Local Government Laws Amendment Bill: deliberations

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Cooperative Governance and Traditional Affairs

17 October 2002
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Meeting Summary

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Meeting report

PORTFOLIO COMMITTEE ON PROVINCIAL AND LOCAL GOVERNMENT

PORTFOLIO COMMITTEE ON PROVINCIAL AND LOCAL GOVERNMENT
18 October 2002
LOCAL GOVERNMENT LAWS AMENDMENT BILL: DELIBERATIONS

Chairperson:
Mr Y Carrim (ANC)

Documents handed out:
Local Government Laws Amendment Bill [B61-2002] (as tabled)
Proposed amendments to the Local Government Laws Amendment Bill
Committee Report on the Local Government Laws Amendment Bill (Appendix 1)

SUMMARY
The Committee finalised deliberations on the Local Government Laws Amendment Bill. The Committee report on the Bill reflected the Committee's unhappiness with the late introduction of the Bill, which put pressure on the Committee. The Committee noted that the negotiations with the relevant stakeholders on the Property Rates Bill should be completed reasonably soon and that the bill should be introduced to Parliament next year.

MINUTES

The Chair pointed out that on 17 October 2002 a Bill changing the types of municipalities had been gazetted for public comment and that it was possible that public hearings would commence on 8 November 2002. However, he pointed out that the matter was not in his hands. Nevertheless, he stated that the aim would be to finalise the Bill before the beginning of 2003. He noted that whether this would occur in fact could only be determined over time.

Ms Borman (DP) wanted clarity regarding the types of municipalities to be created.

The Chair explained that there was a lack of certainty in the Municipal Structures Act regarding the reference to municipalities.

The Chair moved on to deal with the proposed amendments.

Ad clause 8
A new clause would follow Clause 8. Dr Bouwer (Department) explained the amendment was to cover the fact that the Demarcation Board had the ability to render advisory services as well. He gave the example of an investigation in the provincial government that would impact on the municipal demarcation boundaries.

Mr P Uys (NNP) wanted to know whether recommendations made in terms of S 85 would be advisory services.

Dr Bouwer affirmed that position.

The Committee agreed to adopt the amendments.

Clause 7
The Chair stated that they would be rejecting Clause 7. A new clause would follow Clause 7.

Dr Bouwer explained that S 26 had two aspects to it, namely publication and compulsion to consult. This meant that political role players would be covered by the proviso being inserted into Section 21(2). The clause merely complemented subsection 5 by stipulating that there would be public knowledge in that regard. They were making it clear that members of the public could request information as guaranteed by the Promotion of Access to Information Act (POATIA).

A Member asked what would happen in the event that a person is dissatisfied with the reasons given.

Dr Bouwer stated that somewhere along the line a final decision would have to be made. Nevertheless, he pointed out that the existence of irregularities would warrant further recourse to the courts.

A Member added that the request for reasons would allow persons to take the matter to the courts in the event of dissatisfaction.

The Chair agreed.

Ms Borman wanted to be sure that enough people would have the required knowledge.

Dr Bouwer explained that the proposed subsection 5 would apply to any process involving demarcation. He noted that there would be only one exception to this general rule.

Ms Borman suggested the possibility that many people could be involved in the process.

Dr Bouwer stated that it was because of this that public protection had been increased.

Mr Sithole (ANC) explained that the demarcation issue existed for administration purposes. Although the system in place would not please everybody, he felt that it was an adequate system.

Mr Uys wanted to know whether POATIA referred to natural persons.

Dr Bouwer stated that the act would operate on the concept of 'requestor'. This meant that all entities would be covered.

Dr Bouwer referred the Committee to the amendments and explained that the Board would be able to reach a decision whether to entertain requests. He pointed out that it would be unfair to require that a member of the public to consult directly with the public organs, and it was for this reason that the Board would not have to comply with S 26 (3). A problem could arise where a municipality makes a request for further information in terms of S 21. As such, he proposed the addition of a further subsection stipulating that "where the Board acts at the request of a municipality in terms of S 21 (1), the Board may require further information from the municipality".

The Chair did not have any problems with the proposal. However, he pointed out that he was seeing it for the first time.

Ad Clause 9
Mr Uys said that the Board could be at fault in terms of S 22 (a) (iii).

Dr Bouwer did not think that it would be good drafting to make provision for internal administration issues in that sense.

A Member proposed that the Committee act with caution and that they look into the matter seriously before reaching a decision.

A Member stated that it would be possible to change the reference to municipality in S 22 (1) (c) to 'municipal council'.
The Chair questioned why this was so.

The Member responded that this would be in order to address the difficulty faced by the Board in the event that a letter is sent without prior sanction.

