The Deputy Minister described the factors leading to the national and provincial governments’ intervention in the Oudtschoorn municipality under Sections 139(1)(b) and 154 of the Constitution. There had been concern for the state of governance, financial management and service delivery in the municipality. The administrator was vested with all the powers and functions necessary to ensure the proper functioning of the municipal council, and he reported to the Minister and Deputy Minister, as well as the Member of the Executive Council (MEC) on Local Government, on a monthly basis. The intervention had been followed by numerous attempts to deal with the on-going challenges of the municipality, such as political stability, irregular appointments, the lack of waste removal, the breakdown of services to communities, Eskom debt and the decline in the tourism industry.
There had been an issue with the usage of outdated statistics for the development of Integrated Development Plans (IDPs). The matter had then been taken up with the Eden District Municipality, and the sentence in the IDP had been corrected. The allegation that the allocation of funding to municipalities for infrastructure was based on political allegiance, was untrue, as funding was a pre-determined process. Some additional undertakings had been necessary, as it had been felt that it was important for councillors to provide regular feedback to their communities.
From 18 August until the end of September, meaningful changes had taken place. The first change had been the establishment of the council, and the council had begun to work. The main issue here had been the tension between political parties which had rendered the council non-functional.
The Department had also established numerous portfolio committees, such as a finance and audit committee. The councillors had undergone training so that they would understand their responsibilities. All top management posts had been acting posts. The Department had decided to appoint a chief financial officer from another municipality, and an acting technical director had also been appointed for the infrastructural and technical issues. The immediate steps taken by the Department to deal with the financial crisis had been the establishment of cash flow and expenditure committees. Together with the Department of Water and Sanitation, they had been addressing the issue of a lack of access to water.
The Committee asked the Department whether they had received enough support from the provincial government, and specifically from the MEC’s side. The Committee was also concerned about the water crisis and lack of integration in South African communities, and asked the Department what measures they planned on taking to deal with these two matters. Members also raised questions about the Oudtschoorn municipal budget, the functioning of the ward committees, and progress on the forensic report.
Briefing by Department of Cooperative Governance and Traditional Affairs (COGTA)
Mr Andries Nel, Deputy Minister of Cooperative Governance and Traditional Affairs, said he would give an overview of the situation at Oudtschoorn. He commended the National Council of Provinces (NCOP) for deciding to take Parliament to the people, and the Committee could be assured that the people of Oudtschoorn appreciated the meetings. He and Minister Pravin Gordhan had visited the Oudtschoorn municipality before and after the intervention had taken place.
On 17 August 2015, the national and provincial government had intervened in the Oudtschoorn municipality under Sections 139(1)(b) and 154 of the Constitution. There had been a concern for the state of governance, financial management and service delivery in the municipality, which had led to the intervention. The concerns were based on numerous interactions with residents, business people, councillors and the farmers of Oudtschoorn. Mr Kam Chetty had been appointed as the administrator for a period of six months to implement the intervention. He leads a joint national intervention team comprising of four officials, two with financial skills and the others with legal services. The administrator is vested with all the powers and functions necessary to ensure the proper functioning of the Municipal Council, and he reports to the Minister and Deputy Minister, as well as the Member of the Executive Council (MEC) on Local Government on a monthly basis. The role of the Municipal Manager/Accounting officer is also vested in the administrator until a manager is appointed.
The intervention was followed by numerous attempts to deal with the on-going challenges of the municipality, such as political instability, irregular appointments, the lack of waste removal, a breakdown of services to communities, Eskom debt and the decline in the tourism industry. Due to the fact the Oudtschoorn plays a huge role in the economy of the district, the Department could not allow those challenges to undermine the objectives. As national and provincial government, they had a Constitutional duty to support local government, but they also had a Constitutional duty to intervene. The important point was that the intervention was in line with the “back to basics” approach that had been adopted at the Presidential Local Government Summit in September 2014. The approach sought to ensure that municipalities put people first, delivered services, practiced good governance and built strong institutions. The intervention would focus on putting people first, improving public participation, encouraging stakeholder engagement and making ward committees vibrant enough to discuss development issues.
The Committee may have seen the water crisis report on television. The administrator would be able to provide the Committee with more information regarding this matter.
In terms of the budget, the intervention sought to improve the long term planning and put the budget back into surplus. The municipality should be supported to review all appointments of temporary workers and change the management processes in order to align them with a new management vision. The administrative report had been adopted by the municipality. Oudtschoorn had not been an easy municipality to work with, but they were trying to turn it around.
