Constitution of the Republic of South Africa Third Amendment Bill: hearings

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Justice and Correctional Services

05 September 2002
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Meeting Summary

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Meeting report

JUSTICE PORTFOLIO COMMITTEE

JUSTICE PORTFOLIO COMMITTEE
6 September 2002
CONSTITUTION OF THE REPUBLIC OF SOUTH AFRICA THIRD AMENDMENT BILL: HEARINGS

Chairperson:
Adv De Lange (ANC)

Relevant Documents:
Constitution of the Republic of South Africa Third Amendment Bill, No 33-2002
SALGA Submission - Appendix 1

SUMMARY
Hearings continued with SALGA, the Northern Provincial Legislature and the Mpumalanga Provincial Legislature scheduled to make a submission. Both legislatures were unable to attend and only SALGA presented. SALGA submitted that adequate monitoring and support will prevent interventions and for this reason provinces have to at the first instance fulfil this role. They submitted that the amendments undermine the constitutional integrity of local government and were of the view that the Municipal Structures Act provides the necessary framework for provincial monitoring and it allows for the dissolution of a council if there has been an executive failure. They argued that the legislative authority of a municipality must not be undermined and reasoned that if there has been a legislative failure i.e. no budget passed, then the executive would be unable to act, and the council could be dissolved in terms of the Structures Act.
Discussion on the Bill is scheduled for Wednesday 11 September 2002.

MINUTES
SALGA submission
Mr Leeuw and Mr Mettler were the SALGA delegates who presented the submission to the Committee. They provided an executive summary of the submission:

Executive summary
- SALGA affirms and supports the current constitutional status of local government:
- SALGA affirms and supports the current constitutional framework wherein the supervision of
municipalities amounts to monitoring, support and, in the last instance, intervention by the
province;
- SALGA reiterates its stance that adequate monitoring and support will obviate the need for
interventions by provinces:
- SALGA reiterates its stance that a clear legislative framework for provincial supervision is urgently needed and long overdue;
- SALGA is firmly of the view that the financial viability of municipalities is not dependent on the ability of other actors to intervene into municipal affairs;
- SALGA believes that the current regime for supervision is adequate and that the proposed
amendments, insofar as it make inroads into the legislative authority of municipalities, undermine
the constitutional integrity of local government.

The full submission is included as Appendix 1. In it, SALGA had commented on the extension of the time period for the NCOP from 30 to 180 days and thought that it was too long. SALGA However from the briefing meeting the previous day on the Bill, SALGA said that it understood that nothing prevented the NCOP from dealing with the matter even before 30 days. The comment was therefore withdrawn.


At the meeting SALGA proposed alternative wording for Section 139 that would take into account the need to have a supervision regime that caters for monitoring, support, advice, capacity
building and, in the last instance, interventions:

1. By the deletion of subsection 1B(b)(ii).
2. By the addition of a new subsection (3):
(3) If a provincial executive intervenes in a municipality in terms of subsection (1A)(b), it must report to the Council on the circumstances that gave rise to the intervention, including -
(a) what monitoring mechanisms it put in place to supervise the fulfilment of the executive obligations by the municipality in terms of legislation;
(b) measures of support and advice that have been provided, and capacity building initiatives conducted on the basis of its monitoring prior to the intervention;
(c) the specific actions it took to secure the financial sustainability of the municipality.
3. By the renumbering of the current subsection (3) to subsection (4).

Discussion
The Chair commented that he had sympathy for the submission that local government needs to be supported. The question of support however was for discussion in the Finance Committee. At the moment the Committee is looking at what happens when there is a breakdown in a municipality. He hoped that Finance and Local Government would deal with the question of support. The Chair referred to the submission and wanted to know the basis for equating a provincial budget with a local government budget. Provinces get a large proportion of its budget from transfers while local government did not. He felt that for this reason there would be many more problems associated with a local government budget.

