Monitoring the right of access to adequate housing in South Africa

Data contributed by: Studies in Poverty and Inequality Institute

Sufficient budget allocations are imperative in fulfilling government's obligation to ensure the progressive realisation of socio-economic rights. It is equally as important for government to utilise these resources efficiently and for their intended purpose. This requires planning and institutional capacity in order to deliver on mandates and targets. Therefore, spending needs to be effective and through budgetary allocations, tangible outcomes or improvements must be achieved. Finally, resource allocation should be linked to equity, with the needs of the most vulnerable prioritised in order to reduce disparities.

We analyse the allocation and expenditure trends of the Department of Human Settlements over a five-year period, therefore 2012 and 2017, at all three levels of government in order to interrogate the reasonableness of government’s budgeting for the right to adequate housing.

Data is drawn from National Treasury documents- Estimates of National Expenditure- and departmental documents, such as annual reports.

Methodology Used in Gathering and Analysis

Inflation is the term used to describe general increases in the prices of goods and services in the economy over time. Inflation erodes the value of money because rising prices mean that R1 today buys you slightly more than R1 tomorrow. Departmental Annual Reports and Treasury documents tend to only provide the nominal amounts allocated in the budget each year, unadjusted for the effect of inflation. This makes comparing spending patterns over time difficult as the value of the amounts allocated in previous years (i.e. what they can buy) has changed. Therefore, when conducting an analysis of government budgets over time, it is important to take the effects of inflation into account. Converting nominal amounts to real amounts equalizes the value of money for each year under review, and therefore allows us to compare much more accurately the amounts allocated in the budget for different years.

In South Africa, the most widely used measurement of general inflation is the Consumer Price Index (CPI), which is tracked by Statistics South Africa (StatsSA). Adjusting the nominal amounts provided in the Estimates of National Expenditure and DHS annual reports to real amounts requires us to make a calculation using ‘inflators’ which are based on the annual CPI inflation rate provided by StatsSA. The CPI inflation rate and inflators used in this budget analysis to convert nominal amounts to real amounts are shown below. 2017 was used as the base year, hence all amounts in this chapter have been adjusted to 2017 prices.

The nominal figures (which have been converted into real figures for the purposes of this paper) are drawn from National Treasury’s 2015, 2016, and 2017 Estimates of National Expenditure (ENE). The ‘adjusted appropriation’ figures provided in the ENE are used as a proxy for national programme allocation figures in this report, while the ‘audited outcome’ figures represent national programme expenditure figures. It must be noted that there are currently no expenditure figures for the 2016/17 financial year.

However, the DHS’ annual reports (2012/13 – 2015/16) are used as sources for allocation and expenditure trends with regard to the sub-programmes under Programme 4 (Housing Development Finance). Neither the ENE publications nor annual reports provided data for the 2016/17 financial year in this regard.