Treasury releases R7bn while demanding municipal accountability

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JEREMY MAGGS: National Treasury is releasing just over R7 billion in previously withheld funding to 49 struggling municipalities, saying residents should not be denied basic services because of failures by local officials.

But the relief comes with strict compliance deadlines, investigations and the threat of disciplinary and criminal action. This is a very important issue.

I’m going to talk now to Dr Zweli Mkhize, who is chair of parliament’s Portfolio Committee on Cooperative Governance and Traditional Affairs (Cogta). He says the money must protect communities without allowing those responsible to escape accountability.

Dr Mkhize, a very warm welcome. Treasury initially withheld just over R13 billion from 69 municipalities. What has changed sufficiently, in your opinion, to justify releasing most of it?

ZWELI MKHIZE: Well, thank you very much. Jeremy. Let me say that we had welcomed the withholding of equitable share under specific conditions.

That was because, as parliament, we’ve been insisting that there must be accountability, there must be consequence management, and all the departments must use the law to enforce compliance and make sure that money is directed to where it is supposed to be used.

Read:

Municipalities to get outstanding equitable share, compliant or not
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In this case, we had actually supported Treasury’s decision on the condition, firstly, that they must put the pressure up on municipalities to respond, firstly to guarantee that they will investigate and act on unauthorised, irregular, fruitless, wasteful expenditure and put certain deadlines of how much of this money would have been cleared within a period up to 30 November.

They also need a commitment from the mayor that there will be no unfunded budget. They must also begin to show a commitment to paying creditors within 30 days. Now, all the municipalities are supposed to do that by law.

Now, in this case, we have actually said that the Treasurer cannot just sit and make a demand and not put pressure and give support for municipalities to move forward.

So this is to balance the protection of communities whilst they direct the transgressors towards consequence management and accountability.

We are quite comfortable that they have been able to get some commitment from some of the municipalities, and they are going to continue to apply pressure for them to comply fully so that the money must ultimately be released. So we think it’s a step in the right direction.

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JEREMY MAGGS: I do understand the notion of protecting communities, Dr Mkhize, but isn’t releasing the money before anyone has been held accountable simply another bailout for failure?

ZWELI MKHIZE: It is not quite that. Firstly, you need the commitment of the municipality to act on certain things with timelines. Then, if they have to act within those timelines, both Treasury and the portfolio committees at provincial and the national level must monitor and make sure that they, the municipalities, comply with the timelines.

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Now, Treasury didn’t say arrest people and charge them now. They say show us that you are taking them through a disciplinary process. Who is the disciplinary board member? Who is being disciplined? What is the schedule of meetings? What are the minutes of meetings?

We need to see that you are doing what you expected by law to do.

Now, they have been very sluggish and reluctant to act, and we are now pushing them to say for every step you take, we want to see, and that is where it’s going.

I believe the processes won’t be like a guillotine, like you stand up now and charge somebody and so on. You need the processes to be followed. They have not been following the processes.

We want them to convince us at each step that they are following the processes. Because once they do that, they can’t reverse, they also can’t neglect their responsibility.

JEREMY MAGGS: Are they not just receiving the money because government can’t tolerate the service delivery consequences?

ZWELI MKHIZE: Not really. What is happening is that, firstly, the money, the equitable share is meant for communities, and communities are still waiting for the services, but they are not responsible for administering the funds.

Now, who is at fault is the one who’s administering the funds, which are the municipal officials. We are now saying if the municipal officials are at fault, it is correct that you must not give them money when they cannot account and enforce the accountability mechanism, so their communities do not suffer.

Read: Treasury to give departments the municipal treatment

In the process, you must then make sure that the actions are taken on transgressors effectively to get them to face consequences of their irregular actions. Then the communities will be secured because you have to keep the balance. Communities mustn’t be made to suffer, but you can’t let go of the accountability processes in the municipalities.

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JEREMY MAGGS: Municipalities have until the end of November, then, to demonstrate progress. Dr Mkhize, what happens if those deadlines are missed? Will December allocations be withheld despite the likely impact on residents?

ZWELI MKHIZE: If you look at the history of this matter, way back, I think at the beginning of the year, there were almost 100 municipalities that were in this kind of predicament where they did not demonstrate any sense of acting on irregularities and consequence management.

They were told at that time, sort yourselves out, or else we would withdraw. over a short period, about 30 of them complied. So this pressure is working. We don’t believe that they’ll … with all of it.

We believe that the numbers, for example, by the time we met, that number had been reduced from 69.

They’d gone down by maybe about 40 or so of the municipalities that had actually responded. Which, for us, means the pressure is right and the municipalities are responding, and therefore we will not let go of the pressure.

Our point is that there must be so much pressure on municipalities to act by all the committees. That’s why we put all the committees together and said, all the committees are together, all the departments are together, the provinces were also part of the meeting.

Now everybody must act and we must apply that pressure until they actually act.

There’s only one group of municipalities that we’re more worried about. Those are the ones that are non-viable. Those are the poor municipalities. They don’t have enough skills. They don’t have enough money. They don’t have a revenue base. They can’t do anything on their own.

Read: Treasury releases R7.1bn to municipalities after funding freeze

Now we’re saying Treasury, you need to take responsibility for those. Cogta, the national department and provincial government must take responsibility because it doesn’t matter how much pressure you apply, they will not be able to produce the desired effect until they are given the assistance.

But the other municipalities have actually got room to manoeuvre and get things done, because it is more their negligence than it is their objective constraints that are making them unable to perform.

JEREMY MAGGS: We also know, Dr Mkhize, that national and provincial departments owe municipalities substantial amounts of money. Let me put this question to you: can local councils be expected to recover while other parts of government fail to pay their bills?

ZWELI MKHIZE: That’s a very, very important point because, in this case, we are saying that the intergovernmental system needs to work better.

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How can you have pressure on municipalities that are not getting enough revenue because they are not being paid, and amongst the people who owe them are actually the departments, and nothing is being done to them.

Now, the same pressure of Section 206 must not actually be waived, it must actually be raised for the departments to get exactly the same kind of treatment. If they owe the municipalities and the municipalities are failing to perform, then, of course, the department must also be put under a similar kind of sanction.

We’ve made that point very clear. It cannot be. Put it this way, what is good for the goose is good for the gander. What you want to do on this side, must be done on the other side as well.

JEREMY MAGGS: And just a final question. Ultimately, though, isn’t the deeper problem weak financial systems or instead of weak financial systems, rather just Dr Mkhize, political unwillingness to remove incompetent or compromised municipal leaders? Fundamentally, isn’t that the big issue?

ZWELI MKHIZE: It’s a number of issues. But yes, political will is a major issue. As far as we are concerned, and we sent a message to the municipalities to say all these outcomes are not an indication of a finance department clerk that did not fill out the form.

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It is not about the chief financial officer who is incompetent, is not only about that, but the municipal manager is deep in this.

The mayor is deep in it. The full council, the speaker, because they are overall in charge of the performance of that municipality.

So if there are wrong decisions taken, it’s the council that must take responsibility for allowing individuals to make wrong decisions and they must act on them.

Is it political? It starts with the political will, and beyond that it must then go to a question of saying, are these systems strong enough to act when there are transgressions or to provide the security of control of finances, when the funds are being spent.

The laws are the same for every municipality, and no one has got an excuse for not playing according to the same rules.

JEREMY MAGGS: Dr Zweli Mkhize is the chair of parliament’s Portfolio Committee on Cooperative Governance and Traditional Affairs.

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