Municipal Systems Bill: Chapters 5, 6 & 9

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Cooperative Governance and Traditional Affairs

28 August 2000
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Meeting report

28 August 2000

Relevant documents

Municipal Systems Bill
Working Document: Proposed Amendments to Municipal Systems Bill

Chapters five, six and nine of the Municipal Systems Amendment Bill were discussed and questions on these chapters were answered by the Department of Provincial and Local Government. The meeting was technical in nature as were most of the amendments to the Bill that were discussed. It was decided that Chapter 8 should be left to the technical sub-committee to consider.

The Chairperson, Mr Y Carrim (ANC), said that it was necessary that the committee check that the technical sub-committee had completed all the tasks it had been set to do. He noted that the committee would not reach consensus on everything and this had to be borne in mind. On the issue of constitutionality, that was up to other structures to determine.

Mr P Smith (IFP) asked whether Chapter 8 would be dealt with. The chairperson replied that the committee would look at it, but that it was not up to the portfolio committee alone to consider but rather that it should be looked at as part of a process and with consultation from all the relevant stakeholders.

Ms G Borman (DP) asked whether all the proposed amendments to the Municipal Systems Bill were included in the document that had been distributed to the committee? The Chair replied that there would be more amendments handed out later. He added that if there were changes other than legal, technical changes then they could be discussed, but otherwise they would be left alone.


Chapter 8 (Municipal Services)
The committee decided not to look at Chapter 8 but that it should be left to the technical sub-committee.

Chapter 9 (Credit Control and Debt Collection)
Clause 87 - Customer care and management
With reference to 87 (a) to (i), the Chair asked if the municipalities would be able to fulfil the obligations laid out and if so, when and where? Also, repeating a question raised by the Johannesburg Greater Metropolitan Council, did this section meet the requirements of the Water Services Bill?

Ms J Manche of the Department's delegation said that this section was the core of the bill in many ways, together with Clause 88. What was present in Clause 87 was essentially what was needed for an effective customer service programme. The department believed that all municipalities would be able to implement all of the provisions in Clause 87.

Mr P Smith said that there was an assumption that services would be measured by what was consumed. Did this apply to pre-paid services as well? Ms Manche replied that where there was metering, then accurate bills should be sent. Where there were subsidies, these should similarly be made clear.

The Chair asked what was the difference between pre-paid systems and billed systems? Ms G Borman said that bills must be clear with respect to what amounts were for what service. Everything should be clearly specified. Mr Sithole (ANC) added that he too believed that the billing was very important because there were cases where officials did not even know what the amounts on bills were for.

An ANC member commented that certain provisions did not apply here because pre-paid systems did not need any bill. An opposition member added that municipalities should have certain powers in this regard. Ms Manche replied that consumers paid more under pre-paid systems than under other systems. The Chair responded to this saying that he found it incredible, and that he had been unaware that this was the case. Dr Bauer from the department said that perhaps point (i) could include a reference to obtaining tokens for pre-paid systems.

An opposition member added that there had been cases where people's houses had burnt down and the units they had purchased for their pre-paid electricity accounts had been lost. Could provision be made for such circumstances at this point in the bill? Ms Manche replied that she did not know whether or not that could be raised at that point. It was something quite new and would still have to be looked into.

Mr Sithole (ANC) said that he thought that under certain circumstances, it would be impossible that large numbers of units which had been purchased could have been used in a short time frame and therefore consumers in the situation just referred to, should be reimbursed.

The Chair said that it seemed that everyone agreed that in principle people in such circumstances should be refunded. The committee should however look at this issue later, and in the meantime ask the department to also look into the matter. On the issue of pre-paid systems, and whether they cost consumers more or less, the committee needed to investigate further.

An opposition member asked whether certain provisions would not apply if electricity payments were made directly to ESKOM? The Chair replied that that was correct, however the matter still needed to be looked into further.

