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

Meeting report

JUSTICE AND CONSTITUTIONAL DEVELOPMENT PORTFOLIO COMMITTEE; FINANCE PORTFOLIO COMMITTEE: JOINT MEETING
16 September 2002
CONSTITUTION THIRD AMENDMENT BILL: DELIBERATIONS

Chairperson: Adv J H De Lange

Documents handed out:
Constitution of the Republic of South Africa Third Amendment Bill
First proposed amendments in respect of clause 3
SALGA Submission on the Constitution Third Amendment Bill (Appendix)

SUMMARY
The joint committees considered the third Constitutional Amendment Bill. The first clause was flagged pending an answer from the Joint Tagging Mechanism on whether the clause would actually achieve its intention of preventing Bills from being split. Regarding Clause 2, the DP were opposed to the extension of the time period for interventions from 30 days to 180 days, while the ANC felt that the extended period would give the NCOP an effective basis from which decisions could be made. Proposed amendments to Clause 3 were criticized by the DP for allocating the power of government to a non-elected agency. The Chair responded that the clause was drafted so as not to do that, the intention being for the Agency to propose a recovery plan that the municipality would be responsible for implementing. Failing that, the council could dissolve and a new council could be re-elected.

MINUTES
Clause 1: Amendment of s76 of Act 108 of 1996
The Chair said that the clause now seem to include that any provision in any Bill that affects the finances of any province will now be a s76 Bill.

Mr Momoniat, the Deputy DG of Intergovernmental Fiscal Relations for the Treasury, said that the intention was to avoid the splitting of Bills. Should that route be opted for, if a Bill included even one provision that affected the provinces finances, the whole Bill would be dealt with as a s76 Bill. This gives the NCOP more power. The current option was also available and that was for the Minister to take out those clauses relating to provinces finances and pass those separately through an amendment, while the rest of the original Bill would be passed as a s75 Bill.

Ms Hogan (ANC) asked for an understanding of "affecting the financial interests of the provincial sphere of government".

Mr Momoniat replied that those are the words that are used in the Constitution, however they had caused a lot of doubt as it could be argued that any provision of a Bill affects the financial interests of the provinces.

Ms Hogan felt that it would be time consuming to take all these Bills to the provinces and questioned if that was really what was wanted.

Mr Momoniat felt that most Bills would be tagged as money Bills and there would be no ambiguity surrounding them. The provision would only apply to those Bills that were clearly s75 Bills.

The Chair asked Mr Momoniat to explain it differently. The Bill was being introduced to change something and he questioned what it was that was being changed

Mr Momoniat cited the Public Finance Management as an example. The Bill had been passed as Act 1 and Act 29 and had included the words "and provinces" at the end of most clauses. The Bill could have been passed as one Act and did not have to go through two Bills.

The Chair asked if it could not be done previously because of the word "affects", why would the change to "includes any provision affecting" change matters. He questioned if the amendments achieved what they were intended to do.

Mr Momoniat felt that they did as the word had previously been interpreted to mean that if the provision did not affect a province, it was to be treated as a s75 Bill.

Mr Smith (IFP) said that he could not see any difference between the provision as it was and the proposed amendment. He did not see how the amendment achieved the intended aim.

The Chair agreed. He asked Ms Hogan if she was happy with it.

Ms Hogan replied that it would have to be lived with.

Ms Taljaard (DP) suggested raising the matter with the Joint Tagging Mechanism.

The Chair felt that it was not a bad idea to engage the Joint Tagging Mechanism and to say that they were not happy with the way things were being done and to ask if the amendment would solve the problem. This fits into the broader problem being experienced in Parliament of mixed Bills. The Constitution does not provide for mixed Bills. The possibility of introducing a constitutional provision to allow for this had been mooted but nothing had been heard since on the matter. He concluded, regarding clause 1, that the intention was clear but he was not sure if the words used reflected that.

Clause 2: Amendment to section 100 of Act 108 of 1996
The Chair said that the clause dealt with s100 interventions. He had only picked up one thing, and that was that the word "must" in subclause (c) should remain and not be changed to "may".

