MECs of Local Governments on Status of Municipalities

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Cooperative Governance and Traditional Affairs

05 September 2012
Chairperson: Ms D Nlhengethwa (ANC)
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Meeting Summary

The KwaZulu-Natal, Western Cape, Gauteng and Northern Cape MECs of Local Government discussed the state of the municipalities in each province, looking at audits, governance, financial management, service delivery, bulk infrastructure and corruption in the provinces. Here are some highlights:

KwaZulu-Natal (61 municipalities) audit outcomes were ten municipalities improved their audit outcome, five of which received a clean audit progressing from an unqualified audit opinion with other matters, four municipalities improved from qualified audit opinions to unqualified opinions with other matters, one improved from a disclaimer to a qualified audit opinion. Forty four municipalities remained unchanged with an unqualified opinions with other matters. Indaka municipality regressed from an adverse opinion to a disclaimer. Consolidated consumer debt owed to KZN municipalities at 30 June 2012 was R4.1 billion. Out of the 61 municipalities, four had been under a Section 139(1)(b) intervention: Indaka, Umhlabuyalingana, Okhahlamba and Msunduzi municipalities.
Only the Indaka intervention had been extended. Approximately 83.47% of households in KZN had access to portable water, 80.36% had a basic sanitation facility and 76.69 % had access to electricity. A total of 61 Municipal Public Accounts Committees had been established and the department planned training on financial oversight for them.

In the Western Cape (30 municipalities), two municipalities had unqualified audits with no findings, 22 municipalities had unqualified audits with findings, three municipalities had qualified audit outcomes and audits were not finalised in three municipalities. There had been no Section 139 or Section 106 interventions by the provincial department. There was however an informal intervention in
Bergrivier Municipality. In Swellendam Municipality, there was a stalemate in the Council between political parties which adversely affected the decision-making of Council. Councillors reported to MECs. Debt owed by councillors has been reported for Oudtshoorn, Bitou, Saldanha Bay, Beaufort West and Stellenbosch municipalities. Municipal Public Accounts Committees had been fully established in ten municipalities and three municipalities had made firm commitment towards their establishment. The status and progress of the 14 Special Investigating Unit investigations were noted. Municipal Manager and Senior Manager positions were filled in most municipalities, and the submission of employment contracts and annual performance agreements were being monitored; 24 municipalities had established their ward committees. The Municipal Infrastructure Grant expenditure for 2011/12 was 99,3%. The Department had compiled the Bulk Infrastructure Master Plan for water and sanitation for the Western Cape.

The audit outcome for Gauteng (15 municipalities), nine had unqualified audits with findings, six had qualified audit reports; there were no disclaimers or adverse reports. Three municipalities regressed over the past year. Operation Clean Audit targeted hands-on support to address the issues raised by the Auditor-General and was being implemented across Gauteng municipalities.
Municipal Public Accounts Committees and oversight committees had been established by 31 October 2011. Internal control structures were in place in most of the municipalities with the majority having in-house audit units and a few were outsourced. The department’s oversight and support role facilitated the alignment of all Integrated Development Plans with Government outcomes through ongoing engagements (via the Provincial IDP Steering Committee),supporting inter-municipal planning initiatives and establishing partnerships with the Gauteng Planning Commission.

In the Northern Cape Province,
the audit outcomes for 2010/11 revealed 16 out of 32 municipalities had disclaimers and two municipalities had outstanding audit reports. On implementation of Municipal Turn Around Strategies, all Northern Cape municipalities had developed these. Municipal IDPs and budgets were adopted by all 32 municipalities. With regard to Municipal Public Accounts Committees, 31 of the 32 municipalities had established them. Availability of funding for bulk services still remained a major challenge for the municipalities in the Northern Cape due to insufficient generation of funds to rehabilitate, upgrade, renew or extend existing infrastructure.

Members questioned if poor audit outcomes corresponded with poor service delivery in the municipalities. Members asked if there was any support from the national unit to provinces and municipalities and how the provinces and municipalities worked with the support. Members asked how many convictions on corruption charges had been achieved and what follow up measures were taken for officials who resigned. Members remarked that service delivery occurred mainly at municipal level and it was essential that debt owed to municipalities by government had to be paid to ensure sustainable service delivery to citizens. Members noted with dismay that the supply chain management process in the provinces were weak, powers were not appropriately delegated and there was a large number of unskilled workers. Members noted that it was difficult to attract skilled officials to rural municipalities and asked what systems had been put in place to attract skilled expertise to theses municipalities and whether these municipalities viable? The comment was made that it was an anomaly for non performing municipal managers to still be paid bonuses. Members asked what programmes had been put in place in the province to develop skills. Referring to stakeholder involvement in participation of IDPs, Members questioned how non-government organisations were absorbed into the IDP process. Members commented that the excuse by provinces that municipalities were autonomous was unacceptable. The municipalities were not autonomous at the point of receiving grants but in accountability issues suddenly they became autonomous. There had to be consequences for municipalities and their officials. This needed to be urgently addressed.

Meeting report

The Chairperson welcomed all present and invited the provinces to commence their presentations.

KwaZulu-Natal presentation
Mr Michael Mabuyakhulu, KZN Acting MEC for Department of Cooperative Governance and Traditional Affairs, in his opening remarks, noted that for two years the department had maintained a clean audit and in the last year it had a clean audit with no emphasis of matters to attend to. In total, the province had 61 municipalities and the audit outcomes were varied across its municipalities. The partnership forged between the department, municipalities and provincial treasury gave the department a sense of comfort that it was on the right trajectory in terms of meeting the Clean Audit 2014 objective for all municipalities. He handed over to Ms Joey Krishnan, General Manager, to discuss the presentation in detail. The presentation discussed the key areas of governance, financial management and a three-year review on audit outcomes of municipalities.

