Department Budget & Programmes 2003

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Cooperative Governance and Traditional Affairs

09 March 2003
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Meeting Summary

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Meeting report

PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE
10 March 2003
DEPARTMENT BUDGET REVIEW

Chairperson:
Mr Y I Carrim

Documents handed out:
Presentation by the Director General on Budget Overview (See Appendix 1)
Presentation on Key Aspects of the Budget
Presentation on Governance and Development Branch
Presentation on Intergovernmental Relations
Presentation on Free Basic Services
Presentation on Infrastructure Investment: CMIP, MIG
Presentation on Economic Development: LED, Social Plan
Presentation on Integrated Sustainable Rural Development and Urban Renewal Programmes
Department's Budget (link to Treasury website)


SUMMARY
Morning session
The following matters arose in the discussion on the Director General's Budget Overview:
- The sort of capacity building envisaged by the Department for this financial year.
- The role of provincial departments in driving programmes specifically targeted for provinces.
- Steps towards improving the oversight role of the portfolio committee in measuring and monitoring progress in respect of Department's objectives for this year.

Input was provided on Key Aspects of the Budget, the Governance and Development Branch and on Intergovernmental Relations

Afternoon session - Briefings were given on the provision of free basic services, infrastructure investment, economic development and on integrated sustainable rural development and urban renewal development. Although backlogs were noted in the programmes of the department, however the Committee commended the department on its projects and noted that ongoing inter-departmental study groups should be established. It would be in these study groups that all government departments would be able to advise each other freely.

MINUTES
Presentation by the Director General on Budget Overview
Ms Lindiwe Msengane-Ndlela's presentation provided a preliminary annual report of the Department of Provincial and Local Government. She focused on the following issues:
-The increase of the Department's budget from R6,5 billion in the last financial year (2002/3) to R9,4 in the new financial year (2003/04).
-The increase of the equitable share from R3,9 billion to R5,3 billion
-The need to focus more on policy implementation at a heightened pace.
-The use of the LEDF (Local Economic Development Fund) as a tool to strengthen infrastructure and job creation.
-The need to improve the quality of municipal leadership and technical expertise by engaging them in programmes within the principles of good governance and accountability.
-The need to strengthen inter-governmental relations within provinces and introduce targeted support programmes in the respective Premiers' Offices to co-ordinate inter-governmental relations within provinces and with national government.
-The need to stabilise the intergovernmental relations towards accelerated service delivery and development.

The interim budget allocation for 2003/4 financial year was as follows:
R2, 2 billion = towards (CIMP) Consolidated Municipal Infrastructure Programme.
R14 million = towards infrastructure projects
R117 million = towards the Local Economic Development (LED)
R1, 1 billion = towards rural municipalities so that 3 million more people will have access to free basic water and 28 million people will have access to free basic electricity.
R252 million = towards Municipal Revenue Enhancement Programme
R135 million = towards improving the quality of municipal leadership and technical expertise
R13,3 million = towards enhancing disaster preparedness and management capacity
R1,2 billion + R140 million from the equitable share = towards rural projects
R300 000 million = towards research on the impact of development programmes on poverty
R 309 million from CMIP (Consolidated Municipal Infrastructure Programme) + R 31 million from equitable share = towards the rehabilitation and upgrading of basic infrastructure for local municipalities.
R1,3 billion = towards targeted and direct support to 55 municipalities
R 307,8 = towards district municipalities hosting rural nodes
R11,5 million = towards SMME (Small, Medium and Micro Enterprises)/ BEE (Black Economic Empowerment)
R9,2 from the LEDF= towards job creation
R1,5 = towards Improving of Planning of Metros

Questions and Discussions
The Chairperson congratulated the Director General for providing a focused, concise and simple presentation. He however proposed that there was a need for a strategic overview by the department on where it was going in the coming financial year.

Ms Borman (DP) averred that lots of emphasis had been placed by the DG on capacity building. She asked the Department to spell out the sort of capacity building programmes envisaged for the 2003/4 financial year.

Ms Southgate (ACDP) asked for the DG's comments on the accuracy of the statistics on the estimated rollout of free basic services.

