The South African Local Government Association (Salga) and the Congress of South African Trae Unions (Cosatu) gave their responses yesterday to the Select Committee on Appropriations on the Division of Revenue Bill. The bill was tabled recently in the National Assembly by the Minister of Finance.
The Chairperson of the committee, Ms Dikeledi Mahlangu, outlined various processes following the tabling. "After the Bill was tabled before Parliament, the committee had some deliberations on it, which included various stakeholders such as the Parliamentary Budget Office and the Financial and Fiscal Commission."
Thereafter, she said various permanent delegates to the National Council of Provinces (NCOP) went to present to their respective provincial legislatures. "The provincial legislatures will have their own public hearings and will thereafter send to us their respective mandates, which will be considered by the committee before the finalisation of its report on the said Bill," said Ms Mahlangu.
The committee then invited Salga and Cosatu to table their presentations. Salga's representative, Ms Stella Mondlane, began by stating that Salga is dissatisfied with Treasury's R6.5 billion reduction in the Equitable Share allocation. Salga believes the current allocations are inadequate to address infrastructure challenges and the increasing demands for basic services, which have been exacerbated by the contracting fiscus. "We acknowledge the fiscal challenges that the National Treasury has to deal with and the adjustments that had to be effected, which sadly left municipalities with gaping shortfalls," Ms Mondlane said.
She went on to say that the growing unemployment rate has led to a steep decline to municipal revenue collection from 93% in 2019 to 20% in 2020. "This has resulted in the loss of 4.3 billion of municipal revenue. This situation was further exacerbated by the advent of the pandemic, which led to increasing expenditure demands on basic services such as water and sanitation," she said.
What worries Salga most is that these reductions take place against an increase in the cost of basic services. This is compounded by unpaid debt owed to municipalities by the communities they serve. "We welcome the Multidisciplinary Review Committee that seeks to address the revenue shortfalls of municipalities. Most of all, we welcome the technological interventions that are aimed at transforming the revenue fortunes of distressed municipalities," she said.
Although she welcomed the 7.3% increase in infrastructure spending, she lamented that it's not enough given the historical infrastructure backlog in many municipalities. "For instance, this increase won't be able to address the infrastructure backlog caused by migration to cities, let alone their aging infrastructure that will now be put under duress."
However, Salga is of the view that the resolutions made at the local government budget lekgotla held recently will address some of these structural problems to ensure that municipalities perform optimally. In addition, Salga's national executive committee has resolved to act on the Auditor-General's adverse finding of the financial management of many municipalities and enhance its use of the resources allocated to it.
Member of Parliament and select committee member Mr Dennis Ryder asked if Salga's complaints about the equitable share were dealt with at the budget lekgotla. Ms Khomotso Letsatsi, Salga's Councillor, replied: "Yes. As a result, three work streams: revenue, expenditure, power and functions, have now been established to look at this matter thoroughly. Also, a technical team has been put together to address concerns about this matter that have been articulated over the years."
Commenting on the long-standing perception on relationships and policy proposals between the National Council of Province, Salga and national Treasury are not coordinated effectively, Ms Letsatsi responded by saying that relations have improved and are more coordinated than previously.