Provincial Treasury Quarter 1 performance; Division of Revenue: Financial and Fiscal Commission on submissions

Budget (WCPP)

24 August 2018
Chairperson: Mr M Wiley (DA) and Mr M Mnqasela (DA)
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Meeting Summary

The Provincial Treasury and Office of the Premier presented its performance outcomes for the first quarter of 2018/19.
The first quarter spending amounts to R13.133 billion or 20.9 per cent of the R62.748 billion main budget.
At the end of June 2018, the Province reflected a technical net projected over expenditure of R42.542 million for the 2018/19 financial year due to the inclusion of the roll-over requests relating to the 2017/18 financial year. These rollover requests mainly relate to national conditional grants, which have subsequently been approved.  The current reflection of a projected overspending does not pose any fiscal risk at this time
The departments largely contributing to the overall projected over spending include the following:

Department of Health Projected net technical over spending of R36.214 million dues to the rollover request on the Hospital Revitalisation Grant, subsequently approved at a National level and will be taken up in the 2018/19 Adjusted Budget
Provincial Parliament projected technical over spending of R8.063 million mainly due to the inclusion of 2017/18 rollover and revenue retention requests, largely relating to the Enterprise Resource Planning system that was approved by the Speaker. This will be taken up as part of the 2018 Adjusted Estimates process
Agriculture projected technical over spending of R8.7 million relating to funding for drought relief measures within the Matzikama Municipality, inclusive of the request for roll-over amounting to R4.796 million which will be dealt with as part of the 2018 Adjusted Estimates
Provincial Treasury projected under spending of R7.424 million relating to savings on Compensation of Employees, mainly due to staff movements, and the deferment in the appointment and number of uptakes in graduate interns

Provincial Public Entities Expenditure as at 30 June 2018 reported that the first quarter reflects spending of R151.180 million or 21.9 per cent of the R690.596 million main budget. At the end of June 2018, Provincial Public Entities project a net under expenditure of R15.578 million, which mainly include the Western Cape Nature Conservation Board (CapeNature)
Cape Nature projects under spending amounting to R14.671 million, related largely to Compensation of Employees, due to delays in processing back pay and notch increases. Furthermore, delays were experienced with the Kogelberg Nature Reserve Development project, currently in its second phase. The respective delay relates to the cancellation of the site hand-over as the construction guarantees were not signed off timeously, but were subsequently submitted to the Department of Transport and Public Works at the end of June 2018
Western Cape Tourism, Trade and Investment Promotion Agency projects under spending of R903 000, where spending includes, amongst others, training fees, the annual subscription fees for marketing monitoring and research, as well as the continued expenditure on various water projects aligned to the Provincial Strategy

Provincial Own Receipts as at 30 June 2018 reported that Provincial Own revenue collections at the end of the first quarter amounted to R822.579 million or 27.2 per cent of the R3.023 billion main budget

Key Revenue Drivers:
Transport and Public Works: The Own revenue is mainly derived from Motor Vehicle Licence fees, which registered collections of R442.179 million at the end of June 2018, higher than the R420.051 million collected in the 2017/18 financial year. Higher collections in motor vehicle licence fee revenue in 2018/19 were due to an increase in MVL fee tariffs and an increase in the motor vehicle population
Health: The Own revenue collected at the end of June 2018 amounted to R141.221 million, higher than the R121.911 million in own revenue collected up to the end of June 2017. Higher own revenue collections as at 30 June 2018 were mainly as a result of hospital patient fees as well as receipts from the previous year in relation to the training of nurses
Provincial Treasury: Registered collections in Own revenue during the first quarter of the 2018/19 financial year amount to R150.542 million or 27.9 per cent of the main budget. The revenue includes casino taxes contributing R133.721 million to own receipts, while horse racing taxes contributed R15.431 million

Financial Fiscal Commission said provincial legislatures have failed in taking up the recommendations that are made by the Commission. The Commission was very definitive about a number of areas that need to be looked at. Taking it seriously is a big issue, and this is the same thing that the Commissioner has been emphasising to the provincial legislatures. It is also important that as you see in the Treasury, the Minister of Finance will table the budget review, and in that review, there is a section that responds to the recommendations that the Commission made. The shortcomings of that is that it only responds to matters that are important to NT but not all the recommendations such as social policy, education, community, health care, education, infrastructure, etc. Some substantive inputs have been over the years in regard to those aspects. Privileging the issues that have direct effect on the budget is insufficient. It is critical that as this collective, it would be useful to see how recommendations have been made over time.

