Budget cuts don’t reflect our service and spending performance

The decision by the National Treasury and Department of Human Settlements to cut the Urban Settlements Development Grant (USDG) to the tune of R540 million in the DA-run metros of Cape Town and Johannesburg has nothing do with poor spending performance as earlier reported.

The USDG funding is used to upgrade informal settlements and services with the aim to eradicate the housing deficit by placing more focus on metros as the centres of economic growth. It is important to emphasise that USDG funding is used for service upgrades in informal areas too, not just housing.

Both the City of Cape Town and the City of Johannesburg submitted detailed plans showing how the funds would be spent in the current financial year.

It is disappointing that this crucial grant has now been taken away before the City of Cape and Johannesburg could execute their plans on how they intended to spend this money for improving the quality of life of residents who still don’t have the dignity of owning a home.

In  the City of Cape Town particularly, the decision to withhold R176 million of the USDG had nothing to do with the City’s spending performance. The City received a notification in June of a proposal to withhold R278 million of its USDG allocation, which was way before the commencement of the City’s financial year.

Further, in November 2017 the City received another notification of a proposal to withhold R175, 8 million of its USDG.

The City of Johannesburg was given 14 days in which to respond to the notice to withdraw this vital funding. The City submitted an extensive motivation detailing how the remaining budget would be fully allocated and spent in the current year and motivated how spending would improve for the remainder of the financial year.

The City of Johannesburg has improved its USDG expenditure quarter on quarter in the current financial year and even improved expenditure performance compared to previous financial years. That should have been an indication to Treasury of the City’s ability to spend grant funding.

Both the City of Cape Town and Johannesburg have demonstrated that they have fully allocated their USDG funding and that they have plans in place to fully spend it.

The DA believes that these cuts are an overreach given that both metros have detailed plans indicating how they would fully utilise the allocated budgets. The National Treasury and the Department of Human Settlements should have given both metros the opportunity to put those plans into action.

It’s worrisome that the City of Johannesburg’s spending trends have been impacted on severely by suspensions and or dismissals initiated upon discovering the levels of corruption there.

This decision by the National Treasury to cut these crucial grants to the metros of Johannesburg and Cape Town to cut will only serve to hurt the poor more.

The grant cuts are unfortunate and will severely impact the capacity of these metros to deliver much-needed housing to people.

The DA holds our governments to a high standard. We expect nothing less than putting the people who rely on our governments first by delivering clean and efficient service delivery and will continue to do so.

Statement issued by Solly Malatsi MP, DA Shadow Minister of Human Settlements, 26 March 2018