The City of Cape Town's financial performance has come under attack recently from our political opponents. These ill-informed and partisan criticisms have had the effect of distorting perceptions on the City's financial affairs, which are inarguably are the best run in the country.

In order to clear up any confusion, it must be stated at the outset that City of Cape Town has become the gold standard in South Africa for financial management. This is attested to by the fact that this city has received eight successive unqualified audits from the Auditor General (AG).

As a result of this sound financial management, Cape Town has the best credit rating of any municipality in South Africa and is often used by national treasury as an example to other municipalities on how to manage the complex financial and other demands that are placed on any metro.

Of course, and this is the case with any government anywhere in the world, there is always room for improvement and for even more checks and balances to be put in place.

However, much of the argument presented by the ANC and their fellow travellers have ignored the complexities of managing a large, dynamic city with a budget of in excess of R25 billion.

Furthermore, many of our critics adopt an ahistoric approach to assessing the City's performance. When the DA took office in 2006, as a part of a coalition government, we inherited a City that was on the verge of financial and organisational collapse. The City's revenue collection was declining, there was a chronic skills shortage and the ANC could barely spend R1 billion per annum of its capital budget.

Through hard work and a systematic approach, this crisis situation was turned around. Over one million accounts are successfully billed monthly. The City's collection ratio of these billings is 96% meaning that there is an adequate income stream to fund the basic service delivery in the city. Our bank balances are healthy and able to support the expenditure of our budget.

We now have a situation where the city's revenue base has been secured and as a part of our commitment to building a caring and inclusive city, we provide the most extensive basket of free basic services of any metro in South Africa.

This extensive cross subsidisation of services is evidence of our firm commitment to addressing past injustices and to improving the lives of the poor and most vulnerable citizens of this great city.

At the same time over the last 5 five years, this City government has spent close to R18 billion on capital expenditure, in our efforts to ensure that we have quality infrastructure. During this period we also more than doubled the expenditure on repairs and maintenance to R1.88 billion per year.

The evidence of this approach is there for all to see, from the world class Cape Town Stadium, upgraded public spaces, to the roll-out of the MyCiti bus, to roads that are free from potholes, streetlights and traffic lights that work and water and an electricity supply that is reliable. Weekly refuse collection can also be relied upon. The City is complemented by visitors on its cleanliness. 

This commitment to infrastructure led growth, has ensured that Cape Town stands alone in South Africa as a metro that provides quality and reliable services.

We still have a great deal to do to address the backlogs that arise out of past injustices, which is why we continue to set ambitious targets for on-going capital expenditure. It would be far easier and with much less political risk to set the bar lower, but we choose to take this risk and to aim high as we believe that this is what the citizens of this city demand of us.

It is true that the City did not spend its entire capital budget the previous financial year. Eight per cent of the budget was saved due to projects being completed at prices under their budget provision. It is important to note that none of the budgetary allocation for capital that was not spent in the last financial year has been lost. Rather, there were delays in projects and the funding was shifted to the current financial year. The money will still be spent, and projects will still be completed.

The major reason for not meeting the target was project delays due to reasons beyond the City's control. This accounted for 10% of the total budget and this amount has been spent in the current year. We are working on improving project management in order to minimise this issue but it is impossible to eliminate it entirely.

Where we are unable to meet our targets, it is not for lack of effort or political will. Large infrastructure projects, the bulk of the City's capital budget, are complex and subject to many risks. Risks include the fact that at the early stages of such projects, full information is not available on the scope and extent of the costs. Unlike buying a TV off a shelf, each project is unique and many details are only uncovered as the project proceeds. The project is also subject to matters not directly in the City's control, including being able to purchase land in the time desired, environmental approvals, delays due to public objections and appeals, tender prices and appeals on tender awards. These risks lead to uncertainty on timeframes, particularly in the early stages of a project. It is only once a contractor is appointed that costs and timeframes can be fairly accurately pinned down.

While the City government does not accept any illegal activities on its contract awards, when an organisation processes, on average, 800 purchase orders per day, there are opportunities for fraud and error. The Auditor General found irregularities associated with a handful of these transactions. Even then the AG recognised that they were not substantive enough to affect our unqualified status. However, as a result of these findings we have tightened up our systems even further to ensure that we prevent possible irregularities. We are investigating even further due-diligence control systems so that the City is not the victim of misinformation provided by tenderers. All the issues identified by the AG are being investigated by the City's Municipal Public Accounts Committee, who will report directly to Council on their findings and recommendations for action.

It is astounding how strategic investments, such as the one the City is making in conjunction with the Province in the expansion of the CTICC, are attacked on the basis of ignorance. This expansion will help position Cape Town as a key global conference destination. In so doing we will attract tens of thousands of delegates to the City and ensure that we create jobs, which are so desperately required.

For this initiative to be attacked on the basis of unsubstantiated claims, and even false calculations, is inexplicable. This is made further so by the actual expert quoted in the Cape Times, agreeing that the price paid was understandable. The City's own external valuation supports the price paid as does the sale of the next-door property by the former ANC provincial government at essentially the same price.

The citizens of Cape Town can rest assured that we will continue to strive to deliver quality services in a financially sustainable fashion, whilst at all times dealing with any corruption or fraud and making sure that we leave no stone unturned in improving the lives of the poor and the marginalised.

Ian Neilson

Alderman Ian Neilson is the Executive Deputy Mayor and Mayoral Committee member for Finance in the City of Cape Town. This article first appeared in The Cape Times.

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