there are, "Inadequate staff in the municipality to effectively provide the required services in the municipality."s8s
And "There is a lack of other important components within the organogram to effectively deal with lOP issues." Thus one of the objectives identified is to, " ... restructure the organogram to include other important components by 2003."587 As a result the lOP Financial Plan (Table 30) projects that the municipality will spend more than R4,8m on salaries wages and allowances in 2003 or slightly over 14% of its nett expenditure (R34,04m). However, if infrastructure expenditure and contributions to capital outlay are excluded from expenditure, (as they should be in determining operational costs) the salary, wage and allowance component rises to just under 44% of expenditure - the Auditor General regards wage!allowance expenditure in excess of 30% as unacceptable.s88
Comparing this expenditure to income is difficult as the financial plan lists only
"subsidies" (R32m) and "other income" (R34,04m) however since the difference is
about R2.2m (and this figure constitutes roughly the 'own income' of Ngqushwa) it would appear that the R34,04m 'other income' is in fact the total income (and balances exactly with expenditure) of which just under 94% is comprised of transfers or 'subsidies.' Bearing in mind that municipalities like Ngqushwa play very little role in the implementation of infrastructure projects (where most of the non-salary! allowance expenditure goes), in financial terms, it would appear that the main function of the municipality is to provide income for staff and allowances to councillors. This clearly contradicts the policy imperative for increased technical efficiency at municipal level;
Macroeconomic management measures to keep money creation and the public deficit at target levels have also been conceived of as ways of squeezing
greater efficiencies from municipalities.ss9
Apart from direct staffing costs, there were other 'institutional' costs associated with ensuring that staff became more effective and organised in their jobs. Considerable faith is placed in 'capacity-building' and the development of systems and policies in order to meet this objective. Indeed at one point the drafters of the Ngqushwa 2002 lOP suggest that municipalities were created to "empower" municipal staff and councillors:
One of the most important objectives of the municipality is to empower councillors and municipal staff through institutional capacity building and training.s9o
This was more than simply an 'in principle' commitment as the institutional plan and assigned budget shows:
Table 14: Ngqushwa Municipality 5-year Institutional Action Plan
Activity Cost Over 5 yrs
Capacity building for staff and
councillors R750 000
Instituting a skills development and
training plan R100 000
Formulation and implementation of Employment Equity and Affirmative
Action Plans R80 000
Formulation of HR and
administrative policies R80 000
Install computerised
administrative system R475 000
Develop and implement
communication plan R500 000
Total : R 1985 000
[Source: Ngqushwa lOP 2002 p88]
Thus Ngqushwa municipality, with an own income of just R 2057 999 in 2002, planned to spend nearly R2m over the next 5 years purely on staff and councillor development and associated administrative systems and policies. In addition, its expanded staff complement and administrative systems would require new office and workshop accommodation at the cost of R3,5m.591 Significantly, the need for this expenditure is created through policy -a policy framework that places unprecedented reliance on the formulation of plans. Thus the municipality is confronted with the legal requirements to have skills development and training plans, employment equity plans and communication plans. The only certain
outcome of which was that planners and conSUltants would continue to gain further income from the Ngqushwa municipality for the next five years.
