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7 municipal spending sins that Treasury hopes to wrest
From flashy cars to expensive consultants to splashing out on expensive overnight accommodation, Finance Minister Tito Mboweni has unpacked National Treasury’s latest local government expenditure guidelines that aims to curb municipal spending.
The Municipal Cost Containment Regulations for 2019 were drafted in line with the Municipal Finance Management Act of 2003, which National Treasury released on Friday.
An advisory shared by Mboweni on Twitter said, “The regulations aim to promote better governance and management of finances by municipalities. This is in line with the spirit of the MFMA and other applicable regulations, which require that managers must manage but also be held accountable.”
Here are 7 of the municipal spending sins that Treasury hopes to curb:
1. Travel and Business Class
The Municipal Cost Containment Regulations say an accounting officer will have the power to approve the purchase of economy class tickets for all officials or political office bearers if the flight in question is less than five hours.
However, accounting officers can only approve the purchase of business class tickets for officials, political office bearers and persons reporting directly to them for flights exceeding five hours.
“In the case of the accounting officer, the mayor may approve the purchase of economy class tickets where the flying time is five hours or less and business class tickets for flights exceeding five hours,” the regulations said.
The regulations speak explicitly about putting limits to international travel for local government officials, to the point where they can only travel abroad on the state’s tab for meetings and urgent matters.
The Municipal Cost Containment Regulations for 2019 state that a municipality or municipal entity may only appoint consultants after an assessment of their needs confirms that the municipality does not have the skills or resources among full-time staff to perform the function.
The regulations say the accounting officer at the relevant municipality or municipal entity must ensure that contracts with consultants include overall cost ceilings by specifying costs that the municipality or municipal entity will be incurring by procuring the consultant’s services.
3. Credit cards
The regulations say an accounting officer must ensure that no credit card or debit card which is linked to a bank account of a municipality or its entity is issued to any official or political office bearer, including members of the board of directors of municipal entities.
“Where officials or political office bearers incur expenditure in relation to official municipal activities, such officials or political officer bearers must use their personal credit cards or cash or arrangements made by the municipality or municipal entity, and request reimbursement in accordance with the written approved policy and processes,” the regulations say.
4. Accommodation and Meals
According to the regulations, an accounting officer must make sure that costs of domestic accommodation and meals are in line with the maximum allowable rates for domestic accommodation.
The regulations said spending on meals must be in line with regulations communicated from time to time by the National Treasury through a notice. Overnight accommodation may only be booked where the return trip exceeds 500 kilometres, the regulations said.
Accommodation has tripped officials up even at a national level, with former social development minister Bathabile Dlamini notoriously staying at the R11 000 per night Oyster Box Hotel in Umhlanga. At the time, she was criticised for saying that indigent households who receive grants could survive on R753 a month.
Government officials in blue light convoys have been the pet peeve of many a South African motorist in recent years and ministers have been known to splurge on high end vehicles for their official work.
The regulations relating to spending on vehicles were, perhaps unsurprisingly, among the longest sections in the gazette.
The regulations outlined a threshold limit for vehicle purchases for political office-bearers. These, the regulations said, must not exceed R700 000 or 70% (VAT inclusive) of the total annual remuneration package for the different grades of municipalities.
“The procurement of vehicles in sub -regulation must be undertaken using the national government transversal contract mechanism, unless it may be procured at a lower cost through other procurement mechanisms,” the regulations said.
The regulations said the accounting officer must ensure that there is a policy that addresses the use of municipal vehicles for official purposes.
6. Events and catering
The regulations state that a municipality may not spend on catering for meetings that are only attended by the staff of said municipality or municipal entity, unless they receive prior written approval of the accounting officer.
“Entertainment allowances of qualifying officials may not exceed R2000 per person per financial year, unless approved otherwise by the accounting officer.
“A municipality or municipal entity may not incur expenses on alcoholic beverages unless the municipality or the municipal entity recovers the cost from the sale of such beverages,” the regulations said.
The regulations said an accounting officer must ensure that allowances to officials for private calls and data costs are limited to an amount as determined by them in the cost containment policy of the municipality.