War has been declared on frivolous expenditure by municipalities by Finance Minister Pravin Gordhan who this week urged mayors, councillors and municipal officials to pull up their collective socks, cast aside designs on luxury fast cars, and focus on delivery.
Releasing the local government budgets and expenditure review, the minister listed a range of examples of what he called “non-priority” expenditure which could have saved R27 billion in 2009/10 financial year to June last year.
These included excessive sponsorships for music festivals, beauty pageants and sporting events, “including buying tickets to events for councillors and officials”.
He and Treasury director-general Lungisa Fuzile want councils to claw back R62.3bn owed by business, individual ratepayers and government departments to municipalities by December last year, although they admit that the bulk of this debt is probably already too old to retrieve and it may have to be written off. This figure was up 11 percent from R56bn in December 2009.
Of the 2010 debt, R46.9bn was owed for “over 90 days”, R2.5bn was 61 to 90 days old, R3.1bn was 31 to 60 days old and R9.7bn was 30 days or less old.
But urging the media to see the state of local government as a half-full glass – rather than a half-empty one – the finance minister did report a number of positive developments.
Capital spending on water infrastructure by all 283 municipalities rose from R659 million in 2006/07 to just more than R6.5bn in 2009/10. If one adds operating expenditure the figure jumps from R8.3bn in 2006/07 to R17.5bn this time. There has also been an increase in the number of households receiving basic water and sanitation – although the numbers receiving free services have dropped.
This is positive, said Fuzile. “There has been a decline in the overall number of households receiving free basic water and free basic sanitation… this is due to many municipalities moving away from providing these services free to all households to targeting the provision of free services to indigent households only. It strengthens the sustainability of the free basic services programmes of the municipalities.”
Of the 10.9 million households receiving basic water services in 2009, 6.3 million got them free. This was compared with 9.8 million getting basic services compared with 7.2 million getting them free in 2007.
Of the 9.2 million households receiving basic sanitation services, just over 3 million received that free in 2009. The figures in 2007 were 8.1 million and 3.1 million.
Capital spending on electricity infrastructure by municipalities grew strongly – at an average annual rate of 24 percent in 2007/08 and 2008/9 – but for a variety of reasons, including the effect of the recession, spending “remained flat” in 2009/10. Spend was R4.7bn for all municipalities including R3.3bn for the six metros including Johannesburg, Durban, Cape Town, Ekurhuleni, Tshwane and Nelson Mandela Bay in 2009/10, roughly the same figure for 2008/09, but up from just more than R3bn in 2006/07.
Gordhan acknowledged that uncertainty in the distribution industry “during the debate over the regional electricity distributors (Reds)” led to many municipalities delaying necessary maintenance work.
It was now clear that the responsibility in future lay with the municipalities.
The review notes that similar to free basic water, free basic electricity figures have dropped. The number of consumer units – households – receiving free power was 2.9 million in 2009. This was up from 2.7 million in 2008 but significantly down from the 3.3 million in 2006. “Several municipalities have changed their policies from providing free basic electricity to all households to targeting poor households only,” said Fuzile.
This was funded through an unconditional national allocation to municipalities. - Donwald Pressly