BUSINESS DAY LIVE: Grants cut back, controls tightened

Minister Pravin Gordhan has reduced the number of bulk infrastructure grants for municipalities and adjusted their requirements and formulae. Local authorities’ underspending on grant allocations necessitated a review of infrastructure grants, Mr Gordhan said in his budget speech.

Conditional grants are contested and only the most compelling cases for infrastructure development usually qualify. However, the Department of Co-operative Governance and Traditional Affairs has seen persistent underspending of the grant in some cases and misuse of the allocation in others.

Mr Gordhan said the cost of building, maintaining, repairing and refurbishing bulk infrastructure was rising, as was the number of households around the country that would need to be connected to bulk services. Grants related to water infrastructure would be reduced from four to just two — the regional bulk infrastructure grant and the water services infrastructure grant.

Mr Gordhan said R11bn had been shifted over the medium term to direct allocations, allowing councils with the capacity to implement projects for themselves to do so. "We are mindful that municipalities face growing pressures from both the rising cost of bulk services and the rapidly growing number of households.

"Municipal capital spending exceeded R53bn in 2014-15. Yet we continue to see underspending on infrastructure in many local authorities," he said. The structural changes to the grant will allow municipalities to use conditional grants to refurbish existing infrastructure.

The water services infrastructure grant will fund construction and refurbishment of reticulation schemes and services in rural councils, while the bulk infrastructure grant funds large bulk water and sanitation projects.

Meanwhile, cities are implementing the new Spatial Planning and Land Use Management Act through land use densification and public transport projects with private sector buy-in. Mr Gordhan outlined 90 integrated land development programmes in seven metros where transport will receive investment. Read more here