The Trust was established by the South Australian Housing Trust Act 1936 to administer the Act. The Trust also administers the Housing Improvement Act 1940.
The South Australian Housing Trust Act 1995 repealed the South Australian Housing Act 1936 and amended the Housing Improvement Act 1940. It provides for the continuation of the Trust and for the Trust to continue to undertake, as the principal provider of public housing in the State, the following functions:
In addition, the Trust administers a range of programs related to housing on behalf of the Government with respect to which the Trust receives direct capital and recurrent grant funding. The range of programs administered is detailed in Note 13 to the Trust’s financial statements.
The South Australian Housing Trust Act 1995, subsection 27(2), requires the Trust to keep proper accounting records, and to produce financial statements, in respect of each financial year. Subsection 27(4) of the Act requires the Auditor-General to audit the accounts and financial statements.
The Auditor-General is not the auditor of the Trust’s joint ventures but has obtained sufficient information and explanations to rely upon the work of the external auditors as appointed by the joint ventures in accordance with joint venture agreements. Where audited joint venture accounts were not finalised at the time of completing the Trust’s financial statements, joint venture management accounts have been relied on, in conjunction with enquiries to the joint venture external auditor.
The audit program covered all major financial systems and was directed primarily towards obtaining sufficient evidence to enable audit opinions to be formed with respect to the Trust’s financial statements and internal controls.
During 2000-01 specific areas of audit attention included:
Systems operations and activities undertaken by the Department of Human Services on behalf of the Trust, including Accounts Payable and Payroll processing, were also reviewed during the year.
Reliance was placed on the work of internal audit in assessing the effectiveness of the Trust’s internal controls. Specific areas in which reliance was placed on internal audit work included the activities undertaken at Regional Offices.
During the year letters communicating issues arising from the audit were forwarded to the Trust and satisfactory responses were received.
The Trust is required by the Treasurer’s Instructions to implement the Financial Management Framework. The review of controls in operation at the Trust indicate that the prescribed elements of the Financial Management Framework have received adequate attention by the Trust. The following provides an overview of key areas of the Trust’s control environment relevant to the Financial Management Framework.
The Trust has established Risk Management programs which continued during the year. A Risk Management Committee comprising senior managers has direct responsibility for oversight of the Risk Management function and is supported by staff from the Department of Human Services’ Risk Management group.
During the year the Trust updated its risk management procedures and practices to match the framework and policies adopted by the Department for application throughout the Human Services Portfolio.
The Trust Board has an Audit Committee comprising members of the Board and an external adviser. Trust executives, Internal Audit staff and representatives of the Auditor-General attend Audit Committee meetings. The Audit Committee meets on a regular basis to review progress in addressing the Trust’s Internal Audit Program, the outcomes of specific reviews completed, action taken with respect to previous findings and other relevant matters which emerge.
Management of the Trust’s Internal Audit function is undertaken by Department of Human Services staff under a Service Level Agreement between the Trust and the Department. Specific Internal Audit assignments are performed either by Departmental staff or by external contractors from a panel of approved service providers.
The Trust supplements the work of Internal Audit with a program of self assessments which provides for the checking of processes undertaken by the Trust’s regional staff. The self assessment programs cover the core business activities of Public Housing, Private Rental programs and Maintenance with the outcomes of reviews being reported upon to the Audit Committee. The integrity of the self assessments programs is reviewed and reported upon by Internal Audit.
The Trust undertook a review of the self assessment program during 2001 and has developed a range of recommendations to ensure the program appropriately reflects changes to Trust operations since it was implemented in 1998 and to improve its effectiveness.
The Rent Rebates provided by the Trust are a significant element in its program of providing housing assistance to those in housing need. The value of rebates for the year to 30 June 2001 was $124.6 million ($116.7 million) of which $36.2million is provided to the Trust as grant funds and the balance represents foregone revenue to the Trust.
The Trust has established policies and procedures which define a tenant’s entitlement to and the amount of a rebate. Key determinants are the tenant’s household income and the household composition. The process of assessing a tenant’s entitlement to a rent rebate involves the tenant providing relevant information to the Trust.
The challenge being addressed by the Trust is verifying information provided by tenants including income and household composition and in obtaining assurance that any change in a tenant’s circumstances are advised to the Trust. It is acknowledged that the Trust faces some difficulty in detecting undisclosed income or false details of household composition.
In recent years this report has identified initiatives which address this matter and has reported on action by the Trust to implement the initiatives. The following updated information is provided.
Obtaining proof of income on a periodic basis is considered by Audit to be an important step in confirming tenants’ ongoing entitlement to rent rebates.
Arrangements for obtaining proof of income from tenants were reviewed by Audit as part of the evaluation of controls over the Trust’s rent management system. Audit concluded the process for obtaining proof of income was sound and recommended the Trust implement formal reporting arrangements to the Audit Committee upon the outcomes of the work performed. The Trust has undertaken to do this.
The Trust undertook a review of the Home Visits program in August 2000. The review supported the continuation of the program and identified a number of recommendations to facilitate and enhance its effectiveness. The primary recommendation was that the objective of the program be clarified to ensure it was seen primarily as an opportunity for the Trust to improve communications with tenants and with an emphasis on improving service to tenants.
