Deputy Speaker, the primary objective of the division of revenue to the various spheres of government should be focused on service delivery to the poor and the marginalised. Such service delivery should therefore take place at the level closest to the people and that is, in other words, local government.
National government must, however, ensure that municipalities have both the finances and the human capacity to perform proper service delivery. The millions of rands paid by national government to municipalities annually in the form of grants to augment their income are therefore welcome. The average annual growth over the Medium-Term Expenditure Framework, MTEF, in respect of conditional grants to municipalities is 11,6%.
Unfortunately, control over expenditure of the grant leaves much to be desired. Municipalities often use grants to offset overdrafts at banks or for purposes totally unrelated to the priority objectives for which the grants were made available in the first place. Worse still, is when these grants are simply not spent due to human capacity constraints at municipalities. A major cause of these capacity constraints often lies in the field of cadre deployment and the resultant appointment of employees and managers in local government who are totally unfit for purpose, but who have the right political connections.
A case in point is the devolution of property rates grants. These grants are made available by the Department of Public Works to provinces. Provinces, in turn, pay the grants over to municipalities, for municipal rates and taxes due by government for government buildings, but only after receipt by provinces of specified accounts submitted by municipalities.
As at 30 September this year, R862 million or 79% of the allocated budget for property rates devolution, had already been paid over to provinces by the Department of Public Works. The balance of the allocated budget will be paid over during October. Unfortunately, when one looks at the onward payments to municipalities thus far, a sorry tale unfolds. At the end of August 2010 an amount of R435 million had not yet been transferred or paid over to municipalities and sits in the bank accounts of provinces.
Payments effected to municipalities by KwaZulu-Natal province, for instance, amounted to 35% of monies received; the Eastern Cape 14%; the North West 9%; the Northern Cape 2%; Gauteng 1%; and Mpumalanga 0%. The Free State performed well with a 97% payout. The Western Cape payout amounted to 146% of the budget allocation and was based on proper accounts submitted by Western Cape municipalities
The reasons mainly advanced for the poor payouts to municipalities are delays in issuing of invoices by municipalities, inaccurate billing systems, inaccurate verification and reconciliation of invoices from other municipalities, the new Property Rates Act and unreasonable interest charges. All these reasons point to a serious lack of human capacity at local government level. The result is obviously a shortage of funds which hampers service delivery where it is most needed.
Provinces cannot be blamed for the poor payouts as the fault lies with local government. Despite this, provinces are requesting additional funds for the devolution of property rates. It is questionable whether any funds should be made available until such time as municipalities get their house in order.
To improve capacity, the solution lies in the appointment of the right people at local government level. Such capacity must be at the coalface. The appointment of additional Deputy Ministers will increase government expenditure tremendously, but will not improve service delivery to poverty- stricken communities one iota.
Get rid of underperforming officials and replace them with appointees appointed on merit and not based on political connections. Thank you. [Applause.]