He then confirmed that Clauses 87 (a) to (d) were acceptable. He asked, under (e), what would happen if a private person said that the municipality had not taken reasonable steps to insure fair metering and as a result refused to pay? Ms Manche replied that they could not refuse to pay purely on those grounds as there might be other reasons why consumption could have changed, for example water consumption may have increased because of leaks on a person's own property. The Chair concluded that subclauses (e) through (i) were also acceptable, however he pointed out the inclusion of the word "prompt" under subclause (f).

Mr Smith asked whether cross-subsidisation would be reflected on bills? Was it included in these amendments? Ms Manche replied that that was where the department was headed, however those measures were not yet in place. Ms Borman remarked that, that was what she had asked about earlier and she had thought that it was covered under these amendments.

The Chair asked whether it was not covered under subclause (c)? Mr Smith said that he did not believe it was. The Chair said that perhaps these measures may be too difficult to implement. It may be more appropriate in developed countries, however it could well be too ambitious for South Africa to attempt it. Ms Manche said that she thought that Ms Borman's questions had been answered and she reassured the committee that the correct breakdowns relevant to each consumer would be provided on their bills. Cross-subsidisation however, would have to be indicated elsewhere.

Dr Bauer suggested that cross-subsidisation could be indicated elsewhere, other than on consumers' bills, for example in local newsletters. The Chair responded to this by saying that in two years or so this may be possible but currently it was not.

Mr Grove from the department said that he thought that there was a need for greater qualification in subclause (d).

Clause 88 - Debt collection responsibilities of municipalities
Subclauses (a) and (b) were acceptable.

Ms Borman asked whether the department currently had a national policy with respect to indigents? Ms Manche replied that the department did not yet have one, however with respect to water, for instance, a statement was expected to be made that the first 25 litres would be free.

The Chair said that much of this would be dealt with under the Department of Welfare, however it was still necessary to ensure carefully considered legislation.

Dr Bauer noted that with respect to accounting methods, they needed to be consistent. The Chair said that principle was acceptable and he trusted that the department would take care of the details in this respect.

Clause 89 - Contents of policy


Interest on arrears
Mr Smith asked whether the amendments were saying that interest on arrears should be paid? Could there not be an interest rate of 0%? The Chair replied that he did not know that this was possible, however it did seem sensible. Were some municipalities already doing this?

Another ANC member asked whether, if someone built a very expensive house in a lower income area and then became unemployed, would they be charged interest on their unpaid rates bills? Ms Manche replied that with people in less affluent areas who genuinely could not afford rates, the department needed to come up with creative indigent policies.

Ms Borman asked how the department differentiated in this regard, between affluent and less affluent areas? Ms Manche replied that what they were dealing with here, concerned a particular time and particular circumstances and therefore did not govern normal market situations.

The Chair said that it was necessary to more clearly define what an indigent person is. Also, it was not up to the committee to decide on policy in this regard. He declared that all of the clauses up to 89 (2) were acceptable.

Ms Borman asked what support municipalities could expect with respect to their attempts to engender a culture of payment for services. Ms Manche replied that the cutting off of services to people who had not paid, was an absolutely last resort. This Bill had to be looked at in totality. Consultations had to be entered into first, before people's services were disconnected.

The Chair said that he thought that it was necessary to separate the truly indigent, from those who could in fact pay and he reiterated that cutting off a service such as water, should be considered an absolutely last resort. He also agreed that consultation needed to occur. Support could be given to municipalities from the national government level and from individual political parties.

Mr Sithole (ANC) said that sometimes when councils took actions, councillors claimed that it was not initiated by them but instead by MECs, for example. The Chair indicated his agreement with this.

The Chair asked for further clarification of Clause 89 (2), Ms Manche replied that this clause was saying that different debt collection policies could be in place for different categories of ratepayers, for example between private and commercial ratepayers, and for different types of services, eg water and electricity. Dr Bauer added that there may also be different types of electricity supplied to, for instance, big industrial plants.

