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Chris Heymans
T A B L E 2 . 5 Direct Transfers as a Share of Total Municipal Expenditure, FY 2002/03–FY 2005/06 Fiscal year Indicator
Total local government expenditure budget (R billion) National direct transfers (R billion) National direct transfers as a proportion of total local government expenditure (%) Provincial direct transfers (actual and budgeted) (R billion) Provincial direct transfers as a proportion of total local government expenditure (%) Total direct transfers (R billion) Total direct transfers as a proportion of total local government expenditure (%)
2002/03
2003/04
2004/05
2005/06
64.4 8.1
89.3 12.1
101.2 16.9
119.9 16.3
12.5
14.1
16.9
13.6
2.3
—
—
—
3.5 10.4
— —
— —
— —
16.1
—
—
—
Source: Personal communication based on budget data; National Treasury 2003b, 2004b. Note: — = not available. Totals may not add to 100 because of rounding.
Reform of local government grants has been a priority since the 1998 White Paper. The number of fiscal instruments has been reduced, but transfer allocations have moved from R 4.4 billion to R 8.1 billion between 1998 and 2003, and they are expected to grow to R 16.3 billion in 2005/06. It has been one of the highest percentage increases in the past two budgets, albeit off a low base. Whelan (2003a, 2003b, 2004) points out, however, that per capita increases for national and provincial services have been higher than those for local government in actual monetary terms. National allocations to local government are announced in an annual Division of Revenue Act (DORA), published to enhance predictability and transparency over a three-year period. Provincial treasuries are also required to publish their transfers to municipalities. Reporting requirements are stipulated in each DORA. Currently, every municipality receiving assistance under a grant program must submit monthly reports to the transferring national or provincial department. These reported are then submitted to the Treasury. In the cases of the financial management grant and restructuring grant, the National Treasury is the transferring department. Table 2.6
