Democratic Alliance wrong to claim 67% of Cape Town’s budget spent on poor communities

Comments 5

The Democratic Alliance, and many of its senior members, claimed that the City of Cape Town municipality spends 67% of its budget in poor communities. But the evidence that they provided doesn’t prove that.

What do Cape Town mayor Patricia de Lille, Democratic Alliance national spokesman Phumzile van Damme, member of parliament Kevin Mileham, Cape Town councillor Anda Ntsodo and shadow minister of water and sanitation Nosimo Balindlela have in common?

They have all claimed that the Democratic Alliance-run City of Cape Town municipality spends 67% of its budget in poor communities.

This highly contested factoid has also featured in the party’s local government election manifesto and on its official Facebook page.

Is there data to support the claim, though?

How the city interprets ‘poor’

CoCT 67Africa Check contacted the Democratic Alliance at the beginning of May 2016 to ask for evidence to support the claim – as it was cited in their election manifesto: “In the 2014/15 financial year, the City of Cape Town spent 67% of its budget in poor communities.”

In response, the party sent us a memorandum which provided a “summary of the City of Cape Town’s approach in determining what portion of its budget is targeted towards our poorest residents”.

It stated that the city’s “pro-poor spend” calculation is “sourced from line departments” and based on their “respective understanding of the utilisation of their resources”.

“Poor” is interpreted, the memorandum explains, as “being poor by lack of resources, deprivation of human rights, absence of free basic services and capabilities to live at a standard considered comfortable or normal in a society”.

Data provided for wrong year

Attached to the memorandum was a spreadsheet. However, the spreadsheet was for the 2015/16 financial year – not 2014/15, as was cited in their election manifesto.

It’s unclear how the city compiled the spreadsheet because the 2015/16 financial year was not yet over when they sent it to us on 18 May. (Their financial year runs from 1 July to 30 June.)

We alerted the DA to this and they sent us the city’s breakdown for 2014/15.

Spreadsheet only contains ‘service delivery budget’

“The City of Cape Town spends 67% of its budget on services to and upliftment of poor communities,” the party’s spokesman Van Damme claimed in September last year.

But the city’s breakdown does not support this statement – or the others made by De Lille, Mileham, Ntsodo and Balindlela.

Rather, the spreadsheet provided by the city sets out that 67% of what is described as the “service delivery budget” is invested “in poor areas and informal settlements”.

The “service delivery budget” includes the line departments City Health, Human Settlements, Safety and Security and Social and Early Childhood Development. It also includes parts of the budgets of other departments, such as Community Services, Transport and Utility Services.

The city’s tally of these line department’s spending adds up to an investment of R17.5 billion in 2014/15 in poor areas and informal settlements. (Note: On some occasions, the claim has been made within this context.)

A number of departments are not included in the city’s calculations. These include Compliance and Auxiliary Services, Corporate Services, Energy, Environment and Spatial Planning, Finance, Rates and Other and Tourism Events and Economic Development.

If the city’s figure of investment in poor areas and informal settlements (R17,504,774,569) is calculated as a percentage of the total latest publicly available 2014/15 budget (R35,458,835,000), the portion the city says it invested drops to 49.4%.

Departments’ figures contradict the city

But is the city’s estimate accurate? We attempted to verify a number of the figures listed in the spreadsheet.

  • City Health

According to the city’s spreadsheet, City Health invested 85.2% of its total budget in poor areas and informal settlements.

However, mayoral committee member for health, councillor Siyabulela Mamkeli, told Africa Check that “it is not easy to exclusively separate the budget according to poor areas and informal settlements”.

She could only provide a breakdown of what percentage of sub-district budgets was spent in informal areas. This amounted to R196,763,472 in 2014/15 – 21.3% of City Health’s total 2014/15 budget.

  • Social Development and Early Childhood Development

Similarly, mayoral committee member for social development and early childhood development, councillor Suzette Little, told Africa Check that “approximately 84%” of her department’s total budget was spent in poor areas and informal settlements.

This is higher than the figure of 78.2% provided by the city.