Mr Smith agreed with the "must" and felt that the obligation was to review regularly and not frequently and would be for the NCOP to determine.

Ms Taljaard felt that the issue related to the period. An interesting argument had been put forward about the extension of the time period from 30 days to 180 days. It was felt that the role of the NCOP would be watered down and the time would not be sufficient for them to engage issue.

The Chair replied that he had difficulty believing that the role would be watered down because the NCOP were required to be involved within the first fourteen days, however he accepted that there was that argument. His own view was that it could not be as the NCOP were allowed to disallow it at any time and if it was not approved within six months it would fall away automatically. This means that the NCOP can pass rules to regulate it and the clause allows them some flexibility.

Mr Smith asked if executive Members of the provinces had raised objections.

The Chair recalled that the Premier of the Western Cape had said something but in the end had said that the clause was all right.

Mr Smith clarified that he had been referring to MinMec.

Mr Mommoniat said that it had not been sponsored by the Treasury was based on interventions the previous year and before on proposals by Mohamed Bhabha.

A representative of the Department of Local Government said that comments had come from the NCOP who had felt that 30 days was not sufficient so there had been support for extending it to 180 days. She did not think that a lot of MEC's had objected.

The Chair summarised that within fourteen days it must be tabled in the NCOP that there had been an intervention, which the NCOP must approve within six months or else it would fall away. However the NCOP could, within the six months, manually stop the intervention. This would give them the flexibility that was needed with a clause such as this.

He questioned why subclauses (b) and (c) referred to "the Council" while (a) spoke of the "National Council of Provinces"

Mr Smith said that he had asked the Premier who had said that it was practice to use the full name at the beginning and the shortened version elsewhere. This was also the practice in other legislation.

The Chair thought it odd but did not raise an objection.

Ms Smith said that the motivation for extending the date was that the NCOP had had problems with (b) however he could not think of any interventions that it had had to contend with.

The Chair thought that he had been told that it had been done through directives.

Mr Momoniat responded that there had been no s100 interventions.

Mr Smith said that the motivation had been that the NCOP had had problem but it did not appear that they had faced any problems.

The Chair believed that they had intervened under s139.

Mr Momoniat replied that there had been problems but this would be fixed by changing s139. He would look at what the situation would be if the changes were not made, but indicated that there would be a lack of consistency if the status quo were kept.

Ms Chohan-Kota (ANC) felt that one of the things that were missing was an extension of the oversight powers of the NCOP. Thirty days was clearly not enough but if it were extended to 180 days it would create an effective basis on which to make decisions in the NCOP, where after approval the NCOP can only make recommendations to the national executive.

The Chair felt that the point was absolutely crucial and suggested that Members think about that debate. It would be crucial if there were ever to be a province collapsing, especially if it happened when Parliament was in recess. There would not be enough time for an oversight function and it was just a technical problem and must be borne in mind.

Ms Taljaard agreed with the argument for an extended period but felt that it was also, in a "real sense" interfering with the executive power of another sphere of government so it was necessary to have some speed. She felt that the argument cut both ways.

The Chair felt that that was clearly the case and that there is a balance that one tries to create. It was a question of just trying to draw the line in the right place. This was being guided to a large extent by the NCOP who have said that things are not working well and there was a need for better regulation.

Mr Smith added that there seemed not to have been an NCOP submission in terms of s 100 interventions - only in terms of s139 - and the argument was now to apply to s 100 interventions for the purposes of consistency. He still thought that the 30-day period was fine for s 100.

Ms Chohan-Kota felt that there was a need to be pragmatic but did not see why all there was all the debate on the time frames etc. when these things would take place in a highly politically charged arena.

The Chair stated that these things could not be taken in isolation and needed to be looked at in context and to take everything into account. These needed to be borne in mind during the discussion and he suggested that they be held over.
The "must" in clause 2 would not be changed. There had been some suggestions that the 180 days should be made less but that would but looked at later. The rest of the clause was fine.

