REPORT OF THE AD HOC COMMITTEE ON PROVINCIAL AND LOCAL GOVERNMENT ON BUDGET VOTE 5: PROVINCIAL AND LOCAL GOVERNMENT, DATED 17 JUNE 2004.
The Ad Hoc Committee on Provincial and Local Government, having considered Budget Vote 5: Provincial and Local Government, reports as follows:
B. PARTICIPANTS IN THE BUDGET HEARINGS
C. POLITICAL OVERVIEW OF THE BUDGET
7. The Minister emphasized the important role the Committee has in monitoring the Ministry and Department and ensuring that deadlines are met. The Committee also has a crucial role in mobilising sections of society in playing an important role in matters of governance and development.
8. The Committee congratulated the Minister and Deputy Minister on their appointments and wished them well. The Committee welcomes the Minister’s presentation. It was pointed out that there is considerable synergy between the approach set out by the Minister and that of the Ad Hoc Committee. It was noted too that many of the issues raised by the Committee previously were being addressed by the Ministry and Department. The Committee welcomes in particular the decision that all provinces will finalise Provincial Growth and Development Strategies in this financial year. The Committee continues to express its concern however about the transfer of water projects from the national department to municipalities. Many municipalities are not yet ready to take over these projects. The hand-over should be phased in, taking into account the specific capacity of each municipality. Essentially, the Committee stresses that we believe that the two big challenges for local government are in the areas of finances and capacity-building, and much of our programme over the next five years will be oriented around this.
9. The Committee’s work has focused mainly on local government. The Committee is not clear about what precisely its role is in respect of provincial government. The Committee needs to engage with the relevant authorities in parliament to arrive at a clear definition of this. The Committee’s role will have to take into account the provisions in the Constitution on provinces as a sphere of government, the role of the provincial legislatures and the National Council of Provinces, and other considerations.
10. The Committee believes that with our legislative load having been reduced, there will be more time over the next five years to more effectively fulfill our oversight role.
D. STRATEGIC PLAN AND OVERVIEW OF BUDGET
R12, 8 billion this financial year, an increase of 35,8% over the medium term. The budget is expected to increase to R14,3 billion in 2005/6 and R15,9 billion in 2006/2007.
R4,4 billion is earmarked for this year. The aims of the MIG essentially are to improve access to basic services, facilitate Local Economic Development (LED), and increase job opportunities. A major focus of the infrastructure programme will be the 21 urban and rural development nodes.
E. ADMINISTRATION (PROGRAMME 1)
R 88 266 000. 75% of this is allocated to corporate services.
2. The Department finalised its restructuring process in March and has now streamlined its functions. This has allowed for better planning and strategic direction.
F. GOVERNANCE, POLICY AND RESEARCH (PROGRAMME 2)
1. The allocation to this programme has increased by 36,5% to R 26 978 000. The key sub-programmes are Intergovernmental Relations (IGR), Provincial Coordination and Support, Development Planning, LED and Traditional Leadership and Institutions.
2. R6 641 000 has been allocated to the IGR sub-programme. This represents an increase of 36,8% from last year.
3. The Department, over the past financial year, completed a draft IGR Bill and framework; phase one of the review of Schedule 4 and 5 powers and functions; an assignment framework; and amendments to the Municipal Systems Act.
4. The priorities for 2004/5 in the IGR sub-programme are to introduce the IGR Bill to parliament; secure Cabinet approval of the IGR framework; complete phase two of the review of schedule 4 and 5 powers and functions; secure cabinet approval for the assignment framework; and finalize a policy framework for implementing sections 100 and 139 of the Constitution.
G. URBAN AND RURAL DEVELOPMENT (PROGRAMME 3)
1. R 9 878 000 has been allocated to this programme, representing an increase of 67,5% over last year. The allocation for monitoring and evaluating the Urban Renewal Programme (URP) and Integrated Sustainable Rural Development Programme (ISRDP) has been doubled.
2. The Department does not use consultants to co-ordinate this programme anymore, but has established a branch to do so.
3. Over the past financial year all nodes have finalised their IDPs; PIMS Centres have been established and the Independent Development Trust delivery structures have been put in place in the ISRDP nodes; political and technical champions have been determined; anchor projects have been increased in respect of scope and content; and a communication strategy developed.
R168, 5 billion in December 2003, and the investments by the national departments was R5, 9 billion.
R4, 2 billion.
