Support to municipalities under section 139 of Constitution: Department of Cooperative Governance & National Treasury

NCOP Finance

11 September 2013
Chairperson: Mr C de Beer (ANC, Northern Cape)
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Meeting Summary

The Department of Cooperative Governance and Traditional Affairs (COGTA) and National Treasury briefed the Committee on the interventions that were being made at present under section 139 of the Constitution. The Chairperson noted that this Committee had been interacting, since 2009, with various municipalities who displayed problems, and these briefings should indicate the progress in turning around the municipalities. He outlined that section 154 of the Constitution obliged national and provincial government to strengthen and support municipalities to deliver on their mandate, and that it had been accepted that some of the problems would require longer planning and attention to resolve.

National Treasury noted also the links between section 139 of the Constitution and section 137 of the Municipal Finance Management Act, noting that the provinces would be obliged to intervene if there were financial crises, but had a discretion in cases where there were problems in making payments or where expenditure exceeded revenue. At the moment, 70 municipalities were receiving support, based on approved Support Plans, after consultation with provinces. National Treasury appointed competent staff to ensure the sustainability of any recovery plan, and was providing direct support to Madibeng, Mahikeng, Msunduzi, Naledi and Bushbuckridge. However, where interventions were not supported by proper plans, they tended not be effective.  

The Committee was disappointed to note a late apology from the Director-General of COGTA and no representation from the Ministry, but resolved to take the briefing from this Department because it needed information ahead of its meetings with municipalities. A Member noted that the very officials who had accepted reports were regrettably unable to explain what they were doing to solve problems. The Provincial Department from KwaZulu Natal noted challenges around governance, financial management and service delivery. There were conflicts between top management and councillors, and political in-fighting, and municipalities were still beset with poor performance by top management, insufficient organisational structures and vacancies. On the financial side, there was lack of capacity and systems to effectively manage the financial resources. Service delivery was uneven, with lags between demand and supply, and high debt in municipalities, resulting in insufficient spending on maintenance and frequent breakdowns. Seven municipalities in the province were under administration and one was receiving intervention. Problems were particularly apparent in coalition-run municipalities. The Department attempted to appoint Ministerial representatives, governance experts and claimed that there was progress. North West Provincial Department said that there was a section 139 (1)(b) intervention into three municipalities, who faced challenges of political differences, resistance and poor understanding of the attempts to assist. Mpumalanga Provincial Department said that the municipalities of Emalahleni and Bushbuckridge had major challenges around infrastructure and services delivery collapses, with disintegration of functions, lack of trust with the community and government and paralysis of the workforce. Interventions included appointment of technical directors, initiation of work shift systems and establishment of section 80 committees. The National COGTA indicated that section 139(1) posed difficulties of interpretation and for this reason most of the interventions were being done under section 139(2). The COGTA was intending to table an amendment Bill that hopefully would clarify the wording and strengthen the Department’s hand in applying the section.

Members thought that the amendments were needed, following recommendations that had been made already by this Committee in 2012. They were adamant that proper reporting must be made of any official transgressions, and where municipal officials misused the budget they should be held fully accountable, and be required to repay. The Bill should also clearly set out duties and responsibilities of a mayor. One Member, later supported by others, was strongly critical of the fact that since 2009, there had not been sufficient progress and that political challenges and lack of skills were proffered as an excuse. He wanted more specifics n what exactly had been done by the department to engage actively with the parties, and thought that the interventions amounted to window-dressing as he could not believe that a properly-structured intervention should not be able to address political squabbles. He firmly stated that any official who misbehaved must be disciplined, incompetent officials must be removed and the powers under section 139, although they could do with being strengthened, already provided the Department with powers that it could use. Another Member questioned if COGTA, having received reports, did read them and act on them, asking how municipalities could be allowed to collapse under its watch. Members demanded more reports on Bushbuckridge, Mbombela, Indaga and Abaqulusi, and responses to their letters to the Minister.

