Municipal Public Accounts Committees: briefing by Department of Cooperative Governance, Free State & Western Cape Provinces

Meeting report

Department of Cooperative Governance (DCoG) presentation
The delegation from the DCoG was headed by the Acting Director General, Mr Muthotho Sigidi. In presenting the progress report on the MPACs, DcoG Executive Manager: Intergovernmental and Fiscal Relations, Mr Mizilikazi Manyike, took the Committee through an introduction on the MPACs, the MPACs as a response to the State of Local Government in South Africa: An Overview Report, the status of and the training on MPACs. The rationale for the MPACs was that the 2009 local government assessment study highlighted a number of root causes behind municipal problems. One of these was poor oversight. The MPACs aimed to contribute towards restoring the institutional integrity of municipalities.

Mr Manyike noted that a joint DCoG and National Treasury Guideline for the Establishment of MPACs was issued on August 2011. The Guideline took into account the valuable input by the South African Local Government Association (SALGA), Association of Public Accounts Committees (APAC), provinces, municipalities and the Local Government MinMEC. It acknowledged the Municipal Finance Management Act (MFMA) Circular 32 of 2006 which provided earlier guidance on the oversight process of councils. The Guideline provided further guidance on oversight matters and looked at MPAC functions, composition, membership, work programme, meeting arrangements and reporting. The Guideline was meant to assist municipalities in establishing MPACs in terms of the Municipal Structures Act and the MFMA to serve as an oversight committee to exercise oversight over the executive obligations of council.

The primary functions of the MPACs were to consider and evaluate the content of the annual report and to make recommendations to Council when adopting its oversight report on the annual report. The MPACs were also to assist with the conclusion of matters that were not finalised. Information about past recommendations were also to be reviewed – this related to current in-year reports, including the quarterly, mid-year and previous annual reports. The MPACs had the function of examining the financial statements and audit reports of the municipality and municipal entities, and in doing so, the committee had to consider improvements from previous statements and reports and had to evaluate the extent to which the Audit Committee’s and the Auditor General’s recommendations had been implemented.

On MPAC establishment statistics, Mr Manyike said that the 2011/12 DCoG’s Annual Performance Plan stated that 10% of MPACs should be established by 31 March 2012. To fast-track MPAC establishment, the DCoG advised the then Acting Minister of the Department of Cooperative Governance and Traditional Affairs (CoGTA) to request municipalities establish MPACs by 30 November 2011. MPACs which had existed before the recent local government elections had been dissolved with the dissolution of Councils. As of 31 March 2012, the number of MPACs were 223 of the current 278 municipalities. This represented 80% for the 2011/12 national financial year. As of 2nd August 2012, this had increased to 83% (232 municipalities). The Committee was presented with figures and details on the designation of fulltime MPAC chairs.

Training had been provided to assist with the functionality of MPACs. Since the MPACs were established, provinces were conducting orientation/induction sessions. Six provinces had conducted training workshops for all MPAC councillors at district-level from April to July 2012 to complement the induction sessions. The training sessions were a joint collaboration by APAC, provincial treasuries, provincial CoGTAs, provincial Auditor-General Offices, and guidance by National Treasury & DCoG where required. The seven provinces were Eastern Cape, Gauteng, Limpopo, Mpumalanga, North West, Northern Cape and Western Cape. KZN was intending to roll out its training from August 2012.

The DCoG worked closely with provinces (that primarily interacted with municipalities) and collaborated with provinces where there were issues of challenges. Collaboration included guiding the province or municipality in those instances where the municipality directly approached the department. It was through these engagements with the provinces that the Northern Cape which initially had problems was able to make serious inroad towards establishing MPACs. The department was still to interact closely with the Western Cape with respect to municipalities with outstanding MPACs.

The effectiveness of the MPACs would be seen firstly by the quality of the Annual Financial Statements and the increased number of municipalities with improved audit outcomes. Improving the functionality of MPACs required the support of all partners in areas where they were better positioned to add value.

Free State Department of Cooperative Governance briefing
The MEC for Cooperative Governance and Human Settlements, Ms Olly Mlamleli, led the delegation. Mr Kopung Ralikontsane, Head of Department for Cooperative Governance and Traditional Affairs gave the briefing on the MPAC situation in the Free State.

The Free State CoGTA was a partner in the establishment of the MPACs and was part of the MinMEC that decided on the establishment of MPACs. All the municipalities in the Free State were part of a national conference of SALGA on the establishment of MPACs. In a meeting for the MECs and Local Government (MECLOGA), the Free State municipalities took a collective decision to suspend the establishment of MPACs until such a time when there was an enabling legislation in place for the MPACs. The provincial department engaged with the municipalities to encourage the establishment of MPACs but the interaction was unsuccessful. The current MEC had meetings with SALGA and an agreement was reached that with effect from 15 August 2012, the municipalities would establish the MPACs. There was hope that after this general consensus, there was going to be a large improvement in the establishment of MPACs.