Clause 3: Amendment of section 103 of Act
Mr Smith asked why the word "province" had been inserted after "Limpopo". He thought they wanted to be called "Limpopo" and not "Limpopo Province".

The Chair checked s 133 of the Constitution, which uses the words "the following provinces". He asked that it be checked whether the province wanted to be called Limpopo or the Limpopo Province.

Proposed amendments to clause 3
The Chair explained that subclause (1) was basically kept the same. Subclause (2) had been moved to its rightful place. The 40 days allocated to the Minister had been removed and replaced with 14 days. He did not think it adequate for the Minister to sit for 40 days when he had a huge department to consult with, but this was up for discussion. He felt that these interventions could have enormous implications.

Subclause (3) basically remained the same, except that the issue of the budget had been included as a financial crisis in its own right, with the exception of the passing of the budget.
The clause tried to capture two possible ways of intervention. There were two things that the Agency could do: provide a financial recovery plan, including a budget that will give effect to it, which will then bind the council. The municipality must diligently comply in this regard. There were two concepts in the provision - the Agency must prepare and the council must comply and implement. If that fails, the next step will be followed - the Agency assumes responsibility, including taking appropriate steps regarding the budget. There is an "or" separating the clauses meaning that not all the steps have to be followed.

Subclause (4) deals with any intervention while subclause (5) applies where the provincial executive does not adequately perform the function mentioned in sub(3). In such an event the national executive would step in for it and perform its functions.

There were three options in relation to subclause (3) from which the Committee could choose. The first option was almost the same as the original; it was only paragraph (b) that had been changed. A consequential issue was the problem of having to go through all the other steps before it could be done. In the second option, subclauses (a) and (b) were the same. These were the kind of issues that Mr Smith had raised. The word "financial" was removed when first mentioned in relation to a crisis so that the crisis could be wider than a financial one. The obligation was narrower than only providing basic services. The third option was the issue Ms Hogan had raised. The wording was the same except where directly linked to basic services.

Ms Camerer said that there seemed to be a drafting problem in the first option that carries through - subclause (3) seemed to be a separate concept that did not follow.

The Chair explained that sub (3) sets out the test and two options for what could be done. The "or" between them allows the choice of either intervention: sub (a), or dissolution: sub (b). If intervention were decided on, one way of doing it was through an Agency (set up in terms of the Municipal Finance Act) to draft a recovery plan that the municipality must implement.

Ms Camerer felt that there was a missing link between the Agency being expected to formulate a plan and the municipality giving effect to it.

The Chair responded that the Agency must assume responsibility for solving the problem. If this fails, the council can be dissolved and a new council can be elected.

Mr Jeffrey felt that option 2, where reference to it being a financial crisis had been removed, burred with s139. He suggested looking at placing sub (2) under clause 1 and sub (4) under clause 3. The problem with option 2 was that it was too close and too confusing.

Ms Taljaard felt that it was quite a substantial change. The distinction between clauses 139 (1) and (3) were more apparent because it created additional new obligations in a very material manner. There was a new responsibility in s139(3) in terms of the Constitution. The difference with using an Agency approach was that an outside agency would be assuming responsibility for the key responsibility of the democratic process, i.e. the budget process.

The Chair felt that she was talking in generalities and asked what was meant by the Agency taking over the budget.

Ms Taljaard felt that if the Agency has the role of advising council, those areas of decision-making should remain with the council.

The Chair pointed out that this would happen only in an emergency.

Ms Taljaard stated that s 160 (2) of the Constitution was being trumped by creating an Agency that was not part of the democratic process. This was a crucial debate about the democratic process and the legislature's role and could not be done through a non-elected agency and give it a special status through a Constitutional Amendment.

The Chair remarked that, for all of the above reasons, Ms Taljaard's party was opposed to it.

Ms Taljaard continued that it is a conceptual constitutional problem and part of the problem related to it not having been discussed extensively.

