'Incompetent impedes councils'

Kenneth Brown, the head of intergovernmental relations at the Treasury, told members of the National Council of Provinces that local efforts are being hampered by political conflicts, by poor governance, by outright incompetence and by corruption.

Not mincing his own words, Brown told the elect committee on finance: "The issue is not capacity, it is incompetence. It doesn't help to say it in soft words."

Introducing the 2008 local government budget and expenditure review, Brown said that the local government transition process must now shift from organisational restructuring to service delivery.

Members heard that the inadequate responses from local councils include limited focus on development priorities - hamstrung perhaps because of incompetence, Brown said, but also perhaps hamstrung because of external factors, such as having to wait for action from a national government department, say, to build a dam to furnish water for mining.

Weak financial and asset management continues to be a problem, he said, as do outdated spatial plans and delays in approving development plans.

'Grant dependency killing municipal effort'

There are backlogs in infrastructure and inadequate maintenance particularly in keeping up the electrical reticulation networks.

"Around R30bn comes to municipalities from electricity sales," Brown said, "and they spend R17bn on purchasing it. They make a profit of R13bn. They should use these funds to maintain the reticulation, or we shall have a disaster."

In addition to limited maintenance, capital spending is inadequate to meet the demand of the growing economy, Brown told the committee. This is despite rapidly growing increases in national transfers of cash to the municipalities. In fact, he said, the increase in cash injections from the national government is serving to discourage the local authorities from using their own efforts to raise money. "Grant dependency is killing the municipal effort," he said.

He also said that the municipalities tend to under-price their services - which increases grant reliance, and reduces the ability to self-finance utilities. Brown slammed the instability in senior management, which is undermining reform initiatives, and called for better-designed national programmes to support local capacity development.

Some of the policy responses he called for include creating fiscal space by balancing price increases against the need for improved spending efficiency, better management of debtors and more innovative use of opportunities to leverage private finance. "How do we enable them to borrow more?" he asked.

He also called for the better coordination of financing with the allocation of powers and functions to municipalities. This would involve creating a greater differentiation between the powers of municipalities, based on their capacities.

- I-Net Bridge