not so lekker
Charlene Smith
Ever wondered why potholes are increasing in city roads and parklands are becoming jungles?
The Financial and Fiscal Commission points out that while local governments are providing services to five times more people than they did in the past, they have had only marginal increases in revenue.
The commission, which advises the government on fiscal allocations to national, provincial and local governments, went to the defence of cities and towns in Parliament this week.
Commission chair Murphy Morobe said insufficient information is being used to support funding decisions about local government.
He said local government receives about 0,5% of the revenue raised nationally, compared to 39% for provincial governments.
“The local sphere has approximately 2% of its expenditure budget provided through revenue sharing, while provinces have about 95% covered by the equitable share, ostensibly due to the difference in fiscal gaps.”
There is uncertainty in allotments, he added. “It is not clear how the amount of R447-million assigned to 293 towns is going to be allocated,” he said, calling for far more transparency in explaining how decisions are reached.
The background is that more than half South Africa’s municipalities are bankrupt.
Apart from the major metropoles, most have not begun to address Y2K problems, for example, mostly because of financial problems that do not allow them to recruit the necessary consultants.
Underlining the Financial and Fiscal Commission’s concerns about the ability of local authorities to cope, Johannesburg’s five municipalities this week began planning a sale of their assets to raise revenue.
Items on the block include the R200-million Fresh Produce Market, the Rand Airport for R20-million, the Johannesburg and Ruimsig athletic stadiums for R80-million each and a basket of other items ranging from municipal land to gas works.
The city is also considering corporatising the zoo and the Civic Theatre, and creating electricity, water and sanitation utilities. All metros are looking at similar plans.
The commission argues that the national government has a weaker argument for being given big budgets than local government does.
“Local government’s developmental role – set out in the Green Paper on local authorities – is likely to increase pressure on expenditure. In many instances, this cannot be addressed in the short run by local tax bases.
“If the constitutional principle was followed that finance should be linked to function, additional revenues would need to be made available to local government,” Morobe said.
The commission argues that if local government taxes cannot provide adequate revenues, the national revenue pool has to be tapped. “The fiscal flows that existed for local government in the previous public finance system are not relevant to the new system and additional resources are required, either from own sources or fiscal transfers,” Morobe explained.
He added it is critical that urgent research be done to find what funding solutions will work best.