On public participation, the province consisted of 61 local municipalities of the ward participatory type, within which 828 wards existed. Of the 828 wards, 790 ward committee elections were successfully conducted. The remaining 38 wards were billed to be completed by the end of September 2012. The department planned to develop guidelines for ward committee, support plans and community participation plans to assist municipalities with the development of their own plans. Municipal officials were to be trained as trainers to train their ward committee members on the development of Community Based Plans (CBP). Challenges faced in the implementation of ward committees included: lack of sufficient municipal resources (personnel and financial support) to carry out their public participation obligations; insufficient funding to build the capacity of ward committee; institutionalisation of public participation programme – currently considered as an add-on; ward committees were supposed to be apolitical – but currently experienced a lot of political interference; high vacancy rates; shortage of relevant skills.

Out of the 61 municipalities, four were under intervention in terms of Section 139(1)(b) of the Constitution. These four municipalities were Indaka, Umhlabuyalingana, Okhahlamba and Msunduzi municipalities.
The Department assessed the exit strategies developed by administrators and took into account existing capacity at the municipalities and the individual circumstances of each municipality, based on which the Department, after various extensions of the interventions by the Executive Council, the department recommended to the Executive Council, that the interventions cease at Umhlabuyalingana, Okhahlamba and Msunduzi municipalities. On 18 July 2012, based on various challenges, the Executive Council resolved to extend the intervention at Indaka municipality for a period of six months ending on 31 December 2012. Although the Indaka municipality administrator reported progress in the recovery plan, he alerted the Department to certain serious challenges with finances, governance, leadership and performance reporting.

The discussion on financial management revolved around Municipal Public Accounts Committees (MPACs) -
61 MPACs had been established. Challenges faced by MPACs were a lack of understanding of the role and responsibilities of MPAC in relation to other oversight structures; lack of skills and knowledge of Finances and Local Government. The department planned Comprehensive Councillor Training on Financial Oversight to remedy these issues.

The presentation highlighted in detail a comparative analysis of audit outcomes of KZN municipalities over the last three years (see document). For the financial year 2010/11: Ten municipalities improved their audit outcome in the 2010/11 financial year; Five of which received a clean audit progressing from an unqualified audit opinion with other matters, Four municipalities improved from qualified audit opinions to unqualified opinions with other matters. Edumbe Municipality improved from a disclaimer to a qualified audit opinion. Forty four Municipalities had unchanged audit opinions that were unqualified opinions with other matters. Uthukela District, Umvoti, Amajuba District, Newcastle, Edumbe, Hlabisa and Jozini Municipalities received qualified audit opinions. Indaka municipality received a disclaimer audit opinion regressing from an adverse opinion in 2009/10. Umkhanyakude District Municipality received an adverse audit opinion regressing from a qualified opinion in 2009/10. The Auditor-General identified the following as the root causes of audit concerns:
• Key officials lacking minimum competencies and skills;
• Lack of consequences for poor performance and transgression; and
• Slow response to Auditor-General’s messages and not taking ownership of key controls.

The audited consolidated consumer debt provincially owed to KZN municipalities as at 30 June 2012 was R4.1 billion. Challenges faced with the outstanding debt included: Municipalities did not categorise debt appropriately and accurately; Large amounts of unrecoverable debt not written off; Property Rates on RSA properties were not determinable.

56% (34) of municipalities had issues relating to procurement and contract management raised in audit reports. 28% (17) of municipalities incurred unauthorised expenditure, 61% (37) of municipalities incurred irregular expenditure, 20% (12) of municipalities incurred fruitless and wasteful expenditure. Political interference in Supply Chain Management processes, Extensive use of Regulation 36 and Non-implementation of Section 32 of the Municipal Finance Management Act (MFMA) were identified as challenges. It was hoped the Planned Framework for Unauthorised, Irregular, Fruitless and Wasteful Expenditure and comprehensive training programme would address these challenges.

On service delivery, the presentation provided in detail Municipal Infrastructure Grant (MIG) expenditure for 2010/11 (see document). Challenges with the supply chain management process, change in financial year, technical capacity, deficient service providers affected service delivery across the province. To address these challenges, t
he establishment of district shared-service Project Management Units was being attempted, to address skills shortages. MIG commitment levels, project implementation and expenditures were monitored monthly by department officials and municipalities were engaged immediately as necessary.

Out of the 61 KZN municipalities 57 adopted Integrated Development Plans (IDP) on time and only four missed the statutory deadline. The department had developed and applied a Provincial IDP management plan which assisted in ensuring statutory adherence by municipalities and was consistent in the engagement session dates with municipalities to avoid no participation and to keep discussion relevant. The Municipal Performance Reporting, Monitoring and Evaluation (MPMRE) Unit monitored the implementation of the IDP.

As at 31 March 2012, approximately 83.47% of KZN households had access to potable water, 80.36% of households had a basic sanitation facility and 76.69 % of households had access to electricity. While significant progress had been made in the eradication of service delivery backlogs, the pace of delivery was too slow to achieve universal access to water, sanitation and electricity by 2014.

There were
18 on-going non-performance and maladministration investigations instituted in terms of Section 106 of the Municipal Systems Act, at different stages. The challenges faced with regard to corruption included: lack of municipal skills to address recommendations in reports, officials resigning before disciplinary action, poor reporting on progress in implementation of recommendations by municipalities and delays in criminal investigations and prosecution. The department had provided on-going support to municipalities in implementation of recommendations of forensic investigations including instituting disciplinary and criminal actions.

Western Cape presentation
Mr Anton Bredell, MEC Department of Local Government Western Cape spoke about the importance of provincial interaction with Parliament, stellar audit outcomes, reduced indebtedness of government departments, support to its 30 municipalities, service delivery, importance of ward committees and community development workers, and the disaster management system of the Western Cape province. He questioned whether the current system of audit supported or hampered service delivery. Ms Hildegarde Fast, Head of
Local Government, briefly discussed the outline of the presentation and handed over to a colleague to commence the presentation.

