The Committee was briefed by The City of Cape Town, the National Treasury and Cape Town metropolitan municipality on the City’s budget performance, service and infrastructure delivery, and the Integrated Development Plan (IDP).
The Committee heard that the City of Cape Town reported that R6 billion per year was spent towards building a city of opportunity. The City was plagued by gang violence linked to the drug trade. Imbalances related to apartheid spatial planning was being addressed. The top three economic sectors were finance, community services and trade. Cape Town had the lowest broad unemployment rate relative to other metros, at 22.6 percent. HIV rates were reducing. Capital spending was 72.5 percent. The City’s financial position remained strong. A key challenge was the state of collapse of the rail system. The City intended to develop an integrated high level water strategy for transition to a water resilient city.
The National Treasury reported that the City was financially viable with positive cash balances and adequate cash reserves. Budget assumptions were credible, but the capital budget deviated by more than 5 percent due to the implementation of a new water plan. The budget was funded and sustainable. There was a decline in water revenue from water services due to reduced consumption. There was a credible programme for upgrading of informal settlements. There were adequate provisions for repair, maintenance and renewal of existing infrastructure. The City had to review the rationale and prioritisation of catalytic programmes, and needed to translate its good planning into implementation. The urban rail challenge had a negative impact on public transport which led to congestion.
There were remarks and questions about outcomes of Treasury engagements with the City; HIV reducing strategy; the impact of gangs and crime on economic development and service delivery; drug abuse; audit outcome regression; financial management and political interference; apartheid spatial planning; information systems technology; traffic problems; complaints about rates and service charges; planning for water and housing; informal settlements; devolution of transport, and urban migration. The Select Committee acknowledged the progress made by the City.
The Chairperson welcomed the Mayor of the City of Cape Town and her team the session devoted to engagement with the metro municipalities. Apologies were received from Mr Nzimande, Ms Motara and Mr Motlashuping. Engagement with the metros looked into the fiscal position, economic development, and the IDP and its alignment to the NDP. Economic growths in the metros were higher than in the rest of the country, and the metros could be viewed as economic hubs.
Briefing by the City of Cape Town
The briefing was presented by the Mayor Patricia De Lille; Mr Brett Herron, Metropolitan Municipality Cape Town (MMC): Transport and Urban Development; Mr Kevin Jacoby, Chief Financial Officer (CFO), and Dr Gisela Kaiser, Executive Director: Informal Settlements, Water and Waste. There was a commitment to building an inclusive city that was caring and responsive to the needs of the vulnerable. The City had received an unqualified audit outcome for 11 years consecutively. Conditions were being created for a city of opportunity, with R6 billion per year spent on development. There were major challenges in the way of building a safe city. The city was plagued by gang violence linked to the drug trade. Imbalances related to apartheid spatial planning were being actively addressed. There were 203 informal settlements around Cape Town. The Cape Town population was ageing, but the impact of the 18 to 38 year old age group on the economy was significant. The top three economic sectors were finance, community services and trade. Cape Town had the lowest reported broad unemployment rate relative to other metros, at 22.6 percent. HIV rates were reducing. Capital spending was 72.5 percent. The City’s financial position remained strong. A key challenge was the state of collapse of the rail system. Only plus minus 50 percent of trains were workable. The MyCiTi project was a catalyst for transformation of the public transport system. The City intended to develop an integrated high level water strategy for transition to a water resilient city.
Comment by the Chairperson
The Chairperson advised that ward committees could perform a crucial role by educating people to save and harvest water in the wards. He was from a very dry area the Richtersveld, where the ideal was for every household to have a water tank. The Department of Rural Development and Land Reform rendered support for water saving and harvesting in the Namaqualand area. He expressed disappointment at the fact that the National Treasury (NT) did not supply figures as was done for Nelson Mandela Bay and the Mangaung metros. He was concerned about the fact that Cape Town City had returned R660 million to the National Treasury.
Briefing on the City of Cape Town by the National Treasury
The briefing was presented by Ms Kgomotso Baloyi, Director.The City was financially viable with positive cash balances and adequate cash reserves. Budget assumptions were credible, but the capital budget deviated by more than 5 percent due to the implementation of a new water plan. The budget was funded and sustainable. There was a decline in water revenue from water services due to reduced consumption. There was a credible programme for upgrading of informal settlements. There were adequate provisions for repairs, maintenance and renewal of existing infrastructure. The City had to review the rationale and prioritisation of catalytic programmes, and needed to translate its good planning into implementation. The urban rail challenge had a negative impact on public transport, and led to congestion.
The Chairperson commented that a difficult Medium Term Budget Policy Statement (MTBPS) was to be faced. Technically there was a recession after two quarters of decline in growth. Money had to be spent wisely. Fiscal space had to be used optimally so that there could be value for money. The NT had referred to talks about spatial integration. He asked about outcomes and whether there was an action plan. The NCOP had to know what to tell the people as was done in the Free State the previous week.
