Thu. Nov 21st, 2019

Municipal cost containment regulations to apply from July

Municipal cost containment regulationsNew municipal cost containment regulations have suggested mayors should use public transport more often and severely restricted the use of consultants.

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A sweeping new range of municipal cost containment regulations formulated by finance minister Tito Mboweni, in conjunction with cooperative governance and traditional affairs minister Nkosazana Dlamini-Zuma, will come into effect in July 2019.

Municipal Cost Containment Regulations

A document gazetted by the national treasury has detailed some severe cost-cutting measures as the South African government continues to look for ways to reduce expenditure.

The regulations involve instructions for air travel, restricted the use of consultants, banning municipal credit cards, setting a limit on spending on cars for mayors and even encouraging them to use local transport.

It also set out instructions for each municipality to develope their own cost-containment policy, which must be delivered to treasury in writing and reviewed every 12 months.

The highlights

Vehicles

The threshold limit for vehicle purchases relating to official use by political office-bearers must not exceed R700 000 or 70% (VAT inclusive) of the total annual remuneration package for the different grades of municipalities.

Consultants

A municipality or municipal entity may only appoint consultants if an assessment of the needs and requirements confirms that the affected municipality or municipal entity does not have the requisite skills or resources in its full-time employ to perform the function.

Travel

An accounting officer:

  1. may approve the purchase of economy class tickets for all officials or political office bearers where the flying time for the flights is five hours or less
  2. may only approve the purchase of business class tickets for officials, political office bearers and persons reporting directly to the accounting officer for flights exceeding five hours.

Public transport

An official or a political office bearer of a municipality or municipal entity must:

Make use of available public transport or a shuttle service if the cost of such a service is lower than –

  1. the cost of hiring a vehicle;
  2. the cost of kilometres claimable by the official or political office bearer; and
  3. the cost of parking.

Credit cards

An accounting officer must ensure that no credit card or debit card linked to a bank account of a municipality or a municipal entity is issued to any official or political office bearer, including members of the board of directors of municipal entities.

Sponsorships, events and catering

A municipality or municipal entity may not incur catering expenses for meetings which are only attended by persons in the employ of the municipality or municipal entity, unless the prior written approval of the accounting officer is obtained.

Consequences of non-compliance

Failure to implement or comply with these Regulations may result in any official of the municipality or municipal entity, political office bearer or director of the board that authorised or incurred any expenditure contrary to these regulations being held liable for financial misconduct or a financial offence in the case of political office bearers

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