The Portfolio Committee on Cooperative Governance and Traditional Affairs and the Portfolio Committee on Public Service and Administration were briefed by the MEC’s responsible for local government authorities in the Limpopo, Free State, Eastern Cape, North West and Mpumalanga provinces.
The Public Service Commission presented a briefing on the Commission’s report on the assessment of recruitment and selection practices of Section 57 managers and municipal managers, published in March 2011. 27 local government authorities had participated in the study. The municipalities were classified in seven categories. A summary of the findings on the existence of policies, procedures and strategies; the creation of awareness of policies among staff; the review of policies and procedures; the utilisation of recruitment methods and techniques in job evaluation and advertising; the development of recruitment and retention strategies; the utilisation of external recruitment agencies; the selection processes followed; the interview processes followed; the turnaround time for filling vacant posts and the vacancy rate of municipalities was provided.
Recommendations included the establishment of regulations on recruitment and selection; subjecting recommended candidates for senior positions to competency assessment tests; subjecting all candidates to security vetting prior to appointment; verifying the qualifications of candidates, checking references and credit records prior to appointment; improving record-keeping in the human resource departments of municipalities; restricting advertisements to funded vacant posts; establishing guidelines on the declaration of conflict of interest by members of the selection panels; development of a toolkit on the implementation of human resource plans and finalising the TASK job evaluation system.
Members queried the delay in promulgating the regulations provided for in the Municipal Systems Amended Act, which was passed in July 2011. The regulations would address most of the issues raised by the Commission. The Deputy Director-General of the Department of Cooperative Governance and Traditional Affairs advised that the draft regulations were nearing completion and would be released for public comment in the near future. Other questions from Members concerned political interference in the appointment of municipal officials; the use of recruitment agencies by local government authorities and the level of knowledge of councilors of what the position entailed.
The MEC’s of the Departments of Cooperative Governance and Traditional Affairs of the Limpopo, Free State, Eastern Cape, North West and Mpumalanga provinces presented briefings on the local government authorities (municipalities) in the respective provinces. The provinces were asked to report on the audit outcomes, the functionality of governance and financial management structures, outstanding amounts owed to municipalities by Government departments, service delivery, bulk infrastructure and instances of fraud, corruption and maladministration at municipalities. The briefings included assessments of the current situation at municipalities, the challenges and problem areas as well as the interventions and corrective measures put in place by the provincial authorities.
The provinces reported similar problems at the local government level. Few municipalities received unqualified audit opinions from the Auditor-General, most had received qualified opinions or disclaimers for consecutive years and a few had failed to submit annual financial statements on time. Substantial unauthorised, irregular and fruitless and wasteful expenditure were reported. Many senior management positions remained vacant due to the lack of technical and financial management skills in the country and the difficulty in attracting suitable candidates to the more remote areas. Municipal officials failed to carry out their responsibilities and there was a lack of accountability by mayors and councilors. There were no consequences for non-performance by municipal officials. The Municipal Infrastructure Grant allocations were not spent as a result of a lack of adequate forward planning and technical skills capacity. Conversely, inadequate funding provision was made for replacement of aging bulk infrastructure and for the provision of new bulk infrastructure to meet increased demand. Inter-governmental cooperation and supply chain management were identified as challenges. Allegations of fraud, corruption and maladministration had been made against officials in several municipalities. Municipalities were owed substantial amounts by Government departments for municipal services and rates.
The provincial authorities had implemented a range of corrective measures to address the governance and financial management challenges. Interventions included the appointment of accounting and auditing firms to provide financial management support; the deployment of graduates, interns and retired officials to provide financial and management assistance; the establishment of Municipal Public Accounts Committees; the establishment of Municipal Turnaround Strategies; the establishment of various forums, steering committees and planning frameworks; the establishment of governance structures, audit committees and internal audit units and the assessment of the Integrated Development Plans of municipalities. Dysfunctional municipalities were placed under administration in terms of Section 139 of the Act. Allegations of corruption, fraud and maladministration were referred to the Special Investigations Unit for investigation. Performance agreements with mayors, councilors and senior management officials were entered into. Municipalities were required to conduct annual performance appraisals.
The provinces reported that the interventions had resulted in an improvement in the performance of municipalities. An improvement in the audit outcomes for the 2011/12 fiscal year was anticipated.
Members of the Committees asked questions about the transfer of skills from external consultants and the plans for increasing the skills of officials; whether billing disputes had been resolved; access by the provincial authorities to the management letters issued by the Auditor-General to municipalities; the non-performance of municipal officials; disciplinary action taken against officials; performance agreements, appraisals and bonuses; legal action taken against Government departments for outstanding debts; the monitoring measures in place and whether the employment history of applicants were investigated.
The Committees intended to follow a cluster approach in future in order to deal with the issues affecting local government authorities. Members queried the effectiveness of Section 139 interventions and suggested that separate briefings on the subject were held in order to determine if any legislative amendments were necessary.
Members of the Portfolio Committee on Cooperative Governance and Traditional Affairs and the Portfolio Committee on Public Service and Administration, provincial representatives and other attendees introduced themselves. The proceedings were the first joint meeting of the Committees. The Committees received many reports and intended to follow a cluster approach in future.
Briefing by the Public Service Commission (PSC)
Mr Ben Mthembu, Chairperson of the PSC stressed the importance of human capital, effective recruitment and selection processes and the appointment of suitable candidates by local government authorities. The Commission had published its report on the assessment of recruitment and selection practices in respect of Section 57 managers and municipal managers in March 2011.
