Western Cape Infrastruture budget has been cut due to underperformance.
Image: Ayanda Ndamane / Independent Newspapers
THE DA-led Western Cape Infrastructure Department has underperformed, its strategies fell short, lacking the substance needed to tackle the looming risks of underspending and, ultimately, poor performance which led to its budget being cut.
The Western Cape is among the four provinces set to lose hundreds of millions of rands allocated by the National Treasury to build houses, upgrade informal settlements and improve education infrastructure due to non-expenditure. The funds are expected to be reallocated to other provinces.
Infrastructure MEC Tertius Simmers recently claimed that his department was in the dark about the reasons for the cuts and needed more information explaining how the National Department of Human Settlements had come to its decision.
However the national government refuted these claims, saying they had met with all provinces where the reasons for the decision were explained.
The National Department of Human Settlements explained that as the Transferring Officer of conditional grant funds, they were tasked not only with ensuring the transfers of grant funds to provinces and metros, but also to monitor performance of the funds in line with projected expenditure in the approved business plan, implemented projects on the ground as well as the set targets for the period under review.
“The Department, during the beginning of the adjustment period in September 2024, issued letters to Provinces that reported poor performance indicating concerns about their performance and requested that they respond in writing clearly stating measures in place to improve their reported concerning performance.
"The Western Cape Province was amongst the four identified provinces, and they submitted the requested improvement strategies. The Department, subsequent to these submissions, indicated in writing its concerns regarding the efforts put into the strategies as they lacked substance that will result in mitigating the then glooming risk of underspending and ultimately underperformance. At no point did the Department proceed without communicating the performance concerns it had with the identified Provinces, including the Western Cape and followed the due process in terms of the Division of Revenue Act (DoRA),” national government said.
The DoRA prescribed that, in the event that the Transferring Officer was concerned about the performance of a province, it should first adhere to “section 17- Intention to withhold grant funds, then secondly followed by section 18- stopping of grant funds and thirdly by section 19- reallocation of grant funds”.
“The Department duly followed this process and all the relevant parties including National Treasury and the Political Head of the Department in the Western Cape and those of the other three Provinces and their Provincial Treasuries, were duly notified of these processes."
After analysing provincial recovery plans the national housing authority recommended which provinces should receive additional funding and which should have funds stopped to prevent underspending and the Treasury supported these recommendations.
“The analysis is undertaken taking into account the 6 months performance and the adjusted business plans are considered after this adjustment period. The province reported performance that was less than 45% of its annual allocation and in a period where at least 50% of the funds should have been spent.
“The total voted funds for the 2024/25 financial year under this grant amounts to R1.606 billion and with R744 million transferred, the Province had reported on a signed submission by the Head of Department, an expenditure of R660 million as at 30 September 2024.This reported cumulative expenditure at that reporting time equated to 41% of the total voted funds, which was less than the desired 45%. The total voted funds for this grant amounts to R382 million and R192 million had been transferred to the province. The reported cumulative expenditure as signed by the Head of Department, was R75 million. This reported expenditure at that reporting time equated to only 20% of the total voted funds, a performance far below the desired 45%.”
The Western Cape also “failed to fully spend its Informal Settlement Upgrading Partnership Grant (Isupg) during the 2023/24 financial year despite assuring the National Department that the funds will be fully spent” said the human settlements department.
“In addition, the province did not even take initiatives to submit a rollover application for the unspent Isupg funds.
“The approval of the adjusted business plans should not be viewed as agreement that the Department agrees with the reported performance. Provinces are permitted to adjust their business plans during the adjustment period, and they can utilise this opportunity to move funds to projects that they view as likely to perform in line with their set objectives.”
Simmers’ office did not directly respond to requests for comment around the matter, instead referring the Cape Times to a previous statement.
In that statement, he said: “It is critical that the National Department of Human Settlements engages with us and shows us how they came to this decision. We have to come to a resolution, because there is simply too much at stake for housing beneficiaries in this province. This R300 million budget cut puts current projects and hundreds of housing opportunities in the Western Cape at risk.”
Cape Times