The National Treasury has gazetted cost containment regulations that are aimed at ensuring efficient, effective and economic use of municipal resources.
The new regulations will take effect on July 1.
In expanding the Municipal Finance Management Act, Treasury aims to promote better governance and management of finances by municipalities, including by keeping managers accountable.
“A well-managed municipality or entity should already have in place a cost containment policy as part of their budget-related policies. The regulations merely require those without a policy in place to do so, as a minimal measure to ensure good governance,” the National Treasury said in a statement on Tuesday.
The cost containment policy of municipalities should provide for monitoring measures, procedures for review and consequences for nonadherence.
Treasury said these policies must be reviewed yearly and communicated on the municipal website.
Treasury stated that municipalities and municipal entities continue to spend public funds and municipal resources on nonpriority items.
“More often than not this results in a diversion of public funds from core service delivery to other expenditures, resulting in dissatisfaction by communities and delays in service delivery.”
Some of the specifications in the new regulations include that a municipality may only appoint consultants if an assessment of the needs and requirements confirms that the affected municipality does not have the requisite skills in its full-time employ to perform the function.
The threshold limit for vehicle purchases relating to official use by political office-bearers must not exceed R700 000, or 70% of the total yearly remuneration package for the different grades of municipalities, whichever is lower.
However, before a vehicle is bought, the municipality is required to provide information on the status of current vehicles and whether it is more affordable to buy a vehicle than to lease a vehicle.
Municipalities are further only allowed to buy business class air tickets for officials when flights exceed five hours; international flights will also be limited, unless it is considered critical.
Overnight accommodation may only be booked where the return trip exceeds 500 km.
The regulations also stipulate that an accounting officer must ensure that no credit card or debit card linked to a municipality’s bank account is issued to any official or political office bearer, including members of the board of municipal entities.
The disclosure of cost containment measures applied by the municipality or municipal entity must be included in its yearly reports, which will then be reviewed by the Municipal Council.
The reports must also be sent to the National Treasury within seven days after the report is submitted to the council.