New mayors only worry about cars, perks

2012-01-11 20:00
Johannesburg - New mayors who came in after the 2011 local government elections are more concerned about the “official vehicles” they drive and the perks that come with their job than serving communities, according to a stinging report by National Treasury on the state of municipal finances.

The report, which analysed the finances of all municipalities up to June 2011, also said mayors often interfered in the financial management procurement processes and this led to deteriorating municipal finances.

“While it was hoped that the local government elections will usher in some changes in this regard, the signs are not encouraging.

"It is apparent from newspaper reports that certain of the new mayors are more concerned about the official vehicle they drive, their accommodation and perks than serving their communities," said the report.

The study also blamed underspending by municipalities as one of the main reasons service delivery was deteriorating.

“Total under-spending of the 2010/11 capital budget was R12.4bn or 29.3%,” said the report released on Wednesday.

Financial distress

The report also found that 66 of the country’s 283 municipalities are in “financial distress”, while a further 37 “are on the borderline to being identified as being in financial distress”.

Metros Ekurhuleni and Mangaung were in “financial distress”, as were cities such as Mogale City, Msunduzi, Polokwane, eMalahleni and Madibeng.

These municipalities “persistently” did not have funds to pay for services, overspent on their “original” operating budgets, underspent on “capital budgets, have a growing list of debtors, and counted creditors as a percentage of their investments".

“The financial situation of many municipalities has deteriorated significantly over the last four years - and the failures are becoming increasingly visible - impacting directly on service delivery.

This was clearly demonstrated in the run-up to the local government elections,” said the report, which has been published since 2009.

According to Treasury, municipalities were asked to provide information on their financial records on a regular basis to conduct the study and make interventions where necessary but some municipalities were not co-operating.

The report also bemoaned the increase in the number of municipalities which had a “negative or unknown cash balances” for longer than five months from 24 councils in September 2010 to 47 in June 2011.

Deterioration


“This suggests deterioration in the cash position of a growing number of local municipalities, and growing challenges in municipal cash-flow management,” said the report.

Political interference in procurement processes, poor financial planning, the high number of vacancies and acting municipal and financial managers, and badly managed tender processes exposed most municipalities to corruption, said the report.

Treasury also identified that councillors and mayors were pushing incumbent managers out of their positions and this trend was prevalent soon after an election was held.

It said in some instances changes in management of senior officials were not a bad thing if the officials were “incompetent or corrupt”, but it was concerned that mayors and councillors were firing managers to “deploy candidates for patronage or political reasons”.

“This defeats the aims of the Municipal System Amendment Act to depoliticise, professionalise and stabilise the administrations of municipalities,” the Treasury report found.

This also led to the “substantial” financial cost of having to place officials on suspension, with pay, or pay them “golden handshakes”.

Read more on:    local government  |  tenders  |  service delivery

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