National Treasury reviews local government fiscal framework

Finance Minister Nhlanhla Nene says National Treasury is working around the clock to review its fiscal framework to ensure that it helps government achieve its objective of an improved service delivery.

“…It is common knowledge that municipalities face challenges in delivering public services to our people. It has been suggested that the local government fiscal framework is not responding sufficiently to this objective.

“Given these concerns, National Treasury, in collaboration with sector departments and stakeholders, is reviewing the local government fiscal framework, focusing on both national transfers to municipalities and the revenue municipalities generate on their own,” he said during his department’s Budget Vote Speech on Monday.

He said the National Treasury will, over the next three years, put a lot of focus on reviewing the local government infrastructure grants system.

He said as cities grow, SA’s large metropolitan municipalities can no longer focus only on providing basic services and housing.

The minister said bigger cities needed to also facilitate private sector investment and the creation of jobs.

“Urban infrastructure investment is the key to unlocking the potential of our cities. Already, government has invested massively in a new generation of integrated housing programmes and public transport systems, such as Rea Vaya and others.

“The acceleration of these programmes requires metropolitan municipalities to both more carefully select investment programmes and make a far greater financial contribution to their implementation,” he said.

Minister Nene also said that all metros have already drafted and developed their respective urban investment strategies and identified catalytic projects that will assist to stimulate growth.

He said the strategies will, at the same time, transform the spatial socio-economic structure inherited from the apartheid era.

“Government is in discussion with the Development Bank of Southern Africa to facilitate the provision of six reasonably priced financing for cities that have prepared bankable projects with private sector participation,” he said.

The minister also announced several financial management interventions aimed at improving financial management skills, curbing corruption and boosting savings.

He dedicated most of his Budget Vote Speech to announcing measures that will be carried out to achieve government’s main objective of an effective and well-functioning state.

“As the NDP [National Development Plan] points out, the key to an effective and a capable state is having employees at all levels, who not only have the authority but the experience and competence to do their jobs. In this regard, financial management skills are critical.

“National Treasury is implementing a number of initiatives to address the shortage of financial management skills.

“We will implement a Capacity Development Strategy to address financial management capacity constraints in the public sector,” he said.

He said National Treasury will collaborate with provincial branches to ensure that a municipal support and capacity programme to address the challenges faced by municipalities within the entire financial management cycle.

“During this year, the Office of the Accountant General will put forward plans to strengthen the regulatory environment in the audit and accounting industry. This will be done by taking into account the recommendations of the report on the Observance of Standards and Codes (ROSC) done by the World Bank,” he said.

He said the National Treasury, meanwhile, will continue in its efforts to make the procurement system work better.

The minister said the department will also aim to make the supply chain management system more accessible and innovative, and that through the office of the new Chief Procurement Officer, Kenneth Brown, the existing system of price referencing – aimed at setting a fair value prices for certain goods and services – will be improved.

“It will also pilot procurement transformation programmes in the Departments of Health and Public Works, nationally and in the provinces.

“We will also run pilots on centralising aspects of big tenders in line with the manifesto of the ruling party,” he said.

Minister Nene said the current economic climate made it difficult for households to save. He said in a bid to encourage South Africans to save, especially for their retirement, National Treasury has proposed a number of reforms.

“I will continue to engage with the various unions and stakeholders to further explain what we are trying to do as government in enabling a retirement system which offers good value and protection for retirement savings.

“It is necessary to stress once more that workers have nothing to fear from these reforms. Their money is safe.” – SAnews.gov.za

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