In May this year, when the draft budget was presented for adoption, speaker after speaker for the DA praised how faultless the process had been and how perfect the budget was.
Any shortcomings raised by other political parties were fobbed off as grandstanding and petty politicking, or glossed over with assurances and reassurances.
The impression being created was that the 2015/16 budget was the epitomy of perfection, caringly considering everyones concerns and needs, skilfully meeting every legal expectation and perfectly balancing income pressures with increasing expenditure.
At that meeting, and on behalf of the ACDP, I raised concerns about the increasing pressure on the City’s traditional revenue streams because of reduced demand and increased unaffordability of service charges to our ratepayers.
Since 2006/7, revenue from rates has increased by 150%, electricity has increased by 400% and Water has increased by 150%. These massive pressures on our ratepayers show in the increasing levels and frequency of debt arrears and write-offs.
The ACDP forecast that within 3 months, Council would be presented with a plea for further funding and sure enough, just 2 months later, we were presented with a report appealing for permission to raise a further R2 billion long term loan – over and above the R7bn already loaned and that will only be paid back in 14 years time.
Then when council considered the loan, the ACDP appealed that instead of loaning even more to fund its capital programme, the City should rather be rephrasing some projects to start in later years and cancelling others that are non-essential, but this was ignored as we see today. We reiterated a concern first raised in 2007 that long term loans such as these would be a massive burden on future generations as councils disposable budget in 10 to 20 years time will be constrained because of our exorbitance.
Today we are presented with an adjustment budget, a mere 3 months into the year, confirming to us once again that the budget adopted in May was not as perfect as it was presented to be.
Since the year 2000, this is only the second time an adjustments budget is being presented to Council as early as August. Whilst this can be seen as a positive, it also raises concerns about the original budgeting process.
The ACDP is not against adjusting the budget during the year. In fact we have repeatedly said it’s often a healthy sign of a government responding to changing circumstances that are inevitable, trying to get the most value for ratepayers and a sign it is determined to spend its available budget to benefit ratepayers.
When looking at the actual reasons given for the adjustments budget, we see yet again, that roll overs from unfinished projects in the 2014/15 financial year equate to R315 million.
Last year August, council approved roll overs of Capital Grants and Donations amounting to R223 million. This year it has increased to R315 million, a 45% increase.
How is it possible, with all the monitoring reports that council, Mayco, the portfolio committees and sub-councils receive monthly and quarterly, that there is an increase in roll overs?
Who was being economical with the truth in those reports we all received?, when 3 months before year end, officials insisted that all projects in their control would finish on time, within budget and according to specification?
The reasons given in the report before us for these roll-overs point to the very same causes of previous years roll-overs – showing that very little is being learned and perfected each year.
The reasons given include:
- Supplier / contractor / vendor underperformance
- Disputes between the City and suppliers or contractors
- Procurement delays
- Supplier guarantees not in place in good time
- Exchange rate fluctuations
- Supplier out of stock
- Supplier delivered late
- Delays in the finalisation of project specifications
- Contractor poor performance.
While we agree that these are the causes, the fact is that all of these point to poor project management by the administration.
None of these problems could possibly take a year to resolve
3 or 4 months maybe, 6 months on the outside
This means that projects started late even though council approved the budget in May last year.
Speaker something has to be done about this – our officials need to be trained and retrained on project management and it needs to become part of the job specifications of our senior management. Projects performed by external contractors need to start in July not in January, and suppliers should receive our orders 3 months earlier than now.
Nonetheless, the ACDP supports the adjustments.