COGTA response to Oversight Questions; CRL Rights Commission & Municipal Demarcation Board 2016 Annual Performance Plan

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Cooperative Governance and Traditional Affairs

15 March 2016
Chairperson: Mr R Mdakane (ANC)
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Meeting Summary

The Department answered written questions posed by the Committee in a follow up to previous meetings on its Annual Performance Plan.

Members asked what bucket eradication programme was being referred to when COGTA noted that R350m was added to the bucket toilet eradication programme. The increase in the Municipal Demarcation Transition Grant was not enough as the amalgamation of Tshwane and Metsiding costs were in excess of R1.2b. How did COGTA anticipate dysfunctional municipalities would be able to afford these poorly considered amalgamations? The Municipal Infrastructure Grant was decreased by R965m and includes the refurbishing and upgrading of infrastructure over and above the ordinal purpose to install new infrastructure to enhance service delivery. How did the Department reconcile this seemingly impossible conflict of municipal responsibility? Why had the Municipal Disaster Recovery grant been reduced from R188.9m to R140m and what was being done to facilitate access as it was difficult to access these at short notice?

Members asked the reason for the significant decrease in local government support and intervention programme as this should be a priority programme. What was the reason for the 6342% increase in the municipality performance monitoring programme budget? What good was monitoring if there was not going to be intervention and support? In the 2015/16 budget, SALGA was identified as an area where cost cutting could be achieved as this entity had become self sufficient, particularly if it cut its exorbitant administration costs –, so why was SALGA to receive R29.5m for 2016/17 and R90m over the next three years? Cabinet had approved reductions to the Community Work Programme in the medium term of R586m. Why had the Department gone back on the Cabinet’s decision, by increasing the allocation by R815.3m.

Members asked what steps had the Development Bank of Southern Africa taken to reinforce municipal implementation capacity in light of the R7.5b transferred to the DBSA for this purpose. When can we expect the tabling of reports on a) the status of appointments of competent and suitably qualified municipal managers b) those municipalities where appointments were made in contravention of the systems acts already and actions taken in this regard c) the compliance of municipalities with the Property Rates Act and the actions taken in this regard d) the status of the 150 forensic audits called for from municipalities. What movement had there been between the various categories of municipalities as a result of the Back to Basics programme? How many are currently classified as dysfunctional? Of these how many were classified as dysfunctional at the start of the programme and have a) improved out of the category, b) regressed or c) remained unchanged?

Members asked why the Local Government Laws Amendment Bill has been narrowed in focus to only address amendments to the Municipal Structures Act? What steps was COGTA taking to assist municipalities with a) revenue collection and b) expenditure management? Does the Department support SALGA’s call for a national debt collection agency for municipalities? What steps will COGTA take to ensure that municipalities who were owed money by outgoing councillors were reimbursed before payment of the once off gratuity was made for non returning councillors?

Members asked if population migration was taken into account when the amalgamation of municipalities was done. What was SALGA doing with the budget given to them and did COGTA believe it should be stopped? Members asked how many government buildings in a state of disrepair were in each municipality.

Municipal Demarcation Board (MDB)
The MDB felt there was a need for legislative review of municipal wards. Wards were delimited for election purposes but were being used for service delivery. Hence movement to a different ward which might not be providing service delivery lead to protests when demarcation changes occurred. A second reason for the review was that the boundaries for traditional areas prefer consolidation into one municipality. There were over 800 traditional areas and so this was not an easy process.

The MDB had achieved 70% of its predetermined objectives. The remaining 30% was because the MDB could not ignore the section 22 process and had postponed some activities. In addition one senior HR person had been dismissed and one had been suspended so HR had suffered. It had also lost its head of research and a senior manager left because limited funding meant they were on two or three year contracts.

The budget was limited and the MDB had received an additional R10m but it was only for this financial year. The MDB had requested R29m per year. The MDB was looking at generating its own funds through partnerships for research and benchmarking. The MDB said ward based planning was a mistake and creating unreal expectations. The MDB was conscious of the challenges and needed to consider issues of urbanisation, of secondary cities, of mining in preparation for 2021.

Members asked when the HR issues would be resolved and about its ICT investment; what the implications of section 81 were for traditional leaders who also sat on municipal councils because it caused a problem; what were the challenges when two traditional areas comprised one ward; about the lack of consultation in the amalgamation of wards in Johannesburg; requested a more detailed briefing of the Annual Performance Plan; if the board had taken steps about the attorneys who charged an exorbitant amount for two months’ work; about the placement of voting stations in wards; why there had been a 40% increase in staff compensation; when would the outstanding legal matters before the board be settled.