The presentation noted that councils were meeting as required. During the last quarter there were no reports of non-attendance by councillors. The instability at the Swellendam Municipality made it difficult to obtain a quorum for decision-making. Councillors reported to MECs. Debt owed by councillors has been reported for Oudtshoorn, Bitou, Saldanha Bay, Beaufort West and Stellenbosch municipalities. The Western Cape Department of Local Government had assisted with recruitment of three Municipal Managers. MPAC training had been carried out over three days in some municipalities. MPACs had been fully established in ten municipalities and three municipalities had made firm commitment towards their establishment. The status and progress of the 14 Special Investigating Unit (SIU) investigations were noted (see document).

The department had provided support to municipalities across a wide spectrum. On capacity building, Municipal Manager and Senior Manager positions were filled in most municipalities, the submission of employment contracts and annual performance agreements were being monitored, municipalities had implemented performance management systems with various levels of application, municipalities had submitted their annual Workplace Skills Plans by due date of 30 June 2012 to the Local Government Sector Education & Training Authority (LGSETA). There had not been any Section 139 or Section 106 interventions in any of the municipalities. There was however an informal intervention in
Bergrivier Municipality. In Swellendam Municipality, there was a stalemate in the Council between political parties which adversely affected the decision-making of Council.

With the exception of Bitou Municipality, 24 municipalities had established their ward committees. Bitou was in the process of establishing their ward committees, the City of Cape Town was in the process of ‘topping up’ ward committee membership to achieve 10 members per ward committee. Twenty municipalities submitted their quarterly reporting template indicating that all ward committees were functional and had held one or two meetings per ward in the last quarter. Ward committee induction training was held in six municipalities. Meetings were held with Bitou and Swellendam municipalities to advice on ward committee establishment and policy development. The department had distributed Proposed Guidelines for Municipalities in the Implementation of an Effective and Functional Ward Committee System to all municipalities at the MinMay and Speakers Forum meetings.

The department’s approach in its analysis of IDPs, focused on the implementability rather than credibility of IDPs. There were 27 realistic IDPs and three non-realistic IDPs in the province. The presentation discussed in detail integrated service delivery in each municipality (see document).

At the end of June 2012 the Municipal Infrastructure Grant (MIG) expenditure for the 2011/12 amounted to R372 735 955 (99,3%).
The Department was involved with the MIG projects from registration and conducted site visits and municipal engagements to monitor progress and provide support. The Department also hosted monthly MIG provincial monitoring meetings to monitor progress on the MIG implementation at each. The Department supported municipalities with bulk infrastructure planning and implementation through financing strategies. The Department had compiled the Bulk Infrastructure Master Plan for water and sanitation for the Western Cape.

On its disaster management program, the department had recommended that reviews and updates of disaster risk assessments should be done biannually to maintain a credible risk profile. Review of all District and Metro level disaster risk assessments were completed during 2011/12 and a standardised disaster risk assessment methodology had been developed for rollout during 2012/13.

The presentation gave a three-year comparative analysis of the audit outcomes of municipalities in the province. For the 2010/11 financial year, two municipalities had unqualified audits with no findings, 22 municipalities had unqualified audits with findings, three municipalities had qualified audit outcomes, and audits were not finalised in three municipalities. There was an initiative between the Department and Provincial Treasury to improve the audit outcomes through assessment models, providing recommendations, and improving capability in municipalities to Level 3.

The overall status of the debt for non-metro municipalities amounted to R25.57 million at the end of June 2012. The Departments who record the highest debt balances included the Department of Transport and Public Works at R10.06 million or 39.3%, Department of National Public Works at R5.87 million or 23% followed by the Department of Education at R4 million or 15.7%.

Gauteng Department of Local Government and Housing presentation
Ms Itumeleng Mokate, Gauteng Deputy Director General:
Corporate Support Services, Department of Local Government and Housing, started by looking at the role and legislative and policy mandate of the department for the 15 municipalities.

The department had adopted an Intergovernmental Relations (IGR) framework with Key IGR structures (Premier’s Coordinating Forum, MEC/
Members of the Mayoral Committee (MMC) Fora and IGR Practitioner’s Forum) in 2010. Challenges in implementation of IGR were: Capacity constraints in terms of resources, staff and expertise at the local level;Inadequately defined roles and positioning of Intergovernmental Relations Units;Non or irregular attendance of intergovernmental meetings; andUncoordinated activities between the provincial departments and municipalities, between sector departments operating in the same municipality, as well as amongst the neighboring municipalities themselves. The department provided support by: Hands on support to municipalities in reviewing their IGR policies,Quarterly MEC/MMC meetings, Capacity development of municipal IGR practitioners and Development of an IGR Implementation Plan and Monitoring Framework.

In terms of turnaround strategy, the department was focused on five municipalities with regard to targeted support. Identified challenges included:
Capacity constraints; Critical posts being vacant; Political interference; Political differences amongst councillors; Limited ability to source alternative funding. The department had developed specific projects to address these issues.

On public participation, the department
provided support and monitored the functionality of ward committees through quarterly reports submitted by the municipalities,strengthened the ward committees through support programmes and activities, promoted public participation in decision making at municipal levels (such as the IDP) and evaluated public participation processes and systems on a regular basis and provided support to address issues that came up. A Public Participation Framework had been developed and shared with municipalities.

On financial management, both MPACs and oversight committees had been established.
By 31 October 2011, all MPACs were established in Gauteng. Key challenges for MPACs were: Committee members lacked the required skills and expertise on financial and non-financial oversight and scrutiny; lack of resources (such as human and financial); lack of committee researchers was a clear impediment to the majority of MPACs in the province as they bridged the skills gap of members; lack of powers to enforce decisions of the MPACs.

