Finance Committee Strategic Plan & Programme: Research Unit briefing

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Finance Standing Committee

17 June 2009
Chairperson: Mr C De Beer (ANC, Northern Cape)
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Meeting Summary

The Parliamentary Research Unit briefed the Committee on the past Committee’s Five Year Review and informed Members of policy priorities, the budget and issues that had to be considered. One of the issues that was seen as a priority was the challenges facing municipalities. These challenges had to be resolved in order to improve service delivery. The Committee was advised to seek out the poorer municipalities and to follow up on their progress, as they would not be able to focus on all the municipalities in the country. Members agreed that a strong stance was needed and municipalities that were defaulting must be brought to book. Members also needed to understand the parameters under which the Committee operated, and therefore the National Council of Provinces had to organise an induction for Members.

Members considered the format for the Committee’s Strategic Plan. Members were advised to submit their suggestions to the Content Adviser. The Committee adopted the Committee Programme. Members also adopted the minutes of the meeting on 4 June 2009. 

Meeting report

Parliamentary Research Unit’s Briefing on 5 year Review of Committee
Mr Mongana Tau, Parliamentary Researcher, briefed Members on the Review of the work of the Committee over the past five years, as drawn up by the Research Unit. He discussed policy priorities, saying that over the past five years the Committee had focused on issues of intergovernmental financial relations to ensure efficacy of service delivery. In overseeing this system, the Committee ensured better policy coordination, budget planning, implementation and reporting. During the most recent State of the Nation Address President Zuma stated that the Medium Term Strategic Framework (MTSF) had to take into account constraints posed by the current economic crisis. (see attached document for full details).

An analysis of the budget showed that total allocations to national departments decreased from 34.8% in 2004/05 to 31.9% in 2008/09. Although the provincial share decreased slightly in 2005/06, there was a real increase in allocation for the period 2005/06 to 2008/09. The allocations to local government increased at a real rate of 135.31%. Category A municipalities, the metropolitan areas, received a real increase of 369.19% over the period 2004/05-2008/09. Category B (district) municipalities received a real increase of 48.64% over the same period while Category C municipalities received a real increase of 269.82%.

Mr Tau stated that there were still some challenges in the intergovernmental system that should be of concern to the Committee. One of the issues related to the achievement of national priorities where concurrent functions to various spheres of government were concerned. He recommended that the Committee track the progress of budgetary allocations to various spheres of government. The Committee must ensure that the system of making national transfers to local government was strengthened, through the relevant roleplayers having coordinated oversight mechanisms. Previously, the Department of Provincial and Local Government had started reviewing the system of provincial and local government in South Africa. The Committee should closely monitor this study and ensure that any recommendations were taken forward. In terms of local government, Parliament should follow up on evaluating the effectiveness of the fuel levy within the metros, on implementing the Municipal Fiscal Powers and Functions Act, on implementing the Municipal Property Rates Act, on reforming the water and electricity distribution industries and updating formulas of calculating municipal equitable shares.

The past Committee had made a number of recommendations to the National Treasury (NT) regarding the Division of Revenue Bill. The fourth Parliament had to ensure that the recommendations made by the Financial and Fiscal Commission (FFC) would be taken into consideration for the 2010/11 financial year. During oversight visits to municipalities, the Committee identified many challenges such as underspending and lack of capacity. The Committee provided task teams to provide support to each municipality. Parliament had to follow up on progress made through interventions implemented by the task teams. The Auditor-General (AG) also made a number of recommendations about audit outcomes that the Committee needed to consider in its oversight work, to improve service delivery. Parliament should request continuous updates on the progress made in implementing these recommendations. Parliament also had to ensure that suitable workshops would be organized to capacitate Members of the fourth Parliament and the support staff. These were more fully outlined in the attached document. 

Discussion
The Chairperson welcomed Mr E Sogoni (ANC) to the meeting and informed Members that he had invited Mr Sogoni, as the former Chairperson of the Committee, to attend the meeting, and he asked him to make input where applicable.

Mr D Bloem (COPE, Free State) stated that the Committee needed to organise a workshop where Members and task teams could discuss follow-ups on municipalities. He wondered if there was any action taken against municipalities who did not adhere to interventions implemented by the task teams.

The Chairperson added that Mr Bloem’s question was very important. The Committee needed to follow up on resolutions taken by municipalities to see if they were moving forward, stagnating or regressing.

Mr S Mazosiwe (ANC, Eastern Cape) added that the Five Year Review was a useful document. He wanted the Committee to focus on what it had to do and to grapple with issues that were being raised.

The Chairperson noted that in the previous year, the Committee dealt with municipalities’ quarterly reports, specifically their income and expenditure.

Mr Sogoni stated that there were 283 municipalities and the Committee would not be able to do oversight on all. He suggested that the Committee had to identify poor municipalities with small budgets. Members then had to decide how many municipalities they would focus on, as they could not focus on all of them.

The Chairperson recommended that the Committee use audit reports on municipalities as resource documents. He stated that some of the municipalities’ audit reports showed unexplained expenditure. These municipalities had to be called to order.

Mr Mazosiwe stated that the A-G’s reports painted a bleak picture of what was happening with municipalities. Revenue collections at local level also seemed to be a problem.

Mr Bloem suggested that the Committee identify the really poor municipalities and follow up on their progress.  He also asked for copies of the A-G’s reports.

The Chairperson stated that he would ensure that Members received copies of the A-G’s reports as soon as possible.

Mr Tau stated that there were a few success stories in terms of progress made by municipalities. The problem lay with how funds were being used. It was better to show the negatives so service delivery could be improved.

Mr Bloem agreed that there were success stories; however, those that misused taxpayers’ money had to have the necessary action taken against them.

Mr Mazosiwe stated that the Committee had to take a strong stance against this issue. The Committee had to focus on service delivery and stop local governments from “passing the buck”.

Mr J Gunda (ID, Northern Cape) reminded Members that they were guided and governed by Parliamentary policies and rules.

The Chairperson agreed that Committees functioned in terms of the Constitution.

Ms T Chiloane commented that an induction was needed for Members of the Committee. There was training for Members in the National Assembly (NA). The National Council of Provinces (NCOP) had to have its own induction. After the induction, Members would be familiar with Parliament’s mandate and would be able to discuss the Committee’s Programme.

The Chairperson stated that the Member was correct.

Mr Sogoni commented that Members needed to understand the parameters under which the Committee operated. The Constitution was correct in saying that the Committee could call in anyone to account for his/her actions. He advised the Committee to become familiar with the Public Finance Management Act (PFMA). Learning and training was very important, as it would empower Members.

Consideration of the Draft Committee Strategic Plan
Mr Mkhethwa Mkhize, the Content Adviser for the Committee, discussed the format of the draft Strategic Plan with the Committee.

The Chairperson requested that Members make inputs on the plan and forward them to Mr Mkhize, as the plan was not yet finalised.

Mr Bloem congratulated the Chairperson and Mr Mkhize on a good format for the plan.

Consideration of the Committee Programme
The Committee Secretary, Mr Zolani Rento, discussed the Committee Programme.

The Chairperson informed Members that if they approved of the programme, it would go through the relevant processes.

Mr T Harris (DA, Western Cape) stated that he was happy with the programme as long as the meeting with the FFC did not clash with the plenary session on that day.

Mr Bloem proposed that the Committee adopt the programme.

The programme was adopted.

Adoption of Minutes
The Committee adopted the minutes of the meeting held on 4 June 2009.

The meeting was adjourned.

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