National Treasury informed the Joint Portfolio Committees of Cogta and Water and Sanitation that R53 billion was unspent by local government, as of 30 June 2017.
Contrary to common belief, it emerged that a lack of money is not the problem for municipalities. The Portfolio Committee on Water and Sanitation is looking at ways to try to resolve its R10.3 billion debt by the municipalities.
The South African Local Government Association (Salga), the Cooperative Governance and Traditional Affairs Department (Cogta), National Treasury and the Department of Water and Sanitation made representations to the committee on Wednesday following an announcement by Water and Sanitation that it will cut bulk water supply to at least 30 municipalities on account of water debt.
National Treasury noted that some municipalities are failing at effectively delivering services, billing for services and collecting the revenue that is due.
“Consequently, outstanding debtors are increasing and they are not able to maintain positive cash flows to pay creditors within the 30 days’ timeframe, as legally prescribed,” Treasury told the committee.
Failure to prioritise essential services
It was also noted that failure to prioritise essential services was central to the challenges of local government. Other challenges include the lack of internal controls, inadequate leadership and the large scale mismanagement of resources.
Cogta acknowledged this, and the need for strategic and sustainable interventions.
Parliament further re-affirmed the role of Cogta to provide municipal support and emergency relief to municipalities, as well as its function to support operations and maintenance at municipal level.
Debt re-arrangement still possible
The Department of Water and Sanitation said it is confident that debt re-arrangement is still possible as seen by the positive response by a large number of municipalities that have already engaged the department, with a view to making payment arrangements.
“The habitual defaulters and those who have large outstanding water debt will receive special attention,” the department said.
The department added that it is looking forward to the demonstration of commitment to pay by all affected municipalities, with Cogta providing leadership in line with its mandate.
“The aim is to encourage the servicing of current debt, while negotiations on historical debt continue.”
Parliament resolved that the executive authorities of the respective departments must find a solution within 14 days under the leadership of Cogta and submit their plans on resolving the impasse.
All affected departments are expected to return to the Joint Portfolio Committee by 24 January 2018, with concrete solutions.
The department reiterated that while it will cooperate on the options above, “the position remains that all avenues within the mandate of the department will be vigorously pursued, including the suspension and/ or cut off of water supplies.