing programmes. –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 –More emphasis on monitoring of policy impact, expenditure and delivery –More emphasis of oversight on housing institutions –Promoting new and innovative building technologies

12. STRATEGIC POLICY SHIFTS New policy approaches –Having achieved the target of 1 million houses the housing programme now has to reflect on the outcomes and how these can be improved – a Consolidation Phase –A shift in focus from “numbers of units” to quality of products and environments – Medium density integrated housing programme and emphasis on PHP Social housing policy and legislation Rental housing NHBRC warranty

13. STRATEGIC POLICY SHIFTS Promotion of social responsibility through: –Own contribution to access housing subsidies and the NHBRC warranty scheme –Savings linked housing subsidy to promote a culture of savings Improving access to housing credit: –Community Reinvestment Legislation (CRA) –Home Loan Mortgage Disclosure Act, 2000

14. STRATEGIC POLICY SHIFTS Improving human settlement environments: –Programme to main stream environmentally efficient housing –Dissemination of good practice –Measures to cater for needs of special groups (eg. Differently-abled, people living with HIV, elderly,youth and children, farm worker and emergency housing)

15. STRATEGIC POLICY SHIFTS Improving integration in service delivery: –Multi-year national and provincial housing development plans linked to Integrated Development Plans (IDPs) –Identification of and access to centrally located land for integrated medium density housing developments –Contributions to Urban Renewal and Integrated Rural Development Programmes –New demand led procurement regime –Capacity building programmes for stakeholders, including government and industry

16. STRATEGIC POLICY SHIFTS Improving international cooperation on human settlement development: –Lead Ministry for UN Habitat (Habitat Agenda) – World Urban Forum, WSSD –Cities Alliance – “cities without slums” initiative –Supporting NEPAD regarding sustainable human settlement development in the African region is concerned. –Bi-lateral and multi-lateral cooperation programmes with donor countries

17. LINKAGES TO GOVERNMENT PRIORITIES Housing activities are focused in the following Government priorities areas –Urban renewal –Integrated Sustainable Rural Development –The eradication of poverty –Transformation –Black Economic Empowerment –Engendering a culture of saving

18. BUDGET OVERVIEW Programme 2003/042004/052005/06 1 Administration 44 85059 06367 128 2 Housing Policy Planning and Research 16 44822 13924 634 3 Programme Management 122 104152 477165 437 4 Housing Sector Performance 304 871286 252296 446 5 Communication 10 17711 76812 388 6 Housing Development Funding 4 275 0394 502 3974 774 204 7 Housing Equity 5 3475 6125 949 Total 4 778 8365 039 7085 346 186 % Change year on year 10%5%6%

19. PRELIMANARY EXPENDITURE RESULT

20. BUDGET OVERVIEW Programme 1: Administration Purpose of this Programme is to provide administrative and management support services to the Department Changes in the MTEF –A real average increase over the MTEF at 7 % –Decrease from 2002/03 to 2003/04 at 16 % mainly as a result of the of reduction in Prof. and Special services Reduced development costs of the Debtors system Completion of the preparation of the Housing Funds statements and the transformation tenders Completion of auditing and related costs for the Housing Funds statements for past years

21. THE KEY ACTIVITIES OVER MTEF Provision of Strategic Financial Management Services Provision of Human Resources Management Services Provision of General Corporate Services to ensure corporate efficiently Provision of strategic support services for the Minister and Accounting Officer Implementation of toll free number to address public enquiries and as anti-corruption initiative Implementation of the transformation imperatives

22. BUDGET OVERVIEW Programme 2: Policy Planning and Research Purpose of this Programme is to ensure a sound national housing policy framework Changes in the MTEF –Effect of restructuring, function shift and reprioritization resulted in increase of 20 % between 2002/03 and 2003/04 –Addition of the Research Chief Directorate and Framework Legislation projects

23. KEY ACTIVITIES OVER MTEF Drafting of new legislation –Community Reinvestment Bill –Social Housing Bill Amendments to current legislation –Rental Housing Amendment Bill –Housing Consumers Protection Measures –Prevention of Illegal Eviction from and unlawful Occupation of Land Amendment Bill (PIE) Drafting of Regulation under HLAMDA, CRA, and Social Housing Act