The Chair noted that she was opposed to it conceptually and asked if she had any suggestions.

Ms Taljaard felt that what is missing from the argument was the way that the existing constitutional architecture was viewed.

The Chair felt that she was entitled to those views however, in his view, the court depends on what is said in the Constitution and the Agency will be set up in terms of the Constitution. He was not interested in conspiracy theories. The provisions were being drafted exactly so the Agency would not take over the functions of government and if it did not do what it was meant to, a dissolution clause was included. The Committees had been guided here by SALGA. The Agency was being allowed the role of dealing with the recovery plan. The only other option was to give these powers to someone else, and they had tried to avoid letting someone take over the municipalities although that would have been the easiest way to deal with it.

Ms Hogan asked, regarding the Financial Recovery Agency whether, if the plan is not successful or is inadequate and is seen to be so before being implemented, the provincial executive had the right to point out that it was so. Furthermore, it was unclear what the options were should the plan fail. If it did fail, what would the modus operandi of the national government be in intervening?

The Chair responded that the national government would stand in the stead of the provincial government if it were not performing.

A Member asked if the basis for an intervention could be the budget and if, in such a case, one would want to intervene before a crisis occurs.

The Chair replied that surely if there was no budget there would be a crisis. It would be illegal to spend money without a budget.

Ms Hogan questioned if the passing of a budget was something that came out of a financial crisis or if it constituted a financial crisis on its own. Her understanding was that it could stand on its own and was a crisis in itself.

The Chair confirmed this and stated that the amendments must not be looked at on their own but as part of a broad framework, part of which would be consultations and support mechanisms and all of which would be in the Bill. The intention was not to let what happened in Butterworth happen again. This clause would create the pressure that was required to cause all the other mechanisms to take effect.

Ms Chohan-Kota said that she did not have a problem with the Agency, however her difficulty rested on two legs. Firstly, the role of the national Minister coming at the end of the provision and secondly the self-triggering mechanism in clause (3)(a)(ii). Concerning the former, the Agency was not meant to be a permanent body and would be established on a case-to-case basis as things happen. There must be some consultation with the Minister upfront to at least establish the Agency.

Regarding the latter difficulty, one of the problems that would be faced was if the Agency declared a plan that was inadequate and on which there was substantive disagreement. This was one aspect where the spheres of government could speak to each other through the Agency. If there is a problem there should be a dialogue between government and this could be achieved through sub (ii). There needed to be some kind of political backdrop to allow that to happen. She favoured the Premier or the MEC being allowed to decide that as opposed to it being an automatic mechanism. She questioned whether sub (4) referred to subclause (3)(a) and not to (4) as a whole.

The Chair replied that sub (4) was there as a possibility and there was a need to look at it. It deals with the problem Ms Taljaard referred to, in that things might be used for the wrong reasons. It maybe something that needs to be looked at in terms of whether the triggering mechanism was too weak or too strong. Everything that had been mentioned needed to go into the legislation as it clearly could not go into the constitutional amendments.

Afternoon session
Adv De Lange thought that clever MECs would only use S 139 (1) at all times because the issues involved were a matter of degree. He stated that only in desperate situations would one look to S 139 (3).

Adv De Lange listed the three choices that an MEC would be confronted with: -
He stated that almost all problems would fall within the ambit of the executive obligation under S 139 (1). In the event that the situation is so bad, for instance where the MEC would be ready to commit suicide, he explained that there would be two competing choices: -
To use the long option provided by the agency route.
To use the short option.

Adv De Lange did not think that the Members would have the answers to all possible eventualities because there were many variations to the problems. Thus although he stated that there was nothing wrong with the fact that the Members had raised a number of issues, they would have to look to avoiding major debates around the detailed issues. He said that it would be necessary to distinguish between the detail and the principles, and that they would have to concentrate only on the principles in that regard. He pointed out that even upon passing the Bill, there were to remain many unanswered questions, and he gave the example of the question regarding what would happen in the event that all the mechanisms provided for in the Bill failed. Nevertheless, he felt that the discussions had been very interesting.

