1. DEPARTMENT OF HOUSING PRESENTATION TO THE SELECT COMMITTEE ON PUBLIC SERVICES BUDGET 2002/03 TO 2004/05 08 MAY 2002

2. Presentation Index 1.Aim and Vision of the Department 2.Strategic overview Housing environment since 1994 white paper Challenges facing Housing Linkages to Government Policy Priorities Housing Policy Programme Legislative Programme Issues 3.Budget overview 4.Current Budget Perfromance 5.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 Trust = s disestablishment and deregistration and further makes provision for the company = s 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 Department = s 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 Government = s 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 2002/032003/042004/05 R’000R’000R’000 1.Administration 54 71738 74045 914 2.Policy Planning14 24313 898 14 992 3.Programme Management216 274125 701153 517 4.Housing Performance177 917308 527297 168 5.Communication13 17510 17711 768 6.Housing Fund3 768 4744 166 6984 375 232 Total4 244 8004 663 7414 898 591 % Growth11%9%5%

13. 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

14. 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;

15. 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

17. 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; 2001/02:R104m; 2003/04: R109m and 2004/05 R116m Fairly stable over the MTEF period, increasing at 4%; 5% and 6%

18. BUDGET OVERVIEW The Budgeted for the HSRP amount for 2002/2005 MTEF 2002/03 R’000 2003/04 R’000 2004/05 R’000 Eastern Cape10 00011 00011 660 Free State7 5008 5009 010 Gauteng23 00021 00022 260 Kwazulu-Natal25 00026 00027 560 Mpumalanga6 0007 0007 420 Northern Cape2 5003 0003 180 Northern Province11 000 11 660 North West6 0008 0008 480 Western Cape13 00013 50014 310 Total104 000109 000115 540 Growth %4%5%6%

19. 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

20. 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

22. 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.

23. 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 province’s share of total population.

24. BUDGET OVERVIEW The Budget for the SAHF for 2002/2005 MTEF 2002/032003/042004/05 R’000R’000R’000 Eastern Cape 571 485627 253 581 876 Free State283 097316 064 374 679 Gauteng801 940896 8301 085 699 Kwazulu-Natal708 759778 263 727 186 Mpumalanga242 038268 228 288 030 Northern Cape 75 809 83 807 86 900 Northern Province381 767417 204 359 305 North West302 001337 769 409 400 Western Cape372 778412 480 433 357 Total 3 739 674 4 137 898 4 346 432

25. CURRENT BUDGET PERFORMANCE PROGRAMMEBUDGET R’000 EXPENDITURE R’000 UNDER- SPENDING (SAVING) R’000 % UNDER- SPENDING (SAVING) 1 Administration 58,02937,911(20,118)(35%) 2 Policy Planning 7,2475,651(1,596)(22%) 3 Programme Management 274,922259,261(15,731)(6%) 4 Housing Performance 175,175159,767(15,390)(9%) 5 Communication 14,0334,742(9,291)(66%) 6 Housing Development Funding 3,255,5553,254,023(1,532)0% TOTAL3,785,0133,721,35563,658(2%)

26. SOUTH AFRICAN HOUSING FUND Preliminary Provincial Expenditure BUDGET 2002/03 R’000 AMOUNT TRANSFER R’000 EXPENDITURE AS AT 31 MARCH 2002 R’000 Under/(Over Spent) R’000 Eastern Cape508 011 293 242214 769 Free State251 846 146 322105 524 Gauteng767 877 576 202191 675 Kwazulu-Natal697 647 664 27433 373 Mpumalanga309 433 250 45558 978 Northern Cape65 475 0 Northern Province337 523 417 541-80 018 North West264 940 275 439-10 499 Western Cape325 861 328 056-2 195 Total 3 528 613 3 017 006511 607

27. TRANSFER PAYMENTS

28. 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

29. 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

30. 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

31. Estimated rollover for the 2001/02 financial year on the operational budget ProgrammeItemAmount 1 Professional and Special Services R1,173,000 2 Professional and Special Services R 1,003,000 3Professional and Special Services R 1,091,000 3Transfer PaymentsR 1,545,000 Total RolloverR 4,812,000

32. 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

33. Thank You