Free State MEC of Cooperative Governance and Traditional Affairs (COGTA) on 2013/14 consolidated Municipality performance report

Meeting report

The Chairperson welcomed all present to the meeting, and said the purpose of the meeting was to be briefed by the Free State MEC of COGTA on the Section (47) 2013/14 consolidated Municipality Performance Report, to be briefed by the Free State SALGA on support provided to municipalities during the 2013/14 Financial Report, and be briefed by the Auditor General on 2013/14 municipal outcomes in the Free State.

Brief:
Free State Provincial Report on the Submission of Section 47 Report 2013/14
Mr Mokete Duma, Head of Department: Free State Cooperative Governance and Traditional Affairs (COGTA) apologised on behalf of the MEC, who could not attend the meeting because of illness. The presentation outline would focus on the legislative requirements. These were the submission of Section 46 reports; Section 129 reports; Section 47 report: progress; support provided to municipalities; challenges, and analysis per output.

In terms of the legislative requirements according to Section 46(2) of the Municipal Systems Act 32 of 2000, an annual performance report must form part of the municipality’s annual report in terms of Chapter 12 of the Municipal Finance Management Act (MFMA) 56 of 2003. Section 127(2) of the MFMA states that the mayor of a municipality must, within seven months after the end of a financial year, table in the municipal council the annual report of the municipality and of any municipal entity under the municipality’s sole or shared control. Section 127(5) of the MFMA states that immediately after an annual report is tabled in the council in terms of subsection (2), the accounting officer of the municipality must – in accordance with section 21A of the Municipal Systems Act -- make public the annual report; invite the local community to submit representations in connection with the annual report; and submit the annual report to  the Auditor-General, the relevant provincial treasury and the provincial department responsible for local government in the province.

An analysis of the tabling and submission of Section 46 showed that 24 municipalities had tabled their annual performance reports for the financial year 2013/14, as per Section 46 of the Municipal Structures Act (MSA), within the legislated period; 15 municipalities had submitted their annual reports after the date of tabling, rendering their submissions non-compliant; a total of 23 municipalities had publicised their annual reports as required by law, with the exception of Nala Local Municipality. Of all the 24 municipalities, only nine municipalities had placed their 2013/14 annual reports on their municipal websites, as required by section 21A & 21B of the MSA.

Mr Duma said that according to Section 129(1) of the Municipal Finance Management Act (MFMA) 56 of 2003, the council of a municipality must adopt an oversight report containing the council’s comments on the annual report not later than two months from the date on which the annual report was tabled in council, in terms of section 127. Furthermore, subsection 3 states that the accounting officer must, in accordance with section 21A of the MSA, make public an oversight report referred to in subsection (1) within seven days of its adoption.

According to Section 132 of the MFMA, the final annual report with the oversight report must be submitted to the legislature and the MEC must monitor compliance. Out of 24 municipalities, only Letsemeng and Naledi local municipalities submitted their reports to the legislature.

In terms of the support provided to municipalities, reminders were sent to municipalities. Performance Management System (PMS) assessment workshops were held with municipalities from July 2013 to August 2013 to ensure alignment with the National Key Performance Indicators. The Department had launched a provincial PMS forum in June 2015 aimed at addressing some of the challenges that municipalities were facing and would continue to work with relevant stakeholders to achieve 100% compliance.

Mr Duma said that non- compliance with legislated dates for submission was a challenge. The conclusion that could be drawn from the above was that although the figure of tabling the reports was high, municipalities did not give the same regard to submitting and publicising their reports.

In terms of the analysis per output, COGTA had undertaken to monitor and evaluate cooperation among government stakeholders to achieve improved service delivery. COGTA’s approach was aligned to the principles of the Presidency’s document on improving government performance, which was to strengthen the ability to cooperate across the three spheres of government and work as a single delivery machine, and build a partnership between government and civil society so that one could work together to achieve the goal of a better life.
 
