MTBPS: submission by HSRC; Cooperative Governance Special Purpose Vehicle for Improving Municipal Infrastructure Provision

Standing Committee on Appropriations

02 November 2010
Chairperson: Mr T Chaane (ANC, North West) and Mr E Sogoni (ANC)
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Meeting Summary

The Human Sciences Research Council briefed both Appropriations Committees on the Medium Term Budget Policy Statement. The Committee discussed where the HSRC thought the government should be focusing its efforts to ensure more effective education, how there could be better outcomes for grants by creating conditionalities, the nature and scope of service delivery protests, whether the data received from Statistics SA was accurate or if they were “guestimations”, how far the country was from achieving its Millennium Development Goals (MDGs), and whether mobile clinics would be more effective if they were combined with other aspects to effectively address public health issues. Members noted that the HSRC statistics on HIV/AIDS were very concerning. They wondered why South Africa had been rated higher than China in the World Bank's Knowledge Economy Index (KEI). They noted HSRC’s point that cities were the economic engines of the country, but they were also under economic pressure as a result of migration and population growth. Rural development was understandably one of the government's priorities; however, there needed to be a balanced approach because having one without the other was just not going to work. The main beneficiaries of social grants over the last decade had been rural areas. This was a direct transfer from resources generated from the country's cities. The country needed to understand the urban and rural areas were interdependent and not mutually exclusive. The country needed a balance of urban and rural development.

The Department of Cooperative Governance briefed the Committees on their strategy for accelerating and improving municipal infrastructure provision. The purpose of the presentation was to give the Committees more clarity on the Special Purpose Vehicle (SPV) programme.

The Committees wondered how the DOCG would be able to roll out the SPV project with its current capacity, what mechanisms it would use to roll out the project, how it would deal with corruption during tender processes, and if the budget would cover the desired outcomes. Members addressed the Planning, Coordination and Monitoring (PCM) processes within the Department and asked if monitoring mechanisms were in place and if there was coordination between the national, provincial and local government. They asked what the co-operation was like between the different spheres of government when it came to planning processes. The Committees noted that the SPV programme was nationally based and looked at project management, infrastructure and coordination. They wanted to know how the DOCG would run the SPV programme so that it was not going to micro-manage municipalities, as it seemed that the programme imposed on the roles of municipalities. Some were concerned about the amount of power the SPV would have, as well as the amount of resources it would be using. The DOCG presentation showed them that the quality of infrastructure being delivered by municipalities was not up to standard and the maintenance of existing infrastructure was also lacking. They asked what the problems were and how the DOCG intended to correct them. The Committees hoped that the DOCG would succeed although they were worried about the timeframes in which they would roll out the SPV project. This seemed like a mammoth task to undertake.

Meeting report

Human Sciences Research Council (HSRC) briefing on Medium Term Budget Policy Statement
Dr Themba Masilela, Executive Director: Research Use and Impact Assessment: HSRC, said that the HSRC applauded the Appropriations Committees and the Ministry for Finance for enabling public engagement with the national budget priority setting and decision making processes. This complemented the collaborative efforts of Statistics South Africa, various public research institutions, and civil society organisations in producing the country’s third progress report on the Millennium Development Goals (MDGs).

One of the HSRC’s challenges was to find the right balances in economic and development priorities. The strengths of the Medium Term Budget Policy Statement (MTBPS) included employment as one of the government’s priorities, the scale of the challenges faced in the areas of poverty and health, it recognised cities as engines of growth requiring more investment, and it provided for faster growth in municipal spending.

One had to ask if the projected growth in total government spending was modest given the urgent need to expand employment. The MTBPS had to be complemented by more detail on how the government would implement a new development path that would create five million additional jobs over the next ten years. There were uncertainties pertaining to long-term public expenditure pressures.

In terms of recognition of the role and contribution of research evidence, the HSRC proposed that there be research support to prioritise monitoring and evaluation activities that enable programme adjustments directed at specific outcomes. Coordinated strategies for youth development needed to be prioritised and would require planned monitoring and evaluation of programmes. Grants were needed to support families and the government had to think about how to get better outcomes for grants by creating conditionalities.

