Opposition parties warn that huge underspending in the current City of Cape Town budget points to a "city in crisis".
|||Cape Town - As the City of Cape Town prepares to finalise its R31-billion budget on Wednesday for the 2013/14 financial year, the main opposition ANC warns that huge underspending in the current budget points to a “city in crisis”.
The financial year ends on June 30, but the city has spent only R3.6bn of its R6.2bn capital budget, which is used for council infrastructure.
ANC chief whip Xolani Sotashe says the city’s move to cut the capital budget to just R5.4bn for the next financial year is an acknowledgement that it lacks the capacity to spend its budget.
The “cold war” within the DA’s leadership and caucus was affecting the ability of staff in the city to deliver on its mandate. “There is poor leadership and this leads to poor planning by the administration.”
Yet, despite this underspending, the city had increased its operating costs for the day-to-day running of the city from R23bn to R26bn.
But Brett Herron, acting mayoral committee member for finance, said the ANC had misunderstood the budget.
“Last year, the city, in agreement with the National Treasury, rolled over in excess of R1bn of conditional grant funding related to transport projects. This was for projects already contractually committed to.
“These funds have now been spent and are therefore not reflected in this year’s budget. Even excluding these funds, the city’s capital budget has still increased in real terms. It is important to note that the city spends one of the highest percentages of any metro in the country on capex, as part of our commitment to infrastructure-led growth,” Herron said.
While Sotashe expressed doubt that the city would be able to spend its remaining capital budget before the end of June, Herron said it was too early to determine what the city’s final expenditure would be.
The city had to increase its operating costs for the 2013 financial year because of factors beyond its control. These included fuel costs, Eskom tariffs and multi-year wage agreements.
“Critically, the city also prioritises expenditure on repairs and maintenance, at a level higher than inflation.”
Sotashe said the transport directorate got the lion’s share of the last capital budget with R2.6bn, but had only managed to spend R1.4bn. The capital budget for 2013 has been reduced to R1.4bn.
Social development received the smallest budget allocation in 2012, but could only spend 28 percent of it, Sotashe said. “It is a disgrace.”
Herron acknowledged that this department had underperformed for “a range of historical reasons”, but added that improvements to the way it functioned would ensure it delivered on its mandate.
ANC councillor Bheki Hadebe said the MyCiTi bus service was running at an annual deficit of R32 million, but had cost the city R35m in operating costs in 2012. “This service can’t sustain itself.”
ANC councillor Peter Gabriel described the 2013 budgets for safety and security, social development and economic development as “inadequate”. He said crime was the top issue raised during meetings with communities, and the R67m allocated would not be enough to beef up the metro police.
New policies for youth development and to deal with substance abuse would come to nought because social development was not being allocated enough money, he added.
Hadebe questioned the R222m proposed spend on consultants in the 2013 financial year and the allocation of almost a third of the budget to contracted services. “This is a clear indication this is not a well-run city.”
The city had seen a steady increase in employee-related costs, he said, yet it could not spend its budget.
Herron said: “Like all governments, the city uses consultants for the rollout of complex technical projects. For example, the implementation of the IRT requires engineers, architects, quantity surveyors and a range of other professional services. This expenditure therefore improves service delivery.
“The finances of the City of Cape Town are widely regarded as the best run in the country. This is attested to by the fact that we have received eight successive unqualified audits and have been awarded the highest possible credit rating by Moodys.
“Given the financial mess in most ANC-run municipalities, they would be well advised to sort out their own problems before misleadingly attacking the DA-run City of Cape Town.”
Cape Argus