The Auditor General reports presented today to the Portfolio Committee on Public Accounts and Finance have highlighted the dire financial straits faced by municipalities in the Free State.
The meeting was conducted virtually, excluding members of the public and the media, demonstrating once again, the ANC’s blatant attempt at sheltering Free State municipalities and failing in their duty to hold them to account. Several municipalities could not present current reports as auditors had inadequate access to information or reports were not submitted. 10 municipalities still have outstanding audits for the 2020/21 financial year and provincial treasury has indicated that the majority of budgets are unfunded.
The AG highlighted the lack of political leadership, accountability, and consequence management which have greatly contributed to the poor financial state of Free State municipalities. Overall, municipalities have demonstrated a clear disrespect for regulations, significant mismanagement of resources, and a substantial lack of service delivery. Large material revenue losses of water and electricity were reported across the Free State. Poor billing systems contribute to these issues. Without adequate revenue collection, it is impossible to turn around these failing municipalities.
Audit financial statements and performance reporting are of poor quality and performance management systems are inadequate. Non-compliance is widespread and there is no consequence management to curb this issue. Unauthorised, irregular, and fruitless and wasteful expenditure did not improve, showing the culture of impunity present at all levels of government.
Another issue raised is the astronomical cost of external consultants used to prepare financial reports – R254 million over the past 5 years. Consultants are ineffective due to poor record keeping and no needs assessments are done before their appointment. Consultants are heavily relied upon but there is ultimately no skills transfer to assist municipalities in completing their own financial statements.
The debt owed by Free State municipalities is significant with approximately R17 billion owed to Eskom, almost R7 billion owed to water boards and an outstanding debt to pension funds of R446 million.
COGTA’s “proposed solutions” are a wish list which they are fundamentally incapable of fulfilling. Even though COGTA proposes interventions, they have yet to demonstrate that they are able to successfully turn around these dysfunctional municipalities. Without the political will to take responsibility and put qualified and experienced senior officials in positions, it will be impossible to turn around the current financial situation. Intervention by current politicians and officials will create an uncontrollable situation wherein it will become impossible to take remedial action to ensure better audit outcomes
The DA will continue to assess the state of municipalities in the committee throughout the week and place pressure on the MEC to intervene where necessary.