EFF statement on the municipal audit outcome of the Auditor-General
1 June 2016
The Economic Freedom Fighters notes the 2014/15 municipal audit outcome released by the Auditor-General (AG) Mr. Kimi Makwetu. While the audit outcome report shows that there is improvement in compliance with financial reporting, majority of municipalities remain dysfunctional. According to the audit report, more than 92% of the municipalities’ financial health is either concerning or requiring intervention, an increase of 10% from the previous financial year. In addition, 26% municipalities’ financial position was so poor; there is material uncertainty with regards to their ability to continue to provide basic services such as water, electricity, sanitation, and salaries for workers.
The EFF further notes that, while 59% of municipalities received clean audit opinions, it is 41% of the municipalities that received unclean, which account for majority of expenditure. Municipalities with clean audit account for only R134 billion, which is only 39% of the total expenditure of R347 billion. While those with unqualified, adverse and disclaimer audit outcome represent more than R213 billion, and it is these municipalities that are likely to fail to deliver basic services and public money is stole.
It is extremely worrying that municipalities continue to disregard Municipal Financial Management Act (MFMA) and other legislation, especially concerning SCM. The fact that irregular expenditure has more than doubled since 2011 to an astounding R14.7 billion and is incurred by an increasing number of municipalities is concerning. Also, both fruitless and unauthorized expenditure also increased to R1 billion and R15.3 billion respectively. The main reason for increasing irregular expenditure is the tender system, and it is for this reason that EFF’s people municipalities will abolish it once and for all.
All political parties do not have mechanisms to hold councillors accountable, as a result there is no internal control, and the wasting of resources clearly demonstrates lack of consequences. The AG highlighted that there is possible fraud and improper conduct as 45% of municipalities that reported unauthorized, irregular and wasteful expenditure in the previous year had not investigated these transgression as required by the MFMA.
The increasing and unnecessary reliance on consultants on municipal basic functions such as preparations of financial statements, to an extent that municipalities spent R892 million financial reporting services is a sign that municipalities do not have basic internal capacities. It is for this reasons that EFF’s people municipalities will abolish the use of consultants and instead build internal state capacity. EFF’s people municipality will employ all municipal workers, cleaners, security guards, refuse removal workers and all other workers necessary to deliver services to our people.
The report makes it clear that local government does not generate enough revenue to fund operations to deliver services and invest in capital projects. Equitable share and conditional grant is not sufficient, and the division of revenue in its current form perpetuates apartheid spatial redistribution of resources, while poor communities remain destitute.
The EFF remains the only party that has workable and sustainable programs for municipalities that will manage resources much more efficiently. It is only the EFF that will improve governance, financial administration and value for money to deliver quality jobs and services to the people.
Issued by Mbuyiseni Quintin Ndlozi, National Spokesperson, EFF, 1 June 2016
