Department of Cooperative Governance and Traditional Affairs, & LGSETA Strategic plans & budget 2010/11

Meeting report

Address by Deputy Minister of Cooperative Governance and Traditional Affairs
Mr Yunus Carrim, Deputy Minister of Cooperative Governance and Traditional Affairs, stated that during his recent attendance of the United Nations (UN) Organisation of Habitat conference, it was said that most developing societies would never meet the full need of formal housing and the task was really to “formalise” informal housing, in many cases by engaging with the shack lords running these informal settlements. Around two thirds of the world’s population in the next thirty years would be urban-based, and this must be recognised as a major issue, while also focusing on rural development strategies.

He had submitted to the Committee Secretary a number of very useful questions, and although he was not present at the last meeting he was briefed extensively on it, and Members had copies of the Parliamentary hearings of the Ad Hoc Committee on Service Delivery, and the business plan, in which some answers were contained.

Mr Carrim noted that the Department of Cooperative Governance and Traditional Affairs (COGTA) had been travelling around the country to try to put into effect the Local Government Turnaround Strategy (LGTAS). The Chairperson of this Committee, who was also the Chair of another committee, had been travelling around to visit communities under protest and engaging around the Local Government Turnaround Strategies. Although the initial aim was to finish everything by end March, this was subsequently extended to end of April. For the most part the Department was on track, although some aspects in the Eastern Cape and KwaZulu-Natal (KZN) were lagging behind. Mr Carrim had met with the MEC of KZN and was working in the Eastern Cape, and was looking forward to more effective and more productive exchange between the portfolio committees and the Department to ensure that the LGTAS was implemented more effectively and efficiently. The roles were separate and distinct. However, all were committed to constructive engagement and were very keen to ensure the implementation of LGTAS, which formed part of the Integrated Development Plans (IDPs) that would promote a framework for the financial year commencing on 1 July.

The Chairperson thanked Dr Carrim and noted the comments on the Habitat agenda. Although the current system was likely to remain he was optimistic that other alternatives could be found. The very important issues of the impact of population dynamics and urbanisation were raised with the Department of Human Settlements.

Department of Cooperative Governance and Traditional Affairs (COGTA) presentation on business plan 2010/11
Ms Tumi Mketi, Deputy Director General, Department of Cooperative Governance (the Department), briefed the Committee on the Department of Cooperative Governance (the Department) business plan 2010/11. She noted that some of the issues raised in a previous meeting between the Department and the Committee, on 23 March, were included in this document. The mission statement had been amended to include monitoring and evaluation of cooperation amongst government stakeholders to achieve improved service delivery. Amendments were also effected to the values, to reflect that the Department was guided by the spirit of Ubuntu, and to reflect professionalism, an activist approach, goal orientation, participation and collectivism, and service excellence.

She noted that although the Committee had raised issues around the strategic plan, it could not be amended at that stage, so those issues and the Department’s responses were included instead in the 2010/11 business plan.

The Local Government Turnaround Strategy (LGTAS) was presented towards the end of last term. The Department was in the process of supporting municipalities to develop their municipal specific turnaround strategies. The turnaround strategy was informed by the vision 2011 to 2014, while the focus of the business plan was largely on Vision 2011, which emphasised the reduction in the number of complaints of people and communities against municipalities, the necessary powers and resources of the Ward Committee system, reduction of instances of reported cases of fraud and corruption in municipalities,  reforming the remuneration and provision of tools for Community Development Workers and Ward Committees, ensuring increased and effective monitoring of service providers by public representatives, officials and communities; and a reduction in the number of service delivery protests across the country.

This year the Department considered the Local Government 10 Point Plan, the President’s State of the Nation Address, the Estimate of National Expenditure projected, the pre 2010 targets and the LGTA 2009, for the development of the business plan.

The question had been raised by the Committee whether what was being presented incorporated the work of Traditional Leadership. She reported that the five year strategic plan contained the work of both the Cooperative Governance and Traditional Affairs Departments, but the business plan level separated out the work of each function. In this presentation, about 80% of what would be discussed related to the work of Cooperative Governance and about 20% related to work around the Traditional Affairs Department, which was only recently established.

