N6 – Module 8
This analysis is made in order for the process of prioritising to take place, and the list of projects is drawn up for inclusion in The Capital Budget which is then approved by The Legislature.
Both the physical programme and the financial programme are vital in listing projects in their correct order for inclusion.
Operating Budget No capital budget project can be undertaken and financed without the operating budget being directly affected. Building a large project, such as a stadium, will mean added expense to the taxpayer even if the project is financed over one year by using existing revenue; if it is financed by using a loan the following three items will have to appear on the operating budget: • Loan repayments; • Operating costs – salaries, administration, electrical supply, etc.; • Maintenance – without this any construction deteriorates and the cost of repair eventually is usually far more than regular maintenance/
From this it can be seen that each capital budget directly affects the operating budget – the capital budget “supplies expenditure inputs” to the operating budget. (Gildenhuys 1993:449).
Case Study Te financing of the 2010 World Cup stadiums is a case in point. Te cost was around $2 billion – this is approximately R21 billion. Many people felt that the spin-off (positive spill-over) financial effects were not worth this expenditure. Tey felt the money might have been used to lessen or even eradicate the housing backlog, for instance. Added to this is the debate about maintenance: who is going to pay to approx R2 million a year to keep some of the stadiums operational?
“For the first time in its history, Polokwane now has an iconic landmark, the state-of-the-art Peter Mokaba Stadium, which holds over 40,000 people. Te design of the enormous concrete structure resembles South Africa’s baobab tree, with circular ambulatory ramps simulating tree trunks and overhead steel “canopies.”
It was named aſter a deceased politician from the National Congress Party who fought against apartheid but was also well known for using the slogan “Kill the boer, kill the farmer.” For a stadium in a majority white city, it’s an odd legacy to honour.
In spite of its grand scale and inspired architecture, Mokaba Stadium hosted just four games during the entire World Cup, all during the first round. Now it’s unknown how it will pay for itself. Reports in the South African media estimate that its annual
maintenance costs will be around $2 million. Polokwane has no local football team and even if visiting teams come to play, it is unlikely to draw enough fans to fill the 40,000 brand new seats. Of the 212 football games played by South Africa’s Premiere Football League in the 2009-2010 season, only four drew more than 40,000 fans, according to Sports Industry Magazine.” [Global Post, by Maura R. O’Connor July 6, 2010]
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