Mr Dovhani Mamphiswana, Deputy Director-General, PSC presented the briefing to the Committees (see attached document).
27 municipalities participated in the study. Seven categories of municipalities were identified according to size of budget, size of population, rural or urban location and whether or not the municipality was also a water service authority.
The study examined the existence of policies, procedures and strategies; the creation of awareness of policies among staff; the review of policies and procedures; the utilisation of recruitment methods and techniques in job evaluation and advertising; the development of recruitment and retention strategies; the utilisation of external recruitment agencies; the selection processes followed; the interview processes followed; the turnaround time for filling vacant posts and the vacancy rate of municipalities as at October 2010. The findings of the study were summarised.
The Commission recommended that regulations on recruitment and selection were developed; that recommended candidates for senior positions were subjected to competency assessment tests; that all candidates were subjected to security vetting prior to appointment; that the qualifications of recommended candidates were verified, references checked and credit records were checked prior to appointment; that record-keeping in human resource departments in municipalities were improved; that only funded vacant posts were advertised; that guidelines on the declaration of conflict of interest by members of the selection panels were developed; that the South African Local Government Association (SALGA) developed a toolkit on the implementation of human resource plans and that SALGA finalised the TASK job evaluation system as soon as possible.
The Commission concluded that effective human capital management was crucial for the provision of municipal services and the achievement of the country’s development goals. Sound recruitment and selection processes were of particular importance in the appointment of senior administrative managers of local government authorities.
Ms Nlhengethwa suggested that a provincial breakdown was provided in future reports issued by the Commission.
Mr A Williams (ANC) asked if the PSC recommended any changes to the Public Service and Administration Act (PSA).
Mr J Steenhuizen (DA) observed that the Municipal Systems Amendment Act was passed in July 2011. The regulations dealing with the appointment of municipal managers provided for in the Act had not been finalised. The regulations would have addressed most of the issues highlighted in the PSC report and would have improved the situation. It was important that the background of municipal officials were checked as there had been instances of ‘rogue’ officials moving from one municipality to another, leaving a trail of destruction behind them. Municipalities had to check whether there had been any disciplinary action taken against an official transferring from another local government authority.
Ms C Mohale (ANC) said that councilors serving on selection panels needed to understand the job requirements. Councilors were responsible for oversight over municipal managers and must understand what the position entailed.
Mr D Du Toit (DA) said that the issue of political interference in the appointment of municipal officials had to be addressed. He accepted that it was the prerogative of the ruling party to appoint favoured candidates but it was not clear who was responsible for ensuring that there was uniformity in the appointment process. Local government authorities could circumvent the requirement that only funded posts were advertised by changing their organisational charts. The process of establishing regulations for the recruitment and selection of municipal officials had been underway for more than ten years but had not been finalised. He wondered what the cost to the country of the delay had been. He asked how vacant posts could be filled when selection panels did not understand what the job entailed. The Commission’s recommendations were not detailed enough and implementation could not be monitored. He said that municipal officials were a law unto themselves and councilors simply rubber-stamped the budgets. Another problem was the restriction of a certain percentage of the wage bill to cover pension benefits.
Mr T Bonhomme (ANC) asked why the eThekwini Metropolitan Municipality was the only municipality that had not used the Local Labour Forum to create awareness of policies among staff.
Mr Clifford Motsepe (MEC Limpopo) said that the national and provincial tiers of government were responsible for putting laws and regulations in place and were reasonable mature. The local government level needed more development. Municipalities would not carry out security vetting of candidates unless compelled to do so by legislation. There were 283 local government authorities and few security vetting agencies.
Ms W Nelson (ANC) asked what the role was of the provincial Departments of Cooperative Government and Traditional Affairs in the appointment of municipal officials. She said that it made no sense for municipalities making use of recruitment agencies. She asked the national Department of Cooperative Governance and Traditional Affairs (DCOGTA) to take up the matter of the delay in finalising the TASK job evaluation system with SALGA, which had been outstanding for a number of years.
Ms Nlhengethwa noted that external recruitment agencies were used because the municipal management did not understand the requirements for the vacant post. She wondered how the municipal manager would be able to monitor the performance of the person appointed to the post.
Mr Mthembu said that one of the key findings of the study was that there were no norms and standards in place to guide local government authorities. The Municipal Systems Act was amended after the PSC study was completed but the regulations provided for in the legislation were still outstanding. The system of local government was highly decentralised but no overarching framework was in place. The sooner the regulations were promulgated the sooner there would be consistency at the local government level. He agreed with Members’ comments in this regard.
Mr Mamphiswana referred Members to the published report, which included more detail on the findings. He agreed that the system currently allowed officials to be transferred to other local government authorities despite there being problems in the official’s track record. The employer only became involved at the end of the recruitment process when a limited number of short-listed candidates were put forward by the recruitment agency. The PSC had difficulty in finding documented evidence of the recruitment and selection processes followed by certain municipalities. More cooperation between MINMEC and SALGA was required to ensure that policies were in place and uniformly applied. In certain cases, the councilors serving on the Labour Forums were knowledgeable. The PSC was constrained by limited resources and the report focused on highlighting the main issues.
