2009/02/12

The three-year spend on municipal infrastructure which is the main conduit of funds to municipalities for capital spending to extend basic services (water, electricity, sanitation), and to build roads and sports facilities will more than double.

This is thanks to increases to the grant contained in Finance Minister Trevor Manuel's Budget which was tabled in the National Assembly on Wednesday.

"In the past three years, the municipal infrastructure grant programme has spent about R32bn. Over the next three years, infrastructure grants to municipalities total R67bn," Manuel told the House.

Noting that housing and the eradication of informal settlements remain at the forefront of infrastructure investment plans, and that they impact significantly on both employment creation and poverty reduction, Manuel announced that R45bn will be spent on the Breaking New Ground housing programme.

"Together with investment in roads and public transport, these constitute one of the largest areas of expansion of public sector spending, and are rightly prioritised as part of our response to the current deterioration in employment and economic activity.

The Budget review explains that of this appropriation, R500m is for the resettlement of 25,000 households living on dolomitic land in the Khutsong area. An amount of R120m is provided for the establishment of the Housing Development Agency, the purpose of which is to acquire, develop and release state, communal and privately owned land for residential use.

From the coming financial year, the municipal infrastructure grant is amended to take into account the difference between the larger urban and smaller rural municipalities.

According to the report on city finances drawn up, in 2007, the nine largest cities in the country contributed 64,5% to national gross value added. The Budget Review comments that these cities face the dual challenge of keeping pace with the demand for infrastructure expansion and maintenance to support economic activity, while serving the needs of their growing populations.

"For these cities the emphasis in future is to be on integrated planning, effective leveraging of municipal resources to eradicate backlogs, improved performance in the development of human settlements and effective asset management," the review says.

"For rural municipalities the focus is on addressing infrastructure needs for basic services and rural development." – I-Net Bridge