6. The challenges confronting this programme include the need to optimize funding to nodes via nodal financing protocols; a target funding mechanism for the nodes; capacity-building; greater variety of nodal projects, in addition to infrastructure; and improved co-operation across the spheres.
7. The Committee finds it difficult to get a clear enough sense of progress in respect of this programme. The Committee is to visit the nodes next year. The Committee welcomes the greater emphasis being paid by the Department on monitoring and evaluating this programme. The Committee feels that the Department should communicate progress on this programme to the public. This programme constitutes an important test of the government’s capacity to deliver and also the quality of our IGR system. It is also an important test of the capacity of public representatives in all three spheres, the private sector and civil society generally to accelerate delivery and development. All of us have a role to play in ensuring the effective implementation of this programme.
H. SYSTEMS AND CAPACITY BUILDING (PROGRAMME 4 )
1. The decrease from R74 481 000 last year to R 64 819 000 this year for this programme is due to the roll-over of funds from the 2002/03 financial year to the 2003/04 financial year which had the effect of inflating the allocation in the latter year.
2. With most of the legislation defining the new system of local government finalised, the Department will be concentrating on strengthening the system and building the capacity of municipalities to implement the new model and accelerate service delivery and development.
3. Over the past financial year, the Department processed the Property Rates Bill through parliament; finalised the "equitable share" modeling; submitted proposals on funding municipal health; introduced a new web-based system for monitoring municipal finance; commenced a study on the remuneration of councillors; held a conference on and finalised guidelines on ward committees; finalised the Disaster Management Framework; and launched the Vuna Awards for best performing municipalities
4. In the present financial year, the Department intends to finalise policy on the incorporation of local government employees into a single public service; introduce a regulatory framework for the abolition of cross-boundary municipalities; introduce legislation on the rationalization of outdated legislation; launch an anti-corruption campaign; complete an audit of municipal capacity; finalise a training programme for new councillors; implement a web-based early warning system and data-base on municipal transformation; finalise the division of fiscal powers and the restructuring of the RSC levies; finalise indigent policy; and launch the Local Government Leadership Academy, as well as attend to several other matters.
5. The Department reported that through its revenue enhancement programme it recovered R 900 000 000 owed by government departments to municipalities.
6. The Department is finalising work on assisting municipalities to sell a part of their debtor’s book to the private sector.
7. The Committee welcomes the more streamlined and focused approach of this programme. The Committee would like to focus in particular on local government capacity-building. The Committee intends to follow up on the capacity-building and training workshop it organised last May. The follow-up workshop will be held within the next six months. The Committee still feels that there is a need for greater co-ordination of the various service providers who offer capacity-building programmes. Some of these programmes are far from adequate and certainly do not offer value for money. The Department is requested to attend to this in co-operation with SALGA. The Committee welcomes the pending establishment of the Local Government Leadership Academy and would like to see the Academy address the constant concerns the Committee has raised about the inadequacies of capacity-building and training programmes. The Department should consider organizing a major conference on local government capacity-building and training along the lines of the successful Conference on Ward Committees it organised and develop guidelines for municipalities and service providers on capacity-building and training.
8. The Committee recognises that many municipalities lack the capacity to raise the arrears due to them, and the private sector can play a useful role in this regard. But the Committee is concerned that with the engagement of private sector agencies there would be a drastic increase in service cut-offs for people who cannot pay for services. The Committee feels that the Department should provide very firm guidelines in terms of which municipalities may engage the private sector to retrieve arrears owed to them. Any private sector engagement must be located firmly within a more developed indigent policy. Provision should also be made for the transfer of skills from the private sector to the municipalities so that they are better equipped to retrieve their own arrears over time.
9. The Committee would like to get a better grasp of the debt owed to municipalities and the Department’s comprehensive responsive to this, and will meet with the Department within six months to pursue this.
I. FREE BASIC SERVICES AND INFRASTRUCTURE (PROGRAMME 5)
R28 989 000, an increase of 52,4%. The most significant increase is for municipal infrastructure, which goes up from R11 662 000 to
R16 662 000.
2. The number of people receiving free basic water has increased from 24,5 million in 2002/3 to 26,3 million in the 2003/4 financial year. 258 000 households are currently receiving free basic electricity, and 266 000 households benefited from the provision of sanitation in the last financial year.
3. The target for this financial year for the free basic services programme is to increase access to these services to 50% of households where infrastructure is available.
