1. PRESENTATION TO PORTFOLIO COMMITTEE ON PUBLIC WORKS VERIFIED GOVERNMENT DEBT OWED TO MUNICIPALITIES AND PAYMENTS 24 MAY 2016 DEPARTMENT OF PUBLIC WORKS 1

2. Part 1: Verified government debt owed to municipalities Part 2: Payments processed to date Part 3: Key challenges and Recommendations 2 Contents

3. 3 Part 1: Verified government debt owed to municipalities

4. Verified Government Debt Summary 4

5. Verified Government Debt (Per Province) 5

6. Verified Government Debt Per Custodian 6 The tables above shows the custodian department debt for National (R1.08 billion) and Provincial (R2.6 billion) spheres of Government

7. Government Debt Sign-Off Report Progress 7  75% of reports have been signed off and the verified debt submitted to the responsible debtor departments for confirmation and settlement.  16% of reports are awaiting sign-off from municipalities.  4 % of reports are in progress and on target for completion.  5% of municipalities have provided inadequate data to progress with the verification.

8. Government Debt Owed by National Departments 8

9. Government Debt Owed by Provincial Departments 9

10. 10 Part 2: Payments processed to date

11. 11 The table below depicts payments made by the national Department of Public Works for arrear rates & taxes as well as municipal services for 2015/16: Verified Government Debt and Payment by NDPW

12. 12 Part 3: Key Challenges and Recommendations

13. 13 Process Unrealistic budget allocation – debtor departments do not have sufficient allocated budget to address historical debt for property rates and municipal services. Inadequate processes to track the government property portfolio, including determining ownership, registration, surveying and transferral of properties. No standard naming conventions or guidelines for property management across the municipalities. Inconsistent property rates tariffs charged by municipalities. People Poor inter-government relations, especially across the spheres of government (national, provincial and local). Capacity constraints within departments to manage their property portfolio and verify municipal debt claims for property rates and municipal services. Inefficiencies in the management of revenue collection within municipalities due to capacity and competency constraints. Technology No integration of systems across the government spheres, resulting in duplication, manual intervention and loss of critical data such as historical billing records. Inconsistent billing formats and reports across the systems used by municipalities Insufficient governance and management of critical billing data. For example, loss of data during s ystem changes. Key Challenges

14. 14 Sourcing budgets to address historical debt and review the current process for allocation of budgets to municipalities; Departments and municipalities to work together to improve revenue collection in municipalities and billing anomalies; Section 21 schools to consider prepaid services to avoid consumption without payment; Custodian departments to play a more active role in ensuring complete and accurate asset registers that can link to municipal systems; Government to consider implementing minimum standards for property management & reporting to be adhered to by all spheres of government, including standard naming conventions; Foster better relationships between government departments and avoid operating in silos; Consider implementing an integrated management system for all municipalities to submit invoices and department submit payment schedules to assist with allocation of payments. Furthermore the system can be used to track properties and associated municipal accounts. Recommendations

15. 15 Mziwonke Dlabantu Director General: Department of Public Works