Ms Shanaaz Majiet, Deputy Director-General, DCOGTA advised that the Department would liaise with the PSC on the findings of the study. She conceded that the regulations were long outstanding. The Municipal Systems Amendment Act was passed in July 2011 and included important changes. The regulations would respond to the recommendations of the PSC. The Minister had met with the MEC’s on 16 August 2012. Suggestions on improving the regulations were made during the engagement. DCOGTA had held extensive consultations with SALGA. The technical team appointed to draft the regulations had submitted its report to MINMEC. A special meeting would be held to resolve the outstanding issues before the Minister released the regulations for public comment.
Ms Moloi-Moropa pointed out that Section 195 (2) of the Constitution dealt with public enterprises but excluded local government entities. The PSC report was valuable. The Committees received other reports from the PSC as well. A framework to review Section 195 (2) had been developed. The question was if the local government sector was achieving the democracy goals envisaged. A workshop had been held and a report was expected by the end of September 2012. The report was expected to clarify the status quo, identify the problem areas and indicate where action needed to be taken. The high vacancy rate in municipalities was an ongoing problem. She asked if the vacant posts were still valid. The PSA required local government authorities to implement their organograms after consultation with the Minister. A report on the utilisation of external agencies by the State would indicate all the issues that needed to be addressed.
Briefing by Limpopo Provincial Department of Cooperative Governance, Human Settlements and Traditional Affairs
Mr Clifford Motsepe, MEC presented the briefing to the Committee (see attached document).
The briefing included an overview of the 2010/11 audit outcomes for the 30 municipalities in the Limpopo province. Five municipalities received unqualified or clean audit reports; four received disclaimers; eight received adverse reports and thirteen received qualified audit reports. The audit outcome trends over a five year period for the province and for the best and worst performing municipalities were included.
Common findings by the Auditor-General (AG) concerned the failure of 3 municipalities to submit annual financial statements (AFS’s) on time; the failure to account for assets in accordance with the GRAP 17 accounting standards; accounting for water transactions between water services providers and district municipalities; the high level of irregular expenditure; poor record-keeping and the failure to process and reconcile transactions on a daily, monthly and quarterly basis.
The AG had identified the failure of mayors and councilors to take responsibility for financial controls; the lack of consequences for non-compliance and the lack of consequences for poor performance as the root causes.
Provincial interventions included the commissioning of four accounting firms to provide technical support; strengthening provincial oversight; strengthening local leadership oversight; building financial management capacity and strengthening governance capacity. There were currently seven vacant Chief Financial Officer (CFO) positions in the province but it was difficult to attract suitably qualified candidates. Problematic expenditure patterns were caused by the absence of forward planning. All municipalities had Municipal Public Accounts Committees (MPAC) and internal audit units. Most municipalities had external audit committees.
The total amount owed to municipalities by Government entities as at June 2012 was R285.9 million. The Provincial Debt Forum was established to resolve the challenges and to monitor the payment of accounts by Government entities. R32.3 million was received during the quarter ending June 2012. An analysis of payment trends and the key challenges were provided.
The province was allocated R235 million from the Integrated National Electrification Programme, R2.463 billion from the Municipal Infrastructure Grant (MIG), R481.2 million from the Regional Bulk Infrastructure Grant and R318 million from the Urban Settlements Development Grant for the 2012/13 fiscal year. Major infrastructure programmes included the De Hoop and Nandoni dams, eight regional bulk infrastructure projects, the Lephalale Local Municipality and the Tubatse and Musina/Makhado corridor.
In 2009, the total population of Limpopo was 5.6 million. The number of households was 1.4 million. As at June 2012, the basic services backlog was 10% for water services, 36% for sanitation services and 16% for electricity services.
An overview of the MIG expenditure revealed that the province had spent 74% of the total grant for the 2011/12 fiscal year. R531 million was unspent, of which R134 million was rolled over to the following year. The total MIG for 2012/13 was R551.5 million. Lack of forward planning by municipalities was the main reason for the under-spending. A provincial framework for infrastructure forward planning was developed to address the problem.
Details were provided of the initiatives to improve governance in the province. There were currently 22 senior management vacancies in Limpopo municipalities. The CFO of the Capricorn District Municipality was under suspension. 12 municipalities were involved in the Municipal Turnaround Strategy (MTAS). The credibility ratings of municipal Integrated Development Plans (IDP) showed a steady improvement over previous three years.
Anti-corruption initiatives included the black-listing of 24 housing contractors and investigations by the Special Investigations Unit (SIU) into allegations of fraud and corruption at eight municipalities. Details were provided of provincial intervention in accordance with Section 105 of the Municipal Systems Act at the Blouberg, Molemole, Mookgopong, Mogalakwena and Musina municipalities.
Ms Nlhengethwa noted that the province had solutions for problem areas and that measures had been introduced to address the challenges. The province had given commitments to the Committees to resolve the problems.
Ms Nelson said that it was understood that there was a shortage of technical and financial skills in South Africa. She asked what plans were in place to address the skills shortage in particularly rural areas. She asked what progress had been made by the task team appointed to collect the amounts owed by Government entities. She asked if disputes about billing discrepancies and other issues were resolved. She asked if the province was in possession of the management letters issued by the AG.
Mr Du Toit agreed that the management letters contained a lot of factual information that should be made available to the audit committees as well.
