Councils urged to act on officials ignoring municipal debt

Municipalities have clear mechanisms to ensure council officials pay their municipal accounts, but a failure to enforce these rules, particularly in large metros, raises questions about accountability and governance.

University of Johannesburg’s centre for local economic development director Marius Venter said it was astonishing that no action was being taken against the delinquent officials.

It is well established in municipal employment and performance agreements that councillors and senior employees may not be in arrears on their municipal accounts beyond 90 days, he said.

Councillors and employees behind on accounts

“It is a serious issue if a councillor or municipal employee is not paying their account. Most performance contracts clearly state that you are not allowed to have municipal debt.”

Municipalities are expected to take “special steps” when elected officials or staff fall behind on payments, including recouping outstanding amounts directly from salaries, or instituting service cut-offs, in the same way they would with ordinary residents.

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“In the normal flow of things, if you have a councillor in arrears, the municipality will recoup from your salary. That is standard practice, particularly in smaller municipalities,” Venter said.

However, not all cases of non-payment necessarily point to wrongdoing, he added. Disputes may arise due to faulty meters, incorrect billing, or failures by municipalities to read meters accurately.

“There may be a very good reason why someone is not paying. It could be that the meter is faulty or the account is under dispute. But then there must be a proper, written arrangement in place.”

Little room for excuse

What concerned Venter most was the apparent lack of enforcement in large metropolitan municipalities, where administrative capacity and financial systems should leave little room for excuse.

In a big metro like Johannesburg, there should not be a single councillor in arrears, he said.

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By contrast, smaller municipalities tend to apply these rules more consistently, sometimes precisely because their financial position leaves them with little choice.

“I have worked extensively with smaller municipalities and know for a fact that if you fall behind, they act,” Venter said.

The inconsistency, particularly in Gauteng, points to weaknesses in financial management and enforcement, rather than gaps in policy, Venter said.

Why are existing mechanisms not being applied?

Treasury departments and municipal finance units should explain why existing mechanisms are not being applied. “That is the real question. Why are the mechanisms that are clearly in place not being implemented?

“If municipalities are serious about financial recovery and accountability, they cannot allow councillors and officials to ignore the very rules they expect ordinary residents to follow,” Venter said.

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National Treasury’s third-quarter Section 71 report places aggregate municipal consumer debt at R416.1 billion – and R10.8 billion has been written off as bad debt.

Municipalities collectively owe Eskom about R105 billion, exposing a debt trap where non-payment by consumers feeds municipal insolvency.

Peter Baur of the school of economics at the University of Johannesburg, said the money must come from somewhere.

Debt crisis = No money to fix roads, supply water and health care

The municipal debt crisis meant there will be no money to fix roads, supply water and for basic health care.

According to Baur, the municipal debt crisis was rooted in the cocktail of inequality, high rate of unemployment, low tax base, and sluggish economic growth.

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“Many municipalities will have to become more accountable, Stricter monitoring processes will have to be put in place.”

The problem is a systems challenge as municipalities are confronted with continuous pressure of urban migration and unemployment challenges, Baur said.