Mr Duma concluded that according to the Presidency, the outcome performance system was not limited to measuring outcomes and outputs, but was meant to serve as a mechanism to guide the direction of policy implementation; and ensure that they were doing what mattered the most. It was therefore important that government identified priorities which would bring the vision and reality closer together, hence the identification of 12 outcomes which informed the MTSF. COGTA was therefore responsible for Outcome 9, thereby ensuring that the local government system was responsive, accountable, effective and efficient. All 24 municipalities had tabled and submitted their annual performance reports for the fiscal year, which includes the performance of municipalities as per the Outcome 9 and other legislative prescripts as contained in the local government: Municipal Systems Act 32 of 2000 (MSA).

Support Provided to Free State Municipalities 2013/14
Mr Zanoxolo Futwa, Provincial Executive Officer: SALGA, said that in terms of support to Free State Municipalities in 2013/14, Goal 1 was accessible, equitable and sustainable municipal services delivered by local government. The programme that was implemented was to consolidate input of municipalities towards the finalisation of a position paper on bulk infrastructure funding and engaged provincial stakeholders. The impact of the support provided in terms of compliance was that they had consolidated the position of Organised Local Government (OLG) on bulk infrastructure funding. The position paper had transpired into the infrastructure grant review process that was currently under way, to investigate ways that infrastructure funding to local government could be reviewed to be more effective and responsive to the needs of local government. The consolidated input of municipalities had contributed towards the finalisation and provincial stakeholders had engaged on OLG positions towards the establishment of bulk institutions. The position paper had led into the infrastructure grant review process that was currently under way to investigate ways that infrastructure funding institutions could be reviewed to be more effective and responsive to the needs of local government.

There had been a communicated campaign plan for a cleaner environment to municipalities. The plan would promote the implementation of cleaner environment campaigns and projects in municipalities and would lead to cleaner municipalities and protection of the environment. Implementing cleaner environment campaigns would lead to employment creation in municipalities. SALGA had provided two municipalities with hands-on support on the regularisation of their waste disposal sites. The support had led to the two municipalities commencing with the process of licensing the waste disposal sites. This would lead to the municipalities complying with the requirements of the Waste Management Act, which would lead to environmental protection in the municipalities.

Mr Futwa said that they had also supported one municipality in undertaking a Waste to Energy project. The impact was that by promoting the conversion of waste to energy, the use of alternative energy in municipalities was encouraged. Power supply in the country was under pressure. Eskom did not have the required capacity, which sometimes led to load shedding. When municipalities implemented waste to energy projects, they eased the pressure on the grid. The consolidated input of municipalities provided towards the finalisation of a position paper regarding alternative institutional arrangements for electricity distribution, and provincial stakeholders had been engaged. In terms of compliance, they had contributed to the national position paper on alternative institutional arrangements for electricity distribution. The position paper had investigated alternative ways for electricity distribution that would be most suitable for municipalities.

SALGA had facilitated the implementation of service delivery agreements (SDAs) between Eskom and municipalities. In terms of compliance, the awareness of municipalities with regard to their legal right to have SDAs put in place between themselves and Eskom had been created. The guideline that had been developed would give guidance to municipalities on how to go about developing SDAs.

SALGA’s position on minimum benchmark organogram requirements had been communicated to municipalities. Municipalities had received guidance on how to incorporate the roads and transport function into their organograms. The position paper had given guidance on what the minimum requirements were for each category of municipality.

Mr Futwa said that Goal 2 was a safe and healthy environment for communities. In this regard, SALGA had implemented the Developed Assessment Report on the municipal state of financial and HR capacity, based on a Monitoring and Evaluation (M&E) framework. The impact was that they had conducted capacity building initiatives based on the actual needs of all municipalities, with the focus on the Thabo Mofutsanyana, Lejweleputswa and Xhariep districts. Municipalities had been enabled to resource the disaster management centres. Municipalities had adopted the disaster management plans. SALGA had tabled the local government position and proposed amendments to the Disaster Management Act in respect of implications for local government to advisory forums. In this regard, they had consulted and consolidated with member municipalities to make inputs into the Disaster Management Amendment Bill with regards to sections of the Act that hamstrung municipalities from compliance. Provincial inputs had been consolidated and submitted, and the Bill was before Parliament.

SALGA had also solicited provincial inputs into the development of norms and standards for the provision of sports and recreation; arts and culture; and heritage services by September 2013. In this regard, a provincial summit on cemetery management had been held and this had resulted in the formulation of a position paper on cemetery management.

