presentation to the sport and recreation portfolio committee 24 february 2015
DESCRIPTION
Evolution of Grant System Water Serv. Proj. 3TRANSCRIPT
Presentation to the Sport and Recreation Portfolio Committee
24 February 2015
Constitution
• The Constitution of the Republic of South Africa, Act 108 of 1996 places exclusive legislative competence of beaches, amusement facilities, local sport facilities and municipal parks and recreation on provinces
• Thus provinces should pass legislation governing sport and recreation matters within the province
• However, Schedule 5 part B articulates that local government is the core delivery arm of these services and can enact by–laws to regulate them.
• Thus grant funding is provided to local government for sport and recreation facilities
Evolution of Grant System
Water Serv. Proj.
3
MIG
The MIG was started in 2004/05, through the merger of:• Consolidated Municipal Infrastructure Programme, • Local Economic Development Fund, • Water Services Capital Grant, • Community Based Public Works Programme, • Building for Sports & Recreation Programme and • Urban Transport Grant.
MIG
• The Municipal Infrastructure Grant (MIG) programme is the largest local government infrastructure development funding programme in South Africa
• The programme was introduced as part of major reforms implemented by government to improve service delivery in a coordinated manner (that involves all government spheres)
• The Department of Cooperative Governance manages the MIG by exercising its mandate to foster cooperative governance and to develop capacity in the local government sphere.
15% within MIG for sports facilities• The construction of municipal sports facilities has been
funded as part of the Public Municipal Service Infrastructure component (P-component) of the MIG – which accounts for 15 per cent of the total value of the MIG
• Originally the P-component was intended to fund community infrastructure, including sports facilities, community centers, parks, cemeteries and other community amenities
• In 2011/12 this funding was ring-fenced for sport infrastructure only
• Municipalities may also allocate funding from their equitable share and own sources of revenue to complement MIG or for maintenance of sport facilities
MIG allocations to Sport and Recreation in 2014/15
Province Water and Sanitation
(%)
Roads and Storm Water
(%)
Solid Waste
(%)
Public facilities
(%)
Sport Facilities
(%)
Community Street
lighthing(%)
Eastern Cape 55.70 31.96 0.67 6.77 4.29 0.61Free State 34.67 28.55 2.22 12.50 18.92 3.13Gauteng 17.94 62.90 2.81 3.33 11.74 1.28KwaZulu Natal 68.17 20.01 0.24 7.55 3.70 0.33Limpopo 58.91 31.31 0.05 5.46 3.85 0.42Mpumalanga 62.73 28.12 0.82 3.80 3.59 0.95Northern Cape 60.50 30.95 0.09 5.11 3.25 0.11North West 38.03 39.89 4.84 11.81 3.20 2.23Western Cape 56.49 24.99 2.89 2.77 11.95 0.92TOTAL 54.76 30.99 1.21 6.59 5.49 0.97
Summary of MIG Expenditure by Province as at end January 2015 (2014/15)
Province Allocated (R'000)
Transferred to date
Expenditure to date
Expenditure as %
allocation
Expenditure as %
transferred
Balance Unspent
Eastern Cape
2 916 227
1 663 196
1 452 710 49.81% 87.34%
210 486
Free State
813 654 566 378
354 701 43.59% 62.63%
211 677
Gauteng
453 318 331 732
225 822 49.82% 68.07%
105 910
KwaZulu Natal
3 207 141
2 176 888
1 586 366 49.46% 72.87%
590 522
Limpopo
3 064 058
1 514 828
938 962 30.64% 61.98%
575 866
Mpumalanga
1 707 250
1 126 639
871 952 51.07% 77.39%
254 687
Northern Cape
450 944 332 245
268 564 59.56% 80.83%
63 681
North West
1 598 850 952 582
748 025 46.79% 78.53%
204 557
Western Cape
472 393 362 154
273 463 57.89% 75.51%
88 691
TOTAL
14 683 835
9 026 642
6 720 566 45.77% 74.45%
2 306 076
Province Water and Sanitation
(%)
Roads and Storm Water
(%)
Solid Waste(%)
Public facilities
