STRATEGIC AND ANNUAL PERFORMANCE PLAN 2017/ 2018 PORTFOLIO COMMITTEE 14 TH MARCH 2017

1. STRATEGIC AND ANNUAL PERFORMANCE PLAN 2017/ 2018 PORTFOLIO COMMITTEE 14TH MARCH 2017

2. Presentation Outline • Human Settlements Strategic Trajectory • Departmental Priorities • Plans Per Programmes and Functions • Financial Information • Recommendations

3. The Human Settlements Strategic Trajectory • The human settlements trajectory propositions that is that ‘by 2050 visible results from effectively coordinated spatial planning systems shall have transformed human settlements in South Africa into equitable and efficient spaces with citizens living in close proximity to work with access to social facilities and essential infrastructure • The 2030 vision is to achieve measurable progress towards breaking apartheid spatial patterns with: • Significant advances made towards retrofitting existing settlements offering the majority of South Africans access to adequate housing • Affordable services in better living environments • And a more functionally equitable residential property market

4. The Human Settlements Strategic Trajectory To achieve the vision, the 2014-2019 MTSF focus on reforms aimed at achieve the following: • Ensuring that poor households have adequate housing in better living environments • Supporting the development of a functionally and equitable residential property market • Improving institutional capacity and coordination for better spatial targeting

5. The Planning Process • There was continuous engagement with oversight bodies (DPME, AG and National Treasury ) • Comments made were considered, for qualitative targets, there were concerns on measurability which were attended to and explanation provided that the outcomes approach provides space for qualitative targets that measure: • Improved living conditions in quality living environments • Improved compliance to policies • Enhanced institutional capabilities and coordination • Improved organizational operations

6. The Planning Process The departmental annual performance plan was developed in line with: • Provincial Performance Plans • Entities Performance Plans • MTSF delivery targets in the departmental APP mostly are aligned with entities and provincial plans. • The department will at the end of the financial year account for the overall sector performance

7. Translating the MTSF Priorities into Strategic Plan Targets 2014-2019 • Upgrading of 2200 informal settlements • 750 000 households in informal settlements benefitting from the Informal Settlements Upgrading Programme • 563 000 individual units for subsidy housing market provided • 70 000 Finance Linked Individual Subsidy Programme subsidies allocated to approved beneficiaries27 000 social housing units • 10 000 CRU • 35 000 private rental housing opportunities • 5000 non statutory military veterans housed

8. Translating the MTSF Priorities into Strategic Plan Targets 2014-2019 • 10 000 of hectares of well-located land rezoned and released for new developments targeting poor and lower middle income households • 50 Catalytic Projects implemented • 22 mining towns supported on human settlements interventions • 818 057 pre-and post1994 title deeds issued • 340 480 of new title deeds issued • 30% of the HSDG construction budget allocated to Women and Youth Contractors • 30% of the USDG construction budget allocated to Women and youth Contractors

9. Translating the MTSF Priorities into Strategic Plan Targets 2014-2019 • A policy Framework for Human Settlements developed • A comprehensive human settlements legislation developed • A Human Settlements Bank Established • Policy compliance enforced on projects under implementation • Human Settlements Code developed • Seven evaluations of key human settlements strategic thrust completed • Research to support policy development conducted • An analysis of the functionality of the residential property market conducted • Human Settlements Capacity Development Programme Implemented

10. Target Summary 2017/2018 Annual Performance Plan • 50 catalytic projects implemented • 22 mining towns supported on human settlements development interventions • 400 feasibilities conducted in informal settlements • 300 Informal settlement upgrading plans developed • 150 000 households in informal settlements upgraded • 7 Provinces and 6 Metros supported in the implementation of PHP Policy • 1 700 non-statutory Military Veterans housed • 112 600 individual units for subsidy housing submarket provided

11. Target Summary 2017/2018 Annual Performance Plan • 327 300 pre-and post 1994 title deeds issued • 93 200 title deeds for new subsidy houses issued • 6000 Social Housing units delivered • 1 915 Community Residential Units delivered • 7920 private affordable rental housing opportunities delivered • 5 000 Finance Linked Individual Subsidy Programme subsidies allocated to approved beneficiaries • 3 000 hectares of well-located land acquired, rezoned, and released for new developments

12. Target Summary 2017/2018 Annual Performance Plan • A Policy Framework for human Settlements Developed • Housing Consumer Protection Bill 2017 • The Home Loan and Mortgage Disclosure Amendment Bill 2016 • Human Settlement Development Bank Bill 2017 • Human Settlement Bill 2017 • PIE Amendment Bill • Guidelines for Human Settlements Planning and Design revised • Programmes in the housing code reviewed

