Parly committee concerned that Treasury withholding municipalities' equitable share funding could harm service delivery

CAPE TOWN - The Standing Committee on the Auditor-General is concerned that withholding municipalities' equitable share funding because of unpaid auditor-general fees will be detrimental to service delivery.

The committee noted how the auditor-general managed to recover R460 million from municipalities following National Treasury intervention, but it warned against the imposing of section 216 (2) of the Constitution to withhold the equitable share.

National Treasury and the AG briefed Parliament’s Standing Committee on the Auditor-General on the effectiveness of the entity’s current funding model.

READ: Treasury: AG recovered R460m in outstanding debt from municipalities

As of 31 July, the total outstanding debt to the auditor-general stood at R1.83 billion, with more than R400 million owed by local government.

National Treasury said the country’s municipalities paid R460 million after writing letters warning of them of the withholding of equitable share funding that goes towards service delivery.

Standing Committee on the Auditor-General chairperson, Wouter Wessels, noted the settlement but said this would have a negative impact on service delivery.

"That’s my observation with regards to that and I just want to echo what Lucky Montana said. It’s not very productive, especially in terms of service delivery to the poorest of the poor to withhold an equitable share, and it doesn’t actually take us in the right direction."

National Treasury said it withheld portions of the local government equitable share and funds were only released in instalments once proof of payment to the auditor-general and other creditors was provided.