Mr Sithole (ANC) asked how the committee could get information on whether or not it was the case that big companies were not paying for services? It seemed that only the poorest of the poor were sometimes targeted for non-payment for services. Ms Manche replied that there were situations, for instance, when the top three debtors could account for the bulk of a municipality's debt. Currently, municipalities could not tell the age of a debt and this needed to be cleared up.

An opposition member asked that it be cleared up that what was meant by different categories of ratepayers, was domestic, industrial and commercial? Ms Manche replied that this was correct, and it was specified elsewhere in the bill.

Clause 90 - By-laws to give effect to policy
The committee found the changes to this clause acceptable.


Clause 91 - Supervisory authority
Clause 91 (b) needed to be changed so as to remove the word "adapt" from policies and by-laws.

Clause 92 - Implementing authority
The Chair asked whether, under 92 (b), there was a difference between "due" and "payable"? Dr Bauer answered that "due" might mean that an amount was owing but not yet payable, where as "payable" meant that the amount was already in arrears.

Mr Sithole (ANC) asked what would happen in circumstances where owners did not give access to municipal officials to their property? Ms Manche replied that the municipality could, in that event, bill the person for an estimated amount.

Clause 94 - Accounts
The Chair pointed to the provision whereby councils could take funds paid for one service and use them to pay another service. He said that the Institute of Local Government Managers had raised the point in their submission that some of the clauses may be unconstitutional. This was repeated in other submissions too.

Mr Grove asked on what grounds they were considered to be unconstitutional? The Chair replied that it was in fact up to the department to determine whether or not it was unconstitutional. However he did provide one example of how it might be so: if a person contested their electricity bill but paid all their other bills, then it may be unconstitutional to take the money they paid for water, and use it for electricity. Ms Manche replied to this that the reason this clause was necessary was because it was easier to cut off electricity than other services. A lot of people chose to pay their electricity bill but not their rates bill. This was currently a problem for municipalities.

Ms Borman said that it had been reported that some people were paying only their bond payments because the interest rates were higher on those than on unpaid council bills. Was it not possible to see an equalling out of interest rates on bills for services?

Mr Bhabha (ANC) said that this was not about interest rates. Often decisions were taken to cut off services, after cases had been handed over to lawyers. This system was open to abuse.

The Chair said that there were also examples where municipalities claimed that cases were out of their hands and were in the hands of their lawyers. In addition, it was possible that where a person could owe, for instance R800 for services, they may well owe another R1100 in interest and another R1200 in lawyer's fees.

Mr Smith asked why it was necessary to empower a municipality to have consolidated accounts? Why did the committee instead not try to make it the norm that all municipalities would use consolidated accounts? Wouldn't that simplify the process?

Clause 95 - Agreements with employers
Mr Grove said that Clause 95 could be assisted with a clause adding that the provisions only applied where there was a dispute. The Chair said that Clause 95 (a) was acceptable, but asked under Clause 95 (b), what incentives were being referred to there? It was not apparent that his question was answered.

Mr Sithole (ANC) said that it was an employer's responsibility to pay workers sufficiently well so that they could pay their bills. The Chair added to this, the question of why incentives for employees could not be included in this section in addition to incentives for employers?

The Chair noted that the terms "structures", "functionaries", "staff", "municipal managers" and even "officials" and "councillors" weren't used consistently. He appealed that simple and consistent language be used in order to differentiate between the municipality, the officials and the people. Was it not also possible to have a technical definition included here, of the very term "municipality"?

Chapter 5 (Integrated Development Planning)
Mr M Bhabha (ANC, Mpumalanga) who took over as the Chair of the meeting, said the amendments in this chapter were indicated by italics.


Clause 20 - Municipal planning to be developmentally oriented
There were no amendments.


Clause 21 - Municipal planning in co-operative government
In Clause 21 (1) [b] the word "must" was put in, to remove the discretion of municipalities. There was a grammatical error in (4) where the word "organs" should in fact be "organ".