SALGA had advocated for the implementation of a local government position paper on library services in the municipalities. This had resulted in Mohokare, Tokologo, Tswelopele, Nala, Masilonyana, Setsoto,Phumelela,  Nketoana,  Mafube, and Mantsopa local municipalities handing back the library service to the provincial Department of Sports, Arts, Culture and Recreation (SACR), and Maluti-A-Phofung, Dihlabeng, Metsimaholo local municipalities and Mangaung Metro entering into a memorandum of understanding (MOU) with the Department of SACR,  and retaining the library service.

Mr Futwa said SALGA had disseminated information and discussed integrated mainstreaming of transversal issues and poverty alleviation between municipalities, and a quarterly status quo report had been submitted to the provincial working group. The impact of this was that they had conducted capacity building on the mainstreaming of  gender, youth, disabilities, youth, HIV and AIDS, with children in the following municipalities  that had been identified  for  mentorship in the financial year: Lejweleputswa, Thabo Mofutsanyana, Setsoto, Mohokare and Kopanong.  They had facilitated the development of HIV and AIDS plans in Tswelopele, Kopanong, Thabo Mofutsanyana and Mohokare, and had coordinated and submitted the provincial inputs into the review and development of the Human Development Framework. This had resulted in the Human Development Framework document which guided municipalities on how to deal with poverty in their sphere of government.

Goal 3 was planning and economic development. SALGA had supported Nala, Mohokare, Mangaung and Mantsopa municipalities in the implementation of informal trading regulation and by-laws. The impact was that awareness had been created in the development of municipal informal trading policies and by-laws. They had also assisted with the creation of informal trade committees in Nala, and provided on-going support to assist Mangaung with the development of an informal trading policy.

Goal 4 was effective, responsive and accountable local governance for communities. In this regard, SALGA had implemented quarterly reporting on local government represented in provincial Inter-Governmental Relations (IGR) forums and lobbied for coherent policy and a legislative framework for dedicated support for local government. The impact was that leadership had been presented with well-researched positions in their engagements with both the executive and legislative arms. SALGA had participated in IGR forums and raised the plight of local government. It had engaged the Association of Public Accounts Committees (APAC) for a local government-friendly model of public accounts. It had participated and made inputs at the workshop on the draft policy guidelines on the functionality of district IGR structures. It had also implemented structured engagements with provincial departments as per the advocacy and lobbying implementation plan. In this regard, it had made a presentation which had led to SALGA being made a member of provincial government clusters. It had engaged the COGTA Head of Department (HOD) on SALGA positions, and his support of the same in the MinMEC. It had engaged with the Local Labour Forum (LLF) in Masilonyana local municipality to ensure a stable labour environment.

Discussion
Mr G Michalakis (DA, Free State) asked the Provincial Department to explain why the back to basics initiative had worked for some municipalities but not worked in others, since concept had been implemented at all municipalities.

He asked what the MEC and the Provincial Department were doing to municipalities that were not complying with legislation, and what efforts the MEC and the Provincial Department were making to ensure that those municipalities complied with national legislation.

Ms B Engelbrecht (DA,Gauteng) asked the Auditor General (AG) to explain what measures they had put in place to ensure that municipalities improved on their performance because despite the interventions the AG had made, it seemed they were worse off than they were in the 2012/13 and 2013/14 financial years.

She asked for clarity with regard to the six municipalities that had received unqualified audits during the 2013/14 financial year, but the report also reflected 13 municipalities that had received unqualified audits and also three municipalities that had been dissolved in 2014/15.

The Chairperson asked what the Department had done to assist municipalities in terms of publication of their annual reports, because if the annual reports were not publicised they were depriving poor communities of that important information.

Mr Duma said that what had been dissolved was a trust, not municipalities, because what used to happen was that the three municipalities had been under a trust.

Mr Duma said that in terms of publication, it was something COGTA they was focussing on currently because over the years they had not had consequence management or measures in place against non-performers. However, they were not applying a blanket approach -- every case was investigated on its own merits because a number of municipalities lacked capacity, and municipalities that had made publications were those that were fully capacitated with adequate skills, like the metros which were up and running.