Members asked questions about over-expenditure and roll-overs as well as drought; the type of roll-overs and what has not been achieved in terms of the drought in order to be sorted in the next quarter; why targets were not fully achieved in some departments in the 1st quarter, and whether those targets would be achieved on time in the next assessment.  

On the Financial Fiscal Commission, Members asked questions about conditional grants and the equitable share and how it arrived at its conclusion; whether the Financial Fiscal Commission conducts assessments on the illegality of occupation of public land by citizens; whether growth prediction numbers were not inflated; whether the Commission should not be advising local government on how to relook at revenue streams in the modern world instead of going about the old model; whether the extension of government structures have become bloated; whether it was possible to reverse centralisation in order to decentralise so that the performance of municipalities was realised; how far can municipalities deviate from conditional grant conditions, and in what sense can they have accountability and misappropriation of funds when there is a lack of proper oversight

Meeting report

Opening remarks
Ms Waseemah Kamish-Achmat, Committee Coordinator, welcomed Members and informed them that the Committee Chairperson was absent; therefore, Members needed to elect an Acting Chairperson.

Mr M Wiley (DA) was elected as Acting Chairperson until Mr M Mnqasela (DA) arrived because he was running late. Mr Mnqasela had been asked by the Chairperson of the Committee to stand in for him during his leave.

Mr Wiley welcomed the Provincial Treasury and everyone present, and handed over to the Provincial Treasury to submit its presentation.

Briefing by Provincial Treasury and the Department of the Premier

1st Quarter Outcomes of the 2018/19 Financial Year for Expenditure, Revenue and Infrastructure

Provincial Treasury reported that the first quarter spending amounted to R13.133 billion or 20.9 per cent of the R62.748 billion main budget
At the end of June 2018, the Province reflected a technical net projected over expenditure of R42.542 million for the 2018/19 financial year due to the inclusion of the roll-over requests relating to the 2017/18 financial year. These rollover requests mainly relate to national conditional grants, which have subsequently been approved.  The current reflection of a projected overspending does not pose any fiscal risk at this time
The departments largely contributing to the overall projected over spending include:
Health: Projected net technical over spending of R36.214 million is due to the rollover request on the Hospital Revitalisation Grant, subsequently approved at a National level and will be taken up in the 2018/19 Adjusted Budget
Provincial Parliament: Projected technical over spending of R8.063 million is mainly due to the inclusion of 2017/18 rollover and revenue retention requests, largely relating to the Enterprise Resource Planning (ERP) system that was approved by the Speaker. This will be taken up as part of the 2018 Adjusted Estimates process
Agriculture: Projected technical over spending of R8.7 million relates to funding for drought relief measures within the Matzikama Municipality, inclusive of the request for roll-over amounting to R4.796 million which will be dealt with as part of the 2018 Adjusted Estimates
Provincial Treasury: Projected under spending of R7.424 million relates to savings on Compensation of Employees, mainly due to staff movements, and the deferment in the appointment and number of uptake in graduate interns

Provincial Public Entities Expenditure
Provincial Public Entities Expenditure as at 30 June 2018 reported as follows:
The first quarter, reflects spending of R151.180 million or 21.9 per cent of the R690.596 million main budget
At the end of June 2018, provincial public entities project a net under expenditure of R15.578 million, which mainly include the Western Cape Nature Conservation Board (CapeNature)
- CapeNature projects under spending amounted to R14.671 million, related largely to Compensation of Employees, due to delays in processing back pay and notch increases. Furthermore, delays were experienced with the Kogelberg Nature Reserve Development project, currently in its second phase. The respective delay relates to the cancellation of the site hand-over as the construction guarantees were not signed off timeously, but were subsequently submitted to the Department of Transport and Public Works at the end of June 2018
- Western Cape Tourism, Trade and Investment Promotion Agency projects under spending of R903 000, where spending includes, amongst others, training fees, the annual subscription fees for marketing monitoring and research, as well as the continued expenditure on various water projects aligned to the Provincial Strategy

Provincial Receipts
Provincial Own Receipts as at 30 June 2018 reported that Provincial own revenue collections at the end of the first quarter amounted to R822.579 million or 27.2 per cent of the R3.023 billion main budget