13. Target Summary 2017/2018 Annual Performance Plan • Research to support policy development conducted • Analysis of the functionality of the residential property market conducted • 5% of projects under implementation assessed for policy compliance • Human Settlements sector Capacity audit conducted • 7 Provinces and six Metros supported on the implementation of PHP Policy • 100 youth supported through a bursary Programme • 500 practitioners trained on Sustainable human settlements skills development programmes • Guideline Framework for Testing Project Readiness implemented • Operational integration of the 3 DFI’s implemented

14. Target Summary 2017/2018 Annual Performance Plan • 30 per cent of the total HSDG construction budget allocated to women and youth Contractors • 30 per cent of the total USDG construction budget allocated to women • and youth Contractors • Framework for to improve DFI lending developed • Framework to achieve private sector investment leveraging developed • Assessments on the volume of loans granted by DFIs for the affordable housing market conducted • Assessment of the current financing model on grants conducted • Employers’ contribution towards Employer Assisted Housing assessed

15. Target Summary 2017/2018 Annual Performance Plan • 9municipalities assessed for accreditation • 8 municipalities in secondary cities supported on the implementation of the Human Settlements Master Plan • 6 initiatives on international cooperative aligned to human settlements priorities serviced • 24 Intergovernmental fora coordinated in line with human settlements priorities • 40 Partnerships, mobilised towards Human Settlements • 100% of projects under implementation monitored and verified (HSDG and USDG) • 1 evaluation study (UISP three year impact)

16. Target Summary 2017/2018 Annual Performance Plan • All valid invoicespaid within 30 days • Approved internal audit plan implemented • Approved risk management plan implemented • Approved Departmental anti-fraud and corruption plan implemented • Unqualified audit report 2016/17with no matters of emphasis • Human Resource Plan implemented • Approved communication strategy implemented

17. Proposed Audit Outcomes • Material under spending of the vote (Programme 3) by the department • Material misstatements on the reported performance information of Programme which were subsequently corrected • The financial statements submitted for auditing were not prepared in accordance with the prescribed financial reporting framework as required by section 40(1)(b) of the Public Finance Management Act • Contractual obligations and money owed by the department were not settled within 30 days, as required by section 38(1)(f) of the Public Finance Management Act and Treasury Regulation 8.2.3.

18. Priorities for 2017/2018 • Scaling up the delivery on Affordable/ Gap Housing • Accelerate upgrading of informal Settlements • Improved issuing of title deeds for new subsidy houses on occupation • Eradication of the title deeds backlog by 2019 • Establishment of the Human Settlements Development Bank

19. Programme Delivery Support

20. Programme Delivery Support

21. Programme Delivery Support

22. Programme Delivery Support

23. Programme Delivery Support

24. Policy and Research

25. Policy and Research

26. Legal Services

27. Technical Capacity, IGR and Stakeholder & Human Settlements Planning

28. Programme 1

29. Programme 4

30. Budgeting Process

31. Summary of the Priorities and Funding Needs

32. Departmental Budget Proposals To National Treasury

33. CONSOLIDATED SOCIAL AND RENTAL HOUSING FUND • Proposal that the Social and Rental allocations, Institutional subsidies and the Restructuring Capital Grant (RCG),be consolidated and disbursed as one funding stream to Municipalities and Social Housing Institutions; • This will enhance the integrated process between the planning, funding and implementation arrangements, thus expediting delivery outcomes; • Crowding and leveraging of private sector funding and contributions • The Medium Term Strategic Framework (MTEF) target for the delivery of social and rental housing is 30 000 units; • Actual delivery of social and rental housing units, as facilitated through the Social Housing Regulatory Authority (SHRA), is 8 452 as at 31 March 2016; • The remaining number of units required to achieve the target is therefore 21 548.

34. CONSOLIDATED SOCIAL AND RENTAL HOUSING FUND • The available data shows that the average cost of a one (1)-bedroom unit has increased by 47% over the seven years while the RCG has remained static; • To address the challenge, the Department is currently considering a proposal to increase the RCG quantum to R155 000 per unit. • To improve performance and accountability the Department is considering proposals to improve checks and balances in the sector and this includes separation of the regulatory, grant making and allocation and investment functions

35. FINANCIAL IMPLICATIONS: CONSOLIDATED SOCIAL AND RENTAL HOUSING FUND • The calculation is based on R155 000 per unit which brings the shortage on RCG to R1.9 billion over the MTEF. For 2017/18 – R161.2 million, 2018/19 – R932.6 million and for 2019/20 – R876.3 million • The institutional subsidy has already been adjusted to R110k

