NEWS & ANALYSIS

NCape municipalities taking us back to the dark ages – Andrew Louw

DA PL says level of debt owed is shocking

NC municipalities taking us back to the dark ages

12 June 2018

I don’t think that anyone here would dare to dispute the fact that local government in the Northern Cape is in tatters.

Auditor-General, Kimi Makwetu, reported that in the last financial year, municipalities in the Northern Cape stagnated and only one municipality in the entire province, ZF Mgcawu District, obtained a clean audit in 2016/2017.

This is very worrying, considering that municipalities in the Northern Cape spent a whopping R70 million on consultants for financial reporting. This is double the amount spent on such consultants in 2015/2016, and it excludes consultants paid for by other institutions.

This, Hon. Speaker, begs the question as to what is the quality of the services delivered by these consultants? Are they really technical experts, or are they just friends with benefits?

Good quality financial statements and annual reports are necessary to ensure that accountability and transparency are achieved. I therefore want to use this opportunity to call on the MEC of COGHSTA, Hon. Bentley Vass, to launch an investigation into these so-called consultants. Municipalities must be held accountable for their choice of professional advisors.

Hon. Speaker, Finance Minister Nhlanhla Nene, recently indicated in a reply to a question that 22 municipalities in the Northern Cape are on the verge of a total collapse of service delivery because their budgets exceed their expenditure. These municipalities owe creditors a total of R1,098 billion while their cash and equivalents amount to only R239 million.

Allow me to expand on local government’s debt situation, in an effort to emphasize the gravity of this conundrum:

At the last known date, municipalities in the Northern Cape owed Eskom over R840 million, with Kai !Garib leading the pack, owing over R126 million;

They also owed water boards at least R148 million, with Magareng municipality being the frontrunner, owing Vaal Harts Water over R70 million;

They owe the Auditor General over R16 million, with Kai !Garib again taking the lead, owing over R6 million;

And they owe the Northern Cape Department of Transport, Safety and Liaison over R139 million, with Kai !Garib running ahead once again, owing over R37 million.

Clearly Kai !Garib warrants a debate of its own. It is also questionable how ZF Mgcawu District could get a clean audit when one of its local municipalities is fairing so badly. But these are matters for another day.

Hon. Speaker, given the shocking levels of debt owed by municipalities, it is no wonder that Municipal IQ economist, Karen Heese, told a Sunday newspaper that the picture for municipalities in Northern Cape, along with those in Limpopo and North West, is bleak.

The reality, Hon. Speaker, is that “bleak” is an understatement - we are in the midst of a crisis.

Almost a quarter of the way into the 21st Century, we are facing a return to the dark ages.

No electricity due to Eskom debt!

No running water due to water board debt!

No sanitation due to non-investment in sewerage infrastructure!

Donga roads due to limited investment in pothole repair!

Hon. Speaker, frustrations of communities are mounting.

In reply to a question, the Minister of Police last year indicated that the number of protests across Northern Cape municipalities grew from 501 in 2014 to 572 in 2016.

The rise in the number of protests in this province is a clear indication of people’s growing intolerance towards the failure of municipalities to provide basic services.

And, while I know that withholding rates and taxes due to dissatisfaction has legal implications, I can honestly tell this House that communities across the province are considering declaring disputes and establishing trusts to better manage their money - so COGHSTA had better wake up, before you find yourself with an even greater debt dilemma on your hands.

Hon. Speaker, there are many factors that contribute to the drastic decline in local government.

According to the AG, the municipal stagnation seen in this province, points to the fact that mayors, municipal managers and senior management are blatantly disregarding recommendations to hold each other, and their subordinates, accountable.

In Frances Baard, for example, we are witnessing the refusal of Council to implement the COGHSTA MEC’s recommendation to reduce the salary of the MM to an acceptable scale, which is in line with her qualifications.

I believe that this lack of accountability stems from political interference in local government due to increased cronyism. Hon. Speaker, the “I scratch your back, you scratch mine” mentality is wrong. There are laws and regulations that should not be deviated from in order to advance the interests of individuals at the cost of service delivery.

Political interference also stems from participation of the politically connected in criminal activities, which in turn allows fraud and corruption to continue unabated at local levels.