Mr Carrim said that he thought the committee was moving too fast on that section. What, for instance, did 21 (3) (b) (ii) mean? Also, he stated that what had struck him about subclause (3), was that there was too much leeway for future legislation. Wasn't it possible to lay down guidelines?

Mr Grove replied that it was not possible to do that because then the Bill would be laying down guidelines for Parliament. The best one could do was to ensure consultation. Mr Carrim asked whether it was not possible to do that then? Mr Grove said that that could be included there. Mr Smith commented that with respect to this section, one could not have the tail wagging the dog.

The Chair suggested that in Clause 21 (4) in the clauses dealing with subordinate legislation, the term "that legislation" be used. In (3) (a) there was also a change to make reference to 28A(1) (b) (i), (c) and (d). Mr Carrim questioned whether it was necessary to refer to (c) and (d) here? Mr Grove replied that for a full consideration, it was necessary.

Clause 23 - Core components of integrated development plans
The Chair said that the way Clause 23 (1) (b) was defined, was very important. Mr E Africa from the department explained that what was being done in this section was the laying down of a definition for what were basic services.

Mr Smith said that the bill would be putting an obligation on municipalities to determine whether basic services were being delivered. Who actually defined what were basic services? Ms Borman said that she thought it was up to the municipalities themselves to determine this. The Chair disagreed, saying that he believed that there should be a common definition. Mr Carrim said that basic services should be common to each municipality across the country but the minimum could be different for richer or poorer municipalities.

Mr Carrim asked what was meant by "safety" in Clause 23 (1) (b). Mr Africa replied that it was for interpretation by each municipality. Mr Carrim (ANC) said that the committee would therefore defer this matter and he himself would follow it up later.

The Chair said that there were no changes in subclauses (c) to (f).

Mr Carrim (ANC) asked whether there would be multi-year budgets in line with the Medium Term Expenditure Framework (MTEF)? Mr Africa replied that this was already starting.

Mr Carrim (ANC) said that he thought the rest of the bill, should be laid out as clearly as it was in this section. The Chair said that the remainder of Clause 23 and the whole of Clause 23A were acceptable.

Mr Carrim (ANC) asked whether it could not be taken into account that a municipality had a draft Integrated Development Plan (IDP) in those cases where they did indeed have one?


Clauses 28 (Drafting of integrated development plan) to 31 (annual review and amendment of integrated development plan) were acceptable.

Clause 32 - Status of integrated development plan
Mr Carrim (ANC) asked why Clause 32 (1) (c) was stated the way it was insofar as it was to be classed as a by-law? Mr Africa replied that the Department of Land Affairs had said to them that certain parts of an IDP could be put into a by-law. Mr Grove suggested that the word "other" should be put in at that point so that the amendment read, "all other persons".

Clause 34 - Regulations and guidelines
The Chair said that Clause 34 (1) (c) had been flagged to be revisited.

Chapter 6 (Performance Management)
Mr Carrim said that performance management should not be a punitive thing, but should rather include incentives. He also asked that since there was now a 21 day period for consideration, was it still necessary that some items be referred to ad-hoc committees?

The Chair said that there were two different types of performance measurement. Mr Carrim corrected him, saying there were four different types and they had already been outlined. This was a political matter.

Clauses 35 (Establishment of performance management system) and 36 (Developing performance management system) were acceptable.


Clause 37 - Monitoring and review of performance management system
Mr Carrim asked whether the sequencing should not be changed? Mr Grove replied that it should be moved to after Clause 41. Mr Smith disagreed, saying that he thought it should stay where it was. Mr Carrim said that it may as well, since it was too much of a fuss to consider where else it might go.

Clauses 38 (Core components) and 38A were acceptable.

Clause 39 - General key performance indicators

Mr Carrim said that Clause 39 was flagged for the committee to come back to later.

Clause 43 - Publication
Clause 43 (b) (iii) was flagged as it needed to be revisited.

The Chair concluded that the remainder of Chapter 6 was acceptable and that other sections, including the whole of Chapter 7, could be reviewed by the technical sub-committee. He then adjourned the meeting.


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