National government needs to do more to combat the widespread corruption in local government that is undermining its ability to deliver services, says the SA Local Government Association (Salga).
It has suggested that the national government set up a “war kitty” to deal with the pervasive problem, which contributed to the R25bn in irregular expenditure municipalities notched up in the 2017/2018 financial year, according to auditor-general Kimi Makwetu.
Salga acting CEO Mthobeli Kolisa said in an interview on Friday that the government had focused a lot of resources on combating corruption in national and provincial departments and state-owned enterprises but had not done enough at local government level, where there was a huge need to fight corruption. This was not something municipalities could do on their own.
“Municipalities need to be supported with the required capacity to root out and prevent corruption and to build technical, managerial and leadership capacity,” Kolisa said in a presentation to parliament’s standing committee on appropriations on the 2020 Division of Revenue Bill.
At the same time, Kolisa highlighted the underfunding of local government and said there was a need for a radical review of the proportions of national revenue allocated to national, provincial and local government.
He conceded that the shortage of government funding for local government had been worsened by poor leadership, bad decision-making and pervasive corruption, but said these factors provided “a convenient excuse to those who are trying to avoid dealing with the objective fiscal structural issues”.
Salga national executive committee member Bongani Baloyi said the 2020 Division of Revenue Bill “perpetuates the continuation of financial incapacitation of local government that Salga has decried for years. It continues to place an unaffordable burden on struggling ratepayers.
“Over the past 20 years the financial resources available to municipalities have fallen short of the demands on municipalities for services and infrastructure delivery needs and this has been worsening over time.”
Kolisa noted that while local government was responsible for 46% of the constitutionally mandated functions assigned to the three levels of government, it received the lowest allocation of national revenue, which in 2020/2021 will amount to 8.8%. Provinces received funding for functions that municipalities performed at their own cost when what was required was that funding for these functions should be appropriated directly to municipalities.
He said the subsidy amounts municipalities received as part of their equitable share of national revenue to provide free basic services of water, sanitation, electricity and refuse removal to poor households was typically lower than the actual costs of providing these services to the poor, who tended to consume more than the basic level.
“With the current Division of Revenue Bill, it should not be expected that there will be any significant improvement in local government performance,” Kolisa concluded.
Organisation Undoing Tax Abuse (Outa) parliamentary engagement manager Matt Johnston highlighted pressures on the revenue municipalities raised themselves, including through financial mismanagement and collection failures.
“While it may easily be argued that local government needs more rather than less funding, the reality is that local government financial management remains disastrous. There is no guarantee that money will be properly spent in the majority of municipalities. We need better value for money. This requires better oversight and, more importantly, real consequences for repeated delinquency,” Johnston said.
Later this year the Treasury will hold a local government budget forum meeting to investigate claims that local government is not receiving a fair share of national revenue.