Budget Speech by the Minister for Provincial and Local Government, Mr FS Mufamadi, National Assembly, Cape Town

Madam Speaker
Local Government MECs
Traditional leaders of our People
Mayors and Councillors present in the gallery
Honourable Members
Distinguished Guests
Ladies and Gentlemen

1. Introduction

Four months into the 2004/05 financial year, we decided to bring more systematic focus on the institutional issues that have retarded government's movement towards meeting its social delivery and economic targets. The national and provincial spheres of government were mobilised towards making a more intensive engagement with local challenges. In addition, we issued a call to state-owned enterprises, professional organisations and private enterprises, to avail their human capital for deployment towards helping us discharge the task of strengthening the performance of local government.

As we speak, a total of 29 organisations, working along with personnel from national and provincial service-delivery departments, are making an invaluable contribution towards moving us forward at this important time in the history of our country. As at 1 March 2007, 297 individuals with specialist skills had been deployed to various municipalities. These men and women deserve our profound gratitude. We are proud of their sense of duty to the country, and to our people.

2. Project Consolidate and its achievement

Madame Speaker, the task for removing service-delivery backlogs is far from complete. It must be said, however, that the introduction of Project Consolidate is proving to have been a decisive moment in that it has generated tangible results. Indeed, the number of people with access to basic services continues to edge upwards. Rapid progress in the various key performance areas is a striking hallmark of the period following the introduction of the Project.

One area of concern has been, and continues to be, Municipal Financial Viability and Management. We identified 12 municipalities as pilot sites for efforts directed at improving Municipal Billing Systems. A continuum that is referred to as the municipal billing system includes:

* the availability and reliability of infrastructure for service delivery
* the efficiency of organisational systems through which service delivery is supported
* the effective responsiveness to issues that are of great concern to the residents.

Since this intervention, revenue collection in the 12 municipalities increased by an average of 21,4% with increases ranging from 5% to 60%. This total increase in revenue amounted to R1,6 billion over a period of twelve months. The increased revenue has also allowed the participating municipalities to provide new services - particularly to communities that did not have access to such services. It is also improving the reliability of existing services, thereby improving public confidence and the attitude toward payment for municipal services. More importantly, it is helping improve the ability of municipalities to predict revenue flows.

We have also taken steps to provide technical capacity to support infrastructure development. As at 30 November 2006, a total of 42 Project Consolidate municipalities were being supported through this initiative, with 45 deployees who were already in the field. We aim to reach as many as 70 municipalities with 90 deployees by the end of this month. In terms of this particular initiative, a total of 291 infrastructure projects, valued at R1,5 billion are receiving implementation support. The infrastructure projects typically focus on water and sanitation, in pursuit of the national targets for water and sanitation. To date, 51 retired engineers, 45 recent graduates and 99 students have been deployed to 75 municipalities. As we speak, a total of 130 municipal employees are receiving hands-on training. Development and infrastructure implementation support is being given to R2,2 billion worth of projects � focusing on water, sanitation and roads.

Regarding the task of financial management in municipalities, focus was given to 85 municipalities across the country. These are the municipalities that failed to prepare Annual Financial Statements for 2 to 3 years. Attention is given to improving internal controls, developing Municipal Finance Management Act compliant asset registers and to develop tools and procedures to facilitate the compilation of annual financial statements. Following this intervention, all the backlogs of annual financial statements up to the 2004/05 financial year have been eliminated. Significant skills transfer has taken place � particularly benefiting the lower level finance staff in municipalities. Of significance, practical tools and guides to enable sustainability have been developed and provided to participating municipalities.

Madame Speaker and Honourable Members, the challenge of removing the impediments which stand in the way of bringing about a better life to all our people, is a daunting one. However, Project Consolidate is proving that this challenge can be met. Project Consolidate has so far delivered good progress. More of it is required.

All the obstacles on our path to development must be removed. It is important here to stress that we as public representatives, including the esteemed Mayors who are sitting in the public gallery, bear the primary responsibility for ensuring that this indeed happens.

The progress which we have just pointed to, confirms that today's scale and pace of service delivery is unprecedented. However, this progress has so far been realised in a limited number or municipal areas. Communities which have so far not benefited from this must ask themselves whether they have done what they have to do to help create an environment of collective responsibility for what needs to happen in their localities. Political parties and other organisations who took part in the 2006 local government elections must also take stock of their contribution since the elections. They must ask themselves whether their intra-party dynamics (as they manifested themselves immediately before and after the 2006 elections) are not beginning to infect the environment within which public representatives, especially at local level, have to do their work.