  • Safety and Security

The city said that 54.2% of Safety and Security’s budget was spent in poor areas and informal settlements.

However, at the time of publishing, the department had not been able to confirm this.

“The Safety and Security Directorate is having some trouble doing a breakdown of their budget as per your request, reason being that it’s a service provided across the city and to all residents,” City of Cape Town senior media liaison officer, Janine Willemans, told Africa Check. “It is a very difficult exercise.”

These inconsistencies cast doubt on the city’s figures, especially since the city said their figures were “sourced from line departments”.

Conclusion: DA wrong to claim 67% of Cape Town’s budget spends in poor communities

The Democratic Alliance and many of its senior members claimed that the City of Cape Town spends 67% of its budget in poor communities.

The claim is incorrect based on the evidence provided by the city.

The city’s breakdown of the calculation set out that they spent 67% of what they call the “service delivery budget” in poor communities and informal areas.

When the amount the city says it invests in poor areas and informal settlements it calculated as a percentage of its whole 2014/15 budget it works out to 49.4%. The exact percentage of the City’s budget that is spent in poor communities and informal settlements is unknown. It’s unlikely that an accurate figure could ever be calculated, especially given that line departments have highlighted how hard it is to isolate this expenditure. 

Edited by Anim van Wyk

 

Additional Reading

Does the DA create ‘change that moves SA forward’? We weigh up key claims (2016)

We sent a number of questions to the Democratic Alliance two days before publishing this fact-check. They responded after our deadline. We have included their comments below:
  1. We received the 2015/16 estimates from you on 18 May 2016. How was the City able to calculate this figure when the financial year in question was not yet complete? 
The claim (regarding pro-poor spending) relates to our planned spending as per the City’s budget. Financial years in local governments run from 1 July to 30 June. The budget for 2015/16 would have been prepared in late 2014/early 2015. Estimates of planned pro-poor spending would have been made as part of the budget preparation process. 
  1. The "Operating Current Budget" and the "Capital Budget" figures for City Health, Human Settlements, Safety and Security and Social and Early Childhood Development don't align with City of Cape Town's 2014/15 Medium-term budget or the 2014/15 figures in the 2015/16 Medium-term budget. Can you please tell us where these total figures have been sourced form? (The exception is City Health's capital budget of R21,966,466 which is reflected in the 2014/15 Medium-term budget.)
As indicated before, the estimate of pro-poor spending is based on a once-off annual exercise.The calculation provided was based on the budget tabled for public participation in February 2014 (available as part of the Council minutes). Adjustments continue to be made to the budget during the public participation process prior to the final approval by Council, and in various adjustment budgets. Such adjustments would not have a significant impact on the estimate(s) of pro-poor spending.
  1. City Health told us that they could only give us an estimate of the amount they spend in informal settlements - not poor areas. For 2014/15 they said it was R14,031,938.27 (23%) of the sub-district's budget. This is about 16% of City Health's operating and capital budget for 2014/15. How did the city calculate the figure of 85.2% when City Health can only provide estimates for spend in informal areas? 
The methodology used in determining the pro-poor budget was outlined in the original feedback provided. The City’s budget structure is not aligned with specific socio-demographic profiles.  Line departments and functions calculate the pro-poor spend as an annual, ad-hoc exercise and in accordance with their respective understanding of the utilisation of their resources, in line with their own business plans and Service Delivery Implementation Plans (SDBIP). The process is coordinated by the City’s budget office. The figures provided were sourced from the budget office.
  1. Social Development and Early Childhood Development told us that approximately 84% of their 2014/15 budget was spent on poor areas and informal settlements. Please can you account for the discrepancy with the figure of 78.2% you provided?
 Please see response to 3 above. Estimates provided as part of the annual process co-ordinated by the budget office may have been conservative.
  1. The table states that 67% of the "service delivery budget" goes to the poor. Why has the DA then attributed this percentage to the City of Cape Town's budget as a whole?
The DA’s reference to the budget can be found in this document.

