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Presentation to Portfolio Committee on Human Settlements On Department Of Human Settlements 2011/12 Annual Performance And Audit Outcomes

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Title: Presentation to Portfolio Committee on Human Settlements On Department Of Human Settlements 2011/12 Annual Performance And Audit Outcomes


1
Presentation to Portfolio Committee on Human
Settlements On Department Of Human Settlements
2011/12 Annual Performance And Audit Outcomes
  • 9 October 2012

2
Presentation outline
  • An overview of the National Department of Human
    Settlements (NDHS) Strategic Plans in 2011/12
  • Overview on the NDHS achievements/actual delivery
    in 2011/12
  • Financial analysis
  • Audit Outcomes Issues raised by the AG
  • How to ensure continuous improvement
  • Progress with the implementation of FFC past
    recommendations
  • Conclusion and issues for the Committees
    consideration

3
Overview of NDHS Strategic Plans in 2011/12
  • In terms of the outcomes-based approach of
    government, HS is outcome 8 (sustainable human
    settlements and improved quality of household
    life)
  • The following measurable outputs with targets are
    envisaged over the medium term
  • A target of 220 000 housing units per year
  • Support, assess and monitor development of 20 000
    public rental housing units in provinces towards
    2014
  • Upgrade informal settlements and proper services
    and land tenure to 400 000 households by 2014
  • Assemble and acquire 6 250 hectares of
    well-located state-owned land for low-income and
    affordable housing
  • Supply affordable housing finance to 600 000
    households in the gap market

4
Actual Delivery in 2011/12
  • On the target of 220 000 housing units from 2010
    to 2014
  • The actual number of housing units delivered is
    not contained in the Annual Report (difficult to
    determine whether the target has been
    achieved/not)
  • However by December 2011, the number of housing
    units completed and under construction was 88 441
    (for three quarters) therefore unlikely that
    2220 000 units have been delivered for 2011/12
  • Furthermore, the actual delivery has never
    reached 220 000 units since 2007/08 as shown
    below
  • Hence the FFC is of the view that annual
    performance targets need to be reviewed

Indicator 2007/08 2008/09 2009/10 2010/11
Number of housing units completed 146 465 160 403 161 854 121 879
5
Actual Performance...
  • For 2011/12, the target was to support the
    development of 20 000 units
  • Less than half of this target was achieved as 5
    813 units were delivered
  • Reason given for failure is limited funding,
    delays in plan approval and land release
  • Upgrade informal settlements and proper services
    and land tenure to 400 000 households by 2014
  • No annual target for 2011/12
  • Actual performance not provided in the Annual
    Report
  • Assemble and acquire 6 250 hectares of
    well-located state-owned land for low-income and
    affordable housing
  • A total of 13 598 hectares were formally
    submitted for release (hectares actually acquired
    not reported)
  • Actual performance not reported the target to
    supply affordable housing finance to 600 000
    households in the gap market

6
Financial Analysis - Expenditure Outcomes 2011/12
Programme Allocation (R000) Expenditure (R000) () Spent
Administration 222 111 167 552 75,4
Housing Policy, Research Monitoring 39 442 32 954 83,6
Housing planning delivery Support 200 011 187 350 93,7
Housing development Finance 22 197 499 22 105 620 99,6
Strategic Relations and Governance 166 478 105 444 63,3
Total 22 825 541 22 598 920 99,0
7
Expenditure Outcomes...
  • In general, the departments spending is good
    (99 of allocated funds)
  • However, a closer look at expenditure per
    programme shows under-spending on four of five
    programmes (ranging from 6,3 to 36.7)
  • While under-spending on programme 4 (Housing
    Development Finance) is 3,4, a major concern is
    on RHIG with a high under-spending since its
    establishment in 2010 and with more than half of
    what has been spent occurring in March
  • Where only R187,3 m (73) of R257,5 m allocated
    was spent
  • Recommendations on how to improve performance of
    RHIG are presented later

Financial Year Allocation (R000) Amount Spent (R000) Percentage spent by March
2010/11 100 66.7 33
2011/12 257.5 187.3 72
8
Expenditure Outcomes...
  • An amount of R3m is provided for closure of SHF
    which was spent. It is, however, reported that
    this money was not required
  • Raises questions on the planning and costing of
    activities (financial and fiscal implications not
    properly done)
  • With regards to the grants
  • In general, the spending on HSDG is 99 of
    allocated funds