A high proportion of Trust tenants and other benefit recipients receive benefits from a Commonwealth agency, Centrelink. As part of Trust processes for verifying these tenants’ incomes, and hence their entitlement to rebated rent, the Trust obtains details of the tenants income from Centrelink. Existing processes require provision of documented proof of income by Centrelink to the tenant who then provides that documentation to the Trust.
The Trust, Centrelink and other State Housing Authorities have identified the benefit of automating the exchange of information regarding tenants’ income between the Commonwealth and Housing Authorities. Audit understands that there has been ongoing discussion between officers of the State Housing Authorities and Centrelink and that in January 2001 Centrelink had implemented a capability to provide required information to the State Housing Authorities. It is further understood that the Trust will develop its system capacity to use the data provided by the Commonwealth as part of a redevelopment of its Homes system.
In 1999-2000 Audit reviewed the Trust’s arrangements for management and control of Capital Projects. The review identified a concern that the Trust had not obtained required Cabinet approval for capital projects.
In responding to this finding in 1999-2000 the Trust indicated it would seek clarification from the Department of Treasury and Finance as to the practical application of relevant requirements. The Trust has subsequently advised that it has implemented a process of obtaining Cabinet approval as required by the Treasurer’s Instructions.
As required by subsection 36(1)(a)(iii) of the Public Finance and Audit Act 1987,the audit of the South Australian Housing Trust included an assessment of the controls exercised in relation to the receipt, expenditure and investment of money, the acquisition and disposal of property and the incurring of liabilities. The assessment also considered whether those controls were consistent with the prescribed elements of the Financial Management Framework as required by Treasurer’s Instruction 2 ‘Financial Management Policies’.
Audit formed the opinion that the controls exercised by the South Australian Housing Trust in relation to the receipt, expenditure and investment of money; the acquisition and disposal of property; and the incurring of liabilities, were sufficient to provide reasonable assurance that the financial transactions of the organisation were conducted properly and in accordance with the law.
The Trust has continued to experience a high level of demand for its rental accommodation as it received 9388(9967) applications for tenancies and was able to house 4050 (3793) new tenants during the year. The level of applications received, and new tenants housed, compares to the level of housing stock which was 51251 (53310) at 30June2001.
The trend identified in previous years, for a higher proportion of Trust tenants to be eligible for reduced rent due to low income continued and, at 30June2001, 39 977 (41 998) tenants or 82.4 percent (84percent) of all tenants were eligible for rent rebates.
Trust Rental Income
The number of Department of Human Services’ employees assigned to the Trust at 30June2001, expressed as full time equivalents was 624.7 which compares to 622 staff as at 30June2000.
The Trust’s recurrent expenditure with respect to grant-funded programs was $26.4million ($30.3million) reflecting direct expenditure on the programs of $14million ($18.8million) and administration costs of $12.4million ($11.5million).
The overall reduction in the Trust’s expenditure on grant funded programs was principally due to the reduction in expenditure on the Rural and Remote Housing program following the transfer of this program to the Aboriginal Housing Authority in February 2000, reduced expenditure on rent relief following the closure of this program to new claimants, offset by increases in the Private Tenant Support programs.
The Private Tenant Support programs include a bond guarantee scheme which provides for the Trust to guarantee payments to landlords in the event of a claim against a bond. The Trust’s contingent liability with respect to Bond Guarantees increased by $574 000 to $9.9 million as at 30 June 2001.
The two programs with respect to which the Trust incurs the largest expenditure are the Private Rental Assistance Program (PRAP) and the Rent Relief Program (RRP) which both provide support to tenants who are not placed in Trust accommodation. The following graph shows the changing level of grant funded spending.
PRAP and RRP Grants
The RRP provides assistance to tenants in private rental accommodation, who are experiencing financial difficulty, by payment to tenants, of amounts up to $25 per week. The number of recipients of assistance for the year to 30June2001 was 5054 (19881), a significant reduction of 75 percent from the previous year. This material reduction in the number of beneficiaries followed changes to policy which limit entitlement to rent relief.
The PRAP assists people to establish themselves in privately owned rental accommodation by providing a counselling service to help locate suitable accommodation; financial assistance to tenants with respect to security bonds and rent in advance; and short term emergency accommodation in Trust houses.
The Trust, in recent years, has sought to reduce its debt funding with an emphasis on repayment of debt which was not advanced at concessional rates. In 1999-2000 the Trust repaid the last of its non concessional debt. The following graph demonstrates the ongoing reduction in Trust indebtedness over the past five years, the significant level of concessional loans received by the Trust in the past, and the impact of reduced indebtedness upon the Trust’s interest expense. The base year for calculation of the percentage trend is 1994-95.
Indebtedness and Interest Expense of the Trust
*includes Treasurer’s Guarantee Fee
The Trust has responded to changes in demand for housing, the need to quit housing stock which is of inappropriate amenity or involves high levels of maintenance by establishing annual targets for house sales. The following graph depicts the level of house sales and the offsetting acquisitions of houses, over the past five years to demonstrate the net impact of house sales on the level of Trust housing stock. Stock reductions through sales have been supplemented by transferring assets to other State Housing agencies.
As a consequence of adopting this strategy the Trust’s housing stocks have fallen from 62322 dwellings at 30June1994 to 51 251 dwellings at 30 June 2001.
The level of sales in the past and in the current year have been significantly influenced by specific developments. In 1995 the Trust sold 333 houses to the Defence Housing Authority and in 2000 transferred 1790 properties to the South Australian Aboriginal Housing Authority.
