1. Department of Housing PRESENTATION TO THE SELECT COMMITTEE ON PUBLIC SERVICES ON CHAPTER 9: HOUSING TRENDS IN INTERGOVERNMENTAL FINANCES: 2000/01 TO 2006/07 05 October 2004

4. Index 1.Introduction 2.Policy Framework 3.Policy developments 4.Housing Conditional Grants 5.Service delivery and expenditure trends 6.Challenges facing Housing 7.The new housing plan – key elements 8.Conclusion

5. Introduction The report deals mainly with policy and trends relating to two housing conditional grants namely –Housing Subsidy Grant –Human Settlement Redevelopment Grant Acknowledge achievements, shortcomings and challenges Deals with service delivery and spending trends concentrating on the period since 2000

6. Policy Framework Our overall policy framework is determined by the White Paper on a new Housing Policy and Strategy for South Africa, 1994

7. Policy Framework continued Institutional arrangements –Constitution makes housing a concurrent schedule 4A function between National and Provincial government –No explicit role for local government –Housing Act defines the National and Provincial roles –Provides for accreditation of local government –Provides for assignment of housing administration to local government that are accredited

8. Policy Frameworks continued Institutional arrangements –National government is responsible for establishing and maintaining a sustainable national housing development process through Developing of policy and strategy Sets goals for delivery Monitoring and evaluation of housing sector performance Establishment of national funding framework for housing development, and Allocation of the funds to provincial government

9. Policy Frameworks continued Provincial government promote, coordinate, implement housing development programmes within the national policy framework –May develop provincial housing policy which must be consistent with national policy –Administer housing subsidy and projects approval processes –Monitor implementation of projects by local governments

10. Policy Developments Housing environment since 1994 white paper –More than 1,6m houses have been built or under construction and 2,4m subsidies approved –Early focus was on quantity at the expense of quality housing to address housing needs and backlogs –Focus was on development of policies and legislative instruments – Introduction of the Housing subsidy scheme consisting of seven subsidy instruments –Special subsidy dispensation for the disabled –Procurement regime compliant to constitution

11. Policy Developments continued Recent policy developments –Housing Finance - Contributions required from Government, the financial sector, and ultimate beneficiaries –Extension of the NHBRC Housing Warranty Scheme to all subsidy instruments –Increased emphasis on monitoring of policy impact, expenditure and delivery –More emphasis on oversight of housing institutions –Promoting of alternative and traditional/indigenous building technologies –Social Housing policy to promote development and maintenance of sustainable Social Housing Institutions

12. Housing Conditional grants Housing administers two conditional grants: Housing Subsidy grant: finances housing development under the national housing programme Human Settlement Redevelopment Grant: funds projects which are meant to improve the quality of urban environment by addressing the legacy of dysfunctionalities caused by Apartheid settlements

13. Housing Subsidy Grant Past performance –By March 2004 – more than 1,6m houses have been built or under construction and 2,4m subsidies approved –Subsidies approved in the last 4 years average 305 000 p.a. allowing for lead times to improve spending trends –Housing units delivered in the last 4 years average 182 782 p.a. and expected to accelerate as projects reach full implementation stage. –Approvals include projects to be implemented in future

14. Housing Subsidy Grant (cont.) To date the programme has achieved a 51 % to 49 % split in allocation between female and male headed households Between 1994 and March 2004 programme has made an investment and creation of assets of R27,6bn by into low income communities

15. Allocation Provincial allocations are currently made according to a formula determined by MinMec and approved by Cabinet The formula provides for weighting in order of priority of the elements as defined below A = HN(50%) + HH (30%) + P (20%), where –A=Allocation –HN=Housing Need –HH=Households earning less than R3 500 per month (affordability indicator) –P =Population

16. Allocation Housing need used in the formula is defined on a weighted formula that takes 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

17. Spending trends Housing subsidy conditional grant expenditure, 2000/01 to 2006/07 2000/012001/022002/032003/042004/052005/062006/07 R millionActual Medium Term Estimate Eastern Cape 470 305 465 793 599 569 604 Free State 218 252 191 465 386 391 414 Gauteng 610 560 1,147 968 1,117 1,314 1,392 KwaZulu-Natal 560 665 755 912 748 783 830 Limpopo 272 387 413 426 370 390 413 Mpumalanga 153 309 246 355 296 315 333 Northern Cape 58 65 50 104 89 78 83 North West 262 259 322 402 421 458 486 Western Cape 341 329 348 282 446 447 474 Total 2,944 3,131 3,937 4,707 4,472 4,745 5,029