With regard to the municipalities that had received an unqualified audit, even with the ones with disclaimers, there had been an improvement compared with the previous years’ audits. In some municipalities they had replaced the municipal manager in order to improve the performance of the municipality. Therefore, the efforts they were making between the Department, SALGA and the AG would ensure improvements in most of the municipalities.

Mr Duma said that how the back to basics concept actually functioned was that they had a team that visited those municipalities on a weekly basis. However, the challenge was the cost containing measures that had been put in place by Treasury, because officials travelled more than 3 000 kilometres per month and when they engaged in weekly schedule for visiting municipalities, for example, COGTA alone had nine managers who were part of the team. The challenge was that the budget they ended up with on travelling and other expenses affected the cash flow of the Department.

Ms Engelbrecht said that her question on the 13 municipalities that had received an unqualified audit versus the six municipalities that had also received an unqualified audit, had not been answered.

Mr Duma requested that he be given time to check so that he could clarify that disparity.

He said the root causes for repeats in audit findings year on year was the challenge of implementing consequence management, which was why they did not see much improvement in that regard.

There were about nine municipalities which had received an unqualified report and the number had increased to 13. Therefore, all that they were saying was that the municipalities that had contributed to the increase in the number to 13 were the six municipalities that were named in the report which had received unqualified reports. They were putting a great effort into improving the performance of those municipalities.

Mr Michalakis said that he did not know what the MEC was doing with the municipalities that were not complying with national legislation.

Mr Duma said that he commented on the issue of consequence management. They were working hand in glove with SALGA and SALGA was currently developing a framework of consequence management. However, they were not waiting on that framework and were applying procedures to deal with non-performance of senior managers.

The Chairperson asked, with regard to the use of consultants, about the quality of annual financial statements -- whether there were any improvements and if not, what were the measures that had been put in place in that regard.

The Chairperson asked what the AG could say about the state of the audit outcomes -- whether it was positive, negative or moderate.

The Chairperson asked SALGA to explain what they had done in terms of capacity and what the plan was with regard to the issue of competency, since there were many deficiencies in the municipalities.

Mr Duma said that on the issue of the use of consultants, the challenge was that instead of dealing with the problem, the Department just threw money at the problem. The Provincial Treasury had therefore started visiting all the municipalities in the province to identify were the gaps were so they could facilitate the process of appointing consultants. However, one of the challenges was that they would appoint a consultant without even trusting the terms of reference and as a result, even if the consultant did not deliver, the Department could not hold that consultant accountable because it was not clear in terms of the contract they had entered into. It was the first step in the right direction, but the outcomes they had given was still a concern. Except for one municipality, all the municipalities they had audited still had to allow for adjustments to their financial reports.

In terms of the outcomes, they had seen improvements, and there had been some pockets of improvements in the internal controls, but the concern was whether the improvements they had seen were going to be sustainable going forward.

Mr Futwa said that on the issue of capacity, SALGA had designed a program on a range of issues that informed improvement of audit outcomes, focussing on capacity issues, financial management, leadership and governance. In these areas they had designed a training and capacity development tool that would be delivered through the SALGA Centre for Education and Governance. They had also entered into a Memorandum of Understanding in the province through intergovernmental relations between SALGA, Provincial Treasury and COGTA to have a combined effort on delivering on these issues, so that they maximised the impact as well as minimising the duplication of resources at the provincial level.

Mr Futwa said that on the issue of viability, there were legislative reforms that the Committee should take into consideration so that they could be taken up, particularly around issues of funding for the mandate of municipalities on bulk infrastructure issues. In so far as the equitable formula depended on aspects or elements such as population, the current trend in terms of their research with regard to the impact of migration was making it difficult for that formula to continue to be relevant in the manner in which it was implemented, because it reinforced the problem. Smaller municipalities continued to degenerate because they had lesser numbers and were therefore exposed to an allocation in terms of a formula that was based on population.

The Chairperson thanked all the presenters, and said he was looking forward to working with all the stakeholders to improve the performance of the municipalities. The Committee would do its oversight work in all the municipalities that had challenges and would invite both SALGA and the Provincial Treasury on those visits so that they could have a consolidated approach in dealing with the challenges.

The meeting was adjourned.