PERFORMANCE REVIEW Outlook for 2005/06 Financial Year Performance/Expenditure Expenditure review 2001/02 – 2007/08 Department of Local Government & Housing Provincial Government Western Cape January 2006

OVERVIEW B : Expenditure review C : Budget planning : challenges D : Performance April - December E : Improved capacity F : Impact of new programmes A : Outlook 2005/2006

A : OUTLOOK 2005/06 Department has R532m available for 2005/06 (R456m grant + R76m N2 ring fenced funds) R357m spent April to December 9,394 houses were built and 13,161 sites serviced by end December. Expenditure exceeds projections to end of 3rd quarter. National department deviated from the transfer schedule and transferred extra funding in April/May Anticipated that 16,000 houses will be built and 18,000 sites will be serviced by March 2006

B: EXPENDITURE REVIEW 2001/02 – 2007/08 TRENDS 1994 to 2005 : Houses built & under construction – 1999 : 103,730 Houses built & under construction – 2004 : 89, /05 : 16,965 sites were serviced, 15,921 houses provided. R511m spent. More than of 200,000 houses have been provided in the Western Cape since 1994

Trends continued In 2001 there was a shift towards a higher quality product at an increased unit cost In 1994 the unit cost allowed for in the subsidy was R12,500. The current unit cost is almost R40,000. The unit cost has trebled since 1994 Over the same period the Housing grant to the Western Cape has less than doubled, from R283m in 1994 to R456m in 2005/06 It is therefore clear that a lower number of units are able to be produced currently due to the conditional grant not keeping pace with inflation and the improved specifications required.

New policy framework Integrated housing and human settlement development grant introduced in 2005/06 Paradigm shift, introducing innovative new programmes which allow for varied forms of tenure. Unfortunately all new programmes need to be funded from the same grant Number and quality of houses built will remain the primary indicator of performance, but is not the only output that will be measured in future. This will more accurately reflect the more varied nature of housing delivery options now available Greatest challenge – housing delivery is being held back by insufficient funding

C : BUDGET PLANNING 300,000 + Western Cape backlog – Approximately 15,000 units p/a can be built within R456m allocation Funds allocated according to needs survey in Provincial Housing Plan Municipal need as % of Provincial need determines funds allocation Expenditure monitored per municipality Management of housing grant involves the following :

D: PERFORMANCE APRIL to DECEMBER R 357m of the R 456m Grant was spent from April to December. Many new projects starting in January 2006, surge in delivery expected in 2006 as these projects come on stream. 13,161 sites serviced and 9,394 houses built to end December

IMPROVED PERFORMANCE COMPARISON TO PREVIOUS YEARS Quarter:1st 2nd 3rd 4th 2002/03: 68m 77m 131m 71m (348m) 2003/04: 42m 44m 70m126m(281m) 2004/05:73m 92m 153m192m(511m) 2005/06:51m 126m 179m 176m(532m)

Actual expenditure

Projected expenditure

E : IMPROVED CAPACITY IN MONITORING PERFORMANCE Department has engineers, project managers and inspectors who assesses performance of projects on a monthly basis 3 project managers have been appointed by the department recently to boost the capacity of the team of 7 Engineers/Monitors. Cuban professionals are complementing capacity At municipal level project managers and implementing agents have been appointed

F : IMPACT OF NEW PROGRAMMES UISP : (Upgrade of Informal Settlements Programme) New project applications withheld till 1 st April, existing projects held back until conversion Social Housing : New policy not finalised, funds only available from April 2006 Subsidy increase effective date and implementation of new programmes leads to delivery delays. New programs introduced with funding only available in subsequent year.

New programmes cont’d Delays due to lengthy consultation processes with all stakeholders Municipal capacity (as developer) - lack of capacity especially project management Planning - Insufficient planning in past, vast improvement in last year. - Province directly assisting municipalities in planning process

Solutions : Interventions implemented and planned Municipal capacity – Project managers appointed to assist in delivery. Capacity building programmes to up-skill staff Planning greatly improved – Project managers and task teams within municipalities will improve this further

Response to challenges To alleviate the holding back of projects to the beginning of the financial year, the Western Cape has an approach of approving projects in phases, per financial year. Increasing the quantum of the grant, to allow more than 15,000 houses to be built per annum, needs to be taken up at national level Innovative ways to leverage more funding for housing are being explored.

LOOKING AHEAD : SUSTAINABLE HUMAN SETTLEMENT STRATEGY A summit was held on 24 th -25 th November in Stellenbosch. Dialogue with all stakeholders related to the development of Integrated Human Settlements in alignment with the Breaking New Ground policy and Ikapa Elihlumayo. The Summit provided a basis for the formulation of the strategic and implementation plan in line with new policies Pilot projects have been launched to implement plans

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