World Cup spending puts PE in red
A dire cash flow shortage in Nelson Mandela Bay, the sprawling municipality that includes Port Elizabeth, Despatch and Uitenhage, has resulted in an R800 million cut in spending on key service delivery projects in the municipality – including a project to put an end to the undignified bucket system.
And to add to the ire of residents, the council tried to pass a resolution last month that would have had it spending R17.8m on “voter awareness”.
The municipality is carefully using the word “challenge” to describe its desperate cash shortage since September.
- The city has made cuts of R800m, including:
- The R75m budget for eradication of the bucket system slashed to just R1m.
- R73.85m cut in the resurfacing and tarring of roads.
- R50.25. cut in the construction of stormwater infrastructure.
- R17.1 million cut in the budget for the construction of new clinics.
The council’s financial woes are mainly due to World Cup spending that was not recouped, and a drop in the revenue collection rate.
Several provincial government departments, including education and health, owe the municipality millions.
These two departments are in dire financial straits because they have massively overspent on their budgets.
An unsigned agreement between national, provincial and local government indicated that World Cup spending would be split in such a way that the national government covered 70 percent of the costs, provincial government 20 percent and local government 10 percent (the “70.20.10 principle”).
But the municipality spent R537m more than its share. Of the R3.4bn cost associated with the event, there was a R78m shortfall from the national government and a R459m shortfall from the provincial government.
There is little hope that this money will be recouped – a document prepared for the municipal public accounts committee indicates that “there is no indication that any further monies will be gazetted to cover the shortfall in terms of the 70.20.10 principle”.
Roland Williams, spokesman for the municipality, described the World Cup spending as “a bit more than anticipated”, mostly because of inflation and supply and demand pressures.
DA caucus leader for the metro, Leon de Villiers said: “The communications department will say that it is a cash flow challenge, but I can assure you it’s very much a cash flow crisis.”
A document on the municipality’s website, drawn up by Williams, states that “a crisis denotes a dire situation that is beyond one’s control and insurmountable to overcome. A challenge is a situation that can be addressed”.
Williams told Weekend Argus the situation was improving – because of a series of plans that included budget cuts, the sale of targeted land, debt relief and an operational efficiency plan.
De Villiers said: “Some 22 500 residents of Nelson Mandela Bay are still using the bucket system 16 years after the start of ANC rule. The budget has been reduced to R1m, which will have no impact whatsoever.
“Roads and stormwater are very important, especially in the poorer areas where, as soon as the rains come, there is severe flooding, and I cannot tell you how desperately we need new clinics. The clinics here are desperately in short supply and are grossly understaffed.”
Williams said: “The municipality currently provides a temporary solution to certain limited transitional settlements in the form of a bucket system. The permanent fully integrated human settlement solution will see its eradication.
“We fully agree that this must be urgently addressed and mayor (Zanoxolo) Wayile has been quite adamant that no excuses in this regard will be tolerated.
“The R1m was set aside for phase one; funds for the other phases did not make it on to the adjustment budget, as they would not have been completed in this financial year.”
An attempt last month to to pass a resolution that would have allowed the council to spend R17.8m on building voter awareness prompted a mass walkout by DA councillors, a move that Wayile termed “undemocratic and uncalled for” .
The budget was then trimmed to “between R 6m and R10m” but the opposition said the programme was nothing more than “a smokescreen to fund ANC election campaigning”.
An outline of the programme by the municipality includes voter education, branded clothing, transport and catering. A list of the members for each of the committees, however, includes only ANC officials.
“The council has stated its strong intention to do everything it can to support the publicising of elections, which epitomise democracy. Thus far, no money has been set aside for this purpose, and the CFO (chief financial officer) will report back to the council on the resources that may be used for this stated intention,” Williams said. - Sunday Argus