Finance Minister should not cut pro-poor grant funding – GHL

Cape Town Mayor says over R107m has already been cut from housing and informal settlement grants

Cape Town calls on Finance Minister not to cut pro-poor grant funding

19 February 2024  

‘I'm calling on the Finance Minister to protect grant-funding and equitable share allocations to municipalities over the next three years.

‘We strongly object to any further anti-poor budget cuts to national funding, which would mean even deeper cuts for Cape Town's pro-poor spending priorities - particularly for basic services and housing. 

‘Rather than cutting spending that actually delivers to the poor, cuts should come from government departments that serve no meaningful purpose. There is also billions in unnecessary funding going towards Ministerial VIP security, estimated to be in excess of R3 billion.

‘We have shown in Cape Town that, even in tough financial conditions, it is possible to make budget choices that are progressive, pro-poor and pro-growth. This is what we expect from the Finance Minister’s speech on Wednesday,’ 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.

‘We understand that equitable share funding to municipalities and provinces is under threat in this new budget. Actually, what we want to see is an increased share for Cape Town, as the census confirms that we will soon overtake Jo’burg as South Africa’s biggest city with over five million residents,’ said Mayor Hill-Lewis.

Cape Town’s Urban Settlements Development Grant (USDG) and Informal Settlements Upgrading Grant (ISUPG) were cut by a total of R107m for the current 2023/24 financial year alone, as announced in the Minister’s October 2023 Medium-Term Budget Policy Statement.

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 commitment to devolution of passenger rail

‘Budgets are a reflection of government priorities, and Cape Town hopes to see a budget commitment to devolving passenger rail to capable metros over the three-year budget in line with the stated national policy.

‘President Ramaphosa’s SONA was silent on the delayed national Rail Devolution Strategy. If the Finance Minister now also fails to make a budget commitment to devolution, this will be a clear signal that national government has abandoned this policy priority.

‘Getting trains running efficiently is extremely urgent for our economy, and for households. 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.

‘We have made a standing offer to form a joint committee with national government to fast-track devolution. But if the President and his Cabinet again fail to act with urgency, this will ultimately necessitate an intergovernmental dispute. Commuters cannot wait indefinitely for a clear deadline on handing over passenger rail in Cape Town,’ said Mayor Hill-Lewis.

Issued by Lyndon Khan, Mayoral Media Officer, City of Cape Town, 19 February 2024