Culture, Religion, Language Communities Rights (CRL) Commission
The Commission spoke to the focus areas of the CRL for the financial year 2015/16. This covered the cultural practices of Ukhutwala, the recycling of graves and the commercialization of religion where it had done five provinces. For 2016/17 the CRL would be having hearings on deaths at initiation schools. It would also be looking at tribalism, race and languages issues. In KZN, near the border areas, there had been a new phenomenon of people ordering the body parts of albinos and taking them back home over the border. The CRL would be working with traditional leaders and healers to educate them on this issue. The CRL was looking at building the capacity of community councils to settle conflict and also in financial management. It would be looking at the re-use of graves and give guidelines on the indigenisation of the law. Legislation needed to take into account culture and language. The budget for the CRL was R38m. The CRL had appointed a chapter 22 committee to engage with business, the diplomatic community and the international community to generate funds.

Members asked what structures the CRL used, to counter the ‘street corner flyer’ churches. Members
Asked how the hearings process would be conducted. Could the CRL intervene when it recognised that clear abuse or contravention of laws was taking place? There appeared to be an influx of ministers from other countries into south Africa to make money. Was there something that could stop this? Members asked which other state institutions the CRL was collaborating with.

Meeting report

Department of Cooperative Governance and Traditional Affairs (COGTA) response
Mr Vusi Madonsela, COGTA Director General, said the Department would respond to the 15 written questions submitted to it.

1. R350m was added to the bucket eradication programme. What bucket toilet programme was being referred to?

Mr Madonsela said the President had established the Department of Water and Sanitation (DWS) whose mandate included dealing with the bucket eradication system. The Municipal Infrastructure Support Agent (MISA) was one of the implementing agents for the DWS’s bucket eradication programmes, in particular, the Northern Cape.

2. The increase in the Municipal Demarcation Board grant was welcomed but was not enough as the amalgamation of Tshwane and Metsiding costs were in excess of R1.2b. How did the Department and the Ministry anticipate dysfunctional municipalities would be able to afford these poorly considered amalgamations?

Mr Madonsela said the amalgamations that came about were as a result of section 22 requests by then Minister Gordhan, and were predicated on the need to reduce the number of municipalities that were financially not viable.

On the transition grant, Dr Kevin Naidoo, COGTA Executive Manager: Municipal Governance, said that based on an FFC report, the total came to R1.35 billion and was informed by payments made by the city to municipalities that were amalgamated. This total dealt with restructuring costs.

3. The increase in the equitable share did not keep pace with inflation and was a far cry from the increase given to Eskom. This would place further pressure on municipalities. What steps was the Minister taking to address this?

Mr Muthotho Sigidi, DDG: Governance and Intergovernmental Relations, said the equitable share was not necessarily meant to keep pace with inflation because it was not meant to replace the revenue generating capacity of municipalities. The current equitable share had been reviewed by Treasury, COGTA, StatsSA and SALGA in 2012 and the formula, which was redistributive in nature, was driven by population growth. The formula was reviewed on an annual basis.

4. It was noted that the municipal infrastructure grant was decreased by R965m and includes the refurbishing and upgrading of infrastructure over and above the ordinal purpose to install new infrastructure to enhance service delivery. How did the Department reconcile this seemingly impossible conflict of municipal responsibility?

Mr Themba Fosi, COGTA Deputy Director General: Developmental Local Government, said the Minister of Finance in his budget speech announced fiscal consolidation measures which translated into budget cuts at COGTA. The implications for municipalities meant the Department would have to prioritise the funding of projects though the Municipal Infrastructure Grant (MIG). The Department had met with the municipalities to assist with identifying the MIG projects. Municipalities were also expected to raise their own revenue to fund some of the refurbishments and maintenance.

Mr Madonsela said that for the first time it had been agreed that a percentage of MIG could be used for the maintenance of infrastructure. It was not meant to allow municipalities to spend the entire MIG on maintenance.

5. The Municipal Disaster Recovery grant was being reduced from R188.9m to R140m yet it was difficult to access these funds at short notice. What was being done to facilitate access to these funds? Why have they been reduced?

Mr Madonsela said Municipal Disaster Recovery grant was not meant to be accessed at short notice, it was meant for post disaster rehabilitation of infrastructure. There were other grants that could be accessed for emergencies.

6. What was the reason for the significant decrease in the local government support and intervention programme? Surely this should be a priority programme.

Mr Fosi said the local government intervention branch was only established in August 2015. It includes a team of five chief directors dedicated to supporting municipalities and a chief directorate that focussed on monitoring the performance of municipalities.

7. Similarly it is important that we work off good numbers. What was the reason for the 6342% increase in the municipalities performance monitoring programme budget? What good was monitoring if there was not going to be intervention and support?

Mr K Mileham (DA) said the question referred to sub programme 2 of programme 5 of the Department’s budget on the performance monitoring of municipalities. In 2015/16 its budget was R5m and this increased to R322m in 2016/17, a 6342% increase.