Mr Nobunga (ANC) made reference to the proposed support to the Premiers' Offices to coordinate Inter-Governmental Relations within provinces and with national government. He was concerned that he did not see any specific focus on provincial departments playing this role.

Mr Deventer (NNP) asked:
- about SALGA's role in improving capacity building at mayoral levels.
- if the proposed anti-corruption unit could focus on the municipalities themselves.
- if Disaster Preparedness was specifically targeted at national levels only.
- about the purported PIMS (Planning Implementation Support System) Centres for infrustructure planning and the rolling out of basic services. He was concerned about what was planned to be achieved through these centres.

Mr Carrim (Chairperson) commented that it was very difficult for the Portfolio Committee to play an oversight role and to measure and monitor progress of the department. He proposed that there was a need for some dialogue between the department and committee members during the course of the week on the oversight role of the portfolio committee.

Ms Msengana-Ndlela (Director General) responding to the above questions said that the issue of capacity building was a long-term programme and that currently the Department was deploying people with expertise in various municipalities to consolidate all the capacity building programmes. The targeted support programmes were focusing on the Premier offices as - although the role of the provincial departments was important in driving certain programmes - it was important to put more emphasis on the Premier Offices because that was where all the departments were being coordinated.

She stated that the role of the PIMS centres would be more important in the medium term framework as they would be linked up to district municipalities. Furthermore the Department will locate community development workers and align them with institutions like PIMS and by that increasing capacity building at municipal level. She added that the Department was committed in achieving both quantitative and qualitative outputs.

Presentation on Key Aspects of the Budget
Mr Craig Clerihew focused on the budget allocation for the next three years, the breakdown of budget allocation per programme, and the different funding sources of the total allocation. There had been an increase of 20% for the operational budget, 80% for infrastructure and 60% for equitable share. Hence there had been a substantial increase on the Consolidated Municipal Infrastructure Programme, the Municipal Infrastructure Grant, the Municipal System Improvement Grant and on Equitable Share.

He highlighted three sub-programme changes put in place:

- In Programme 2, Local Economic Development and Social Plan Grant to be incorporated into CMIP in 2004/05 and new would be the Municipal Infrastructure Grant from 2003/4.
- In Programme 3, Local Government Capacity Building (created from the former Local Government Support Grant and the capacity-building element of CMIP) to be incorporated into the Municipal Systems Improvement Programme in 2005/6. The Local Government Transitional Fund will be incorporated into the Local Government Equitable Share.
- In Programme 4 there would be two new items: a commission on claims and disputes relating to the traditional leaders and the SA cities network.

Questions and discussion
Ms Borman (DP) asked if the R1, 5 million equitable share was going to be spent on free basic services and how could the Portfolio Committee measure if the money was used for that which it was allocated.

Mr Deventer (NNP) asked for clarity on the municipality infrastructure grants and how much capacity was need at each district municipality.

Ms Southgate (ACDP) asked for clarity on this year's equitable share and she raised concern about the lack of clear policy framework. Secondly she asked if the equitable share would rise in the next financial year.

Mr Solo (ANC) asked if the envisaged programmes were going to achieve the desired results despite the current problems at local and municipal level.

The Chair urged members to stop asking general questions and focus on budget questions.

Mr Nonkonyana (ANC) asked if enough money had been allocated to the relevant structures responsible for capacity building and whether the relevant structures had the capacity to spend the money allocated to them as well as the role of the Portfolio Committee in measuring and monitoring progress.

Responding to the above questions, Mr Clerihew pointed out that the anticipated savings was estimated at an amount of R17 million and all the moneys allocated for grants would be completely spent this year. He said that the remaining question would be covered in the coming presentations.

Presentation on Governance and Development Branch
Mr Elroy Africa gave a progress report on the policy and legislative initiatives in the Governance and Development Branch. It was intent on stabilising the system of intergovernmental relations for accelerated service delivery. The focus for 2003 would be:
- to establish research and support capacity to DPLG on governance-related matters

- to stabilize the intergovernmental system
- promote integrated development planning and local economic development across government
- enhance speedy and equitable provision of municipal services and innovative approaches to infrastructure delivery
- effectively manage and broaden the impact of the Consolidated Municipal Infrastructure Programme and pilot the consolidated Municipal Infrastructure Grant (MIG)
- effectively manage across government the implementation of the ISRDP (Integrated Sustainable Rural Development Programme) and the URP (Urban Renewal Programme)


Questions and Discussion
The Chairperson asked about the steps taken by the department to set up job creation programmes. Secondly whether the department had any plans on urban renewal. With regards to the purported programmes Mr Carrim asked if there was a substantial difference between Programme 2 and Programme 3.

