Select Committee Finance 21 Sept '11

23 Sep 2011

SALGA presents and makes recommendations to Select Committee on Finance and Appropriations (NCOP) on focal areas of Local Government

On 21 September a SALGA delegation, led by the Chairperson, Cllr Thabo Manyoni, presented and made recommendations to the Select Committee on Finance and Appropriations (NCOP) on four focal areas, Review of SALGA funding model; review of LG fiscal framework and municipal financial management; bulk water infrastructure, economic regulation and IGR approach and Councillor Support. Also in attendance were the Chairpersons of the Finance Committees from the respective Provincial Legislatures.

The session opened with the Chairperson of the Committee, Honourable De Beer, congratulating the new NEC and expressing his hopes for fruitful relations between SALGA and the NCOP.

SALGA opened with its presentation and articulating the resolutions of conference on the four focus areas.

Review of the SALGA funding model and its listing as a public entity

SALGA clearly articulated the challenges the organisation faces in meeting its mandate with the current funding model. The current high reliance on municipalities and CoGTA allocated grants is not sustainable in the long term risked SALGA scaling down on its activities if additional sources of revenue are not found.

SALGA has been dependant on sourcing additional funding, which has been a challenge due to its listing as a Schedule 3 public entity. SALGA informed the Committee that if the much needed additional funding requested from the National Fiscus was not forthcoming, the organisation should be delisted as a schedule 3 to allow it to seek additional funding externally.

Review of fiscal framework and Financial Management

The existing framework is a challenge for municipalities and a comprehensive review is needed to address fundamental structural challenges rather than minor ad hoc adjustments that only give short term solutions to operational efficiency. The comprehensive review of the Local Government Fiscal Framework should systematically re-assess the appropriateness of the baselines that underpin the vertical division of revenue to examine whether the Local Government sphere is receiving adequate revenue for funding its broader development mandate, not just free basic services.

This review must also seriously consider the much needed differentiated approach to municipalities based on the different fiscal capacities and varying delivery demands, as well as the significant fiscal gap between municipal revenue resources and their expenditure responsibilities.

Local Business Tax

SALGA expressed its concern on the role of SALGA in Intergovernmental structures and on the type of governance and funding model where municipalities are dependent solely on government grants. SALGA raised the need to have municipalities that are positioned to be financially viable with appropriate mechanism of self-funding. It further raised the need for the existing legal framework to change or be strengthened.

The intention of the Local Business Tax would be to partially address a significant funding gap at local government level, especially in relation to infrastructure & services, as well the weaknesses in the formal governance and accountability arrangements characterizing the intergovernmental fiscal system.

SALGA proposed that steps be taken to implement a local business tax to increase municipal responsiveness to the local economy, local accountability generally and to increase municipal fiscal capacity so that municipalities are better able to provide the infrastructure services required for economic development and growth.

SALGA touched on key observations from the municipal audit results, citing the major improvement in municipal audit outcomes whilst noting the challenges that that still need to be resolved.

Bulk Water Infrastructure

SALGA presented the case of municipalities when it came to bulk water infrastructure highlighting the need for a sustainable funding model for bulk infrastructure. SALGA has recommended the establishment of a national municipal infrastructure refurbishment fund to provide for the rehabilitation of municipal infrastructure, a national GIS based database and national programmes to collect data and manage information on an ongoing basis.

The plight of inheriting dilapidated infrastructure that is more than 30 years old and overdue for replacement, as we prioritised  the extension of services the previously not serviced rather than rehabilitating infrastructure. SALGA went further to graphically illustrate the capital expenditure to date on infrastructure backlogs to date.

Councillor Support

SALGA raised specific concerns with the lack of appreciation of the critical role of councillors vis-a-vis public office bearers at other spheres of government; the lack of understanding the roles and responsibilities and more so the critical contribution councillors make in our democracy and the disturbing increase in number of attacks on councillors and their property. Within the context of the challenges with the system of remuneration for councillors SALGA called for an urgent review of the system of remuneration which should give effect to the principle of uniformity and equity of all public office bearers across the three spheres of government.

Proceedings after the presentation

The presentation was welcomed by the Committee with great interest expressed on the detail provided under each of the four key areas.  Due to the nature and detail of the issue raised, the Committee further committed to engage on it further and proposed that a workshop be convened to thresh out some of the key issues.

SALGA was requested to take up its space in the NCOP, introduce constitutional amendments to the relevant parliamentary committee and introduce legislative amendments that are seen as impacting negatively on service delivery and effectiveness of SALGA as the voice of local government.

SALGA was also cited for not dealing with some of the critical issues such as the appointment of section 56 and 57 employees and the related vacancies; the appointment of unskilled and unqualified staff; high salaries to municipal officials; municipalities that are financially non-viable; spending of MIG funds on related matters (salaries, etc).

The Committee indicated that it would be necessary for SALGA to be part of the interaction that is planned with COGTA on the Local Government Fiscal Framework issues.

Interest was expressed in SALGA’s proposals on the Local Business Tax and the need to look into revenue collection within municipalities in addition to other forms of tax.

Conclusion

The Chairperson of the Committee confirmed that the interactions and engagements with SALGA over the years have been positive and trusts that it will continue if not be strengthened. He reaffirmed the committee’s commitment to assisting SALGA in the challenges raised during the presentation and where possible, use the appropriate platforms to raise these issues with a view to come to common solutions. The Committee requested SALGA senior officials and politicians to be part of the oversight visits in the provinces.