Surely, it is wrong for people who failed to secure nominations as candidates for their parties, not to direct their energies towards helping today's incumbents to serve the people as expected. If such unsuccessful candidates cannot find it in themselves to be helpful to others and therefore, to the people whose cause they purport to cherish, they must at least desist from actively putting obstacles in the way of the government and the people.

3. Municipal Integrated Plans

Honourable Members, our acknowledgement goes first and most importantly, to the Chairperson and members of the Portfolio Committee on Provincial and Local Government for the unflagging support they have given, and continue to give to the Ministry and the department. Thanks to this support, there has been a consistent upward shift in fiscal allocations to those areas of work for which we are directly responsible, including allocation to the local government sphere.

It has become a factor of recognised importance that government across all the three spheres, must ensure that the available fiscal resources do not surpass the institutional capacity for implementation. It is for this reason, amongst others, that the Department of Provincial and Local Government (DPLG) has initiated a national assessment process, looking at the Integrated Development Plans (IDPs) of all our municipalities. This intergovernmental effort has resulted in the increased adoption rate of IDPs. In this regard, I am pleased to report that in the 2006/07 financial year, the adoption rate was 98%. The IDP engagement process also helped us identify national and provincial support actions which are needed to help enhance the quality of IDPs. Consequently, we are systematically assisting municipalities to fill mission-critical, senior municipal posts. We also issued regulations and employment contracts, and guidelines for job descriptions.

These IDP engagement processes are also buttressing a welcome trend in terms of which inter-sphere co-ordination and integration is fast becoming an enduring part of our government and development landscape. Efforts directed at deepening this trend continue apace. In addition to the seventeen national intergovernmental structures which were established since 1994, all the provincial governments have now established their own Premier's Co-ordinating Intergovernmental Forums. These were constituted in terms of Section 16 of the Intergovernmental Relations (IGR) Act. All these forums are functioning well and they meet regularly.

In addition, all 46 district municipalities have established their district intergovernmental forums in terms of Section 24 of the IGR Act. Here the challenge is to pay attention to the functionality of the fora.

4. Work in the rural and urban nodes

Meanwhile, we are also intent on upping the pace of implementing government programmes which seek to cultivate conditions for sustainable economic development in geographic spaces that were previously neglected. Working with the Business Trust, we have developed economic profiles of all urban renewal and rural development nodes. We have produced an investment atlas which is a 'compendium' of potential private and public sector investment opportunities for each node. The Urban Renewal Nodes Investment Atlas identifies 25 investment opportunities, while its rural counterpart identifies 88 investment opportunities, mainly in agriculture, tourism and mining.

A market development approach to creating jobs, building capacity for economic development and reducing poverty in the nodes is currently being piloted at the Maruleng and Bushbuckridge nodes. This pilot is a R30 million partnership between DPLG and the Business Trust. In its first year of execution, the pilot facilitated R4 million in direct business development support; (it) saved R41 million worth of investment in agriculture; agri-processing and tourism; (it) created 766 job opportunities; (it) created 18 small medium and micro enterprises (SMMEs) linkages to commercial markets; and (it) conducted 4 community-public-private sector partnerships.

In the immediate period ahead, all development stakeholders, ranging from the South African Local Government Association (SALGA), national and provincial governments, state owned enterprises, private sector organisations to the institution of traditional leadership, will have to spare no effort in mobilising development-generating resources for investment into the nodal municipalities.

5. Conclusion

Madame Speaker and Honourable Members,

Our future success depends, crucially, on our ability to draw the correct lessons from the output mix that was wrought by our earlier endeavours. Clearly, our well-signalled strategic aim of reducing by at least 50%, levels of poverty by 2014, requires a more rapid rate of forward movement. It also requires something else. Experience over the last 13 years of democratic government has produced a logical case for local government policy review and for consideration of steps to establish a coherent policy framework for provincial government. We shall deal with these particular matters in detail when we table our Budget Vote in the National Council of Provinces (NCOP) on the 20th of this month.

Thank you very much for your attention.

Issued by: Ministry of Provincial and Local Government
6 June 2007