The major reasons for refusal by municipalities to establish MPACs resulted from the tensions and confusion related to the implementation of the new Municipal Systems Amendment Act. There were no legal provisions empowering an MEC to establish and enforce an MPAC.

The Free State CoGTA had conducted workshops on the Guideline for the Establishment of the MPAC and there was a general agreement on progress.

There was a unique situation in some municipalities as they had only about eight members in council. This was a challenge for the creation of MPACs. There was engagement with SALGA to come up with an approach to deal with the establishment of MPACs under such circumstances.

The Free State CoGTA was committed to reporting to the Portfolio Committee and all relevant authorities on the progress of establishing MPACs in the province.

Western Cape Department of Local Government presentation
Mr Seraj Johaar, Director for Municipal Governance at the Western Cape Department of Local Government, presented the concerns of municipalities about MPACs and the provincial response to these. Municipalities had the following concerns: the Guideline was not obligatory, they were doing what was necessary and MPACs would be a duplication, MPACs were going to increase costs, administrative and councilor capacity where there were small councils. The provincial response was that oversight was of critical importance and there was a need for a change of name for the Oversight Committee. On costs and duplication, the province held that there could be more meetings with insignificant costs and the duplication was insignificant if people continued to do what they were doing. On small councils and capacity, the province held that the small councils could decide on what to do and all role players were to assist to beef up the capacity.

In the Western Cape, ten municipalities had established MPACs and two municipalities had given firm commitments for their establishment.

With regard to progress with MPAC establishment, the Western Cape Province was supporting the APAC and MPAC training initiatives and it communicated the provincial position through municipal engagements. Oversight was prioritised and the importance of the role of the Speaker and part time councillors was emphasised. The province intended to send circulars to municipalities encouraging the establishment of MPACs and at the next political engagement with Mayors and the next Western Cape Speakers Forum, MPAC establishment was going to be emphasised.

Discussion
Mr J Steenhuizen (DA) asked if MPACs were a “silver bullet” to solve all municipal problems. He asked if the DCoG could give a list of provinces that were 100% compliant with MPAC establishment and how was the effectiveness of the MPACs measured.

Acting DCoG Director General, Mr M Sigidi, replied that in a municipal environment, there was not the possibility of getting one structure that could solve all the problems within a municipality. There were many external forces that played out at local government level and the entire leadership of the municipality was responsible for running that municipality. On measuring the effectiveness of MPACs, it was necessary to state if the measurement of MPAC effectiveness related only to financial issues or to general performance.

The Chairperson said that the objective was to ensure proper oversight. Seeking to achieve complete 100% compliance could lead to ineffectiveness in the actual objective of the programme.

Mr J Matshoba (ANC) asked the Free State MEC if specific reasons were given by the municipalities when they decided not to establish MPACs.

Mr Ralikontsane replied that there was no particular reason given by the municipalities. He said that it was basically political posturing.

Mr P Smith (IFP) asked if the guidelines were not weak in dealing with some of the challenges and if so were there any considerations made to deal with the challenges raised. Why had the DCoG engaged with other provinces but was yet to engage with the Western Cape? Were there any measurements and statistics to justify the effectiveness of the full time chairpersons of the MPACs?

Mr Manyike replied that the DCoG had indicated that it intended to have MPACs established country wide but if it had to prioritise, it would be the provinces where the bulk of the municipalities had challenges. That was why the engagements with the Western Cape would come at a later stage.

On the issue of the Guideline, the DCoG intended to provide guidance to municipalities and the municipalities had to adapt solutions to their local challenges. By way of legislation, there was nothing which said that the Chairperson of the MPAC should be a councillor from the opposition party.

Mr Sigidi said that the challenges in the Guideline should not hinder the establishment of the MPACs. The lessons learnt during the establishment process were going to inform how the challenges of the Guideline were going to be tackled.

Ms W Nelson (ANC) asked how the MPACs and other oversight committees were functioning in small municipalities. She asked why was it only the chairperson of the MPAC who was full time, considering that oversight had to do with overall performance within the municipality.

Mr Sigidi said that the DCoG was still ensuring the effectiveness of MPAC establishment and the experience gained from the establishment process would determine the approach in the handling of challenges in small municipalities.

Mr Manyike said the Guideline did not deal with the full time nature of the other members of the MPACs.

The Chairperson asked if any national departments had participated in the workshops organized by the DCoG. What were the challenges faced and what was the Department doing to address the challenges? What was the DCoG planning to do about the establishment of MPACs in small municipalities? She asked the Free State for details on the progress of the MPAC establishment and if there were other stakeholders who attended the trainings and workshops. She asked the Western Cape presenter for clarity on “administrative capacity” being a concern in establishing MPACs.

Mr Manyike said that the workshops were attended by the provincial governments and departments and the APAC. There was no consolidated report on the training and the training was flexible.

Mr Johaar replied that administrative capacity referred to the organisation of meetings and the effective functioning of the MPACs.

The meeting was adjourned.