Presented By Ms MB MONAMA 24 NOVEMBER 2006 PUBLIC HEARING ON CONDITIONAL GRANTS AND CAPITAL EXPENDITURE – 2nd QUARTER 2006/2007 Presented By Ms MB MONAMA 24 NOVEMBER 2006

CONTENT Departmental priorities till 2008/9 Data trends, allocations and expenditure Budget Allocations Second Quarter Expenditure Profile MTEF Budget Allocation Overview of the organisational environment Constraints hampering delivery Interventions to deal with challenges Monitoring and Evaluation Conclusion

DEPARTMENTAL PRIORITIES TILL 2008/9 The Department of Housing has refocused its plan and the following has been prioritised Formalisation and Eradication of Informal Settlement Development of Social and Mixed Income Settlements Regeneration of Twenty Old established Townships Affordable Rental Accommodation Urban Regeneration

DEPARTMENTAL PRIORITIES TILL 2008/9 (Cont) This will be achieved through: Fast tracking of top structure delivery Provision of Housing in targeted areas in line with Growth and Development Strategy and Global City Region approach. Renewal of 20 prioritised townships Social Housing program to be refocused to include affordable rental – low and middle income earners Job Creation through housing development SMME/ BBBEE - Empowerment and Participation

Planned Transfers 2nd Quarter Actual Expenditure 2nd Quarter Trend in Allocations, Transfers and Actual Expenditure i.r.o. Conditional Grant Name of Conditional Grant Amount Transferred 2005/06 R’000 Planned Transfers 2006/07 Planned Transfers 2nd Quarter Actual Transfers 2nd Quarter Actual Expenditure 2nd Quarter R'000 % Deviation from target Housing Fund 1,117,463 1,757,666 510,822 468,644 -8% Human Settlement 30,353 0% Land Distribution: Alexandra 6,335 8,000 TOTAL 1,154,151 1,765,666

Trend in Allocations, Transfers and Actual Expenditure i. r. o Trend in Allocations, Transfers and Actual Expenditure i.r.o. Conditional Grant Name of Conditional Grant Planned Transfers 2006/07 R’000 Planned Transfers 2nd Quarter Actual Expenditure R'000 % Deviation from target Housing Fund 1,757,666 510,822 468,644 -8% Land Distribution: Alexandra 8,000 0% TOTAL 1,765,666

YEAR TO DATE EXPENDITURE Programmes Payments Audited 2005/06 R’000 Projected Payments 2006/07 (R’000) Projected Payments 2nd quarter (R’000) Actual Payments 2nd quarter (R’000) % Deviation from target Administration 78.017 74,918 20 727 28 727 138% Housing Planning and Research 7,513 10,284 2 486 2 004 81% Housing Performance/ Subsidy Programme 1,195,267 1,550,152 399 816 399 417 99,9% Urban Renewal and Housing Settlement Redevelopment 326,992 380,630 92 625 44 543 48% Housing Asset management 65,513 65,478 16 206 61 029 499,9% Total 1,673,302 2.081,462 531 860 535 720 100,7%

Conditional Grant/s and Capital Expenditure Data on trends in allocations, transfers and actual expenditure of conditional grants and capital expenditure of the Department as well as a brief assessment on this departments monitoring capacity for the financial year: 2006/07 is captured in the next few slides i.t.o. a tabular format.

BUDGET ALLOCATION (2006/2007) Particulars Amount R’000 Total Particulars of the financial resources available funding of the activities of the Department are summarized in the Table hereunder: Particulars Amount R’000 Total Integrated Housing and Human Settlement Conditional Grant [Note 1] Provincial Allocation for Urban Renewal [Note 2] Administration [Note 3] Goods, Services & Machinery [Note 4] 1 765 666 191 500 87 150 37 146 124 296 Total : IHHSCG, Dedicated & Operational Budget 2 081 462

BUDGET ALLOCATION (2006/2007) cont. Note 1: This represents the capital allocation to the Gauteng Housing Department in terms of the Division of Revenue Act [DORA] for the funding of the implementation of National Housing Programmes and Provincial Housing consistent therewith Note 2: This is an allocation from the Provincial Revenue Funds towards the funding of the Urban Renewal Programme in Gauteng Province. • Note 3: An allocation with the Operational Budget of the Department for the funding of compensation of employees during the 2006/07 financial year. Note 4: The available funding for expenditure in terms of Goods & Services with the Operational Budget of the Department.