Key Revenue Drivers:
- Transport and Public Works: The Own revenue is mainly derived from Motor Vehicle License (MVL) fees, which registered collections of R442.179 million at the end of June 2018, higher than the R420.051 million collected in the 2017/18 financial year. Higher collections in MVL fee revenue in 2018/19 were due to an increase in MVL fee tariffs and an increase in the motor vehicle population
- Health: The Own revenue collected at the end of June 2018 amounted to
R141.221 million, higher than the R121.911 million in own revenue collected up to the end of June 2017. Higher own revenue collections as at 30 June 2018 were mainly as a result of hospital patient fees as well as receipts from the previous year in relation to the training of nurses
- Provincial Treasury: Registered collections in Own revenue during the first quarter of the 2018/19 financial year amounts to R150.542 million or 27.9 per cent of the main budget. The revenue includes casino taxes contributing R133.721 million to own receipts, while horse racing taxes contributed R15.431 million

Mr Wiley indicated that every time he comes across the Treasury’s documentation, there is improvement going on, although there are red lights, there is momentum. There will be catching up going on. He asked whether any of the departments that are far behind in reaching their targets were actually catching up and whether there was any improvement.

Mr H Malila, Deputy Director-General: Fiscal & Economic Services, Provincial Treasury, said he was not concerned on Treasury’s perspective on the financial and non-financial performance because one would find that the departments that have not yet achieved their targets as per the presentation have probably done so in the first month of the second quarter. On an updated document the Committee would see all the improvements that would have been made. It could be issues of compliance or projects that were 80% completed in the first quarter. Treasury was not concerned because no major risks have been communicated to the Treasury as yet. With oversight visits, Treasury zooms in on the numbers as part of quarterly engagement and it would interrogate any red lights and all those issues are normally brought to the Committee in November when Treasury comes back to report.

Discussion
Mr S Tyatyam (ANC) welcomed the report and asked about the over-expenditure and roll-overs as well as drought. He asked for clarity on the type of roll-overs and the outstanding achievements regarding the drought for the next quarter. Furthermore, he asked whether the work that was supposed to be done was affecting current productions. Thirdly, he had an explanation that some of the under-expenditure may be covered now; he wanted some assurance that at the end of the year there won’t be any vacancies that were not filled.

Ms B Schafer (DA) said in Agriculture, the targets were carrying over due to issues such as drought, flooding, etc. She agreed that there was no cause of concern in the department.

Mr M Mnqasela (DA) said he was interested in the quality of the achievements and the targets because it was always impressive to see performance but there is a need to do qualitative assessments as well. He only had one target that was not achieved, the 5%, but he was happy with the performance and would engage the department to get the qualitative aspect of the targets. He wanted to know why the targets were not fully achieved and whether they would be achieved on time in the next assessment.

Mr Malila said it was important that the impact of the targets was highlighted and the department can reflect on that in the annual reports. It is moving beyond the quantitative of the report into the qualitative as Members outlined. The point made by Mr Mnqasela was exactly where Provincial Treasury is focusing on, because it was important to ensure that the departments performed.

Ms A Pick, PGF, Provincial Treasury, said that everyone agreed in terms of what needed to be done to eliminate the issues. However, we are looking at how these issues can be resolved and specifically looking into the quality of how these departments can be dealt with.

Ms Z Ismail, Chief Director: Support, Monitoring and Intervention (SMI), said part of the roll over in agriculture was due to the services, the department cannot apply for the roll over if the services were not delivered in the previous financial year. On the drought, Treasury checked to ensure whether the service was delivered and ensured that water was available to the farmers. This is just a technical matter in terms of making sure that the service was delivered.

In terms of vacancies, the vacancy rate needs to be made as little as possible going forward. When people resign, that is not within the control of management but we try to make sure that when there are vacancies we decrease the time it takes to fill in those vacancies and this is where the underspending stems from. On the graduation programme, the provincial treasury budgeted to take on 42 graduates but only 29 were taken in. Treasury will now factor this in terms of budgeting and ensure that those graduates that are able to fulfil the terms and conditions of the contract were absorbed.

Mr N Hinana (DA) wanted to know about the target that was set by the department for its vacancy rate.  

Ms Ismail said the previous target set was 0.6% but usually it is at about 0.2%.

Mr Wiley asked with regard to the austerity measures and the transfer payments and the ongoing threats, is that something that Treasury was able to respond to at this stage, because it will be a direct threat.

Mr Z Hoosain, HOD, Western Cape Provincial Treasury, said the annual reports would be tabled soon; it was only the Department of Agriculture that still had unresolved issues with transfer payments. This is a discussion that should be held in the presence of the executive authority, because the reports have not yet been tabled.

