Lindiwe Sisulu’s proposal to top-slice municipal grants slammed
SA Local Government Association says ‘unfair’ practice not sustainable solution to mounting water debts
Human settlements, water & sanitation minister Lindiwe Sisulu is on a collision course with local government on how to deal with water arrears.
Sisulu said last week her department was exploring legal measures that would enable top-slicing. This entails diverting 3% to 5% of municipal grants to municipalities with arrears to the department to reduce their debt for water supplied.
She said this in a written reply to a question by DA MP Emma Powell.
However, the SA Local Government Association (Salga) is strongly opposed to the idea.
Municipalities are estimated to owe R14.9bn to water boards and other water entities, largely because people are not paying for their water usage. They will receive about R45bn in various conditional grants in the 2019/2020 financial year.
"For the top-slicing to be implemented, parliament would have to approve the top-slicing of all the municipal grants," Sisulu said.
She said that the total water debt increased by R1.7bn from March 2018 to September 2018 and a further R1.8bnfrom September 2018 to September 2019.
Salga’s head of infrastructure and spatial transformation, Jean de la Harpe, said the local government association does not support the top-slicing of municipal grants as a means to solve the debt problem.
"While we strongly support the view that those who can afford to pay must pay for the services they use, the top-slicing of grants is not the solution.
"Grants are carefully designed to support the poor, both through the equitable share and through the various infrastructure grants. Local government’s share of nationally raised revenue is designed to fill the gap where communities cannot afford to pay for services. Top-slicing these grants would effectively top-slice funds allocated to the poorest of the poor."
De la Harpe noted that the debt owed to municipalities is in excess of R165.5bn, of which about R50.2bn is for water services. This debt is owed by households, businesses and the government.
"Top-slicing funds from municipalities’ grants is not only unsustainable, it is also unfair, particularly because those grants already are insufficient to cover the full costs of services to poor communities.
"The growing levels of household consumer debt every year are a result of both non-payment of services by those who can afford to pay, and a direct result of poverty and lack of affordability.
"Towards addressing non-payment, the Salga national executive took a decision that all municipalities should urgently and aggressively enforce credit control management measures."
The Treasury’s deputy director-general for intergovernmental relations, Malijeng Ngqaleni, said there was no legal provision for "top-slicing" municipal allocations to pay off debts owed to other entities.
"In the case of municipalities with the largest outstanding amounts owed, the amounts they owe are too large for them to be paid off by top-slicing a grant or grants."
Ngqaleni said the Treasury supported a strategy that required municipalities to adopt credible or funded budgets. This would require them to cut expenditure and boost revenue.
"These credible budgets must include realistic plans to service the amounts owed to their creditors. This is the only sustainable path as we believe there is more municipalities can do to cut waste, prioritise properly and optimise on their revenue collection. The cost containment regulations are aimed at supporting better management of spending to restore their finances to sustainability."
Sisulu said her department was in constant engagement with municipalities over their debts. It also participated in the interministerial task team on service delivery that had made a number of recommendations.
The minister said the National Water Act allowed the department to restrict or suspend the flow of water to defaulting municipalities until the outstanding debt together with interest had been paid. The department had resolved to take legal action against municipalities with debt. Action has been taken against 65 municipalities and judgments have been obtained against six of them.
"The fundamental challenge is that 60% of SA households do not pay for water services. In the majority of these cases, household incomes are so low that they would qualify for free basic water as indigents," Sisulu said.
"However, because their consumption is not metered, it is possible they are using more than the free basic allowance and should be paying for that ‘excess’ consumption. To address this will require a thorough review of household affordability, indigent registration procedures and financial provision for basic water supply. In addition, a process to insist on payment for consumption over and above the free allowance will have to be initiated."
Replying to a question by Freedom Front Plus MP Philippus van Staden, Sisulu said the latest report on real water losses and non-revenue water (which included 2017/2018 data) estimated that 1,150,079,000m³ was lost countrywide. Real losses are defined as physical losses from a pressurised system, up to a point of measurement of customer use. This includes losses from reservoirs and pipe leakages.