Ad S 139 (1)
Mr Pep explained that it would not be possible to rely on this provision in certain instances, and suggested that the preferable option would be to allow provincial executives to intervene both in S 139 (1) and S 139 (3). Although the agency had the power to intervene under the previous legislation, he felt that the committees should not endorse such an approach, as he did not find this to be the intention of the Bill. He referred to the comments made by the provinces, and stated that they were clearly pleased with the power to intervene. He noted that in the event that the provinces do not carry out the task, it would then be possible for the powers to revert to the national government. In light of that, he called for the committees to endorse the approach as has been presented to them in the first draft of the Bill.

Adv De Lange did not agree with the view that the intention of the Bill had previously been directed towards the agencies.

Mr Pep explained that provincial governments previously had the power intervene.

Adv De Lange wanted SALGA to speak on the matter because they had previously raised the issue.

Mr Carrim apologised for missing the morning session of the meeting. He pointed out that whilst S 139 (1) would bind the executive only in a specific sense, he wondered whether the wording adopted had been clear enough.

Adv De Lange found the point raised to be valid. He proposed stating something to the effect that "to the extent that….".

Mr Carrim agreed and added that the wording would be left to Adv De Lange. He stated that on close consideration of the text, he was slightly uneasy with the idea of the agencies, although he did not feel that the remedy would then be to simply amend the legislation from one agency to another. However, he said that he was not vigorously opposed. Nevertheless, he felt that there would still be a need for the provincial executive to intervene, as it appeared that the agency had been given too much latitude. He noted that what was of importance would be the relationship between the two options.

Adv De Lange stated that Mr Carrim had pointed out the difficulty. He added that it would be necessary to remember that the agency was formed as a response to the growing antagonism between the three spheres of government. Thus if the committees were to opt for the agency, it would not be possible to water down their powers. The remaining option would then be to opt for a political structure.

Mr Carrim felt that it would indeed be possible to make allowance for a particular relationship between the two.

Mr Smith stated that he had always been uneasy about the agency, and that he preferred the political process to the technocratic process. He added that he was unhappy with the scenario that had been created in subsection (a) (ii).

Adv De Lange responded that the matter was a question of preference.

Mr Smith explained that it could be possible for the nature of recovery to transcend councils. In light of this, it was not clear what the effect would be on a new council in respect of obligations passed by an old council.

Adv De Lange supposed that it would be necessary to read the two provisions separately:
The political process.
Intervention by the agency in the event of financial consequences.

Ms Taljaard stated that apart from the desirability issue, an option would be to avoid creating the agency situations because it has the potential to lead to distortions around questions of accountability, and to focus then on the role of the provincial executives. This would involve circumscribing their role to the requisite degree, and he emphasised that this would be a very circumscribed and narrow approach. She added that she had political difficulties with the inclusion of broad executive powers.

Adv De Lange wondered whether the provincial executives would have the capacity for the job. He imagined that the choice would be at a national level, as they would have the capacity to intervene.

Ms Hogan pointed out that concerns had been raised regarding the capacity of provincial executives, and referred to the nervousness surrounding the idea that Gauteng province take on the entire metropolitan area. She explained that the option to adopt an agency would have to be incorporated in (a) (i). However, it would be necessary to specify the relationship between the agency and the provincial executive in order to ensure accountability. She felt that it would be critical to establish a relationship between the MEC and the agency, as the MEC would have to have some say. She noted that she was rapidly coming to the opinion that failure to implement the recovery plan by the municipality would not mean that they could be forced into it. She explained that in certain instances there would simply be a lack of the requisite financial capacity, thereby making coercion futile. She stated that the agency intervention would then lead to deep-seated conflicts between the administrator and the council. However, the MEC would have to recognise its inability to operate in certain instances.

Ms Hogan agreed with Mr Carrim that (a) (ii) would have to be removed. The result of this would then be ensuring a much faster and smoother process, thereby restoring confidence. As such, she moved for a deletion of (a) (ii). In cases where the MEC would be unable to operate, the MEC would then have to move to the decision of the agency.