Mr Fosi said that the R5m for the performance monitoring directorate was for a structure that now had three directorates while in the past it only had one directorate. The intervention was important because it gave support to municipalities to improve performance.

Mr Madonsela said that in the past the monitoring had been limited to receiving reports. Since the Back to Basics campaign, the Department had a hands-on approach to monitoring and needed people on the ground to confirm the accuracy of the reports. Back to Basics had become a way of life and the budget needed to reflect this.

8. In the 2016 budget vote SALGA was identified as an area where cost cutting could be achieved as this entity had become self sufficient, particularly if it cut its exorbitant administration costs. We note with concern that an amount of R29.5m was budgeted for SALGA for 2016/17 and R90m over the next three years.

Mr Madonsela said that the entity itself had said that it did not need the funds. SALGA monies were a transfer from Treasury via the Department. SALGA itself had then had a change of mind and wanted to continue to receive the previous allocation Treasury was giving them, which flowed through COGTA’s budget vote. It was not a decision of the Department.

9. Cabinet had approved reductions to the Community Work Programme in the medium term of R586m. Why had the Department gone back on the Cabinet’s decision, by increasing the allocation by R815.3m.

Mr Madonsela said the Department had had a target of one million participants by 2019. Every year the Department made requests to ensure it was enabled to reach its target to attain one million work opportunities by 2019. The decision to reduce the amount was not a Departmental decision, it was Treasury’s decision based on fiscal constraints. Some monies were found elsewhere and the Department welcomed the increased allocation.

10. What steps had the DBSA taken to reinforce municipal implementation capacity in light of the R7.5b that was transferred to the bank for this purpose.

Mr Madonsela said the Development Bank of Southern Africa was not within the purview of the Department.

Mr Fosi said DBSA reported and accounted to Treasury. The Department did however work closely with DBSA on programmes.

11. When can we expect the tabling of reports on a) the status of appointments of competent and suitably qualified municipal managers b) those municipalities where appointments were made in contravention of the Systems Act already and actions taken in this regard c) the compliance of municipalities with the Property Rates Act and the actions taken in this regard. d) the status of the 150 'plaas' forensic audits called for from municipalities.

Mr Sigidi said all the reports would be made available after the end of the 4th quarter, at the end of March. The reports would be forwarded to MinMecs for MECs to confirm some of the statistics after which it could be presented to the Committee. Reports a, b and d could be made available on a quarterly basis. Report c was an annual report.

12. What movement had there been between the various categories of municipalities as a result of the Back to Basics programme? How many are currently classified as dysfunctional? Of these how many were classified as dysfunctional at the start of the programme and have a) improved out of the category, b) regressed or c) remained unchanged?

Mr Fosi said that after the first year of implementation, the Department’s view was that it was still too early to determine significant movements within the categories. However based on the monthly municipality reports, the Department was starting to notice trends in the five pillars of the Back to Basics campaign. In some of the municipalities where regression had been observed, it had been in provinces where there were weak COGTA departments and there was a relationship between poor political leadership and instability like high vacancies or Human Resource (HR) challenges.

13. Why has the Local Government Laws Amendment Bill been narrowed in focus to only address amendments to the Municipal Structures Act?

Dr Naidoo said that as the Back to Basics campaign unfolds, lessons learnt required amendments to the Systems Act and matters relating to the Municipal Demarcation Act. These were lessons picked up while determining the new boundaries so an intergovernmental discussion needed to take place with a larger audience to inform proposed amendments to the Systems Act and the Municipal Demarcation Act.

Mr Madonsela said the current amendments did not have deep policy impact, could be done quickly and were non controversial.

14. What steps was the Department taking to assist municipalities with a) revenue collection and b) expenditure management? Does the Department support SALGA’s call for a national debt collection agency for municipalities? If so, why?

Mr Sigidi said the Department was taking the following steps to assist municipalities with revenue collection. Municipalities were supposed to have credit control and debt management policies and bylaws in place. The Department assisted in reviewing the credit control and debt management policies and checked that bylaws were in place. There was a revenue enhancement project the Department initiated in 12 municipalities. It did six feasibility studies and realised that municipalities were not prepared enough to be able to take up the recommendations of the study, so the Department was now partnering with the DBSA to provide technical support to municipalities. The Department and the Department of Public Works (DPW) were jointly leading a team to support all municipalities to collect outstanding debt and service providers have been appointed to audit and verify debt claims by municipalities. Government had agreed through the Presidential Coordinating Council that government departments that owed municipalities, even if the account was not verified yet, had to pay 80% of the current debt, pending resolution and verification of the accounts.

With regard to expenditure management, he said that was the purview of Treasury.

