This is an extremely important motion as it hits at the heart of accountable government as well as sound financial management. In terms of the Democratic Alliance’s agenda for accountability, we have identified compliance with Legislation such as the Public Finance Management Act and the Municipal Finance Management Act as key issues in improving accountability and the financial management of this Province.
Over the years I have frequently raised questions in the house in relation to the smooth payment of Municipalities by the Province. In spite of this, this problem continues to rear its head from time to time. Non payment by the Province and National Departments has an extremely adverse effect on the smooth running of Municipalities. This is nothing more than poor financial management.
When the Province withholds money that is due to Municipalities, it has an extremely adverse effect on their financial viability. This sometimes results in cash strapped Municipalities having to divert other resources to cover the shortfall caused by the Province.
This is extremely frustrating for officials who have to spend hours of their time fighting the bureaucratic monster that Bhisho has become in this regard.
It is detrimental to the morale and motivation of employees of Municipalities who already have their backs to the wall when it comes to trying to improve service delivery.
For small Municipalities, amounts such as these are extremely important and without it they cannot function effectively. In the end it is the people on the ground who need service delivery that are badly affected.
Many of our Municipalities in this Province are cash strapped. They cannot afford to experience any delays in the payment of monies. In the last incident in which I was involved in earlier on this year related to the Baviaans Municipality, the Provincial Education Department took nine months to pay an amount of R240 000 and the health Department took seven months to pay R112 000. These amounts were only paid after I personally raised the matter with the two MEC’s concerned. Prior to that the Municipality made a number of efforts and my office also interacted with the Departments themselves.
On the 28th December 2009 the Baviaans Municipality received R169 000 being the last payment from Health out of an allocation of R497 000. This was for the 2008/9 financial year.
In January and March they received a further payment of R240 000 out of a total budget of R532 000 for the 2009/10 year. In other words, for the first 6 months of the municipal financial year, they received no funding for the services that they were providing to the Health Department.
Why does it have to take a question in the house and personal interaction with MEC’s to ensure that the basics of Government work?
When the basics of Government fail to operate smoothly, then service delivery is hampered. We need to get the basics right.
This brings me to the issue of accountability. In terms of Section 38 (1) (f) of the Municipal Finance Management Act, the accounting officer of a department “must settle all contractual obligations and pay all money owing, including inter governmental claims within the prescribed or agreed period.”
In terms of paragraph 38 (1) (h) the accounting officer must “ take effective and appropriate disciplinary steps against any official in the service of the Department, trading entity or constitutional institution who contravenes or fails to comply with the provision of this Act.” And (2) “commits an act which undermines the financial management and internal control system of the Department, trading entity or constitutional institution.”
When Municipalities and other institutions of Government are not paid timeously, in terms of the contractual obligations of Government, then the Public Finance Management Act is being contravened. It would be interesting if the MEC could inform us whether he is aware of any officials that have been disciplined for late payments to Municipalities.
Late payments are a costly exercise. In the first 11 months of this year, Provincial Governments were sued for failing to pay their bills. They spend R237 million on legal fees for state attorneys to defend these matters. Guess who was the highest? The Eastern Cape who had to pay out R181 million to State Attorneys who had to defend 31 cases for non payment.
Unless we are prepared to take concrete action in terms of the Public Finance Management Act, and that there are real consequences for non performance, then the situation will not improve. The Public Finance Management Act also instructs us to monitor how these funds are being spent as well. It is therefore critical that the Province has the right monitoring systems in place to do this.
This motion also calls for a report highlighting all outstanding monies owed by both Province and National Government to be tabled at the next sitting of the finance and Local Government portfolio committees. This is an extremely important report. This should be done on a quarterly basis to both committees. This will enable the committees to monitor the transfers of funds to Local Government on a regular basis and where one does not need to tackle this issue on an ad hoc level.
This, however, will need the various departments to co-operate and comply. This house, by ensuring that this part of the motion is enforced, can really contribute to the improvement of service delivery in this Province.
This House has a duty to ensure that financial management at Local Government level is improved. Managing tight cash flows in Municipalities is a real art. We must ensure that the Province does not remain an obstacle to the smooth running of our Municipalities. Rather, it should be seen as a partner that contributes to improving service delivery.