File image: IOL
File image: IOL

National Treasury urged to extend cost-containment rules

By MAYIBONGWE MAQHINA Time of article published Jun 13, 2019

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The National Treasury has come to the defence of the cost containment measures for local government, saying they promoted better governance and management of finances in municipalities.

The department published the regulations last week, a move that attracted a mixed reaction.

The Municipal Cost Containment Regulations, effective from July 1, say municipalities and their entities should develop or revise and implement cost-containment measures.

According to the regulations, a municipality can only appoint consultants if an assessment of its needs and requirements confirms the affected institution does not have the requisite skills or resources.

Municipalities can buy vehicles for use by political office bearers that are not more than R700 000 or 70% of annual remuneration, and vehicles can be procured through the transversal contract concluded by the Treasury.

The rules also provides for the use of municipal fleet, public transport or shuttle service by officials and office bearers if the costs of such is lower than hiring vehicles and claimable kilometres.

It also prohibits issuing credit cards linked to a municipal bank account to any official or office bearers.

Also prohibited is incurring catering expenses for meetings attended only by municipal people, alcoholic beverages and branded items other than uniforms, office supplies and tools of the trade.

In a statement, the Treasury said the cost containment measures were in line with the Municipal Finance Management Act and other regulations to hold managers accountable.

“The regulations requires those municipalities or entities that do not have a policy in place to do so to ensure good governance,” it said.

According to the Treasury, then minister Pravin Gordhan announced putting such measures in place for local government in 2016.

“The draft regulations were first published for public comment on February 16, 2018. Twenty-eight written submissions were received.”

It also said the regulations were also intended to eliminate wastage of public resources on non-core service delivery items over the past years.

“Municipalities and municipal entities continue to spend public funds and municipal resources on non-priority items this results in diversion of public funds from core service delivery resulting in dissatisfaction by communities and delays in service delivery.”

The Treasury also said the office of auditor-general had highlighted the extent of wastage of public resources in the past four to five years.

“Weak governance as well as the significant increase in the number of municipalities incurring unauthorised, as well as fruitless and wasteful expenditure were also highlighted as areas of concern.”

The South African Local Government Association said it was aware that the country was undergoing economic and financial constraints.

“It becomes necessary that all of us in government tighten our belts as we strive to improve government efficiency. We have a responsibility to ensure that they remain practical and do not unintentionally impede service delivery and the implementation of the government programme,” spokesperson Sivuyile Mbambato said.

“In our endeavours to do more for less, all proposed measures should be applied across the board, that is, in all spheres of government.”

The DA said Minister of Finance Tito Mboweni should not limit these measures to local government.

“Stricter cost containment measures should be extended to all spheres of government and state-owned entities,” Geordin Hill-Lewis said.

Political Bureau

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