ANC caucus once again refuses to let the facts get in the way of their story

The ANC caucus of the Cape Town City Council today once again displayed their alarming and damaging lack of understanding around the City's financial processes.

In response to the City of Cape Town's Capital expenditure of 92,9% in the 2012/13 financial year, in a written statement, the ANC has claimed that they "have been vindicated by the Provincial Gazette No. 71/52 which stipulates that the City of Cape Town has only spent 85,3% of its budget in the 2012/13 financial year."

In fact, they have not been vindicated at all but have demonstrated that they lack even the basics with regard to an understanding of how municipal budgets work, or to listen to explanations provided in Council meetings.

In light of the above, the ANC should apologise for consistently misleading the people of Cape Town. 

The 85,3% that is mentioned in the Provincial Gazette is NOT the final amount spent as it was not calculated at the END of the financial year. It did not include all expenses that had been raised during June but not yet processed, as we have explained on a number of occasions. Further processing of accruals raised before the end of the Financial Year brought the total capital expenditure for the year to 92,9%.

As to the amount of R632 million under the Transport Directorate, this relates to the compensation to individual minibus-taxi owners giving up their minibus-taxis and taxi licences, and does not relate to the contract with the Vehicle Operating Companies (VOC) who will have the contracts to operate MyCiTi busses for the next 12 years. The compensation agreement was a necessary precursor to the conclusion of the VOC contracts.

The City reached agreement with the minibus-taxi owners before the end of the last Financial Year and the City became liable for the full amount of the agreement. In terms of the accounting principle, Generally Recognised Accounting Practice (GRAP) 19, this full obligation had to be accrued immediately. The moneys are ring-fenced in an interest-bearing account which is protected by all of the internal controls of the City.

The City of Cape Town is currently finalising its Annual Financial Statements which will be handed to the Auditor General (AG) at the end of August.

If there is disagreement as to how the City has dealt with the accounting treatment of this matter, we should wait for the AG's evaluation of the Annual Financial Statements.

Statement issued by the Executive Deputy Mayor of Cape Town, Ian Neilson, August 28 2013

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