Mr M Monakedi (ANC, Free State) welcomed the presentations. He commended the City for service delivery and financial management. He noted that the according to the NT the City had the best IDP. HIV figures were down from 18.9 percent in 2015, to 7.5 percent. He asked about strategies employed to accomplish that. He referred to crime challenges, and its negative impact on economic development and service delivery. Projects were being interrupted. He asked about new measures with reference to help from provincial and national spheres. Drug abuse could not be accepted as a permanent feature. There had to be provincial and national support. He referred to the regression to a less favourable audit opinion. The NT referred to findings on financial management and political interference. Contract management applied to Cape Town metro. He asked about steps taken to get back to a clean audit. He asked about apartheid spatial planning, if enough was being done to identify vacant land to redress the situation. There were media reports about tracts of land sold to private individuals. He asked if information systems technology was accessible to people in the City, especially to business and education. He agreed with the Chairperson that the District Transport Committee in the NCOP could be worked with to provide provincial bus services to the City. He asked if challenges around the Mayor had a negative impact on service delivery.
Mr O Terblanche (DA, Western Cape) commended the presentations. He was currently a proud citizen, as he stayed in Mossel Bay, which was one of the best run municipalities. Certain areas in Cape Town were war zones on account of gangsterism and drugs. A special effort had to be made. Children were being shot and killed. It was not to be tolerated. Cape Town had to lead from the front with spatial planning. There had to be a special project to show the way. Other projects were seemingly not properly integrated. Cape Town was his home during the week, and hence he experienced its serious traffic problems at first hand. This could be an obstacle to fast-paced growth. Different levels of government support had to be integrated where options like high speed rail transport was considered. There was confusion at around 14h00 when people who left from work early joined with those who returned to work. Savings on capital works for water related projects did not mean that things were hunky dory, as Cape Town was a growing city. The R66 million salvaged was not a high percentage of the budget but much could have been done with it. People were complaining about rates and charges for services. They claimed that they were being billed out of their properties. Cleanliness had taken a step backward. There were people sleeping around Parliament, and they were being ignored. They had to be accommodated. It was hard to believe that there were 203 informal settlements in the City area. He was somewhat disturbed to hear that Cape Town had an ageing population. It was said to be a city of opportunity which rightly had to draw younger people.
The Chairperson remarked that if one flew in from the False Bay direction, the informal settlement known as Blikkiesdorp (shantytown) could be seen. It was the same at Mangaung, East London and Nelson Mandela Bay. He asked what the plans were for the following 20 or 30 years. When one drove off the N2 onto Jakes Gerwel Drive, shanties could be seen, which had been there prior to 1994. One wondered what those people did when it rained. The previous government did not have a long term plan, and the challenge was carried over into the present. Mr Monakedi had referred to migration and influx which affected planning for water and housing. It also happened in Kimberley. People came from the rural areas for jobs, but there were none, which made them resort to illegal mining. There had to be an action plan.
Mayor De Lille replied that the term “influx” was no longer used. The current phrase was “urbanization”. Influx control was a mechanism used during apartheid. All cities were growing as could be seen from the air around airports. Cities had to manage urbanisation. She had a soft spot for unemployed rural people who went to cities for work opportunities. But it led to a load on the infrastructure and a demand for housing. Government only provided housing for those who earned R3500 or less per month. It was a worldwide problem in London, New York, Sydney and Vancouver. Land invasion had increased by 73 percent in the preceding five months in Cape Town. It was directly linked to the debate about expropriation of land. People claimed that the President had said that they could take land without compensation. When people invaded privately owned land, they demanded services like water, electricity and sanitation, and the City could not provide services on private land, as the Municipal Finance Management Act (MFMA) did not allow that. There were 60000 people at the settlement known as Marikana. There were a number of cases before the high court. A multi-disciplinary team was assigned to integration. The HIV percentage was reduced, as Cape Town was the only city that could still utilise a grant from the United States of America (USA) for antiretroviral drugs (ARVs). The grant would still pay out for five years, but in the meantime the City was investing more so that by the time the grant was finished the City could sustain further costs. Figures produced by Stats SA showed that the number of people above 65 years was increasing, but on the other hand the presence of “millenials” (people in the 18 – 38 age bracket) was an advantage, as their participation in the economy was of a different kind. Millenials were responsible for growth in the technical sector as they were drawn to high-tech opportunities. The group would be absorbed advantageously into the City economy. Gangs did indeed interrupt projects. Gangs would tell contractors that they wanted jobs, and would tell the City which contractors had to be appointed. Work was done with national and provincial spheres on a plan to curb drug abuse, but both the supply and the demand was increasing. There could be two drug merchants in every street in Mitchells Plain, and people had to live next door to them as neighbours. There was work done with the Western Cape government on alcohol abuse game changers, as alcohol abuse was as much of a problem as drug abuse. Homeless people had increased because Home Affairs had closed down an office where asylum seekers could go to obtain documents. It took a court decision to re-open the office. The city was building safe spaces with ablution facilities. In answer to the question of whether challenges to her position influenced service delivery, the Mayor quipped that she was ‘boxed’ on the outside so it did not impact service delivery.
