Pretoria – The South African Local Government Association (SALGA) has welcomed the Budget proposals for the 2017/18 fiscal year as presented by Finance Minister Pravin Gordhan.
The Minister presented the Budget Speech before Parliament on Wednesday in Cape Town.
SALGA on Thursday said it appreciates the context and challenges facing the country, and the local government sphere in particular, against which the budget was presented.
“We join other voices and organisations across the country who see hope in the budget presented and wish to acknowledge upfront that, as the sphere, we will contribute positively in ensuring that the budget allocated to us is used to attain the transformation objectives well – articulated by the Minister,” said SALGA.
The slow global economic growth has catapulted local government into the forefront of initiatives to leverage budget spend, infrastructure development, and economic facilitation to ensure sustainably cities and economies broadly.
SALGA said various resolutions taken in platforms such as the United Cities and Local Government Africa (UCLGA), the Addis Ababa Accord on Urban Development Financing and others resonate well with the thrust of the budget presented by the Minister.
SALGA said if the budget is properly leveraged, it could spur various initiatives that could go a long way in addressing the challenges of unemployment, inequality, poverty and underdevelopment.
“In the context of increasing government debt, which stands at 49% of the Gross Domestic Product (GDP), slow economic growth, reduced revenues and borrowing constraints, local government understands the need to be frugal, innovative and creative in spending the limited resources allocated to the sphere.
“We have noted with appreciation that the main thrust of the budget, as articulated by the Minister, is on local government spending.
“We equally appreciate the increased role and urgency given to the State Owned Enterprises in ensuring local investment and infrastructure spend.
“Nonetheless, we can’t say the same with the 9.1% allocation to local government — which has remained constant over the past Medium Term Expenditure Framework (MTEF), we will continue engaging with Treasury for a better fiscal dispensation for municipalities.”
Financial management interventions
SALGA said it notes the pragmatic approach of increased allocations to rural municipalities. This is alongside the increased progressive spending on health and education which remain some of the key challenges facing communities and the poor.
“We do agree with the identified initiatives that focus on the strengthening of financial management in municipalities.
The identified interventions include building capacity for the implementation of the Municipal Standard Chart of Accounts (MSCOA) which is coming into effect on 1 July 2017; Supply Chain Management reforms which will ensure value for money, return on procurement spend and better management of limited resources; and enhanced revenue management, revenue collection and improved billing systems.
“These resonate with some of the resolutions we took at our conference held in December 2016, which among others include urgent need to decisively deal with the escalating debt owed to municipalities; ongoing engagement with municipal creditors such as Eskom to find viable and sustainable solutions; and finding innovative instruments to generate more local revenues to fund development and service delivery.”
Other resolutions are building professionalism and managerial capacity in the sector, and others.
SALGA said it particularly welcomes the budget support and pronouncement on municipal initiatives such as R18.4 billion over the MTEF allocated to Regional Bulk Infrastructure Grant and the R12.5 billion allocated to the Water Services Infrastructure Grant.
“These are meant to benefit 27 most impoverished district municipalities.”
Investing in infrastructure
It also welcomes the R1 billion allocated to the Local Government Equitable Share for infrastructure maintenance and on account of increasing household numbers, and said the support given by the budget to the metros to continue their work of spatial transformation and investment in high density development corridors.
The budget highlights that in eThekwini, the Cornubia mixed development node will yield 25 000 housing units, while over R13 billion in private sector investment in the nearby Dube Trade Port has been identified. SALGA said a R30 billion inner city regeneration program is underway.
The development along the corridor linking Thembisa to Kempton Park in eThekwini has been prioritised.
SALGA said Cape Town has adopted a transit-oriented development strategy including mixed-use development of the Bellville Transport Interchange, upgrade of the Phillip East Station Precinct and the redevelopment of the Athlone Power Station.
In Mangaung, the airport development node is under construction and 8 500 affordable housing units will be built in and around the inner city of Bloemfontein.
In Johannesburg, there is further progress with the “corridors of freedom” linking Soweto, Alexander, Sandton and the CBD. This include the new bridges that can be seen along the M1.
About 190 projects have been completed through the neighbourhood development grants, while a further 55 are in construction.
In the Joubertina/Alabama Hub in Matlosana, for example, an investment in transport and health facilities has been accompanied by commercial investments of about R155 million.
In the Solomon Mahlangu node in Tshwane, which serves over 500 000 people, a R1 billion public investment in roads, parks and trading facilities is expected to leverage R4 billion in private investment.
“We will continue working with the National and Provincial spheres of government in various intergovernmental platforms to ensure that the transformation agenda materialises.
“We will equally continue engaging and advocating for a better dispensation for the sector so that developmental objectives enshrined in the National Development Plan (NDP) and Integrated Development Plans (IDPs) are realised.”