In terms of audit outcomes,
of the 15 audited municipalities in the province, nine had unqualified audit reports, six had qualified audit reports; there were no disclaimers or adverse reports. Three municipalities regressed over the past year. Operation Clean Audit targeted hands-on support to address the issues raised by the Auditor-General. It was being implemented across Gauteng municipalities. Primary focus areas of support were: internal controls, assets, oversights, revenue management, capacity building, performance information and annual financial systems. The Provincial Coordinating Committee monitored the implementation of Operation Clean Audit within municipalities and streamlined the support from various stakeholders to municipalities.

Internal control structures were in place in most of the municipalities with majority having in-house audit units and a few were outsourced.
The issue of outsourcing the internal audit function posed a challenge to municipalities with regard to skills transfer and huge costs to municipalities. Audit Committees were established and functional in all municipalities in Gauteng. The Auditor-General also attended these audit committee meetings as a means to improve future audit opinions and give guidance.

The five Government Departments that owed municipalities the most were: Departments of Local Government and Housing, Health and Social Development, Education; Infrastructure Development and; Transport. A provincial debt management committee had been established to facilitate and ensure thatprovincial departments pay municipalities for services, rates and taxes on time, and thereby reduce government debt to municipalities. The amounts paid to date and amounts due to municipalities and the challenges from the five highest debtors were shown (see document). The impact of the debt affected cash flow in municipalities and also delayed payments as departments had to verify accounts.

With regard to the supply chain management process of the metros, the department provided support through its monitoring and oversight roles in proper closing of contracts, compliance with legislation, and ensuring proper internal control measures.

The province was on course with regard to basic service delivery and bulk infrastructure programs. The major challenge remained capacity. With regard to its Integrated Development Planning (IDP) the department’s oversight and support role facilitated the alignment of IDPs with Government outcomes through ongoing engagements (via the Provincial IDP Steering Committee),
supporting inter-municipal planning initiatives and establishing partnerships with the Gauteng Planning Commission to ensure that IDPs were linked to the evolving planning system of the province.

Northern Cape
Cooperative Governance, Human Settlements & Traditional Affairs presentation
Mr Kenny Mmoiemang, MEC Department of Cooperative Governance, Human Settlements and Traditional Affairs, Northern Cape gave an outline of the presentation, a comparative analysis of the department’s audit outcome over the last three years and an overview of its 32 municipalities.

13 Local Municipalities were receiving targeted support from the department and National Department of Cooperative Governance and Traditional Affairs, with its Local Government Turn-Around Strategy (LGTAS). Seven of these same municipalities were also receiving support from the Municipal Infrastructure Support Agency (MISA). Intergovernmental Relations (IGR) structures in the province consisted of District IGR Forums, MUN-MEC and the Premier’s Inter-Governmental Forum.

Community development workers (CDWs) were at the forefront of public participation in the province. Challenges experienced with CDWs was the
tension between CDWs and elected ward councillors as well as ward committees due to the fact that ‘some’ CDWs carried on as if they were elected public representatives; hence they compete with elected Councillors. To resolve this, the department was in the process of finalising appointment of CDW supervisors for municipalities and CDW Supervisors were to be assisted by Municipal CDW Mentors.

A total of 5 Ward Committees had not been established in some municipalities.
Accredited training targeting 870 Ward Committee members was conducted in 12 municipalities funded by the European Union. Training to other municipalities were to follow soon. Ward Committee members were being paid R1 000 p/m out of pocket expenses. The presentation discussed in detail the composition of wards committee per districts (see document).

On implementation of Municipal Turn Around Strategies (MTAS),
all Northern Cape municipalities had developed individual MTAS. Municipal IDPs, Budgets and Service Delivery and Budget Implementation Plan SDBIPs) were integrated and adopted by all 32 municipalities. Implementation of the IDP went hand-in-hand with ‘hands on support and Rapid Response’ support processes and leveraging of stakeholder support and reporting and monitoring. Municipalities reported to District IGRs and MunMECs on the progress made regarding implementation of MTAS.

With regard to
MPACs, 31 of the 32 municipalities in the province had established MPACs: Khai-Ma local municipality had not yet established an MPAC as it consisted of seven councillors, four of whom served as chairpersons in other committees excluding the Mayor. The MEC has advised the municipality to discuss the possibility of shared an MPAC with Namakwa District Municipality. The Association of Public Accounts Committees (APAC), together with its strategic partners: Auditor-General South Africa (AGSA), National Treasury Department of Cooperative Governance (DCoG) and SALGA with the Provincial Legislature, conducted training for all MPAC members on 16-18 April and 24-26 April 2012. The presentation gave details of the composition of MPACs per municipality (see document).

A comparative analysis of the audit outcomes of municipalities over a three-year period was provided. The audit outcomes for 2010/11 were: eight municipalities had unqualified audits with other matters, six municipalities were qualified, 16 municipalities had disclaimers and two municipalities had outstanding audit reports.

An i
nternal audit function was in place in 27 of the 32 municipalities. 25 audit reports were verified to assess the effectiveness of internal audits and it was noted that 14 internal audits did not comply with applicable legislation. The presentation gave details of the composition and functionality of the internal audit units per municipality (see document).

As at end of June 2012, Government departments owed Northern Cape municipalities R151 767 911. The presentation gave a breakdown of debt owed to each municipality (see document). Intervention measures had been introduced to ensure the debts were paid to municipalities. The Executive Council instructed all provincial departments to pay municipalities outstanding monies owed to municipalities. A Debt Collection Committee comprising of the department and Provincial Treasury was established to deal closely with municipalities to assist and support them to collect money due to them.
Credit control and debt collection policies of municipalities were being monitored by the department to ensure adequate implementation.