Thus the planning process itself served to defeat one of its main objectives; that of using limited financial resources within the system to maximum public benefit;
In a 1999 Department of Finance circular, municipalities were directed to define and stick to their 'core' activities (Department of Finance 1999). The IDP process has been suggested as a means of defining that core, with cost benefit analysis playing a key role within the process. The linkage between the IDP and the budget, obliged in legislation, is an attempt to facilitate the shift in expenditure patterns. 592
What could explain the planners reckless endorsement of further inflated internal costs in a context where the municipality was already expending an unreasonable percentage of grant income on staffing overheads? One obvious explanation is that planners did not regard the financial sustainability of Ngqushwa municipality as pertinent to the planning brief. With the formula driven, non-discretionary equitable share transfers in place, the National Treasury was able to exercise little control over how municipalities used these transfers. The main instrument available to the treasury to curb municipal expenditure was the budget cap. Although these ceilings on increases in municipal budgets became tighter between 1997-1999, the 'cap' did not effect the internal allocation of expenditure within the budgets93
It is also evident that the respective national departments did not share the same imperatives. In contrast to the abovementioned position of the Treasury, the
Department of Provincial and Local Government did little to prevent the ratcheting up of municipal salary bills during the 1999 I 2000 transitional period when virtually all municipalities were disestablished and re-established. Anticipating the need to make 'acting' appointments in the case of municipal managers and other senior posts, the Special Task Team on the Establishment of municipalities recommended:
... that employees be compensated on the basis (of) the highest graded administration in the newly established municipality.594
The Task Team favored the appointment of senior managers on performance linked contract rather than fixed salaries. 595 The Team argued for private sector linked salaries and that municipalities were "part of the wider Human Resources market and must compete therein for suitably qualified and experienced personnel."596 Given the lack of staffing capacity already outlined, these comparisons were inapt. Another factor may have been the reluctance at provincial level to confront problems of municipal staffing arising from the perceived political risks of standing in the way of informal 'job creation strategies.' This crude interpretation of job
creation was based entirely on the expansion of municipal bureaucracies. On the face of it, this could be interpreted as a strategy whereby, local elites were 'bought off' to retain their loyalty to the party and the 6-year old government.
This was matched by a reluctance to confront organised labour on the need for retrenchments. Whelan interprets escalating salary bills as yet a further indication of incapacity in local government:
The capacity of employer representatives to negotiate affordable salary increases is critical, as municipal services are currently labour intensive and labour costs make up a large component of the costs of services (Van Rhynevled 1998). Salaries are also one of the elements that constitute transitions costs. Judging from the inflation increases in personnel costs that have occurred since 1996, it would appear that local government has limited capacity in negotiating affordable wages.
However inflated wage scales were only one element of the problem as the
massive increase in the number of posts for Ngqushwa illustrates - a problem that emanates at a fairly high policy-making and political level and which is not simply due to poor negotiating skills by the employer body (SALGA).
Why was planning unable to reveal and reverse these irrationalities? One obvious explanation is that the planners themselves were in a client relationship with the new municipal elite. A planning consultant who suggested that the municipality was overstaffed, was paying salaries not commensurate with skill levels and in addition had too many full-time councillors on the pay roll, could not look forward to future appointments. Eastern Cape lOPs generally reflect a situation where the planners are dictated to by council and thus endorsed populist strategies that avoided the hard questions that lie at the root of planning ie rationality and affordability.
Whatever the motivation, the effect was clear. With all its claims to rationality and financial prudence, the lOP served to regularise very doubtful practices in the deployment of public finance. The Ngqushwa lOP developed a technical planning rationale for short-sighted policies that were mainly in the interests of staff and municipal councillors.
Local and regional political forces and their impact on planning services and consultants is an under-researched topic and the comment reflected in this paper is based on the experiences of a participant-observer rather than a formal research process. It is possible that an investigation into this relationship between planning and politics could do much to explain why planners simply omitted to deal with
certain fundamental municipal issues. Instead the lOP program continued to focus on data and its extrapolation. The implied need is for a more comprehensive and scientific assemblage of data which would quantify the municipality's development priorities in technical terms thus creating the opportunity for professional/technical solutions. In many cases the planner's call for specialist support masked the fact that municipal officials were not doing their job either due to incapacity or due to weak performance. The Auditor General shared this concern:
Cognisance is taken of the action taken in employing consultants to assist failing municipalities. However, this in itself is seen as a short-term solution that could result in fruitless expenditure, especially where existing financial staff are already remunerated to do the task. 59?
The example of the Hamburg town clerk during the time of the Afesis-corplan (1999) lOP report gives some indication of how 'incapacity' arises. The Town Clerk had been in his post from 17 March 1997 to April 1999 and was suspended at the time of the research. He had no professional qualification and no training or experience as a town c1erk.598