36. CATALYTIC PROJECTS PROGRAMME • There is an agreement between DHS and Housing Development Agency (HDA) to align, streamline and integrate programme and project functions; • Proposal for HDA to function as an developer and/or implementation agent and/or facilitator to reduce inefficiencies in Provinces and Municipalities in respect of key programmes focusing on the catalytic projects; • The HDA will undertake development facilitation and project structuring, development implementation in conjunction with the private sector; • The assessment of the projects indicates the catalytic projects will include the implementation of the Informal Settlements Upgrading Programme, Affordable Rental Housing and FLISP.

37. FINANCIAL IMPLICATIONS: CATALYTIC PROJECTS PROGRAMME

38. CENTRALIZATION OF FLISP • The FLISP is not performing as expected in Provinces and Municipalities; • The proposal is to top-slice both the HSDG and USDG to allow the FLISP to be managed by the department and/or entity; • The Department to agree on the programme delivery vehicle.

39. FINANCIAL IMPLICATIONS: CENTRALIZATION OF FLiSP

40. DFI CONSOLIDATION AND CAPITALIZATION • The recapitalisation of the consolidated human settlements DFI’s is proposed to ensure that the Department adequately responds to the NDP guideline to “lessen the developmental load” for provision of adequate housing and integrated human settlements • This will promote improved leveraging and multiplier benefits from partnership funding • It is projected that an amount of R10.3 billion or 10% be “shaved” off, from the HSDG and USDG, and used to recapitalise the Human Settlements Development Bank with agreed targets, outputs and outcomes, which will benefit households

41. FINANCIAL IMPLICATIONS: DFI CONSOLIDATION AND CAPITALIZATION

42. ASSET VERIFICATION PROJECT • Proposal to compile asset registers of the HSDG and USDG funded projects (deliverables) implemented in 2015/16 and 2016/17 that set the basis for monitoring human settlements projects for the remainder of the 2014/19 MTSF period • The aim of the project is to have an effective M&E system that contains credible and verifiable information, which is consistent across various reports and information platforms • The NHBRC will also be expected to assist in asset verification exercise on HSDG funding.

43. FINANCIAL IMPLICATIONS: ASSET VERIFICATION PROJECT

44. NORTHERN CAPE BACKLOG ERADICATION • The Human Settlements MinMec has taken a decision to target the Northern Cape to eradicate the housing backlog • Total backlog in the Northern Cape is 52 000 units, and there will be a pooling of resources from the Provincial grants to co-fund the eradication • The targeted output over the 3 years is 11 384 units costing R1.6 billion The additional amounts required for 2017/18 is R800m for 5 525 units, for 2018/19 it is R500m for 3 453 units and for 2019/20 it is R348.4m for 2 406 units

45. FINANCIAL IMPLICATIONS: NORTHERN CAPE BACKLOG ERADICATION

46. GOVERNMENT EMPLOYEES HOUSING SCHEME (GEHS) • The GEHS provides housing access support services to government employees and is administered by the State to ensure that employees have access to adequate housing on a sustainable basis • The Department is expected to undertake the function of service provider to the GEHS

47. FINANCIAL IMPLICATIONS: GOVERNMENT EMPLOYEES HOUSING SCHEME (GEHS)

48. UPSCALING INFORMAL SETTLEMENTS UPGRADING • The number of informal settlements in South Africa grew from an estimated 300 in 1994 to approximately 2700 in 2010. • As a result, the upgrading of informal settlements was already prioritized during 2004 in the Comprehensive Plan for the Development of Sustainable Human Settlements (BNG) which was approved by Cabinet.

49. UPSCALING INFORMAL SETTLEMENTS UPGRADING • The upgrading of informal settlements was introduced as a target under Outcome 8 and targets were set for Provinces based on the Human Settlement Development Grant (HSDG) Allocations. • With the introduction of the Urban Settlement Development Grant (USDG) to the eight (8) metropolitan municipalities, particular targets were also set for these municipalities.

50. UPSCALING INFORMAL SETTLEMENTS UPGRADING • Feasibility studies for 1 100 informal settlements completed, Municipal upgrading strategies completed for 43 municipalities and 400 settlement upgrading plans have been completed for implementation by municipalities. •  At March 2016, 185 731 households were upgraded which represents 25,9% of the MTSF target. A total of 8 879 households were upgraded, a total of 555 390 households remain to be upgraded in 3 years at an average of more than 185 130 households per annum.