Mr Elroy highlighted that the funds for stabilising intergovernmental relations would be drawn across the departments. In ensuring more job creation, the department was currently supporting municipalities at various levels. The Department also required that in their business plans, they outlined a programme of action on job creation.

The DG pointed out that Programmes 2 and 3 were the key areas of focus for this year and that Programme 2 was specifically concerned with policy and legislation on the IGR (Intergovernmental Relations). A unit would be set up to monitor the implementation of the said programme. Programme 3 dealt with systems and programmes targeting certain municipalities and provinces.

Presentation on Intergovernmental Relations (IGR)
Mr Derek Powell's presentation assessed progress in the previous financial year and identified outputs for the 2003/4 financial year:
- to integrate core systems of governance (planning, budgeting, implementation) for more efficient service delivery and greater developmental impact.
- to secure the place of local government within the IGR systems of planning, budgeting and implementation.

He assessed progress on the following issues and identified outputs for:
- Legislation regulating s139

- Assignment of powers and functions to Local Government

- Assessment of schedules 4&5

- Legislation implementing Section 41 of the Constitution

- Intergovernmental structures

(See document for detail)

Questions and Discussions
The Chairperson suggested that there was a need for a greater intervention by various departmental spheres to improve service delivery.

Mr Powell noted that the Department was currently drafting a consolidated report to Cabinet on intergovernmental relations and that they were also working closely with the Office of the Presidency, Land Affairs and the Gauteng Province in that regard.

The Chair asked, given the lack of coordination amongst the departments, what were practical steps emerging from the department to counter that problem.

Mr Africa pointed out that various support units for public service delivery had been established to improve both the internal and the external capacity of the municipalities. He believed that the culture of integration was developing throughout the country.

Mr Powell added that role of the Premier Office was fundamental in budget issues as it facilitated coordination amongst provincial departments.

Afternoon sesion:
The Chair noted that some of the issues that had been raised by the Committee during the morning session would be dealt with in the course of the afternoon's presentations.

Free Basic Services
Ms G Gumbi-Masilela noted that the government had committed itself to deliver free basic services (FBS) to all municipality households. Cabinet had approved this in 2001 and the department introduced free basic water (FBW) to all households on 1 July 2001. However the official roll out for free basic electricity (FBE) would only commence at the beginning of July 2003. She acknowledged that there have been substantial backlogs in the process and attributed such to the lack of infrastructure and the need for capacity building. However she reaffirmed government's commitment to this process and the department would assist those municipalities who are still struggling to implement this process.

Discussion
The Chair asked if would it be possible for the department to draw up guidelines on how the FBS should be handled by the municipalities. He commented that the present measures used by the municipalities in ensuring payment are inappropriate since cutting off water would not deter people from abusing water.

Ms J Manche (DLPG) acknowledged the concern and noted that when the new local government system was introduced, the government apportioned a certain amount of money to be used by municipalities in ensuring delivery of FBS to every household in their municipalities. However some people have decided to abuse the system resulting in the municipalities applying tough measures. This has indeed dramatically affected poor people, however the municipalities cannot be expected to go around and verify if each household really falls below the poverty line as that would seriously encumber the municipalities.

Mr S Mshudulu (ANC) noted that there are few progress reports showing that the municipalities have been assisted in terms of capacity so that they could be able to deliver the required services.

Ms Gumbi-Masilela acknowledged the discrepancies in municipal infrastructure. However the department intends to improve conditions by giving assistance to the municipalities so as ensure service delivery.

Ms Manche added that it would be important for the municipalities to develop a set of conditions, based on the Systems Act, that would assist the municipalities in addressing these problems.

Ms G Borman (DP) asked if the budget would be enough to ensure that the department accomplished its envisaged programmes.

