Premier of the Western Cape, Mr Ebrahim Rasool,
Cabinet Colleague, Min Lynne Brown
Deputy- President of SALGA, Cllr Nomaindia Mfeketo,
President of Weclogo and our host, Executive Mayor of the Boland District Municipality, Cllr Clarence Johnson,
Executive Mayors and Deputy- Mayors,
Finance Committee Chairpersons,
Municipal Managers,
Finance Managers,
Comrades, Ladies and Gentlemen
... and if I didn't get the protocol quite right , you have to acknowledge it was not for lack of trying .
I thank you for this opportunity to address the Western Cape SALGA (South Africa Local Government Association) Budget Week. We meet here today at the start of the Budget week, with the key themes of consolidation of legislation and accountability of local government structures. I am reminded of a quotation by Frank Carlucci, a former American Secretary of Defense who said:
"The budget has evolved from a management tool to a management obstacle".
A major challenge for all of us present is to ensure that we restore the Budget to being a useful tool for managment and delivery, not a means to wield the destuctive power of inertia. SALGA's primary challenge, is I submit, not only about obtaining a fair and equitable share of the national fiscus, but of efficient utilisation of those funds. In an environment where typically 40 to 50% of a municpality's capital budget goes unspent, the challenge is not easily explained as a shortage of money.
We meet in the aftermath of fundamental political changes in the province. Increasingly local governance and service delivery are coming under the spotlight from the Presidency. The national legislators under Yunus Carrim, undertook a detailed assessment of the state of municipalities post the 2000 local government elections. The Standing Committee has visited municipalities in the province with similar aims. The results tell a story of extreme variation in institutional capacity, delivery and leadership, low level of poorer community engagement, and a skewed scorecard in satisfying the basic needs of the people. People who have shown their faith and resilience by renewing their contract with us for a further 5 years!
Politically, the biggest challenge has been to ensure that municipalities fulfil their role and functions constitutionally and institutionally. This is particularly important for the effective functioning of SALGA. Municipa;ities are a critical layer of government, directing and monitoring the rendering of fundamental services that speaks to the rights of people and the responsibility of the state.
It also requires us to examine what Premier Rasool calls " the state of the state" and our active responsibility or passive compliance within such a state. There has been a consensus at national level about the fact that if we are going to undo past injustices, we need a developmental local government strongly supported by the province and appropriately funded by national government.
The current financial framework for South Africa, begins to draw the inextricable link between financial management and development objectives. It is this particular principle that is designed to modernise local governance in South Africa. It is no longer sufficient to state how much we spent, but more importantly we must account for what we actually spent the money on and whether those are defensible as developmental priorities.
In an effort to unravel what is the essence of the South African context and progressive in terms of governance, three main pillars of what defines developmental local government were agreed upon :
- Integrating and co-ordinating planning.
- Maximising economic growth and social development, and
- Democratising development
Program Director,
Can we honestly say that we align our budgetting process with these pillars? How many of our IDPs are Integrated, Developmental or Planned? And yet this is supposed to be key to the strategy and practice underpinning the budget. To what extent do we pay attention to the critique from our national minister, Min Mufamadi who in his Budget Speech observed that: "municipalities do not interact with provincial government in formulating Intergrated Development Plans and likewise provincial budgets are drawn up without reference to local plans"?
It is critical to consider the role of local government in addressing the broader challenges facing the country: challenges of poverty, inequality, unemployment and socio-economic development. This begs the question, how do we align the programmes of local government with that of national and provincial government to enhance service delivery and foster investment?
NATIONAL FRAMEWORK
The President in his, May 21, State of the Nation address underscored the importance of local government. He stated:
"Recognising the critical importance of local government in terms of social and economic delivery, we are undertaking a major review of the local government equitable share allocation and formula, to ensure that municipalities with low fiscal capacity are adequately resourced, and empowered to collect their own revenues. We will complete this review in six months. The review will also focus on such systems as need to be introduced to improve municipal capacity for credit control and implementing policies that alleviate the plight of the indigent."
Underlying the commitment of the President, the effective functioning of local government requires:
- local government has adequate capacity to meets its constitutional objectives;
- to align the spheres of government into a seamless single institution;
- the necessary resources to finance its basic functions;
- the need to be responsive to people's needs and priorities; and
- to implement the principles of Batho Pele.
INTERGOVERNMENTAL RELATIONS
The constitutional mandate granted to Provinces is to support and monitor local government. It the strategic objective of our department to work with organised local government, in determining a framework that will adequately monitor and support municipalities. It is essential, that we anticipate potential problems and act proactively in resolving these problems.