The 2009 World Bank Knowledge Economy Index (KEI) showed that Denmark led the world in KEI. Emerging economies such as Brazil, South Africa, China and India still lagged far behind. The number of full time equivalents of researchers per 1000 people in employment showed a similar pattern. It was clear that there was a low level of investment in Research and Development (R&D) in the South compared to the North. In South Africa, a R&D tax incentive to encourage private sector investment in research and development activities came into effect in November 2006. Although government established the Technology Innovation Agency (TIA) to enable technology innovation, more programmes to support research plus build human capital were needed.

The HSRC recognised that education and skills development were critical for personal development, civic participation and readiness for the labour market. The MTBPS highlighted education and skills development as national priorities. The challenge was how and where to intervene in education to break the cycle of the ‘development trap’.

There was stabilisation of the AIDS epidemic but intensive efforts were still required. The third national HIV prevalence, incidence and communication survey (2008) revealed a number of positive trends. There was a decline in HIV prevalence in the teenage population, which was corroborated by a decrease in the mathematically derived HIV incidence in the 15-19 years age group. The number of people aged between 15 and 49 years who were aware of the HIV status doubled between 2005 and 2008. However, HIV infection risks remained high in the country and women aged 25-29 continued to record very high levels of HIV.

There was a proposal for a South African National Health and Nutrition Examination Survey (SANHANES). The Survey would help to provide the country with real time annual monitoring of the health status of the nation. It would help to address public health issues that can be best, or only, answered using combined direct physical examination and biomarker measures using mobile clinics. The HSRC also proposed a Small Area Estimation Modelling programme. It would use a combination of survey and census data to develop forecasts for non-surveyed areas. This data would be useful for national planning.

The HSRC looked at addressing inefficiencies in and improving the effectiveness of public management. They commended the acknowledgment in the MTBPS of procurement and tender fraud. They noted that public-sector investment was the cornerstone of the government’s strategy to support higher sustainable growth and employment creations. Young people were identified as the major perpetrators and victims of violent crimes in the country. Efforts towards youth employment needed to be integrated within a properly budgeted national crime prevention strategy that took account of the multiple factors which impacted on crime, including risk factors and underlying causes. 

Discussion
Mr M Swart (DA) noted that the government was spending huge amounts of money on education and the figure seemed to increase every year. However, the government did not seem to be making headway where results were concerned. He asked where the HSRC thought the government should be focusing its efforts to ensure more effective education.

Mr Masilela replied that there had been a comprehensive overhaul of policy regimes, legislative regimes and programmes for education over the past fifteen years. There was a legitimate question about whether these goals were too ambitious. The government intervened in the area of curriculum, teacher training colleges, and in other areas across the board. Going forward, the government would address the inadequate outcomes of these initiatives. It was going to be critical to prioritise which areas needed further intervention. The HSRC had a research programme on the quality of education, which focused specifically on a whole range of factors that impacted on outcomes. This would help to show the areas that had to be prioritised. The programme would provide the government with empirical evidence of what the HSRC thought the most effective interventions would be.

Dr Sharlene Swartz, Senior Research Specialist: Human and Social Development Research Programme (HSRC), added that the country was actually doing quite well in terms of education. However, the “bar was set too low”. The MDG for education was that countries should have universal primary school education.  South Africa almost had this. One of the country's challenges was to find ways to keep young people in schools. South Africa spent more money on education than many other countries; however, a big proportion of the government's education spending was on school nutrition feeding programmes. If this was excluded from the budget, the government would see that it was not spending as much as it should be on education. The government needed to put more funding into after-school programmes, social and emotional learning for children, cognitive development programmes, and language policies.

Mr C De Beer (ANC, Northern Cape) said that the HSRC spoke of getting better outcomes for grants by creating conditionalities. What should the conditionalities be? The HSRC proposed a closer examination of the nature and scope of service delivery protests. Had the HSRC done such an examination already? In what way could they assist the government in this regard?

