Co-operative governance & traditional affairs minister Velenkosini Hlabisa’s multibillion-rand budget for 2025/26 received a mixed reaction from portfolio committee members, with some rejecting it as insufficient to turn around the embattled sector.
During the budget vote debate in parliament on Thursday, Hlabisa said co-operative governance had been allocated R410.9bn for support to municipalities and their entities, while traditional affairs was allocated R195.5m for transfers and subsidies, including support to the CRL Rights Commission.
Hlabisa said R57bn had been allocated for the municipal infrastructure grant to “fast-track basic services”; R4.1bn for the Integrated urban development grant to support spatial transformation; R474.6m for the municipal systems improvement grant to strengthen governance systems; and R1.63bn to support the Municipal Infrastructure Support Agent (Misa) and its deployment of technical capacity.
The debate comes as numerous government agencies have highlighted the shambolic state of local government, which lost R17.6bn over the past three years to fruitless and wasteful expenditure.
According to the auditor-general’s local government audit outcomes for 2023/24, there has been a slight increase in councils that received clean audits in 2023/24. A total 41 of the country’s 257 municipalities obtained clean audits, an increase from 34 in 2022/23.
In 2023/24, 99 municipalities received unqualified audit opinion with findings, down from 110 in 2022/23; 90 received qualified opinions with findings (83 in 2022/23); adverse with findings remained unchanged at six; and 11 municipalities received disclaimers, down from 15 in 2022/23. A total of 10 municipalities had outstanding audits.
The rot in local government spurred President Cyril Ramaphosa to use his state of the nation address in February to outline sweeping measures to turn around a sector buckling under the weight of pervasive malfeasance and systemic corruption that has resulted in billions being lost to fruitless, wasteful and unauthorised expenditure each year.
The entrenched issues facing local government have already attracted the attention of Operation Vulindlela, a joint initiative of the Treasury and Ramaphosa’s office, set up in 2020 to reinvigorate the economy.
The second phase of the initiative will focus on local government, which has drawn sharp criticism from business leaders and citizens for its failure to roll out basic services such as potable water, electricity, clinics and refuse collection.
During the debate, Hlabisa hailed the budget as anchoring “stability, resilience and deepening of democracy across spheres of governance”.
Regarding distressed municipalities, the minister said: “Working with National Treasury, where need be, we are going to use extraordinary means to compel municipalities who adopted 2025/26 unfunded budgets to review and adopt funded budgets. We have concurred with Treasury to compel the payments for water boards and Eskom, and pay pension and medical aid contributions to third parties.”
He said the same principle would have to apply to all government departments who owe municipalities: “they must be compelled to pay what is due to municipalities”.
In October 2024, Gauteng finance MEC Lebogang Maile said the province’s 11 municipalities were owed more than R130bn by households, commercial entities and organs of state.
The ANC, DA, Rise Mzansi, IFP and Build One SA, among others, supported the budget, while the EFF and ATM rejected it.
ANC MP Zweli Mkhize commended the budget, saying it addressed economic development and employment creation. “Local government must be fixed,” he said.
EFF MP Hlengiwe Mkhaliphi said the red berets rejected the budget, pointing to the dysfunction in local councils. These, she said, were due to poorly designed local government, adding the chaos bred corruption and malfeasance.
Freedom Front Plus MP Wouter Wessels said the local government sector was the biggest failure of government, as councils did not comply with legislation governing the environment and financial affairs.
Bosa leader Mmusi Maimane said: “There can be no sphere of government more important than local government … We will support the budget as we believe we need to bring change in local government.”
Standing committee on public accounts chair and Rise Mzansi leader Songezo Zibi said a more aggressive approach was needed to turn the ailing sector around. “We support the budget.”
Meanwhile, Hlabisa said the government had released R1.255bn to the Eastern Cape, KwaZulu-Natal, the Free State, Mpumalanga, Limpopo, and the North West to address the February disasters, with the Eastern Cape set to receive R504m of the funds.
“In relation to June disasters, we have received the assessments from all provinces at an estimated cost of R6.3bn. Our technical team, under Misa, is on the ground conducting verification to initiate recovery.”
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