Mayor condemns R540m slashed from Cape Town amid national funding cuts

Cape Town Mayor Geordin Hill-Lewis has condemned a major R540m cut in national funding to Cape Town over the next two years. This forms part of nationwide cuts announced by Finance Minister Enoch Godongwana in the national Budget Speech on 21 February. Read more below:

Cape Town will receive R353,28m less in equitable share funding over the next two financial years compared to last year’s medium-term budget figures. This is part of a national reduction to Division of Revenue funding shared among all municipalities and provinces on a population-based formula.

National grant-funding cuts have been particularly severe for job creation grants, with Cape Town’s Expanded Public Works Programme (EPWP) funding slashed by almost 60%, from R62,59m in 2023/24, to R26,66m in the coming 2024/25 financial year. Over 83 000 EPWP work opportunities were created in Cape Town in the last two years, with the programme offering valuable training aligned to skills gaps in the economy

There has also been a R100m reduction to the City’s Presidential Employment Programme (PEP) funding allocation, from the current R230m to R130m in 2024/25. PEP funds a range of job creation initiatives in the city and nationally.

Cape Town will further receive R52m less than forecasted in last year’s national budget for infrastructure grants for housing, basic services and informal settlement upgrading over the next two financial years. The affected grants are the Urban Settlements Development Grant (USDG), Informal Settlements Upgrading Grant (ISUPG), and Neighbourhood Development Partnership Grant.

This follows a R107m cut already effected to the USDG and ISUPG for the current 2023/24 financial year alone, as confirmed in the Minister’s October 2023 Medium-Term Budget Policy Statement.

‘We in Cape Town strongly condemn national government’s decision to cut critical job creation and infrastructure funding. This follows years of corruption, looting, and bailing out State-owned Enterprises.

‘South Africans should not be fooled that these cuts were the only option: it is possible to make budget choices that are progressive, pro-poor and pro-growth, as we have shown in Cape Town. The National Cabinet had every opportunity to make these cuts from wasteful national government departments that serve no meaningful purpose, or from the estimated R3 billion which goes to VIP security.

‘Instead, they have taken the easy way out by making anti-poor budget cuts to grant-funding and equitable share allocations to municipalities over the next three years. This will have far-reaching consequences across the country, and will make a deep impact on Cape Town’s pro-poor job creation and infrastructure programmes for basic services and housing. 

‘We will continue to fight for the protection of critical grant funding, and for an increased equitable share for Cape Town. A growing population must come with increased national equitable share funding, especially now that the census confirms our city will soon overtake Jo’burg as South Africa’s biggest city with over five million residents,’ said Mayor Hill-Lewis.

Mayor Hill-Lewis said Cape Town had ensured grant-funding was spent on the intended purpose of housing and informal settlement upgrades, with 99% of the USDG spent or contractually committed over the last three financial years since 2020/21. In 22/2023, the City also spent 100% of its grant-funding under the ISUPG, a new grant aimed at upgrading informal settlements.  

Budget shows no sign of passenger rail devolution intent

‘As with President Ramaphosa’s SONA, the National Budget includes no sign of funding towards  devolving passenger rail to capable metros over the three-year budget, despite this being stated national policy. There was also no mention of the delayed National Rail Devolution Strategy.

‘It is clear that the President and his Cabinet lack the political will to devolve rail despite the extremely urgent need to get trains running for the sake of our economy and households who need safe, affordable and reliable public transport.

‘The City’s ongoing rail devolution feasibility study has found that lower income families in our city would save R932 million a year with working trains. Functional rail will also sustain over 51 000 jobs and add R11 billion to the local economy each year.

‘Commuters cannot wait indefinitely for a clear deadline on handing over passenger rail in Cape Town. While we have made every effort to form a joint committee with national government to fast-track devolution, the President and his Cabinet have again failed to act with urgency, which will ultimately necessitate an intergovernmental dispute,’ said Mayor Hill-Lewis.

Statement issued by City of Cape Town, 22 February 2024