Dr Swartz explained that the question on conditionalities was very important. However, it was also a matter fraught with difficulties. The government had to ensure that the conditionalities that they would be proposing were not going to clash with the Constitution. One example of one of the best uses of social grants was when a woman was given a social grant. A woman would usually feed her family or the community. The World Bank had evidence for this. Also, the child support grant proposed that a child receive funds until the age of eighteen. One of the conditionalities could be that the child should be in school. This was a proposal that the HSRC would like to explore. The government could also consider an initiative such as a job-seeker's allowance. This could be a very useful conditional grant.

Dr Masilela answered that the HSRC had done some research on service delivery protests in the country and the findings showed that the protests were in response to very specific conditions and issues found at the local level. The conditions and issues varied from municipality to municipality, and from township to township. The HSRC's research had not reached a point that would allow them to generalise, but they found that the protests were responses to very specific conditions at the municipal level. Some had to do with the capacity level of some municipalities that affected their service delivery. 

Prof Demetre Labadarios, Executive Director: Population Health, Health Systems and Innovation (HSRC), added that the HSRC had data sponsored by the World Bank that showed the relationship between violence and crime in relation to service delivery. Where service delivery was poor, unrest and violence was higher. This would also indicate where the needs of the country were.

Ms B Ngcobo (ANC) asked if the data received from Statistics SA was accurate or if they were “guestimations”. Given the HSRC's research, how far away was the country from achieving its Millennium Development Goals (MDGs)?

Dr Masilela felt that it was necessary to recognise the wide array of statistics generated by Statistics SA. Their information was based on studies done on the entire population and the information was very accurate. The HSRC worked in partnership with Statistics SA and it was very rare that the HSRC had problems with the value or quality of information provided by Statistics SA.

Prof Thomas Rehle, Director and Senior Programme Adviser: HIV/AIDS, STIs and TB (HSRC), addressed the question on MDGs, saying  he thought the country was on track. If the Committee looked at what the country had achieved over the last five years, they would see that some of the negative trends that the country had experienced were being reversed. There were fewer new HIV infections than in the past. This meant that child mortality was decreasing as well. There had been many improvements due to the implementation of new policies. However, it was time for the government to address matters such as family values, social behaviour, society norms and community behaviour.

Prof Pamela Naidoo, Chief Research Specialist: HIV/AIDS, STIs and TB (HSRC), added that the country had to see itself as a development state in order to understand its challenges. The government had to recognise that development should happen in every sector of the country. The government also should not under-estimate the role of women in society. This was a serious issue at a systemic level in the country, also in relation to HIV/AIDS. There was more than enough evidence around the world that showed that educating women immediately resulted in better outcomes for families, communities and societies. It was also found that gender-based violence and poverty were huge factors in driving the HIV/AIDS epidemic as well as other health problems.

Mr J Gelderblom (ANC) said that there was a big problem with Tuberculosis (TB) in the rural areas in the Western Cape. Was there any correlation between HIV and TB in the province? The HSRC identified the need to set up norms and standards for access to services such as schools and clinics. They identified that there was usually a 5km walk to these services in rural areas. He asked what the government could do about this as the matter had to be addressed urgently.

Prof Rehle answered that there was no doubt that TB and HIV infections were two epidemics that needed to be addressed urgently. Treatments for both sicknesses had to be integrated into services. This was one of the key service delivery challenges. He agreed that the illnesses were a major problem in rural areas. This was an area that had to be observed closely.

Ms T Memela (ANC, KZN) addressed the South African National Health and Nutrition Examination Survey. The HSRC said that the best way to address public health issues was to combine direct physical examinations and biomarker measures using mobile clinics. She felt that mobile clinics would be more useful in rural areas. However, mobile clinics were not as effective as they were meant to be. She asked if the HSRC had looked at combining mobile clinics with other aspects to effectively address public health issues.