Ms Manche agreed with the proposed amendments.

Dr Bouwer found the proposal to be unnecessary because it would then be necessary to refer back to all the systems and the structures within the Bill. He advised the Committee against adopting the proposal because a particular scheme within the Bill had already been adopted.

A Member asked what would happen in the event that the Board requires information from the public.

A Member responded that this would be an unnecessary duty on the Board.

The Chair wanted to know why the term 'municipal council' could not be adopted.

Mr Uys added that they were dealing with a decision of the council.

Dr Bouwer responded that it would be possible to delegate duties.

The Chair agreed that the amendment would have many consequences. He stated that they would not adopt the amendment and that their sympathies would be sent.

Dr Bouwer wanted to know whether he should add another subsection in order to extend a request to information held by the municipalities.

The Chair stated that he was surprised that the Members were not picking up the provision because he saw the sense in it.

The Committee emphatically stated that they agreed with the proposal.

The Chair directed Dr Bouwer to include the clause.

Dr Bouwer confirmed that this would mean that where the Board acts at the request of a municipality, the Board may request further information from the municipality.

The Chair referred to S 9 (a).

Dr Bouwer stated that it was a consequential amendment.

The Chair said that it looked fine.

Ms Borman expressed great concern with S 20. Although she was not worried with S 8 (a) and (b) as they stood, she wanted to know what would come into effect upon the passing of the Bill. In light of the lacuna, she wanted to know whether it would not be better to accept the amendment from the date that it becomes operative and to make interim arrangements in that regard.

Mr Uys could not understand her request.

Dr Bouwer explained that since 1994 everybody had acted on the belief that the valuation system was legal. However, the position was currently such that a technical difficulty drew a line on that belief. It was for this reason that the Committee was attempting to rectify the belief. He stated that it would not be possible to wipe out the previous acts. Although the Committee would not be introducing anything new, he said that the Bill would operate both retrospectively and prospectively.

Ms Manche (Department) added that the ordinance should have come into effect on 1 July 1994. Thus they would be saying that the ordinance became operative on 27 April 1994 in order to accommodate the Constitution.

The Chair confirmed that the rates that people had been paying in all the three provinces had strictly speaking been illegal.

Mr Manche agreed.

The Chair explained that people only became aware of this fact mid-2001 and early-2002.

Mr Solo explained that the Committee had engaged in this debate on Tuesday 15 October 2002 and stated that they were dealing with a technical amendment.

The Chair stated that all S 9 did was to allow one to use the provincial valuation role with the permission of the administrator. He explained that this was not a new addition to the ordinance because the aim would merely be to avoid the unconstitutionality in securing the consent of the administrator. Because the Cape Town boundaries had changed a number of times, it would not be possible to have a certified final valuation Bill. He assured the committee that they were dealing with a very technical amendment.

Ms Borman said that she would let the matter pass although she would need to revisit it at a later stage.

The Chair stated that all the clauses would be subject to review.

Mr Uys referred to Clause 8 (a) and said that provision would have to be made for both the municipal council and the municipality.

Dr Bouwer explained that the wording used had been intended to avoid confusion.

The Chair wanted to know whether the proposal would be necessary.

Mr Uys moved on to another issue. The Cape Town based problems highlighted by the Rates Action Group would have to be rectified. In that regard, he wanted to know whether there were any saving provisions, and referred to deferred rates as an example.

The Chair stated that the issue would be about principles and values. Although he was not concerned with race, his concern was the situation where a widower resides on property which had had risen in value with a resultant increase in rates. He felt that something would have to be done.

Mr Solo agreed.

A Member asked why the Committee was not prioritizing itself on the matter. He pointed out that there were many victims in that regard.

Mr Uys questioned whether an amendment could be made for Cape Town whilst awaiting the passing of the Property Rates Bill.

The Chair added that because the affected strata were not the rich, it would be necessary to be fair. The Committee would have to pursue the matter. However, it would be included in the report to Parliament. He noted that the Committee could urge that the Property Rates Bill be brought before Parliament as soon as possible.

A Member explained that the reality was that since 1979 the valuation system was not legal and that very high rates were being paid. In light of the fact that the playing field is now leveled, people that cannot afford property rates should move.

The Chair ruled the comment was out of order. He felt that the Member was misunderstanding him because it had been emphasized that rates must be paid. They were simply dealing with fair play and that they should not be blinded by the past.

Mr Solo suggested that the Committee not discuss the matter any further for fear of introducing too many collateral issues.

The Chair added that the Committee could discuss matters of redistribution. However, he directed the Committee not to open up the debate at this stage.

The Chair wanted to know whether deferred rates would not be possible.

