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Cape Town mayor Patricia de Lille and deputy mayor Ian Neilson. Photo: Tracey Adams

Growth means new dynamism – but in the short-to-medium term it also puts a great deal of stress on services, writes Cape Town deputy mayor Ian Neilson.

Cape Town - Our city population grew by 30 percent in the 10 years to 2011 and continues to grow by about 100 000 people year. In the long-term this is good for our city as it brings in new dynamism, but in the short-to medium-term it places great stress on our services, without adequate additional resources that are necessary to respond to the increased need.

Despite these stressful times, our ratepayers and consumers continue to pay their rates and service charges. We currently have a 97 percent collection rate on our billing – and I want to thank our ratepayers for keeping their side of the social compact. It is they who keep this city going.

From the city’s side, a key factor is good governance. Last year the city received its second clean audit and ninth consecutive unqualified audit. There is real value in this achievement. Ensuring accurate reporting and compliance with the law – such as the Supply Chain Management regulations – means that there is strict control over potential fraud and corruption.

It ensures that money is spent on what it was intended for, and not the frivolous wants of some individuals. That means more delivery is possible than would be otherwise.

The operating budget of R28.6 billion is financed primarily from rates and tariffs, which have increased between 6 and 8 percent. Grant funding of R3.5bn is anticipated. Thus the city’s budget is funded by 88 percent from its own revenue sources.

There is provision for repairs and maintenance of R3.1bn in this budget – an increase of 11 percent from the current year – emphasising our commitment to a functioning system.

The capital budget of R6.2bn is to be funded by R2.9bn of grant funding, R1bn from the city’s own resources, and R2.3bn from borrowings. Council will be asked to give approval to go to the market to seek loan funding of up to R2.2bn.

The key thrust of the proposed expenditure over the next three years, particularly as expressed in the capital budget, is to ensure the provision of basic services to all our residents in the form of bulk services, water, sanitation, electricity, refuse removal and disposal, public transport and housing. The emphasis in the budget is pro-poor and is committed to redressing historical imbalances. We have tested the proposed budget against the risks in our engineering infrastructure.

The projections show that the three-year budget up to 2016/17 will have eliminated a large portion of the bulk-services backlog in the city and we have a clear understanding of where the priorities will be required beyond 2017.

But this provision is not only about delivering services; it is about continuing to build the enabling environment for economic growth.

By ensuring that there is a reliable supply of electricity and water, that the roads are in a workable state, that the street lights and traffic lights work, that workers are able to get to and from their places of work easily and cheaply, we ensure that economic activity can take place, that jobs can be created and that our residents have the income that is needed to have a better life. You will have that better life only if you have a job. You will not have it if you only rely on government handouts.

In addition to the basic services, there are particular programmes of economic intervention, such as the financial incentives to create jobs in Atlantis, the broadband project to bring the new economy to all our residents and the extension to the Cape Town International Convention Centre to build on the success it has had to bring in visitors to spend money in our economy.

Money has always been tight, but it seems to be tighter than ever and it will get more difficult as we move forward to the future, with growing expectations from our growing population but with limited income sources.

The key issue is that over time our expenditure has been rising faster than our income, meaning that there is little room for new initiatives unless we can supplement our income or find significant savings on our current operation.

The risk on the operating budget is no longer one of under-expenditure, but of over-expenditure. Thus we will be implementing tighter controls to ensure that the city remains within the budget limits. Any over-expenditure will require immediate action.

I want to reinforce mayor Patricia de Lille’s comments about the urgent need for a national re-examination of the funding of local government.

Most urgently required is the unresolved issue around unfunded mandates – that is, the city paying for service delivery that is outside its constitutional mandate. This continues to place a heavy burden on the city’s finances, to the extent of over R1bn a year.

The city can no longer afford to pay for services that are not our mandate because we have enough needs in terms of our own responsibilities, such as for environmental health care and early childhood development, which are still significantly under-resourced.

This matter can be resolved only if all three spheres of government commit to stop avoiding the resolution of this matter. After 20 years, it is about time that we ensure full implementation of the constitution.

While we will take on these challenges over the next few years, this budget succeeds in bringing the key services to all our residents and drives on the key transformation required in our economy to a more energy and carbon efficient one, primarily through improved public transportation and communication systems.

It provides the platform that is the enabling environment for our continued economic growth: to create more jobs that provide a better life.

* Alderman Ian Neilson is Cape Town’s deputy mayor. This is an edited version of his speech on tabling the draft budget for the city.

Cape Argus


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