00. NEWSFLASH

Author: Bulewa Payi
4 April 2021

Cape Town rate payers, brace yourselves for rates increase

Cape Town – Faced with economic hardships, Cape Town ratepayers will now have to fork out more for rates as proposed in the new budget.

The City of Cape Town’s R56.48-billion budget proposal for the 2021/22 financial year will now go out to the public after it was tabled in a council meeting this week.

The proposed budget comes amid findings by the auditor-general (A-G) of irregular expenditure, which continued to plague the City despite similar red flags raised in the previous year.

The A-G gave the City an unqualified audit with findings.

The A-G report also noted that the City had materially under-spent its operating budget in the previous financial year by R1.5bn and the capital budget by R738 million.

The new proposed budget would see water tariffs increase by 5%, largely due to “upgrades and extensions to the wastewater treatment plants, the installation of water connections and the testing of meters”.

The electricity tariff increase will increase by 13%, the City argued, which was much less than the Eskom’s hike.

All the proposed tariff increases were scheduled to take effect from July 1.

In tabling the proposed budget Mayor Dan Plato noted that the Covid-19 pandemic had placed a “huge strain” on residents and on the City’s capacity to deliver financially sustainable services.

Cost containment measures would include zero salary increases for employees and councillors, reduced dependency on consultants and other contracted services, Plato added.

The A-G made material findings on compliance with the supply chain management regulations and sections of the Municipal Finance Management Act (MFMA), noting that reasonable steps were not taken to prevent irregular expenditure.

The report found that:

* Some goods and services were procured without inviting competitive bids or obtaining the required price quotations

* Some bid documents for local content production did not stipulate the minimum threshold as required by the 2017 preferential procurement regulation;

* Some of the contracts were extended or modified without the approval of a properly delegated official

* The performance of some contractors or providers was not monitored as required by the Act

The AG noted that similar non-compliance related to all the above was raised in the previous year.

The report further noted that management did not ensure that appropriate contract management and performance processes were in place to monitor the expiry of contracts, resulting in expenditure being incurred even after the contracts had lapsed.

It also noted that the financial system used by the City was not configured to prevent payments after the expiry date of contracts or in excess of the contract amounts.

African Christian Democratic Party Councillor Grant Haskin lambasted the City for “painting a rosy picture of its performance” while it “failed to comprehensively deal with challenges”.

“The issues raised by the AG were also raised in previous years. In fact the municipal public accounts committee also noted a rise in cases of irregular expenditure,” said Haskin.

ANC leader in the Council, Xolani Sotashe also criticised the City for not spending its previous budget on critical services.

“The Water and Waste department failed to spend R587m. It’s a lie to say that the City did well in its budget expenditure last year. The City does not boast of a clean audit anymore,” he charged.

Cope councillor Farouk Cassim also warned that Covid-19 should not be used as an excuse for not meeting some of the targets.

“It should be the reason why the Expanded Public Works Programme projects should be doubled or quadrupled…and stop long-term job losses,. he said.

Cassim also said the DA led council’s “business as usual” approach to planning and budgeting could no longer work for the city.

“Where is the money for transformation of townships conceived of as dormitory and 27 years later remain the same. Will they ever change. No alignment in terms of budgeting. I will not support this,” Cassim said.

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