Mr David Madurai, Chief Director: Department of Cooperative Governance and Traditional Affairs (COGTA), said there had been an issue with the usage of outdated statistics for the development of Integrated Development Plans (IDPs). The matter had then been taken up with the Eden District Municipality, and the sentence in the IDP had been corrected. There were also inequalities with regard to the distribution of the equitable share to municipalities, so the formula to use the Local Government Equitable Share (LGES) had been revised during 2012 through a collective and consultative process which had involved the National Treasury, COGTA, the South African Local Government Association (SALGA), the Financial Fiscal Commission (FFC) and local government. It had been alleged that the allocation of funding to municipalities for infrastructure was seen to be based on political allegiance. The funding procedure for municipalities was pre-determined and based on population, backlogs, revenue and the number of indigents.
The issue of a lack of integration had been discussed with the George Local Municipality and all had agreed that the levels of integration in the municipality were unacceptable. There had been some additional undertakings, as it was felt that it was important that councillors provided regular feedback to their communities. The Western Cape “Back to Basics” (B2B) team had supported all the priority municipalities to develop operational ward plans, which were being monitored.
Mr Kam Chetty, the Oudtschoorn administrator, said after the “Taking Parliament to the People” meeting, the communities had started to appreciate the work which was being done by Parliament a little bit more. There were two phases around the administrative intervention and support. The first phase was around supporting the council, normalising the political processes and supporting the package which was based on B2B programme. From 18 August until the end of September, meaningful changes had occurred. The first change had been the establishment of the council, and it had begun to work. The main issue here had been the tension between the political parties which had rendered the council non-functioning. Together with the support of COGTA, they had started to build leadership among the councillors and argued that besides their political differences, there had to be some issues which they agreed upon. The Department had also established numerous portfolio committees, such as a finance and audit committee. The councillors had gone through training so that they would understand their responsibilities.
The Department had had the choice to spend a lot of money on the municipality or wait until the by-elections. Effectively, there had been a view that stability had to be established first. With that, the powers of the administrator had been changed to include executive and administrative powers. That had completely changed the process under which the administrator had to function. What had become transparent was the extent of dysfunctionality in the municipality -- for example, all top management posts were acting posts. The Department had decided to appoint a chief financial officer from another municipality, and an acting technical director had also been appointed for the infrastructural and technical issues. All those in acting positions had then been moved back to their original positions so that stability could be achieved.
The second key issue was that a number of the staff complement had been appointed outside of the establishment -- and that number was about 300 staff members. The financial crisis was alarming. The current remuneration expenditure was 20% of the total budget. They had received support staff from both the national and provincial treasury to put together a revised budget. The immediate step which the Department had taken was to establish a cash flow committee to deal with cash flow issues. The Department had also set up an expenditure committee that reviewed every bit of expenditure over R100 000. There was a new and tight policy on procurement, as it had not been transparent and in the past there had been a high number of deviations. The number of creditors was extremely high and many had been threatening the municipality with legal action, so the Department had decided to apply for Section 200 support from the national and provincial treasuries so that the municipality could be protection from the creditors.
The newly established forensic team was looking at the number of contracts and processes. Community organisations and stakeholders had been raising concerns as to how contracts were awarded, so the forensic team had had to be established. At the end of November, the Department would give the Committee a preliminary report of the findings.
Together with the Department of Water and Sanitation (DWS), they had been addressing the issue of the lack of access to water. There was, however, a long-term and short-term approach to saving water in the small rural towns. Municipal officials were being trained to be able to identify areas where by-laws were being broken. The communities had raised an issue around the condition of roads. There had been discussion with the provincial and national Department of Public Works to assist with improving the roads.
He concluded by saying that the Cango Caves -- which were part and parcel of the municipality -- were not being managed in the best way. The Department had managed to employ a new management team which would try to make the caves more accessible and generate income.
Mr D Ximbi (ANC, Western Cape) asked the Department if they had received enough support from the provincial Department regarding the administration of Oudtschoorn. He specifically wanted to know if the Office of the MEC had been supportive enough. Was the support of the provincial Department sufficient for the matters which had to be resolved? It was important for both the national and provincial departments to work together as a team to ensure the success of the administration of the Oudtschoorn municipality, because without the support of the MEC and Head of Department it would be impossible to help the community of Eden District Municipality.
Mr J Julius (DA, Gauteng) said he was worried about the prevalence of the lack of integration in the country. He asked what the Department had done to try and increase the integration of communities, as many political parties had been aiming for the integration of Alexandra township and Sandton.
Ms T Wana (ANC, Eastern Cape) said the Department had indicated that the municipality was receiving assistance from the National Treasury -- why had it taken so long for the municipality to verify the previous budget before they could be bailed out by the Treasury? She asked how far the Department was with its forensic investigation into the unauthorised expenditures in the municipalities. What had they found and what measures were going to be taken?
Mr M Mhlanga (ANC, Mpumalanga) said he was concerned about the water issues in the country. They had seen a dam during their oversight visits, and the Committee had been told that the development of the dam was in progress. However, the report had not provided any information on the dam, and he wanted to know at what stage of development the dam was.
Mr Nel replied that the national Department had worked closely with the provincial Department, and there had been a joint oversight visit to Oudtschoorn. There had been issues over political differences which both departments had managed to put aside for the sake of the people of Oudtschoorn.
