Statement by the City’s Executive Deputy Mayor, Alderman Ian Neilson

In its assessment of the City of Cape Town’s 2019/20 Budget, the National Treasury highlights ‘national economic factors such as ratings downgrades, State Owned Entities (SOEs) failure, national policy uncertainty, power outages, rising cost of living’ as factors having a negative impact on City objectives. It is pointed out that the City is being let down by SOEs and national departments and that the City is increasingly dealing with crime and grime matters which redirects spending priorities.

Importantly, it shows that Cape Town is ‘experiencing congestion challenges as a result of the collapse of rail. This is a major risk and requires Intergovernmental Relations elevation’. This is also impacting the City’s efforts to address spatial transformation and congestion, seeing that passenger rail should be the backbone of public transport in Cape Town.

The National Treasury found the City’s budget to be funded, credible and sustainable.

The National Treasury also states that the City’s spatial plans ‘reflect a clear logic for spatial transformation’; there is ‘a clear, compelling investment rationale and spatial logic’ and our ‘approach to prioritisation is sound’, but that we need to work harder towards implementing the programmes.

The City acknowledges the report and will endeavour to do its best to strengthen the areas of weakness that have been pointed out and that are within its control. As for the factors that are not wholly within our control, we urge that urgent direction is given about some of Cape Town’s biggest challenges being the implosion of passenger rail and its impact on commuters and our local economy, energy, water and crime, congestion and spatial transformation. These challenges cannot be unlocked by the City on its own. An example is the City’s efforts to strengthen energy resilience by allowing the integration of Small-Scale Embedded Generation and the purchase of power from Independent Power Producers which requires policy reform and intergovernmental support, as per the report.

The assessment indicates the City’s financial management and governance is sound, and it has:

a positive cash balance and adequate cost coverage within the norm of one to three months

robust debt collection which has led to an improved collection rate from 92% in 2016/17 to 95% in 2017/18

assumed an increased average collection rate of 96% in 2019/20

budgeted for a surplus over the 2019/20 term which will enable it to fund capital projects from own revenue

considered tariff affordability during budget preparation process to promote payment for services in difficult economic times in the country

credible and realistic budget assumptions and revenue estimates

provided services to vulnerable households above the minimum level at 11 kilolitres for water and 60 kWh for electricity

has prioritised the upgrading and renewal of existing assets at 56,7% of the capital budget and is above the 40% norm

a focus on the renewal and upgrading of assets increases with the spotlight on water and sanitation and waste management especially

It is stated that Cape Town’s economy is continuing to create jobs, showing signs of resilience, despite the impact of the drought and depressed economic growth nationally.

There is much work under way, such as our efforts to procure power from independent power producers, to ensure the City is resilient and equipped for the future. It is very clear that we need all stakeholders to work together for the good of the people.

Source: City Of Cape Town