Speech on City of Cape Town Budget (2017/18)

This is the speech I delivered in the City of Cape Town Council meeting.  Allocated time = 5 min. Cape Town remains an unaffordable city to live in. While the ACDP supports the budget, I raised 8 problems the City (the municipality) has: Research and Planning; Staff; Debt; Compliance; Customer Satisfaction; Priorities; Planning and Implementation.

The ACDP fully supports the proposal to end the free basic services to all customers – and making it only applicable to indigent customers.  We also fully support the proposed 19,5% increase in consumptive water and sanitation tariffs.

Furthermore, we agree with the Mayoral Committee that implementation of the electricity Home User Tariff, be delayed for a year.  Given the massive public outcry against it, we are pleased that the Mayoral Committee has softened the blow in this way, after creating the outcry in the first place with its reckless and insensitive proposal.

Simply put, Cape Town is already an unaffordable city to live in and this home user tariff would have caused financial chaos in hundreds of thousands of households in Cape Town, particularly for pensioners and all those who have already reduced their electricity consumption to barely affordable levels

I now want to highlight just 8 of the problems the City has:

  1. This city has a research and planning problem:

We seriously wonder if the person who wrote the section on the economic outlook and external factors influencing the budget, has misread what the Bureau for Economic Research has forecast and/or not watched the news since March when the same section was tabled in the first draft

The BER most recently reported that its factored cabinet reshuffle on March 31, the subsequent credit rating downgrades into the outlook and said “These developments will undoubtedly further constrain the medium-term prospects for the SA economy. we now expect almost no increase in SA per capita GDP over the next six years and slippage on fiscal debt metrics.”

But not the writer – who felt it prudent to simply copy and paste the entire section from the March draft budget to the May budget, leaving the entire section largely unchanged, thus ignoring almost everything that’s happened since March and the impact on our economy (cabinet reshuffle, the GM announcement, ratings down grade, etc)

If the City is relying on this level of non-research to position this draft budget correctly, then we have a serious problem.

  1. The City has a staff problem:

The ACDP notes National Treasury expects no more that 30% of operating budget be spent on employee costs and remuneration.

Yet in this budget, the City already exceeds that level, currently sitting at 31% and projecting to further exceed it in the outer years to 32%, rather than reducing it, by further growing employee costs and remuneration.

We note that no plan is presented to rectify this in the next 3 years.

This is not responsible or sustainable, and flies in the face of NT expectations of constant management of staff, improved productivity and performance feedback to staff, and ignores the 30% limit NT has set.

  1. The City has a debt problem:

National Treasury also expects every effort be made to recover debt before write off – yet according to the audited financial statements, the City writes off well over ½ a billion Rand in bad debt annually.

The NT also expects the City to avoid excessive use of debt collectors.  But this City loves using ineffective and costly debt collectors.  The Audited statements for the past 3 financial years confirm that the City is projected to spend 22% more in 2016/17 than it did in 2013/14.

Yet consumer debtors has increased by 41% since 2013/14 and debt impairment has increased by 17% over the same period.

The R205 million spent in 2016/17 on debt collectors is hardly well spent if debt impairment and consumer debtors is increasing more than the expenditure on debt collectors.

  1. This City has a compliance problem:

The ACDP notes with interest the contents of the National Treasury circular 82 that was first published in March 2016, and that focusses on cost containment measures on excessive and wasteful expenditure.  It is patently clear to us that the City conveniently selects which aspects to implement and which to ignore.

Circular 82 calls for, among others, the immediate curtailment and cost cutting of overseas trips.

Yet at every council meeting we are given a list of overseas trips and their costs, many of which run into hundreds of thousands of Rands – the Mayor herself being the most prolific globetrotter, spending well over R2 million in one series of overseas trips late last year.

We note too that NT expects municipal or provincial government facilities to be used for conferences, meetings, strategic planning sessions etc, rather than holding these events at expensive private venues.

But the DA ignores this by spending over R414,000 going to a fancy hotel conference venue in Gordons Bay at ratepayers expense for its party caucus strategy session in November last year – this after receiving the NT circular, and clearly ignoring it.

  1. This City has a customer satisfaction problem:

The Citys Annual Customer Satisfaction Survey asks the question if its customers are happy with the level of service from the City.