(%)
Sport Facilities
(%)
Community Street
lighting(%)
Eastern Cape 66.39 23.57 1.10 6.02 2.40 0.52
Free State 21.32 16.80 1.68 9.63 49.75 0.82
Gauteng 15.91 84.09 1.57 3.87 20.94 0.09
KwaZulu Natal 63.63 22.36 0.30 8.69 4.61 0.41
Limpopo 55.02 34.42 0.12 5.70 4.61 0.12
Mpumalanga 33.62 59.08 0.63 2.52 3.46 0.70
Northern Cape 72.40 19.65 0.05 6.69 0.76 0.46
North West 44.75 35.93 5.86 7.88 3.80 1.78
Western Cape 58.71 28.58 2.24 1.50 8.61 0.36
TOTAL 50.01 33.43 1.21 6.28 8.48 0.60
MIG Expenditure per Sector as at 31 January 2015
MIG Allocation, Beneficiaries and Expenditure for sports facilities for 2014/15
Province Sport Facilities
Budget Allocation by Municipalities
Planned Households Expenditure
Eastern Cape 51 624 289 24 499 14 232 053
Free State 148 498 460 501 741 283 328 343Gauteng 49 724 129 152,727 35,631,665
KwaZulu Natal 71 736 815 467 173 71 736 815
Limpopo 119 288 452 181 342 37 061 428
Mpumalanga 46 169 152 46 618 35 017 232
Northern Cape 12 035 426 31784 1 542 474
North West 46 249 254 41 349 21 684 762
Western Cape 57 940 651 35 363 23 404 802
TOTAL 603 266 628 1 329 869 488 007 909
Challenges
The following challenges are generic to the MIG programme:•Inadequate planning and communication of sector priorities by sector departments, in the context of Integrated Development Planning•Lack of Intergovernmental cooperation (municipalities, provinces, and sector departments involvement in MIG implementation)•Lack of capacity to manage MIG projects (Project Management Units)•Appointing service providers or contractors who cannot deliver•Late payment of service providers•Delays in approval of projects and budgets by Councils•Delays in Technical reports and Environmental Impact Assessment (sector departments)•Use of MIG funds for operational budget pressures
• The proposed MIG Framework for 2015/16 is that “The P-component of the MIG formula (described in part 5 of Annexure W1 to the Division of Revenue Bill) amounts to 15 per cent of the MIG and must be used for municipal sport facilities only”
• Proposal for the P-component over the MTEF: R 2,058,114,300 in 14/15 R 2,146,928,250 in 15/16 R 2,280,056,400 in 16/17• Only Local Municipalities have a P-component• MIG funding for Districts is only allowed for water and sanitation -
Municipal allocations are not made to District Municipalities as MIG funding is only allowed for water and sanitation.
12
Proposed MIG Framework 2015/16
COGTA support to municipalities
• COGTA’s main responsibility is oversight of MIG processes and procedures. This role includes:
• promoting sound inter governmental relations• coordination between stakeholders• coordination of stakeholder support to municipalities • coordination of stakeholder participation in MIG project pre-
implementation and implementation phases• COGTA• SALGA does not have a monitoring role on the spending of
15% MIG allocation – this is COGTA’s role
13
The SALGA MandateThe SALGA Mandate
Represent
Support
Advise
SALGA’s keyroles
Employer Body
Knowledge hub (intelligence) to support the roles above
Profile
Employer Body
Act as an employer body representing all
municipal members and, by
agreement, associate members.
The Voice of Local Government
Support and advise our
members on a range of issues
to assist effective
execution of their mandate.
Build the capacity of the municipality as an institution as well as leadership
and technical capacity of both Councillors and
Officials.
Lobby, advocate, protect and
represent the interest of local government at
relevant structures and
platforms.
Transform local government to
enable it to fulfil its
developmental mandate.
SALGA Mandate
Lobby, Advocate & Represent
Support &Advice
Capacity Building
Build the profile and image of
local government within South
Africa as well as outside the
country.
