The Nelson Mandela Bay Municipality has been raked over the coals by the national Treasury for its indigent policy which has left the city’s finances in a shambles.
Amendments to the Assistance to the Poor (ATTP) policy, approved by the previous administration in June, have resulted in the metro having to shoulder a budget deficit of about R500-million for the current financial year.
This is in stark contrast to the R4-million surplus it had forecast at the beginning of the 2016-17 financial year.
The ATTP indigent policy provides free basic services and discounted electricity purchases to poor households.
It was amended by the city last year to benefit all residents whose homes cost R100 000 or less.
In a scathing letter, Treasury director of local government budget analysis Templeton Phogole warned that if the policy was not reviewed, it could lead to unaffordable tariff increases in the next financial year, which starts on July 1.
“The metro is seriously advised that the current indigent policy is not affordable and may result in higher than affordable tariff increases in the 2017-18 [financial year],” he said.
“It is a significant risk that the metro presented that it will close the 2016-17 financial year with an operating deficit estimated at R536-million, which is a great concern considering the cash-flow status of the metro.
“This emanates from the adoption of the ATTP with a qualifying criteria to further include houses valued at less than R100 000.”
Last week, the mayoral committee resolved to verify all ATTP recipients as the city believes some beneficiaries who automatically qualified for discounts can afford to pay for services.
The decision awaits the council’s final approval on Thursday before it can be implemented.
Metro budget and treasury official Jackson Ngcelwane said yesterday that due to the increased debts written off, the city was forced to table a budget deficit.
He was speaking at a joint mayoral and budget and treasury committees meeting, where the adjustments budget was discussed. “The original budget on June 7 had a surplus of R4.8-million, now it has a deficit of R471.692-million,” Ngcelwane said.
“We had to write off the qualifying ATTP recipients and we write off daily whatever is accrued on ATTP customers.
“We had to make sacrifices to avail the funds. We met with the national Treasury to alert them to the situation.
“This is not a very nice budget, but this is the best situation we can present to council.”
Budget and treasury political head Retief Odendaal said they would have loved to present a surplus budget, but that was impossible.
“The national Treasury said it is clear to them that the solution is to rescind the decision to change the ATTP,” Odendaal said.
He said the Treasury had advised that they find money in the budget to accommodate the massive deficit, but said it was not possible to cut any of the budgets to accommodate the R500-million.
“We said we could look at where we could find additional budget and possibly trim the deficit,” Odendaal said.
ANC councillor Bicks Ndoni said the city should reconsider the reviewing of the ATTP.
“The reason we made the decision to allocate ATTP based on property values was because of the long time it took for people to get the benefits.
“You cannot make something available to people but make it difficult for them to get it,” Ndoni said.
“It is as good as not there. All other parties agreed on that decision.
“But the way it is projected, it is demonised like it is something that will sink the municipality.
“It is almost like you are saying there are people who planned to sabotage the municipality.”
Ndoni urged the city to be cautious and sensitive when dealing with the ATTP policy and not focus on the recommendations of the national Treasury.
“I feel strongly that we should engage national Treasury on the complication of doing away with the policy,” he said.
EFF councillor Yoliswa Yako said: “We hear the assurance from councillor Odendaal that the review will not in any way infringe those benefiting.
“The main reasons people take to the streets is the lack of information.
“We support the review but people must be told.
“We don’t want a situation where they are being patronised.”