Sol Plaatje and the rental of the mayor’s house and the purchase of the mayor’s vehicle, is a case in point.

The ANC’s willingness to harbor at least three mayors in Sol Plaatje, Dikgatlong and Hantam respectively, who face criminal charges ranging from assault, to crimen injuria, to culpable homicide, is another.

Hon. Speaker, I also believe that increased factionalism and in-fighting within the ANC, which sees public representatives being shifted around like pawns on a chessboard, is worsening instability in municipalities and aggravating their lack of accountability. In this regard, Sol Plaatje, Frances Baard, Namakwa, Kamiesberg and Khâi-Ma are prime examples of municipalities affected by surprise purges of mayors or speakers within the past couple of weeks.

Hon. Speaker, we urgently need to change the current perception of accountability.

Councils must not be allowed to be held hostage by individuals or the ruling party for that matter. Municipalities and councils should first and foremost be answerable to civil society whom they serve.

Another factor that I want to red flag, Hon. Speaker, is the shocking lack of functional billing systems across Northern Cape municipalities.

A reply to a question by the MEC of COGHSTA, has revealed that only three of this province’s 31 municipalities, have fully functional billing systems.

Hon. Speaker, billing systems drive cash flow which is paramount to the sustainability of municipalities. Without revenue, there can be no service delivery.

The credibility of billing systems, however, must be beyond reproach if they are to be successful.

Immediately, the controversial example of the outstanding rates and taxes valued at over R634 million, owed by the Roads and Public Works Department to Sol Plaatje municipality for the new mental hospital, springs to mind.

Invoices that do not reflect the true nature and quantity of services delivered will probably result in non-payment. The trend in the accumulation of debt therefore, may be attributed to the impact of the municipal billing system on dwindling public confidence, which mainly results from incorrect bills.

Hon. Speaker, an improvement in billing can hold immediate improvements for municipalities.
In Gamagara municipality alone, there are residents who are literally willing to pay millions of rands in a single swipe, to wipe out their debt. They cannot, however, do so because of a lack of accurate billing information, which Gamagara municipality in turn blames on a malware attack that occurred as far back as 2016. To date, no progress has been made in addressing this dysfunctional system.

I dare say, the dysfunction in this municipality has been aggravated by a dire lack of action by former acting MM and current CFO, Moses “Maserati” Grond, who is far more interested in buffing up his sparkling personal fleet of luxury vehicles, than he is in repairing broken services, owed to the people of Gamagara.

I take note of an intervention by Provincial Treasury, regarding the implementation of a data cleansing project that is focused on improving the integrity of municipal billing data.

I cannot, however, emphasize enough just how important it is that functional municipal billing systems are in place across ALL municipalities in the Northern Cape! In this regard, I also ask for an investigation into the contract between Gamagara and Vesta, who is the service provider who is largely to blame for the billing fiasco in Gamagara.

Hon. Speaker, the problems on a local government level are considerable and they also spill over into other key deliverables of this department, especially human settlements.

In the last financial year, irregular expenditure amounting R57,891 million was incurred on the Lerato Park Services project due to lack of evidence regarding contracts that were awarded.

We have also more recently seen issues of non-compliance arising with the Prieska-Fairview “Breaking New Ground” housing construction project, which ultimately led to the termination of the contract. The project, is due to resume in this financial year at a cost of R6,7 million.

Hon. Speaker, the total housing backlog currently stands at 24 865.

Every time projects are delayed, the possibility of ever eliminating this backlog gets more elusive. This is particularly due to a declining Human Settlement grant accompanied by an annual increase in building costs.

Local and provincial government must therefore work more transparently, and with more integrity when it comes to housing projects.

Otherwise, this department will continue to deliver houses at last year’s very slow pace, which saw only 284 houses completed. At this rate, Hon. Speaker, it will take over 87 years to meet the housing backlog.

Hon. Speaker, as Ronald Reagan once said: “In the present crisis government is not the solution. Government is the problem”.

On this note, I wish to close off by saying that change is desperately needed to rebuild our municipalities and to deliver quality services and dignified housing options to all citizens. This change, however, will not come from this government, it can only come from a DA-led government in 2019.

Thank you.

Issued by Andrew LouwProvincial Leader and Spokesperson on COGHSTA, 12 June 2018