KwaZulu-Natal Legislature, Pietermaritzburg:  22nd October 2009

Madam Speaker

The focus of the Hon. MEC’s report was on the 17, mainly rural-based, KwaZulu-Natal municipalities which are in dire straits. With few or no sources of own revenue, they are unable to deliver services to their communities. In total, 18 municipalities in this province raise less than 15 percent of their own revenue while 6 municipalities raise less than 5 percent of own revenue.

The Municipal Property Rates Act, which was implemented in the last lot of KwaZulu-Natal municipalities in July, has not improved this situation. Four months into its implementation, a significant number of these municipalities are not billing their residents in accordance with the MPRA. Some of them have not set their randage, others have not properly identified their consumers.

In addition to their inability to generate revenue, many of these municipalities have cash flow problems, many routinely use conditional grants for operating expenses, many grossly overspend their budgets, many run on bank overdraft, and many entertain recurring audit issues. Their viability has come into question amid fears that they could be stripped of some of their powers.

At the core of the problem is the fact that legislation confers similar powers on all municipalities, irrespective of their status, size and capacity. For instance, the rural municipality of Umhlabuyalingana, which raises no own revenue and is 91 percent dependent on grants, is expected to deliver similar services to its residents as the eThekwini Metro, which has the capacity to raise billions of rands from its ratepayers.

As a result, these municipalities are only able to pay for their administration and their staff. The bulk of the challenges these municipalities face are therefore due to structural problems which are beyond their control. At the same time, as the Hon. MEC has pointed out in her report, there are no municipalities performing at the level which indicates a generally acceptable state of compliance.

A different set of municipal shortcomings occurs irrespective of the municipality’s capacity. These are demonstrated in what is a priority in many municipalities at the expense of service delivery: an expensive car or residence for mayor, overseas trips for office bearers and officials, permanently absent section 57 managers, large advertisements in newspapers, excessive spending on community projects which only benefit a few, or the changing of street names.

Very often politics also deepens rather than solves the problems. Unrealistic promises are made and wild expectations are created in order to win votes, but the same individuals who are responsible are nowhere to be found after elections. The frustrations of the communities are ignored and if visits are paid to them by provincial or national institutions to ostensibly listen and enlist public input, little or no feedback and progress follows. Similarly, interventions in municipalities are often motivated by political expediency rather than genuine desire to improve the prospects for service delivery.

In addition, several well-meant efforts aimed at creating efficiency and boosting municipal capacity have achieved the opposite. For instance, the rates and taxes accounting systems have been changed, but – as I pointed out earlier - instead of improving the situation, billing has been plunged into chaos and accounts are not sent out on time or not at all. As a result, outstanding debt owed to municipalities is increasing and further crippling efforts to improve service delivery.

Experience from municipalities that have devised unrealistic rates to cover unrealistic and wasteful expenditure, such as inflated salaries for public office bearers and senior managers has shown that shortfalls cannot be addressed simply by raising the rates and taxes to balance budgets. As things are, we are facing a situation where residents can no longer afford them. Only when the debt control measures have been addressed can we begin to balance the books and provide free basic and adequate paid municipal services.

On occasion, local government stakeholders have also compounded the problems of municipalities. SALGA, for one, has - without a proper mandate - on behalf of the municipalities negotiated a 13 percent increase, which these municipalities have not budgeted for. This will put further strain on municipalities and will result in fewer services being delivered. Interestingly, work ethics and productivity were not addressed during these negotiations, making municipal labour too expensive.

The latest proposal aimed at improving service delivery comes directly from the national Minister of Co-operative Governance and Traditional Affairs. While addressing the Association of Public Accounts Committees in Cape Town in September, the minister argued for municipal councillors to be remunerated at the same level as Members of Parliament. The assumption is that it this will immediately lead to improved service delivery in municipalities.

At a time when the fiscus is facing a major contraction as a result of the economic recession, the minister’s proposal would mean doubling the salaries for councillors in metropolitan councils and raising the pay of councillors in the smallest councils by four times their current level. If all 9000 councillors countrywide were to be remunerated at the same level as MPs and MPLs, the additional cost to the fiscus would be R5.8-billion.

As things stand, 70 percent of councils – the smallest and poorest – classified as categories 1 to 3, rely on national government to pay councillors’ salaries which they have been unable to afford since 2006 when salaries were doubled by the then national Minister of Local Government. Already this pay hike was made on the assumption that all councillors should discharge their council duties full-time. Councillors' allowances, which have risen sharply since 2006 in keeping with the boosted status of local government and revised salary structures, have already placed an undue burden on municipal budgets.

The current ministerial proposal is not only unaffordable but it is hard to justify in the same way as the current legislation anticipates both small rural and large metropolitan councils to deliver the same standard of services. Ward councillors in metropolitan councils serve as many as 14 000 constituents. Their counterparts in small rural councils are not quite so busy. The uniform salary hike is just another one-size-fits-all solution that will not work. A salary hike in the absence of proper performance assessment will merely create a new layer of state patronage without improving service delivery at municipalities.

Madam Speaker, what our municipalities really need are skilled and dedicated officials to deliver services. If a municipality has competent and hardworking officials appointed on merit, a decent level of services will be delivered, even if most councillors are failing to discharge their duties. If we are looking to spend more state resources in local government, we should invest them into skills.                 

I thank you.

Contact:
Roman Liptak

078 302 0929