Ms Gumbi-Masilela replied that money would never be enough to address the municipal programmes as new issues would always crop up. However the department had made its representation to the Treasury regarding its envisaged projects.

Mr M Ngubeni (ANC) asked if there is any organ that would be responsible for supervising the management of finances within the municipalities.

Ms Gumbi-Masilela replied that Treasury would be responsible to monitor the financial management of municipal councils.

Nkosi W Nonkonyana (ANC) asked if the department had managed to attain the goals set for 2002/3.

Ms Gumbi-Masilela replied that although there are 209 municipalities that have not yet started to implement the programme, the department is pleased with the manner in which the programme has unfolded. Now their duty would be to target those municipalities that have not yet delivered FBS and ensure that they do, especially those in rural and previously disadvantaged areas.

Mr Ngubeni pointed out that Eskom is a profit-making institution, therefore how would the department be able to deliver FBE to those who are provided electricity by Eskom.

Ms Gumbi-Masilela replied that where the private sector is involved, an agreement, which would not compromise government's commitment to FBS, would have to be reached.

Mr Mshudulu noted that the IDPs that are in place are based on the 1996 Census and thus likely to be inaccurate. He suggested that the department together with the provincial and local governments should create one which is based on the human reality on the ground and not just on paper.

Ms Gumbi-Masilela replied that the reason why the department still used the 1996 Census figures is that the 2001 Census is not yet available. The department would adapt the IDPs as soon as that one becomes available.

Mr M Lobe (ANC) requested that the department provide the Committee with precise details on what it has done to address the problems of poor communities.

Ms Manche noted that department would submit that information as soon as possible. However she noted that at present 57 percent municipalities have been provided with free basic services.

The Chair commented that the Free Basic Services programme is one of the most ambitious programmes that the department has ever undertaken and as such it should be applauded. However he said the Department should be able to respond to questions surrounding the involvement of private sector companies, such as Eskom in the FBE, as they are know to be profit orientated. Therefore the Department should take into account the profit margin which Eskom would want to benefit from in this venture balanced with the need of access to free basic electricity.

Infrastructure Investment: CMIP (Consolidated Municipal Infrastructure Programme) Municipal Infrastructure Grant (MIG)
Mr R Kruger commented that municipal infrastructure plays an important role in social security and economic development and there was a need to consolidate this. The national and provincial levels of governments would provide support and capacity building to the municipalities. See document for the principles and objectives of the the Consolidated Municipal Infrastructure Programme and its institutional arrangements. Although the project would be multi-departmental in orientation, the DPLG would remain financially accountable. One of the major challenges faces this project is the lack of technical support to municipalities and it has to develop capacity for delivery of infrastructure to the municipalities, especially those in rural areas.

Discussion
Mr Mshudulu noted that in order for this project to become a success, management training would have to be provided.

Mr Kruger replied that indeed management training would be provided to everyone and would not be concentrated only on the district councillors.

Mr Ngubeni noted that although Mpumalanga is a rural area it was not identified as one of the nodes.

Mr Kruger replied that the allocation of budgets for the nodes including their determination is done through the IDPs. Therefore although Mpumalanga is a rural area it was not determined by the IDPs and could not be identified as a node. He did point out that the node identified in the North West was in actual fact side-by-side with Mpumalanga.

Mr B Nobunga (ANC) asked how far the project is in terms of its implementation.

Mr Kruger replied that the project is in its design stage and thereafter it would be applied to the provinces and municipalities based on their capacities. Ms L Msenagna-Ndlela (Director-General: DPLG) added that the success of the project would largely depend on intergovernmental cooperation.

Ms Borman noted that such a project is an ongoing one but asked if he believed that the department would have attained some of its objectives by the end of the financial year 2003/4.

Mr Kruger replied that it would be difficult for the department to answer that since a project normally takes 18 months to get off the ground.

Ms Msengana-Ndlela said that most of the basic infrastructure need to be rehabilitated, however there are those municipalities, which do not even have infrastructure. In such cases the department would be required to first develop that infrastructure.

