Interventions by Gauteng Debt Management Committee pay off for municipalities
4 Sep 2012
Improved co-operation between Gauteng provincial departments and municipalities has helped ensure speedier payments of the departments’ obligations to municipalities.
“Gauteng provincial departments owed local authorities R476 million at the end of June 2012, a fact that we are not quite content about,” Matlakala Motloung, the Head of Communications in the province said.
However, added Motloung, this was a reduction from the R619 million owed by departments at the end of March 2012.
“Because we are cognisant of the importance of cash-flow to municipalities; we have been working hand-in-glove with local authorities to ensure that we meet our obligations faster,” she said.
Government debt to municipalities often relates to assessment rates and/or services that have in certain instances accumulated over an extended period of time.
“We realised a while back that there were challenges that faced both our departments and municipalities that needed to be resolved so that our accounts with municipalities are up-to-date. On the one hand the municipalities had to correct service billings and property addresses while on the other departments had to fix their administrative procedures to ensure faster payment of account. The challenge was that if these two entities did not speak to each other; payments stalled and municipalities suffered,” Motloung said.
The introduction of the Debt Management Committee specifically it’s Government Debtors Project, which focuses mainly on data cleaning and the collection of government debtors and is managed by the Department of Local Government and housing and the Gauteng Treasury, has helped improve the situation.
“Of the R476 million owed to municipalities at the end of June, the Department of Infrastructure Development (DID) owed more than R182 million,” Motloung said.
One of the major contributors to the DID’s high debt was because some municipalities still bill the DID at the beginning of the financial year for the whole year; yet the department receives its devolution grant in quarterly tranches.
“This, then, gives a view that the department is overly outstanding,” said Motloung.
The other two departments which owe municipalities substantial amounts of money are Education (R107 million) and Health (R100 million).
“Regarding the Education department; the department allocates funds to the schools in a form of a subsidy for the year including municipal services funds for schools to pay for municipal accounts. Some of these schools are not paying the municipalities as required and this affects the payment record of the Gauteng Department of Education. The GDE has also raised concerns about the lack of financial management within School Governing Bodies as they have a role to play in ensuring that funds are used for the purpose they were disbursed for and not other activities,” she said.
Furthermore, the GPG has also identified that most schools with exorbitant outstanding amounts were due to poorly-maintained, aged or vandalised water infrastructure that resulted in water leakages. Also, numerous schools are not properly secured and some communities abuse the water and electricity infrastructure.
“We have a Debt Management Strategy in place and a Debt Management Committee sits every quarter to attend to issues of debt to municipalities. We are also working closely with municipalities to ensure that they have adequate personnel to help them deal with this challenge. We are aware that as a province, we must take a lead in this matter so that the rest of the citizens can take a leaf out of our book,” Motloung said.
Cell: 079 897 2240
Issued by: Gauteng Provincial Government
4 Sep 2012
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