Cost of water, electricity to rise

SOUTH Africans will have to continue digging deeper into their pockets to pay for basic services like water and electricity, the cost of which will continue to increase above inflation.

Provinces and municipalities will also feel the effects of providing these services, as the cost involved will outstrip what the Treasury is able to dole out to them.

Yesterday, Finance Minister Pravin Gordhan revealed that local governments will only be receiving 9.1 percent of available government revenue over the next three years, and will face tough fiscal choices.

Their equitable share allocation from government will be slashed by R300 million in 2016/17.

Gordhan said the cuts were necessitated by the government’s need to reprioritise its spending and to get budget growth back on track. “Municipalities can offset these trends by improving their own revenue collection, increasing efficiency and obtaining greater value for the money they spend,” says the Budget Review.

The government will also be be scaling back on direct transfers to local government for infrastructure over the next three years.

To address its spending needs, the country’s municipalities will be receiving R67.5 billion in equitable share and infrastructure grants, R52.1bn for human settlements, water and electrification, R40.7bn for public transport and R22.3bn for other human settlements and municipal infrastructure.

The government said municipalities would be able to offset the budget cuts through reducing under-expenditure, which averaged 9 percent in 2014/15.

Rural municipalities will bear the major brunt of the budgetary cuts, relying on Treasury for about 80 percent of their funding. Metropolitan municipalities like Cape Town, Johannesburg, eThekwini and Tshwane, derive only 19 percent of their income from national government.

Electricity is expected to go up another 8 percent this year, and annually until 2018, but the equitable share allocation intended to help municipalities cope with the annual tariff increase does not compensate for any additional increases after the budget is tabled.

During 2016/ 17, municipalities will receive a subsidy of R335 per household per month to provide free basic services to 9.2 million poor households.

In 2013, the Non-Financial Census of Municipalities found that 5.3 million households were receiving these services, and the government says this shortfall must be addressed.

As part of new measures to ensure municipalities spend as planned and deliver to ratepayers, secondary cities will have to prove how infrastructure investments will contribute to doing away with apartheid spatial plans.

A new formula will also be used to calculate allocations for public transport in 13 cities. Treasury says the previous system incentivised cities to plan overly expensive systems in the hope of receiving more funding. The government will also be empowering municipalities to implement water and sanitation projects by shifting R11bn from indirect to direct allocations.

The number of water and sanitation grants will be reduced from four to two – a regional bulk infrastructure grant and a water services infrastructure grant, to construct and refurbish reticulation schemes.

After this year’s local government elections, a number of municipalities will be absorbed by other municipalities, as the government reduces the number from 278 to 257. The most significant demarcations since 2000, municipalities in the Western Cape won’t be affected.

The Budget Review says the mergers are expected to reduce administration costs and free up resources for service delivery.

The municipal systems improvement grant has been reconfigured as an indirect grant from 2016/17 to help struggling municipalities with revenue collection. HEALTHCARE bodies, including the South African Medical Association (Sama), have called on Treasury to be extra cautious when financing the health sector and appealed that critical posts not be cut as such a move could result in catastrophic service delivery.

Sama and the Rural Health Advocacy Project (Rhap) said even though the country was going through “pressing budget constraints”, clinical posts should be protected at all costs.

Sama chairman Dr Mzukisi Grootboom said while politicians were denying claims of “frozen clinical posts”, reports on the ground suggested that “posts are not being filled across the country”.

“Political semantics around what constitutes frozen posts need to be put aside so that the national Department of Health and Treasury can address the real issue of funding and protecting critical healthcare posts now falling victim to increasing tight austerity measures. Decisions must be informed by what’s happening on the ground, not just financial considerations,” he said .

In addition, the Junior Doctors Association of SA (Judasa) said budget constraints in the Western Cape were already negatively affecting placement of trainee doctors with a significant number of doctors not being placed. Judasa provincial chairman, Dr Zahid Badroodien, said at least 24 medical interns were without jobs.

He said at a recent meeting with the Health Professions Council of SA (HPCSA) Judasa was made aware of accredited posts which remained unfilled due to them being unfunded.

“One tertiary hospital, which employed 45 interns last year, has this year employed only 35 and there’s no more space,” he said.

Recently Health Minister Aaron Motsoaledi denied allegations that there were frozen posts in the country, challenging any doctor who was unemployed due to freezing of posts to come forward, and he would make sure that these doctors were placed.