Ms Mketi then outlined the Strategic priorities. There was a need to contribute to building a developmental state, in national, provincial and local government, that was efficient, effective and responsive, with focal areas being identified around LGTAS. The roll out of the LGTAS process of coordination and support was nearing completion, and there was development of a stakeholder strategy to enable the Department to interact with the different stakeholders. The next focal area was on legislative reform. The Department was reviewing a number of pieces of legislation, one of which was the review of the governance system. The Department developed a Green Paper on Cooperative Governance.

Strategic Priority 1 noted that the Department proposed to take a differentiated approach to municipal financing, planning and support. Strategic Priority 2 related to strengthening of accountability and clean government, with a focus on oversight and accountability (including deployment, the regulatory framework, combating of fraud and corruption and promoting integrity, monitoring reporting and evaluation of the oversight role to be provided by councillors in municipalities and provinces, improvement in the submission of financial statements to assist with credibility of the auditing process, and streamlining of reporting). She outlined the need to develop the regulations on participation of the municipal officials in elections, which was particularly important in regard to the forthcoming local government elections. A process was under way for the review of municipal performance awards, improvement of governance and reduction of red tape in the district family of municipalities, provision and support to provinces to ensure they understood their support role to local government, strengthening the Minister’s powers to regulate the human resources (HR) practices in local government, the regulation of the dispute process and the issue of remuneration of councillors.

Other focal areas under Priority 2 were ethics management in provinces and municipalities, combating corruption and promoting integrity, ensuring greater transparency, fighting corruption and supporting the review of anti-corruption legislation, and promoting good financial management.

Strategic Priority 3 related to accelerating service delivery and supporting the vulnerable, through capacity building in local government and provinces. The focus for national disaster management was on the cities hosting the 2010 World Cup, and the main issues were set out (see attached presentation).

In regard to access to basic services, there was a focus on the acceleration of household access to Free Basic Energy in a financially sustainable manner, municipal infrastructure performance audit and Municipal Infrastructure Grant (MIG) management, cooperatives at ward level, and increasing access to Free Basic water, electricity, sanitation, roads, community lighting and refuse removal. In regard to Ward Communities and Community Work Programmes (CWP), the focus was on the development of capacity of Ward Committees, the utilisation of the CWP to support the establishment of cooperatives in each ward, the work opportunities created through that process, the development of the Community Development Programme Policy Framework; and strengthening the functionality of ward committees.

Strategic Priority 4 related more to the Department of Traditional Affairs, and improving the developmental capability of the Institutions of Traditional Leadership. The first focus was on the establishment and internal capacity and capability of the Department of Traditional Affairs (DTA), which was still receiving internal support from the Department of Cooperative Governance. Other focal areas included the legislative process for the DTA, the provision of the interim arrangements for the participation of Khoi-San leadership in all houses of traditional leaders, the framework regulating relationships and the partnerships between municipalities and traditional councils, the electronic information system for disseminating information to traditional leadership and traditional communities, the coordination of amendments(together with Department of Health) to the Traditional Health Practitioners Act of 2007, and the comprehensive review and overhaul of the traditional leadership legislation. This would aim to coordinate policy and legislation on issues such as initiation, ukuthwala, indigenous knowledge and systems, remuneration and other benefits for traditional leaders, their roles and delegation of functions, in liaison with other relevant departments.

A further focus was on institutional support and coordination by the Department of Traditional Affairs, for the development of skills and a framework for all levels of traditional leadership to assist with the building of their capacity, support to the 840 traditional leadership institutions, and facilitation of the launch of the Southern African Development Community (SADC) Kgotla. There would also be support and coordination for the National House of Traditional Leadership in regional and international issues; and information sessions on uniform norms and standards, the allocation of roles and delegation of functions.

Strategic Priority 5 related to fostering development partnerships, social cohesion and community mobilisation. The major concerns related to the support of the Ministry, and communication.

Strategic Priority 6 related to strengthening the organisational capacity and capability of the Department to deliver its mandate, with an emphasis on strategic planning, the implementation of the project management approach, the Internal Audit, the Cluster performance outcomes, legal support, ICT support and ICT infrastructure.

Mr Masilo Makhwa, Acting Chief Financial Officer, Department of Cooperative Governance, then briefed the Committee on the budget allocation of the Department for 2010/11. The total budget was R43.9 million for 2010/11, increasing to R50.4 million for 2011/12 and R57.2 million for 2012/13. Mr Makhwa indicated the breakdown of the total voted funds of R43.9 million, and the spending focus for each of the programmes (see attached presentation for details). He indicated, in particular, that under Programme 3: Governance and Intergovernmental Relation, there was a need to improve vertical and horizontal coordination and alignment between all spheres of government, as well as promote public participation in governance through regulatory mechanisms as well as oversight, intervention, support programmes to provinces, municipalities and associated institutions.