With regard to the supply chain management (SCM) process, most municipalities had qualified audits for non-compliance with Supply Chain Management processes. During the monitoring of Audit Action Plans, municipalities were advised on how to deal with SCM transactions to avoid irregular and unauthorized expenditure.
Furthermore, Provincial Treasury was providing hands-on support to municipalities.

Access to services were as follows:
93.6% (177,482) households had access to a basic level of water, that is, potable water; 79.9% (160 000) households had access to a basic level of sanitation; 77.6% (91 232) households had access to basic level of refuse removal and 82,1% (141 488) households had access to electricity - of which 48 408 households received Free Basic Electricity.

The Northern Cape IDP Analysis took place on 28-30 May 2012, 31 Municipalities submitted their draft IDPs, with the exception of Kamiesberg which did not submit as its draft IDP was not yet approved by council but it attended and presented at the engagement/analysis session. Some of the issues identified by local municipalities were:
Attendance by provincial and national sector departments to the IDP Representative Forums and District IGR was still a challenge;
Most municipalities did not have the capacity – human and/or capital – to implement their IDPs;
District municipalities (shared services) support to local municipalities was not effective;
Local municipalities required more funding as most of the DMA areas fell under their jurisdiction.
The Department coordinated the Provincial IDP Task Team which comprised of all provincial and National Sector Departments and all important role-players. Within the Departments itself, the Directorate of Planning and Development monitored implementation of IDPs.

Availability of funding for bulk services still remained a major challenge for municipalities in the Northern Cape due to insufficient generation of funds to rehabilitate, upgrade, renew or extend existing water infrastructure which at present was operating beyond maximum capacity due to expansion of the towns. Municipalities applied for funding at National Department through MIG and Department of Water Affairs with the Regional Bulk Infrastructure Grant (RBIG) and the Accelerated Community Infrastructure Programme (ACIP). With regard to MIG, the annual allocations received proved insufficient to fund the bulk services and in such cases municipalities would have to commit their entire Mid-term Expenditure Fund (MTEF) allocations over a number of years to be able to fund those projects 100%.

In fighting corruption,
there had been no proclamations instituted by the Provincial Government and the department had assisted all municipalities in developing Fraud Prevention Policies and was also monitoring implementation.

Discussion on KwaZulu-Natal

Ms M Sigale-Diswai (ANC) questioned whether the audit outcomes corresponded with service delivery in the municipalities.

The KZN MEC, Mr Mabuyakhulu, replied that the audit outcome showed improvement despite the infrastructure backlog which the department still recognised existed. In KwaZulu-Natal, each MEC was allocated districts to supervise to ensure issues of service delivery and governance are properly dealt with. Secondly, there were clearly visible programmes which integrated all government services, including local government, and therefore ensured intervention before protests and discontent amongst the people arose.

Ms Sigale-Diswai asked for clarity on political interference in the Supply Chain Management process.

Mr Mabuyakhulu explained that upon conclusion of local elections, a new breed of leadership took over and training was organized to empower councillors on the supply chain management process. There were however sometimes persons who still tried to influence the process in their favour. A recent summit organised by the Premier had resulted in a framework being put in place under which persons who try to influence the process would have criminal actions instituted against them. The complaint by officials about political interference is sometimes misconstrued due to the pressure put on these officials to deliver services.

Ms Sigale-Diswai asked if there was any support from the national unit to provinces and municipalities and how the provinces and municipalities worked with the support.

Ms Krishnan replied that there was overwhelming support at the national level to the provinces. Various programmes were underway in conjunction with National Treasury and the National Department of Cooperative Governance and Traditional Affairs. There were constant meetings and generally the provincial department had very good relations with national bodies. The most effective partnership was through coordination at local levels where both national and provincial representation were present in some municipalities. In such instances, a framework was developed to determine the roles of the various stakeholders.
 
Mr Mabuyakhulu added that under the current constitutional dispensation, the local governments had their constitutional role as a sphere of government and the provincial government could not act in ways which could be construed as usurping powers from the local government, except in the clearly defined case of a Section 139 intervention. The support offered by the provincial government must therefore remain within the context of its constitutional role.

Ms Sigale-Diswai asked for further explanation on the challenges experienced with implementation of support with intergovernmental relations.

Ms Sigale-Diswai asked if the issues of infrastructure backlog which could not be implemented due to a shortfall in funds, could be married with unauthorised and fruitless expenditure.

Ms Krishnan replied that there was no relationship between the two. Unauthorised expenditure was usually not budgeted for and was sometimes undertaken in the process of service delivery. Irregular expenditure was based on Regulation 36 and came up in the supply chain management process. More often than not, this expenditure helped to fast track service delivery. The treatment of each of these kinds of expenditure had a different accounting treatment. Guidelines had been forwarded to all 61 municipalities and the department planned to meet with each municipality to deal with these in terms of Section 32 of the Municipal Finance Management Act.

Ms W Nelson (ANC) questioned what the role of districts and municipalities was in assisting ward committees.

Ms Krishnan replied that administratively, the IEC supported wards in elections and the districts participated in support services and programs during ward committee elections. Part of the training programme involved district officials assisting municipalities.
 
Ms Nelson asked for a report on the four municipalities under Section 139 interventions.
Mr Mabuyakhulu replied that in cases of a Section 139 intervention, the provincial government was required to write to the National Minister responsible and the Minister in turn accepted the intervention. Upon conclusion of the intervention, the provincial government was required to submit its report to the NCOP and to the Minister. It was thus duty bound to intervene with the NCOP, as the Constitution was clear on the NCOP being the line of accountability. The Portfolio Committee could therefore liaise with the NCOP on the report it had submitted.