Ms Camerer (NNP) referred to SALGA's comment in 4.1 that there is an important need for a uniform legislative framework for provincial supervision that deals with monitoring, support and interventions. She was not clear if the Committee should have such a broad focus or just look at the suggested changes to the amendment provided by SALGA.

Mr Mzizi (IFP) referred to 1.2 which stated that there should not be an intervention for the failure of a legislative nature. He could not reconcile this statement with the fact that SALGA preferred the total dissolution of the Council and the appointment of an administrator as the administrator would take full control.

Ms Chohan-Khota (ANC) referred specifically to the new subparagraph three that was suggested by SALGA. She said that the clause was trying to discover the relationship between the province and the municipality. She felt that there were no obligations placed on the province but merely reporting requirements. She wanted to know if what SALGA was saying was that the Constitution is deficient in respect of the relationship between the levels of government.

The Chair added that the issues in the proposed sub 3 were better placed in other legislation not the Constitution.

Mr Jeffrey (ANC) agreed that many of the proposals belong in other legislation. He referred to the heading of point 6 that reads, 'The proposed amendment undermines the constitutional integrity of local government.' The member thought that nothing in the submission supported that heading.

Mr Smith (IFP) said that last year one of the major issues when the previous amendment was tabled was that there was insufficient consultation. He found that some statements in the submission were striking because SALGA is part of the consultation. One such comment by SALGA relates to municipal borrowing. He said that last year Treasury said that certainty needed to be provided for the private sector in the event of a default on a loan. All that SALGA submits is that loans from the Development Bank SA rise from 2000/02 - 2001/02. He found this to be an inadequate response.

Secondly, he said that SALGA wants the status quo to remain, i.e. intervention only for an executive failure. He referred to the suggested new Section 139 from SALGA and said that it does not give effect to this view.

The Chair commented that last year the proposed amendment took over all legislative functions of the municipality. The amendment now before the committee limits the extent of the legislative intervention to specific situations. He also pointed out that SALGA's proposed amendment only relates to a province's discretionary power and not the obligatory one. He wanted SALGA to clarify this.

Ms Taljaard (DP) said that she had a degree of sympathy with the submission especially with the issues raised under point 6. She reminded the Committee that there was still the question of Mayor Nkosi's proposal that Chapter 11 of the MFM Bill be deleted and the necessary amendments be made to the Local Government Fiscal Relations Act. She also thought that there was merit in looking whether the current framework places enough obligation on other levels of government to support local government. She added that the submission was silent on the powers given to National Government and wanted the SALGA view on this.

The Chair reiterated that these are the issues that Finance must consider. For this reason the constitutional amendment would be passed into law on the latest date possible i.e. 25 October 2002. At the moment the Constitution is clear on the obligations on the spheres of government and how they interact. This needs to be expanded in legislation. Finance would therefore have enough time to consider if the amendment is sufficient to enable them to include the necessary mechanisms in the legislation - the Municipal Finance Management Bill.

Ms Hogan (ANC) asked SALGA what happens when a budget is not passed. Secondly, she commented that the DBSA figure of R1.5 bn is not even close to what a Municipal Council needs. She said that municipalities can borrow much more, not just the metros, but confidence is needed in the market so that smaller municipalities will be able to access debt finance.

Mr Leeuw responding to Mr Mzizi said that what SALGA was trying to say is that other things such as monitoring and support must take place before intervention.

The Chair was puzzled that SALGA preferred the dissolution of the Council as opposed to an intervention that keeps the Council intact.

Mr Mettler replied that SALGA was making two points. The first is that Section 139 cannot be seen in isolation. The second is that a legislative intervention in a municipality is problematic.

In respect of the first point he said that the Chair rightly pointed out that the Constitution does say something about support to local government. He submitted that a mechanism is needed before a municipality breaks down and in this regard the new 139 amendment does not reflect the intention of the Constitution that local government should be supported. For this reason he felt that part of Section 139 should include the obligation on an intervening province to show that it has taken the support responsibility seriously.