Ms Mohale suggested that the information provided in the briefing should be made available to the municipalities. Residents wanted to see visible service delivery and under-spending of the MIG was not acceptable. She asked what the consequences were and if any action was taken against the responsible officials for the failure to spend the available funding. The asset registers had been an issue since 2006 and needed to be finalised without further delay. Steps needed to be taken to ensure middle management was on board and doing their job. She asked what measures were in place to ensure that the external accounting firms appointed to provide support actually transferred skills. There was a need to educate local government employees on their job functions.
Mr Williams observed that the overall trend indicated that there had been some improvement in financial management at the local government level. He applauded the anti-corruption measures put into place. He asked for more information on the capacity building plans, the transfer of skills to employees and the up-skilling of employees. More information on the money owed by Government institutions was required so that the Committees could determine the extent of the debt and consider possible solutions.
Ms F Boshigo (ANC) asked what disciplinary action had been taken against employees for transgressions. She noted that the briefing provided details of the intervention at three municipalities but there were eight municipalities with capacity problems.
Mr Bonhomme observed that the Department of Basic Education owed almost half of the total outstanding amount. He asked when punitive measures would be taken against entities that failed to pay their accounts. He asked what the reason was for the increase in MIG expenditure towards the end of the fiscal year.
Mr Motsepe agreed that there was a national shortage of technical and financial management skills. The National Development Plan (NDP) included proposals to address these challenges but was long term vision. The short term solution had been to appoint external accounting firms to provide support to the municipalities affected by a lack of financial management capacity. Service Level Agreements (SLA’s) with the firms were entered into and the key deliverables included identifying municipal employees that could be provided with further training. The total State debt was R285 million and R32 million was recovered by the end of June 2012. A Cabinet resolution bound the provincial MEC’s to engage with the local government authorities on the problems with unreliable data and billing disputes and to find solutions. There were more than 4000 schools in the province. School property belonged to the provincial Department of Basic Education. The outstanding amount was for property taxes and services. The recovery rate had improved and he was confident that the outstanding issues would be resolved. The MEC held quarterly meetings with the mayors to discuss remedial action plans in response to the matters raised in the management letters issued by the AG. Mayors were required to report on the progress made in resolving all audit matters before the end of the financial year. The major reason for under-spending of the MIG was a lack of forward planning. A provincial framework to address the issue had been developed. The framework took the various lead times and deadlines into account.
Mr Motsepe agreed that problems with asset registers were long standing but were exacerbated by the imposition of the GRAP 17 standards. The major problem was with water assets. Water assets belonged to district municipalities but were administered by local government authorities. A possible solution was to dissolve the district municipalities, as proposed in the White Paper on Local Government. Disciplinary action had been taken against three officials who were not authorised to approve quotations for small amounts. The loss was recovered by salary deductions. The AG had not considered the transgressions to be material but had recommended that disciplinary action was taken against the officials concerned. There had to be consistency in applying disciplinary measures and the province was not afraid to dismiss an official if large sums were involved. A turnaround strategy for the Sekhukhune Municipality was being developed. A similar intervention at Capricorn the previous year was expected to result in an unqualified audit report for the current year.
Ms Nlhengethwa observed that municipalities in the Western Cape were required to develop plans for a five year period rather than the three year period required by the legislation.
Briefing by the Free State Provincial Department of Cooperative Governance and Traditional Affairs
Ms Matawana Mlamleli, MEC reported that the province experienced similar problems with attracting suitably qualified financial management skills. Interventions included deploying municipal managers and CFO’s to municipalities when necessary. The Setsoto Local Municipality was most affected by service level protests and administrative instability. The province had to intervene by deploying people to carry out the functions of Municipal Manager, Manager for Corporate Services and Manager for Technical Services. The Nala and Masilonyana municipalities were placed under administration in terms of Section 139.
Mr Kopung Ralikontsane, Head of Department presented the briefing (see attached document).
The briefing included an overview of the provincial DCOGTA audit outcomes for the previous three years. The splitting of the DCOGTA and the Department of Human Settlements in 2009 had had a major impact on financial performance in prior years. The DCOGTA received an unqualified audit opinion for 2011/12.
The overview of municipal audit outcomes reported on the measures put in place to enhance good governance at local and district municipalities; the implementation of municipal turnaround strategies (MTAS); the functioning of Ward Committees; service delivery protests; Section 139 interventions and the implementation of MPAC. The audit outcomes of the five district municipalities; 25 local government authorities and 6 municipal entities for the period 2008/09 to 2010/11 were summarised. Three local government authorities received qualified audit reports, eight received unqualified reports and the financial statements of three entities were outstanding for the 2010/11 fiscal year. Three municipalities had effectively functioning internal audit units and seven had effectively functioning audit committees.
The total amount owed to municipalities by Government entities was R295 million as at June 2012. An Inter-Governmental Debt Steering Committee was established by the province in August 2011. At the time the total State debt amounted to R436 million.
Supply chain management (SCM) challenges included the awarding of tenders to State officials and their close family members, uncompetitive or unfair procurement processes, inadequate contract management and inadequate controls. Libraries, health services and the replacement of aging infrastructure remained unfunded mandates. ESKOM provided technical and training support to improve service delivery in the province.
The IDP status of the 24 local government authorities in the province was assessed. Thirteen municipalities received a high rating. Financial management and inter-governmental support were identified as the main IDP challenges.