The Chairperson in response stated that by virtue of Section 156 of the Constitution, the Committee acted on behalf of Parliament and the executive was accountable to Parliament. The Constitution further gave the Committee powers to subpoena where it met with resistance from executive officers. However, the current meeting with MECs was for the purposes of interaction rather than calling to account.

Ms Nelson referred to the audit remedial action put in place to assist municipalities and asked what specific actions had been taken, for how long, and what impact had these actions had on municipalities which had regressed in their audit outcomes.

Ms Krishnan replied that the remedial program had been in place for nine months and, yes, the teams had picked up on the regression in the seven districts that had regressed. The major reasons for the regression were asset management and compliance with the GRAP 17 guidelines. Also, the Auditor-General was focused more on the performance management side.

Ms Nelson questioned the progress in the framework for irregular and wasteful expenditure.

Ms Krishnan replied that the council may decide to condone or undertake investigation and commence disciplinary action in cases of irregular expenditure. The current framework helped council to properly investigate in a consistent and controlled manner and take necessary action. Much irregular expenditure in municipalities was as a result of lack of internal control. This was corrected through the support provided to the internal control unit by the department.

Ms Nelson referred to the MIG funding and said that its principal purpose was to impact on the lives of citizens; hence it was unacceptable when MIG funding was rolled over.

Ms Krishnan replied that the rollover of MIG funds occurred mainly because the projects were on-going and because of the difference in the financial year for national, provincial and local government. The rollover happened in March but the municipal financial year ended June.

Ms Nelson questioned if the service project management unit was new and at what stage it was.

Ms Nelson requested that a report on all corruption charges and the recommendations once finalized be forwarded to the Committee.

Mr T Bonhomme (ANC) decried the total amount representing wasteful expenditure and asked what actions were being taken to retrieve the funds from parties responsible for the waste.

Ms Krishnan replied that the treatment of wasteful expenditure was an accounting treatment and would start with the municipalities.

Mr Bonhomme questioned why implementation of ward committees established in 2009 had been slow in the municipalities. He asked for the statistics on the backlog of bucket toilet eradication.

Ms Krishnan replied that the old regime of toilets had been totally eradicated in KwaZulu-Natal

Mr Bonhomme asked how many convictions had been achieved on corruption charges and what follow up measures were taken on those officials who had resigned.

Mr Mabuyakhulu replied that an official could not be stopped from resigning from office except in cases where disciplinary processes had been instituted; hence the disciplinary process would be continued in absentia. Where there was a prima facie case, the onus lay on the department to pursue the case along legal routes as a criminal matter. Some of the matters that had come up had been pursued, but it was necessary to ensure that matters were pursued based on evidence.

Ms Krishnan added that there had been five arrests out of 50 criminal cases. One of the five was still in process while others were still before the court.

Mr J Steenhuizen (DA) remarked that there had been an increase in service delivery protests across the board. Ward committees were an important tool in allowing communities to express their frustrations and interact with the IDP. It was therefore important that ward committees were functional. The functionality assessment did not paint a good picture for ward committees in KwaZulu-Natal. What would be done to address this?

Mr Mabuyakhulu replied that there were two issues surrounding this. Firstly there were municipalities that had not been able to comply with the requirements for the election of ward officials. Secondly, there were clear guidelines for the election process and where concerns had been raised about the election, the MEC reviewed this through proper processes. The challenge that arose was with “sore losers” who refused to accept election results. The guidelines were clear enough and where it was found that they had been contravened, this was thoroughly reviewed.

Ms Krishnan added that in terms of functionality of the ward committees, support had been provided to ward committees through training.

Mr Steenhuizen remarked with the approval about paying ward committee members a monthly stipend of R1 000, it was important that the election of ward committee members represent the diversity of persons in the wards and not representation of political parties, especially as political parties were already represented in the council structure. It was necessary to ensure that the election of ward committee members was not hijacked by political parties. One needed to ensure the requirement in the Act that diversity of representation was ensured.

Ms Krishnan replied that due to limited funding on the part of municipalities, the stipends were paid by only a few municipalities in the province. Although the national department had proposed that the stipends be paid, it was not affordable to all municipalities in the province. In KwaZulu-Natal, about 26 municipalities were grant dependent and thus did not have the funding in their budgets to pay ward committees.

The Chairperson referred to the intervention scheme of monthly visits of the audit committee and asked if non-performance was detected during visits to municipalities that had disclaimers or adverse reports.

The Chairperson asked if the audit of any of the municipalities had improved from qualified to unqualified.

Ms Krishnan replied that overall, ten districts had improved: five had clean audits and five had moved from qualified to unqualified audit reports. Forty four still remained unchanged.

The Chairperson referred to departmental debt owed to municipalities to the tune of R4.1 billion and asked what measures were being taken to recover this debt on behalf of the municipalities.

Mr Mabuyakhulu replied that the amount represented the total debt owed to municipalities and not only debt owed by government departments. Only a minimal percentage of this debt - about 10% to 12% - was attributable government departments. In this context, as far back as 2004/05 a provincial team had been set up to review all government debt to municipalities in terms of billing and properties. It was discovered that the claims made by municipalities on properties were not necessarily properties that belonged to provincial departments. Measures were therefore put in place to scrutinize and ascertain if in fact the amounts were owed by government departments. Where it had been established that they were, then the indebted departments had to pay.

The Chairperson questioned if the lack of coordination between the department and other departments such as Human Settlements was only at the provincial level or extended also to the national level. She referred to corruption and asked if any of the cases had been finalized and what the outcomes were. Noting the huge backlog on water and sanitation infrastructure, she asked which had been prioritized.

Ms Krishnan replied that water and sanitation infrastructure were programs being driven vigorously to improve the backlog situation.

The Chairperson referred to the instances of rural-urban migration within KwaZulu-Natal and asked what the levels of crime were in areas being migrated to.

