FINANCE Minister Pravin Gordhan has given municipalities an extra R5billion over the next three years — though a recent Treasury report revealed that local governments underspent their capital budgets by R11.3-billion last year. Provincial governments got an extra R20.2-billion, though much of it will be used to pay "higher-than-anticipated wage agreements" for public sector workers.

Treasury figures dated June 30 showed that North West had underspent its capital budget by 52%, Limpopo by 42% while Free State and Mpumalanga's underspent by 39%. Eastern Cape underspent by 38.5%, Northern Cape by 31.4% and Western Cape by 25.6%. KwaZulu-Natal by 24%, while Gauteng fared best with an underspend of 16.9%. Gordhan said R2.8 billion of the R5billion cash injection would go to municipalities in the form of conditional grants to electrify informal settlements and speed up the delivery of serviced sites for poor families. But his own figures showed that he gave the electrification programme R1-billion in 2010, but municipalities failed to spend R126-million of this.

Conditional grants in total were underspent by R4.4-billion in 2010. Deputy Finance Minister Nhlanhla Nene told a press conference at Parliament yesterday that the reason for underspending, particularly on infrastructure, was "poor planning and a lack of capacity to deliver". Injecting another R5-billion into local government was "a demonstration that we want to build this capacity, but also that [we are] targeting infrastructure development as one of the key drivers of our economy" Nene said. Gordhan said he would not stop pumping money into municipalities just because they had underspent in the past. "What we also want to do is look at alternate delivery mechanisms. There is a lot of work going on at the moment, which we are not ready to talk about. It looks at how we deliver some of the things we want, on scale. We are still a young state, we have to build up this capacity," Gordhan said.

Of the R5-billion being given to municipalities, R2.2-billion goes to the local government equitable share, which is spent on providing municipal services. The other R2.8 billion will be given to municipalities in grants, with the urban settlements development grant and electrification grant being increased. Both these grants focus on setting up serviced sites for poor households, and electrifying informal settlements.

Cosatu slams wage control for workers in public sector. COSATU general secretary Zwelinzima Vavi has sharply criticised Finance Minister Pravin Gordhan's budget statement, in particular the wage restraint for public sector workers. "Government is trying to enforce an un-negotiated wage policy as part of its New Growth Path policy. The problem with that is that it can enforce one-sided wage moderation because it has instruments to push it down the throats of the public sector workers. "Private sector bosses will read this as a signal to follow suit. So at the end there will be wage moderation for the working class but government has no instrument to enforce a wage moderation on company CEOs who earn obscene salaries and bonuses," Vavi said.

Cope has called on government officials to lead by example and cut down on spending public coffers. "This figure is higher than it has ever been. In 2012 it will amount to more than R1-trillion. The Presidency and ministries must lead the way on this. "It is cooling down time and time to save. Ministers must spend less on luxurious hotels and cars. "We must address the 'reckless spending' perception created by departments and ministers. It is crucial that we enter into 'savings mode'," it said.

The party said Gordhan should come out stronger on these issues. Civil advocacy group Black Sash said the government must include a "social justice" clause in its tenders to ensure that those awarded such tenders do indeed create jobs. It said the move would go a long way in ensuring that government tenders do not only enrich an elite few. The Black Sash would like to see more guarantees that this spend will reach vulnerable households through decent work," said advocacy officer Phelisa Nkomo.