Data was provided on the provision of bulk water and sanitation services to households. 98% of the target to provide water services and 96% of the target to provide sanitation services to 615909 households by 2014 had been achieved. The challenges with providing water and sanitation services were summarised.
Details were provided of the incidents of maladministration, fraud and corruption at the Nala, Setsoto and Matjhabeng municipalities. The South African Police Service (SAPS) had reported that little or no cooperation were received from municipalities on cases of fraud and corruption.
Ms Nlhengethwa observed that problems arose in municipalities where the governance structures were not in place. She suggested that MEC’s ensured that structures such as internal audit units and audit committees were in place and functional.
Mr Steenhuizen noted that only six municipalities in the Free State had received unqualified audit reports. Thirteen municipalities had received disclaimers for three consecutive years. The Nala Municipality had not submitted financial statements for two years. There were no consequences for the failure of the political leadership to improve the financial performance of local government authorities. It was necessary that targets were set and that the responsible officials were held accountable when the targets were not met.
Mr Du Toit said that audit reports had to be approved by the municipal council. He asked how the province dealt with instances where there had been collusion between councilors and officials.
Ms Mohale wanted to know how the province found people to deploy to municipalities with vacant senior management positions. She asked why the deployed officials were not appointed on a full-time basis. She asked why the local government authorities had not approached the province for assistance with approaching the National Treasury with requests. She expressed disappointment over the audit outcomes in the province. Officials were paid to do a job but failed to deliver.
Ms J Maluleke (ANC) asked if the projects funded by the province were monitored. For example, funds were paid to a contractor to deal with open toilets in the Free State. It would appear that the province waited for the AG’s report before becoming aware of problems.
Ms C Mosimane (COPE) asked what systems were in place to address the SCM challenges.
Ms Moloi-Moropa said that there was a need for the Committees to investigate certain issues in depth. For example, the issue of aging infrastructure needed to be given more attention. The anti-corruption strategy required a collaborative approach by the local, provincial and national governments. The PSC had reported on the same problems highlighted by the provincial authorities. The National Treasury had briefed the Committee on procurement systems but the briefing had not given Members much comfort. It was necessary to find solutions for the problem of corruption. Assistance was available but it appeared that certain municipalities were in denial and refused to accept help.
Ms Nlhengethwa remarked that the existing, aging municipal infrastructure was not coping with the expanding population. There was insufficient funding to support the current demand for bulk services. Breakdowns of bulk infrastructure also threatened the health of the community.
Mr Bonhomme noted that a stipend of R500 was paid to Ward Committee members. He felt that stipends should not be paid if the members of the Ward Committee had not been inducted. He asked how many households were still reliant on the bucket system for sanitation.
Ms Mlamleli pointed out that the provision of water and sanitation services were afforded strategic project status at COP 17. The province had intervened to improve the audit outcomes of municipalities by putting in the necessary governance structures and ensuring that remedial action plans were developed. Action would be taken against officials failing to carry out their duties. The contracts of non-performing municipal managers and CFO’s would not be renewed. Allegations of collusion were often caused by a misunderstanding of the responsibilities of councilors. Losses incurred as a result of incorrect action taken by councilors were recovered from the official concerned. The province provided support to struggling municipalities by deploying retired professionals or unemployed graduates on a temporary basis. The province did not wait for municipalities to ask for assistance but intervened as soon as problems were identified. Although the contractor had enclosed the open toilets, inspection by the local government authority revealed that some of the toilets were not enclosed according to standard. It was decided not to appoint a contractor to replace the remaining buckets with toilets. A project manager would be appointed and the necessary materials would be provided instead. The stipend paid to Ward Committee members was intended to compensate them for out-of-pocket expenses and was not a payment for services rendered. The Xhariep municipality had made much progress and was aspiring to achieve water authority status. Communities did not understand the problems caused by aging infrastructure.
Mr Ralikontsane explained that the MIG allocation was transferred to local government authorities before project plans were in place. The management of the MIG was under discussion with DCOGTA. Members of all but one Ward Committee had been inducted. The National Treasury had seconded officials to fourteen municipalities to provide assistance with financial management. The province deployed officials to provide management support where the Municipal Manager position was vacant. Where water was not available, the bucket toilets were replaced with VIP toilets. The VIP toilets were upgraded to flush toilets where water was available.
Ms Nlhengethwa said that the Committees wanted to see that corrective action measures were in place and that the situation had improved.
Briefing by the Eastern Cape Provincial Department of Local Government and Traditional Affairs (DLGTA)
Mr Mlibo Qoboshiyana, MEC presented the briefing (see attached document).
There were 45 local government authorities in the province. As at August 2012, 34 senior management posts were vacant. The action taken to fill the vacant posts was summarised.
The audit status of 16 municipalities had improved, 21 remained unchanged and eight had regressed. Details were provided of the audit opinions for each municipality for the previous three years. Municipal Public Accounts Committees (MPAC’s) had been established in all the municipalities by February 2012. The MPAC’s were intended to strengthen financial oversight in municipalities and improve audit outcomes. 44 municipalities had functional audit committees and internal audit units.
The total amount owed to municipalities by Government departments as at June 2012 was R151.6 million. The DLGTA and the National Treasury was providing assistance to municipalities affected by unpaid Government debt. The steps taken to collect the outstanding amounts were summarised. As at July 2012, R122 million had been recovered.