The Chair noted that the Committee had previously requested the Department to record all its achievements and shortcomings so that the Committee would know what is happen at the departmental level. However that had never been done and should therefore be done as a matter of urgency. There also need to be inter-departmental study groups comprised of all role players where issues could be openly discussed.

Economic Development: LED (Local Economic Development), Social Plan
Ms Gumbi-Masilela noted that one of the objects of this programme is to develop and review policies and guidelines for Local Economic Development. In order for the department to achieve this it had to develop a direct, hands-on support to municipalities and provinces. One of the major achievements of this project was to design and secure a Local Economic Development Innovation Programme funded by the Italians. The Department would train people who would become LED planners, specialists, councillors, municipal managers etc.

Discussion
Nkosi Nonkonyana commented that this shows the importance of dissemination of information and the establishment of departmental study groups noted by the Chair, since members were not aware that the Italians and the Dutch had granted the department funds.

Mr Nobunga commented that although these projects are very important, the amount allocated to them is minimal and as such these project would have little impact in reality.

Ms Gumbi-Masilela acknowledged the concern and stated that the department had decided to increase the amount and is still engaged in that process.

The Chair asked how could LED could be made an economically viable structure that could be able to create jobs in the municipal areas.

Ms Gumbi-Masilela replied that the department, together with SALGA, are presently working on a programme intended to enhance the viability of LED to be a job-creating institution.

Integrated Sustainable Rural Development and Urban Renewal Programmes
Mr E Africa stated that the department is committed to the principle of nodes and as such it has decided that more nodes should be introduced. It believes that it is only through this project that the fight against poverty and underdevelopment can be mounted and sustained. Therefore it would consult with the President's Office and request for the introduction of other nodes to add to the 21 existing ones. He noted that the ministerial visits, which were conducted by the Ministers and MECs to the nodes, had provided visibility. He thereafter noted the lessons that the department had learned through this project. He acknowledged that there are still gaps which remains a challenge facing the department. (See document for details).

Discussion
Ms R Southgate (ACDP) said that there should be incentives for businesses to locate in disadvantaged environments so that they could be lured to join the process.

Mr Africa replied that the process of identification is already in its execution stages. Disadvantaged municipalities had been encouraged to identify places which they feel would need preference when development commences.

Mr Nobunga noted that national and provincial departments have the tendency of taking on the projects themselves, but when they realise that they cannot perform they then dump them on to local government. At the end of the financial year local government would have to take the blame although it might have only taken the project on when the year was almost over.

Mr Nobunga asked if community development workers would be part of the existing staff or would there be a new intake.

Mr Africa replied that the department is of the view that the community development workers should part of it, however the finer details would have to be determined.

The Chair commented that there is still a problem of communication amongst the departments and that should be addressed as a matter of importance. This is important since the councillors living in those nodes should know what the provincial and national departments are doing in those nodes. He said that a similar situation had led to the failure of the RDP and should be avoided in this case.

The Department stated that it had noted down all the concerns raised, especially with regard to nodes.

The Chair thanked the department for its presentation and said that the Committee wished it all the best in its endeavours. The meeting was adjourned.


Appendix 1:
Budget Overview: 2003/4 Financial Year

Presented by the Director General for the Department of Provincial and Local Government

Ms Lindiwe Msengana-Ndlela

  1. INTRODUCTION
  2. Thank you for inviting our Department to this Budget Hearing. We view the input of the Portfolio Committee to our work as critical.

    Interestingly, we meet today six days (04 March 2003) after President T Mbeki addressed the Commonwealth Local Government Forum on issues of local government service partnerships. This conference was co-hosted by our Minister, Mr F S Mufamadi together with Father S Mkhatshwa, the Chairperson of the South African Local Government Association and the Mayor of the City of Tshwane.

    The President emphasised the need for countries to observe the "Local Government Declaration" that was adopted at the World Summit for Sustainable Development in 2002. The 'Declaration' asserted, in part, that there are four inter-connected principles for local governments, which need to inform and underpin all efforts to combat poverty and build a just, peaceful and sustainable world. As the President stated,

    "These are the over-arching principles of sustainable development; the issue

    of effective democratic decentralization with commensurate financial

    resources for local governments, the matter of good governance as well as

    co-operation and solidarity." (My emphasis)

    The 2003/4 budget for Provincial and Local government is significant in a number of ways.