The biggest portion of expenditure was on the local government equitable share to the total value of R125.7 billion over the MTEF period, representing 68% of the total transfers. This was an integral funding instrument to supplement municipal revenue to allow municipalities to provide free basic services to poor households, and to fund institutional capacity and support for weaker municipalities in remote rural areas.

Mr Makhwa also outlined Programme 4: National Disaster Management Centre allocations, noting that this would promote an integrated and coordinated system of disaster management, with special emphasis on prevention, mitigation and preparedness by national, provincial and municipal organs of State, statutory functionaries, and other role players involved in disaster management and communities. The main expenditure increase was to implement disaster management contingency plans for the 2010 FIFA World Cup, but over the remaining years the expenditure would decrease. Under Programme 5: Traditional Affairs,
expenditure was expected to increase at an average annual rate of 17% over the MTEF period due to additional funds needed for the establishment of the Department of Traditional Affairs.

The Department then gave an update on the LGTAS. There were four flagship projects:  namely, Operation Clean Audit, Local Economic Development and Infrastructure, Revenue Collection and Living Enhancement, and Clean Cities. These had been completed in all but two provinces to date, the Eastern Cape and KwaZulu-Natal. The Department’s monitoring and evaluation (M&E) section would look at whether a particular municipality was implementing the plans for Operation Clean Audit, whether it had addressed issues around Local Economic Development, addressed issues on the infrastructure development and addressed issues on Clean Cities. Those four flagships were also the cornerstones of the 10 Point Plan on the local government turnaround.

The Department was currently looking at local government turnaround, but had also already begun to look at provincial departments, since it had come to the conclusion that municipalities would not be facing those challenges if the provincial government departments had done their oversight and given the necessary support in the first place to the municipalities. Municipalities were a conduit of finance, and comprised a bureaucratic component of people.

The Department had examined the Department of Public Service and Administration (DPSA) as part of the greater corporate government turnaround, and would be doing a technical evaluation of all the provinces. Three senior officials from the latter department would also be deployed to evaluate and analyse whether the provincial governments had the capacity to intervene in municipalities. This Department was also doing an audit, on the instruction of the Minister and the Deputy Minister. Many municipalities had little idea of what their real functions were, and this had led to them spending money on matters that in fact did not fall within their mandate. A memorandum had been submitted to Cabinet to try to get the LGTAS under the legislative review.

Local government turnaround was a systematic issue that had been raised over a considerable period. The whole local government system itself needed to be reviewed, including the current system around Speakers and whether committees on public accounts at provincial and local level had the capacity to deal with issues. As previously mentioned, the Eastern Cape and KZN were still outstanding, although there would be meetings with their leaders later in the week. Each Deputy Director General in the Department was a team leader for a province, so the Department was fully involved in the turnaround strategy itself. By the end of April it would have met the target of the completion of the municipal turnaround, and would then enter the public participation process.

Discussion
Mr P Smith (IFP) commented that the Department seemed to have quite an ambitious set of targets and asked whether it had the staff complement to do all it hoped to achieve.

Ms Heather Engelbrecht, Executive Manager: Human Resources, COGTA, responded that there was a planned programme for that.

Mr Smith asked if there were specific outputs and outcomes associated with each of the priority areas. He also asked whether there was any separate engagement with the two departments, as opposed to the Ministry.

Dr M Sibanda, Acting Director, Department of Traditional Affairs, clarified that the formal separation between the Department of Cooperative Governance and the Department of Traditional Affairs was accepted on 1 December 2009, through a presidential proclamation.

Mr Smith asked if a Director General of the Department of Traditional Affairs (DTA) had yet been appointed.

Dr Sibanda responded that a permanent Director General (DG) had not yet been appointed; in the meantime he was the Acting Director General. The post had been advertised on 28 March, the closing date was 13 April, and the DG would be appointed shortly.

Mr Smith sought clarification on the legislative reform programmes. He commented that legislation seemed to be preceding the review of the system and the Green Paper, which amounted to trying to amend legislation in the absence of a formal policy framework.