24. KEY ACTIVITIES OVER MTEF Audit of all legislation impacting on housing Outreach programme to provincial departments and local authorities for training and monitoring of implementation of legislation Development of emergency relief housing Development of Medium Density Housing policy Development of CR Policy Produce policy paper on Environmentally sound and efficient Housing Produce report on child headed households and housing

25. BUDGET OVERVIEW Programme 3: Programme Management Purpose of this Programme is to manage national housing programmes Changes in the MTEF –Mainly dominated by transfer payments: 90% –Major Reduction from 2002/03 to 200304 on the Job Summit Project no more funding after 2002/03 –Major increase conditional grant Human Settlement Redevelopment Programme From 2003/04 :R109m; 2004/05: R116m and 2005/06: R122m – Fairly stable over the MTEF period –Experiencing staffing capacity problems

26. KEY ACTIVITIES OVER MTEF Implementation of the Human Settlement Redev. Programme and the Presidential Pilot programme Promotion of Improved Traditional Building methods and technology Management of the Phasing Out programme Produce guidelines and report on the possible extension of the Warranty cover to PHP Produce report on outcome and lessons from implementation of the Presidential Pilot programme Development of housing education and training programme and professionalisation of the Housing sector

27. BUDGET OVERVIEW Programme 4: Housing Sector Performance Programme is to monitor and assess the impact of housing delivery, manage housing information, and support housing institutions Changes in the MTEF –Mainly transfer payments: 92% –Increase from 2002/03 to 2003/04 by 42% Mainly as a result of increases in SAHT liabilities allocation to be transferred to National Treasury upon of finalization of the disestablishment of the SAHT

28. KEY ACTIVITIES OVER MTEF Monitoring the implementation of housing policy & programmes Monitoring the performance of Housing Support Institutions Impact assessment of implemented policy and programmes Monitor identified economic and financial variables as well as Construction Industry trends & reciprocal impacts Maintenance of Housing information systems.

29. 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 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 2003/04 –Increases by an average of 7% over the MTEF period –Various ministerial programmes National Housing Awards Rand show Exhibitions –Staffing problems being resolved

30. KEY ACTIVITIES OVER MTEF Dissemination of information to stakeholder and facilitate feedback Development and maintenance of a communication strategy in support of housing programme Production of publications on targeted basis Consumer awareness campaigns

31. 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 and repayment of loans raised by the old Housing Boards. Key Activities Over MTEF –Management of the grants transfer to provinces –Monitoring of financial performance for compliance with DORA & PFM Act. –Reporting of grants performance to NT, AO and Minister (MINMEC)

32. BUDGET OVERVIEW Programme 7:Housing Equity To promote fair lending practices by banking institutions, and provide for setting and enforcing specific minimum targets by financial institutions in lending to the low and medium income level households for housing purposes. Take responsibility for implementing the Home Loans and Mortgage Disclosure Act (63 of 2000) (HLAMDA), its regulations and the Community Reinvestment Bill when the latter comes into operation. Funding provides for setup costs

33. CONDITIONAL GRANTS Housing administers two conditional grants:  Housing Subsidy Grant [included in Programme 6]  Human Settlement redevelopment Grant [included in Programme 3]

34. PURPOSE OF GRANTS Housing Subsidy grant: is to finance housing subsidies under the national housing programme Human Settlement Redevelopment Grant: is to fund projects which are meant to improve the quality of urban environment by addressing the legacy of dysfunctionality

35. HOUSING SUBSIDY GRANT  Past performance  Since 1994 – more than 1,47m houses have been built or under construction and 1,8m subsidies approved benefiting more than 5,6m ( 8m people by the end of the MTEF)  Subsidies approved in the last 3 years average 235 540 p.a.  Housing units delivered last 3 years average 197 520 p.a.  It is estimated that the programme has maintained average of 350 000 Direct jobs and 325 000 indirect jobs

