Chairperson and Minister, in the few minutes that I have today, I would like to concentrate on one theme, namely spending efficiency at the local level. This focus is due to the recent publication by the Fiscal and Financial Commission of a report authored by one Jugal Mahabir, titled, "Measuring the Efficiency of Local Government Expenditure". I urge all practitioners in local government to read it.
Now, we all know that local government is not in a good shape. In fact, the recent comments by the Auditor-General are cause for even deeper concern to many of us - even if the Minister appears to be more optimistic than those of us on this side of the room.
What many would term appalling governance is, in fact, taking place against the backdrop of what is claimed by many to be the national government's indifference to what is going on, as well as an austerity budget in which it is self-evident that we cannot spend as if there was no shortage of money.
What is the reality? Well, of course, delivery is occurring - as the Minister has said, and he itemised some housing and other delivery outcomes - but the question I am putting to the Minister and to the department is: Are we getting value for money?
Now, we are all aware that far too many municipalities perform very poorly in respect of delivery of basic services. But I think you will be very surprised by the headline finding by the Financial and Fiscal Commission in this regard, and I quote:
In general, the sample of municipalities that they used could use 60% to 70% less resources and still maintain the current quantum of services rendered.
That's amazing. What it's saying is that 60% to 70% of monies spent on service delivery is not required or adding any value to the services. That means only 30% to 40% of monies spent is actually utilised for service provision.
Now, of course, this gloom and doom is not achieved solely through corruption and pure waste, but is also the inherent nature in which the government does its business. However, I do think that we should look at this more carefully.
The FFC also has a number of subsidiary findings. The first, which you will find interesting, is, of course, that the resources are distributed unequally throughout the country. These resources are also in the form of grants issued by the government to municipalities.
This is an issue that we have raised for years, particularly the inequitable formula by which poorer rural municipalities are short-changed, as far as we are concerned. We are very pleased that there has been a process to engage with the equitable share formula and hon members will recall that in last year's budget debate the Ministry reported on what's going on.
However, I have not heard anything today from the Minister. Therefore I would like to ask, through the Chair, whether the Minister can tell us where we are with the review of the local equitable share formula and what the progress is to date.
The FFC also made another rather interesting observation, which is not what you would think, actually. What it says is that the better-resourced municipalities use their resources more inefficiently. This does not make sense to many people, but you can attest to this yourself - many of us come from places that are fairly well-off municipalities.
I come from Durban, which is my constituency, and I can tell you that the municipality there has the best billing system in South Africa. It has the least problems with its billing system, but it has spent R500 million - and is still spending more - on a new billing system, which is not needed, it does not work and they are not using it. Now that is exactly the kind of thing that the FFC is talking about. [Laughter.]
There is another finding, which you might find interesting, colleagues, and this is also counterintuitive, but there is logic to it. What the FFC found is that the more resources a municipality generates, not from grants from the national government but from its own sources, the more inefficiently it spends it. Yes! That's counterintuitive, but that is what they found.
This has important implications, I would suggest, for local democracy, because when we created the form of democracy we now have - the decentralised model - part of the logic in the Constitution-making process for creating a decentralised model was that local decision-making, especially local accountability for funds raised locally, would be enhanced. Now, if the reports of the FFC are telling us that this is not happening, then obviously our assumptions about the validity of that model need questioning. So, it has important implications that we should look at.
This is also not surprising, because it has been mentioned by both of my predecessors here: The FFC also found that the lack of capacity and skills of municipal managers are serious problems and have to be addressed if we want to improve the efficiency of spending. Now, of course, this is not something new. Since this new system started 12 years ago, we have been on about it consistently, year after year. Frankly, in my humble opinion, the government has done very little to address the problem. What it has done has been done under extreme duress, if not with a lackadaisical approach. I don't know what else to call it ... [Time expired.] [Applause.]