Prof Labadarios replied that one had to look at what the country had at a national level and what the country needed. The country had a large number of surveys that were conducted by funder donations rather than by government expenditure. By the time these results were analysed and solutions had to be implemented, it was usually too late because the data was too old. The last health and demographic survey was carried out in 2003 and the report was released in 2008. The data was then completely outdated. One had to wonder how policies could be made based on this data. Another unfortunate fact was that outdated technology was used to do much of the research in the country. The country needed new tools and the faster they received them, the better. The country needed new technology in order to do real-time monitoring. It would help the HSRC inform the Department of Health where the nation was in terms of health and nutrition. It would also help the country to achieve its MDGs and to inform mobile clinics of the prevalence of certain illnesses that could be found in certain areas. There were 1174 mobile clinics in various parts of the country. The mobile clinics could be upgraded to deal with certain illnesses, but this would require more investment in the future.

Dr P Rabie (ANC) noted that the HSRC's presentation showed that the number of people aged between 15-49 years, who were aware of their HIV status, doubled between 2005 and 2008. However, women between the ages of 25 and 29 continued to record very high levels of HIV. He asked the HSRC to expand on this and wondered if the government should be speeding up its HIV/AIDs awareness campaign. Many of the HSRC's figures concerning HIV were of great concern.

Prof Rehle agreed that the prevalence of HIV/AIDS amongst women aged between 25 and 29 was worrying. There were 5.5 million people in the country infected with HIV, which was one of the highest in the world. The government had to find programmes that worked for women in the country. They also had to look at changing individuals' behaviour and community norms.

Chairperson Sogoni complimented the HSRC for the valuable information they had provided. He noted that South African had been rated higher than China in the World Bank's Knowledge Economy Index (KEI). Some reports were saying that the HIV/AIDS infection was stabilising and there was a greater awareness about the epidemic. He asked if there was any truth in these reports from a research perspective. He wanted to know what the ideal investment was that the government could make to yield sufficient research in order to turn the country around. How practical was the South African National Health and Nutrition Examination programme? He was concerned, as many people were saying that South Africa was becoming a welfare society.

Dr Masilela replied that the country was probably rated higher than China because of China's huge population. Quite a number of the criteria were looked at relative to a country's population. For example, the index would look at the number of researchers relative to that country's population. The index also took into account what it called the institutional setup of various countries. It looked at whether certain institutional arrangements were more conducive to a knowledge economy than others.

Mr S Montshitsi (ANC, Gauteng) noted that cities, in general, were the engines of growth in countries and that they needed more investment in infrastructure and other important aspects. In the past few years there was a huge decline in the economic activities of the main cities in South Africa. Many cities became dilapidated, almost to the point of disrepair. Many municipalities were engaged in a programme that focused on the rehabilitation of cities. He wanted to know what comparative studies the HSRC had done in the past ten years to look at the rehabilitation and economic activities that cities could participate in order to become as vibrant as they used to be.

Prof Ivan Turok, Deputy Executive Director: Economic Performance and Development (HSRC), answered that the HSRC was leading a major comprehensive study on the status of South African cities. It was due to be published in April 2011. It was a comprehensive study on the social, environmental and economic conditions in the country's cities. The HSRC was using data from Statistics SA. He had to admit that the information received from Statistics SA was not great at the local level. They provided good data at the provincial and national levels, but their data at the municipal level seemed to be lacking. In the short term, it seemed that cities had suffered the most through the economic downturn. However, in the longer term, cities had done well over the last decade, economically in particular. The economic strength of the cities had benefited the whole country through higher tax revenues and markets for goods and services that were produced. Approximately two-thirds of the country's formal economy emerged from the cities. This was a very knowledge-intensive sector of the economy. Cities in South Africa had also experienced strong employment growth. This had acted like a magnet and there had been strong migration into the cities. This growth created challenges for the economic infrastructure of our cities, congestion on the roads, electricity shortages and water scarcity. The risk of blackouts would be growing over the next few years. It had also put pressure on communities. There have been a disproportionate number of protests in cities where people were drawn to communities where municipalities were struggling to keep pace with the growth of informal settlements. This had created problems for housing and basic services, which had resulted in more service delivery protests. It has been said that because of the wealth of the country's cities, they are able to look after themselves. This was not the case and cities were unable to look after themselves. Cities were the economic engines of the country, but they were also under economic pressure as a result of migration and population growth. Rural development was understandably one of the government's priorities; however, there needed to be a balanced approach because having one without the other was just not going to work. The main beneficiaries of social grants over the last decade had been rural areas. This was a direct transfer from resources generated from the country's cities. The country needed to understand the urban and rural areas were interdependent and not mutually exclusive. The country needed a balance of urban and rural development.