Ms Manche wanted a description of deferred rates.

Mr Uys explained that instead of paying rates at this point, arrear rates and interest would accrue and would be claimed against that person upon death or sale of the property.

Ms Manche responded that the Bill did not make provision for deferred rates.

Mr Uys wanted such rates inserted.

Ms Manche explained that the Bill was based on equity. As such, the Bill would include an exemption for the first R 50 000. However, anything other than that would be at the discretion of the relevant municipality. She added that property was an asset and therefore part of the market economy. This meant that property values would change. She stated that people in South Africa would have to be educated about their property and noted that because property is an investment, people would have to pay for the value.

Mr Solo noted this point but he wanted to development of rates feasible for all South Africans because the reality was that people were being exploited. He called for the issue to be dealt with within the context of South Africa.

Mr Uys added that the remarks made by Ms Manche were valid for persons within the market and not the people such as pensioners, for example. Her remarks had nothing to do with the deferred rates, which meant that only payment would be deferred.

Ms Manche stated that the Bill did not explicitly state that deferred rates would not be allowed. She explained that it would be a local choice.

A Member emphasized that an amendment would be necessary at this stage.

Ms Manche responded that the Committee would have to introduce an amendment.

The Member agreed with Mr Solo and called for interim arrangements.

Dr Bouwer explained that the Committee was dealing with validation. As such, he wondered whether they could even pass such an amendment. In addition, he called for the policy consequences of deferred rates to be thoroughly considered before introducing such an amendment. He pointed out that these rates would effectively be services on credit and that capital gains tax implications would result.

The Chair took the point.

He did not think that the Committee should introduce the amendment because they were currently dealing only with the technical issue of validation. They could include the proposal in the report. He sympathized with the victims and stated that although he did not agree with the underlying concerns of the Rates Action Group, he did identify with only one stratum of their concerns. He urged the committee to forgo such considerations at this stage.

Ms Manche noted that the Committee should be aware of the packages that the government has for the poor and stated that it would become difficulty to extend these packages to the rich. Nevertheless, she emphasized that it would have to be a local choice.

The Chair stated that although he was not necessarily supporting deferred rates, he was calling for some measure with which to address the legitimate concerns.

The Chair referred to the new definition of municipal services and pointed out that Ms Hogan, Chair of the Finance Portfolio Committee as well as the National Treasury thought that the definition would suffice. However, they had expressed concern with the consequential amendments. He explained that he would be giving them time to look over the issue.

The Chair referred to the procedural issues and asked whether, given the substantive nature of the changes, the Committee felt that it would be appropriate for the amendments in the Finance Committee. He noted that this would be allowed.

Mr Uys felt that the amendment would have to be dealt with within this Committee.

Mr Sithole stated that the seriousness of the issue meant that it would not be correct to have the matter interpreted on their behalf.

The Chair cautioned that the Committee should not set a precedent. However, he explained that the Schedule was 'huge'. As such, the Committee would pass a formal resolution on Tuesday 22 October 2002 indicating that in this instance it would not be correct for the matter to be decided outside the Committee.

The Chair referred to the definition of municipal services.

Dr Bouwer explained that it included both direct and indirect services. He noted that the local community had been defined in the systems act.

Mr Uys agreed with the definition. However, he felt that it would be redundant to refer to the 'powers and functions'.

The Chair stated that it would be both legally and politically useful to make the inclusion. Thus he said that the amendment would be correct for now.


Dr Bouwer explained that that difference with performance evaluation in terms of S 6 had been accommodated. In addition, the original instruction had been removed and the section had been renumbered.

The Chair said that they could adopt the provision.

Dr Bouwer explained that Section 118 presently created leverage through the requirements of a clearance certificate for the transfer of a home. In addition, amounts due to the council would not be cancelled, and this would amount to a preferential claim on property. As such, the amendment sought to dispense with the leverage mechanism and to protect a new owner in respect of outstanding amounts. Nevertheless, he noted that the municipality would not be precluded from attempting to recover outstanding amounts.

Mr Uys understood. However, he wanted to know where the policy difference lay.

Dr Bouwer responded that any amounts owing according to the law meant that the prescription could be raised.

Mr Uys wanted to know whether it would not be safer to refer to the transferee.

Dr Bouwer found that this would be unnecessary.

Ms Borman referred to the service charges and wanted to know whether a lessee would be bound by the contracts of the lessor.

Dr Bouwer confirmed that the preferred entity would be the contract between the owner and the municipality. Nevertheless, he stated that this would not be an easy plan because it could lead to the charging of high deposits. However, he explained that the present situation would make room for contracts between owner and municipality and lessee and municipality.