Ms Krishnan replied that migration patterns happened across the province generally and this created a strain on urban areas in terms of the infrastructure. However, houses in rural areas were not left vacant, as persons, comprising of the elderly and young, occupied these houses.

Mr Mabuyakhulu replied that there had been no significant increase in crime levels as these areas enjoyed relative political stability.

The Chairperson questioned if Section 57 managers also received performance bonuses. She questioned the need for bonuses as these positions attracted market related salaries.

Ms Krishnan replied that legislation provided for the payment of performance bonuses hence they were paid. The province considered the grading of municipalities and this had provided a guideline for payment of performance bonuses. For most rural municipalities, there was a need to attract skilled personnel and this was achievable only with attractive pay packages.

Discussion on Western Cape
Ms Segale-Diswai remarked that from previous interactions with the Western Cape government, it had shown reluctance to establish MPACs. It was thus commendable that the MPACs had been rolled out across the province.

Ms Segale-Diswai referred to the recent service delivery protests in Cape Town and asked why there seemed to be consistent vandalisation of robots during these protests. She urged that an investigation into this be carried out.

Mr Bredell, Western Cape MEC, replied that he was not aware of the reasons for the vandalisation of robots but it seemed to be politically motivated. At the root of service delivery protests were the unresolved issues of poverty, inequality and communication between the leadership and the people. Until these were addressed, the discontent would most likely persist.

Ms Segale-Diswai asked for further explanation on councillor debt.

Ms Segale-Diswai noted that an IDP had not been implemented in three municipalities. She questioned what the function of the provincial government was in implementing IDPs.

Mr Bredell replied that the IDP process was in its third stage. The municipalities sent draft IDP proposals to the provincial department. The provincial department in turn reviewed the draft IDPs, made its recommendations and invited stakeholders to debate. Problematic municipalities had been in the habit of not responding to the calls for IDP proposals but were currently more open to ideas, as they observed the benefits that accrued from the process.

An official from the department added that that the province had put in place four mechanisms to ensure the proper implementation of IDP: The province through the department had beefed up the directorate to provide support to the municipalities; The province had targeted training programs to commence next month in municipalities where the IDP had failed; The province ensured it held quarterly meetings with municipalities to discuss their challenges with their IDP; The province encouraged municipalities to involve stakeholders such as NGOs on the IDPs.

Ms Segale-Diswai referred to stakeholder involvement in participation of IDPs and questioned how NGOs were absorbed into the IDP process.

Ms Segale-Diswai said it was alleged that the Western Cape cabinet had passed a resolution not to work with the national support team. She asked what informed this decision.

The Chairperson cautioned that this amongst other issues would be dealt with at a future closed door session with the Western Cape provincial government.

Ms Nelson noted that the presentation had acknowledged that the province had requisite capacity in terms of engineers. Could these engineers not assist with the formulation of IDPs, especially as previous experience had shown that consultant-driven IDPs were usually problematic.

Mr Bredell replied that engineers were involved in the IDP process but it was not necessary that they drove the process. There existed a huge gap between the needs of the citizens and the response of the government through the IDP process; hence the best efforts of the government seemed inconsequential.

Ms Nelson acknowledged that the Western Cape had an excellent disaster management programme; however the flooding in Western Cape every winter remained an area of grave concern. This issue had been raised in previous engagements with the Western Cape government and the Committee had been informed that people were moved away from the affected areas but they usually moved back and it remained a yearly re-occurrence. What strategies were in place to permanently deal with this issue?

Mr Bredell replied that there was no quick solution to the flooding issue in the Western Cape as huge capital was needed to build houses which could only be met over time. Citizens consistently moved back to the flooded areas in the hopes of being resettled by government.

Ms Nelson referred to the nightmarish network of illegal electrical connections seen in certain areas of Cape Town and asked what the province’s role was in negotiating on the issue of electricity supply.

Mr Bredell replied that the City of Cape Town was aware of the illegal connections in different parts of the city. This was one of the areas where good policies existed but did not translate to impacting at grassroot level. There was a need to revive the ward systems in affected communities to help address the issue.

Ms Nelson referred to drug and alcohol abuse, gangsters and foetal alcohol syndrome that were rampant in Cape Town and asked what programmes the Western Cape Province had with regard to moral regeneration and how it planned to deal with these issues.

Mr Bonhomme referred to the inability to form a quorum to appoint a Municipal Manager in one of the municipalities. He asked if this was due to political party interference and for how long it had gone on.

Mr Steenhuizen referred to the SIU investigations and questioned if there had been feedback to the department on these and when the investigations were to be concluded.

Mr Bredell replied that the over the past four to five years, the SIU had been contacted for investigations. On conclusion of investigations, the SIU report was sent to the President who forwarded the report to Cabinet for action. The department interacted on a consistent basis with the SIU on current investigations and received constant reports from the SIU. As regard the duration, it was important to avoid cheap politicking and ensure that the investigation was carried out thoroughly.

Mr Mosimane referred to the intervention of the province to ensure a quorum was formed and asked if there was an intervention from the province to ensure the meeting was held.

The Chairperson noted that the presentation highlighted intervention in relevant areas.

Discussion on Gauteng
Mr Bonhomme noted with dismay that from the presentation, the supply chain management process in the province was weak, powers were not appropriately delegated and there was a large number of unskilled workers. These issues within the supply chain management were of concern especially with regard to corruption.

Ms Mosimane decried the challenges with the supply chain management process and remarked that such discrepancies must be taken seriously.

Ms Mokate, Gauteng Deputy Director General:
Corporate Support Services, replied that the concerns of Members about supply chain management and debt were received and noted.

Mr Bonhomme in response to Ms Mokate stated that it was evident the supply chain management process was blatantly useless.

Ms Mokate conceded this and committed to providing the detailed plan of action that had been developed to address this issue, in a written report to the Committee.

