The average councillor’s wage has risen 130% from R36769 to R84573 a year under the new municipal system, the treasury’s intergovernmental fiscal review shows. This is despite a 30% reduction in the number of councillors in terms of the new municipal demarcation, from 11 368 to 8 939.
The review says councillors’ pay had risen from R418-million a year last year to an estimated R756-million. This is because “the introduction of full-time councillors and the expanded role of executive committees has led to the need to revise remuneration scales”.
Minister of Finance Trevor Manuel told the National Council of Provinces this week that the transfer of staff in newly amalgamated municipalities had ratcheted up pressure to equalise salaries and benefits. The cost of personnel and benefits had become the highest cost driver for municipalities “with salaries continuing to consume the largest portion of operating expenditures at 31%, closely followed by costs to provide bulk services”.
Manuel’s speech and the review reinforce mounting concerns about the viability of South Africa’s newly demarcated municipalities, particularly those outside metropolitan areas.
Manuel said the new municipali- ties face considerable challenges in expanding service delivery to all South Africans and the new demarcation has created some municipalities that will have to be built from the ground up. He said they have to absorb personnel into new organisations, as a result of the merging of councils and the reorganisation of the powers and functions of municipalities. In terms of a little-noticed amendment last year, water, power supply, sanitation and health services are to be transferred from local and district councils.
The word “challenges” in finance department speak is generally code for “grave problems”. The deputy director general for intergovernment relations in the treasury, Ismail Momoniat, confirms there are concerns about local government. “For instance, municipal rates are rising above the rate of inflation. Some of it is plain inefficiency, but there are other problems.”
The review says basic service delivery suffers as municipalities face various budget challenges.
“Operating expenditures, and especially the share of salaries in the expenditure figures, continue to be high. Capital expenditure declined as a percentage of total spending. Revenue from property rates, electricity, water and other significant sources steadily increased, as did outstanding debtors.
“But many municipalities find it difficult to collect revenue effectively, and the pricing, planning for and management of revenue must be priorities. Inadequate information undermines budgeting and makes benchmarking, comparisons and tracking of funding flows difficult.”
The review says that in most cases, municipalities overestimated revenues and the failure to account for under-collection of rates and tariffs had led to year-end deficits.