Patchy municipal record left Gordhan no choice

THE budget is keenly watched by markets tax practitioners and individuals but it is also a bellwether of inter governmental policy direction. And the 2012-13 budget did prove to be a revealing event for local government in confirming the state of the nation’s omission of local government as a major driver of development in any explicit way. But is local government being deliberately sidelined as suggested by some analysts?



President Jacob Zuma and Finance Minister Pravin Gordhan made conspicuously little mention of local government in the state of the nation address and the budget. Zuma’s focus was on a grand economic vision to be implemented by supporting industrial mining and agricultural activities through investment in a number of infrastructural spines. The budget gave meat to this vision. This is consistent with the extensive and rigorous work of the National Planning Commission and responds to calls from business and various government documents to invest in and upgrade infrastructure to support long-term economic growth.



This approach is not only one that appeals to industrialists but also perhaps speaks to the company Zuma is keeping in the alliance of Brazil Russia India China and SA where huge Chinese-style industrialisation is driving unprecedented growth. But does this mean Zuma has consciously adopted this approach over a more bottom-up developmental view?



Perhaps even if only implicitly the reports presented to the Cabinet combined with periodic headaches from the sector especially regarding allegations of corruption incompetence and service delivery protests would put anyone off a major development plan through municipalities. This is where the worry lies for the future of local government not to mention the disappointment for past advocates of the sector.



One could even argue the development of special economic zones condemns the average local-level administration supplanting it with a superior regional model to circumvent the need for investors to engage in municipal interaction.



The question is: could national industrial policy be stripping local government of its autonomy? And is this intentional?

Not that the budget did not have implications for local government but aside from a number of specific grants reference to municipalities applied across government spheres with the assumption of a single public service perhaps coming to the fore. As with national and provincial government local government is expected to improve its delivery pace and value for money with Gordhan arguing "government departments and municipalities that do not spend underspend or misspend their allocated funding will be at risk of losing the allocations".



Along with stronger monitoring of grant spending is greater oversight and standardisation of procurement plans including the Treasury’s appointment of a chief procurement officer "who will have overall responsibility for monitoring procurement across government". In public engagements since his speech Gordhan has given numerous examples of how this kind of action could combat corruption.



But municipalities are anything but insignificant in the budget: in 2012-13 local government will receive 84% of nationally raised revenue rising to 88% in 2013-14 and 89% in 2014-15 with direct transfers to local government rising by R53bn over medium-term baseline allocations. But in terms of policy emphasis the budget echoed prioritised support for the National Development Plan’s long-term vision for S A focusing on infrastructure and public-sector efficiency.



This means local government’s contribution to the future will be seen through a sectoral lens. It will be up to individual municipalities to take part meaningfully in water schemes upgrading of informal settlements roll-out of public transport and other priorities to ensure their developmental significance rather than relying on guaranteed allocations.



Depressingly it seems local government simply does not appear to hold the same kind of promise that might have been suggested of it several years ago and while some metros (in particular) may be expanding their roles (to include housing and transport) these are the exception.



There is probably at some level an acknowledgment that the sphere’s performance record is simply too patchy for it to be trusted as a key agent of economic regeneration. To this extent local government has sidelined itself.