4. The Department believes that there needs to be better co-ordination of social grants with municipal indigent policies. The Department intends to finalise a national policy on the indigent during this financial year. The Department is working on what it costs to provide free basic services as part of the process of reviewing the "equitable share" allocation to local government. The Department is also undertaking work on how to develop a credible database on poor households and improve billing systems. The Department is seeking to strengthen its monitoring of the delivery of free basic services.
5. In respect of the CMIP Programme, which has been incorporated into the MIG, R2, 246 billion was transferred in 2003/4 to municipalities for infrastructure. Almost 43% of this was allocated to the nodes. 336 small, micro and medium enterprises were utilized. A MIG Policy Framework has been finalised and a MIG and letters of allocation sent to receiving municipalities.
6. In terms of its MIG sub-programme, the Department intends in this financial year to establish a MIG unit; develop a monitoring system; organise MIG workshops for municipalities; and carry out an independent macro control audit of the local programmes.
7. In terms of the Municipal Services Partnerships (MSPs) sub-programme, the Department established a national MSPs Task Team; organised a stakeholder workshop; conducted training for 360 councillors and officials; and formed a Support Unit for the Public Provision of Services.
8. In this financial year, the Department intends to undertake an audit of MSPs; finalise MSP guidelines; hold provincial workshops; develop an exit strategy for MIIU; conduct MSP training; and hold an international conference on service delivery and development.
9. In terms of its Public Participation and Empowerment sub-programme, the Department is to facilitate effective participation of communities in municipal decision-making.
10. The Department is also supporting the role of CDWs. It is to organise a CDW National Stakeholders Workshop. 740 CDW learnerships are in progress.
11. The Department also intends to take forward its programme to empower ward committees.
12. The Committee welcomes the significant increase in allocation to this programme for the full roll-out of free basic services. Municipalities will need more money, but they will have to develop the capacity to spend the money currently allocated more effectively to make the case for more money. The Committee is concerned that in some municipalities households end up paying for the first 6000 litres of water as soon as they pass the threshold. A stepped tariff system is not operative. The Department is requested to co-operate with SALGA in attending to this. The Committee awaits the finalisation of the indigent policy with keen interest.
13. The Committee feels the Department will have to be very supportive to municipalities in their roll-out of infrastructure. While recognizing the importance of private sector investment in municipal service delivery, the Committee welcomes the establishment of the Support Unit for Public Provision of Services. The Committee believes that the Department has a crucial role in developing CDWs. It would also like to see the Department effectively fulfill its sub-programme on community participation and empowerment.
J South African Local Government Association (SALGA)
K NATIONAL HOUSE OF TRADITIONAL LEADERS
1. The National House of Traditional Leaders has been allocated R6 788 000, an increase of 11% over last year.
2. Over the past financial year the House consolidated its structures and focused on the Property Rates, Traditional Leadership and Governance Framework, and Communal Land Rights Bills. It also tried to address issues around poverty, unemployment and HIV/AIDS
3. In this financial year, the House intends to improve its working relationship with organizations within and outside the government, and intensify its programmes related to poverty alleviation, unemployment, HIV and AIDS and other diseases. The House has just organized a successful Conference on Initiation Schools.
4. The House believes that relations have improved with the government and parliament over the past financial year. However, the House believes its budget is inadequate, especially in view of the role traditional leaders have to play in terms of the Traditional Leadership and Governance Framework Act and the Communal Land Rights Bill. About 53% of the budget is spent on travelling and about 15% on allowances. The House feels very strongly that it needs a chamber in Cape Town to have its meetings. Three options have been identified: the use of the Old Assembly Chamber of parliament; the use of another building owned by the Department of Public Works, if a suitable building can be found; or the construction of a new building.
5. While the House believes that many of its concerns have been addressed in the Traditional Leadership and Governance Framework Act and the Communal Land Rights Bill, there are still outstanding issues that have to be pursued. The House maintains that the Constitution and the Municipal Structures Act still need to be amended.
6. The House is keen on becoming more active in NEPAD activities, and is working with traditional leaders in other countries on the possible establishment of a continental organization of traditional leaders.