    Firstly, the budget of the Department has increased from R6.5 billion in the last financial year (2002/3) to R 9,4 billion in the new financial year (2003/04). The bulk of this amount (R6,3 billion) goes towards building the capacity of government to bring services closer to the people, at local level. This budget reflects the commitment and the will of government to provide adequate resources for the strengthening of our intergovernmental system between national, provincial and local spheres.

    Secondly, this budget is presented after two years since the new system of local government was inaugurated in 2000. Our presentation today will give us an opportunity to share with the Honourable Members our views on progress made in the establishment phase (2000-2002) of local government transformation, with particular reference to the last year of that phase, the 2002/3 financial year. We also intend to advise the Honourable Members of the key interventions that we intend to undertake as we enter the consolidation phase, which will start from 2003 until 2005.

  3. PRELIMINARY REPORT FOR 2002/3

We present to you the preliminary report for the financial year 2002/3. In this report we identify set objectives, what was achieved and the intended impact of our programmes on our communities.

As we assessed our progress during last year (2002/3), we have identified a number of challenges, which will be addressed in various ways, including the effective and efficient application of resources. Previously we have, correctly so, paid particular attention to the development of policy and governing frameworks. In this 2003/4 financial year our department will focus more on policy implementation at a heightened pace.

 

3. FROM POLICY TO IMPLEMENTATION…Incremental funding to municipalities

Our work at provincial and local government continues to benefit from the growing national economy. As the President said, in his state of the Nation address on the 14th February 2003,

 

" South Africa has been able to have 10 consecutive years of positive growth".

This healthy state of our national economy has made it possible for the funding of municipalities through the equitable share that is administered by our department to increase from R3,9 billion in the last year to R5,3 billion this year. The funds will enable municipalities to improve their capacity to deliver quality services.

 

4. FROM POLICY TO IMPLEMENTATION …Infrastructure and job creation

Over 450 000 additional households will receive access to services through the improvement of infrastructure supported by R2,2 billion in the Consolidated Municipal Infrastructure Programme (CMIP). An additional 14 million will be allocated to infrastructure projects that are delivered through municipal service partnerships countrywide. The Local Economic Development (LED) Fund will be allocated R117 million and it is expected that 3000 temporary permanent jobs will be created.

 

FROM POLICY TO IMPLEMENTATION …Extending free basic services to the poor

With regard to the provision of free basic services particularly to the rural poor, there is a need to implement government's policy with greater speed and vigour. To this end an allocation of R1.1 billion to rural municipalities will be utilised to provide free basic water and electricity. A total of 3 million more people will have access to free basic water and a total of 28 million people will have access to free basic electricity.

Enhancing Municipal Financial Viability

From 1994 we inherited the legacy of municipalities that do not have a decent revenue-base. This is our historical legacy, which we must strive to collectively change for the better. We are therefore concerned about the inability of some of our municipalitlies to collect revenue due to them. The staggering debt for services must be addressed with urgency. Our Department presented the extent of this debt to the Portfolio Committee on the 4th of March 2003. Facts, figures and proposed solutions were also placed before the Municipal Viability Indaba, which was held in December 2002. The intended outcome of the Municipal Viability Indaba was therefore to achieve a collective and heightened awareness of the threat of municipal viability so as to encourage the appropriate emphasis and attention to this matter and its relationship to service delivery and the national economy. The Indaba agreed on the need for a Municipal Revenue Enhancement Programme, which we will fund from this budget. In this context, the department will provide an amount of R252 million to assist municipalities to reduce the accumulated municipal services debt and improve their overall financial viability. We will also pay particular attention towards improving the treasury capacities of our municipalities.

Whilst it is important that, on one hand, we address the legacy of municipal debt it is equally important that we create conditions for local economic development. The more we invest in entrepreneur development the more we will have municipalities with improved revenue sources. This is the dynamic link that we intend to maintain between municipal financial viability and economic development. In our view, improving the revenue and economic base of municipalities is a key component of the current phase of developmental local government.

