DA requests urgent intervention to restore stability in municipalities with unfunded budgets in the 2017/18 financial year

The DA will write to the Minister of Finance, Nhlanhla Nene, requesting the immediate intervention in terms of section 139(5) and (7) of the Constitution, read with the relevant sections of the Municipal Financial Management Act, to restore financial stability to South Africa’s failing municipalities.

This follows a reply to a parliamentary question to Minister Nene, which has revealed that a shocking 43% of municipalities (112 out of 257) have unfunded budgets in the 2017/18 financial year.

This means that these municipalities do not have sufficient resources to meet the service delivery needs of residents, as their income does not meet their forecast expenditure. It may also indicate that municipalities are not budgeting effectively, or are not adopting austerity measures to ensure that basic services are prioritised.

The DA cannot allow our local governments, which have a clear mandate of service delivery, to fail.  What is even more shocking, is that only 14 have approved financial recovery plans.

What is particularly distressing is the lack of understanding of the Constitution on the part of the Minister. He suggests section 139(5) of the Constitution affords a provincial executive (i.e. the Premier and MEC’s of the relevant province) a discretion in deciding whether or not to impose a financial recovery plan on a failing municipality. In fact, section 139(5) reads as follows:

If a municipality, as a result of a crisis in its financial affairs, is in serious or persistent material breach of its obligations to provide basic services or to meet its financial commitments, or admits that it is unable to meet its obligations or financial commitments, the relevant provincial executive must

(a) impose a recovery plan aimed at securing the municipality’s ability to meet its obligations to provide basic services or its financial commitments, which—

(i) is to be prepared in accordance with national legislation; and

(ii) binds the municipality in the exercise of its legislative and executive authority, but only to the extent necessary to solve the crisis in its financial affairs; and….

 Section 139(7) then imposes a similar obligation on the national executive (i.e. the Cabinet) where a province cannot or does not exercise its powers in terms of Section 139(5). The DA finds it completely disingenuous to “pass the buck” to municipalities and provinces.

The DA will continue mounting pressure on Minister Nene to step up and take responsibility for the failure of the national executive to act decisively and impose financial recovery plans on these dysfunctional municipalities.


Defaulting municipalities will not face water cuts in the short term

The DA welcomes the decision by the Minister of Water and Sanitation, Nomvula Mokonyane, to offer a temporary reprieve to the municipalities facing water restrictions for their failure to pay off their debt. This followed a robust debate in a Joint Portfolio Committee of Cooperative Governance and Traditional Affairs and Water and Sanitation.
The committee agreed that no municipalities would be cut off or throttled in the short term and that an Interdepartmental Committee will convene, within 14 days, to consider a way forward.
This comes on the back of Minister Mokonyane’s deadline of 8 December 2017 within which the 30 defaulting municipalities had to honour their debt.
The deadline was impractical as these municipalities simply could not have collected enough revenue to honour their debts within this short period.
It was also resolved in the meeting that no equitable share would be utilised to pay the water boards before the join portfolio committees meet in March to reconsider the matter.
The DA is satisfied that this decision re-affirms that innocent South Africans and businesses that will not be cut off from water by the ANC’s mismanagement and inefficiencies, for now.

DA to question postponement of tabling of balk tariff increases for municipalities

Despite the fact that the National Energy Regulator of South Africa (NERSA) has already granted a 2.2% bulk tariff increase for municipalities, Minister of Public Enterprises, Lynne Brown, requested a last-minute postponement to table these before parliament, on the day of the deadline, on 15 March 2017.
Minister Brown now has until 5 April 2017 to table to the increases and the DA will submit parliamentary questions to get to the bottom of this seemingly unnecessary postponement, which could be potentially disastrous for local municipalities and Eskom.
It is also suspicious that Minister Brown only requested a postponement on the day of the deadline considering that National Treasury had responded to this request for postponement on 2 March 2017.
The DA will therefore also submit questions to get clarity on why the Minister waited almost two weeks before approaching Parliament to ask for a postponement.
Further questions will be submitted to the National Treasury on the affect the extension means for municipal revenues for 2017/18 and whether the condoned delay still allows for implementation in this 2017/18 financial year as opposed to the 2018/19 financial year.
The DA expresses our deepest concern at the following potential problems that this creates:

  • Delayed budgeting processes that may leave municipalities open to costly legal challenges (eg Nelson Mandela Bay);
  • Delayed budgeting processes at municipal level that could threaten front line services;
  • Uncertainty amongst consumers, made up of balk tariff increases in municipalities and businesses, which adds to already substantial economic uncertainty.

The tariff increases must be tabled before municipalities can go ahead with their budgetary processes. It is, therefore, vital that we get to the bottom of this delay to ensure that service delivery is not hampered.