7. The Committee believes that there has been significant progress in addressing the needs of the traditional leaders over the past year, particularly with the adoption of the Traditional Leadership and Governance Framework Act and the Communal Land Rights Bill. The House may have a case for an increase in its budget if it is to fulfill responsibilities set out in these two pieces of legislation – but its case would be strengthened if it used the money currently allocated to it more effectively. The Committee requests the Department to assist the House in reporting adequately on the use of its budget to parliament. While recognizing the challenges posed in dealing with matters of tradition, the Committee feels that the House should set out more clear targets to be achieved during a financial year and report on progress in achieving this. There needs to be an alignment between rands and cents spent and outcomes. To the extent possible and appropriate, the Committee will seek to offer assistance to ensure more effective reporting by the House. The Committee will seek to meet the House within the next six months to explore the possibilities of this, and discuss further issues.
8. The Committee has no authority to respond to the House’s request that it be allowed to use the Old Assembly Chamber for meetings. The matter will be raised with the Speaker.
9. The Committee requests the Ministry and Department to facilitate the enactment of provincial legislation in terms of the Traditional Leadership and Governance Framework Act and the formation of the Commission on Claims and Disputes relating to Traditional Leadership within this financial year.
L Local Government, Water and Related Services Sector Education and Training Authority (LGWSETA)
3. The LGWSETA reported that the compliance level of municipalities submitting WSPs in the 2002/03 financial year was 54% and in the 2003/4 financial year was 69%. Part of the non-compliance was due to fact that municipalities did not allocate staff to develop WSPs or did not have staff with the skills to do so. The LGWSETA spent R5 000 000 on the empowering and capacity building of Skills Development Facilitators in the 2003/4 financial year.
5. In the last financial year LGWSETA rolled-out various programmes, including on Adult Basic Education and Training; skills development facilitation; project management training; contract management training; water learnerships; finance and administration learnerships; community development workers; and councillor development, among others. About 10% of its learnerships are for the unemployed.
6. The challenges for this financial year include ensuring effective co-ordination between different institutions facilitating training in the sector, including SALGA and the Department; monitoring and evaluating the quality of the training that LGWSETA is providing; and getting more employers to take learners, especially the unemployed, on learnerships. The LGSWETA said that it saw its training of CDWs as very important.
7. The Committee welcomed the LGWSETA’s comments that it had substantially addressed its governance problems. The Committee feels that the report given by the LGWSETA is much better than in previous years, but finds it difficult to really assess the outcomes of the LGWSETA’s work. The Committee would like to see a better alignment between the LGWSETA’s priorities and outcomes and the government’s priorities on job-creation and fighting poverty as it applies to the local government sphere. The Committee stresses the importance of the role of CDWs. The Committee has requested the LGWSETA to provide it with a list of the municipalities which have failed to provide WSPs. If any of these municipalities fall within the constituencies of members of the Committee, members will over the July constituency period approach these municipalities to encourage them to complete their WSPs.
8. The LGWSETA will be invited to the capacity-building and training workshop to be held later this year where matters will be pursued further. Should time permit and the need arise, the Committee will also arrange to meet the LGWSETA separately later this year.
M. Municipal Demarcation Board
2. A new Board was appointed with effect from 1 February 2004. The Board’s main activities over the past year have centred around boundary re-determinations; preparations for the ward delimitation process in 2004/5; the identification of non-viable municipalities; the adjustment of provincial boundaries to dispose of cross-boundary municipalities; a categorization study for possible future metropolitan areas; a study on district management areas; and assessments of the capacity of municipalities to perform their powers and functions.
3. The main focus of the Board in this financial year will revolve around preparations for the next local government elections. The Board is to review all ward boundaries. It also receives a significant number of requests to review municipal boundaries, and also corrects boundaries technically on an ongoing basis. The Board intends to complete the review of all ward boundaries by March/April 2005 so that the Independent Electoral Commission has adequate time to prepare for the elections. Depending on funds, the Board will, during this financial year, also continue work on municipal boundaries; annual capacity assessments of municipalities; a study on poor performing municipalities in terms of their powers and functions; the identification of non-viable municipalities for possible redemarcation; a study on future metros; a study on the performance by municipalities of the roads and transport functions; and the future of District Management Areas.
4. The Board raised the need for amendments to legislation and the Constitution affecting cross-boundary municipalities and other legislation affecting the Board’s work to be passed as soon as possible.
5. The Committee congratulated the members of the new Board, particularly its chairperson, Dr V Mlokoti, and wished them well. The Committee welcomed the Board’s work on non-viable municipalities, and referred to the Committee’s views on this expressed in various reports. The Committee will raise with the Minister and Department deadlines around the introduction of legislation relating to cross-boundary municipalities.