StrategicProfiling
Serve as the custodian of local
government intelligence and facilitate inter-municipal peer
learning
Knowledge & Information
Sharing
The Voice of Local GovernmentThe Voice of Local Government15
The SALGA MandateThe SALGA Mandate
Consult and represent municipalities • While the impact of ring-fencing 15% of MIG for sport infrastructure is
yet to be assessed – initial consultations with municipalities during 2011 found that municipalities supported the creation of a separate grant for municipal sport infrastructure
• Such a grant would look specifically into backlogs of sport infrastructure in municipalities especially rural areas
• During the Infrastructure Grant Review consultations of 2014 municipalities indicated a preference for consolidated funding which would rationalise the number of grants a municipality receives and have to report against
Infrastructure Grant Review• The review resulted from concerns regarding underspending and inefficiency
in local government infrastructure grants, and the proliferation of new grants in the system as a whole
• The Budget Forum committed National Treasury to undertake a thorough review of these grants. (ToR were endorsed by the BF in October 2013 and the Review’s recommendations were presented to the BF in 2014.
• The Review is a collaborative effort between the National Treasury, the Department of Cooperative Governance (DCoG), theI Financial and Fiscal Commission (FFC), the South African Local Government Association (SALGA), and the Department of Planning Monitoring and Evaluation (DPME).
• The Review engaged other stakeholders at national and local government levels throughout the process to ensure full consultation.
• Following literature reviews, policy analysis and consultation with all stakeholders, 8 principles agreed upon:
1) Respect the Constitutional Mandates of different spheres2) Provide for Predictability and Stability 3) Encourage Transparency, Simplicity and Accountability4) Integrate a Variety of Funding Sources and Aims5) Be Sustainable and Unlock Growth6) Involve Supportive National Departments7) Reflect the Approach of Differentiation8) Reinforce practices that optimise the impact of grants and minimise
negative spill-over or perverse unintended effects
• All reforms relating to the local government infrastructure grant system must therefore adhere to and be guided by these principles
Principles
Key outcomes of the review
1. Grant Structure• Greater asymmetry and differentiation in the grant system; proposals address
service delivery and locational challenges applicable to the different types of municipalities
• Rationalisation in the number of grants each municipality receives and municipal discretion (i.e. consolidated, not ring-fenced funding) is key
2. Asset Management and Planning• Incentivising and enforcing improved pre-planning and asset management over the
life-cycle of grant-funded infrastructure
3. Management of the Grant System• A rationalised, more functional and accountable reporting system
• Clearer roles for national government departments even if not grant administrators; NT to manage the grant system holistically, then grant administrators and sector departments to support and monitor municipal implementation of grants
Grant structure summary (2 of 2)
Metros and Emerging cities•Future: Consolidate INEP with USDG (+ MIG for secondary/ emerging cities) into Integrated Urban Development Grant, administered by DCoG. •Towns•Future: Asset management reforms. INEP into MIG in long-termWSA Districts (Rural)•2015: Rationalise water and sanitation grants administered by DWS into one W&S grant•Future: Review possible extension of general infrastructure grant to other district municipalities depending on institutional role envisaged for districts and NDP’s call for regionalisationNon-WSA Locals (Rural)•Future: Ensure need for sector oversight is reduced as capacity improves and movement is towards more general funding
Asset managementKey Problem•New infrastructure at expense of sustainable investment in existing infrastructure; maintenance funding not prioritised by municipalitiesRecommendation1.Encourage grant investment in renewal of existing assets (rather than always creating new) and incentivise improved asset management2.No extra funds for maintenance (LGES already does; perverse incentive) but emphasise importance (like DCoG’s 7% rule in Back to Basics)
National administrationKey Problem•Limited data on grant performance/outcomes with limited analytical use•Uncontrolled proliferation of new grants (esp. indirect); old grants are not phased-out
Recommendation1.Streamline & standardise reporting of grants to improve accountability2.Stricter requirements for introduction of new indirect & ad-hoc grants; regular reviews to ensure holistic/strategic management of system
Time line for reforms2015 Budget•Smaller changes (i.e. combine public transport grants, begin process of reconfiguring water and sanitation grants) implemented immediately•Signal medium and long term direction of reforms and findings of Review
2016 MTEF•Phase-in medium-term reforms to avoid disruption to planning at municipal level•Begin implementation towards longer term vision
On-going•Regular (every 3-5 year) reviews of LG infrastructure grant system to continue longer-term reforms