18. Spending trends

22. Delevery trends Housing subsidies by province and category of subsidy, 1994 to 2004 Project Linked Individual Consoli- dation Institu- tional Rural Hostel Redevel- opment Total Eastern Cape201,05127,6539,3055,7101,0500244,769 Free State79,92015,3648,1271,3002,459516107,686 Gauteng709,35252,63984,16119,105563162,2821,028,102 KwaZulu-Natal234,57414,35328,47721,19710,2480308,849 Limpopo91,4254,3483,252061,606353160,984 Mpumalanga85,61516,36246,0465,4501,476885155,834 Northern Cape37,6317,6883841,0000046,703 North West118,6248,4197,3261,15417,4921,273154,288 Western Cape157,98410,99848,3436,99804,866229,189 Total1,716,176157,824235,42161,91494,894170,1752,436,404

25. Delivery trends Houses completed or under construction, 1994 to 2004 Number 1994/95 - 1998/991999/20002000/20012001/20022002/20032003/2004Total Eastern Cape63,39320,34534,02110,81658,66227,119214,356 Free State48,4347,17716,0887,0059,15516,746104,605 Gauteng185,33345,38438,54746,72324,34449,034389,365 KwaZulu-Natal149,12628,99728,54714,37924,48533,668279,202 Limpopo49,75012,40120,99616,66714,95315,810130,577 Mpumalanga47,5954,80816,45714,58421,64921,232126,325 Northern Cape13,8212,6004,1482,5886,0563,78733,000 North West60,63112,94414,10913,88523,78410,484135,837 Western Cape103,73026,91617,73016,63420,50015,735201,245 TOTAL721,813161,572190,643143,281203,588193,6151,614,512

27. Human Settlement Redevelopment Grant The human settlement redevelopment grant (HSRD) funds projects aimed at improving the quality of the environment and correcting dysfunctionalities in urban communities, by: –Identifying and addressing the nature and underlying reasons for the dysfunctionalities; –Providing a source of funding to correct dysfunctionalities and serving as a catalyst to gear other funding and resources; –Co-ordinating sources of development funding to ensure co-ordinated development; and –Adding value to projects that can be funded through other processes and programmes.

28. Spending trends Human settlement and redevelopment grants expenditure, 2000/01 to 2006/07 2000/012001/022002/032003/042004/052005/062006/07 R thousandActual Medium Term Estimate Eastern Cape 482 - 10,007 10,200 11,660 14,697 15,579 Free State 1,200 - 1,569 1,904 9,010 10,079 10,684 Gauteng 2,019 2,102 38,198 23,258 22,260 33,900 35,934 KwaZulu-Natal 650 3,203 19,611 15,534 27,560 20,220 21,433 Limpopo 7,783 9,269 140 12,212 11,660 10,055 10,658 Mpumalanga 449 - 350 9,359 7,420 8,120 8,607 Northern Cape 1,000 - 1,467 3,180 2,021 2,142 North West 100 7,758 13,720 2,543 8,480 11,831 12,541 Western Cape 5,203 1,860 5,804 10,379 14,310 11,549 12,243 Total 18,886 25,192 89,399 86,856 115,540 122,472 129,821

29. Current challenges Current challenges facing the housing programme –Lack of private sector investment and resource constraints –Moving towards medium density housing as a priority and integrated development –Creating higher quality housing and living environments –Reducing dependency and promoting a culture of savings –Need for interventions to deal with emergency situations resulting from natural disasters and other incidents - Grootboom case.

30. Current challenges cont. –Growth in number and size of informal settlements –Building capacity of all spheres of government to meet challenges of accelerated quality housing delivery especially local government –Accelerating transformation of the apartheid settlement patterns and dysfunctionalities caused by that system –Fraud, corruption and mal administration

31. Key issues emanating from report Some positive –Recognition of the alignment of key strategic shifts with the rights based approached namely Housing policy emphasis on coordination and policy alignment Improving of quality of end product and urban environment Increasing the delivery rate, and increased impact of the People Housing Process –Recognition that the housing policy minimum norms and standards for permanent residential structures generally exceed suggested international norms

32. Key issues emanating from report Some negatives –Raises concerns about lack of emphasis to ensure participation of citizens and civil society in housing related discussion making process –Other shortcomings are raised relating to Insufficient delivery to meet backlog of adequate housing Lack of integrated development leading to unsustainable settlement insufficient programme to deal with specific housing needs –Absence of a rapid national land release programme –Absence of an informal settlement upgrading programme suitable for needs of the poor.

33. Policy response Recently Housing has developed a comprehensive plan which addresses the issues that have been identified as challenges and the negative areas identified in the report –It provides of stakeholders and provides for a broad range of choices to beneficiaries –Deals with whole communities at a time – Informal Settlement upgrading programme and Emergency Housing programme –Introduces a phased development approach

34. Policy response –Provides for the fast tracking of the development of the housing Chapter of the IDPs –Provides for increased Capacity at all levels of government and enhances monitoring and evaluation processes –Provides for the harnessing of private sector recourses and creates a conducive environment for increased participation in the programme

35. Thank You