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Auditor general: Only 34 of 257 municipalities achieved clean audits in 2022-23:
Poor audit outcomes in local government continue unabated, with only 34 of South Africa’s 257 municipalities obtaining clean bills of health.
Auditor general Tsakani Maluleke highlighted this stark finding when her office presented its 2022-23 consolidated general report on local government audit outcomes to parliament on Tuesday.
In her report, Maluleke called on “all roleplayers in the accountability ecosystem to work deliberately and with urgency towards a culture of performance, accountability, transparency, and institutional integrity that will ultimately result in a better life for the people of South Africa”.
The auditor general said despite commitments made by those concerned, the pace of improvement has been “slow, with little impact on the lives of ordinary South Africans”.
The trend of poor audit outcomes had persisted, with 36 municipalities regressing since the 2020-21 audit cycle, while only 45 showed some improvement.
Maluleke said many municipalities were stuck in a cycle of unqualified audit opinions on financial statements, but with findings on performance reporting and compliance with key legislation. She expressed concern that 77 municipalities had remained in this category since the end of the previous administration’s term, showing little effort to advance to a clean audit status.
While a few municipalities have maintained clean audits over several years, exemplifying sound financial and performance management practices, the overall picture remains bleak, she said. Compliance with legislation continues to be a significant problem, with 86% of municipalities receiving material compliance findings, slightly worse than in previous years.
Maluleke said 45% of municipalities did not comply with legislation on strategic planning and performance management.
“Additionally, 48% of municipal performance reports included unreliable or unuseful information, complicating efforts to assess municipal performance and address service delivery shortfalls.”
Maluleke urged national and provincial governments to intensify their support for municipalities, stressing the need for sustained efforts to improve their financial health and service delivery.
“Local government’s inability to comply with legislation remains a significant obstacle, with 86% of municipalities receiving material compliance findings. This marks a slight regression from previous years, with compliance findings at 85% in the last year and 83% in 2020-21,” she said.
Frequent delays, cost overruns and poor-quality work were cited as common problems, while new infrastructure was often not put into use promptly, and existing infrastructure continued to deteriorate because of inadequate maintenance.
Maluleke said poor financial management was still prevalent, with municipalities losing revenue because of inadequate billing and collection practices, and infrastructure neglect leading to water and electricity losses. Financial mismanagement directly affected service delivery, with unpaid creditors, including Eskom and water boards, threatening access to basic services for households and hindering business operations.
On a positive note, Maluleke said 18 municipalities, primarily in KwaZulu-Natal, Mpumalanga and North West, had moved out of the negative category during the current administration.
“Fourteen municipalities received disclaimed opinions in 2022-23, including two whose audits were finalised after the 31 March 2024 cut-off date for this report,” she said, adding that the support provided by provincial governments had led to positive signs of improvement.
Municipalities with clean audits, particularly those that have maintained this status over several years, generally exhibited sound financial and performance management practices.
“These municipalities manage projects effectively, adhering to timelines, budgets and quality standards, and have well-functioning control environments that support improved performance and service delivery,” Maluleke said.
“The submission of financial statements by the legislated date has improved, with 94% of municipalities meeting the deadline in 2022-23, up from 91% in 2021-22 and 81% in 2020-21.”
The late submission or non-submission of financial statements was the primary reason for the delayed completion of 2022-23 audits for 10 municipalities, although seven of these audits have since been finalised, Malulele said.
Landmark ‘Deadly Air’ case heads to supreme court of appeal:
The ongoing legal battle for clean air in South Africa will reach a critical point on Wednesday when the supreme court of appeal hears the Deadly Air case.
Led by groundWork and the Vukani Environmental Justice Movement, which are represented by the Centre for Environmental Rights, the case challenges the government’s failure to enforce regulations that would protect people from air pollution in the Highveld Priority Area.
The area includes parts of Gauteng and Mpumalanga and is home to 12 of Eskom’s coal-fired power stations, Sasol’s coal-to-liquid fuels refinery and an assortment of coal mining operations and other industries.
It was declared a priority in 2007 because of the dangerously high levels of air pollution, yet the “government’s inaction has continued to jeopardise the health and well-being of millions living nearby”, the Centre for Environmental Rights said.
In March 2022, the Pretoria high court delivered a landmark ruling affirming that the government’s failure to regulate air quality in the region was a violation of section 24 of the Constitution, which guarantees the right to an environment not harmful to health or wellbeing.
Former forestry, fisheries and environment minister Barbara Creecy appealed a critical technical point: whether the Air Quality Act’s provision that the minister “may” make regulations should be interpreted as “must” in this context. This is the argument that will now be presented before the judges.
