EDITORIAL: Towns and cities in trouble
Municipal finance structures must be rethought before they fall into irreparable ruin
How much more needs to go wrong before we can admit that the municipal government model has never worked for a large portion of municipalities and never will?
Water and Sanitation Minister Nomvula Mokonyane said on Monday she planned to cut bulk-water supplies to at least 30 errant municipalities on December 8. Water debt from municipalities has reached R10.7bn, with 73% of this having been outstanding for longer than 60 days.
Processes to recover the money, including legal action, that started two years ago have not been able to stem the rising tide. Mokonyane now says she will start the cut-offs. She has also put in motion an intergovernmental process with the Treasury to compel it to withhold equitable share grant from municipalities that have not paid their debt.
Taps running dry and sanitation plants that spill into rivers have become unremarkable
It is the same story with electricity, only defaulting on Eskom accounts has been going on for much longer. Municipalities owe the power utility R10bn and Eskom says it has no plans to write off any of this. Cut-offs of offending towns have been happening on and off for the past two years.
In 2015, the Treasury caused an uproar when it told municipalities it would withhold their equitable-share grants until their Eskom debt was paid.
The Treasury’s 2017 report on municipal finances painted a startling picture. While water and electricity cut-offs loom, municipalities themselves sit on a R120bn mountain of unpaid consumer bills, most of which they are unable to collect.
The report said the inability to collect debt and raise revenue was threatening municipal sustainability.
This is certainly true, but the problem is not new. The viability of many of the country’s 284 municipalities has been in question since the municipal boundaries of the democratic era were drawn up in 2000.
Five years later, the government launched Project Consolidate, the first of many municipal rescue programmes, sending task teams to intervene in almost half of them. The local government department at the time said 42 municipalities were not able to execute even half their functions.
While it would be inaccurate to say no progress has been made in the past 12 years – a good deal of effort has gone into skills-capacity building and the setting of rules around qualifications and appointments for particular jobs — the fact is that fundamental structural problems exist in municipal finances.
Now, as corruption deepens and consumers come under growing pressure — poverty and unemployment have risen again in the past year – and the entities to which municipalities owe large amounts are themselves buckling, municipalities face a perfect storm that could develop into a full-blown crisis.
The South African Local Government Association and the Department of Co-operative Governance and Traditional Affairs said last week there was now concern that municipalities were dipping into infrastructure grant funds to pay salaries. These funds – critical for maintaining water, sanitation and electricity infrastructure at local level — are supposed to be ring-fenced and not spent on operating costs.
In the midst of this we are seeing ever more serious failures of infrastructure. In small towns, taps running dry and sanitation plants that spill directly into rivers have become unremarkable problems. That a large portion of affluent Johannesburg was left without water for several days last week would have been shocking had the inner city and Hillbrow not been deprived of electricity for 10 days a couple of months before.
While the electricity problem originated through theft and damage, the reason the problem took so long to fix was that the substation was 75 years old.
The warning signals are now loud and clear.
Municipal finance structures must be rethought before they fall into irreparable ruin.