The Chair replied that no clause in the Constitution renders another one redundant. He said that the support clauses are in the Constitution and that SALGA had to interact with Finance and Local Government on the framework for support. The Chair advised that the amendment before the committee is just a crisp test for when a system has broken down. He agreed that there is a need for a support system but could not see why it was needed in the 139 amendment.

Mr Mettler responding to Ms Hogan said that if no budget is passed, the province would come in directly to pass the budget and the council would be dissolved in terms of the Structures Act.

The Chair asked what section in the Constitution would allow this.

Mr Titus (Advisor to the Minister, Department of Provincial & Local Government) said that the Constitutional Court was silent when pronouncing on the Structures Act on whether that specific clause is constitutional.

The Chair said that no section in the Constitution allows that a province can do that. He added that with this new amendment it could be argued that it is allowed.

Mr Mettler continued and said that if there is no budget, the executive cannot act and then the council would be dissolved. It was important that the legislative integrity of the Council had to be preserved.

The Chair commented that the SALGA submission should then be understood to call for no legislative intervention.

Mr Mettler agreed and said that the non-reflection of this in the proposed amendment is an oversight. In respect of the point of the DBSA, he said that SALGA is trying to say that the increase shows that the system is consolidating. If the necessary time, support and capacity is provided, he submitted that the system can work. He added that one cannot say that the system is going to fail because as yet it has not failed. It was not necessary to infringe on the legislative authority.

The Chair said that there will be a recovery plan that the experts will work out and give to the municipality. There was not a taking-over of any function. If the recovery plan fails, then the experts will implement it. This was not the same as last year's proposal and the current amendment does not allow the take-over of all legislative functions. The Chair was afraid that SALGA was reading the amendments incorrectly. He again referred to Ms Hogan's question and asked SALGA - if they did not want what was in the new amendment - what do they want when a budget is not passed.

Mr Dorfling (SALGA) replied that in terms of the Structures Act if there is no budget passed, then the Council can be dissolved.

The Chair asked if this was SALGA's position.

Mr Leeuw commented that it would not reach the stage of dissolution if the necessary support is provided.

Ms Hogan said that local government always asserts its independence and autonomy and in the same breath wants another sphere of government to take responsibility for them. She added that SALGA was happy for the MEC to come in and shut down the council but not happy with a recovery plan.

Mr Leeuw replied that all SALGA was saying is that provinces must apply their role in supporting and building the capacity of local government.

The Chair again reiterated that the committee is not dealing with that here but only looking at what happens once there is a breakdown.

Mr Leeuw replied that he would have to think about that.

Mr Jeffery advised the members that the dissolution of the Council is only allowed in the Structures Act if Section 139 has not worked. He felt that the new 139 limits the extent of a legislative intervention. He asked what happens if after dissolution the same people come back to office and are faced with the same problems. He also wanted to know what happens in the period after the administrator is appointed and before the elections.

Ms Taljaard commented that the recovery plan is the budget and thought that it is problematic if an outside agency assumes responsibility.

The Chair replied that he had already told the Finance Portfolio Committee about the changes that were needed to Chapter 11.

Ms Taljaard added that the desirability of an outside agency assuming the responsibility of a sphere of government still had to be debated.

The Chair agreed that the debate still needed to take place and said that would take place in the Finance Portfolio Committee.

Ms Maabe (ANC) felt that there was an opportunity for SALGA to make further comments because the dissolution of a Council had serious political consequences. She was sure that the Chair would accept further comments. She did not want SALGA to feel that they have to respond to everything now because she had a problem with what they were proposing.

Adv Masutha (ANC) asked what recourse is there for citizens when municipalities do not fulfil their executive and legislative obligations. He put it to SALGA that it was up to National Government to ensure that all levels of government function is such a way that the Bill of Rights and the rights of citizens are not infringed.

Mr Leeuw said that he did not have all the answers and that SALGA would look at the issues carefully and would still have the opportunity to come back to the Committee.

