Provincial & Local Government: Minister's Budget Speech

 

BUGDET SPEECH BY THE MINISTER FOR PROVINCIAL AND LOCAL GOVERNMENT, MR F.S. MUFAMADI.

Chairperson;
Deputy Minister, Nomatyala Hangana;
Local Government MEC’s;
Mayors and Councillors;
Facilitators present in the gallery;
Traditional leaders of our People;
Honourable Members;
Distinguished Guests;
Ladies and Gentlemen;

1. Introduction.
The year 2008 marks the tenth anniversary of the adoption of the White Paper on local government. This was indeed a significant landmark in the process of democratising the South African state and society.

Two years before the adoption of the White Paper, parliament adopted our country’s constitution, which amongst other things, sets out what municipal government must do as well as a vision of expected outcomes. The White Paper transformed that vision into policy. It reaffirmed the principle that the democratic state is of the people, and for the people, and that consequently, our prime task is to change the character and quality of the relationship between the state and the people. Accordingly, the White Paper details the democratic state’s obligations to the people in the areas of sustainable development and basic services.

In the White Paper we characterise local government as a sphere of government which is “committed to working with citizens and groups within the community, to find sustainable ways to meet their social, economic and material needs and improve the quality of their lives”. 
We went further to outline the key outcomes that the system of local government must yield, namely: the

 

•          provision of household infrastructure and services;
•           creation of liveable, integrated cities and services;
•          local economic development, and
•           community empowerment and redistribution of resources.

 

These commitments constitute a reiteration of the Constitution’s ethical foundation for local government. In this regard, Section 153 of the constitution states:
“A municipality must –
(a) structure and manage its administration and budgeting and planning processes to give priority to the basic needs of the community, and to promote the social and economic development of the community; and
(b) participate in national and provincial development programes”.

2. Project Consolidate and the Local Government Strategic Agenda (2006-2011): Assessment of Progress and Challenges.

Until the advent of democracy, local government in our country had a chequered history of being one of the instruments used to draw and enforce the boundaries of inclusion and exclusion. Many of our people today still have to experience full recovery from the legacy of exclusion. They still do not have access to basic services.

However, we take pride in the fact that in a matter of just two years after the adoption of the White Paper, we organised the first fully non-racial and democratic municipal elections in December 2000. This was a milestone development which provided the basis for our current system of 283 wall-to-wall municipalities. The new system of local government has charged over 9 300 democratically elected councillors, with the political responsibility to ensure that a democratic culture pervades all our communities.

In 2004 we conducted an elaborate diagnostic audit of local government. Through this audit, we sought to:

 

•         obtain a greater understanding of the challenges and problems we face in local government;

 

•          develop a common, focused and measurable approach to addressing these challenges and problems;

 

•         improve the quality of support and oversight provided to the municipalities by SALGA, the national and provincial spheres of government; and

 

•          facilitate the focused participation of various government departments, state-owned enterprises and the private sector in addressing the identified challenges and problems.

 

Having identified significant capacity deficits, institutional development and service delivery anomalies, we set out to mobilise expert knowledge to support the development of local government. Chairperson and Honourable Members, I will be remiss if I do not pause to pay tribute to several national sector departments, donor agencies, professional associations and private sector companies and organisations, for their outstanding record of support and active participation in the work of local government. Three years after the first deployment of technical expertise, a total of 1,120 experts have been deployed to help us make a difference. Between them, national sector departments, namely the dplg, National Treasury, the Department of Water Affairs and Forestry, and the Department of Environmental Affairs and Tourism, have collectively mobilised 626 technical experts to support municipalities. Of note are the 503 Financial Management interns who, supported by National Treasury through the Financial Management Grant, have been exposed to the municipal environment, and the same group are being formally integrated into the staff compliment of the municipalities. The Department of Water Affairs and Forestry has also dedicated 51 technical experts to focus on water related services, particularly in the Free State province – assisting municipalities and the province to address their unique challenges. 

Chairperson, on behalf of the Ministry, the department, SALGA and all our partners and stakeholders, it is my pleasure to report that, the on-the ground manifestations of progress since the introduction of Project Consolidate, show that the intervention has, without doubt, yielded a much improved systemic performance. Testimony to this is the fact that whereas-

•         In 116 of the 283 municipalities, 60 percent or more households did not have access to formal housing, that number has (in a matter of three years), been reduced to 87. A 33 percent reduction in the number of municipalities!

 

•          In 155 of the 283 municipalities, 60 percent or more of the households did not have access to water in their yards or in their dwellings, that number has been reduced to 115. A 35 percent reduction in the number of municipalities!

 

•          In 122 of the 283 municipalities, 60 percent or more of the households did not have access to electricity, at least for the purpose of lighting. That number has been reduced to 45. This translates into a 71 percent reduction in the number of municipalities!

 

•         In 203 of the 283 municipalities, 60 percent or more of the households did not have access to sanitation at the standard of a flush toilet, a septic tank sanitation system or a chemical toilet. Three years later, this number has been reduced to 150. A 35 percent reduction in the number of municipalities!

 

These outcomes suggest profound implications for how we should approach our ongoing task of improving the performance of local government in particular, and of government in general. Having regard to the ephemeral character of progress which was made thanks to external facilitation and support, priority attention must be paid to ensuring that improved local government performance becomes a self-sustaining dynamic.

