1. Presentation to the Standing Committee on Appropriations DEVOLUTION OF PROPERTY RATE FUNDS GRANT
12 OCTOBER 2010 1

2. Devolution of Property Rate Funds2

3. Spending against transfers received

4. Issues affecting spending
Uneven billing across municipalities leads to uneven expenditure by provinces (e.g. Gauteng);
Inadequate billing systems or internal capacity in predominantly rural municipalities (e.g. Eastern Cape & Limpopo);
Disputes between provinces and municipalities over the accuracy of invoices (e.g. Gauteng);
Disputes regarding the actual ownership of certain properties and the rating of “mixed use/ownership” properties (e.g. farm schools);
Slow payment by certain provinces (reasons given include poor internal capacity in provincial departments to verify accounts);
High levels of inflation in the rating of government properties in certain municipalities (e.g. Free State);
Opening balances on devolved properties;
Legislative clarity being provided as it relates to the rating of PSIs (Public Service Infrastructure);
Deeper issues around the actual transfer of properties to provinces. Is the process complete? (Certain provinces are still receiving notification that previously unregistered properties have been transferred to them).

5. Actions to address challenges
Certain provinces (e.g. KwaZulu-Natal and Western Cape) have created inter-governmental forums between the province and municipalities to address challenges related to rating, billing and payment.
Amendments to the MPRA to address rating ratios and the rating of PSIs have been proposed by the DCOGTA. Pending approval by Cabinet, these will be presented to Parliament in due course;
Notwithstanding the capacity challenges, the implementation of GIAMA as well as the process outlined in the DoRA framework, should see an improvement in the management of properties, and therefore the speedy payment of property rates;
Payment challenges regularly affect different spheres of government. Both the National Treasury and the Auditor-General have consistently highlighted non-compliance with Treasury Regulation 8.2 in this respect. The audit findings as it relates to late or non-payment of suppliers, municipalities, etc are annually presented to SCOPA committees of legislatures and Parliament.
Direct engagements and arrangements between accounting officers of different spheres should be encouraged. Accounting officers are responsible for ensuring that payment issues do not degenerate into intractable conflicts between agencies of the state.

6. THANK YOU