Deputy Minister Carrim explained the relationship between the Green and White Papers and Cooperative Governance, the policy review and the legislative programme. Logically and structurally, he agreed that the Green and White papers should come first, before the legislation was introduced. However, that process would take quite a while. Any legislation that the Department was planning to introduce before the White paper was finalised was anticipating some of the aspects of the Cooperative Governance process. The Green Paper went to Cabinet at the end of April and would be processed very quickly and brought to the Portfolio Committee. The public hearings on this and the legislation should come through simultaneously.
 
Mr Smith noted that the formal structure of the budget, the priorities and programmes were all cross cutting, and therefore he asked if there was a specific costing procedure associated with that.

Mr Makhwa replied that some of the costing fell under Programme 1, Administration, which was the DG’s office. The DG and he had held one-on-one discussions with the different managers to motivate why they wanted a share of the budget. There were challenges, because everyone wanted a large amount of money from the budget.

Ms D Nhlengethwa (ANC) asked whether the Department of Traditional Affairs would be making a separate presentation, or whether the presentation also covered its budget.

Dr Sibanda requested that a separate detailed presentation be given to the Committee for guidance.

Ms Nhlengethwa noted that the presentation highlighted capacity building of councillors, and asked if there was any monitoring in municipalities where that programme was taken forward.

Ms Nhlengethwa asked the Department to expand on its comments on additional food, basic water, sanitation, and lighting.
 
Mr W Doman (DA) appreciated the presentation, which indicated clearly what the Department was aiming at and what it would like to do. He asked about the funding for the Commission on the Promotion and Protection of Cultural, Religious and Linguistic Communities (CRLR Commission), and asked if this Commission was still to remain under the Department of Cooperative Governance.

Mr Makhwa replied that the Department was still responsible to transfer money to the Commission for 2010/11.

Mr Doman also asked for clarity on the Green Paper and legislative reform, asking it the Green Paper was about the whole system of local government and whether there were then specific legislative reforms that would come to Parliament in the second half of the year.

Deputy Minister Carrim responded that the Municipal Systems Act Amendment Bill was currently before Cabinet, which effectively dealt with the intervention of the MEC and the National Minister, without eroding the original powers and functions of local government as set out in the Constitution, around minimum guidelines for Municipal Managers and Senior Managers. Municipal Managers were often suspended with full pay for 18 to 24 months, without their disciplinary matters progressing further. This Amendment bill had to do with regulations provided in 2008. Further amendments to the Municipal Systems Act should come before the Committee by end of May or June, and would address issues raised previously by the Committee, where municipal managers were hired and fired seemingly at will, partially because of political factions. The amendments amounted to tightening regulations, and allowing some role, within the constitutional dispensation, for the MECs and the Ministers to monitor the appointment, suspension and dismissal of Municipal Managers. Minimum guidelines being set for appointment of municipal managers would ensure that they were not appointed because of affiliation to a particular political faction. Municipal Managers and Senior Managers would not be allowed to be political office bearers.

Mr Carrim further noted that the Municipal Property Rates Act Amendment Bill would be submitted to public hearings. He undertook to furnish the Committee with all the submissions, and noted that the amendments related largely to implementation of the Municipal Property Rates Act, public service infrastructure, the developmental role for State Owned Enterprises (SOEs), public service, and how and when property rates would be applied to communal land and to agricultural property.

Mr Carrim noted that a further Bill would be presented to the Committee, not to amend the Constitution, but to regularise and provide certainty and clarity on how Section 139 of the Constitution was applied. It looked into the responsibility of provincial departments and local government in regard to monitoring and what criteria should be applied for interventions under Section 139. Another aspect related to Section 100 interventions.

Mr Carrim said that, later in the year, the General Laws Amendment Bill would look at issues that had to be passed before the 2011 election, and would also set a basis for considering issues such as the two-tier system.

Mr Carrim noted that the policy review process was very complex and very expansive. Because the Policy Review was not currently before Cabinet, it was suggested that key aspects of the Policy Review process be included in the Cooperative Governance papers and legislation.

The Chairperson thanked the presenters for their explicit answers. He asked if the Department had the capacity to do the community work, which seemed to demand many resources. This would be a significant addition to the work of Department of Cooperative Governance, particularly in light of the Department’s restructuring and lack of staff.

Ms Engelbrecht responded that the Department did not have the capacity to implement that programme. When it was transferred from the Presidency to the Department on 1 April, the Department extended the quotas for the current project managers to ensure that during that period the department built its own capacity internally.