Meeting report

Chairperson’s opening remarks
The Chairperson provided the background of the presentations, noting that section 139 of the Constitution empowered interventions into municipalities that were struggling. The Committee had interacted with municipalities as well as other concerned stakeholders, since November 2009, and these included Eskom, National Treasury, Department of Cooperative Governance and Traditional Affairs (COGTA) and Department of Public Works (DPW). The Committee managed to address some of the issues immediately, but others remained to be resolved in the longer term. In terms of section 154 of the Constitution, the national and provincial government must provide support and strengthen the capacity of municipalities in order to deliver in terms of their mandate. The Committee had engaged with the former Deputy Minister of Cooperative Governance and Traditional Affairs, Mr Yunus Carrim, who had told this Committee that it would probably take ten years to achieve the “Municipal Clean Audit” plan. That was in 2011. The Committee emphasised that the municipalities should be pro-active. The Department of Cooperative Governance and Traditional Affairs (COGTA) as well as National Treasury (NT) would now brief the Committee on the support they were providing to turn the failed municipalities around.

Support being provided to municipalities in terms of section 139 of the Constitution:
Department of Cooperative Governance and Traditional Affairs briefing
Ms Shaanaz Magiet, Deputy Director General, Department of Cooperative Governance and Traditional Affairs, apologised for the absence of the Director General, Mr Vusi Madonsela.

Mr R Lees (Kwazulu Natal, DA) asked the Committee to postpone the meeting due to the absence of the Minister, Deputy Minister and the Director General, and asked also for reasons why the Director General was absent.

Ms Magiet informed the Committee that the Director General had other very important issues to attend to. He was hosting and engaging with international guests.

The Chairperson accepted the apology and told the Committee that he believed that Ms Magiet was telling the truth. However, he cautioned that this should not occur again. The Committee should be informed in advance if its top officials would not be attending, and it was not desirable that he should be told of this only when the meeting started. He asked that the Department submit a formal apology.

Answering Mr Lees, the Chairperson said that whilst normally the top officials would be expected to attend, the meeting was important and there were very crucial issues to deal with. He felt that it could not be postponed because the Committee would be meeting the municipalities in the following week.

He welcomed the National Treasury, and asked it to brief the Committee.

National Treasury briefing
Mr Schalk Human, Acting Accountant-General, National Treasury, briefed the Committee, taking it through the attached Powerpoint presentation. He informed the Committee that section 139 of the Constitution was linked with Municipal Financial Management Act (MFMA). The provincial government had a mandate to intervene to assist distressed municipalities, but National Treasury also had a mandate to intervene in the financial matters and to provide support. He indicated that there was discretional provincial intervention in terms of section 137 of MFMA, read with section 139(1) of the Constitution. However, this discretion came into play when there was, for example, failure to make payment or in cases where municipal expenditure exceeded revenue. There was also a mandatory provincial intervention if the municipality was experiencing a financial crisis.

He informed the Committee that 70 municipalities were, at the time, receiving support, upon request, based on the approved Support Plans by Councils, after consultation with provinces. In so doing, the National Treasury appointed competent staff to ensure the sustainability of any recovery plan that it launched. It provided direct support to Madibeng, Mahikeng, Msunduzi, Naledi and Bushbuckridge at the moment.

Mr Human informed the Committee that interventions were not always supported by structured plans or received relevant support, and where this was the case, the interventions did not go as planned. He concluded by requesting the Committee to consider Joint Sittings of the Finance and Cooperative Governance Parliamentary committees when processing the matters.

Provincial and National Departments of Cooperative Affairs briefings
KwaZulu Natal
Ms Sheetal Maharaj, Acting Senior Manager: Municipal Governance, KwaZulu Natal, COGTA, stated that the municipalities in Kwazulu Natal were facing challenges in terms of governance, financial and service delivery. In the area of municipal governance, there were conflicts between top management and councillors and political in-fighting. There were frequent findings around lack of, or poor performance of top management, insufficient organisational structures and the existence of vacant post in key management positions.

