Western Cape Government Response to Treasury
The Western Cape Government has responded to National Treasury's latest communication regarding the sale of the property known as the Tafelberg site.
A copy of the full letter sent to Treasury today is attached for ease of access.
This is a summary of the key points:
Our government has noted with concern the misunderstanding by Treasury, of the reasoning for the decision to release the Tafelberg site, while issuing directives for both the Waterfront property and the Old Woodstock Hospital site, to be earmarked for affordable housing.
It would seem Treasury relied on media coverage for its current view that the decision made by the Provincial Cabinet was "specifically based on the National Treasury directives for 'fiscal austerity' and revenue enhancement".
There was no single reason for the decision, but a range of reasons, as we have repeatedly stated before.
The need for fiscal austerity in the current economic climate was indeed one of them. However, it was by no means the only reason for the decision. It constituted one amongst a range of factors, in a complex situation, taken into account by the Cabinet.
We took the decision following the outcome of the national salary negotiations, that left us in a fiscal crisis. The national government could not bridge this, and Treasury accordingly advised us:
"With prevailing fiscal constraints it is impossible to fully cover the shortfall that both national and provincial governments now face as a result of the wage settlement. As such, Provinces must re-allocate their budgets to cover any shortfall over the 2016 MTEF."
Treasury further instructed provinces to "investigate how and where their budgets can be reprioritised to accommodate the (new) baseline reductions".
We followed up with this exercise in all Departments. The Department of Transport and Public Works was requested to find ways of leveraging some of our existing property assets to help balance the budget, in accordance with the Treasury instruction.
However, we took great care, despite the fiscal crisis, to adopt a holistic approach to the utilisation of provincial assets, so that we did not only pursue the single objective of balancing our budget. We consider prospects for achieving different government priorities on a site-by-site basis.
Cabinet has accepted that it cannot achieve all its strategic objectives on every single site.
On the basis of what was presented to cabinet, including the current pipeline for affordable housing in the Metro, the two aforementioned decisions, legal advice from senior counsel, affordability risks, fiscal constraints in the current economic climate, Cabinet resolved that the Tafelberg site is not ideally suited to affordable housing, especially as the state subsidy cannot be utilised there under current national policy.
The correct facts of the provincial government's commitment to delivering affordable housing are as follows:
- Pipeline projects worth R3.2 billion and 40 000 potential affordable housing units;
- The Better Living Model Game Changer : mixed-use, mixed-income projects in Pinelands (3600 units), an inner-city feeder suburb, and Belhar CBD (3000 units) -- both of which are well served by public transport; and
- The conclusion of an MOU between Human Settlements and Public Works, in terms of which pockets of inner city land have been identified for transfer and use by Human Settlements for affordable housing.
We find the latest Treasury communication peculiar as Treasury is acutely aware of the budgetary constraints and challenges facing governments across the country exacerbated by the economic meltdown which occurred at the end of 2015.
We have set this out in great detail in the letter attached.
The Western Cape Cabinet is committed to redressing the legacy of Apartheid spatial planning, through the provision of well-located affordable housing throughout the province in a rational, prudent and holistic manner.
We hope the cause for affordable housing will not be distorted for the benefit of political or other agendas going forward.