An aerial view of Cape Town at dawn. Picture: 123RF/MAURIZIO DE MATTEI
An aerial view of Cape Town at dawn. Picture: 123RF/MAURIZIO DE MATTEI

The Western Cape government is set on fighting deep cuts looming for provincial and municipal budgets after the release of Wednesday’s gloomy medium-term budget policy statement (MTBPS).

Transfers to provinces and municipalities will be reduced by a combined R40.8bn in the coming three years, finance minister Tito Mboweni announced.

These spheres of government are at the coalface of providing services to citizens. The Treasury said in the policy statement that the reductions “are likely to affect service delivery, particularly through delays in building infrastructure”. 

The cuts are “unaffordable and unrealistic and will compromise service delivery in the Western Cape”, finance MEC David Maynier said. The cuts are being imposed on provinces to “effectively bail out zombie state-owned enterprises”, he added.  

The provincial equitable share is reduced by R7.3bn through a 2% reduction on all non-compensation spending per year, the Treasury said, while direct conditional grants are reduced by a net R13bn.  

At municipal level, the cuts will come from a R3.2bn reduction of the local government equitable share and R17.3bn from direct conditional grants.

But the Western Cape would oppose the potential cuts using all platforms available, including the National Council of Provinces, parliament and intergovernment forums such as the budget council, said Maynier.

In the medium-term budget, it was announced that state aviation assets SAA and SA Express will get R5bn and R1.2bn in additional funding, respectively. The SA Post Office will get R2.9bn in new funding from the government. About R138bn has been earmarked for power utility Eskom over the next three years.

Along with the additional support for state-owned enterprises, the medium-term budget revealed steep declines in revenue collections of R251bn over the next three years.

The province aims to lessen the effect of the proposed cuts by reviewing its own budget to identify where it can save money.

donnellyl@businesslive.co.za