One size does not fit all says review of councils

For local government analysts the release of the Treasury’s Local Government Budgets and Expenditure Review is keenly awaited for its invaluable collation of data and analysis of both financial and nonfinancial trends relating to municipal functions. But this year’s review is particularly important; its significant conclusions pull together shifting policy on local government that make it clear that different arrangements are needed for rural and urban contexts.

The underlying message has strong policy congruence with statements by the president as well as the minister and deputy minister of co-operative governance that local government requires a "differentiated" set of solutions to address rural and urban contexts — "one size does not fit all". To this extent the Treasury has followed the lead of the president as well as the minister — an important political and institutional issue if a policy shift is to be taken forward with any success.

The review has fleshed out what the bold if consensual position of differentiated local government means more than any other source to date. It should therefore be widely interrogated by anyone interested in local government spatial development intergovernmental relations and poverty alleviation.

Of course most analysts look to the review for its analysis of revenue and expenditure trends which suggest strong real aggregate growth and this analysis remains as relevant as ever.

The authors make it clear that improved financial reporting means the information collated supports the outcomes approach of the Presidency in assessing municipal performance as well as facilitating better planning by local government and enhancing accountability.

While the challenges identified in 2008 remain relevant the challenges have been made more complex by economic recession. As the review argues: "Due to the recession municipal revenues are growing slowly; which makes it all the more important to ensure that spending is prioritised appropriately and implementation is effective and efficient."

This is a consistent theme of the minister of finance but considered further one with significant implications for local government — more appropriate structures and systems may be required to ensure that municipalities deliver optimally. Reading between the lines there is a clear indictment of local government’s ability to deliver municipal services equitably across the country.

The review identifies three main themes — the role of local government in supporting economic growth the implications of rural versus urban contexts on service delivery and the importance of good governance and accountability.

Seven key issues are highlighted: quality leadership is critical to municipal performance; municipal budgets must be credible and properly funded; cash and revenue management must be well managed; municipalities must maintain existing assets; the funding of capital budgets must be interrogated; municipalities must review the basis on which basic infrastructure and services are delivered; employment-creating activities must be enhanced; national government should further support municipal capacity; and a differentiated approach to the fiscal framework should be pursued.

While the final issue may sound fairly obvious when considering the clearly divergent delivery records of different regions and types of municipalities the implications of a review of powers and functions in local government could ultimately usher in a constitutional amendment. A departure from the constitution’s conceptual framework of metro district and local municipalities is nothing short of a sea change in the accepted thinking but given the rate of urbanisation a revisited rural-urban distinction is widely considered to be necessary if local government is to attain its developmental goals.

It will certainly mean a very active period ahead for policy makers and analysts and the review to this end may herald a new era for local government — underpinned by the need to recognise the development realities of fast-growing cities with growing poor populations juxtaposed against the continuing underdevelopment of rural areas.

Given that local government is estimated to account for 20% of government spending and that this targets basic services the current challenges of a recessionary climate and growing levels of inequality demand nothing less.