He said the lack of integration in the country was a concern for the Department, and asked if the Chairperson would allow the Department report to the Committee on the Integrated Urban Development Framework (IUDF). The Framework’s purpose was to transform the national space economy – this was aligned with Chapter 8 of the National Development Plan (NDP). The NDP had identified that spatial transformation, breaking the apartheid legacy of the country, had been one of the most difficult tasks. In fact, the successes which the Department had had in the field of human settlements had had unintended circumstances, which further reinforced apartheid special spaces due to the complex interplay of policies and market forces. A lot of human settlements had been placed at the periphery of the cities, which meant that people were far away from economic opportunities and social services. The NDP’s vision set out that cities should have liveable and efficient cities which were also economically inclusive and socially integrated. The pillar of this integrated the IUDF’s vision of access, governance and spatial transformation. More and more cities were implementing the corridors of freedom.
A number of resources had been ploughed back into communities in order to develop the historically disadvantaged areas. What had been a great concern for the Department was that the funds which were being ploughed back into the communities were grants from the government. This was problematic, because it seemed as if the projects of integration were not being taken seriously.
Mr Chetty said the intervention was being undertaken by both the national and provincial governments in order to address the major issues. The provincial department had provided COGTA with a technical director, administrative support and legal services support, and the national department had employed engineers, a specialist from the National Treasury and human resources specialists.
The Chairperson asked Mr Chetty to respond to the question of what the role of the MEC was. The second question was related to the budget deficit and the adoption of a budget. The adopted budget must be sent to all the provincial treasuries and national treasury. Had there been verification of the previous budget -- why was this verification not picked up in time before the National Treasury had to bail the municipality out? If the Department could not respond to these questions, they should indicate that. The department should also communicate their challenges to the Committee.
Mr Chetty replied that the financial statement of the previous year had shown an under-expenditure. The municipality’s budget was not credible, but it had somehow managed to pass the budget. He could not report on why the budget had been approved by the municipality, but the budget process which had been followed by the municipality would be sent to the Committee. The forensic team had collected all the data and they were now busy with the interview process. They were interviewing all the staff members and asking them questions regarding the budget approval and incurred expenditures. The report should be finalised by mid-December. The forensic investigation also included the Financial Investigation Unit (FIU) investigation, which they had just started.
Some long-term and short-term proposals had been made to the Department on how to solve the water crisis. The long-term proposals were to build a private dam in the mountains, and the short-term proposal was to have a borehole. The Department of Water and Sanitation had put together a proposal around building the new dam, and three feasibility studies were being done.
The Chairperson asked what the status of the Blue Drop Green Drop water quality management scheme was. What was the status of the ward committees – had they been functional or dysfunctional before the intervention took place? The Department had indicated that Section 79 committees had been established -- had these committees been established with the Employees Political Action Committee (EMPAC), and if not, why had they not been established with EMPAC? The Department had also indicated that there had been an amendment in terms of the intervention, and it had indicated that all the necessary legal processes had been taken. Did this mean that Section 160(2) of the Constitution had also been implemented?
Mr Chetty asked if he could send the Blue Drop Green Drop figures to the Committee before the end of the week. He added that the ward committees had been established and were currently functioning, and confirmed that there would be an inter-ward committee meeting.
The Chairperson asked if the ward committees had been functioning before the intervention took place. He asked Mr Chetty if he was aware of Section 47 of the MEC’s report, which had been prepared by the Western Cape provincial government.
Mr Chetty replied that the ward committees had not been functioning before the intervention. He said the provincial Department could answer the question about Section 47 of the MEC’s report.
Mr Michael Brewis, Director: Specialised Support, Western Cape government, said he did not have the details regarding the Section 47 report. He was able to report only on what the provincial Department had been doing with the ward committees.
The Chairperson said that Mr Chetty would not have known whether the ward committees were functional of dysfunctional without having read Section 47 of the MEC’s report, because the report would have indicated the status of the ward committees. Section 47 of the MEC’s report indicated that the ward committees had been functional. He said a follow-up had to be made because there were contradicting statements.
Mr Chetty said the ward committees had had to be trained so that they could function properly. The EMPAC had been established with proper training.
Mr Brewis said Section 160(2) powers were still retained by the municipal council, because the administrator had the executive powers.
The Chairperson said that the Committee was happy to hear that the Council still had those powers, because the Committee had been given the impression that the administrator had also taken over the powers in Section 160(2).
Mr Nel concluded by saying the oversight from the Committee enriched the work which was done by the Executive.
Mr Ximbi concluded by thanking the Deputy Minister and his team for the report. He also thanked the Committee members for making themselves available for the meeting.
The Chairperson also thanked the Minister and Deputy Minister for the work which they had been doing in the Ministry. South Africa was a unitary state and departments should not be competing, but rather working together.
The meeting was adjourned.