The Department of Public Works and Infrastructure (DPWI) on Tuesday reiterated that it remains resolute in its commitment to settle all verified debts within 30 days of receipt of the statements, invoices and reconciliation signoffs.
Public Works and Infrastructure Minister Patricia de Lille started a campaign earlier this year, in August, along with the department’s CFO to settle all outstanding national government debt owed to municipalities.
The campaign was a proactive measure to resolve all outstanding issues and ensure there was no repeat of unpaid municipal accounts, she said in a statement, wherein she explained that the current system sees the DPWI settling the municipal accounts of all government departments that, in turn, have to reimburse the DPWI for municipal services, while the property rates expenditure is borne by the department.
The department’s CFO is spearheading the project and his office developed a project plan to reconcile outstanding government debt for municipal services billed, as well as to agree with municipalities for settlement or recovery of the outstanding amount and confirmation of balances, while simultaneously verifying ownership and occupation for property rates and municipal accounts, respectively.
The project plan will also provide clear recommendations to avoid repetition of issues.
As part of the plan, the Minister explained that each of the DPWI’s eleven regional offices provide a weekly update to the CFO and the Minister on the progress. Each office has finance officials who engage with relevant municipal officials in the form of working sessions to reconcile verified accounts to be settled.
During engagements with the DPWI and municipalities, officials establish the reasons for varying accounts, verify accounts and agree on the correct amount to be paid to the municipality.
Once the amount is verified and agreed on, the DPWI finance unit pays the municipality within 30 days. However, the Minister noted that once municipal accounts are paid on behalf of other departments, the DPWI then relies on other national departments to reimburse the DPWI timeously in order to keep its books afloat.
“I have raised this matter with National Treasury and proposed that perhaps the long-term solution is that all national government departments must pay their accounts to municipalities directly,” the Minister said in the statement.
As of June 30, 2019, municipalities reported in terms of Section 71 of the Municipal Finance Agreement Act (MFMA) that the overall government debt was R3.1-billion.
There are 135 municipalities, of a total of 257, that reported that they were owed by DPWI. The DPWI is, however, in the process of verifying the debt owed for all 257 municipalities.
The stated amount of R3.1-billion, has, however, proven to be unreliable and incorrect as is displayed in Section 71 MFMA information, the Minister said.
As an example, she referred to the Bushbuckridge local municipality, which disclosed an outstanding debt of R925.5-million. However, the regional office has agreed with the municipality that the outstanding debt is R6.9-million as per the joint reconciliation of work performed.
Another example is the Emfuleni local municipality, which disclosed an outstanding debt of R185.9-million. The municipality was, however, unable to provide any supporting documentation to support this rand value on enquiry from the regional office and Gauteng Government Debt Forum.
The Minister also referred to the Makhuduthamaga local municipality, which disclosed an outstanding debt of R362.2-million. The DPWI regional office, however, agreed with the municipality that the outstanding debt is R1.3-million as per the joint reconciliation work performed.
“It is therefore essential that amounts disclosed by municipalities require verification and validation prior to processing payments in order to avoid irregular and fruitless and wasteful expenditure,” the Minister said.
As of October 11, 2019, the DPWI has obtained sign-offs after reconciliations were performed from 29 municipalities and has had engagements with 78 municipalities to date.
The department said it would be sending letters to municipalities to raise awareness and ensure cooperation and commitment in relation to all records and reconciliation for verification of government debt.