The National Treasury has taken a decision to deduct monetary amounts owed to municipalities by national and provincial government departments to settle outstanding debts, Finance Minister Enoch Godongwana announced in his Budget Vote address.

He reported that provincial departments owed municipalities about R14.9-billion currently, while national departments owed municipalities about R8.2-billion.

“Municipalities have consistently raised concerns that where they owe organs of State, National Treasury deducts funds directly from municipal allocations.

“However, the same principle has not been consistently applied where national and provincial departments owe municipalities outstanding amounts.

“Consequently, National Treasury has taken a decision to deduct monies from national and provincial departments to settle outstanding debts owed to affected municipalities,” Godongwana said.

In notes released following the Budget Vote debate, which itself was dominated by a lively exchange relating to the poor performance of several unlisted investments by the Public Investment Corporation, local government reform received significant attention.

The Minister said the National Treasury was continuing with reforms relating to the local government funding model, and was redesigning the local government fiscal framework to improve alignment between expenditure responsibilities and revenue sources.

“National Treasury has finalised policy positions to ring-fence municipal trading services and strengthen maintenance and infrastructure rehabilitation.”

Also highlighted were ongoing water infrastructure reforms.

These would seek to address problems associated with the fact that significant resources were being spent on emergency water leaks and system failures, rather than addressing dilapidated water infrastructure, as well as a water funding landscape that remained fragmented across multiple grants and funding instruments.

Government intended shifting towards a more coordinated and performance-driven approach, which focused on non-bulk infrastructure, metered billing and revenue recovery, and institutional strengthening.