DIVISION OF REVENUE BILL HEARINGS - 2003 DEPARTMENT OF HOUSING PRESENTATION TO THE SELECT COMMITTEE ON FINANCE

OVERVIEW INTRODUCTION PURPOSE OF GRANTS HOUSING SUBSIDY GRANT HOUSING ALLOCATION FORMULA HUMAN SETTLEMENT REDEVELOPMENT PROGRAMME MONITORING OF PERFORMANCE MOTIVATION FOR RETENTION AS CONDITIONAL GRANTS END

INTRODUCTION Housing administers two conditional grants: Housing Subsidy Grant Human Settlement redevelopment Grant

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

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 8m people 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

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

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

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

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

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

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

PROVINCIAL ALLOCATIONS

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 .

H.S.R.P PROVINCIAL ALLOCATIONS

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 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

MOTIVATION FOR RETENTION AS CONDITIONAL GRANTS It is proposed that these grants continue under the current mechanisms in order that the Minister of Housing can fulfill her functions adequately The current mechanism provide the basis for uniform norms and standard across the country The Human Settlement Grant provides for the corrective mechanism for addressing dysfunctional settlements and provides the department with the lessons as basis for policy intervention It is confirmed that the Housing Grants meet with the Constitutional requirements – S214

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