Mr Smith noted that with regards to the complexity of the issue, a 'crisis' could refer either to a huge problem or to a minor situation. This meant that a blanket approach that requires the agency to address all situations would not be feasible. He noted that in certain instances, provincial executives could handle low level crises. As such, he found that there was room for the adoption of a differentiated approach.

Adv De Lange stated that it would be possible to specify the instances where provincial executives must assume authority, thereby providing the political protection. Nevertheless, he felt that this would not solve the bigger political issues.

Mr Smith explained that the agency as phrased in the context of the Bill now applied to a financial crisis as defined. Thus, through broadening the scope of the agency, it would become less relevant to adopt an agency and the concomitant technocratic approach to the crisis.

Adv De Lange stated that Mr Smith had referred to the part of the Bill introduced.

Mr Smith clarified the position by saying that he was referring to the adoption of the budget.

Adv De Lange was satisfied. Nevertheless, he felt that the matter would depend on how one argues, and referred to the views that had earlier been raised by Mr Delport.

Mr Smith stated that the test in 139 (3) had created two grounds, namely a political process and a technical process. As such, a clear difference existed between the two.

Ms Hogan added that the amendment had lost the steps necessary to propose a budget.

Mr Carrim explained that he was not necessarily calling for the removal of S 139 (3) (ii). Rather, his argument was that there had to be a clear separation between the political and the technical issues. He pointed out that his understanding regarding the submission by SALGA was that they were concerned that there could be unduly political reasons for intervention. As such, he felt that the political process would ultimately have to carry sway.

Adv De Lange explained the two stage approach:
A political decision into the question whether the situation has deteriorated to the extent that a crisis has arisen.
A technical structure through which the crisis will be resolved.
He stated that the proposed amendments would substantially alter this position, with the option that the political process would assume responsibility with the result that the entire process would be politically driven. In that event, it would be possible to hand the crisis over to the resolve of the technical process. Otherwise, he said that the agency option could be deleted altogether.

Adv De Lange explained that he had just outlined the suggestions that could shift the thinking of the Members. He called on SALGA to raise problems with them as he felt that the Members would have to be 100% sure that the amendments were satisfactory in order to prevent major debates in the future.

Mr Carrim called for a point of order and stated that the Chair was seeking to be extremely ambitious.

Adv De Lange stated that his was not the case.

Ms Hogan consoled SALGA by noting that in certain instances, her committee had revisited a matter over 50 times.

Mr Smith explained that the political structure would place an obligation to resolve the matter. However, the matter could be resolved in-house or out-house. He said that there would not be any obligation to rely on either. However, he felt that out-house structures would provide repositories of knowledge and skill. As such, he did not feel that this situation would result in any problems, and endorsed the two-stage approach.

Adv De Lange noted that his silence was the result of his lack of an understanding about the issue. Nevertheless, he felt that the resort to an entirely political process could put the provincial government under great pressure. He explained that the current proposal would place the responsibility on the provincial executive, with the duty to implement the recovery plan. However, he felt that this would not be sustainable in practice, and referred to the numerous requisite votes in the Johannesburg structure.

Mr Carrim stated that their debates were becoming circular. He felt that the Chair was polarising the matter, and explained that he was not calling for a completely political process. He stated that whilst the decision would ultimately be political, the agency need not be ruled out completely, and the appropriate wording to this extent could be grafted. He repeated that they did not desire a completely political process and stated that he would formulate the provision within 24 hours.

Adv De Lange said that there would be a formulation from Mr Carrim. However, he assured the committees that he was not trying to polarise the issues.

Treasury explained that political oversight from the provinces should always be the first form of intervention. However, a crisis would require national financial aid. With regards to defaults, he said that the powers of the province would have to be balanced with a comparable agency. However, he stated that it would be necessary to decide who would carry out the implementation process in a situation where a municipality either refuses or cannot act. He explained that the history of S 139 interventions had shown that many MECs usually operate slowly. Thus, the more credible the mechanism and the quicker it is in acting, the less the risk premium would be. Therefore, although political oversight would be welcome, he wondered what would happen at the end.