Supply chain management remained a major challenge in the province. The 2010/11 audit report by the AG indicated R566.49 million in unauthorised expenditure, R1.8 billion in irregular expenditure and R11 million in fruitless and wasteful expenditure.
The functionality of governance structures in 44 municipalities was reported on. Portfolio Committees had not been established at three municipalities but the other structures were functional. No council meetings were convened at the Mnquma (Butterworth) municipality since 30 March 2012. The MEC had deployed as fact-finding team and the municipal council was requested to comment on the findings and recommendations of the team. The adoption and implementation of administrative systems by the municipalities was summarised.
Thirteen municipalities received unqualified audit opinions, thirteen received qualified opinions, 17 received disclaimers and two had adverse opinions for the 2010/11 fiscal year. Five municipalities had received unqualified audit opinions for three consecutive years. The outcomes for eight municipalities had improved. Thirteen municipalities had not improved.
Details were provided of the bulk infrastructure backlogs in the province. It was estimated that R41.7 billion was required to address the backlogs in providing sanitation and water services. An analysis of the gap between the MIG allocation and the required funding for infrastructure showed that three times more funding than the MIG allocation was required to address the backlogs. Currently, 84% of households had water services and 68% had sanitation services. The province had previously reported on service delivery and the Integrated Development Plans of municipalities to the Portfolio Committee on Cooperative Governance and Traditional Affairs.
The DLGTA had conducted 116 investigations at 6 local government authorities. The complaints investigated were categorised into maladministration, corruption and fraud allegations (79), SCM and tender irregularities (17), service matters (15) and land sales (5). 59 investigations were completed, 18 were referred and 39 were pending.
The role of district municipalities, the provincial departments and the national departments was outlined. Provincial Technical and Political MUNIMEC’s were established to facilitate inter-governmental interaction. The MUNIMEC’s had adopted strategic agenda setting to ensure that agenda items were prioritised for discussion. The MUNIMEC resolutions and highlights of the implementation of inter-governmental relations (IGR) were listed.
The briefing was concluded with an overview of the assessment of the municipalities’ IDP’s.
Mr Steenhuizen asked if the MEC was satisfied that the Municipal Managers that were appointed were not implicated in corruption and maladministration allegations at other municipalities. He asked if appointments were made in accordance with the legislative requirements.
Mr Bonhomme suggested that consideration was given to place the consistently bad-performing municipalities under administration. He deplored the backlog in providing water and sanitation services.
Ms Nlhengethwa observed that the media tended to report on the negative aspects and did not recognise where progress was made. She thought that the provincial authorities were doing much to address the problem areas and to build the country.
Mr J Matshoba (ANC) asked for a detailed breakdown of the money owed by all Government departments to municipalities in the Eastern Cape.
Ms Mosimane applauded the implementation of MPAC. A performance evaluation system should be introduced to assess the performance of officials.
Ms Mohale noted that councilors were required to submit declarations of interest. She asked if the Section 56 managers were also required to submit declarations of interest. Performance agreements between mayors and municipal managers and between the mayors and the MEC were in place. She asked if checks were carried out to ascertain whether the key performance indicators had been met. She acknowledged the action that had been taken by the province to address the problem areas.
Ms Nlhengethwa remarked that no service delivery protests were experienced by a municipality where councilors were subjected to quarterly performance reviews.
Mr Stan Khanyile, Head of Department, Eastern Cape DGOGTA explained that the province wanted to ensure good governance at the municipal level. Only competent, qualified persons were appointed to the vacant posts. Appointments were made in accordance with the legal requirements applicable to the post. Appointments that did not comply with the requirements were referred back to the local government authority. The provincial authority wished to give a frank report on the state of affairs to the Committees. The Operation Clean Audit project was gaining momentum and showing results. It was necessary that there were consequences for the non-performance of officials. The province was decisive about terminating the services of officials who failed to carry out their duties and that bonuses were not paid to under-performing officials. The regulations in terms of the Municipal Systems Act would specify the requirements for performance management, recruitment and appointment systems and would address most of the problems currently experienced. The MUNIMEC reports detailed the progress that had been made.
Mr Qoboshiyana confirmed that appointments that did not comply with the legislative requirements were reversed by the province, for example when an official’s contract was renewed without following the correct procedure. If the province considered that applicants were not suitable or lacked experience or skills, the municipal council was informed. Section 56 managers had to comply with the requirements concerning ethical conduct and the declarations of interest of the incumbents and their close family members. The debt owed by the national and provincial Government departments was being collected. The performance of mayors was assessed against a scorecard, which measured the performance in each key performance area.
Briefing by the North West Provincial Department of Local Government and Traditional Affairs
Mr Thamsanqa Dodovu, MEC presented the briefing (see attached document).
The presentation provided an overview of the governance, financial management, service delivery, bulk infrastructure and corruption issues in the province.
Governance issues included inter-governmental relations; the implementation of MTAS; public participation and the Section 139 interventions at the Madibeng, Moses Kotane, Tswaing and Mafikeng Local Municipalities.
Financial management issues included the establishment of MPAC’s; the municipal audit outcomes for the previous three years; the support provided to improve audit outcomes; a breakdown of the outstanding Government debt and the functionality of audit committees.
Three municipalities received financially unqualified audit opinions (with findings), two had qualified opinions, six had disclaimers and the AFS of twelve were outstanding for the 2010/11 fiscal year.