Ms Nelson remarked that government departments owed local governments money and the province ought to facilitate the repayment of that debt. Service delivery occurred mainly at municipality levels and it was essential that the municipalities were refunded to ensure sustainable service delivery to citizens.

Ms Segale-Diswai added that the department was responsible for driving the process to ensure municipalities were paid the debt owed to them by government departments, but when the department itself was indebted to municipalities then it was a major issue as it created an environment of laxity around debt owed to municipalities.
 
Ms Mokate replied that there had been major improvements in debt recovery although the department needed to work harder. There was strong political commitment on the part of the Premier and MECs to resolve the debt issue.

Ms Nelson noted that there was a major shortage of critical skills in the country and asked what programmes had been put in place in the province to develop skills.

Ms Mokate replied that there was a plan in place to deal with scarce critical skills such as engineering and finance, which included training and skills transfer between consultants and municipality/provincial staff. The challenge was in sustaining the drive as there was high turnover and movement of staff between municipalities. Recruitment and retention policies were not always sufficient to address this. The province planned to embark on an impact assessment drive to review the amount spent so far on capacity building.

Ms Segale-Diswai asked for further explanation on how service delivery was hampered by political interference in the province.

Ms Mokate explained that sometimes political leadership influenced tenders and in some municipalities, councillors got involved in staff employment.

Ms Segale-Diswai noted that the presentation had highlighted the lack of power to enforce decisions of MPAC as a challenge. She asked for clarity on this.

Ms Mokate explained that the powers of MPAC stopped at making recommendations and the municipalities still had the duty to enforce the recommendations.

Discussion on Northern Cape
Mr J Matshoba (ANC) questioned why despite the appointment of municipal managers and consultants in some districts, their audit outcome was still a disclaimer for two years running.

Ms Greta Apelgren-Narkedien, Head of Department, replied that some Municipal Managers and Chief Financial Officers in some municipalities were skilled and yet unable to produce unqualified reports. A proper analysis would be forwarded to the Committee at a later date.

Mr Matshoba replied that it was an anomaly for non performing Municipal Managers to still be paid bonuses.

Mr Steenhuizen asked what the spend for municipalities was on the funding allocated for 2010/11.

Ms Nelson also asked what the progress was on monies allocated to projects.

Ms Apelgren-Narkedien replied that detailed information on municipality spend would be forwarded to the Committee. By June 2012, only 12 municipalities had been able to spend 100% of their MIG funding, four municipalities could not spend up to 20% of their MIG funding, while others spent between 50-100% of their MIG funding. Support was planned for all municipalities to assist in addressing this issue.

Mr Steenhuizen noted with dismay that just fewer than 50% of municipalities in the province had perpetual disclaimers and asked what the consequences were for these municipalities and their officials.

Ms Apelgren-Narkedien replied that municipalities were autonomous; hence the provincial department could only assist but was limited in the actions it could take.

Mr Matshoba replied that the excuse that municipalities were autonomous was unacceptable. The municipalities were not autonomous at the point of receiving grants but in accountability issues suddenly became autonomous. This needed to be urgently addressed.

Mr Steenhuizen noted that it was difficult to attract skilled officials to some of the rural municipalities. What systems had the province put in place to attract skilled expertise to these municipalities? Were these municipalities viable?

Ms Apelgren-Narkedien replied that no decision had been reached yet on demarcating municipalities. The danger of lumping municipalities which were not viable with others was that some of them were so poor they would outstretch the resources of municipalities that were doing fine on their own.

Ms Nelson asked what happened to the audit outcome of Frances Baard municipality.

Ms Apelgren-Narkedien replied that the deteriorating audit outcome of Frances Baard was attributed to a number of factors, including the acting Municipal Manager.

Mr Mmoiemang added that the Auditor-General had explained that there was a misinterpretation with one of the regulations around assets. If the Chief Financial Officer (CFO) had taken time and not hurried to submit, this might have been avoided. The department was monitoring the municipality and necessary changes would be effected soon. A team that was part of the Steering Committee had visited all disclaimer municipalities to monitor the action plan that had been put in place. Service providers were also appointed as part of the Steering Committee around March/April. The reason there had been delays in some municipalities meeting the submission deadline was the delay caused by using only two specific consultants to assist with financial plans.

Ms Nelson remarked that the current funding model of the province needed to be reviewed.

Ms Nelson noted that during oversight visits of the Committee, it had gathered that there were outstanding funds due to municipalities for their disaster management schemes. What was the status of these outstanding funds?

The Chairperson also asked what the state of disaster management centres were in the province.

Ms Apelgren-Narkedien replied that most of the municipalities had received the disaster management funds but a few were still outstanding.

The Chairperson remarked that the Committee recognised the peculiar challenge of the province with its vast land mass and long distances between municipalities, hence the need to devise measures such as video conferencing to beat the distance and still keep in touch with municipalities. She wondered if these measures were still used. She asked for clarification on the school protests in the province.

Mr Mmoiemang replied that two municipalities were affected by the school protests and in one of these municipalities there had been no schooling since 29 May. The Department of Education had organised alternative catch up classes for the Grade 12s. The protest arose as a result of a demand for the mayor to resign. The second municipality was predominantly rural with a backlog of infrastructure programmes. Although there had been progress, the demand by the community was for the construction of a road network. Half of the schools in this municipality which were closed at the beginning of June had been opened as a result of the intervention by the Provincial Government. The commissioner on regional affairs had met with the communities to discuss the issues. Due to these protests and the resultant disruption to the academic calendar, the Grade 12 students in these communities would be unable to sit for the preliminary exams. However, the school administration was concentrating on catch up programmes to ensure the syllabuses were completed.

The Chairperson thanked the representatives of the provinces for fruitful deliberations. The meeting was adjourned.

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