“Thus far an amount of R80 million has been paid to Sol Plaatje Municipality over the past two years for rates and taxes.”
THE MEC for Finance, Economic Development and Tourism, Maruping Lekwene, during his budget speech yesterday, indicated that 17 out of a total of 31 municipalities in the Northern Cape are in financial distress.
Lekwene pointed out that Sol Plaatje Municipality accounted for the highest debt in the Province.
“Thus far an amount of R80 million has been paid to Sol Plaatje Municipality over the past two years for rates and taxes.”
He said that they had engaged National Treasury to avail two technical advisers to Sol Plaatje Municipality.
“The advisers have been deployed until the end of March to improve supply chain management and payroll administration, while National Treasury is in the process of developing a financial recovery plan for the municipality.”
Lekwene said that many municipalities were overstaffed and were struggling to pay salaries.
“The norm for cost of employment as a percentage of operating expenditure is between 25 to 40 percent. Whenever any municipality exceeds this norm it can be an indication of inefficiencies, overstaffing or misdirected expenditure on non-essential or non-service delivery related expenditure. Regrettably, most of our municipalities rank way above this norm, while critical technical posts remain vacant. This must be reversed as a matter of extreme urgency.”
He stated that interventions aimed at building the capacity of local government were failing to produce the desired results.
“The inability to fund the delivery of basic public goods and other requirements, as required by their constitutional mandate, has far-reaching implications for the political, social and economic state of affairs in a municipality.”
Lekwene added that Provincial Treasury would appoint a rapid response team, using funds from National Treasury, to develop and implement financial recovery plans for municipalities facing legal action to attach their properties due to unpaid bills.
“We will attach conditions on this assistance as we often provide and deploy financial resources while municipalities lack commitment and the will to take ownership of the process to ensure continuity.”
He said many municipalities were selling services at a loss, which had a direct impact on payment of bulk services.
“Eskom and Provincial Treasury, in collaboration with National Treasury, provided training on determination of cost reflective tariffs in municipalities. Municipalities should conduct a cost of supply study to obtain long-term sustainability of cost reflective tariffs.”
Lekwene stated that they would consider offsetting the debt owed by departments to municipalities to ensure that departments prioritised payment for municipal services.
“Municipalities will be expected to have an effective billing and customer care process that generates credible and timeous accounts.”
He said that there was a firm commitment to settle debt obligations over the next three years. “This will allow us fiscal space to direct funds earmarked for debt to other policy imperatives and further assist Health and Education in this respect.
“The standing committee on public accounts is currently engaging various departments through the legislature process to provide for the current debt amounting to R965 million up to the end of the 2019 financial year to ensure that the Province is debt free.”
Lekwene indicated that the compensation of employees continued to be the biggest cost driver in the budget, where R11.6 billion of the total provincial budget was spent on salaries in the 2020/21 financial year.
“The current total personnel numbers for the Province are estimated at 29 504 up to the end of March 2020.”
He added that while a marginal decrease is expected in the staff complement, down to 28 277, in the 2022/23 financial year, personnel costs would increase by an average of six percent.
“The Province has not been able to attract the desired number of officials applying for the special dispensation to reduce the wage bill, where only 48 employees applied.
“The estimated costs related to this special dispensation amounts to R23.9 million, including the total exit packages and the employer’s liability.”
Lekwene stated that the insourcing of security personnel employed by private companies was at an advanced stage.
He reported that cuts in the conditional grants were not expected to have any impact on the delivery of services in the health and education sectors.
“We are taking tough actions on wastage across provincial departments. We have downscaled considerably on international trips, catering costs have been reduced, travelling and subsistence costs have also been reduced, in addition to further cost-containment measures.”
Lekwene added that the recession would increase reliance on government assistance, where tax revenue stood to decrease.
“Government is reliant on tax revenue to provide social assistance, develop infrastructure and to provide vital services to the people in the country. Further risks, amongst others, are low investor confidence and potential capital outflows.
Total provincial budget 2020/23:
R60.7 billion
Total provincial receipts: R45.5 billion
Conditional grants: R13.8 billion
Provincial own revenue: R1.4 billion
Department of Education:
R7.2 billion
Education Infrastructure Grant: R597 million
Improvement on condition of service: R165 million
Growth in pupil numbers, appointment of additional teachers:
R91 million
Sanitary towels at public schools:
R4.6 million
Eradication of pit latrines, construction of schools and maintenance:
R1.7 billion
Department of Health: R5.5 billion
Health infrastructure: R1.3 billion
Appointment of critical staff at health facilities: R21.4 million
Improvement on conditions of services: R194 million
Carry through for the bailout provided to the department in the 2018 medium-term expenditure framework: R150 million
Department of Social Development: R1 billion
Gender-based violence: R12.3 million
Appointment of social worker graduates: R9 million
Maintenance of early childhood development centres: R60 million
Office of the Premier: R273.3 million
Premier’s Bursary Fund: R4.9 million
Provincial Legislature:
R211.2 million
Department of Transport, Safety and Liaison: R308 million
Department of Roads and Public Works: R1.9 billion
Provincial Roads Maintenance Grant: R1.2 billion
Roads infrastructure: R3.9 million
EPWP: R4.1 million
Sol Plaatje Cleaning Project:
R20 million
Galeshewe Urban Renewal Programme: R10 million
Settlement of rates and taxes:
R20 million
Department of Economic Development and Tourism: R352 million
Department of Sport, Arts and Culture: R416 million
Construction of libraries and procurement of books: R167 million
Mass participation and sport development grant: R32 million
Provincial Treasury: R330.8 million
Municipal interventions and support: R5 million
Department of Co-operative Governance, Human Settlements and Traditional Affairs: R720 million
Housing: R1 billion
Title Deed Restoration Grant:
R11 million
Human Settlements Development Grant: R573 million
Department of Agriculture, Land Reform and Rural Development: R559.9 million
Comprehensive agricultural support programme grant: R123 million
Construction of agro-processing infrastructure for emerging, smallholder and previously disadvantaged farmers: R189 million
Department of Environment and Nature Conservation: R177.6 million
Infrastructure spending:
R11.9 billion
Local government infrastructure: R3.5 billion