The Chairperson asked about the qualification by the Auditor-General, and the Department’s reaction and response to that. He noted that the Department had made mention, during the presentation, of the need to promote ethics management at provincial, national departmental and local government level, so it would be expected that the business plan would have something to say about addressing the qualifications. The Committee would not like to see this Department having a qualified audit.

Deputy Minister Carrim responded that the Department was embarrassed by the qualified audit. It had achieved unqualified audit reports for the previous eight years. The Chief Financial Officer had left, which was why there was now an Acting CFO in place. Some of the aspects were very technical. The qualifications were not in fact that serious, although he conceded that the fact of having a qualified audit was not as good as the Department should have been.

The Chairperson asked for clarity on Priority 1, around the Minister’s powers to regulate Human Resource systems and procedures.

Deputy Minister Carrim said that Human Resources and the Minister would have the role of providing a set of regulations around performance management. Municipalities would be part of the process. This was why there had been mention made of a set of minimum guidelines for appointment of senior managers.

Ms Mketi added that the deliverables could be found on pages 33 and 34 of the business plan. The question also related to the comments made by Mr Smith on deliverables. The table in the business plan dealt with the deliverables and milestones for each of the projects.
 
The Chairperson noted that in regard to Priority 3 - accelerating service delivery and supporting the vulnerable and promotion and facilitation on Municipal Service Partnerships – there was a history. He asked how the Department was now planning to deal with those issues in a different manner.

The Portfolio Manager responded on the acceleration of free basic services. He highlighted four major areas that would be done differently. Firstly, the issue of coordination of grants in terms of accelerating service delivery had been a major weakness within the Department, which was now engaging with other sector departments, such as Department of Human Settlement and the Department of Water Affairs, to ensure the alignment of the grants towards service delivery. All 52 districts had developed their own comprehensive infrastructure plans, and each and every municipality had to ensure that it followed the plans when implementing its infrastructure programmes to provide basic services. There was also a special purpose vehicle for municipal infrastructure development. The Department was currently developing a business case to establish that special purpose vehicle, which aimed to support the more vulnerable municipalities in terms of implementing their infrastructure projects and systems to ensure acceleration of service delivery

The Portfolio Manager then responded to the question on how municipal service partnerships would be implemented differently. Currently, the Department was stressing that municipalities must first convince the Department that they had considered all options, particularly in terms of engaging and soliciting support from other public entities, before looking at private sector support and municipal services partnerships. Municipalities were buying into that approach.
 
Ms Nhlengethwa added to the Chairperson’s remarks on the qualified audit, noting that there had also been questions raised around asset management. She asked how the Department was maintaining its asset management systems.

Mr Makhwa responded that when the Department appeared before SCOPA it had already started to draw the asset register and had submitted a recommendation. The asset register was submitted to the Auditor-General on 16 March and the audit was 99% complete. The Department had already dealt with the findings and the asset register was much better than it had been previously.

Ms Nhlengethwa asked what was the programme on the Operation Clean Audit.

A Departmental representative responded that the Department had already embarked on a programme to try to change matters. A strategy had been launched and implemented to ensure that all assets that were owned by managers were registered in the credible asset register developed by the Department. Operation Clean Audit was designed in the context of the Turnaround Strategy. A “clean audit” referred to the quality of the annual financial statement. Currently, there was a need to support municipalities and improve the quality of the annual financial statements. There was a need to do so through partnerships and training of officials, especially in terms of record keeping. The focus was also on the internal audit, because if that governance function was effective the internal audit committees should be able to take charge.

Mr M Nonkonyana (ANC) referred to the Equitable Share, noting that provision had been made also for grants to local government. He agreed with the increase in the previous financial year. However, in light of the challenges that municipalities were continuing to experience, he asked for comment from the Department as to whether the amount voted in the previous financial year was well spent by local municipalities, and if not, whether there was any other way to ensure that the proposed allocations this year would be well spent.

The Portfolio Manager responded that the Department was currently reviewing the MIG to ensure that there was better and more efficient spending of the MIG grants. The allocations were contained in the Division of Revenue Act and the increase given to the base line of equitable share was particularly to cushion municipalities in terms of the anticipated electricity hikes. Broad figures, without break-downs, were given in the Division of Revenue Act. There were three phases of April, July and November. He agreed that the manner of spending was a challenge. In regard to the equitable share, unlike the conditional grants, there was no record submitted to the Department of how the money was being spent, so the Department could not pick up exactly what the equitable share spending had achieved. The Department only looked at how the budget was spent, which was contained in the Section 71 Report to National Treasury.

