2001 Intergovernmental Fiscal Review Housing

1. 2001 Intergovernmental Fiscal ReviewHousing NCOP 17 October 2001

2. 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

3. 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)

4. 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

5. Budget trends

6. Budget trends

7. 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.

8. 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

9. 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

10. Normalising the housing environment (2) • 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)

11. 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

12. 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

13. 2001 Intergovernmental Fiscal ReviewHousing NCOP 17 October 2001