Mr Dodovu admitted that the audit performance of the 23 local government authorities in the province had regressed. The AG had commented that municipal leaders did not take their responsibilities seriously, did not hold themselves accountable, responsible officials lacked the necessary skills and that there were no consequences for poor performance. The AG had identified five main areas requiring attention, i.e. supply chain management, human resource management (particularly the appointment of suitably skilled officials), verification that deliverables were met and material errors in the financial statements.
The interventions by the provincial authority to provide support to municipalities had resulted in some improvement. Graduates were deployed to provide assistance. Consultants were appointed to improve the quality of annual financial statements. All municipalities had submitted annual financial statements for the 2011/12 fiscal year. Improved audit outcomes were anticipated. Mayors were required to appoint steering committees to address any audit findings. The absence of supporting documentation was a major problem, possibly because mayors and councilors were doing business with the municipality.
The total debt owed to four municipalities in the province amounted to R336.6 million as at 30 June 2012. The outstanding debt at the Dr Ruth Segomotsi Municipality was R211.5 million. Government departments had the necessary funds available to pay municipal accounts. The failure to pay accounts was as a result of incompetence rather than a lack of funds. The province supported cutting off services to premises owned by Government departments if the accounts were not paid.
Four audit committees serving eight local government authorities were functional. The audit committees for the Dr Ruth Segomotsi and the Ngaka Modiri Molema districts were not functional.
A detailed breakdown of the MIG allocation and expenditure in each municipality for the 2009/10, 2010/11 and 2011/12 financial years was provided. The province had spent 79% of the MIG allocation (R946.4 million) in 2011/12. The main reasons for the under-spending were a lack of forward planning.
Other service delivery issues included the implementation and monitoring of IDP’s; the availability and functionality of bulk water, sanitation and electricity infrastructure and the provision of housing. There were 982000 households in the province in 2010. In the same year, 6.3% of households did not have access to pipe or tap water, 6.9% did not have access to sanitation services and 15.9% had no electricity. The current housing backlog was estimated at 238000. The backlog for the Bojala Platinum District Municipality was 122911.
The SIU had conducted investigations into allegations of corruption at all 23 municipalities in the province. The investigations covered the period January 2005 to November 2009. Investigations were concentrated on the Madibeng, Greater Taung, Mahikeng, Moses Kotane, Ventersdorp, Rustenburg, Kenneth Kaunda and Maquassi Hill municipalities. Details were provided of the various allegations, the amounts involved, the number of officials implicated and the disciplinary action taken.
The PSC referred 28 cases of corruption, fraud and maladministration to the province in 2011. Four cases concerned municipalities in the Gauteng and KwaZulu Natal provinces and were referred back to the PSC. The remaining 24 cases involved 12 North West municipalities. Investigations were still in progress.
Mr Steenhuizen appreciated the open and honest briefings provided by the MEC’s. He noted that most of the municipalities that had failed to submit annual financial statements in 2010/11 had also done so in prior years. He asked why it had taken the provincial authority so long to intervene and what measures were put in place to ensure that the statements were submitted on time. During an oversight visit to Ventersdorp, Members became aware that the relationship between the mayor and the speaker had broken down and that he municipality was dysfunctional as a result. The matter was reported to the province but the Committee had not received a response.
Ms Nelson observed that the province had the biggest number of municipalities that had failed to submit AFS’s. She was pleased to hear that the situation had improved. Planning for a longer period would help to improve the MIG spending rate. The performance of the municipalities placed under administration in terms of Section 139 did not appear to have improved. It was necessary to monitor and report on the progress that was made.
Ms Mohale acknowledged that the MEC was appointed only three months earlier and that he had a huge task ahead. She deplored municipal officials failing to meet their responsibilities. She was impressed by Mr Dodovu’s enthusiasm and appreciated the courage shown in presenting a briefing that did not reflect well on the province. She asked what progress had been made in getting declarations of interest from councilors and municipal officials.
Mr Dodovu was not concerned if he was regarded as the most unpopular politician in the North West province. He reported that all the councils had adopted their budgets and that all the outstanding AFS’s had been submitted. The province had appointed auditing firms to provide assistance to the municipalities and to provide officials with the necessary skills. Graduates were deployed as interns, which enhanced their training and allowed them to gain experience. He was confident that progress would be made in the immediate future and was determined to succeed. Regular monthly meetings were held with the mayors and he had observed a marked improvement in attendance at these MUNIMEC meetings. He was willing to provide a separate briefing on the Section 139 interventions. The Madibeng municipality in particular was a prime example of a dysfunctional municipality and could provide valuable insight that would be useful to the country as a whole. The challenges in local government had been underestimated. It was necessary to resolve all the political issues and for all the stakeholders to work together to resolve the problem areas.
Ms Moloi-Moropa agreed that more cooperation was required to deal with all the problem areas. The North West province was considered to be the worst-performing province in the country. Heads of Departments had not been appointed in the province. The Committees were well aware of all the problems and she suggested that a cluster approach was followed to do oversight and to monitor the progress that was being made.
Ms Nlhengethwa noted the interventions and action taken to address the challenges. The Committees would invite provinces to submit briefings on Section 139 interventions and consider whether any legislative changes were necessary. Most provinces had reported that the Section 139 interventions had not been successful.
Briefing by the Mpumalanga Provincial Department of Cooperative Governance and Traditional Affairs
Mr Basie Strauss, Acting Chief Director: Local Government, Mpumalanga DCOGTA presented the briefing (see attached document). The apologies of the MEC and Head of Department were noted.