Mr Mettler advised that they would go and consult. Responding to Mr Jeffrey, he said that the administrator has the power to pass an interim budget that operates until after the elections.

There were no further questions. The Chair advised that further comments were always welcome but that the time frame for this Bill had to be taken into account. The Committee will meet on Wednesday 11 September and Monday 16 September for discussion. If necessary, the 17 and 18 September would also be used.

The meeting was adjourned.

Appendix 1
SALGA SUBMISSION ON THE PROPOSED AMENDMENTS IN TERMS OF THE RSA THIRD CONSTITUTIONAL AMENDMENT BILL, 2002

28 August 2002

1. The constitutional status of local government
1.1 The provisions of Sections 40 and 43 of the Constitution constitute the constitutional foundation of local government as one of the three spheres or of government. These provisions introduced a change of revolutionary proportions to the scheme of government in general on the one hand, and the scheme and profile of local government in particular on the other. While in the past local government was no better than a mere public body acting on a delegated legislative authority, the current local government is granted the status of being a government on its own and a lawmaker in its area of jurisdiction. Unlike in the past. lawmaking in the current local government scenario is not 'administrative" and therefore subject to a judicial review, but it is legislative. As the Fedsure Life Assurance Ltd and others vs Greater JMC case shows:

'Under the interim constitution (and the 1996 Constitution) a local government is no longer a public body exercising delegated powers. Its council is a deliberative legislative assembly with legislative and executive powers recognised in the Constitution itself..."

1.2 'When the new Constitution was passed, the institutional integrity of local government was preserved under the Constitution and protected from the other organs 9f the State. It is within this Constitutional protection that one must read and understand Section 139 of the Constitution. The underlying proposition is that if there is a need for provincial intervention, the intervention should be limited only to a failure of a municipality to fulfil an executive obligation. This means that the intervention should confine itself only to the operational conduct of the municipality and not extend to the legislative authority of a municipal council. This is exactly the same principle that underlies Section 100 of the Constitution that regulates national intervention into the affairs of a province. The full scope of the legislative authority of a province is left intact during an intervention.

1.3 Local Government is, therefore, not a stepchild of the Constitution, or an unintended consequence of our democratic transformation. If there is anything that distinguishes democratic South Africa from the past, it is precisely that local government has been elevated to a new status, with a responsibility to be the engine of transformation.

2. Supervision includes monitoring, support and, in the last instance intervention
2.1 Section 139 covers more than just the provincial executive taking remedial action. It also includes a process whereby the province reviews and monitors the actions of municipalities. Thus, Section 139 has two components. The first one is a process of provincial review of the actions or municipalities in order to ensure fulfilment of executive obligations. The second process is a process of correction should a municipality fall snort of its obligations.

2.2 In the second certification judgment the Constitutional Court identified five successive steps in the process of supervision, the first of which is the review or monitoring of local government and the last being the managing and termination of the assumption of responsibility.

2.3 The purpose of intervention is not to punish but to assist a municipality in addressing very specific problems. Intervention is a measure of last resort in a process of provincial supervision which would normally commence with review and monitoring, followed by steps to strengthen and support where needed. The basis of the power of the province to monitor local government is set cut in Section 155(6) of the Constitution where it is provided that 'each provincial government ... by legislative or other matters, must provide for the monitoring and support of local government in the province'.

3. Adequate monitoring and support obviate the need for interventions
3.1 Building capacity can be seen as the main purpose for rendering support. This can take place through the training of staff and councillors, through the provision of material and technical support, making available legislative support systems, through methods of skills transfers, and through the snaring of resources.

3.2 As stated earlier. there is a constitutional obligation upon national and provincial governments to support and strengthen the capacity of municipalities. In respect of the requests by municipalities for support, there is a clear need that legislation should determine issues such as when and how support may be requested, the role of organised local government in that process, the identification of instances where support may be imposed (e.g. disaster management), and general criteria in terms of which indicators that show a need for support, may be drawn up.

