District Development experiment fails spectacularly as OR Tambo District Municipality funds cut

Issued by Vicky Knoetze, MPL
Shadow MEC for COGTA

President Cyril Ramaphosa’s District Development experiment has been dealt another devastating blow after National Treasury announced they will not be releasing the OR Tambo District Municipality’s (ORTDM) equitable share.

The ORTDM was launched as the pilot site for Government’s District Development model, in 2019, and despite the heaps of praise for the model from the national government, it has been a failed experiment.

You cannot change the form without dealing with the substance of what is rotten.

The consequences of withholding funds are devastating, as equitable share funds are meant to be used in providing basic services and performing various municipal functions. By cutting this funding, contractors, sub-contractors and SMME’s will lose much-needed sources of income and the people who need services the most, will be left in the lurch.

This is the direct consequence of the ANC’s cadre deployment policies, where individuals have been put into positions of power without the necessary skill set to do the work expected of them. As a result, the municipality has pushed through a budget that is unfunded by R200 million, with a cost of employment (COE) far exceeding Treasury’s benchmarks.

The benchmark for COE is between 25 and 40%, but ORTDM’s COE is at a staggering 46% and had also factored in a 3,9% salary increase.

Also flagged was the fact that the municipality had not increased tariffs for residents or businesses for the new financial year.

The ORTDM has a track record of poor financial controls:

  • In 2020 a sum of R234 million was withheld by National Treasury due to advances paid to the Amatole Water Board that did not comply with the Division of Revenue Act.
  • A further R230 million was withheld due to underspending of conditional grants.
  • The previous Municipal Manager, Owen Hlazo, was suspended in 2020 for allegations of financial misconduct including advancing payments of R105 million.
  • ORTDM received a qualified opinion with findings in the latest Auditor-General Report, and is cited several times throughout the report:
  • ORTDM is the 7th highest contributor in the country and 3rd highest in the province in terms of irregular expenditure at R696 million.
    ORTDM is the 10th highest contributor in the country in terms of irregular expenditure not dealt with at R 1.35 billion.
  • The AG specifically cited that ORTDM did not deal effectively with investigations of irregular expenditure which has now accumulated to R 1.98 billion at the end of 2020.

The Democratic Alliance is calling for provincial intervention in terms of section 139 (5) of the Constitution as the municipality, as a result of a crisis in its financial affairs, is in serious and persistent material breach of its obligations to provide basic services or to meet its financial obligations.

A financial recovery plan must be imposed.

The responsibility to turn around local government is the responsibility of its leaders. We need leaders that are committed to capable, efficient and ethical government based on the values and principles of our Constitution.

The DA has clearly demonstrated that it gets things done, has sound financial systems in place and spends tax payer’s money with transparency and accountability.