Fat-cat salaries are crowding out socio-economic delivery in many of South Africa’s municipalities, official figures show. The salaries of municipal councillors and officials outstrip spending on services by nearly R10-billion — 10% of the total municipal budget.
The figures, drawn directly from local government budgets in KwaZulu-Natal, the Eastern Cape, Gauteng and Free State, must be seen against the backdrop of the municipal protests that have exploded across South Africa in the past six months.
A particularly gross example is that of the Ntambanana municipality, in KwaZulu-Natal, where the council manager pockets R500 000 a year, while the council allocates 20c per citizen for the delivery of services — this compared with a national municipal average of R380 per person.
In some large councils, such as the Ethekwini (Durban) metro, the high remuneration of senior managers appears justified in terms of the budgets managers are responsible for.
Michael Sutcliffe, the municipal manager of Ethekwini, is the highest earning municipal manager in the province at R1,9-million, but his salary is the lowest relative to budget size. In percentage terms, he earns 0,01% of Ethekwini’s total budget, compared with 7% earned by the Ntambanana manager, RP Mnguni.
The rampant misallocation of funds by local authorities is one of the national government’s most intractable headaches. ”To ensure effective service delivery … governments in each sphere must address a number of challenges. One is the balance of spending on personnel and non-personnel needs,” says the National Treasury’s 2003 Intergovernmental Fiscal Review.
In KwaZulu-Natal, 24 out of 29 local municipalities spent more on salaries than a national average of 31,8% of operating expenditure.
In Ezinqoleni local municipality, 34% of the total budget was allocated to salaries and 11% to capital expenditure — well below the national average for capital expenditure of 18% of total budget. In this municipality, 60% of households lack electricity.
In Indaka local municipality, 40% of the total budget was allocated to salaries compared with 12% to capital expenditure. More than 60% of the population live below the poverty line of R1 100 a year.
In Ugu district municipality, 29% of the budget was allocated to salaries and 9% to delivery.
Answering a question by Joanne Downs of the African Christian Democratic Party in the KwaZulu-Natal legislature, the provincial local government department revealed that, of 161 000 households in Ugu, – 155 000 do not have access to electricityand 79 000 do not have running water.
The municipal manager, KE Mpungose, earns R714 000 a year.
But even in municipalities where the infrastructure budget outweighs the allocation for salaries and wages, nominal service delivery figures show they are not spending money earmarked for capital projects.
At the release last month of the preliminary expenditure outcomes for local government, Minister of Finance Trevor Manuel noted there was ”sluggish spending on capital budgets”.
A similar picture emerges from the West Rand municipality in Gauteng. More than half the budget was allocated to salaries, and 5% for capital expenditure.
The West Rand municipal manager, MJ Mohlakoana, banks R810 000 while only R9 is spent per capita on delivery each year.
The South African Local Government Association (Salga) recommends that an average municipal manager should earn R592 000 annually. The lowest paid municipal manager, according to the Mail & Guardian sample, is the manager of Mphofana municipality in KwaZulu-Natal, with R303 000 a year.
Kevin Allan, local government consultant and former adviser to Provincial and Local Government Minister Sydney Mufamadi, and Karen Heese, an independent economist, published figures in Business Day this week, clarifying protests in Free State municipalities.
Assessing the seven municipalities hit by protests, Allan and Heese found that ”typically, those towns with larger salary bills spent significantly less on capital budgets in 2004/05 than other municipalities, both in the sample and nationally …
”The explanation of a third force at work in the seven Free State municipalities … overlooks a simpler explanation: the poor fiscal planning prevalent in these municipalities.”
Mufamadi is legally entitled to cap municipal managers’ salaries in terms of the Municipal Systems Act, but has been reluctant to do so for fear of violating the constitutional independence of local government.
Councillors and officials are employed by individual municipalities whose regulation of employment contracts differs from national and provincial government. Councils have carte blanche to determine the salaries of senior managers, while national and provincial governments pay senior managers according to salary scales.
The government’s target is an overall wage bill of about 30% of total spending by national and provincial governments. The M&G sample shows that the wage bill consumed as much as 54% of council budgets past financial year.
Local authorities are not as financially dependent on national government as the provinces, collecting 98% of their revenue through taxes and levies. Provinces, on the other hand, receive 96% of their revenue from national government.
Manuel has repeatedly expressed frustration at the mismatch between pay and performance in local government.
He was the driving force behind enactment of the Municipal Finance Management Act last year, which strengthens political oversight of municipal budgets by, for example, compelling senior managers to publish their salary packages annually.
In addition, the national executive committee of Salga will shortly scrutinise a government report on salary packages and service provision in local government.
Linda Dlamini, Salga’s executive director for labour relations, said Salga and the Department of Local and Provincial Government had been reviewing the municipal salary structure.
”Some of the criticism that has been levelled against local government is unjustified. But we will come up with a framework for payments [within the next few months].”