Ms Borman suggested that the Committee look to inserting undisputed amounts.

The Chair felt that it would not be necessary, however, the inclusion could be made.

A Member said that it would be fine either way. He noted that the matter was currently implied by the provision.

A Member agreed.

The Chair stated that therefore there was no need for the inclusion.

The Chair asked if there were other issues in the submissions that had not been addressed. The Committee responded that there was nothing else.

The Chair asked the Committee whether they had any issues to add to the Committee Report.

Mr Uys responded that he was not happy with the outcome of the discussions.

The Chair felt that Cape Town should be directed to do something for the people. Nevertheless, he wanted to know whether there was anything to add to the report.

A Member pointed out that property rebates were offered in some jurisdictions.

Mr Uys said that the report should state that the Committee urges that any hardships arising should be taken care of by the local authorities.

The meeting was adjourned.

Appendix 1:
Report by the Portfolio Committee on Provincial and Local Government on the Local Government Laws Amendment Bill
[B61-2002]

Having considered the Local Government Laws Amendment Bill the Portfolio Committee reports further as follows:

1. The Portfolio Committee feels that it is unacceptable that the Bill should have been introduced to Parliament so late and that the Committee should have had a limited time in which to process it. However, as the Bill dealt mainly with minor technical amendments, the Portfolio Committee was able to apply its usual rigour to the Bill, particularly in respect of the substantive clauses, and has been able to complete the processing of the Bill within the timeframes decided upon. Despite this, it would have preferred to receive the Bill earlier, and urges the Ministry and Department of Provincial and Local Government to avoid a recurrence of this.

2. The Committee acknowledges the need to extend the transitional period relating to the MECs' authorizations of the division of powers and functions between District and Local municipalities from 5 December 2002 to 30 June 2003. The Committee feels that it is important that consideration be given in the division of powers and functions between District and Local municipalities to:

· The alignment of the publication of the notices of the Minister's authorization of the four "national" powers and functions and the MECs' publication of the notices of the adjustments of the remaining powers and functions. The publication of these notices takes place by no later than the end of January 2003 in order to give municipalities adequate time to prepare and to budget accordingly.

· The alignment, over time, of the Minister's authorizations of powers and functions and the MECs' adjustments of
the powers and functions.
· The Minister's authorizations and the MECs' adjustments be reviewed, over time, to ensure that the important role allocated to District municipalities in legislation and policy is fulfilled.

3. The Committee was careful to ensure that the clauses seeking to validate the Cape Valuation Ordinance are of a technical nature. They are necessary to ensure that the new valuations of municipalities in Western, Northern and Eastern Cape are legally valid.

4. Related to the issue of validating the Cape Valuation Ordinance is the dispute between the Cape Town metro municipality and the Rates Action Group and the Robertsons. While it is the right of the parties to the dispute to pursue legal action, the Committee feels that all the parties in the dispute should seek to resolve their differences through discussion and negotiations. It is regrettable that a section of the ratepayers is exploiting an unfortunate technical loop-hole as the basis for their legal action against the Cape Town municipality to address their concerns over the new equitable valuations and rates policy of Cape Town. The Committee feels these rate payers' concerns with the new equitable valuations and the rates policy might be more usefully served by engaging with the municipality on the substance of the rates policy. If the new valuations and rates policy of the Cape Town municipality unduly disadvantages any group of ratepayers, the municipality needs to explore whether there is anything that it can do to provide some relief to these ratepayers.

5. In processing the clause dealing with the remuneration of councillors, the Committee noted that municipalities are providing allowances and benefits to councillors in contravention of the Remuneration of Public Office Bearers Act- 1998. Many of these municipalities purport to provide these in terms of the provisions in provincial ordinances But these provincial ordinances do not have legal effect since the enactment of the Remuneration of Public Office Bearers Act. The Committee recognizes that councillors' salaries and allowances need to be adequate, but the dissatisfaction of municipalities around this should be negotiated through the appropriate channels. The present practice of transgressing the Remuneration of Public Office Bearers Act is unacceptable, and the Committee urges that:

· The Ministry and Department of Provincial and Local Government take steps to stop this practice.

· The MECs for local government act more decisively against these transgressions.

· The Ministry and Department of Provincial and Local Government seek to repeal the relevant provisions of the provincial ordinances as soon as possible.

· The Chairperson of the Portfolio Committee sends a copy of this part of the report to the Ministry and Department of Provincial and Local Government and the MECs for Local Government and requests them to act expeditiously.

6. The Committee feels that the negotiations with the relevant stakeholders on the Property Rates Bill should be completed reasonably soon and that the bill should be introduced to Parliament next year.

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