MEC Barbara Creecy announces initiative to reduce service cuts to government buildings for outstanding debt

New initiative to reduce service cuts to government buildings for outstanding debt

Gauteng Finance MEC Barbara Creecy says a debt management committee between the province and municipalities will ensure that departments timeously settle their dues to local government.

The MEC made the announcement at the Gauteng Provincial Legislature today, where she presented the fourth quarter spending report of the provincial government.

The committee is made up of finance officials in municipalities as well as the province. It will function as the first port of call between the department and municipalities in cases where there are disputes over the cutting of municipal services because of outstanding debt.

“It cannot be acceptable that the provincial sphere owes another government entity and there is no plan to sort it out. We have a moral responsibility as the provincial government to make sure that we are not undermining the financial sustainability of another level of government. This debt management committee is about a commitment to fulfil that moral responsibility,” she said.

As at the end of April 2015, the debt owed by government to municipalities was R890 million.

MEC Creecy explained that the province has taken direct responsibility to sort out the accumulated debt. Since 1 April 2015, provincial departments have ring-fenced funds for estimated rates and services and this will be paid over to municipalities on a monthly basis. The province will monitor expenditure on these funds and ensure that they are not diverted to other operational needs by departments during the year.

While preventing the further accumulation of debt, the debt management committee will be working to settle disputes. “There needs to be a meeting of minds with regards to quantifying the accruals as well as payment arrangements,” MEC Creecy said.

MEC Creecy said she had agreed with the South African Local Government Association (Salga) and municipalities that all disputes will be escalated to this committee and will be addressed and resolved at that level to minimise the cutting off of services.

In addressing accruals, the debt management committee will need to look at the billing of services and payments that may or may not have been made, had not been captured or captured incorrectly.

“The role players are very positive and there is renewed energy for tackling this issue,” MEC Creecy said.

She commended an initiative by some Finance MMCs who met with schools in their locale that have a direct responsibility for payment of services. Other schools’ municipal rates and services are paid for by the Gauteng Department of Education.

She said this initiative involves meetings with all these principals where challenges regarding school budgets and municipal rates and services are jointly discussed. Municipalities also impress upon schools about the importance of paying for services or making proper arrangements. This initiative should be generalised throughout the province as it reduces acrimony and the cutting of services, MEC Creecy said.

Table with the breakdown of municipal debt owed by each department

John Sukazi
MEC Spokesperson
0837724885
john.sukazi@gauteng.gov.za - See more at: http://www.treasury.gpg.gov.za/Pages/New-initiative-to-reduce-service-c…