Improving the quality of municipal leadership and technical expertise

We intend to increase the capacity of local government institutions and their leadership to be efficient. We will allocate an amount of R135 million towards improving the quality of municipal leadership and technical capacity. As you will know, local government leaders and municipal managers are expected to exhibit a tremendous amount of service delivery initiative, commitment and expertise. That is why we will seek to support them through capacity building programmes.

Preserving the integrity of the new system of LG and decisive action against corruption

It is important that the integrity of the new system of local government is preserved. We will require municipalities to engage in their programmes strictly within the principles of good governance and accountability. In the 2003/4 financial year, our department will establish an anti-corruption unit that will guide municipalities in dealing decisively with corruption. We will pursue a national anti-corruption campaign that will impose strict penalties for corruption and reward good governance. Through this programme we will mobilise and empower our communities to expose corrupt practises and work together with government to root our corruption. Most importantly, the law will take its course in instances where local government councillors and officials are on a collision course with clean and good governance.

Enhancing disaster preparedness

In the last financial year, with your support, the Disaster Management Act was promulgated into law. This year, we will allocate an amount of R13.3 million to enhance our disaster preparedness and management capacity. This will go a long way towards improving human security and reducing the vulnerability of communities to natural and human made disasters.

4. THE RURAL BIAS OF THIS BUDGET

One of the problems that face our municipalitlies is the inherited under-development, neglect and the high level of unemployment in rural areas. That is the reason why we have designed major interventions such as the Consolidated Municipal Infrastructure Programme (CMIP), the Local Economic Development Fund (LEDF) and the Integrated Sustainable Rural Development Programme (ISRDP). In this financial year an amount of R 1.2 billion will be allocated to rural projects. Of this R 1.2 billion an amount of R 307.7 million will go towards the 13 development nodes in 55 local municipalities (Annexure A).

In addition a total of R 26.7 million of the LEDF will go towards the rural nodes to unlock their agricultural and tourism potential (Annexure B). The rural nodes will also receive R 140 million of the Equitable Share. We will also allocate an amount of

 

R 300 000 million towards research on the impact of development programmes on poverty.

5. THE BENEFITS OF THIS BUDGET TO DIFFERENT CATEGORIES OF MUNICIPALITIES

You will recall that in 1994 we inherited segregated administrations, which were made of:

  • The Central government
  • 10 Bantustan administrations
  • 4 Provincial administrations
  • Over 1200 municipalities

We now have 284 municipalities, which have been integrated to meet the objective of developmental local government. However, because of the legacy of segregation, our municipalities have uneven levels of development. It is therefore important that in allocating our budget we focus on the different capacities of the three categories of municipalities, that is, local municipalitlies, district municipalities and metropolitan municipalities.

How will this budget benefit the 231 Local Municipalities?

A total of R 309million from CMIP will be allocated to the rehabilitation and upgrading of basic infrastructure for local municipalities with a budget of larger that R200 million (Annexure C). Of the CMIP amount, R 22 million will be allocated to local municipalities hosting urban nodes (Annexure D). The local municipalities will also receive R 96.1 million from the Local Economic Development Fund in order to contribute to job creation and SMME development (Annexure E). From the total Equitable Share, a total amount of R20million and R11million, respectively, will be allocated to the Local Municipalities, which host urban and rural nodes. The Planning Implementation Support System (PIMS) centres will receive financial support that will be focused on infrastructure planning and the provision of free basic services (Annexure F).

How will we support municipalities who have the greatest need?

Targeted and direct support will be given to 55 municipalities in 13 nodes and 209 local municipalities who have not been able to comprehensively roll out free basic services. These municipalities will receive an amount of R 1.3 billion for this purpose. (Annexure G).

How will the budget benefit the 47 District Municipalities?

The state of infrastructure in district municipalities requires attention. An amount of

R 1.4 billion will be allocated towards the rehabilitation and upgrading of basic infrastructure for district municipalities, through the CMIP Programme (Annexure H). Of the above CMIP amount, R 307.8 will be allocated to district municipalitlies hosting rural nodes (Annexure I). From the total Equitable Share amount, R 137 million will be allocated to district municipalities hosting rural nodes.

