Thank you, Madam Chair, for this opportunity. Minister, the Budget for 2014 emphasises the need to maintain costs and improve efficiency across all spheres of government. But the reality is that we face a lack of consequences for poor performance and transgressions.
At 59% of departments and 45% of entities the root cause of poor audit outcomes is the lack of consequences. There are no consequences for corruption and maladministration, and municipal managers and managers at provincial level know this. We recommend that the year 2014 be the year of consequences for poor performance and transgressions.
The Standing Committee on Appropriations and the Select Committee on Appropriations have made several recommendations to the National Treasury and the Department of Co-operative Governance and Traditional Affairs with regard to intensifying measures towards realising Operation Clean Audit so that there is value for money. Only when this goal becomes reality will South Africa see the much needed improvement in service delivery levels. This reality, however, seems bleak noting the latest Auditor-General's report. It is quite clear that this report deprives poor people of services and there are no consequences for poor performance and transgressions.
The Auditor-General recently said that the lack of committed leadership lies behind the sharp decline in financial management in municipalities. Total irregular expenditure amounted to R9 billion, while fruitless and wasteful expenditure reached R568 million, more than double that of the previous year. His finding on local government audit outcomes in the 2011- 12 financial year are in conflict with the message that the ANC has been crafting ahead of this year's general elections.
Clean audits have remained at the low level of 5% out of 278 municipalities for the past three years and the overall audit outcomes have regressed, as indicated by the Auditor-General. We therefore note with concern that the constitutional interventions in terms of section 216(2) of the Constitution and 139 (1) (b) and (c) in terms of interventions at provincial level in municipalities to ensure that there is an adequate supply of essential services to residents were not mentioned in the budget.
There is a lack of adequate measures to address dysfunctional municipalities. These have not been announced, and government is vague on the exact consequences for transgressing officials. National Treasury support to municipalities is noted in terms of the S15 Gazette and the setting up of the Office of the Chief Procurement Officer is, I believe, a step in the right direction.
We share the concerns of the Financial and Fiscal Commission with regard to the growing trend of indirect grants. These grants should be coupled with a clear phase-out strategy and capacity-building of undercapacitated provinces and municipalities.
We also note with concern that the FFC was not consulted before many indirect grants were instituted. It is regrettable that the previous provision in the Act, that a portion of the grant must be used to build capacity at this level of government, has now been taken out. I believe that we should look at those aspects.
The division of revenue allocates 43,5% to provinces and 9% to municipalities, that 9% being about R90 billion. Efforts to reduce corruption in provinces and at local government have not yielded results to stop corruption and maladministration. I think that we need to come up with concrete steps with regard to this.
The Auditor-General has conducted numerous forensic investigations into irregularities and financial misconduct in the Public Service. There were 27 forensic investigations in Limpopo, whilst in the Free State, where there is a dysfunctional provincial administration, only 5 officials were suspended. We believe that Treasury ... Thank you. [Time expired.] [Applause.]