PROJECT CONSOLIDATE
The transformation of local government has gone through three phases, a major demarcation process that rationalised the number of municipalities, and substantial changes in the legislative framework. Project Consolidate is designed to understand the current challenges facing municipalities, and find appropriate mechanisms to address these challenges. The overall objective is to consolidate and strengthen local government.
The key objectives of Project Consolidate are:
- To align national and provincial government outlook and strategies for developmental local government - and to synergise the areas of focus.
- To discuss the broad provincial strategy with regard to local government and a targeted approach to identified municipalities
- To confirm how the provincial government, as well as department responsible for local government will strengthen its capacity to carry out its support, monitoring and evaluation role
- To strengthen partnerships with key stakeholders to support municipalities and to build confidence in the new system of local government
I believe that SALGA as a constitutionally mandated organisation has a crucial role to play in this regard.
A further indication of te seriousness of intergovernmental relations is the reference by our President that there will be a Bill passed in this regard later this year. It is intended as a framework bill to complement existing institutional and informal practice. This will require a mindset of real co-operative governance at a political as well as administrative level.
PROVINCIAL IMPERATIVES
Over the past few months, there have been four major points emphasised in provincial policy speeches. These have been the state of provincial governance, the challenges to de-racialisation, fast-tracking service delivery and fighting poverty. These congruent challenges are there for all departments to address in their respective functional areas.
Given the enormity of the housing backlog, I have charged that there be close cooperation between both provincial departments in my portfolio. This is reflected in other areas like disaster management, informal settlement upgrading, etc and extends to working with our partner municipalities too.
GOVERNANCE
During my Budget Vote, I raised the key functions of municipalities. Let me recap on these by placing in context the matter of governance and our commitments in this regard.
We said, "municipalities are the institutions through which most ordinary citizens experience government in any form. It is here that Batho Pele finds expression and that all people, no matter how poor, should be heard.
Municipalities have the responsibility to strategically direct public and private resources in support of sustainable development interventions. This specifically includes improving inter-governmental relations to ensure integrated service delivery between the spheres of government and requires the leadership of provincial and local government to work together in delivery on a clear development strategy.
Municipalities are further charged to act as co-ordinator of social and economic investment into peripheral urban areas and rural settlements to address the geographic implications of povrty in former apartheid planning. This includes intensifying integrated programmes that target the poor and vulnerable.
Municipalities are the primary providers of services to all of the citizenry, rich and poor. However, they have a particular responsibility to those in greatest need to ensure access to the social safety net, in a sustainable way.
Lastly we said municipalities have to be sustainable institutions with effective legislative, administrative and operational systems. This includes a clear understanding of the external environment and economic reality of their jurisdictional area and making resource allocation choices that support key sectors.
I committed the Ministry to focus their attention and resources in supporting you in building developmental local governance in this province which translates into specific initiatives in this financial year, some of these are in the 100 day targets as you know.
In an effort to make sure that parity is achieved and that this critical challenge is not left to the dubious whims of unfair local economic practices, we have thought it proper that our approach and engagement with governance be an interventionist one.
Premier Rasool defined an interventionist state during his Provincial Administration Budget Vote as that which "gives leadership to its social partners about how we will, as a society with multiple constituent parts; move in the same direction to our shared goals". In essence building what the president referred to as being 'united in action', this unity of purpose requires that people genuinely work together in building a community.
The next five years will see a strong drive aimed at bringing people closer to government work and planning, as benefactors and partners, in an effort to create and flavour programmes aimed at narrowing the divide between first and second economies. We will have to find innovative ways of doing what people actually need and are asking for, and not that which we think they need and think we provide. Our planning as government, particularly the provincial and the national spheres will have to be realigned to the plans of local government informed by those national imperatives to which all spheres subscribe.
WARD COMMITTEES
The President has referred to the role that Ward Committees can play in deepening democracy and making government accessible..
It is important to develop a system which facilitates and promotes interaction and communication with residents, to allow for meaningful participation in activities such as community campaigns, budgeting, planning and implementation of specific projects. In this process, we would have to monitor and ensure that the voices of women and the youth are heard, that the pledges and concerns of the disabled and the vulnerable are acted upon. We also need to mainstream these discussions so that the discourse in Ward Committees is not removed from the economic reality of municipalities.
Does the way we budget make the participation of Ward Committees meaningful or do we consider them a nuisance?
COMMUNITY DEVELOPMENT WORKERS
In the State of the Nation Address in May this year, our President, Mr. Thabo Mbeki, called for the deployment of community development workers. Community development workers are particularly important in facilitating a closer partnership between communities and government. Their role is essentially that of improving access to services, and channelling the needs and challenges to the appropriate level of government. This again, stresses the need to find ways to integrate the respective spheres of government into a single comprehensible one - one that is easily understandable by ordinary people.