Province Percentage of allocated funds spent
Eastern Cape 82
Limpopo 83
Free State 99
All others 100
9
Expenditure Outcomes...
  • Unlike in 2010/11, 100 spending by 6 provinces
    has been achieved without shifting funds between
    provinces
  • Concerns are on the EC and LP with 82 and 83
    spending respectively due to a number of reasons
    including
  • Unavailability of bulk infrastructure and
    serviced sites
  • Cash flow problems
  • Lack of capacity

10
Expenditure Outcomes...
  • On the Housing Disaster Relief Grant the spending
    has been very poor as only 18 was spent by
    provinces (R33 212 000 of R180 000 000)

Province Amount transferred (R000) Amount spent (R000) Percentage spent
Eastern Cape 56 700 0 0
Free State 44 100 16 631 38
Gauteng 36 0 0
KwaZulu-Natal 31 140 3 503 11
Limpopo 21 474 0 0
Mpumalanga 360 360 100
Northern Cape 10 350 10 350 100
North West 15 840 2 368 15
Total 180 000 33 212 18
11
Expenditure Outcomes...
  • On the USDG, 44 (which is R2,7 billion of R6,2
    billion allocated) has been spent up to 31 March
    2012
  • Spending ranges from 37 (Nelson Mandela metro) -
    81 (Buffalo City)
  • Though this reported expenditure is 3 months
    before the end of municipal financial year,
    municipalities are unlikely to be able to spend
    remaining 56

Municipality Funds allocated and transferred (R000) Funds spent Percentage spent percentage of total amount
Buffalo City 423 446 796 99 19
Nelson Mandela 502 626 314 922 63
Mangaung 411 995 163 153 40
Ekurhuleni 1 094 276 504 305 46
City of JHB 1 027 970 470 176 46
Tshwane 891 081 349 874 39
eThekwini 1 091 574 558 323 51
City of Cape Town 824 030 287 972 35
Total 6 266 998 2 728 424 44
12
Audit Outcomes Issues raised by the AG
  • The AG raised a number of issues
  • Material under-spending on RHIG
  • Under-spending of R70 155 000 of R257 508 000
    allocation - the Department has not achieved
    some of its objectives on sanitation to rural
    communities
  • Performance indicators not well defined in some
    cases
  • A total of 22 of the indicators relevant to
    programme 2, 3 and 4 not well defined in that
    clear, unambiguous data definitions were not
    available to allow for data to be collected
    consistently
  • Performance targets not clearly specified in some
    instances
  • A total of 27 of the targets relevant to
    programme 2, 3 and 4 are not specific in clearly
    identifying the nature and the required level of
    performance
  • Performance targets not measurable
  • Required performance could not be measured for a
    total of 28 of the targets relevant to programme
    2,3 and 4
  • Some planned targets not achieved during the year
    under review (23)

13
How to ensure continuous Improvement
  • Issues raised by the AG are as a result of
  • None compliance with the National Treasurys
    Framework for Managing Programme Performance
    Information (FMPPI) and
  • Lack of monitoring and evaluation role that the
    NDHS should play in the sector
  • The NDHS should strengthen its monitoring and
    evaluation role within the sector
  • In some instances, targets are only set for the
    MTEF
  • There is need for a further break down of targets
    per annum
  • Variances between targets and the actual
    performance in some instances are reported
    without reasons provided, this could be
    interpreted as poor understanding of underlying
    reasons
  • Reasons for such discrepancies need to be
    researched and understood
  • This will assist to develop solutions and avoid
    under-spending in future
  • MTEF targets could be revised annually based on
    available funding and associated costs of
    providing a service in order for targets to
    remain realistic

14
Progress With Implementation of FFC Past
Recommendations
  • The FFCs previous work has revealed that the
    current institutional arrangements, funding and
    some of the policy issues relating to the
    delivery of housing have to reviewed
  • As a result, the FFC has made a number
    recommendations pertaining to policy (especially
    acceleration of accreditation of municipalities
    based on their capacities to administer housing
    programmes), funding and institutional issues
    over the past years
  • Under-spending in some instances results from
    institutional issues and the flow of funding and
    this shows that some institutional issues are not
    yet resolved for example under-spending on
    human settlements development grant in the EC
    (82) and LP (83 ) is attributed to some extent
    to these institutional issues

15
Progress with the implementation of the FFC past
recommendations
  • Progress on accreditation recommendation
  • Accreditation of municipalities has been very
    slow over the year and the NDHS has an intention
    to go beyond just accreditation to shift housing
    function to six metros (Ekurhuleni, Tshwane,
    Johannesburg, eThekwini, Nelson Mandela Bay and
    Cape Town) by 2014
  • Implications of housing function shift to
    metros
  • Housing function shift goes beyond
    accreditation as it involves a permanent
    devolution of housing function to affected
    municipalities
  • Affected municipalities will be fully responsible
    for the overall housing function including direct
    flow/ allocation of funding
  • Improve the ability of municipalities to increase
    opportunities for the application of innovative
    planning , coordination and also to improve
    accountability
  • Shifting housing function from provinces to
    municipalities will have implications on assets,
    liabilities and personnel