3.3 A framework for provincial monitoring has been established in section 105 of the Municipal Systems Act. It is now up to provinces to establish a monitoring regime that will serve, not only to enhance service delivery, but also to highlight those areas where support is needed. This will go a long way to obviate the need for a full scale intervention where irreparable harm has already been done.

4. A need for a clear legislative framework for provincial supervision
4.1 Our new local government dispensation is just short of two years old. The Constitution is clear in respect of the obligations of national and provincial government towards local government. What is of critical importance at this juncture is for there to he a uniform legislative framework for provincial supervision that deals with monitoring, support and interventions.

4.2 As stated in paragraph 3.3 above, a framework for provincial monitoring already exists as per the Systems Act. What is lacking, is a clear framework for support and interventions. As far as support is concerned, we have already alluded in paragraph 3.2 above to the principles that should be incorporated into such a framework.

4.3 In terms of a clear framework for interventions, the following issues must be provided for:

4.3.1prior to intervention. there must be statutory recognition of the role. and consultation with organised local government within the province and the NCOP;
4.3.2 there must be an obligation to report regularly to organised local government and the provincial standing committee;
4.3.3 permanent intergovernmental structures must be established at provincial level to provide for consultation on identification of problems, terms of intervention, reporting mechanisms, and appointment of an administrator
4.3.4 interventions must be preceded by measures to support and strengthen local government in general and municipalities in particular;
4.3.5 provincial commissions of enquiry must be preceded by consultations with organised local government; and
4.3.6 a regulatory framework to capacitate provinces to deal with interventions

4.4 It would be ideal if a uniform framework for provincial supervision could be a stand-alone Act of Parliament instead of being scattered in various pieces of legislation.

5. Interventions not a prerequisite for private sector investment
5.1 An argument has been made on a previous occasion that there is a need to create an investor-friendly climate between the private sector and municipalities in order for municipalities to attract private capital. SALGA as always understood the demarcation process to have as its ultimate objective the creation of fewer, bigger and better municipalities that are financially viable. It would follow that the need for interventions should now be less. not more.

5.2 It deserves to be noted that it was reported in Business Day, 27 August 2002 that a new municipal demarcation was finally paying off. This statement was made in light of the fact that municipal borrowing from the Development Bank of SA has increased during the period 2001-2002. The Minister of Finance indicated that loan approvals by the bank picked up in 2001/02, rising from about R600m in 2000/02 to R1.5bn for 2001/02. This is the case despite the fact that the current section 139 is in place, that there is apparently no investor-friendly environment, and that municipalities are portrayed as being cash-strapped with little ability to generate own funding.

6. The proposed amendment undermines the constitutional integrity of local government
6.1 It deserves to be repeated that the legislative authority of local government, as guaranteed in the Constitution, is a radical departure from the past and has been in place for a very short while. Nothing has happened between 5 December 2000 and the present to justify any inroads into the legislative integrity of local government no matter now circumscribed such inroads may be.

6.2 The situation that faces all of us now is that we have a proposed constitutional amendment before us that seeks to significantly alter the constitutional status of boa government without any demonstrable evidence that there is a clear and present need for such a drastic diminution of powers. Once this principle has been compromised on such questionable grounds, any future diminution of local governments legislative powers will require very little, if any, substantiation.

6.3 The legislative and executive authority of local government, as circumscribed by the constitution and the Municipal Structures Act, deserves to be protected until such time as there is a clear demonstrable need to alter the arrangement. It must be pointed out that there already exists the ultimate sanction for a municipal council that fails to execute its executive obligations. Such a council can be dissolved by the MEC where an intervention has failed to correct the situation.

7. Insofar as the extended time periods are concerned in subsection 5, the period of 180 days would appear to be inordinately long especially if one has to consider that the NCOP managed to review the interventions in the cast curing the 30 day time period. It is only appropriate that the Constitution, through reasonably tight frames, creates a sense of urgency in cases where one sphere intervenes into the affairs of another as oppose to allowing for a period of 180 days to expire before the intervention ends.

END

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