With reference to financial matters, Ms Maharaj indicated that most of the municipalities were characterised by financial mismanagement. This included a lack of adequate systems and capacity to effectively manage financial resources.

She further noted that service delivery was often highly uneven, significant lags were found between demand and supply and many municipalities had high debt levels for bulk water and electricity purchases. The municipalities spent little, or showed no spending at all, on repairs and maintenance, resulting in distribution losses and breakdowns of systems, or services not rendered.

She indicated that there were seven municipalities in the KZN province under administration in terms of section 139(10) of the Constitution and section 136(3) of the MFMA. They included Indaka, Umvoti, Imbabazane, Abaqulusi, Umzinyanti, Uthukela, and Ugu. She further indicated that Matubatuba was also experiencing managerial problems, and was thus not functional. It was also receiving an intervention in terms of section 139(1)(b) of the Constitution.

Ms Maharaj informed the Committee that various municipalities, especially those termed “coalition municipalities”, where the municipal governance was being effected by a political coalition, were challenged by political in-fighting. There were often votes of no confidence, walk-outs, or one party could refuse to sit with others in the meetings convened by either national or provincial COGTA.

The Chairperson asked whether there were any success stories.

Ms Maharaj responded that the COGTA responded to the problems by appointing ministerial representatives and municipal managers. The municipalities were benefiting from placement of governance experts. She said that there was considerable progress and COGTA was aiming for sustainable and effective management. She had not actually prepared a report showing indicators of success. Nonetheless, many municipal sections were functional due to these interventions. Municipalities were generally recovering.

North West
Mr Monnapula Motlagelwa, Head of Department, North West Provincial Department of Local Government, briefed the Committee on intervention support provided by COGTA in this province. He informed the Committee that intervention was provided in terms of section 139(1)(b) to the municipalities of Maqassi Hills, Ditsobotla, and Matlosana. These municipalities were challenged by political difference and disagreements, high level of resistance and poor understanding of the application of section 139 of the Constitution.

Mr I Strauss, Director: Municipal Finance, Provincial Department of Local Government, Mpumalanga, informed the Committee that the municipalities of Emalahleni and Bushbuckridge in his province were facing major challenges around infrastructure and services delivery collapses, whilst the municipal capacity to function had disintegrated. The municipalities were financially at the point of collapse, there was a breakdown of trust between communities and government, and the workforce had become paralysed due to workers’ union actions.  With regard to governance, a technical director was appointed in Bushbuckridge, a shift system was reviewed and signed in Emalahleni, and section 80 Committees were established.

National IGR Directorate
Ms Sheila Hughes, Chief Director: Inter-governmental Relations, National COGTA, then briefed the Committee. She stated that the limitations of the wording of section 139(1), in regard to failure to fulfil an executive obligation, had led to difficulties in interpreting, firstly, what constituted “failure” and, secondly, when interventions would be permitted. Most of the interventions were conducted in terms of section 139(1)(b).  She said that there was a need to strengthen the application of section 139, by way of amending legislation that would clearly explain how and when support and interventions could be provided. She stated that a Bill had been drafted that provided the manner in which interventions should be provided in terms of sections 139 and 100 of the Constitution. The Bill had been sent to the State Law Advisers so that they could give consideration to its constitutionality.

Ms Magiet thanked the Committee for hearing the long presentations by her team.

The Chairman acknowledged that this was not the first time that the Committee had heard about the Bill being prepared, and indeed the Committee had made recommendations in 2012, so the process of its adoption should go on. He stated that this Bill was very important, and that it would be a good approach towards resolving the weaknesses of section 139 of the Constitution. Should the Bill be rejected, there would be severe consequences. There was a need to have proper reports on official transgressions. In cases where municipal officials might misuse the budget, there should be a legal mechanism to hold them accountable, and especially to require them to repay the money misused. The Bill should also clearly indicate the duties and responsibilities of a Mayor.

