Municipalities wasted R27bn - report

2011-09-15 09:19
Cape Town - Municipalities could have saved R27bn in the previous financial year - that is R74m per day - by cutting down on unnecessary expenses.

Finance Minister Pravin Gordhan said on Wednesday at the launch of the Treasury’s latest financial municipal oversight report that new council members had to “forget about fancy extras like brand new Mercedes-Benzes”.

The oversight report for the 2009/10 financial year listed a range of items which municipalities had to cut down on, including “excessive” benefits, like expensive cars, cellphone allowances, sponsorships, catering, work sessions, luxurious offices, overseas trips and consultants. In this way up to 15% of their costs could be reduced.

“Cut down on non-essentials and get your planning, budgets, service delivery and bureaucracy right,” said Gordhan at an information session at Parliament.

He believed some “progress” had been made, but cautioned municipalities to rather spend their budgets on necessary infrastructure development and maintenance.

Break in trust

Although the report showed that more people had gained access to essential services during the last three financial years, the break in trust between residents and local government was identified as the “biggest obstacle”.

Up to 111 service delivery protests were reported last year (the most since 2004) and there was an increase in the number of “militant” taxpayers' associations, which held back payments due to disputes with municipalities.

According to the report, the financial affairs of municipalities still looked bad, in part because of faulty service accounts, but also because too little was charged for services and because of an inability to collect debt. Outstanding debt was R62.3bin in December – an increase of 10% compared to 2009.

There was still too little being spent on maintenance and repairs to electricity distribution networks, water infrastructure and roads. The national backlog regarding water infrastructure was R13bn.

The report warned that this neglect would in the medium term lead to unreliable services, higher maintenance costs, transmission losses, lower income and finally raised tariffs for taxpayers.

“Several rural municipalities don’t know what assets they have, where they are or how old they are.”


In addition there was a shortage of critically essential technical skills like those of qualified drivers, engineers and technicians.

Statistics also showed municipalities and metro councils were employing fewer staff in critically important sectors like financial and technical departments and more in “other” departments. By 2009, 11% of employees were tasked with financial administration, 23% were in technical sectors and 65% in “other” departments.

Although staff numbers increased by only 4% between 2006 and 2009, municipal salary accounts increased by up to 52%.

And while metro councils and smaller city municipal managers earned salaries appropriate to the experience and skills required by those posts, municipal managers at district councils were paid salaries that were “unreasonably high”, said the report.

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