Deloitte SA 2015/16 Budget

Municipal services in the spotlight

The bar is being raised by the Presidency and the Minister for Cooperative Governance and Traditional Affairs (COGTA), Pravin Gordhan for municipalities to create conditions for decent living by consistently delivering municipal services at the right quality and standard.

To effectively deliver on this mandate, basic service delivery infrastructure must be functional. The effect of functional infrastructure cannot be over-emphasised in propelling economic growth and investor confidence in the local economies. In order to achieve an ideal municipality which is effective and efficient in its service delivery mandate, functioning infrastructure is key.

The following is identified in the back to basics approach of COGTA in order to ensure functional municipal infrastructure:

  • Planning for and delivery of infrastructure and amenities;
  • Maintenance and upkeep of the infrastructure and amenities;
  • Budgeting to perform the above; and 
  • Restoration of services with urgency where failures do occur.

In 2014/15 to 2016/17 a total budget of R50.9 billion has been set aside for delivery of municipal infrastructure through the Municipal Infrastructure Grant (MIG), Integrated National Electrification Programme (Municipal) Grant (INEP) and Municipal Disaster Recovery Grant.  In order to ensure sustainability of service standards, 7% of the municipal operational budgets must be allocated towards the maintenance of infrastructure and performance of infrastructure audits that must be performed on a regular basis going forward.

The accounting standards require that each municipality must be able to give a clear indication of the condition and longevity of their infrastructure assets.  The general report of the Auditor General on municipal audits for the 2012/13 financial year revealed that 73% of municipalities with qualified audits could not report in line with the required standards for their infrastructure assets. The above means 114 of the 278 municipalities (excluding entities) could not answer these basic questions. 

Those that could answer did so by spending money on consultants.  The Auditor General reported that close to R700m was spent on consultants in the reporting process, it is estimated that about 40% of this goes towards the development and updating of asset registers. A projection of this amount over a 5 year term means about R1.4bn of municipal funds will be spend towards the development and updating of infrastructure asset registers. The estimates exclude any additional funding provided by supporting departments and agencies. 

Significant funding has been committed for infrastructure development, maintenance and close monitoring of infrastructure delivery by the provincial and national COGTAs. In our view, for the strategic objective of the “Back to Basics” approach to succeed as it relates to infrastructure delivery and monitoring, there is an urgent need for National COGTA to:

  • Standardise and consolidate all municipal infrastructure data into a single platform per province/district; and
  • Perform a national comprehensive verification and condition assessment of the municipal infrastructure assets against a predetermined infrastructure standard.

The above view is premised on the basis that, if 41% (114/278) of all municipalities are getting infrastructure record keeping wrong, and those that get it right continuously employ consultants to do so, National COGTA must step in and standardise processes and monitoring of data quality. Being in control of infrastructure data will ensure same set of facts are used in developing maintenance and infrastructure development plans across the country, enabling COGTA to effectively monitor and report on the functionality of local government infrastructure.

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