The transfer payment risks have been managed across departments and specific task teams have been set up to deal with transfer payments from becoming a generic issue.

Mr Mnqasela took over as Acting Chairperson, and welcomed everyone.

Financial and Fiscal Commission (FFC) on 2018/19 division of revenue
Professor Daniel Plaatjies, Commissioner, FFC, thanked the Committee for the opportunity to present to the provincial legislature. He appealed to the Committee that it would be helpful if it stressed to the local municipalities and metros to comply. However, if compliance is not enforced, the FFC would have no choice but to call their bluff. Over the last two years recommendations were made by the FFC for urban and rural development, notwithstanding the politics that have been going on in those areas, but the FFC is not interested in that but putting together in carrying out its mandate.

It is hard to respond to whether government takes the Commission seriously if the provincial government does not take it seriously. The FFC responds by providing its Constitutional mandate nine months before the time, in that it requires the Provincial Legislature to be able to look at what the provincial government is doing in relation to the submission and the national government. What happens is that by giving its responses to National Treasury (NT) and NT collates it on behalf of provinces, there is a classical disjuncture in terms of why the Commission has to interact with the Committee. FFC needs to get the comments directly from the Committee and what the provinces are saying to NT about the submissions that the FFC submits. This is something that needs to be looked at by the Committee, in the same way we have been asked whether we are taken seriously in our submissions.

Thirdly, whether the FFC was being taken seriously or not, it needs to be told by the Committee. We never hear the Provincial Legislature talking about the submissions made by the provincial legislatures and they have failed in taking up the recommendations that are made by the Commission. We were very definitive about a number of areas that need to be looked at. Taking us seriously is a big issue, and this is the same thing that the Commissioner has been emphasising to the provincial legislatures. It is also important that as you see in the Treasury, the Minister of Finance will table the budget review, and in that review, there is a section that responds to the recommendations that the FFC made. The shortcomings of that is that it only responds to matters that are important to NT but not all the recommendations such as social policy, education, community, health care, education, infrastructure, etc. Some substantive inputs have been over the years in regard to those aspects. Privileging the issues that have direct effect on the budget is insufficient. It is critical that as this collective, it would be useful to see how recommendations have been made over time.

(See document for a detailed analysis)

Discussion
The Acting Chairperson said he took the point that municipalities tend to not do proper oversight over projects and there is a lack of inspection in terms of qualitative measures over those projects. Municipalities are at the centre of the economy, because if there is a lack of service delivery, companies tend to move away from those areas.
With regard to conditional grants and the equitable share, he wanted the FFC to interrogate that further and how it arrived at its conclusion. In the rural areas for instance, municipalities tend to abuse the funding that comes with conditional grants and sometimes want to use those conditional grants to pay for bank loans and Eskom. Some of these municipalities have been brought to the Committee to account.
On the expenditure, the province is said to be spending less on human settlement. If one looks at the Eastern Cape many houses that are unoccupied because there are no beneficiaries, but if one looks at the Western Cape, the demand is high. When one digs deeper, one would understand why the Western Cape under spent on human settlement. There are a number of informal settlements in the Western Cape and people continue occupying the land without following due process because people are frustrated. One also needs to remember that the City has spent a lot of money on the provision of security over public owned land to stop people from occupying it illegally. When the FFC conducts an assessment, does it look at those contributing factors?

Ms B Schafer (DA) said the Commission is predicting a growth of 2% but the country is not there and that prediction should be accelerated to 4%. She asked whether the numbers were over inflated. She asked if the FCC should rather be presenting from the worst-case scenario point of view instead? Secondly, should it not be advising local government on how to relook at revenue streams in the modern world – the world is changing?

Mr Hinana referred to the recommendations that were made to the Provincial Legislature that were not captured, as stated in the opening remarks; he asked whether the FFC could outline those recommendations so that the Committee could see how it may move forward. Secondly, the reason why we do not have funding on rural development is based on the poor spending of the resources. The fundamental matter for him was decentralisation versus centralisation because it is captured in the presentation that there is revenue under collections and a narrow base because of the narrow government structures. He wanted to know whether additional government structures were bloated to a point where resources allocated to those structures end being wasted because those structures become redundant. Basically, are the additional or extended structures adding to the poor performance?

