Financial Fiscal Commission briefs Committee on withholding of funding to municipalities
The Standing Committee on Appropriations was briefed by the Financial Fiscal Commission (FFC) on the views regarding the withholding of the Local Government Equitable Share (LES) allocation by National Treasury for municipalities that have not prioritised or persistently defaulted on debt they owe to Eskom and Water Boards.
The Committee noted with concern that withholding of LES has an impact on service delivery. The Committee expressed concern that proper processes of withholding LES funds were not properly followed. The Committee noted that legislation and the Constitution allows and makes provision for the stoppage of LES but the Committee restated that other mechanisms should be used to deal with the withholding of funds.
The Committee noted the unfair treatment that municipalities receive as compared to national and provincial departments. Members of the Committee were in agreement with the FFC recommendations that all spheres of government should be treated equally. Chairperson of the Committee, Mr Paul Mashatile said: “It’s unfair that funds are taken away from municipalities but when it comes to national departments nothing happens. It cannot be that national and provincial only receive a warning,” he added.
The Committee questioned where leakages in government existed and indicated that healthy intergovernmental fiscal relations did not exist, members of the Committee said if effective mechanisms were practised government would not experience the financial challenges that it has. The Committee wanted to understand what reasons Head of Departments and Chief Financial Officers provided as a result of non-payment, particularly in national and provincial departments.
Mr Mashatile added: “What is important on our side is that process that have implemented to municipalities by National Treasury wherein agreements have been signed is to ensure that the same processes are applied to national and provincial departments so as to equalise the situation. Responding to questions, National Treasury (NT) said the process of withholding LES was to address the culture of non-payment, to understand why municipalities did not pay creditors and why Eskom did not enforce its credit control. NT restated that proper processes have been followed regarding the withholding of LES funds.
The Committee welcomed the commitment by National Treasury to ensure that conditions would be imposed on funding for national and provincial departments that enforced payment for the consumption of basic services such as water and electricity. Members of the Committee supported the recommendations that were proposed by the FFC.
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