Gravy train derailing cities

Metro municipalities are increasingly spending more on salaries while their budget allocations for services - including repair and maintenance to infrastructure - are decreasing.

Port Elizabeth's troubled Nelson Mandela Bay metro, where the rate of staff costs increases peaked at 31% three years ago, emerged as the worst offender.

These revelations were contained in the State of Finances of SA's Metropolitan Municipalities 2013 report, released in parliament yesterday.

The report listed above-inflation staff salary increases and hikes in electricity tariffs as some of the factors straining the budgets of the country's major municipalities.

The report was compiled by the South African Cities Network, a local government association monitoring trends in big cities. It examined financial trends in the metros between 2009 and 2011.

The rate of increase in staff costs for the 2010-11 financial year in another seven metros was, on average, 20 percentage points above inflation but Nelson Mandela's salary bill shot up 31% above the consumer price index.

In the same year, Cape Town's salary bill rose 19% above inflation, with the City of Joburg at 16%, Ekurhuleni 14%, eThekwini 13%, Buffalo City 12%, Tshwane 11% and Mangaung 11%.

These municipalities were also under pressure from the increase in bulk purchases such as electricity tariffs.

The increase in bulk and salary costs also led to a drop in operational expenditure from 22% in 2009 to 18% in 2011.

Sithole Mbanga, CEO of the South African Cities Network, tried to paint a picture of an improving club of big municipalities but admitted cities were under greater pressure to deliver and contain costs.

Urbanisation was also putting a strain on metros trying to cater for more residents.

Funding for this aspect of government needed serious improvement. Filling vacant posts and hiring more people were listed as two reasons for ballooning expenditure on salaries.

Cape Town deputy mayor Ian Nielson, a panellist on the network, said the rate of increase in the metros' salary bill "significantly outstripped" other areas of expenditure, "substantially putting pressure on everything else".

South African Local Government Association chairman Thabo Manyoni said municipalities were operating in a space where finances were tight because of the global economic crisis and urbanisation was rapid.

"People get more into debt and the most of the people coming to cities don't have skills," he said. - Additional reporting by Sapa