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PUBLIC HEARING ON CONDITIONAL GRANTS

AND CAPITAL EXPENDITURE – 2nd

QUARTER 2006/2007 Presented By Ms MB MONAMA

24 NOVEMBER 2006

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CONTENT

1. Departmental priorities till 2008/92. Data trends, allocations and expenditure3. Budget Allocations4. Second Quarter Expenditure Profile5. MTEF Budget Allocation6. Overview of the organisational environment7. Constraints hampering delivery8. Interventions to deal with challenges9. Monitoring and Evaluation10. Conclusion

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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

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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

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Trend in Allocations, Transfers and Actual Expenditure i.r.o. Conditional

Grant Name of

Conditional Grant

Amount Transferr

ed 2005/06

R’000

Planned Transfers 2006/07

R’000

Planned Transfers 2nd

Quarter

R’000

Actual Transfers2nd Quarter

R’000

Actual Expenditure 2nd Quarter

R'000

% Deviation from target

Housing Fund 1,117,463 1,757,666 510,822 510,822 468,644 -8%

Human Settlement 30,353 0 0 0 0 0%

Land Distribution: Alexandra 6,335 8,000 0 0 0 0%

TOTAL 1,154,151 1,765,666 510,822 510,822 468,644 -8%

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Trend in Allocations, Transfers and Actual Expenditure i.r.o. Conditional

Grant Name of

Conditional Grant Planned

Transfers

2006/07

R’000

Planned Transfers2nd Quarter

R’000

ActualTransfers2nd Quarter

R’000

Actual Expenditure 2nd Quarter

R'000

% Deviation from target

Housing Fund 1,757,666 510,822 510,822 468,644 -8%

Land Distribution: Alexandra 8,000 0 0 0 0%

TOTAL 1,765,666 510,822 510,822 468,644 -8%

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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%

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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.

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BUDGET ALLOCATION (2006/2007)Particulars of the financial resources available funding of the activities

of the Department are summarized in the Table hereunder:

Particulars AmountR’000

TotalR’000

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 50087 15037 146

1 765 666

191 500124 296

Total : IHHSCG, Dedicated & Operational Budget 2 081 462

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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.

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Second Quarter Expenditure Profile: 2006/2007

GRANT BUDGET Projected Expenditure

Actual Expenditure

Variance

Integrated Housing and Human Settlement Development

1,757,666 510,822 468,644 42,178

Conditional Grant

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Second Quarter Expenditure Profile: 2006/2007 cont.

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

Current and Capital Expenditure

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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

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Service Delivery Statistics for the 2nd Quarter of the2006/07

Financial Year Programme Unit of

MeasureProjected Actual

deliveryEssential Services Houses - 693

Stands 3,287 10, 433PHP / CBP Houses 1,935 450Project Linked Stands 1, 340 2.573

Houses 4,627 4,155Individual Stands 877 112

Houses 877 112Relocation assistance Stands 17 7

Houses 17 7Upgrading of Hostels Beds 1.100 264TOTAL STANDS 5,521 13,125

HOUSES 7,403 5,417TOTAL BEDS 18,697 2 790Institutional Subsidies units 605 -

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Reasons for VarianceA 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.

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Payment Summary – MTEF Baseline 07/10

Medium-Term Estimates

PROGRAMME  2007/08  2008/09  2009/10

1. Administration 84,595 91,770 91,7702. Housing Planning and

Research12,432 12,154 12,154

3. Housing Development Implementation

2,361,356 2,562,652 2,562,652

4. Housing Property Management

62,149 61,869 61,869

Total Programmers 2,520,532 2,728,445 2,728,445Economic Classification      Compensation of Employees 127,513 134,366 134,366Goods & Services 39,573 44,369 44,369Households 2,387,223 2,589,079 2,589,079Machinery & Equipment 5,796 5,000 5,000

Total 2,520,532 2,728,445 2,728,445

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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

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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.

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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.

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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.

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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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THANK YOU