Mr T Chaane (North West, ANC) said that what he had learnt from briefing was the lack of progress caused by political challenges. This appeared to cut across all provinces. He said that he was tired of hearing this as an excuse, and was similarly tired of hearing about lack of skills or incompetence of officials.

Mr Chaane requested clarification on the reports of resistance, and what efforts had been made to engage with the concerned political parties.

Mr Chaane wanted a full report on Abaqulusi.

Mr Chaane noted that he had addressed a letter to the Minister but had not yet had any response.

Mr Chaane thought that the interventions were only window-dressing, because there was still leeway for impunity. He emphasised that the Department was achieving nothing if in fact it could not turn around the failed municipalities, which had failed merely on the basis of resistance and political interference.

Mr Chaane wanted to make some positive and strong suggestions, as follows:
- If an official misbehaved, s/he must be disciplined
- COGTA should, using its power, actually make section 139 work. Failure to do so could be viewed as an indicator that the Department had not taken proper cognisance of, nor exercised its power over municipalities
- Any incompetent officials should be removed from any form of governance where a municipality had collapsed.

The Chairman noted these comments and added that the Department should also take into consideration how section 139 could be strengthened to be able to deal effectively with municipal officials. He agreed with Mr Chaane that the Committee had been listening to the same rhetoric since 2009.

Mr B Mashile (Mpumalanga, ANC) indicated that the Committee was facing a difficult situation if the National Treasury and the Department did not have capacity to apply section 139. He asked if the municipalities did submit reports, and whether the Department had set aside time to read them and act on them, in accordance with section 154 of the Constitution. He felt that interventions in terms of section 139 should be a last resort. He was of the view that the correct procedure was not being followed; COGTA was supposed to oversee and inspect, but yet municipalities collapsed under its watch. He wanted clarification on Bushbuckridge and its crises, which had been mentioned in a letter that he had addressed to the Minister, but nothing had been done to solve the issues there. Mr Mashile questioned the credibility and veracity of the briefing, noting that what he saw on the ground was very different from what he had heard in this briefing, and that nothing had been mentioned about  Mbombela.

Mr Lees said that the failure of KZN municipalities under the coalition arrangements could not simply be explained as resulting from problems in the coalition. COGTA should not be afraid of dealing with councillors who brought the management into disrepute, or who cause municipalities to collapse. He asked why the Department took such a long time to respond to, for example, Indaga Municipality, and supported his colleagues in asserting that he felt that the COGTA was failing to discharge its mandate.

Ms S Faku (Eastern Cape, ANC) agreed that there was nothing new in this intervention briefing. The Department was supposed to show the Committee what best practices were adopted to effectively apply section 139. She agreed that the excuse could not be proffered that a municipality was dysfunctional because a Mayor was merely fighting with a Chief.

Mr D Joseph (Western Cape, DA) asked the Committee why high profile politicians and officials had tendered apologies and were not attending the meeting. They were the very people who had endorsed the reports, so they should have been answering how they intended to solve these problems.

Ms Magiet assured Mr Chaane that his letter would be attended to and said that the COGTA had noted the comments raised.

The Chairperson thanked the National Treasury and COGTA and stated that the Committee needed to find, with them, a way to achieve more effective interventions. The Amendment Bill should be adopted to strengthen the work of Department.

The Chairperson wanted to remind COGTA that no government official was untouchable and that no officials could be allowed to do as they liked, without facing sanction. Both government officials and politicians were accountable to the people. The Chairman said that section 100 interventions would send a bad signal.

Consideration and adoption of minutes
The Committee minutes of 13 August 2013 were adopted, with minor amendments.

The minutes of 21 and 25 August 2013 were considered and adopted, without amendments.

The meeting was adjourned.


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