On page 11, there are realities that have been observed about this recentralisation – is it possible to reverse the centralisation to decentralise so that the performance of municipalities was realised?

Mr B Kivedo (DA) said generating extra revenue in municipalities was very important and while they are sitting back waiting for grants and funding, the middle class is not paying municipal rates and that contributes to the growing list of indigents who cannot pay. We are sitting with an Integrated Development Plan (IDP) that spells what the wishing list should be and what is needed which is sometimes blown out of proportion. What type of incentives one could trigger in already over-burdened communities and municipalities that could generate these funds?
On the recommendations made regarding Treasury granting the flexibility of conditional grants to poor municipalities, this is good news but it poses eminent challenges as well. If the flexibility is granted to municipalities to resolve specific problems; there are certain limitations when funding is being granted to municipalities; so how far can municipalities deviate from those conditions, and what sense do municipalities have in terms of accountability and misappropriation of funds when there is a lack of proper oversight. These municipalities get a lot of leeway.

Mr Tyatyam spoke to the input of the Commissioner but he was uncertain about whether he would be singing in the wrong funeral or not, as he jokingly said. It is important when acknowledging the challenges we have in the country that our growth has been very low, particularly after 2008. However, our growth even since 1994 has not been what was expected for a post independent country – we have not grown beyond 5%. Even then he hoped that part of the challenges of our economy are the adjustments that have been imposed by some international institutions and there are still many discussions about that and those have not really helped the country to grow beyond the 5% mark. So how do we deal with such because continuously we have that challenge as the country in terms of how we can go beyond the limitations that are imposed as a pressure to developing countries such as South Africa. It is going to be difficult to only want to deal with the issue of fiscal management and neglect the fact that how we can manage properly the monetary aspect of things because they do speak to each other. Continuously we are managing how to minimise our processes. It may not be the FFC’s role to address such but it is something to be considered.

In times of distress one would find that national government would want to absorb certain powers – and so he agreed with the recommendation that we should not have a blanket approach and we should be given some light on the issues of capacity. We must be honest and able to ask where capacity is and the programme to ensure that the right capacity exists in all spheres of government. We need to ask where the country’s capacity lies. There are departments going around passing their budgets, but during the course of the year, they come in and ask for grants. Those grants must be ring-fenced so that municipalities do not do as they please.

Mr T Simmers (DA) shared his observations on agreeing with the concluding remarks of the Commissioner because it is very concerning at the moment how the economy is having impact on local economy. On page 4, on provincial health budgets, it would be interesting to see the Western Cape added onto that. He had the audacity to blame the influx of people coming from neighbouring provinces stating that they are causing a strain on the budget and service delivery for residents of the Western Cape province. He asked whether the equitable share of the Western Cape should not be increased, because this was not recommended by the FFC.

On chapter 4, slide 19, on the categorisation of municipalities, if you go to the B3 and B4 municipalities we are seeing more and more residents moving to the denser populated municipalities yet the way the equitable share is distributed according to the population size is not sensible. Does the FFC have any idea how that can be addressed? And the equitable share formula was previously questioned particularly regarding the B3 and B4 municipalities – the bigger municipalities are able to come up with innovative ways to make more revenue, but the smaller municipalities are not able to get sufficient funds and those are the municipalities that are actually in need of the funds to address their issues and deliver necessary services to locals.

Lastly, with regard to chapter 6, at the moment the national Department of Water Affairs and Sanitation is bankrupt; does the Commission believe that recentralising has been a massive contributor to that? And, instead of recentralisation we can look at decentralising the core and crucial aspect of national government that provincial must build capacity to do. For instance, the national water plan does not exist anymore that is why sometimes you find municipalities that come up with strategies to ensure that water saving initiatives were implemented. When provincial departments actually knock at the national department they are unable to get assistance because there is no money.

Ms L Botha (DA) referred to slide 28, last bullet, and asked whether the FFC could speak to what and how many those municipalities are and stipulate the amount in Rand value.

Responses
Professor Plaatjies said the country’s transition will go on for a while and the leadership does not seem to get that 20 years is a small period for transition, and it takes time but it does have its own challenges. That is why it is important to always remind government that the citizens deserve what they vote for. The level of incompetence and low quality of counsellors across the country is something that the FFC cannot do anything about until the citizens understand how they should make their decisions regarding voting on a municipal level. Another matter is that if you cannot budget you cannot govern, and we have also picked up over time that many of the municipalities are spending monies which they do not have. To run a municipal government or a provincial government is no different to how you run your own household, you spend the money that you have and not what you do not have. It is then incumbent on provinces to ensure that municipalities do not go onto deficit.