Adv De Lange explained that the suggestion made had been to take the agency out of the Constitution and to drive the process from the provincial executive. He wanted to know whether SALGA was happy with the proposal.

SALGA responded that the question asked was a hard one because there would be instances where the political process would fall short.

Adv De Lange asked whether they needed more time to think over the issue.

SALGA affirmed that position.

Ms Hogan wanted to know whether SALGA were opposed to placing the agency function in legislation.

SALGA did not have any problems with the suggestion. However, he questioned how far the work of the agency would go.

Adv De Lange explained that the political structure, and not the agency, would be empowered to carry out the job.

Mr Carrim found that situation to be simple. He stated that the legislation should just stipulate the respective roles of the bodies, and the agency will be removed from the Constitution. In addition, he hoped that the Members were not seeking a solution in this meeting, but rather that the aim of this meeting would be to define the parameters within which the Members would debate within their respective study groups.

Adv De Lange responded that although the aim was to finish the discussions in this meeting, there would be no voting on the matter. He explained that they would literally have two to three days after recess to finalise the matter, and that this called for clarity in their discussions. He listed the options:
An agency
The provincial executive
A mixture of both
He noted that he was very mindful of the fact that he hoped to pass the Bill with the maximum support, and not with a split house. He stated that he did not have a personal interest in the issue at all, other than finding the correct solution to the problem. He added that he was also concerned with the fact that their time was running out.

Ms Chohan-Kota challenged the issue of establishing an agency in terms of the legislation. She explained that, given the fact that a specific chapter in the Constitution has provincial executive authority, on what basis they would sustain the argument that an unelected agency may assume the powers of the provincial executive without entrenching those powers in the Constitution? She seemed to agree with Mr Carrim in that she was uneasy with (a) (ii). She felt that they would clearly have to be a political decision as to who will assume the responsibilities in order to ensure accountability.

Adv De Lange explained that two stage approach that had just been suggested:
A political decision to the effect that (a) (i) applies.
A political decision to the effect that (a) (ii) applies. He pointed out that this would be in comparison to the situation where the agency would make this decision.

Ms Chohan-Kota agreed.

Adv De Lange stated that it was another possibility.

Mr Smith explained that although he did not have a problem with (a) (i), he did have a problem with the agency powers as per (a) (ii).

Adv De Lange explained that they would require amendments in both (a) (i) and (a) (ii) in order to avoid trumping the Constitution.

Mr Smith explained that he could live with (a) (i) easier than he could live with (a) (ii). He felt that a mandatory intervention mechanism would be necessary, and stated that a fourth option to the effect that an agency may be optionally drawn upon should be included.

Adv De Lange listed the options:

- Political decision in terms of (a) (i) and a political decision in terms of (a) (ii).
- A political decision with regards to (a) (i).
- The executive assumes responsibility without agency intervention.
- A mixture of agency and provincial executive powers in terms of which a political decision must be taken by a MEC before (b) (ii) kicks in.

Adv De Lange apologised for putting SALGA on the spot earlier.

SALGA felt that the government should initially have the responsibility, whilst the tools to which it may resort should remain optional.

Adv De Lange wanted to know if there was anything else.

Adv De Lange noted that he remained unsure regarding the problems relating to subsection (4). He pointed out that the matter would obviously depend on the relationship between subsection (3) and subsection (4).

Ms Chonkota added a rider to her proposal. She explained that the Minister of Finance should by and large deal with the agency option in S 139 (3) consultations. However, she said that there would still be a role for the Minister of Provincial and Local government, and as such, room remained for the enactment of S 139 (4).

Ms Hogan would not opt for subsection (4) because she felt that the provision would create problems.

