Cape Town – The 20% cut in the Urban Settlements Development Grant (USDG) could push the demand for housing in the province into further crisis.
The grant is mainly used for the upgrading of informal settlements, water, sanitation and housing.
The National Treasury indicated earlier this month an intention to stop and reallocate grants.
Deputy mayor and mayoral committee member for finance Ian Neilson said: “These are mere proposals (not final) by National Treasury that are primarily in line with the trend of reducing national government transfers to metro municipalities across South Africa.
"It is understood that all metros will be affected should the proposal be executed primarily to address the immense pressure on the national purse.”
Neilson said the City manager has written to the national government providing information on the progress of the projects funded by the USDG.
“(This) indicates that the City is on course to spend the full allocation, and that it does not agree that there is any argument for the reduction in the funding,” he said.
Across the metros in the country, the USDG has been cut significantly.
In Mangaung, they will be receiving a 37% reduction, the City of Ekurhuleni a 6% cut and Tshwane a 20% cut. Metro’s exempted from the cut are Joburg, Buffalo City and Nelson Mandela Bay.
In September, the Cape Argus reported that the City did not spend R178million as at end of June from a R1.48 billion USDG and asked for R117m to be rolled over and the rest to be returned to the National Treasury. A portion of 4% was unspent of the total budget.
National DA spokesperson on human settlements, water and sanitation Emma Powell said: “In total, an amount of 20% or R314m of the USDG grant allocation has been summarily cut to the City of Cape Town by Treasury, which will have significant delivery consequences.
"Most questionably, while the DA-run cities of Cape Town and Tshwane have been informed of a 20% Division of Revenue Act (DoRA) grant allocation cut, comparatively under-performing municipalities such as Joburg, Buffalo City and Nelson Mandela Bay are not affected ”
Standing committee on human settlements chairperson Matlhodi Maseko said she suspected the grant was prematurely retracted to fund a number of budget deficits at national level such as the R129bn for SOE bailouts.
“From my understanding, the USDG was retracted by the government before the City could spend it.
“I will be inviting the City to my committee to explain this process to ensure the national government provides an adequate time frame for the City to make use of the grant following due process to ensure transparency.”
@MarvinCharles17