The latest strike and pay demands are going to put huge strain on the national fiscus that is already operating under severe constraints as a result of falling tax revenues. It is therefore unlikely that there a going to be large bail-outs for provinces and municipalities.
The financial crisis that the province finds itself in also appears to be cascading down to the Nelson Mandela Metropolitan Municipality. The Eastern Cape provincial Departments of Education and Health are projected to overspend by R3 billion in the current financial year.
It is in the public interest that one understands the full extent of the cash flow problem being experienced by the Metro. Public representative who are accountable for the Metro’s well-being should not be kept in the dark. What needs to the clarified is whether or not there is unbudgeted expenditure taking place or whether the problem lies with a lack of revenue collection. The extent to which both these factors are impacting on the cash flow of the Metro needs to be spelled out.
I therefore tabled a question to the MEC for Finance, Mcebisi Jonas, (attached) to clarify the situation. The MEC is obliged in terms of section 71 of the Municipal Finance Management Act to table regular reports in the legislature on the state of municipal finances. This is simply not occurring.
What is totally unacceptable is outstanding millions due to the municipality from the provincial departments. It was reported that the Departments of Health, Education and Public Works owe R53,3 million and that R190 million was owed by the Department of Human Settlements, and R31,6 million by the Department of Economic Development and Environmental Affairs.
When a municipality experiences cash flow problems they tend to go slow on the payments for service providers. It has a crippling effect on businesses and results in job losses. This is clearly an unacceptable state of affairs. The MEC for Finance needs to thoroughly assess the situation and determine whether or not eventual intervention is necessary or not.
For further information, please contact Bobby Stevenson, MPL on 082 775 3444.
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