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Comment on this report

Comments 5
  1. By Stian

    So the DA’s response seems to be true, if maybe inaccurate when they don’t specify that it is the service delivery budget. They also provide the source for the information, which confirms their initial number.

    What this whole article then boils down to is that it is difficult to be 100% accurate. How can Africa Check then say that it is wrong?

    Also, it must be pretty obvious that what is interesting is where the service delivery budget is spent, not the total budget?

    To me it seems like Africa Check’s statement is more inaccurate than DA’s.

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  2. By Damian

    Would also be interesting to know what percentage of the Citys entire budget is spent on poor communties if we are going to be using total budget as a denominator. For example, Environment and Spatial planning where not included in the service delivery estimate, but the City is definitely spending a portion of that budget on poor communities

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  3. By Dirk de Vos

    The City of Cape Town’s claims are overblown and don’t support the 67% claim as this is hard to do without making very fast and lose assumptions that are hard to factually check.

    The biggest problem in the Africa Check article is where the 49%/50% figure is derived. This is calculated on the “investment” (actually there is an investment & operational spend) in poor areas and informal settlements of R17,504,774,569 which is then divided by the total latest publicly available 2014/15 budget of R35,458,835,000. Actually, that R35 billion is misleading as R11.3 billion odd is via the sale and distribution of electricity bought from Eskom.

    To get an accurate picture, the whole electricity budget should be taken out first and only the surplus generated R1,8 billion added back. That would reduce the R35 billion to R26 billion and divided by R17 billion, you get 65%. Of course, you are still left with the question of electricity. As it is supplied on a per kWh basis is highly re-distributive and more so with inclined block tariffs. A proper cost of supply analysis would show that all consumers of electricity that consume less than 600kWh/month are subsidised (i.e. it cost more to supply these customers then what one gets from the charges). The cross-subsidy of poorer customers and the surpluses (which get put into the general budget & spent in the way described) is almost entirely generated by customers consuming over 1,000kWh/month. In this way, electricity is more highly re-distributive than the general budget.

    I do agree that claims in political campaigns should be checked and Cape Town fails in many important respects – the first hald of your piece was valuable but the alternative calculation you suggest is just not correct. Hope that this contribution assists.

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    • By Africa Check

      Thank you for your comment, Dirk. We fact-check a claim as it is made because that is how it will be understood by the public. The DA’s claim made reference to the budget as a whole – not the budget excluding electricity.

      Our calculation of the 49.4% was an attempt to give readers an idea of what percentage the “pro-poor” spend could be of the whole budget. The exact percentage of the City’s budget that is spent in poor communities and informal settlements is unknown. It’s unlikely that an accurate figure could ever be calculated, especially given that line departments have highlighted how hard it is to isolate this expenditure.

      We have added a line to the report to make this clearer.

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  4. By Lester September

    Dear Africa Check,

    We request clarification, I have interpreted your article to state that the city spends only 49% of their budget in poor areas,

    It would be interesting what percentage of the total budget Social Development and Early childhood development gets, to measured against the amount of social ills on the Cape Flats, bearing in mind the city’s constitutional obligations to promote a safe and healthy municipal environment, and promote social development as per S152 of the Constitution?

    Supporters of the ruling party, in reference to your article claim

    “note the conclusion of the article where it is shown that that the DA misquoted themselves, and noted that they were referring to the service delivery budget, and not the total budget, which includes the Eskom electricity budget and all other expenditure as well.

    “The Democratic Alliance and many of its senior members claimed that the City of Cape Town spends 67% of its budget in poor communities.

    The claim is incorrect based on the evidence provided by the city.

    *The city’s breakdown of the calculation set out that they spent 67% of what they call the “service delivery budget” in poor communities and informal areas.*

    When the amount the city says it invests in poor areas and informal settlements it calculated as a percentage of its whole 2014/15 budget it works out to 49.4%. The exact percentage of the City’s budget that is spent in poor communities and informal settlements is unknown. It’s unlikely that an accurate figure could ever be calculated, especially given that line departments have highlighted how hard it is to isolate this expenditure. “”

    Are you claiming that the ruling party misquoted themselves?

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