Treasury has released its new Municipal Cost Containment Regulations through which it hopes to ensure that public resources are used effectively, efficiently and economically. Mayors, councillors and municipal managers have been warned that failure to implement or comply with the new regulations will result in them being held liable for financial misconduct. The regulations will apply to all municipalities and their entities from July 1.
“Despite provisions in the Municipal Finance Management Act (MFMA) and the reforms developed over the last 13 years to support the implementation of the MFMA, municipalities and municipal entities continue to spend municipal resources on non-priority items,” Treasury said. It said spending on non-priority items resulted in the diversion of funds from core service delivery, resulting in dissatisfaction in communities.
In terms of the regulations, mayors will no longer be allowed to buy cars that cost more than R700 000 or 70% of their annual salaries. Mayors earn between R404 000 and R1.3 million a year depending on the size of the municipalities they run.
Last year Lindiwe Ntshalintshali, mayor of the eMalahleni Local Municipality in Mpumalanga, faced service delivery protests over her decision to buy a R1.5 million luxury car.
Ntshalintshali was forced to abandon the plan.
Morris Mataboge, mayor of the cash-strapped Waterberg District Municipality in Limpopo, was also shopping around for the latest R1m SUV last year. The municipality wanted the car to have a three-litre engine, alloy wheels, panoramic sunroof, and rain sensor wipers, among other specifications.
The municipality already had a palladium silver ML350 Mercedes-Benz BlueTec which was bought for R900 000 in December 2014. Electioneering using municipality funds has also been banned, according to the regulations.
The regulations state: “Municipal resources may not be used to fund elections, campaign activities, including the provision of food, clothing and other inducements as part of or during election periods.”
The regulations also prohibit the hosting of social functions, team building exercises, year-end functions, sporting events and budget vote dinners using municipal funds. These cannot be bankrolled by suppliers or sponsors either
From July municipalities will only be able to appoint consultants if an assessment of needs confirms that they do not have the requisite skills or resources in their full-time employ to perform the function.
The consultants must be paid fair and reasonable remuneration, taking into account the rates stipulated by Auditor-General Kimi Makwetu and the public service and administration department.
Last year Makwetu complained that the continued reliance on consultants for financial reporting, which cost R838 million, called into question whether municipalities have the appropriate basic systems of internal control to ensure accurate and relevant in-year reporting.
”Over the last four to five years the auditor-general’s general reports on local government audit outcomes highlighted the extent of wastage of public resources” Treasury said.
Weak governance, according to Treasury, and the significant increase in the number of municipalities incurring unauthorised, irregular, fruitless and wasteful expenditure are also highlighted as areas of concern.
In June Makwetu revealed that irregular, fruitless and wasteful expenditure stood at over R17.7 billion in the 2015/16 financial year.