Moneyweb 22 June 2020
With 6.25% for the rest of the staff at Steve Tshwete Municipality. There’s a disturbing pattern here.
As we reported last week, the City of Joburg plans to vote a 6.4% pay increase for its councillors, much to the outrage of residents.
Steve Tshwete Municipality in Mpumalanga has gone one better, sneaking through a 48% increase for its municipal manager and a 6.25% increase for the rest of the staff. And all this during lockdown when eight out of 10 South Africans have suffered a drop in income averaging R7 500, according to TransUnion.
Municipalities are sheltering behind three-year agreements concluded in 2018 with the SA Local Government Association that allow for staff pay increases of CPI plus 1.25% this year, and a home owners’ allowance increase of 7%. But this agreement was concluded well before the lockdown, leaving cash-stumped residents to cover the municipality’s spending wishes.
“This budget bears no relation to the reality facing residents,” says Rob Hutchinson, campaign head at participative democracy non-profit Dear South Africa.
The six senior managers of Steve Tshwete Municipality voted themselves an average 16.8% increase. But the real whopper is the municipal manager, whose salary was bumped up by 48%.
Residents of the municipality will be lumped with an average increase of 9.5% on property rates, and increases of 8.1% for sewerage, 6.7% for refuse collection, 6% for water and 6.3% for electricity.
Participative democracy groups like Dear SA and the Organisation Undoing Tax Abuse (Outa) are stepping up their monitoring of the country’s 257 municipalities to make residents aware of the spendthrift ways of their local government rulers.
“It is unconscionable for Steve Tshwete Municipality to vote itself a 6.25% increase in staff pay when the rest of the country is going through incredible difficulties,” says Outa project manager Tim Tyrrell. “People have lost their jobs, and most people have had to take a pay cut because of the lockdown, yet here we have municipal executives agreeing on a budget, seemingly without the slightest concern for the plight of their own residents.”
Tyrrell says perhaps it’s time to impose zero-based budgeting on municipalities, as Finance Minister Tito Mboweni has suggested for National Treasury.
Zero-based budgeting assumes each new year starts with a blank slate, rather than the usual method of applying a percentage increase to each expenditure item in the previous year’s budget.
Tyrrell says the municipal manager’s salary appears to have been brought into line with salaries of similar managers in other municipalities, but says the timing of the 48% increase – in the midst of an economic crash – is a slap in the face for ordinary South Africans.
Hutchinson says this is yet another case of extreme insensitivity for the economic plight of the country. “We need to pay far greater attention to the budgets of the 257 municipalities around the country, as these inflation-plus budgets seem to [be] rather routine, with councillors voting themselves increases in complete disregard for the ability of residents to pay.”
The municipality plans to spend R1.93 billion in 2020/1, up 6% from the R1.82 billion spent in the previous year. Councillors are to receive a modest pay increase of 1.7%, though staff costs are budgeted to rise 6.8% to R638 million.
Steve Tshwete is one of the better-run municipalities in the country, being one of just 18 that received unqualified audits in recent years, but even here there is slippage: in previous years it received clean audits (a higher grade of audit assurance than unqualified).
Repairs and maintenance languish
Municipal Money, a database of municipalities operated by National Treasury to increase transparency and strengthen civil oversight, shows Steve Tshwete Municipality spent just 1.18% of its Property Plant and Equipment budget on repairs and maintenance, against the recommended level of 8%.
An increasingly common feature of municipal financial management is to cannibalise the repairs and maintenance budget for staff pay or favoured projects.
The result is a steadily deteriorating infrastructure across the country.
An example is Steve Tshwete’s water infrastructure. Engineers have warned for years that a water crisis is imminent due to the need to replace about 640km of asbestos pipes installed in the 1950s and 1960s. Pipes are bursting weekly, but rather than replace them all, at an estimated cost of R9 billion, the municipality has been forced to do patch-up work on an increasingly decrepit water pipe infrastructure.
Steve Tshwete’s capex budget for this year is R673 million, of which R110 million is going to upgrading roads, and R53 million on upgrading water assets.
But what most disturbs residents is the increase in staff pay and the huge jump in the municipal manager’s salary.
“I think this is greed on another level especially during these trying times,” says one resident.