Budget presents a gloomy picture for local government: Samwu

Finance Minister Malusi Gigaba.
Malusi Gigaba smiling - Finance Minister Malusi Gigaba.

The SA Municipal Workers Union (Samwu) says the budget presented by Finance Minister Malusi Gigaba on Wednesday paints a gloomy future for local government as it reduces the amount of money meant to help municipalities.

“The presented budget further presents a gloomy future for local government given the government cut to municipal funding through conditional funding to the tune of R28-billion. We believe that this will set back municipalities as they will not be able to undertake projects which are largely funded through conditional grants‚” Samwu said in a statement.

Of the R85.7bn cut in government expenditure projected for the next three years‚ R53.4bn will be cut from national government budgets (particularly large programmes and transfers to public entities‚ at R30bn) while the conditional infrastructure grants of provincial and local government will be slashed by R28-billion.

Reductions in the allocations to provinces and municipalities over the next three years amount to 1% of provincial allocations and 3.5% of local government allocations. The impact of spending cuts falls mostly on capital programmes. A substantial reduction has been made to the municipal infrastructure grant.

About 47% or R39.7bn of the R85.7bn spending cuts will consist of cuts to capital transfers‚ while goods and services will be reduced by R16.5bn and current transfers by R27.4bn.

Samwu said the budget did not meet the union’s expectations and it was not pro-poor. However the union welcomed support to be given to municipalities in some of the challenges they are facing.

“We also welcome the R6-billion advanced to the Department of Water and Sanitation to assist with the drought relief. We believe that this will go a long way in ensuring that the water crisis currently faced in [the] Western and Eastern Cape provinces are addressed. We also believe that there is a need for a holistic approach to the water crisis in the country‚ an approach which will particularly focus on rural areas of the county which we believe are the hardest hit by the water crisis‚” the union said.

The union also welcomed the decision to assist municipalities in putting in place mechanisms for proper and adequate revenue collection. The SA Local Government Association (Salga) noted announcements made in the budget and said: “We understand that we will have to make sacrifices like other spheres of government and adjust our budget projections accordingly. In dealing with this‚ we need to relook at our revenue collection methods.”

Salga added that a more comprehensive response would be issued at an appropriate time.

Finance Minister Malusi Gigaba delivered his annual budget speech in Parliament on February 21 2018. Here are the highlights.