Finance and Economic Opportunities
With regard to the financial crisis at the Cederberg Municipality:
(1) Whether it has been bought to his attention that R127 million is required by the Cederberg Municipality to improve its financial situation; if so, how does the Department plan to help the municipality with this;
(2) whether he and his Department are aware of the municipality’s prior council approval of underfunded budgets; if so, (a) how did these approvals occur and (b) will any criminal investigations be pursued;
(3) with reference to his reply to question 2 of 1 April, whether the unfunded budgets of the Cederberg Municipality were part of these investigations; if so, what are the relevant details;
(4) whether, once the Department has assessed the reports, they will be made available to the Standing Committee on Local Government; if not, why not; if so, what are the relevant details?
1. Whether it has been bought to his attention that R127 million is required by the Cederberg Municipality to improve its financial situation; if so, how does the Department plan to help the municipality with this;
Answer:
The Provincial Treasury is aware of the financial challenges facing Cederberg Municipality and is supporting the financial turnaround of the municipality.
The Provincial Treasury has supported the municipality to develop a Budget Funding Plan. This plan sets out realistic actions to reduce expenditure and improve revenue that, if successfully implemented, will allow the municipality to achieve a fully funded budget position. Provincial Treasury regularly monitors the municipality’s implementation of this budget funding plan and also monitors the financial health of the municipality on a monthly basis. The province has also allocated R2.9 million over the period from 2021/22 to 2023/24 to support revenue enhancement projects in the Municipality. Provincial government also provides technical support and advice to the Municipality.
The provincial government does not provide bailouts to municipalities. By adhering to the commitments in its Budget Funding Plan, and with guidance and support from the province, the Municipality will be able to rebuild its financial sustainability.
2. whether he and his Department are aware of the municipality’s prior council approval of underfunded budgets; if so, [a] how did these approvals occur and [b] will any criminal investigations be pursued;
Answer:
The Provincial Treasury’s assessment of Cederberg Municipality’s draft and final budgets for the 2021/22 Medium Term Revenue and Expenditure Framework period identified that the budget was unfunded. The Municipality was warned that if they were unable to adopt a funded budget, they would have to adopt and implement a Budget Funding Plan, which they subsequently did. Adopting a Budget Funding Plan is also a requirement from National Treasury for the transfer of equitable share funds.
a. The budget was adopted by the municipal Council in terms of the process set out in section 24 of the Municipal Finance Management Act [Act 56 of 2003].
b. Adopting an unfunded budget is not a criminal offence.
3. with reference to his reply to question 2 of 1 April, whether the unfunded budgets of the Cederberg Municipality were part of these investigations; if so, what are the relevant details;
We are informed by the Department of Local Government than unfunded budgets did not form part of the investigations conducted by the Department of Local Government.
4. whether, once the Department has assessed the reports, they will be made available to the Standing Committee on Local Government; if not, why not; if so, what are the relevant details?
Any questions relating to reports prepared by the Department of Local Government would have to be referred to the Minister of Local Government, Environmental Affairs and Development Planning.
