NEWS & ANALYSIS

Our Hercules labouring in the municipal stables

William Saunderson-Meyer says the Greek hero and Kimi Makwetu have at least one thing in common

JAUNDICED EYE

Greek hero Hercules and South African Auditor-General Kimi Makwetu have at least one thing in common. Both were tasked with getting rid of decades of accumulated dung.

The obvious difference is that it took just a day for the mythical Hercules to clean out the Augean stables. In contrast, the admirably dogged Makwetu has laboured for seven years, only to see the crud pile grow.

Makwetu’s hard-labour sentence ends in November, when he retires. In a country where even the most vicious criminals get generous parole relief, poor old Makwetu simply has had to soldier on, with no time off for good behaviour.

In retrospect, former president Jacob Zuma must have much regretted at least two executive appointments that he made: that of Makwetu as AG and that of Thuli Madonsela as Public Protector. Given the cronyism and corruption that thrived during his tenure, Zuma had likely assumed that they would be pliable and compliant. They turned out to be anything but.

During her term, Madonsela proved adept at leveraging her office and public popularity, delivering a series of crushing rulings against his administration in general and Zuma in particular. Makwetu’s approach has been more low key and diplomatic, never courting the limelight.

Nevertheless, in his annual reports on the financial performance of provincial and national government, as well as state-owned entities — there is one such report to come before he leaves office — Makwetu has been unequivocal in his warnings. He has time and again reiterated that unless wasteful and irregular state spending was curbed, SA was heading towards a fiscal calamity.

But it's to his annual reports on local government that one should look, to best trace the unravelling of the country. For it is in the municipal and district councils that we can daily gauge the efficiency or failure of the state. Water, sewage, roads, rubbish removal and, often, electricity, all come to us through the municipal pipeline, making it the level at which the government of the day can most readily and most rapidly intervene to improve the lives of the poor. Or fail to do so.

And as the AG’s recently released municipal finances report for 2018/19 shows, what a disaster local government is. For simplicity’s sake, let’s take just the past three years of accelerating decline.

In the AG’s 2015/16 report, only 18% of the 257 municipalities got clean audits. By 2017/18 that was down to 14% and it has now dropped further to 8%.

Irregular and wasteful spending in 2015/16 was almost R17bn, up 50% up on the previous financial year. The next year it rose to over R24bn, then managed to hold steady for a year, only to now grow by a third to R32bn in the past financial year.

In 2015/16, 27% of municipalities were deemed financially unsustainable. The following year, that rose to 33%, with another third on the edge. By the end of the 2017/18 financial year, 33% were technically bankrupt, with 18% under direct administration, while 76% of those remaining needed “urgent intervention” to survive.

The latest report shows that the deterioration continues. More than a third were in the red and 79% need urgent intervention. Over 90% of all municipalities were not legislatively compliant.

More than a fifth lack a chief financial officer and/or a municipal manager. Where they do exist, they are generally politically deployed cadres with few discernible skills — in 2016/17, the AG’s report noted that 170 of the CFOs had no qualifications for the job. Aside from a political party membership card, that it.

Despite spending almost R1.3bn in 2018/19 on outside firms to prepare the financial statements, almost 60% of the municipalities audited “produced material misstatements in the areas in which consultants did the work”. Yet another low tide mark for a local accountancy profession that has been rocked in the past few years by revelations of scandalous incompetence and dishonesty.

Expenditure on salaries and wages, including those of councillors, consumed 40% of municipal revenue in 2018/19, up from a StatsSA estimate of 26% in 2014/15. At many municipalities, the salary bill far exceeds what consumers are billed in service charges and property rates.

Undaunted, municipalities are at present tabling their budgets for the next year and they’re figuring on wage increases in the region of 7%. The assumption is that the central government and the long suffering ratepayer will provide.

That assumption is increasingly flawed. The national government has no money, while straitened economic circumstances and ratepayer resistance are coalescing, with more people every year withholding or delaying services and rates payments.

That comes on top of a culture of non-payment for services, tolerated by the government for more than a generation. According to Democratic Alliance statistics released last year, in the Free State barely 10% of residents pay their services bills in many municipalities. In some, that figure is as low as 2%.

So it is not surprising that in 93% of municipalities, more than 10% of the debt reflected on books is considered by the AG to be irrecoverable. Time is likely to prove that to be a conservative estimate.

At the other end of the transactional equation, if you have been foolish enough to have sold goods or services to a municipality, the wait for payment is now six months. That’s up from 146 days in the previous financial year, whereas the government’s nominal terms are 30 days.

In the 2018/19 audit, performance reports of more than two-thirds of municipalities were found to be so flawed that they are “not credible enough for the council or public to use”. In other words, expensive works of fiction,

More than a quarter of municipalities have no road infrastructure plan, 41% have no water plan, and 41% no sanitation plan. The AG’s figures give statistical precision to any vague sense ratepayers might have that the neighbourhood is turning to shit.

It is telling that the AG singles out some municipalities by name for the cordiality and courtesy extended to his auditing teams.  For years, the AG has been reporting that that response to the AG’s teams has become more hostile, with threats and pressure.

No matter how optimistic a face Makwetu puts on it, the situation is bad and getting worse: “Now, in the third year of this [President Cyril Ramaphosa’s] administration, there was again a regression in the audit outcomes.” At another point in the report, he delicately qualifies the pervasive gloom: “It should be appreciated that there are some exceptions, a large number of which are concentrated in [Democratic Alliance-controlled] the Western Cape.”

In 2013, a bad president mistakenly appointed a good Auditor-General. It will be interesting to see who is now chosen to fill Makwetu’s shoes.

As the seven years of government snubbing Makwetu’s findings show, it may not matter that much who is chosen. Any AG’s attempts to correct government behaviour is bedevilled by the fact that the ANC’s plight is now of such a magnitude that denial of there being a problem is the only way of coping.

Every year, there have been promises of improved oversight, performance management, and accountability. Every year matters have got worse.

The latest ANC solution — faithful to the party’s socialist fantasies — is a half-baked, poorly articulated plan for provincial command councils. In the same way that the country is at present run by the National Covid Command Council that is only vaguely overseen by Parliament, the mooted new command councils, also run by unelected party apparatchiks, will supposedly champion good governance in the provinces and municipalities that are slacking off.

Makwetu would know this for what it is. New shovelers, the same growing pile of manure.

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