State tackles underspending

Posted On Wednesday, 20 February 2002 14:01 Published by
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Government to set up co-ordinating structure to boost the performance of municipalities
Government to set up co-ordinating structure to boost the performance of municipalities

Political Correspondent

CAPE TOWN Government is tackling the problem of local government's lack of capacity to deliver one of Finance Minister Trevor Manuel's bugbears by setting up a body that will co- ordinate all of government's capacitybuilding programmes.

The problem has impeded the fasttracking of social delivery, but attempts to address it have been fragmented.

The need for greater cohesion is understood to be one of the recommendations made by the ministerial advisory committee led by Peter Leon.

The committee was appointed by Provincial and Local Government Minister Sydney Mufamadi to look into the financial viability and capacity of local government.

Manuel is likely to highlight problems of underspending and a lack of delivery by all three spheres of government in the budget he tables in Parliament today. Government allocated R456m for local government capacity building last year and an allocation of about R548m is expected today.

The national treasury chief director of local government, TV Pillay, said yesterday that the proposed new structure made up of state and civil society representatives would pull together the capacity-building projects of all departments, identify priorities and direct funding.

It would also act as a central co- ordinator for all government resources and donor funding earmarked for capacity building.

The proposed body would consist of representatives of the national treasury, the provincial and local government department and the SA Local Government Association. Other line departments would be brought in when needed. Problematic areas included financial management, planning, project management and engineering

Pillay said the national treasury, with the provincial and local government department, was drawing up a capacity-building framework document due for completion by June which would be attached as an annexure to the Division of Revenue Bill, which allocates funds to provincial and local government.

The absence of a coherent, all- embracing strategy to strengthen local government was one of the weaknesses identified yesterday by critics of the Municipal Finance Management Bill, which aims to modernise and tighten financial management at local government level and to regulate municipal borrowing.

Demarcation Board chairman Michael Sutcliffe warned of 'severe consequences' if the bill was implemented in its current form as it failed to take account of the wide variation in size and capacity between local governments. Large ones such as Durban, Johannesburg and Cape Town, with budgets of about R9bn, spent R2525 per person per year, while small ones such as Bushbuckridge spent R2 per person per year.

Sutcliffe said the bill's requirements for financial management, reporting and accountability needed to be differentiated as the application of the same rules to weak and viable municipalities could prove too onerous for the former and too restrictive on the latter.

He believed elements of the bill should be removed and used to strengthen the Municipal Systems Act and that the bill should include a chapter on capacity building, which would identify which organs of state were responsible for this.

The independence of municipalities should be respected and Sutcliffe questioned the constitutionality of aspects of the bill allowing national government to intervene in cases of financial crisis. He said financial supervision could not be separated from political authority.

Institute for Municipal Finance Officers' representative and Durban city treasurer Krish Kumar believed the bill was too prescriptive and undermined the proactive role of financial officers.

Publisher: Business Day
Source: Political Correspondent

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