Second Quarter Expenditure Profile: 2006/2007 Conditional Grant GRANT BUDGET Projected Expenditure Actual Expenditure Variance Integrated Housing and Human Settlement Development 1,757,666 510,822 468,644 42,178

Second Quarter Expenditure Profile: 2006/2007 cont. Current and Capital Expenditure Economic Classification Budget Projected Expenditure Actual Expenditure Variance Compensation of employees 93,378 24,215 24,055 160 Goods and Services 32,700 7,907 11,749 -3,842 Buildings and other fixed structures 53,925 13,580 8,977 4,603 Machinery and equipment 4,446 2,077 302 1,775 184,449 47,779 45,083 2,696

Second Quarter Expenditure Profile: 2006/2007 cont. Urban Renewal GRANT BUDGET Projected Expenditure Actual Expenditure Variance Urban Renewal 369,433 89,787 42,930 46,857 Payments made for projects that concerned previous financial year

Service Delivery Statistics for the 2nd Quarter of the2006/07 Financial Year Programme Unit of Measure Projected Actual delivery Essential Services Houses - 693 Stands 3,287 10, 433 PHP / CBP 1,935 450 Project Linked 1, 340 2.573 4,627 4,155 Individual 877 112 Relocation assistance 17 7 Upgrading of Hostels Beds 1.100 264 TOTAL STANDS 5,521 13,125 HOUSES 7,403 5,417 BEDS 18,697 2 790 Institutional Subsidies units 605

Reasons for Variance A deliberation of the reasons for the variance in expenditure in comparison the allocation In terms of DORA is as follows: Certified Claims to the value of R 32 million for work completed during and prior to 30 September 2006 could not be paid in time and had to be effected in October 2006 of which should have been accounted for in terms of actual expenditure incurred during the 2nd Quarter. Similarly, an amount of R30 Million of which was accounted for during the seconded quarter of which relate to the 1st quarter.

Payment Summary – MTEF Baseline 07/10 Medium-Term Estimates PROGRAMME  2007/08  2008/09  2009/10 1. Administration 84,595 91,770 2. Housing Planning and Research 12,432 12,154 3. Housing Development Implementation 2,361,356 2,562,652 4. Housing Property Management 62,149 61,869 Total Programmers 2,520,532 2,728,445 Economic Classification   Compensation of Employees 127,513 134,366 Goods & Services 39,573 44,369 Households 2,387,223 2,589,079 Machinery & Equipment 5,796 5,000 Total

Overview of the organisational environment During the second quarter the Department implemented it’s revised organisational structure. The implementation of it’s Regional Offices took effect in terms of negotiations around the office accommodation and other related infrastructure requirements, had taken place. The Department has rearranged its expenditure management processes and delegations have been finalised. Newly appointed Professional Resource Teams (PRT’s) to replace the Regional Professional Team’s whose contract ended on the 30th of June 2006 had been finalised. Regrouping of established developers and improve on the procurement system. The Department also appointed contractors on the procurement rooster who will assist in implementing projects. The contractors have been appointed in two categories which are the established and emerging contractors

Constraints hampering delivery Submission of insufficient information and supporting documents for payments Fast track the enrolment of projects with NHBRC Improvement of contract management processes Submission of trench payments by Municipalities on quarterly basis. Improvement of house inspections by the Department and Municipal inspectors Improvement of quality as well as meeting specified targets by contractors and developers. Slow pace of delivery by emerging developers Inability to provide guarantees by appointed developers and contractors within specified time frames Dealing with illegal land and buildings invasions Inability of municipalities to implement by Laws to deal with erection of illegal structures in newly built subsidized houses.

Interventions to deal with challenges Established a task team with NHBRC to deal with approvals – change information on weekly basis on all projects submitted and feedback on those approves and not approved. Established an Inspectorate within department to deal with quality issues as well as inspecting of houses regularly Established working protocols between department, municipalities and NHBRC inspectors to coordinate and manage inspections process Regular site visits by Project Managers and Senior Managers to deal with identified challenges per project Provided professional support to emerging developers to be mentored Simplified payment process drafted and improvement now realised Interaction with Executive Directors of Housing to agree on payment processes and service delivery improvement mechanisms for each Municipality. Executive Management monitoring projects and able to shift budget on slow project in favor of those best performing.

Monitoring and Evaluation A Monitoring and Evaluation Unit has been established to evaluating progress in the implementation of the strategy against the targets set. It will further recommend intervention mechanisms in areas where there is little or no progress. A draft monitoring and evaluation framework has been developed and will be finalised by end of financial year 2006/07. Departments submits various reports as prescribed by the PMFA to various institutions such as Provincial Treasury and Legislature.

Conclusion Our delivery processes are starting to yield results and there's hope amongst communities that government is addressing housing their needs. We are putting proper plans and re-prioritizing our approach that must always adhere to the principles of the Breaking New Ground policy. Better coordination with municipalities and developers Improved management and monitoring systems within the Department Department providing leadership and guidance in all aspects of housing development Political support from all spheres of govrnment

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