ALLIANCE REJECTS CAPE TOWN CITY BUDGET

Media Release
May 24, 2012
The Greater Cape Town Civic Alliance

CAPE TOWN CITY BUDGET REJECTED

The Greater Cape Town Civic Alliance (GCTCA) informed the City of Cape Town on Thursday 24 May 2012 that it is rejecting the city’s Draft Budget for 2012/13 as the city has chosen not to engage with a public representative body regarding written objections and concerns presented to the city management.

As envisaged in the Constitution, the Municipal Systems Act and the Municipal Finance Management Act, the Greater Cape Town Civic Alliance (GCTCA), a voluntary association of residents’, ratepayers’, civic and other interest groups within the City of Cape Town municipal area, set out to participate in the annual budget process.

On 5 April 2012 the GCTCA submitted a request for information relating to the audited Annual Report for 2010/11, and the Draft Budget for 2012/13. This information was requested to gain clarity on certain aspects of the budget that was required in order for the GCTCA to lodge a meaningful contribution by way of objection. To date some information, neither comprehensive nor complete in all instances, has been received.

In addition, on 21 April 2012 the GCTCA lodged a number of objections pertaining to the Draft Budget and other financial issues. The objections deal mainly with:

  1. The proposed increases in utility tariffs which exceed the inflation rate by a huge margin. Optimization and savings measures should be instituted to contain costs. The composition of cost and of tariff increases should be made available to the public;
  2. The exorbitant surplus of R1.5bn (19.5%) budgeted on the sale of electricity, in addition to a surcharge of R925 million. Together this amounts to a surplus of R2.4bn, effectively a 35% mark-up. Tariffs have to be revised downward drastically to more affordable levels;
  3. A surcharge concealed within the electricity tariffs. Residents are not provided with any information regarding the huge amount so charged, i.e. approx. R925 million in 2012/13, R1,140 million in 2013/14 and R1,386 million in 2014/15. Because the surcharge is reflected as part of the tariffs, users are subject to VAT. The surcharge should be reflected separately and clearly stated on monthly accounts to users, and should be free of VAT;
  4. The surcharge is currently used for unknown purposes not disclosed in budget documents.
  5. The electricity loss projected at 9.3% for 2012/13 at an estimated cost of R860million
  6. The Environment Levy currently collected on behalf of central government is also concealed within the electricity tariffs, subject to VAT, and not disclosed to users.
  7. No clear indication given how the substantial surpluses for water and sanitation will be applied. These should be ring fenced for improvement and maintenance of infrastructure, especially in view of the huge loss of water -20% at a cost of R500 million in 2010/11;
  8. In addition to the exorbitant surpluses derived from utility services, the lack of clear definition(s) of the purposes for which the surpluses are used is unacceptable;
  9. Convincing proof should be made available that the 2009 General Valuation Roll is on par with market values as at the date thereof. The GCTCA has done considerable research regarding values and has made a number of attempts to engage the City of Cape Town in this regard, to no avail due to council disinterest. No rates increases should be contemplated
  10. The lavish subsidies and rebates currently available, expressed as a revenue forfeited cost of R2.23bn, is more than double the Equitable Share of R1.09bn received from the National Treasury. This is unaffordable
  11. Any increase in the total remuneration cost of R7.125bn contemplated for 2011/12, including councilors and political employees, is unacceptable. The proposed increase of R688 million in remuneration expenses for 2012/13, followed by further increases of R839 million and R856 million each in the two outer years, is unacceptable. Official statistics released by the National Department of Statistics on a quarterly basis, indicate that Local Authority employees are paid 22% more than private sector employees for similar jobs, on average. City council employees should therefore perform well above average to justify their existing remuneration.
  12. The huge extent of risk involved (R2bn) in non-conformance with laws, rules and prescribed procedures, within the Centralized Procurement department, as reported by the Auditor General for the 2010/11 book-year, is cause for grave concern. The measures / steps taken to prevent more such cavalier use of public funds should be disclosed. Control measures must be improved and more strictly applied. Severe corrective actions should be applied to discourage this type of wasteful expenditure

To date the city’s management has chosen to ignore the objections and has made no effort to consult with the GCTCA with a view to overcoming objections.

The GCTCA is deeply concerned about the City’s inability, or perhaps refusal, to engage with a public interest group as part of a meaningful and substantive public participation process, which is an integral part of government processes to ensure that our democracy remains meaningful and effective.

We urge residents to raise their concerns with their councilors regarding the opportunity for real and meaningful public participation as part of the City’s budget process.

 

 

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