NOMBEKO MBAVA | Whichever way you cut it, running a town takes financial discipline

As campaigning for the local government election heats up, voters are being bombarded with promises from political parties. Each promises to ensure that municipalities work for everyone. Voters will want to vote for the councillor who ensures that streetlights work, water is delivered, refuse is collected and potholes are fixed.

Essentially the law gives powers to municipalities to either insource or outsource these services. In their manifestos, parties make a case for each of these options. How will voters know which is best? Beyond the provision of these basic services, the constitution grants municipalities a wide range of other duties ranging from road maintenance and cemetery operations to firefighting services, stormwater management and regulation of street trading.

These duties make municipalities responsible for planning and maintenance, safety, cleanliness and good order in towns across South Africa. Importantly, each of these responsibilities requires funding, which is why a municipality’s own revenue and equitable share from the national government are a crucial foundation.

Municipalities receive income through their own revenue such as property rates, tariffs for municipal services and revenue from the sale of electricity. In addition, they are entitled to transfer of funds from the national government. This includes the equitable share grant, infrastructure grants and conditional, ringfenced grants for specific purposes. Municipalities are entitled to borrow in the money markets and the big metros receive a portion of the nationally collected fuel levy.

Crucially, the manner in which these services are delivered is entirely up to the municipality, guided by section 78 of the Municipal Systems Act. Services can be delivered directly by the municipality through its own departments or can be outsourced to municipal entities, other municipalities, organs of state, licensed service providers, traditional authorities, community-based organisations or any institution or person legally competent to deliver required services.

According to their manifestos, the ANC, EFF and SACP want to bring outsourced municipal work back in-house. The ANC argues in its manifesto for “remunicipalisation”. Every outsourced core service such as cleaning, security, waste collection, meter reading, water tankers and ground maintenance must be reviewed within two years. Where it governs, the EFF promises to employ municipal workers directly within 24 months to reduce dependence on labour brokers and tenders for key municipal functions.

No party has done these assessments, since political parties are not municipal councils

The SACP undertakes to ensure insourcing is “the new normal”.

On the other hand, the DA will bring in external providers where a municipality fails. A DA-led municipality will use public-private partnerships for water, electricity and waste removal services, and will outsource municipal repairs and maintenance. The FF+ takes a similar approach, suggesting that when municipalities lack capacity, communities and the private sector should be empowered to contribute.

Insourcing essentially moves costs from contracts to the permanent municipal wage bill. The effect on the municipal budget in the next five years is not clear, given each municipality’s fiscal capacity. Similarly, the proposed roping in of the private sector by the DA and FF+ has cost implications that voters need to understand.

Before a council decides who will deliver a service, the law requires it to test whether it can do the work itself. It must weigh its skills and resources, whether its budget can carry the extra staff, the effect on jobs and the views of organised labour. If it chooses to look outside, it must notify the community and compare outside service providers on cost and capacity. It must seek the views of residents and organised labour.

This can only happen after the election. No party has done these assessments, since political parties are not municipal councils. None of the manifestos gives the cost, capacity or jobs figures that section 78 asks for. Consequently, voters are choosing between promises. A voter who supports insourcing or outsourcing is trusting that the party, once it runs the municipal council, will do these assessments honestly and not skip them once in power. The voter trusts that these assessments will be done faithfully, using real figures on costs, staff, skills and jobs, not estimates, and that following the assessments the party will accept the outcome even if it contradicts its election promise.

In terms of transparency and accountability, every new council that promises insourcing or outsourcing should, within two years of taking office, publish each section 78 assessment in full, with costs, before it takes a decision. The National Treasury and department of co-operative governance should help weaker municipalities carry out these assessments properly, so the test is a real one and not an estimate. Insourcing costs money in salaries. Outsourcing costs money in contracts and oversight. Neither option is free, and neither works without strong financial management.

• Mbava is an independent public finance expert and a former chair of the Financial & Fiscal Commission