We have a number of municipalities in the country that are bankrupt. On guarantees and loans, it is the same as the household example – you need to have collateral. It is painful how municipalities are loaning money to pay salaries and against the conditional grant – this is breaking the law. It is breaking the Public finance Management Act (PFMA) and there must be consequence management on that, and there are clear mechanics on how to deal with that. Consequence management needs to apply down to the councillors as a collective for such behaviour and actions.

The key point on rural development is functionality, but there are municipalities that no matter what you do they would never be able to fulfil certain functions due to the lack of capacity. We have not yet looked properly at the municipal systems and their functionality. There are certain municipalities that should close down because they are budgeting where they do not have money and they are putting citizens at risk. FFC is concerned about how the centralisation is happening, but the FFC is acutely aware of the fact there is a lack of system of asymmetry. There is a need to get councillors accountable.

On growth, the NDP (National Development Plan) was approved but everybody has approved in the provincial and local level with its targets and our reflection of that is against the targets set relative to where we are, that is why we will not move out of that. FFC must ensure that it identifies the economic targets and the hurdles to get to that, and some of those hurdles have to do with policy decisions. Economics is about perceptions and the messaging across the country in the last ten years has not been good on the political government side. Also, the messaging around fraud and corruption has not been very good particularly with the public purse. He has not heard any provincial legislature say anything around the collusion that the Competition Commission has discovered around bread, cement, and other products, and this is an indictment on our political heads not to be able at the level where it matters to decodify those messages for the citizens.

On prudent financial spending, in many institutions there are spending concerns and the national policy trajectory says that we need to get value for money. However, we need to look at value for money and what it really means, but also the Provincial Legislature and Parliament talk about this because we are not able to unpack and hold the officials accountable for the wastage that is going on. Due to our political electoral system we are unable to ask the difficult questions. Back when he used work for Mr Trevor Manuel, he used to say he did not understand why members of his own political party cannot ask him the hard questions, and this also applies to you Members of the Provincial Legislature. Why are you not asking those difficult questions to hold your own leadership accountable?

On the revenue streams for municipalities, he said the middle class should not be punished for being innovative but it should not be allowed to break the law as well. The point is that we need to have a functional City of Cape Town, if people do not pay their rates, we will have a situation where the City cannot sustain itself because sufficient revenue is not coming in. The City of Cape Town has spoken to the FFC about this particularly on water, and we need to look at how we can protect the municipality and the citizens as well. The effects of this are bad, there is water harvesting going on around and people are getting innovative.

With the issue of influx, the movement and migration of people is understandable but we should not forget that there are indigent related conditional grants that pay for the elements of free basic services but the question is to interrogate whether that is enough or not. It needs to be interrogated further, and part of our problem is that the past is catching up with the present. We endeavour in the next submission that we address some of the issues at the Western Cape.

An Official said that with respect to recentralisation, there are problems of delivery but the answer is not to simply centralise because the location of the function is neither here nor there. What is important is oversight, and the Constitution states that capacity needs to be built for municipalities. We also need to build capacity from an organisational point of view not only just for people. On chapter 3 we were looking at the expenditure accruals, and that the Western Cape has the lowest out of all the provinces.

As for conditional grants and its performance, our result shows that for rural municipalities’ conditional grants incentives decline in capital expenditure. It is indeed a fact that these grants are not being spent for what they are intended for.
In respect to the low funding on infrastructure, the way that fiscal system is designed is that it incentivises the municipalities that spend the funds and otherwise for those that do not spend the funds. From the Commission’s perspective in the case of the fiscal constraints we look at how effective we are utilising the funds allocated. We found in one of the provinces that over R1 billion of the conditional grant was spent but if you look at the value for money it was very minimal.

The recommendation we made with regard to people that are not paying, our research found that there are two components to revenue collections which included the part of the tax base that cannot afford to pay the tariffs and the other is that those that can pay, the municipality is not collecting the revenue. We made a recommendation to incentivise municipalities through local municipality equitable share formula to get a larger share.

On the impact of oversight and bullying of the conditional grants, there should be limitations so whilst you are providing municipalities with flexibility there should be stringent oversight measures.

The Commissioner requested Members to submit the outstanding questions in written form.  

The Chairperson agreed to the request, and thanked the Commission for its input.

The meeting was adjourned.


 

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