PUBLIC SERVICE
The President has charged us to see to that we "ensure that the public sector discharges its responsibilities to our people as a critical player in the process of growth, reconstruction and development of our country". He has also charged us to give effect to " a new echelon of public servants".
During my Budget Speech, I quoted Che Guevarra to illustrate the point. Today I use a source from a market- driven perspective, Eugene McCarthy who said:
" The only thing that saves us from the bureaucracy is its inefficiency."
This resonates with the words of an Anonymous source:
" If there is a way to delay an important decision, the good bureaucracy, public or private will find it."
If Budgets are truly to be the financial logic that underpins the action plans of government, then let us take responsibility for our actions, operational and financial in the interests of our citizenry, particularly the poor who are dependent on us making the right calls at the right time.
I am on record in senior management meetings as having said, 'Not all that is old is bad and not all that is new is necessarily good'. Mostly, I want our officials and institutions to internalise their developmental and functional responsibilities in a pro-poor agenda.
In this month of August employment equity issues, especially those of gender, spring to mind. We must also continually support BEE and create opportunities for the lesser-abled. This is a challenge as much for my Department as it is for all municipalities.
PROVINCIAL GRANTS AND PROGRAMMES
The financing of the municipal infrastructure grant has been revised, and based on a formula that is transparent and predictable. The Municipal Infrastructure Grant, which replaces CMIP, will be phased in over the next two years and allows for greater alignment between the IDP and infrastructure financing.
During this year an amount of R244 million has been allocated by the Province. What will be the consequences for the poor? Will downstream benefits be realised by communities? What additional investment will be leveraged?
The same questions can be asked of of the R15 million allocated to the management support programme as well as initiatives like Disaster Management, the URP and USRDP.
With effect from the 2005/2006 financial year the Local Government Capacity Building Grant will be paid directly to the district municipalities. The district municipalities will be responsible to make allocations to the local municipalities in their area.
POWERS AND FUNCTIONS
This is a complex matter that will be resolved through joint discussions between WECLOGO and Provincial Government. Following a circular to all Mayors two months ago, I have raised the matter again during the first meeting of the Provincial Advisory Forum on 23 July 2004.
THE MUNICIPAL FINANCE MANAGEMENT ACT
Programme director let me return to the Municipal Finance Management Act. This Act now aligns the financial management system of local government with the Provincial and National Government. I have deliberately focussed thus far on the crucial governance and service delivery challenges, to stress that good financial management without a good programme to address the key socio-economic challenges is useless. What we need in essence is an appropriate programme underpinned by good financial management. In essence, thus MFMA stresses the need to establish a IDP that is responsive to people's needs. The resourcing and financial management is derived from the IDP.
The MFMA outlines a budget process and budget cycle, which underscores the main public finance principles:
- The financial plan must be sustainable. In other words we must balance expenditure priorities with income raised.
- Accountability - this clearly identifies the key drivers as the Executive Mayors and Municipal Managers. Both the mayors and the municipal managers have significant responsibilities to ensure good financial management in the municipality.
- Participation - the budget process places emphasis on community participation. This is necessary to communicate the programmes and the constraints with communities. Further, the need for councillors to understand every facet of the budget is quintessential so that they can monitor implementation and more importantly communicate this to communities.
- The Act clearly delineates the responsibilities of the councillors and the administration. This separation is designed for good governance.
Without alluding to the details of the Act, the introduction of the MFMA allows for standardisation and transparency of municipal finance. This allows both the public and policy makers to understand the challenges facing municipalities in a scientific manner. Further, we can develop systems that will enable government to respond in a proactive manner to emerging crises in service delivery.
The role of the Provincial Government, particularly the Department of Local Government and the Provincial Treasury, is clearly identified in the Act. This requires a reporting and monitoring system both to track compliance and financial management. Additionally, the Provincial government will provide guidelines and support where necessary to facilitate the implementation of the Act. We urge municipalities to embrace the spirit of the Act and work with us to develop a financial management system that is effective and will respond adequately to the challenges facing our communities.
Conclusion
In this start of our second decade of democracy, we can proudly celebrate our achievements achieved despite the numerous odds stacked against this new nation. It is this spirit of perseverance and innovation that ensured we were able to reach our current destination. In taking stock of our challenges, we face the harsh reality of poverty, unemployment, inequality, underinvestment and inadequate development. Moving forward, we need to intensify our energy and commitment towards finding the innovative solutions that will realise a better life for all in this Province. Our budgets should reflect that innovation.
This meeting today, is the beginning of ushering in a new phase, a phase that will bring about greater transparency and accountability in managing local government finances. The resource constraints will certainly provide challenges in addressing the enormous needs of communities in the Western Cape. I trust that this phase will also bring about greater cooperation between local and provincial government.
"Let us get down to work in a people's contract to build a better South Africa and a better world", President Mbeki.