The Department will also allocate an amount of R 11.5 million towards job creation, SMME/BEE development and local income generation projects in district municipalitlies. In view of the need to increase our human resource capacity in a number of areas, including matters of the local economy, business management and project management, the District Municipalities will be able to use these funds for training programmes.

How will the budget benefit the 6 Metropolitan Municipalities?

Investment, rehabilitation and upgrading of basic infrastructure in metros will be allocated R 549 million from CMIP (Annexure J). Of the above CMIP amount, R 71 million will be allocated to metros hosting urban nodes (Annexure K). The LEDF will contribute R 9.2 million towards job creation, SMME, BEE development and local income generation in Metros (Annexure L).

Metros will also benefit from the general LED-training programme. Through the Municipal Infrastructure Investment Unit (MIIU), focus on facilitating strategic partnerships between all municipalities and public or private service providers will be strengthened. There are currently 29 partnerships of this nature. Improvement of planning in Metros will also be facilitated through engagements with the Cities Network, which we will allocate an amount of R1, 5 million this year.

Networks, engagements and partnerships will become increasingly important in governance and matters of local service delivery. Our officials, councillors and communities are increasingly being engaged in programmes that will enable them to share experiences and develop innovative ways of making our newly found democracy meaningful for all citizens. At a number of levels, people are doing their best to make the new system of developmental local government to work. Although we face a number of challenges, there are areas where our people have been successful. That is why we will continue to support these networks and partnerships.

5. TARGETED PROVINCIAL PROGRAMME

In view of the importance of Provincial Government in inter-governmental relations, our Department will introduce targeted support programmes to Provinces. These programmes focus, amongst other things, on;

  • Supporting the Premiers' Offices to coordinate Inter-Governmental Relations within provinces and with national government;
  • Aligning provincial plans with local government plans (the Provincial Growth and Development Plans - PGD's - and the Integrated Development Plans - IDP's). In effect, this means that the National sphere of government will have to take into consideration these provincial and local government plans before pursuing programmes in Provinces; and
  • Working with National Treasury in supporting provinces to implement the Municipal Finance Management legislation.
  1. STABILISING THE IGR SYSTEM

The overall theme which our Department will follow this year is that of:

Stabilising the system of intergovernmental relations towards accelerated service delivery and development.

This is the context within which the Provincial Support programmes, mentioned above, will be implemented. In addition, we intend to provide more legal certainty to matters of planning, budgeting and implementation within the three spheres. We will therefore propose an Inter-Governmental Relations Bill, which will deal in detail with these matters, including the following:

  • The elimination of unfunded mandates to municipalities, where applicable, by managing the assignment of powers and functions to municipalities;
  • The predictability of fiscal allocation processes to municipalities; and
  • A clear framework for interaction, which will result in government officials spending more time on implementation and less on processes that impede implementation.

We intend to add value to the work of government. As we implement this year's programme, our main focus will on the people we serve, the public, and the taxpayers who expect quality services from government. Our Department is committed to contributing to a better life for all South Africans.

It is within this context that our organisational value chain is premised.

    1. Public participation and empowerment
    2. Provision of Free Basic Services at local government level
    3. Provision of basic Infrastructure and Local Economic Development
    4. Development of local government systems, capacity and leadership
    5. Contributing towards a predictable Inter-Governmental Fiscal
    6. Relations system and enhancing Municipal Viability

    7. Targeted Provincial Support programme
    8. Integrated Development Policy and Programmes

The components of this value chain are interrelated. Departmental programmes cannot be implemented in silos, and thus the need for internal integration within the Department, before we talk of external integration.

7.THE DEPARTMENT'S LEVEL OF READINESS TO IMPLEMENT THE BUDGET

High-level business plans which indicate how the Department's budget priorities will be implemented (Annexure M), are available. Details of each programme and the associated institutions will be discussed over the next four days.

Soon this quarter, our Minister, Mr F S Mufamadi will table the Department's Policy and Budget in Parliament. As we conclude, we look forward to meaningful discussions with the Honourable Members today. We are mindful of your critical and constructive inputs in previous sessions with the Department. As the State President said during the 14th February 2003 State of the Nation Address:

" The challenge we all face as South Africans is to put our shoulders to the wheel to accelerate the pace of change."

 

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