Speech notes: Cooperative Governance and Traditional Affairs Portfolio Committee Report and Budget 2020/2021

Issued by Vicky Knoetze, MPL
Shadow MEC for COGTA

Local Government in the Eastern Cape is collapsing

  • More than 14 Municipalities are in distress and unable to pay creditors.
  • ESKOM debt has spiralled out of control and is bringing municipalities to its knees.
  • The illusive stimulus packages to assist with Covid19 is not forth-coming.

Honourable Speaker, Honourable Premier, Honourable members and guests, good morning.

The fact that this department is spending 93.8% of its budget on the cost of employment completely consumes the department by its payroll turning it into a glorified employment agency. This while local government is the Eastern Cape is on its last legs in many of the municipalities, and needs all the assistance from the department that they can get.

We are all already aware that the MEC had to approach National Government for funds in February this year to bailout 14 of the unsustainable and bankrupt municipalities in the EC. Honourable Speaker, this is an indictment on the state of government in the EC and reveals the true State of the Province.

Cities and towns link people to the National economy which in turn link people to the international economy. Therefore, if it does not function as it should it has a knock-on effect on the entire economy. Cities and towns only function well if they are governed well.

Local government is the bedrock of politics and the bedrock of the economy. It is the sphere of government closest to the people – if local government fails – government fails. The effectiveness and efficiency of local municipalities can be severely hamstrung and their problems exacerbated by failures of provincial and national government to provide the necessary guidance and assistance.

The Democratic Alliance believes that these municipalities must be dissolved in terms of section139 of the Constitution and that fresh elections should take place. This will allow for a reconstruction of South Africa with a consolidated democracy in which power can change hands through the ballot box.

Honourable Speaker, of further grave concern is the collective debt of municipalities to ESKOM in the Eastern Cape, it has surpassed the Billion Rand mark in November last year already and has surely grown exponentially by now.

We desperately need a provincial action plan in terms of assisting and supporting municipalities that owes ESKOM to settle their debt and prevent power cuts and load-shedding. We cannot further allow situations as what occurred in the Sunday’s River Valley Municipality last week in term of which hundreds of people were without electricity and sewerage pump stations were not functioning due to ESKOM cutting the power as a result of non-payment.

It is fundamentally unfair to punish the residents of these municipalities for the failures of the administration of these municipalities to pay ESKOM and for allowing the debt owed to ESKOM to run into millions.

This situation is of great concern to residents, local businesses, the tourism industry and societies most vulnerable. It will have a negative effect on the economy in these already severely cash-strapped municipalities. The Provincial Department of Cooperative Governance and Traditional Affairs have no clear plan in terms of assisting and supporting these municipalities and there is no intention to keep any officials responsible for the chaos.

The situation is potentially disastrous for affected municipalities that are already in distress and severely cash strapped – the impact on service delivery and the quality of life of the people will be devastating. Money that must be paid to ESKOM must be ringfenced by municipalities, with the necessary planning and leadership it must be ensured that money is spent on items that it is earmarked for.

Electricity losses in Nelson Mandela Bay, for example amounted to over R 1 billion over the past three financial years up to February of 2020. This was revealed after ESKOM last month announced that they has suffered damages of R 71 million in the 2019/20 financial year and R188 million over the past three financial years due to illegal connections and tampering.

The Democratic Alliance maintains that there must put a plan in place to eradicate illegal connections, the only way to do this is by ensuring that there is an efficient and effective plan to roll out connections to informal users in a formal power strategy for the city.

This strategy must include, the use of alternative energy solutions such as solar (off-grid) and wind power especially in the effort to connect informal users, the use of spider web connections, metered connections in informal areas and an amnesty period for users that have meters that have been tampered with as well as the planned roll-out of electronic-tamer-proof meters. It is also imperative that the strategy includes a detailed plan of the inspection, maintenance, replacement and upgrade of electricity infrastructure.

Honourable Speaker, the collapse of governance in the Eastern Cape is becoming more and more evident as in the wake of more and more municipalities being identified as being in a state of ‘distress’. The collapse of governance normally coincides with economic collapse. The report of the Auditor General is damning – it paints the province as being guilty of a widespread lack of financial controls and project monitoring and goes on to characterise the province as having a culture of a lack of accountability which resulted in further regression of audit outcomes.

13 EC municipalities have regressed in terms of audit outcomes for the 2019/20 financial year. 5 of the 13 municipalities are already on the list of municipalities that are in distress, however, 8 municipalities are not on the list, including Sakhisizwe Local Municipality and Sunday’s River Municipality. According to the 2020 Audit Outcomes for the Eastern Cape, only 1 out of 32 municipalities received clean audit outcomes – 3% of municipalities – this is a disgrace Honourable Speaker.

It is the position of the Democratic Alliance in the Eastern Cape that the list of 14 municipalities are greatly underestimated and that the number of distressed and unsustainable municipalities are in fact much higher. In fact, the Auditor General’s report indicates that 83% of municipalities in the EC have cash flow-problems and 24 municipalities have severe cash-flow problems and are unable to pay creditors.

Having an accurate reflection of which municipalities are in distress for which reason will assist the Department to determine a strategy for assistance and intervention. On this point, I thank the MEC for agreeing to look into doing a re-estimation of the municipalities in distress in the EC.

Lastly Honourable Speaker, I must appeal that we insist on the stimulus packages for municipalities in the Eastern Cape, as promised by President Cyril Ramaphosa.

R 20 billion of the R 500 billion stimulus package to keep South Africa’s economy afloat during the Covid19 pandemic was supposed to be allocated to municipalities for the provision of emergency water supply, increased sanitisation of public transport and facilities, and providing food and shelter for the homeless. To date it is unclear if and when these packages will be made available to municipalities. This disaster is not happening in ‘the near future’ it is happening now!

Local government is the bedrock of economy, when local government fails, everyone suffers, as the collapse of governance will inevitably translate into essential infrastructure failures, sewerage leaks, water leaks and availability problems, business will struggle to operate, healthcare services will be adversely affected and schools will struggle to operate effectively – livelihoods will be threatened – and it will affect everyone.

The Democratic Alliance continues to fight for the people to ensure that they can live a life of value, protect their livelihoods, and have dignity and hope for a prosperous future.