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Parliament, Sunday, 17 December 2019 – The Standing Committee on Appropriations and the Select Committee on Appropriations have told the South African Local Government Association (SALGA) and individual municipalities to strengthen their debt collection systems to curb the problems of revenue collection the municipalities experience.

The committees said that during the last day of the public hearings on the Division of Revenue Amendment Bill [B15-2019] that were concluded at Parliament on Friday.

The committees heard that the municipalities are owed in excess of R165.5 billion on rendered services. They highlighted their concern on the fact that R24.7 billion of the amount is owed by the private companies, households R118.5 billion. And R10.3 billion by government entities.

While both committees acknowledge SALGA’s assumption of the problem of underfunding of the municipalities by the national government, but the problem of the non-payment of services rendered by the municipalities by their clients, private companies and government entities contributes a great deal in the imbalance between the available revenue and expenditure.

It is hoped that migration to prepaid metres strategy will curb the culture of non-payment of rendered services and the municipalities are urged to consider the strategy as it shows the potential of improving the revenue collection system.

Furthermore, the committees have called for improvements in the financial management systems at municipalities especially after they considered regression in audit opinions over the past three years.

While the committees appreciate the pressure that the announced budget cuts by the Minister of Finance during his Medium Term Budget Policy Statement on Local Government Equitable Share by approximately R3 billion, and a further cut by approximately R14 billion on Conditional Grants over the Medium Term, both committees are of the view that improvement in governance systems at local government level is inevitable to ensure that the limited available financial and other resources are used sparingly and in a sustainable manner.

The committees called upon the municipalities to ensure that inefficiency and underperformance within the local government sector are areas of focus especially on infrastructure development and maintenance to improve the dwindling revenue base.

They urged the municipalities to ensure that there are strong revenue collection and debt recovery systems in place to boost the revenue base of the municipalities to ensure that they have better capacity to deliver services to the people. The committees called upon all the relevant stakeholders of the municipalities to work together to ensure that the culture of the payment of municipal services prevail.

The committees have told SALGA and National Treasury to continue with their engagement on the issue of funding model of local government.

ISSUED BY PARLIAMENTARY COMMUNICATION SERVICES ON BEHALF OF THE CHAIRPERSONS OF THE STANDING AND SELECT COMMITTEES ON APPROPRIATIONS, MR SFISO BUTHELEZI AND MS DIKELEDI MAHLANGU

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