Mr Nonkonyana asked whether it would be possible to have a monitoring tool so that Members of Parliament, when doing oversight work in their constituencies, could monitor the deliverables arising from the spending of the equitable share.

The Chairperson noted that some of the issues arising should be communicated to the Portfolio Committee. He had noted a statement in the media about a report allegedly commissioned by the previous DG on matters of procurement in the Department. He wondered how such reports got into the media. Because any report that the Department received would be likely to end up in the public domain, it was crucial that the Committee be kept fully informed, particularly since this Committee had not been involved in the report.

Deputy Minister Carrim replied that in regard to forensic reports the Chairperson was correct. Other reports had to do with the old administration, and whilst they may have nothing to do with the present administration, it was possible that there might be legal and other implications for the individuals concerned. The substance and quality of some of those reports was questionable. They probably reached the media through leaks within the Department.

Mr M Nkontwana (Special Advisor to the Minister) said some of those issues had been dealt with before the elections, but the challenge remained to deal with matters internally as they were far more difficult to manage once they were in the public domain. The Department tried to deal with these issues. Due processes must always be followed. The Department was equally disturbed by any leaks and the matters should be dealt with collectively.

Mr T Botha (COPE) asked for clarity on the Department’s strategic priorities, and particularly asked what the measurable outcomes would be for Priority 1, which was stated as contributing to the building of a developmental state, in National, Provincial and Local Government, that was efficient, effective and responsive.

Deputy Minister Carrim clarified that the relationship between Department of Cooperative Governance and the developmental State depended on how effective the State as a whole would be, in intervening in issues such as global economic development, service delivery and ensuring effective IDPs and LEDs. It was not possible to have a strong developmental State unless public communities were mobilised and organised.

Mr Botha asked about the ongoing discussions between the Department of Human Settlement and the Department of Cooperative Governance regarding where the value chain should be located or coordinated. He had understood the role of the Department as being one of coordination and maintaining and managing the relationship between the stakeholders.

Deputy Minister Carrim replied that of course the entire sphere was involved. The two portfolio Committees dealing with Cooperative Governance and Human Settlements could meet and feed into the process. There was not a need to hand over functions; rather the Committees should be working together.

Mr Smith questioned the title of the Department. He also noted the criticism that this Department seemed to be focusing almost exclusively on local government. He asked how many of the priorities outlined focused on dysfunctionality at national level as opposed to municipal level, which still seemed to be accounting for about 95% of the Department’s work.

Dr Sibanda indicated that there was still an issue of where the Commission’s budget would be located. For the financial year 2010/11 it would be located in the Department of Cooperative Governance, Vote 3. A separate vote for the Department of Traditional Affairs was yet to be created, and hopefully it would be sorted out before the financial year 2011/12.

Mr Botha commented on the vision statement in the business plan, and said that reduction of the infrastructure backlog, elimination of violent protests and reduction of municipal debt could not be a vision. The Department would have to describe how it envisaged achieving these, because they were not measurable.

The Chairperson thanked the Department and appreciated their input.

Presentation by Local Government Sector Education and Training (LGSETA)
Mr Sidwell Mofokeng, Chief Executive Officer, Local Government Sector Education and Training Authority, introduced Mr Keith Goodsell (Chairperson), Ms Ntombenhle Nkosi (the incoming CEO), and Ms Janet Davies (SSP Manager), and noted that this was the last time he would attend the meetings in his capacity as CEO.

Mr Mofokeng noted that five years previously the Local Government Sector Education and Training Authority (LGSETA) had taken the decision to spend its money on key focal areas to assist local government, or the line departments and ministries to achieve their mandate. The focus of LGSETA, as an entity under the Ministry of Higher Education and Training, was to support skills development intervention. Whilst LGSETA was not an entity under this Department and was not reporting to this Department directly, or receiving any contribution from it, it was strategically aligned to local government. LGSETA had received nine unqualified audit reports during the nine years of its existence.

