KZN municipalities – 2014 clean audits a distant pipe dream

George Mari, MPP

DA KZN Spokesperson on Co-operative Governance and Traditional Affairs (COGTA)

Let me start by thanking the MEC for her Report for the second quarter although the figures are out dated and do not give an indication of the latest situation. If, however, we take the figures as presented and unaudited, they paint an alarming scenario in terms of KZN municipality’s income and expenditure.

Poor reporting by municipalities and the information given to National Treasury is questionable as it does not allow for an accurate picture of municipal performance to be formed.  The MEC has acknowledged this.  The Auditor General has raised the same concern, questioning the integrity, credibility and accuracy of some of the information provided.

The only positive aspect of this report is the provincial operating expenditure being less than revenue generated with an operating surplus of R2.995billion.  However, this must not be construed as municipalities being in a healthy situation.

I am not convinced that municipalities have generated slightly above the 50% benchmark when one looks at the increasing debtors, which are sitting at R11.1 billion – an increase of R900 million  when compared to the 2011/12 financial year. This represents a significant increase compared to the two quarters of the last financial year.

This is not good. 

Take away Ethekwini and the situation gets worse ie R9.5 billion revenue out of a budget of R26.4 billion. Revenue through property rates must be increased as most municipalities are still grant reliant.

While municipalities have spent R19 billion of their operating budget of R40.2 billion, the worrying part is under-expenditure on Capital. We cannot allow under-expenditure when communities are crying out for Infrastructure, Housing and Services.  Even the Metro showed an under expenditure. Umgungundlovu spent just 19.8 % and uThukela 14.6 %.  This is appalling.

The under-spending of the MIG Grant is extremely worrying. If these funds are not spent it could lead to National Treasury withholding funds. Municipalities must plan early when it comes to spending. The SCM process cannot be blamed for under-expenditure. Not spending monies allocated deprives communities of much needed services especially infrastructure, housing, water and electricity.

There must be consequences for under spending. Municipal Managers must have performance contracts that clearly set out their targets.  If they don’t perform, they must face the consequences.

The regression of KwaZulu-Natal’s municipalities is extremely worrying. Never before have our province’s municipalities been in such a precarious position.

KZN has regressed from six clean audits to one, from two to seven disclaimers with several of these municipalities under administration.  A massive 49 municipalities have unqualified audits with other matters.  KZN has also gone from seven to nine qualified audits.  Alarmingly, eight municipalities with qualified audit used consultants.

The Auditor General has raised the following challenges which must be attended to immediately – unauthorized and irregular expenditure, poor reporting on service delivery targets, targets that are not defined, compliance issues with laws and regulations, quality of financial statements and forensic investigations unearthing massive fraud and corruption.

MEC – what has gone wrong?  We need to pray for divine intervention!  Since the ANC took over KwaZulu-Natal we have gone backwards and it appears as if the MEC has given up.

A clean audit for the province of KwaZulu-Natal in 2014 is a distant pipe dream.

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