6. The Committee acknowledges that the Board has much work to do regarding the next local government elections, and feels that its case for increased funding is credible. The Board is requesting a minimum additional allocation of R5 553 000. The Committee, unfortunately, does not have the technical resources to undertake an effective audit of the Board’s case – but it seems a reasonable case. The Committee has, certainly, constantly observed that the Board has run a very tight ship, and used its limited resources in a very productive and effective way. Of course, it may be true that at times in the past some of the work undertaken by the Board had, strictly speaking, not been firmly within its mandate – but the work has been useful nevertheless. In view of the nature of the Board’s work this year, it does not seem reasonable to expect the Board to make up the shortfall in funds completely from donors. Government should at least ensure that sufficient funds are allocated to the Board so that it can comply with its legal obligations. Given the Board’s very effective use of its resources and its responsibilities to prepare for the next local government elections, the Committee feels the Board’s case for increased funding should be seriously considered. The Board indicated that the Department was considering allocating some funding, if possible. The Committee requests the Department to give sympathetic consideration to this. The Committee also believes that further representations should be made by the Board and the Department to the Treasury for increased funding for the Board, provided the Board presents a fully convincing case for this. The adjustment appropriation processes could cater for this.
N. Municipal Infrastructure Investment Unit (MIIU)
last year to R10 600 000. In addition to the R10 000 000 that the MIIU received in the last financial year from the national fiscus, the unit raised R1 400 000 from USAID, R3 500 000 from Cities Alliance and R2 540 000 from DFID.
2. The MIIU reported that a considerable part of the time of its limited staff was spent on meeting the requirements of the Public Finance Management Act (PFMA). The compliance costs made up about 20% of its operational budget. While it recognized the importance of the PFMA, the MIIU was not sure that it was fair to expect a small organization like it to meet the onerous requirements of the PFMA in the way that other larger public organizations are required to.
3. During the past financial year the MIIU’s work contributed to at least a further R1,8 billion being invested in or lent by the private sector to municipalities. In all, MIIU has contributed to about R7,5 billion in capital and skills being raised since its formation in 1998. The MIIU completed 9 projects during the last financial year. The MIIU has undertaken a further 12 projects on solid waste disposal, sanitation and water. The MIIU explained that previously most of its projects were on solid waste but now its focus is on water and sanitation and non-core services. The MIIU explained that many projects were held up at the feasibility stage because of the rigorous standards that had to be met. The MIIU had also done work on electricity ring-fencing and the restructuring of the electricity that it would like to share with the Committee at some stage.
O. Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities
1. The Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities was established in December 2003, with 18 commissioners. It spent 17,5% of its R9 140 000 budget. The Commission and the Department are requesting National Treasury to allow the unspent R6 700 000 to be carried over to be used partly to cover the cost of the National Consultative Conference to be organized by the Commission in late November this year. R9 703 000 has been allocated to the Commission for this financial year.
2. Only the Chairperson of the Commission is full-time currently. The Minister is to phase in the appointment of three other commissioners as full-time.
3. The Commission has met with the Human Rights Commission and other "Chapter 9" institutions to discuss co-operation among them.
4. The Commission has begun a process of recognizing and defining community councils. It has undertaken road shows to five provinces in which it organized mini-conferences. These visits were also used to mobilize interest in the National Consultative Conference.
5. The main focus of the Commission this financial year is to consolidate itself; organize a successful National Consultative Conference; advance its work on Community Councils; explore the possibilities of launching a cultural dictionary; and identify a role for itself in responding to the challenges of managing cultural diversity in schools, among other issues.
6. In response to questions from members of the Committee, representatives of the Commission clarified that they had visited Israel on the invitation of the South African embassy there, and not the Israeli government. They also visited Palestine. In fact, they were invited to share experiences of the South African nation-building process as a way of encouraging dialogue between Israelis and Palestinians.
7. The Committee congratulated the Commission on its establishment and wished it well. The Committee explained that it sees the Commission as serving a very important role in creating greater understanding across the divides in South Africa and in contributing to the nation-building process. The Committee feels that it is vital that the Commission co-operate effectively with the Human Rights Commission and other "Chapter 9" institutions with which its work overlaps. It is vital too that the Committee fulfills its role effectively, as there is increasing concern within parliament and among the public about the value of some of the "Chapter 9" institutions and whether all of them are necessary anymore. The Committee will arrange to meet with the Commission before its National Consultative Conference to discuss issues further with it.
P. TOWARDS MORE EFFECTIVE OVERSIGHT