In their heads of argument, the respondents said the residents of the Highveld Priority Area are exposed to air pollution that is harmful to their health. The department has estimated that the pollution contributes to about 10 000 premature deaths annually.
The respondents noted that in 2012 Creecy’s predecessor, Edna Molewa, created the Highveld Plan to address this environmental and public health crisis. But that plan “has no legal force” without regulations.
“The minister has the power, under section 20 of the … Air Quality Act, to create targeted regulations to implement and enforce this plan. Her own department has concluded that these regulations are necessary and have the potential to save lives. However, the minister has failed to promulgate regulations, almost 12 years later, with no explanation”, the respondents said.
Draft regulations were only circulated in 2021, long after the litigation was launched, but have still not been finalised. “In the face of this crisis and the department’s own conclusions on the necessity for regulations, can the minister lawfully fail or refuse to exercise her section 20 regulation-making powers?”
The high court had “answered no” for three reasons, the respondents said. “First, section 20 is a power coupled with a duty where the condition for its exercise is satisfied: the regulations are necessary for implementing and enforcing approved priority area air quality management plans in the Highveld Priority Area.”
On the uncontested facts, and the department’s internal assessment, the regulations are necessary, they said. “Second, this interpretation of section 20 is reinforced by section 7(2) of the Constitution, which requires reasonable and effective measures to protect and promote the constitutional rights of Highveld residents who are exposed to harmful air pollution.”
“Third, even if the minister is somehow vested with a discretion, the improper exercise of this discretion and the unreasonable delays in preparing regulations are reviewable under the Promotion of Administrative Justice Act.”
The department is challenging a “very narrow legal point”, Ntombi Maphosa, an attorney at the Centre for Environmental Rights, pointed out. “But I think it’s important to know in the sense that the department has known about the extent of the air pollution, especially in the Highveld, for decades now. They did an impact assessment study as far back as 2019 where they basically were trying to decide whether to prepare these regulations or not.”
The impact assessment was unequivocal on the dangers to Highveld residents and the failure of the Highveld Plan. The report emphasised that the plan had failed, in large part because of the absence of regulations to enforce it and that implementation regulations were necessary.
“Even with the study that they made, they are still trying to argue that the regulations are not necessary to implement key air pollution interventions,” Maphosa said. “The main points of our arguments are that the regulations are necessary in this instance because the high court found that constitutional rights are being violated because of the air pollution.
“As much as the department or the minister is not challenging that constitutional declaration, the fact that they now want to challenge the interpretation, impacts the health messaging which we want to keep prominent. The whole point is that these regulations are necessary to essentially save lives in the Highveld”, Maphosa said.
The appellant’s heads of arguments noted that on a proper interpretation, section 20 is manifestly permissive and “confers a discretion on the minister or the MEC but does not oblige them to act.
“The minister has the power to prepare, initiate and pass regulations. The power is discretionary; it is a ‘prerogative’. The minister retains the discretion to determine when it is appropriate or necessary to initiate and pass the regulations. Furthermore, should the minister or the MEC decide to exercise a discretion to promulgate regulations, section 20 permits her to decide on the content of any regulations and the timing of promulgation”, the appellant noted.
The minister’s heads of argument noted that if the “may” in section 20 is interpreted as creating an obligation, the result is that the “principle of separation of powers will be undermined”. If it is interpreted to be empowering and permissive, affording the minister or MEC discretion, the principle will be upheld. “The latter interpretation should be preferred.”
The second interpretation is capable of a meaning that upholds a constitutional principle. “Section 20 commences with the empowering part of the provision — giving the minister or the MEC the power to pass regulations. The provision is obviously permissive. This means the minister or the MEC has a discretion when to prescribe the contemplated regulations.”
There are instances when “may” may be interpreted as peremptory, meaning the
minister or MEC, in this case, is obliged to make the obligations.
“But the starting point in all legislative interpretation is the wording actually used. At the outset, therefore, it is clear that ‘may’ does not mean ‘must’.”
The making of regulations is plainly a form of law-making. “Regulations are promulgated
to facilitate the implementation of legislation. The minister or the MEC have a choice
whether to pass regulations as authorised in the Air Quality Act or not. A court should not
decide when it is necessary for her to do so.”
The minister has “already adopted air quality management tools” to address the air pollution in the Highveld Priority Area, which already promotes and supports the goals of the Highveld Plan as they give “legal effect to the Highveld Plan goals, coupled with appropriate penalties for non-compliance”.
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