The presentation document included a detailed, high level performance analysis of the 21 municipalities in the province, which was not covered in the briefing (pages 21 to 97 of the attached document).
The briefing included an overview of the state of local government in the province. An assessment of the local government authorities was undertaken after the last local government elections. Municipalities were categorised into those located in the former homelands, those that were unable to generate sufficient income and required financial assistance from the province and municipalities that had been placed under administration. Details were provided of the 797 councilors and 122 senior management posts (Section 57 managers) in the province. 37 senior management posts were currently vacant. 368 of the 402 Ward Committees in the province were functional.
The province had developed a comprehensive integrated support plan and established oversight committees to ensure that the plan was implemented. MPAC’s were established in all municipalities. Nine municipalities had adopted the MPAC oversight reports.
A breakdown of the audit outcomes for the 2008/09, 2009/10 and 2010/11 fiscal years was provided. Eleven municipalities received unqualified audit opinions, three received qualified opinions and seven received disclaimers. The province anticipated that only two municipalities would receive disclaimers for the 2011/12 financial year. Audit committees and internal audit units were established for all municipalities. Details were given of the interventions to address the problem areas identified by the AG.
The IDP’s of all municipalities had been assessed. The MIG expenditure report indicated that the province had spent 80% of its allocation as at 30 June 2012. The current status of the backlogs in the provision of services indicated that 4.1% of households did not have access to water, 19.2% did not have access to sanitation services, 6.9% did not have basic refuse removal services and 4% did not have electricity.
The total outstanding amount owed by Government departments as at November 2011 was R74 million. The province had appointed a debt committee, which interacted with the municipalities and provided support to improve debt collection. It was found that most of the money owed to municipalities was outstanding accounts for services to schools. Schools were Section 21 companies and the Office of the Premier was requested to investigate why the schools were not paying their accounts in accordance with the legislative requirements.
Mr Bonhomme observed that there was not sufficient female representation in councils, which could be problematic. He asked if any performance bonuses had been paid to municipal officials.
Ms Nelson remarked on the similarity of the problems experienced with local government authorities throughout the country. She asked what the reason was for the provincial authorities having difficulties in obtaining the management letters from the AG from the municipalities.
Ms Mosimane asked for more clarity on the outstanding performance agreements with Municipal Managers.
Ms Boshigo asked if all senior officials had signed performance agreements.
Ms Nlhengethwa observed that the workshops for new councilors arranged by SALGA had been too technical. Newly appointed councilors had not acquired the necessary knowledge from the workshops. She suggested that a more basic induction programme was developed for new councilors. The Mkhondo municipality was placed under administration in terms of Section 139. The municipality had failed to submit its AFS on time. It would appear that the Section 139 intervention had not resulted in an improvement. She asked for more information on the causes of the reported disputes between senior officials in the Dr JS Moroka municipality. She was aware of allegations that documents were destroyed to hide evidence of wrongdoing. She asked what the current situation was at Thaba Chweu. There had been a number of service delivery protests in the area and changes in the municipal leadership.
Mr Strauss confirmed that bonuses had been paid by local government authorities. The province had established a unit to investigate performance management processes and whether performance assessments were completed before bonuses were paid. If required, a list of officials who had received bonus payments could be made available to the Committees. The Office of the Auditor-General had refused to provide the province with copies of the management letters issued to municipalities. It was the prerogative of the council to make the letters available to the provincial authority. The province was restricted to the information provided in the annual report if a copy of the management letter could not be obtained. Operation Clean Audit was monitored at a high level and cooperation form municipalities had improved significantly. He was reluctant to speculate on the breakdown of relationships between the mayor, chief whip and speaker of the Dr JS Moroka municipality. The province had intervened in the Dr Pixley Ka Isaka Seme and Dipaleseng municipalities and was monitoring the situation through the existing structures.
Mr Strauss advised that performance agreements for most Municipal Managers had been signed. Officials were required to sign the agreements within three months of the effective date of appointment. The performance of officials had to be reviewed on an annual basis and the review process had to be completed before the end of September. The province monitored the performance review process and looked at the performance appraisals. It was difficult to measure the impact of a Section 139 intervention and further discussion on the effectiveness of the intervention should be undertaken. Thembisile was an example of a successful Section 139 intervention. He was willing to prepare a briefing on Section 139 interventions.
Ms Nlhengethwa remarked that Municipal Managers argued that performance appraisals were not necessary as salary adjustments were market related. Managers were adept at tweaking the data to ensure that they qualify for performance bonuses.
Ms Moloi-Moropa advised that the Committees were committed to finding solutions for all the issues concerning municipalities. The briefings had provided much valuable and detailed information.
Briefings by the Western Cape, Northern Cape, Gauteng and KwaZulu Natal provinces would be presented on 6 September 2012.
The meeting was adjourned.
- Limpopo Department of Cooperative Governance, Human Settlements and Traditional Affairs presentation
- Eastern Cape Department of Local Government and Traditional Affairs presentation
- Free State Department of Cooperative Governance and Traditional Affairs presentation
- Mpumalanga Department of Cooperative Governance and Traditional Affairs presentation
- North West Department of Cooperative Governance and Traditional Affairs presentation
- Public Service Commission: Report on Assessment of Recruitment & Selection Practices in respect of Section 57 Managers & Municip
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