Mr Nkhahla stated that in view of subsection (5) dealing with the situation where the provincial executive fails to act, subsection (4) would not be necessary. He said that it would not be correct to retain both provisions.

Mr Carrim explained that S 139 (2) (a) gave the Minister a softer form of intervention by allowing him to have a say. However, this power had been forgone in the more direct and intrusive interventions. He said that should the Members feel that seven days is untenable, that figure could be changed. In addition, he was unsure as to the argument that subsection (5) eclipsed subsection (4). Nevertheless, he explained that the Minister has a better sense of the broader local government issues and that in light of that, it would not be correct to dispense with subsection (4). However, he noted that the majority would have the final say.

Adv De Lange stated that they had not forgone any provisions at this stage because the aim was merely to gain perspective. He agreed with the view that a tension had been created, although he did not feel that this situation was destructive in the sense that their powers would be mutually exclusive. He said that a lot would depend on the option chosen in S 139 (3), and the question would be whether to create a further check and balance in S 139 (4).

Adv De Lange said that the remaining provisions of the section spoke for themselves.

Mr Carrim put in on record that he found that the arguments that had been raised the last time were both weak and untenable. He felt that there was a substantial easing of the responsibilities of the NCOP to monitor, and was surprised that that this role was being further eroded. He stated that 180 days was very unacceptable because the NCOP would be given a way out.

Adv De Lange added that the points raised contributed to the discussions that had been raised in the morning session of the meeting. He stated that one would have to read the entire clause, and that the NCOP was provided with an oversight and not a technical role. Nevertheless, he personally felt that all the required checks and balances had already been included.

Mr Carrim heard what the Chair said.

Adv De Lange added that the number of days would have to be revisited, as it should be 180 days from the intervention, at the very least.

Mr Smith referred to the opening lines in S 139 (3) and wanted to know whether there were other any consequences of a crisis that would have to be included.

Adv De Lange explained that Mr Smith had referred to the flipside of the option that he had earlier raised, with the view to removing the phrase "financial crisis".

Treasury felt that the matter had been dealt with because recovery plans would only be necessary for serious financial crimes.

Adv De Lange noted that this was a matter of degree.

Ms Hogan hoped that the Members would not lose sight of the interventions when not adopting the budget as the failure to adopt a budget could be a political problem. She referred to the budget in the council and explained that this budget was related to the legislature and not to the financial crisis.

Adv De Lange wondered whether subsection (3) did not cover the matter.

Ms Hogan stated that remedial measures would be necessary.

Mr Smith said that the problem was answered in subsection (1); otherwise it would become necessary to entrench a different set of interventions.

Adv De Lange responded that Mr Smith was only partly correct as it would not be necessary to spell out the measures in so far as they do not impede on other Constitutional provisions. However, he felt that one would not completely avoid the problem.

Adv De Lange asked whether there was anything else.

Ms Taljaard stated that it was valid to aim to adopt the Bill with unanimity. However, she felt that the dividing issues would need to be discussed because they were realities, and it would be necessary to be sensitive to them. Nevertheless, she called upon the Members to aim for unanimity in order to send a message to local government.

Adv De Lange explained that he was a very practical man and as such would aim to accommodate all the views raised, with the aim of drawing all the Members in as far as possible. He did not want breakdowns. Nevertheless, he said that the various Departments would have to look into the options.

Mr Nkhahla wanted to know the meaning of S 139 (1)(b)(iii).

Mr Landers also wanted to know what an economic unit referred to.

Adv De Lange responded that this was one of the criteria in Canadian laws, and gave the example of the government as an entire economic unit. However, he stated that this reference had been made in the Constitution and that the Members should not concern themselves with it. He pointed out that the concept was legally well known.

Adv De Lange proposed that all the departments submit drafts of their views to him in order for him to type them into the Bill. Nevertheless, he stated that he would aim to accommodate all their views.

Adv De Lange stated that the Committees would not be meeting again until the first week after recess, and that it would be necessary to set a few dates aside for this. He hoped that the committees would return with concrete discussions.

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