Chairperson Chaane thanked the HSRC for their presentation. The Committees would continue to process the information received from the entity. Members hoped to see the HSRC again very soon in the future.

Chairperson Chaane informed the Committee that the Department of Cooperative Governance (DOCG) wanted to give the Members more clarity by giving a presentation on the Special Purpose Vehicle (SPV) project that they were in the process of establishing.

Department of Cooperative Governance (DOCG) briefing on Special Purpose Vehicle (SPV) project
 Mr Elroy Africa, Director-General: DOCG, informed Members that the presentation provided the broad rationale for an extra-ordinary intervention to speed up the delivery of basic services. President Jacob Zuma and the Minister for Cooperative Governance and Traditional Affairs had concluded a performance agreement whereby the establishment of a Special Purpose Vehicle (SPV) for municipal infrastructure was a key deliverable.

Basic service targets for 2014 included all houses to be connected to the national grid (electricity), all houses had to have access to at least clean piped water 200m from the household, all households had to have access to ventilated pit latrines on site and, all households had to have access to at least once a week refuse removal services. Kwazulu-Natal and the Eastern Cape had the highest backlog when it came to electricity and piped water services. Mpumalanga, Limpopo, Northern Cape and Eastern Cape had the highest backlog when it came to sanitation services. Limpopo, Eastern Cape, Mpumalanga, KZN and the North West had the highest backlogs when it came to refuse removal services. Overall, the Northern Cape, Western Cape and Free State provinces had the best service delivery. Limpopo province had the worst overall access to basic services.

The projected investment for infrastructure for the country amounted to R495 billion. This was needed to address the failure of municipalities to deliver and manage infrastructure properly. In particular, there was inadequate integrated planning and monitoring, there was a lack of adequate capacity to plan and deliver infrastructure, and there was inadequate funding to meet capital investment needs. There was also inadequate coordination and performance management of a wide range of current support programmes. Initiatives were not coordinated at any central level and there were unclear performance standards and a lack of proper monitoring and evaluation.

Of the 237 local municipalities and metros, 11% were classified as high capacity, 51% were classified as medium capacity and 38% were classified as low capacity. Of the 46 district municipalities, 32% were classified as high capacity, 34% were classified as medium capacity and 34% were classified a low capacity. DOCG noted that while spending of the Municipal Infrastructure Grant (MIG) and the magnitude of fiscal transfers had been consistently improving, there were still considerable backlogs and the condition of existing infrastructure was still not being maintained at the level required to provide a consistent, adequate level of basic services to the more disadvantaged groups of the population.

The FIFA World Cup showed that there was a need for greater private sector involvement in infrastructure delivery, dedicated support interventions were needed to meet deliverables, there was a need for a differentiated approach, and the government would benefit from a specialised technical and financial support mechanism to assist municipalities. It was crucial that the skills within municipalities had to be upgraded and/or in-sourced.

DOCG looked at what had to be done to address the key service delivery challenges. The first approach was to implement a differentiated approach to municipal financing, planning and support. They had to improve access to basic services, implement a community work programme, support human settlement outcomes, focus on administrative and financial capability and have a single view of coordination. The SPV would assist poor municipalities with infrastructure planning and project management, and it would mobilise private sector funding. A Bulk Infrastructure Fund would ring-fence dedicated funding that would address backlogs of bulk infrastructure. The Grant Coordination Framework for local government would minimise duplication and ensure synergy of grants to support integrated human settlements. A review of current municipal infrastructure support programmes would be done.