The financial performance report was covering two years. For the financial year ended March 2009, the levy income received was R129 million, of which R122 million was disbursed back to the sector. In the past years, LGSETA had disbursed just over R1 billion back in levy grants to municipalities, but sadly most of that funding did not go towards training. The question was what happened to that money. If R1 billion was reinvested in the last eight years surely local government should not have a problem. Those were the some of the inherent challenges that SETAS were facing. He stressed that funds disbursed for training should be monitored, to ensure that they were in fact going to meet that objective of training.

Provinces paid the largest portion of the levies. Gauteng still received the bulk because it accounted for 70% of the total levy, which was approximately R240 million, from ten large employers, the larger districts and local municipalities.

In 2010 LGSETA received R240 million in levies and R190 million had been disbursed back to municipalities by the end of that financial year in March 2010. 96% of municipalities were now compliant with the Skills Development Act and were paying levies, although there were still challenges with respect to where that money was spent.

In terms of discretionary grants disbursed to municipalities LGSETA had made disbursements in the six focal areas of infrastructure and service delivery, financial viability, community based participation and planning, management and leadership, Adult Basic Education and Training (ABET), and workplace-training systems.

In the financial year ending March 2009 R62 million was spent on what LGSETA regarded as strategic programmes that were key to assisting municipalities, including support to the Department and National Treasury with the compliance regulations for municipal finance practitioners, and the practitioners at a lower level. R90 million was spent on discretionary grants. Mr Mofokeng highlighted that in the financial year 2010/11 there was another R140 million that LGSETA was putting into strategic interventions, largely driven by Department of Public Service and Administration (DPSA) and other partners. R70 million would be put towards hands on support to municipalities, by deploying artisans and giving support for artisan training.

Mr Mofokeng presented detailed reports giving an analysis of spending by province, by municipality, around training interventions, and also giving profile of the provincial and municipal training interventions. He noted that priority was not being given to training – for instance in Tshwane 13 000 of the 19 102 employees worked in technical service-related areas, but only 161 had been trained. Unless municipalities themselves decided to embrace training and make it part of their core business LGSETA was somewhat hamstrung in what it could do.

Based on the five focal areas agreed to with the department, LGSETA measured whether municipalities were responding to training When it came to accounting training as proposed by National Treasury, LGSETA found municipalities did comply, simply because it was part of the competency requirements of key personnel in the budget and Treasury offices.

Discussion
Ms Nhlengethwa asked how many trainees entered the programmes, how many dropped out and how many graduated.

Ms Davies responded that the attrition rate and learner tracking varied from programme to programme ranging from a high drop out rate with ABET, where only 45% to 48% of learners completed this training.

Ms Nhlengethwa noted that often the budget allocated for training was not utilised and was diverted to other things. She asked what LGSETA recommended in this regard.

Mr Smith asked if half of the R1 billion had been disbursed over nine years on things other than skills training, as he would have thought that was a form of misappropriation of funds. It was strange that he did not see a constant refrain in the Auditor General’s reports relating to individual municipalities misspending in this way. If it was not illegal for them to do this, then he thought that it should be made illegal.

Mr Mofokeng responded that there was no enforcement mechanism if municipalities diverted funds. The Executive Authority of the Department of Labour undertook to promulgate regulations to enforce the utilisation of funds for a specific purpose, and one of the suggestions was that LGSETA should be able to ringfence funds earmarked for training. It was not statutorily illegal to use these funds for other purposes, although it was morally incorrect.

A bigger challenge was that most municipalities did not have training committees, so there was no level at which the unions and employers could discuss the diversion of funds for training.

Mr Mofokeng said that LGSETA was beginning to lobby the Auditor-General to note these issues in the report, as also to raise the question with the South African Local Government Association (SALGA).

Mr Smith asked if there was any real relationship between outputs and outcomes, and whether an assessment of the effectiveness of training in fact would make any difference.

Mr Mofokeng responded that there was a National Skills Development Strategy 1 and 2. Strategy 1 was basically a “numbers game” in which LGSETA had to achieve certain numerical targets. Strategy 2 differed, in that LGSETA had taken a decision that it would not commit to numbers unless those numbers made a difference in the key performance areas of municipalities. It had come up with the five focal areas, and had taken a decision to be measured against quality and quality interventions.

Ms Davies added that the majority of the training in the sector took place outside and was non-priority training. LGSETA was currently engaged with the National Productivity Institute, who was doing an impact assessment on the training within municipalities on LGSETA’s behalf, and that would be measured against municipalities obtaining their key performance objective.