In this regard, we note with satisfaction, a positive trend in the filling of municipal manager posts over the last six years. The vacancy rate which stood at 22 percent (or 62 municipalities as at the end of September 2007, has been reduced to 12 percent (or 35 municipalities) by the end of March 2008. This means that 88 percent of all municipal manager posts nationally, have been filled.

Over the same period, the number of signed Performance Agreements of municipal managers has increased from 58 percent (or 164 municipalities) to 74 percent (or 183 municipalities). This matter requires further attention from the dplg, provincial governments, SALGA and the municipal themselves.

Chairperson, we continue to pay attention to the task of strengthening the financial management and viability of our municipalities. Whereas as at May 2007, only 48 percent (or 136 municipalities) had audit committees and 7 percent (or 22 municipalities) were sharing audit committees at district level, by September 2007 the overall establishment rate had increased to 80 percent, with 63 percent (or 178 municipalities having individual audit committees and 48 ( 17 percent) of municipalities having shared audit committees.

There must certainly be a causal link between these institutional improvements and the improvements in actual performance. According to the Auditor General, performance with regard to submission of municipal Annual Financial Statements is indeed impressive. By the due date of 31 August 2007, the number of timely submissions of these statements stood at 81 percent (or 230 municipalities).

These improvements speak to the effectiveness of the partnerships we built with the Development Bank of Southern Africa, the Institute of Municipal Finance Officers, the South African Institute of Chartered Accountants and the Old Mutual Group. Over the next three years, the support rendered through the Municipal Systems Improvement Grant, will need to be intensified to complement the transfers to local government. These local government transfers will increase by 17.1 percent per annum. Over the medium term period, 2008/9 to 2010/11, through the Local Government Equitable Share, the Municipal Systems Improvement Grant and the Municipal Infrastructure Grant (MIG), local government will receive a total of R122.5 billion.

Chairperson and Honourable Members, we are acutely aware of the immense challenges which issue from the exponential increase in resource outlay. We are not daunted by this. In recent years, we have seen our municipalities rise to the challenge. For instance, since the launch of the Municipal Infrastructure Grant in 2004/5, the spending capacity of municipalities on MIG has doubled from R3,4 billion per year to R7 billion per year. Spending patterns also show improvement. By the end of the municipal financial year, municipalities are able to spend 97 percent of their allocations. As many as 113 municipalities were able to spend 100 percent of their MIG allocations by the end of March 2008. The most improved expenditure is recorded in the Free State and Mpumalanga.

In terms of impact, almost 66 percent of MIG expenditure is spent on water and sanitation projects, followed by roads and storm water. Over 3.5 million households have benefited from completed MIG projects, with the utilisation of close to R29 billion that was allocated for MIG since 2004/5.

3. The Way Forward

The recently released 2007 Community Survey gives a synoptic overview of the substantial material improvements which government effort has had on the collective quality of life of our people. According to the Statistic South Africa survey:

•         In 2007, 86 percent of the population of South Africa enjoyed access to piped water;

 

•         In 2007, a little more than 60 percent of households in South Africa had access to a flush toilet;

 

•         By the end of March 2008, 91 percent of the 252 254 buckets identified in February 2005 were removed in formal established areas throughout the country.

 

•          Electricity for lighting has increased in all provinces with 80 percent of households in South Africa using electricity for lighting;

 

•          Between April 2007 and March 2008, access to Free Basic Water (FBW) increased from 73 percent to 77 percent, and

 

•         During this same period, access to Free Basic Electricity (FBE) increased from 60 percent to 73 percent.

 

Needless-to-say, the South Africa we inherited in 1994 bears little comparison with what Statistics South Africa described as the material reality of South Africa in 2007.

To what combination of actions and circumstances can we trace this remarkable social renaissance? The salutary lesson to take away from this experience is that; sustainable progress can only be achieved if pursuit of delivery and developmental targets goes in tandem with institutional reforms.

This is precisely what we have done and the benefits are there for all to see. As we said earlier, these successes were realised, in large measure, because as government, we sought and achieved the fruitful deployment of resources (human and material), including those that do not traditionally resort under the state.

The consequential and prime task for execution in the medium to long term is to ensure that we lock in these achievements. The Local Government Strategic Agenda embodies our determination to do precisely that. The work which we will be carrying out in this regard includes positioning such institutions as national sector departments, provincial government, SALGA and the institution of traditional leadership, better to support and complement the work of municipalities. Success in this regard will enhance the already existing momentum towards the United Nations- posited ideal of a world in which, come 2015, levels of poverty shall have been reduced by half.

5. Conclusion:

Chairperson and Honourable Members: I wish to conclude by recalling what I said on 6 June 2007, on the occasion of the dplg’s budget vote. Those words ring as true now as they did then. Our future success depends, crucially, on our ability to build on this strong foundation and to learn from the output mix that was wrought by our earlier endeavours. Experience over the last 14-years of democratic government has produced a logical case for local government policy review and for consideration of steps to establish a coherent policy framework for provincial government. We shall deal with this and other related matters when we table our Budget Vote in the National Council of Provinces (NCOP) on the 12^th of this month.

As I prepare to sit down and benefit from the insights of Honourable Members, I wish to say a big Thank-You to Deputy Minister Nomatyala Hangana, Director General Lindiwe Msengana-Ndlela and all staff members of the Ministry and the Department of Provincial and Local Government (past and present). Their contribution deserves my tributes of respect. They belong to a special category of people: the people I have had the fortune to meet… in this life! I will always cherish my association with them.

I Thank-you.

Cape Town, 03 June 2008