Mr Herron replied to the question about land sold to private individuals or companies, and said that the City did not sell land without an assessment about whether it was needed for the City’s own purposes or not. The strategy adopted was to link transport and housing. Before land was disposed of it was assessed if that could aid a transport oriented development strategy. A flagship project towards city integration was the Woodstock/Salt River inner city precinct created in the previous year in partnership with social housing companies. Three weeks before a second precinct was established around four railway stations in the Parow CBD. Cape Town was leading the way in showing how to identify good sites among City owned land. He agreed with the Chairperson about taking the matter of transport devolution to the relevant Select Committee. The City obtained approval from the previous Minister for assignment of the Province’s contract with Golden Arrow Bus Services (GABS) to the City, but the Minister was replaced before she could sign off on it. Traffic congestion could not be addressed by building roads. To add an extra lane to the N2 would not make a significant difference. The slogan currently popularised was: “You are not stuck in traffic, you are the traffic”. The intention was to encourage people to use alternative modes of transport to private cars. There was the challenge of rail transport collapse. Metro rail lost 2.7 million passenger trips per month in the previous year, which made people take to the roads. Peak traffic times had doubled to four hours in the morning and in the evening. Resolving the rail problem was the key to improving the traffic situation.
Mr Jacoby replied to the issue on audit outcome regression. An unqualified audit without findings as designated by the AG and the NT, apart from financial statements, was a true reflection of adherence to legislation, both from a political and administrative perspective. Once a clean audit had been achieved, a taste for it was developed, and there was a desire to regain that status. Once the audit report and management letter from the AG office had been received, all actions required had to be carried out. The AG was looking for consequence management reactivity. He was confident that 96 percent of what was set aside to be resolved was indeed resolved. The City wanted to automate data on EPWP workers, but automation data could only be available in September. However that was not an audit finding. Findings were in Supply Chain Management (SCM) space and related to procurement. A flagship project of information system access was planned to provide Wi-Fi on buses. Connectivity of people to systems in the City was achieved through broadband installation. He did not see the underspending on capital projects as a drop in the ocean. It had been a strange year with capacity normally devoted to capital works diverted to the water programme. The City did not want to spend the Urban Settlements Development Grant (USDG) just for the sake of spending it. The water programme was continuously reviewed; where responses from the “man upstairs” were taken into account. He was working with Dr Gisela Kaiser on complaints by water consumers. Dr Kaiser would advise from a technical perspective. It had to be asked whether adjustment of rates would lead to more consumption. The system needed a revenue base and revenue had to be brought back into it through higher consumption. Tariffs were demand oriented because the higher the tariff, the lower the consumption. The public would be given guidance within the following two weeks. Planning was already done for the next budget. There was continuous revision based on what the needs were.
With regard to traffic congestion, Mr Gershwin Fortune, acting TDA Commissioner: Transport and Urban Development, replied that there was no silver bullet solution. It was not possible to build a way out. There had to be an integrated plan, based on the correct mode for the correct response. There were different modes to consider. Roles and responsibilities around devolution funding had to be ascertained. A 10 year funded plan was needed for transport.
Mayor De Lille added that the biggest contributor to congestion was employees especially in provincial government. A flexi time plan had to be rolled out. A pilot project for corporate services was rolled out. Flexi time could be introduced wherever it was not necessary to open a counter at a specific time. Payment in malls could also grant relief. School time flexibility had to be considered, and the Department of Education (DoE) had to decide about that. Resorting to flexitime by big business could provide relief by early 2019, but it should be noted that more people were coming in. Congestion was especially concentrated at the Waterfront and the Northern and Southern suburbs. There was information on the City website. The water situation had improved. Water financing had to look into reducing the levels of restriction without the national department.
Mr Mishandra Moodley, NT Coordinator: City Governance, responded to the Chairperson’s question about the outcome of discussions with the City. The NT engaged with the City twice a year through the mid-year review and the benchmarking process, which was a formal discussion around City performance and the way forward in terms of actions to be taken. The NT worked closely with the City to provide support to spatial transformation. Political support for water resilience and desalination was obtained through partnership with the World Bank. There was also World Bank support for devolution of rail transport, and advice was given on critically reflecting on development. Assistance was given to assess performance of the property market in Cape Town. The City reported on backyard development as was the case in the Joe Slovo area. There was reflection on reducing the cost of private sector business. The City was supported in intergovernmental planning on creating investment, through investment in integration zones and spatial transformative areas. Capital expenditure was guided by a system co-developed with other metros, known as the City Infrastructure Delivery and Management System which entailed methodological planning for and delivering infrastructure. It addressed the problem of cities not being able to spend adequately on capital budgets on a long-term basis. Metros involved were Cape Town, eThekwini and Johannesburg.
The Chairperson noted that the Select Committee also visited those metros. The Select Committee acknowledged progress by the City of Cape Town. One of the key performance areas for the NCOP was intergovernmental relations (IGR). The Finance and Appropriations Select Committees, composed of the same personnel, focused on IGR in all nine provinces and also at municipal level. There was a lot of work to be done. Departments and administrations had to be taken to task. The Committee would meet with the National Departments of Basic Education and Public Works on the coming Friday.
The Chairperson adjourned the meeting.