36. HOUSING SUBSIDY GRANT ( CONT.) To date the programme has achieved a 61 % to 39 % split in allocation between male and female headed households Since 1994 the programme represents an investment R21,309bn by December 2002 into low income communities

37. HOUSING SUBSIDY GRANT ( CONT.) –Experiencing slowdown in delivery in the past 2 years resulting in average of 15% under spending due to the following reasons: Transformation/restructuring since 2000 elections and capacity of some Local Authorities Delaying effects of the Environmental Impact Assessment processes Land transfer issues Local Government: Municipal Systems Act, No. 32 of 2000 which has been resolved Delayed finalization of outstanding issues relating to Job Summit Projects – which has since also been resolved Deposits to be made by beneficiary towards the warranty of their properties

38. HOUSING SUBSIDY GRANT(CONT.) Currently the Department is undertaking a Capacity requirement analysis for a new strategy for capacity building processes to address the capacity problems at local governments for housing delivery The grant provides for funding of emergency housing in accordance with the Grootboom Case Constitutional Court Judgment at 0.5% to 0.75% of allocations

39. PROVINCIAL ALLOCATIONS (SAHF)

40. PRELIMANARY EXPENDITURE RESULT

41. HOUSING ALLOCATION FORMULA  Background information to the formula used  2002/03 allocates funds as a combination of the old formula that was rural/urban neutral and the current formula that is urban biased in order to phase in the new formula by 2004/05  As from 2004/05 the new formula is expected to have been phased in completely  Use is made of the statistics from Stats-SA as updated by the October survey

42. HOUSING ALLOCATION FORMULA The formula format is weighting in order of priority of the elements as defined above A = HN(50%) + HH (30%) + P (20%), where A= ALLOCATION HN= HOUSING NEED HH= HOUSEHOLDS EARNING LESS THAN R3 500 PER MONTH P = POPULATION

43. HOUSING ALLOCATION FORMULA HOUSING NEED USED IN THE FORMULA IS DEFINED ON A WEIGHTED FORMULA THAT TAKE INTO ACCOUNT THE FOLLOWING : HN = HL(1.25) + SE(1.2) + SBY(1.0) + TC( 1.0) +FR(0.5) WHERE HN = HOUSING NEED HL = HOMELESS PEOPLE SE = SHACKS ELSEWHERE SBY= SHACKS IN BACKYARDS TC = TENTS AND CARAVANS FR = FLAT/ROOMS ON SHARED PROPERTY

44. HUMAN SETTLEMENT REDEV. PROGRAMME Introduced in 1999/2000 as pilot programme started very slowly at R20m p.a. and grew to current levels of over R100m. Addresses dysfunctionalities in Human Settlements Expected to accelerate delivery as guidelines are developed taking into account experiences learnt in the last two years. Currently there are 123 projects approved throughout 9 provinces on a multi year basis with a gross commitment value of R302m 29 projects targeted to the Presidential Urban Renewal and Integrated Sustainable Rural Development Nodes. Current allocations are 2003/04 – R109m; 2004/05 – R116m; 2005/06 – R122m.

45. PROVINCIAL ALLOCATION (HSRDP)

46. PRELIMANARY EXPENDITURE RESULT

47. MONITORING MECHANISMS Monitoring is performed in accordance with requirements of the DORA on a monthly basis The Department has developed specific and targeted monitoring frameworks for monitoring the grants Project performance reports are used to determine project that are stalling and underlying reasons Department has installed a Transversal Information Management system which is being rolled out to provinces (HSS) Provincial reports are presented to MinMec, H.O.D meetings on a quarterly basis Structured Quarterly Provincial visits take place targeting especially provinces that show low expenditure

48. Conclusion Need to improve access to housing credit by the low income group Need to address dysfunctional secondary low cost housing market Improve governance – non-adherence to prescripts – Corruption Investigating capacity Improvement in information to beneficiaries – lack of adequate communication

49. Conclusion Addressing unresolved housing land issues Implementation of new policy regimes eg. Procurement regime, own contribution, phasing out programme. Housing backlog Improvement in delivery capacity

50. Thank You