Wasteful spending at metros balloons

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municipality.jpgMOST of the country’s big cities have increased their "fruitless and wasteful" spending in the last financial year, despite some of them receiving kudos from international rating agencies.

Nelson Mandela Bay metro was the worst offender, according to auditor-general Kimi Makwetu’s 2014-15 local government audit report, released on Wednesday.
Managerial capacity at the country’s metros is expected to be vastly better than that of local and district municipalities, as they have larger budgets and were likely to attract skilled managers to oversee their finances.

Out of the total of R1.3-billion fruitless and wasteful expenditure incurred by the country’s 272 municipalities — up from R685-million the previous year — Nelson Mandela Bay was responsible for R423-million. This was a whopping increase from R10.6-million in the 2013-14 financial year.

Free State-based Matjhabeng Municipality, while not a top-tier council, was one of the worst offenders. Together with Nelson Mandela Bay, it accounted for more than half of the wastage.

All three of Gauteng’s metros regressed in their efforts to curb wasteful spending.

Buffalo City metro in the Eastern Cape improved in cutting wastage from R4.7-million in 2013-14 to R480,000, while eThekwini and Cape Town incurred no wastage. This was the second year eThekwini incurred no losses in this area, while Cape Town improved from R290,000 to nothing.

According to Makwetu’s report, irregular spending — another category of the reckless management of the public purse — amounted to R14.75-billion in the 2014-15 financial year, up from R11.76-billion the previous year.

Topping the list in irregular expenditure was Rustenburg in the North West (R3.06bn), followed by Nelson Mandela Bay metro (R1.34-billion), City of Tshwane (R1.10-billion), Buffalo City metro with R479-million and uThukela district with R324-million.

Karen Heese of Municipal IQ, said these high numbers reflected poorly on leadership in the metros.

"It’s not ideal. On the one hand, the defence is that there are such massive budgets being dealt with."

"But on the other hand, it is equally important that there is clean auditing because of the size of it. It’s a double-edged sword," she said.

In general, Makwetu lauded SA’s municipalities for the improvement in overall audit results — the number of municipalities that received clean audits increased from 40 in the preceding year to 54 in the 2014-15 financial year — claiming that it was possible to show improvement despite the surge in fruitless and wasteful spending.

It was a "conundrum" that despite the good outcomes, wastage levels were still high.

This article first appeared in Business Day

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