For infrastructure provision to be effective in low capacity municipalities there would be direct support in the delivery of new infrastructure to eradicate backlogs, rehabilitation of existing infrastructure, effective operation and maintenance of infrastructure and aligning and structuring of capital funding and financing. This was the proposed role of the SPV. The SPV was proposed to support infrastructure delivery, maintenance and operations in low capacity municipalities that were unable to undertake these functions. In order for this to happen, they need a detailed diagnostic of the specific issues facing municipalities, agreements with municipalities for support interventions, access to transfers that would finance the needs and fund operations, and adequate accountability and reporting to the national and provincial spheres and the affected municipalities. The SPV would also gather planning and coordination support, procure relevant service providers, support delivery, promote the efficient and effective use of funding, offer operating support and develop municipal capacity. Technical support was needed to turn things around.

The SPV would coordinate the technical capacity needed to support infrastructure delivery and management. It would also monitor the effectiveness and impact of the support. In order to do so, the SPV would need a detailed diagnostic of the specific issues faced by the municipality, planning support areas to be agreed with the municipalities, and adequate accountability and reporting to the national and provincial spheres and affected municipalities.

By 2014 and beyond, the DOCG wanted to ensure better coordination and integration of efforts from all stakeholders involved in the delivery of municipal infrastructure and services. They wanted to fast-track the delivery of services, ensure better efficiencies in the delivery of municipal infrastructure, ensure that municipalities maintained their infrastructure, and mobilise additional resources from stakeholders. The SPV was a dedicated programme that would manage capacity and fast-track the delivery of services. It was a structure that would facilitate more effective inter-governmental accountability, and it had the ability to retain critical technical personnel and to rapidly procure and deploy services. The SPV also needed to have the authority and ability to deal with the complex intergovernmental issues that would need to be negotiated in order to expedite infrastructure delivery and improved management.

Discussion
Ms Ngcobo wondered how they would be able to roll out the SPV project with the capacity that the DOCG currently had. What mechanisms would the DOCG use to ensure the rolling out of the project? A lot had been said about the corruption experienced in tender processes. She wanted to know how the DOCG would deal with this.

Mr Ongama Mahlawe, Head of Infrastructure and Economic Development: DOCG, replied that for the kind of work the Department expected the SPV to undertake, it would require a lot of additional capacity, technical capacity specifically. The DOCG had looked at the type of capacity that they would need for the SPV to deliver on its mandate. This being said, the DOCG also wanted the SPV to be as “lean” as possible, except where technical capacity was concerned. They found that more than half of the low capacity municipalities did not even have engineers. Municipalities needed to find creative mechanisms such as the sharing of capacity to ensure service delivery. This was one of the mechanisms that the DOCG had considered including in the SPV project. The DOCG was conscious of the fact that they would have to work closely with the private sector as well as with state owned entities (SOEs) and community based organisations (CBOs). The DOCG was also in the process of figuring out what role the Development Bank of Southern Africa (DBSA) would play in the SPV project.

He answered that the DOCG would deal with corruption in terms of the Local Government Turnaround Strategy. The Department was putting various mechanisms in place to deal with this challenge.

Mr G Snell (ANC) addressed the DOCG’s desired outcomes and their budget going forward for the next three years. He asked if the budget would cover the desired outcomes and if not, what the shortfall was.

Mr Mahlawe used an example of the Bulk Infrastructure Fund to answer the question. For the DOCG to be able to meet the targets of 2014, they would need approximately R26.3 billion. They had outlined to National Treasury what this would entail. They looked at what they would need in order for the SPV to have sufficient capacity to deliver on its mandate. 

Mr Gelderblom addressed the Planning, Coordination and Monitoring (PCM) processes within the Department. He asked if there were monitoring mechanisms in place and if there was coordination between the national, provincial and local government. He also wanted to know what the co-operation was like between the different spheres of government when it came to planning processes.