16
Progress with the implementation of the FFC past
recommendations
  • FFC is involved in the process housing function
    shift as required by various pieces of
    legislation including the FFC Act of 1997
  • (2A) (a) in particular requiring an organ of
    state in one sphere of government which seeks to
    assign a power or function to an organ of state
    in another sphere of government in terms of a law
    to first, before assigning the power or function
  • Notify the FFC of the fiscal and financial
    implications of such assignment on the future
    division of revenue
  • Request the FFC recommendation regarding such
    assignment

17
Progress with the implementation of the FFC past
recommendations
  • An initial meeting on the housing function
    assignment was held by the NDHS and the FFC in
    April 2012
  • A technical task team to work on housing function
    was established (consists of FFC, National
    Treasury and NDHS)
  • A formal letter from the Minister of HS was
    received on 18 June 2012 and the FFC is required
    to make its submission within 180 days (by
    mid-December 2012)
  • There are some delays encountered in this process
  • For example the NDHS is yet to finalize a number
    of activities (formal consultations with
    affected municipalities, implications of function
    shift on personnel and assets as well as
    financial implications)
  • It was indicated that some of this work will take
    time and this include personnel and financial
    implications

18
Progress with the implementation of the FFC past
recommendations
  • Consideration should be given to link new housing
    subsidies with MIG and LES formula to ensure that
    the LES allocations keep pace with the
    installation of new housing infrastructure among
    other things
  • One of the technical indicators under the
    strategic outcome-oriented 2 is to facilitate
    stronger alignment between the MIG and human
    settlements development

19
Progress with the implementation of the FFC past
recommendations
  • Government should actively and specifically
    pursue development of a more spatially compact
    urban form for cities, by developing and adopting
    appropriate policies and financing instruments
  • This has also been emphasised in the National
    Development Plan
  • The NDHS has set more efficient land utilisation
    as one of strategic outcome-oriented goal
  • In practice - there are initiatives already with
    recent launch of 512 newly build flats for the
    residents of Jabulani Hostel in Soweto

20
Conclusion and Issues for the Committees
Consideration
  • Overall spending in 2011/12 has slightly improved
    by 0,2 compared to 2010/11 financial year
  • Concerns on Housing Policy, Research and
    Monitoring programme as well as Strategic
    Relations and Governance as they under-spent by
    16,4 and 36,7 during the period under review
  • But there is a slight improvement compared to
    2010/11 where under-spending was 25 and 40
    respectively
  • The FFC has itself raised concerns on the overall
    performance of RHIG during this year and has put
    some recommendations which include
  • A review of grant design - with a view to make it
    flexible and where necessary and cost effective,
    repair and maintenance should be considered a
    priority
  • Introduction of termination Clauses - A
    termination clause be inserted in all contracts
    in to manage poor performance
  • Monitoring and evaluation - The NDHS needs to
    strengthen their capacity to manage and monitor
    the RHIG

21
Conclusion and Issues for the Committees
Consideration
  • Development of the monitoring system for
    verification of housing projects delivered in all
    provinces by instrument needs to be emphasized to
    improve reporting
  • Issues raised by AG are issues of compliance with
    the FMPPI that requires the NDHS urgent attention
  • The NDHS needs to strengthen its monitoring and
    evaluation role not only on human settlements
    grants and the development finance institutions
    but the sector as a whole
  • Making both financial and non-financial
    performance data easily accessible
  • In general, reporting format makes it difficult
    to understand the actual delivery in some
    instances for example hectares formally submitted
    for release vs assembled and acquired, this needs
    to be improved

22
Conclusion and Issues for the Committees
Consideration
  • Development finance institutions are segregated
    and are not providing sufficient bridging finance
    to speed up the delivery of low-income housing
  • Need to enhance coordination in order to address
    the scale of the housing requirement
  • Review of housing needs and financing mechanisms
    to ensure that development finance functions are
    appropriately institutionalised and evolve over
    time

23
  • Thank you.

Financial and Fiscal Commission (FFC) Montrose
Place (2nd Floor), Bekker Street, Waterfall Park,
Vorna Valley, Midrand, Private Bag X69, Halfway
House 1685 www.ffc.co.za Tel 27 11 207
2300 Fax 27 86 589 1038
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