Mr Smith asked where the Local Government Academy’s role.

Mr Mofokeng responded that LAGOLA was accredited by SETA as a college, but unfortunately it had not taken off the ground.

Mr Smith noted that when Mr Carrim had been the chairperson of the previous Parliament’s Portfolio Committee, there had been an arrangement that Members received documents produced by the Department. The provincial reports should also have been circulated.

Mr Mofokeng said that he would make that information available to Parliament.

The Chairperson agreed that Parliament should be the centre of LGSETA’s work. The information could be used for interaction with stakeholders.

Mr Nonkonyana said he would have expected a more structured report and an organogram would have been useful.

Mr Mofokeng responded that LGSETA did circulate its Annual Report and had assumed that the Committee would have had sight of that.

Mr Nonkonyana referred to the R62.6 million discretionary fund and asked whether it was LGSETA’s core business to have a discretionary fund of that magnitude.

Mr Nonkonyana was not comfortable with the fact that there was simply a clean audit; he would have liked to have received more information from the Auditor-General and a financial statement to see that LGSETA was doing well in that regard.

Mr Nonkonyana asked whether any training was being offered for Traditional Leaders and Traditional Councillors. Two years ago LGSETA launched a laudable programme.

Mr Nonkonyana asked for clarification on the Memorandum of Understanding (MOU) signed between 2007and 2009 that was still current.

Mr Mofokeng said it was true that LGSETA had had an MOU with the National House of Traditional Leaders, and that this was still valid. There had been changes, including the shift in the House itself with the movement of the key personnel to the department, the establishment of the Departments of Cooperative Governance and Traditional Affairs, and the slow process around reestablishment of provincial houses. The programme was driven provincially, not nationally. The MOU at National level provided an overall framework of interaction with Traditional Leaders but in some of the provinces there were issues around the Houses, which slowed down the process. That would be addressed through Department of Traditional Affairs.

The Chairperson said the Traditional Leaders in North West had requested that he discuss training with LGSETA. He asked what was the progress with regard to that work.

The Chairperson also asked what would be the role of LGSETA when reporting to the Department of Higher Education.

Mr Mofokeng responded that LGSETA had a one year extended licence to 2011 because the Ministry was being established. LGSETA was required to re-look at its constitution. In the newly revised constitution the line department was named as Department of Cooperative Governance, and Department of Traditional Affairs would be part of the SETA’s board; currently there was a gentleman’s agreement. The focus of the new Ministry was to ensure integration between skills development and education, ensuring that SETAs were able to leverage the existing capacity of public training providers or integrate the work of SETAs with that of Further Education and Training Colleges (FETs) around skills development. There were a number of challenges that SETAs would be looking at, including the Decent Work programmes, linking the work of SETAs with the government key priority programmes, including fighting poverty and unemployment.
 
The Chairperson was pleased to hear that National Treasury’s approach had worked, in relation to the Municipal Finance Management Act and training. He asked how much attention was paid to the actual coaching to ensure implementation of the amendments.

Ms Nkosi explained the funding for LGSETA.  It received 1% of the payroll for municipalities, which was then split: with 20% to National Skills Fund, 10% for administration costs, 50% for mandatory grants that were disbursed back to the sector, and 20% for discretionary grants, which could be disbursed at LGSETA’s discretion according to equity targets, or scarce skills or priority needs in the sector.

Mr Mofokeng added that there was R300 million in the discretionary grant fund, of which R199 million was already committed. There had been accelerated expenditure on the commitment and it was growing at R48 million per year in allocation, with approximately R30 million in interest earned. In the last three years between R60 million and R90 million had been spent on strategic projects.

Mr Mofokeng added that there was a focus on the training of officials of the Department dealing with intervention programmes in the municipalities. LGSETA was driving the process.

The Chairperson said another problem was the attendance of councillors at courses, they only came for half a day, and there was a need to look at the linkage to the objective. He asked about the relationship with the Public Administration, Leadership and Management Academy (PALAMA) and the rest of the public service, strategically looking at cultivating cadres in local government and public sector that had some common denominator.

Commission on the Promotion and Protection of Cultural, Religious and Linguistic Communities (CRLR Commission)
The Chairperson announced that it had been negotiated that the Commission present for a whole morning on another day.

The Committee would also create space for the Department of Traditional Leaders to brief the Committee on the new set up.

The meeting was adjourned.