Mr Mahlawe replied that PCM was the primary mandate of the SPV. The DOCG was proposing a joint monitoring and evaluation panel, which would comprise of a number of government departments that played a role in delivering infrastructure at the local government level. The DOCG was also looking at other kinds of mechanisms that were intergovernmental in nature and would ensure that the SPV delivered on its work. Cooperation and coordination amongst the three spheres of government had been a challenge for many years. The DOCG wanted to include mechanisms in the SPV project to ensure that provincial government also played a vital role in service delivery.

Ms R Mashigo (ANC) observed that the SPV programme was nationally based and looked at project management, infrastructure and coordination. She asked how the DOCG would run the SPV programme so that it was not going to micro-manage municipalities. It seemed that the programme imposed on the role of municipalities.

Mr Mahlawe answered that DOCG did not want the SPV to manage municipalities. The SPV would only be included in a municipality if there was an agreement with that municipality. The agreement would be very clear about what was expected from the SPV and what was expected from the municipality.

Mr De Beer asked how many engineers the DOCG had in their provincial departments in all nine provinces. He wanted to know if the engineers that built the stadiums in the country were part and parcel of their performance plan for the year. The performance plan had to be submitted to Parliament in February 2011. The Constitution said that national and provincial departments had to support local municipalities to perform. When the Committee visited the municipalities, they noted that this was the biggest problem. There was no coordination between local municipalities, Water Affairs and Public Works. The Northern Cape and Mpumalanga provinces did not have universities. In what way was the DOCG connected with educational institutions in order to help these two provinces?

Mr Mahlawe addressed the question on how many engineers the Department had. He said that at this stage, the DOCG was still planning for the SPV. One of the issues that they recognised was that provincial governments lacked capacity. The DOCG wanted to ensure that the SPV assisted municipalities as well as provincial government with capacity challenges.

He noted that there was a lack of support and assistance for municipalities. The biggest challenge within the three spheres of government was lack of coordination and integration of the work that was done. These were issues that had to be dealt with, or else the challenge of lack of coordination would persist. The DOCG had proposed some mechanisms to deal with these challenges.

Mr Mahlawe told Members that the DOCG was having discussions with universities to ask them to assist with challenges regarding the lack of infrastructure and service delivery in municipalities. The DOCG was also trying to secure funding for bursaries for technical students that would work for municipalities once they graduated.

Dr Rabie said that Mr Africa had stated that the quality of infrastructure that was being delivered was not up to standard and the maintenance of existing infrastructure was also lacking. One of the Members of Parliament from Mpumalanga told him that most of the municipal sewerage systems in Mpumalanga were not working. Apparently, there was a small amount of spillage that occurred in the province. The DOCG said that 48% of all municipal infrastructure grant projects experienced problems. He asked what the problems were and how the DOCG intended to rectify them.

Mr Mahlawe replied that one of the problems that the SPV would deal with was inefficiency. Municipal grant projects experienced corruption. The DOCG would ensure that municipalities categorised as having corruption challenges would be addressed through the SPV’s procurement mechanisms.

Mr Mahlawe answered that the quality of service delivery and lack of working sewerage systems in Mpumalanga was a serious problem. It spoke to the lack of operations and maintenance of infrastructure in provinces. For a very long time now, municipalities have not been maintaining their infrastructure. The DOCG wanted to take a two pronged approach to issues of operations and maintenance. The infrastructure would be rehabilitated and frameworks and mechanisms would be in place to ensure maintenance of the infrastructure. Maintenance was not a once-off thing; it was a practice that municipalities had to undertake.

He said that one of the problems that grant projects experienced was their inadequate design. This spoke to a lack of capacity within municipalities. There were also contract issues. The SPV would address all of these problems, especially problems regarding planning and design.

Chairperson Sogoni noted that the “Business Case” and proposal for interventions to speed up the delivery of basic services still had to be approved by Cabinet. This was concerning. It looked like the whole project relied on cooperation and coordination of all the government departments as well. The Committees hoped that the DOCG would succeed but they were also worried about the timeframes in which they would roll out the SPV project. This seemed like a mammoth task to undertake, but Members wanted the SPV to succeed. The Committee was also concerned about the amount of power that the SPV would have, as well as the amount of resources it would be using.

