1 / 17

National Budget 2006

National Budget 2006. DBSA Commentary Liziwe Dyasi Mbulelo Tshangana Barry Jackson. LOCAL EQUITABLE SHARE. 2006/07 Allocation includes RSC Levy Replacement 2006/07 – R18 Billion (including R7 Bn RSC Levy Replacement 2007/08 – R20 Billion (including R8 Bn RSC Levy Replacement)

amity
Download Presentation

National Budget 2006

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. National Budget 2006 DBSA Commentary Liziwe Dyasi Mbulelo Tshangana Barry Jackson

  2. LOCAL EQUITABLE SHARE • 2006/07 Allocation includes RSC Levy Replacement • 2006/07 – R18 Billion (including R7 Bn RSC Levy Replacement • 2007/08 – R20 Billion (including R8 Bn RSC Levy Replacement) • 2008/09 – R22 Billion (including R9 Bn RSC Levy Replacement).

  3. LOCAL EQUITABLE SHARE (cont.) • Horizontal allocation (among municipalities) • Majority of B3s and B4s rely significantly on LES, and trend will continue . • To what extent does the revenue-raising capacity component of the LES encourage operational efficiencies or inefficiencies? • Lack of clarity on how the D component will be administered, and the purpose it seeks to serve.

  4. MUNICIPAL INFRASTRUCTURE GRANT • 2006/07 MTEF allocation • 2006/07 – R6, 3 billions • 2007/08 – R7, 2 billions • 2008/09 – R8,1 billions • Intended to supplement municipal capital budgets to fund backlogs in municipal infrastructure required for the provision of basic services.

  5. MIG (CONT.) • Intended to supplement municipal capital budgets to fund backlogs in municipal infrastructure required for the provision of basic services. • Reality: MIG constitutes entire capital budget for most small and rural munics (B3s, B4s, C1s, and C2s). • To what extent does the administration of MIG contribute to low levels of spending of the allocation?

  6. MIG (cont.) • The MIG formula: B+P+E+N+M • B = basic infrastructure (new and rehab)=75% • Water and sanitation = 72% • electricity = 0% • Roads = 23% • Other = 5% • P = public munic services (new and rehab)=15% • E= social institutions and micro enterprises= 5% • N=nodal munics = 5% • M=MIG performance-based allocation

  7. MIG (cont.) • Easier to determine backlogs w.r.t basic infrastructure component of the formula (MIIF study) • P component: • Definition of municipal public services • How to measure backlogs? • M component – past poor performance caused by a number of factors

  8. LOCAL EQUITABLE SHARE (cont.) • The Vertical split of Equitable share is premised on the revenue-raising capacity of municipalities (significantly more than that of provinces). • Realities: • revenue base is not vibrant in majority of municipalities (especially B3s, B4s, C1s, & C2s). • Some municipalities use the LES for capex (plays a significant role) • The emphasis of the removal of infrastructure backlogs will put more pressure on operational budgets

  9. MIG (cont.) • The eradication of backlogs will not be met by MIG allocations only • Municipalities are expected to raise their revenue, including borrowing, • The capacity to raise own revenue to eradicate backlogs is questionable in most munics (B3 &B4)

  10. MIG (cont.) • The administration of MIG Needs review • The entire project cycle takes more than 18 months • Low capacitated municipalities spend the ES on Capital Projects much easier than MIG. • A mechanism needs to be found to encourage municipalities to spend the MIG quickly without violating the conditions of the grant

  11. NEIBOURHOOD DEVELOPMENT PARTNERSHIPS • MTEF ALLOCATIONS • NDP 2006= R50m • NDP 2007= R950m • NDP 2008= R1.5 Bn • Key issues: • The administration of the grant: will it be application/demand based? • Will the real partnerships kick in 2008? Will the 2006/7 allocations focus on technical assistance only? • Does this mean the public sector participation will be limited to Technical Assistance?

  12. CAPACITY BUILDING GRANTS • 2006/07 allocations • Recurrent grants for: • Municipal Systems Improvement = R200 million • LG Financial Management = R145 million • LG Restructuring Grant = R350 million and • Water Services Operating Subsidies = R500 million • The total allocation = R1,2 Billion

  13. CAPACITY BUILDING GRANTS (2) • Key issues on the Capacity grant • The key point here is the quality of spending of these capacity grants since 2000. • What is the impact of the grants on low capacitated munics • Are these grants talking to each other? eg MSIG, LFM and LGRG • What is the impact of DWAF support to WSAs? • Do these grants support Project Consolidate initiatives • The additional allocation for Project Consolidate is welcomed.

  14. CAPACITY BUILDING(3) • DBSA Support: • Work Out Strategies • Project Consolidate • MFMTAP • Siyenza Manje (LG Task Force)

  15. Other Sectors • ASGISA: • Ambitious Infrastructure Spend + 2010 World Cup : Depleted capacity of Construction Industry: Beware! Bottlenecks ahead • How to deal with pressure to spend? Will we get the right assets? Will we ignore the need for operational efficiencies? • Transport • Gautrain: comprehensive public transport strategy is essential • Transnet: Portnet: keep restructuring on the agenda, set up professional, well-resourced oversight

  16. Other Sectors (2) • Water Sector • NWRA & Water Boards: need for strict accountability • DWAF transfers of rural schemes: assets or liabilities? Too fast? • Other sectors dominated by parastatals • professional, well-resourced oversight.

More Related