The audited financial results are very telling. This year will be the third straight year of decline – from 3.1 out of 5 in 2014/15 to 2.8 in 2016/17.

There is never any mention of why the decline is happening. Instead ratepayers face a barrage of praise singing, smoke and mirrors by this government – pretending that everything is fine when we know its not.

Today then, adding further smoke and mirrors to distract our customers from the worsening reality, we see two heritage proposals that the City cannot afford but will pursue anyway.

Mr. Mandela himself lived a life in service to the people rather than in service to himself and his name.  Clearly then, the proposal to spend R4,4 million over 3 years on a statue and another R3 million this year on an exhibition is less about Mr. Mandela than it is about DA election campaigning.

The ACDP believes the best way to honour Mr. Mandela is to serve the poor with that R7,4 million – give them water security or improve their safety and security.

  1. This council has a priorities problem:

From the corporate score card, the number of water service points provided to informal settlements is reduced this year, to 50% below the KPI baseline set 2 years ago (2014/15), and that baseline will not be exceeded in the next 3 years.  So it will take 5 years to deliver what it did in 2014/15.

Some ward councilors are spending R40,000, even double that, on a single lunch time banquet for senior citizens when what those senior citizens actually need are sustained services over the year.

This is also in clear contravention of the NT circular on cost containment measures that prohibits lavish expenditure on once-off functions and catering.

  1. The City has a planning and implementation problem:

In this current financial year, council budgeted R315 million of Capex for new water infrastructure assets.  This was adjusted downwards by R38 million to R277 million and it is projected to only spend R254 million, R23 million less than the downward adjusted budget and R61 million less than originally budgeted – yet we have a worsening water crisis.

The Audited financial statements confirm this department spent nothing on renewal of dams and reservoirs water infrastructure in 2013/14 and 2014/15, then suddenly R134 million in 2015/16 before crashing to only R31 million this current year – yet we have a worsening water crisis.

And its spending less this year on Repairs and Maintenance on dams and reservoirs than it did last year – yet we have a worsening water crisis.

We also note, when comparing the March draft budget and todays final draft, that while our water crisis was worsening, planned Capital expenditure on renewal of existing water supply infrastructure assets in 2017/18 was reduced from R296 million to R260 million and from R329 million to R317 million in 2018/19. Total upgrading of water supply infrastructure assets was reduced from R147 m to R122 m.

Furthermore, the budget for the water meter replacement programme was reduced from R250 m to R235 m, increasing the risk of water losses and revenue losses.

The ACDP applauds the Utilities and Energy Transversal Committee for its amendments proposed to the March draft budget, in respect of addressing the water crisis. But we hope council now sees the problem – you cannot build over the cape flats aquifer while wanting to harvest and protect the precious water it holds.  Cancel the build projects and protect the water resource for all our sakes.

For as long as you continue to ignore these problems, or ridicule those of us who see them and point them out, you will continually be putting yourselves before the people you are elected to serve and therefore risking their futures.

Finally, we want to raise a concern about the large number of external organisations who benefit annually from the City’s Capital Grants and Donations programme and note that not one of them commented on the draft budget or the IDP in terms of their role as City partners in fulfilling important aspects of the IDP as it relates to their areas of focus.

We further note that too many of them no longer even receive City funding to continue their vital work – the numerous churches and religious bodies, the childrens and youth empowerment centres and initiatives, the arts, music, cultural, crafts and design bodies, the sports clubs, etc.

These have all previously been considered good enough to receive vital City funding for their programmes, but from one year to the next they suddenly no longer receive funding, or receive dramatically reduced funding – with no explanation coming from the City.

While seeking to understand the process around compiling this list, I am informed by senior officials in the Directorate that City officials simply perform an administrative role in receiving applications, vetting them for validity and then divide up the budget available among the applicants.  That’s all this list is.

There are 3 problems with this process –

  1. Previous beneficiary organisations are not informed when funding is cut or reduced, and are not asked to re-apply,
  2. There is no independent assessment done after the fact on the impact of their programmes and initiatives on the lives of their target audiences, on the economy or on the extent to which they have bolstered the City’s vision in respect of its IDP or policies, and
  3. There is strategic assessment on the long term links between these organisations and the IDP that they are offering to implement as City partners.

We want to propose that this process be assessed and improved on for future years.

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