Chairperson Chaane added that in the past few years, the DOCG had made many changes to transform the local government. The Department was moving at a very fast pace, which he was concerned about some of the people and municipalities that were being left behind. Many municipalities were still trying to understand and implement the Local Government Turnaround Strategy. Now they were being bombarded with the Municipal Amendment Act and the SPV project. Municipalities also had challenges with financial mismanagement that resulted in a lack of capacity. The DOCG wanted to address the lack of technical support and skills. However, it seemed that the capacity challenge was not being addressed. The DOCG did not say how the SPV project would address municipal capacity problems in the medium and long term. He only saw the project as a vehicle that was going to take over the responsibility of ensuring bulk infrastructure in so far as technical staff was concerned. The community would be happy but the municipalities would remain incapacitated. He was mindful that this was a subject that would require further engagement with the Department.

Mr Africa informed Members that the Department had prepared a fairly detailed proposal that covered 90% of the issues raised by Members. However, some of the matters had not been processed politically yet.

Chairperson Chaane told Members to note that the SPV project was still being processed and there would be more discussions on it at a later stage after Cabinet’s approval. He thanked the DOCG for availing themselves at the last minute.

Committee Report on the Division of Revenue Bill: adoption
Chairperson Sogoni noted that the Standing Committee had approved the Report pending some amendments. The amended version was now available. He did not understand the process of adopting the report. Legislation said that a joint meeting had to be held, but he was not sure if the Committees had to adopt the report together or if each Committee had to adopt it separately.

Mr Mkethwa Mkhize, Content Adviser and Unit Manager, replied that legislation was silent when it came to how the adoption should be done. Other committees made the decision to follow the usual adoption protocols. In the National Council of Provinces (NCOP), a five province majority rule was used, and in the National Assembly (NA), a 50% plus 1 member rule was used. He thought it was safer to do it this way. 

Chairperson Sogoni clarified that the two Committees would then adopt the report separately.

Mr Mkhize replied that the legislation called for a joint sitting, not a joint Committee. There was a difference between a joint sitting and a joint committee. A separate report was needed from each Committee. The content was more or less the same and a quorum had to be observed for both adoptions.

Mr De Beer said that the Standing Committee on Finance and the Select Committee on Finance had recently adopted a report as a joint committee. He proposed that the Committee do it this way.

Mr Snell seconded Mr De Beer’s proposal. He asked how the process would unfold.

Chairperson Chaane clarified that the Standing Committee on Appropriations would adopt the report first. The Select Committee was not going to adopt today, as Members still had to await mandates from provinces. The Select Committee would adopt the report on 10 November 2010.

Mr Swart said that the legislation said that there was a period of nine days that had to lapse after the adoption of the Report before the Appropriations Committees should adopt it. If they adopted the report now, they would be squeezing it in to three days. It seemed that the Committees were not dealing with the report in the proper manner because there were no rules and no Budget Office in place. The Committee had agreed that they would debate the report on 16 November 2010 because this was when the report could only be adopted.

Chairperson Chaane noted that it was a serious concern that there was no Budget Office in place or that there was no actual procedure to follow. This matter had been raised with both the House Chairs of the NA and the NCOP and was being discussed.

Chairperson Sogoni added that he did not think that Members should prolong this debate. It had been agreed that the Standing Committee would approve the report today. The report had been amended and it was time to adopt it.

Mr D Mavundla (ANC) replied that the report had been adopted yesterday, and all that was outstanding was the conclusion of the report, which had now been included in the report.

Chairperson Sogoni noted that the Member was correct.

Mr Snell added that the Committee had to look at what its report should contain. The report had to say that the Committee recommended that the Division of Revenue Bill be adopted by the House and that Members saw no reason for amendment.

Chairperson Sogoni agreed that this would be clearly stated in the report. The Committee would continue with this discussion at another meeting.

The meeting was adjourned.

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