Cape Town calls on Finance Minister not to cut R100m in housing grants

31 October 2023

‘All indications are that provincial and local governments will bear the brunt of budget cuts announced in the Minister’s mid-term budget speech this week. That’s only because the Finance Minister’s Cabinet colleagues won’t object to cuts that don’t affect them. But the impact on the poor will be worse if local governments and provinces must absorb these cuts.

‘Both Cape Town’s Urban Settlements Development Grant and our Informal Settlements Upgrading Grant have been earmarked for substantial cuts amounting to more than R100m for the current 2023/24 financial year alone.

‘We in Cape Town object in the strongest possible terms to these anti-poor budget cuts, which will come directly from housing and informal settlement budgets servicing our most vulnerable communities.

‘Expenditure that is aimed directly at improving the lives of the poor, upgrading services in informal settlements, delivering housing, or building essential infrastructure, should be protected at all costs.

‘If there are to be cuts, as there clearly need to be, these should come from government departments that serve no meaningful purpose – and there are several of those – or from unnecessary expenditure like R3,5 billion for VIP security for Ministers.

‘As South Africa’s Finance Minister, you have an imminent opportunity to demonstrate your commitment to building the kind of South Africa that we are trying to build here in Cape Town – progressive, pro-poor and pro-growth.

‘I understand the financial constraints facing this mid-term budget, and that there is no magic money tree to harvest. But I also know that the cuts proposed so far are absolutely the wrong decision,’ said Mayor Hill-Lewis.

Hill-Lewis further called for an increased Equitable Share for Cape Town, following census data revealing the city will soon pass Joburg as SA’s most populous.

‘The census confirms that Cape Town has rocketed up the population rankings to be the second most populous city – just 100 000 people behind Jo’burg. In fact, Cape Town will soon overtake Jo’burg as South Africa’s biggest city, and will very soon cross over the 5 million person mark.

‘In accordance with these figures, our Equitable Share should be increasing, not decreasing as expected,’ said Mayor Hill-Lewis.

Hill-Lewis said the City further expected to see confirmation of raised social rental housing subsidies in the national medium-term budget following a circular from the National Social Housing Regulatory Authority that the subsidy quantum has been raised.

‘Raised subsidies are a must given that the national social housing subsidy regime has not changed in five years, has not kept pace with inflation, and has not done enough to really ignite the viability of the social housing sector,’ said the Mayor.

Faster land release for affordable housing has been elevated to a Mayoral Priority Programme in Cape Town, with Hill-Lewis stating that the future of housing is all about private sector delivery backed by an enabling state, especially given dwindling housing conditional grants.

Over 2 200 social housing units across seven land parcels have reached various approval and land release milestones in the first year of the Priority Programme, with over 6 500 social housing units in the pipeline across 50 land parcels in Cape Town.

‘Over the past financial year, the Human Settlements Directorate spent 99,3% of its more than R880 million capital budget in the 2022/23 financial year. This is money being spent on directly improving the living conditions of vulnerable households and providing and enabling decent accommodation. Some R2,5 billion capital budget has been allocated for human settlements projects over the next three years.

‘We spend our budgets where earmarked. If we received more budget, we would spend it. ‘However, the profound national government grant budget cuts will continue to have immense impacts on human settlements delivery in Cape Town and across the country, and we call for no cuts to conditional grants serving the most vulnerable,’ said the City’s Mayoral Committee Member for Human Settlements, Councillor Carl Pophaim.

Issued by Media Office, City of Cape Town, 31 October 2023