On SALGA’s call for a collection agency, he said the Department did not have SALGA’s full proposal.

15. What steps will the Department take to ensure that municipalities who were owed money by outgoing councillors were reimbursed before payment of the once off gratuity was made for non returning councillors?

Mr Sigidi said the code of conduct provided for the fact that councillors could not owe for more than 90 days. When the councillor’s term ended the municipalities had to follow him up as a normal debtor. The Department gave a once off gratuity to councillors but first checked with SARS and the municipalities whether the councillors owed money to them. If they did, this was first deducted and paid before the balance was paid to the councillor. Otherwise credit control policies and the bylaws of the municipalities came into effect and the councillors were treated as normal debtors,

Mr A Masondo (ANC) asked if population migration was taken into account when the consolidation and amalgamation of municipalities were done.

Mr Sigidi replied that the equitable share had a distributive nature. Where there were gains in population there would be gains in the equitable share and in the revenue adjustment factor. The revenue adjustment factor applied to institutional and population gains and decreases but for decreases the revenue adjustment factor was not enough to cover inflation.

On the Demarcation Transition Grant, Dr Naidoo said the question dealt with the processing of HR matters, for example where grade 4 and grade 5 municipalities came together. Bigger municipalities would have a staff of three to four thousand while smaller municipalities would have a staff of three to four hundred. A single new structure could fill vacancies by using the staff of the smaller municipalities. The Department however strongly discouraged that municipalities automatically moved from a grade 4 to a grade 5 municipality. It looked at it as a new municipality with a bigger pool of senior management people and it presented opportunities to rationalise.

On the Disaster Recovery Grant, Mr Madonsela said the grant was not designed for quick relief. It was used after the municipalities had made an assessment. No municipalities could use the fund other than for post disaster reconstruction.

He said SALGA was a voluntary association not an entity of the Department. SALGA was held accountable for monies received from the Department
 
Mr Fosi said the Department could begin to talk about trends based on the monthly municipal reports. He said the Department was looking at scientific tools to look at the shift. It still needed a tool to determine the shift in category.

Mr Madonsela said that to assess whether a municipality belonged in a category, the Department looked at the five pillars of the Back to Basics campaign. Some municipalities improved for example in three of the categories. Without a scientific tool one could not tell with confidence whether it had shifted into a new category. Once the tool was available, it would share it with the Committee.

Ms J Maluleke (ANC) asked what SALGA was doing with the budget the Department was giving to them. She said that if the Department was not achieving its targets because something was wrong with the Department’s planning, then how could it assist municipalities? SALGA did not have the power to ensure that departments paid their debts.

Mr Madonsela said that all departments go through the DPW whose responsibility was government land and building assets. The Department worked with DPW in verifying the correctness of invoices. The DPW had appointed an independent service provider to verify the invoices. The PCC had agreed that even where invoices were contested that 80% of the invoice had to be paid. This directive was important because an accounting officer could only pay verified invoices.

SALGA was not an entity of the Department but was accountable to the Department for monies that came from the Departmental budget. The Department could account for the R90m allocation to SALGA after it had been spent.

Mr Masondo said that government buildings in a state of disrepair were a concern as there was a risk of criminal activity. How many such buildings were there in each of the municipalities?

Mr E Mthethwa (ANC) asked what the view of the Department is if the money collected from Treasury and passed on to SALGA could be stopped.

Mr M Hlengwa (IFP) asked what were the challenges regarding Department accounting for SALGA and if it was monetary only. What was the Department’s views and could this be strengthened.

Regarding the landlord, Mr Madonsela said issue was for the DPW to answer.

On the Department’s role as a conduit for SALGA’s monies, Mr Madonsela said government did not allocate separate votes to entities or components. A vote was created for which a minister was responsible. SALGA’s activities were linked to COGTA’s mandate.

Municipal Demarcation Board (MDB)
MDB Chairperson, Ms Jane Thupana, said that for the past two years the MDB did not have a CEO and CFO. She said there was a need for legislative review of municipal wards. Wards were delimited for election purposes but were being used for service delivery. Hence movement to a different ward which might not be providing service delivery lead to protests when demarcation changes occurred. A second reason for the review was that the boundaries for traditional areas prefer consolidation into one municipality. There were over 800 traditional areas and so this was not an easy process.

Regarding MDB performance, she said it had achieved 70% of its predetermined objectives. The reason it could not attain a higher percentage was because the MDB could not ignore the section 22 process and had postponed some activities. One senior HR person had been dismissed and one had been suspended so HR had suffered. It had also lost its head of research and a senior manager left because limited funding meant they were on two or three year contracts.

The budget was limited and the MDB had received an additional R10m but it was only for this financial year. The MDB had requested R29m per year. The MDB was looking at generating its own funds through partnerships for research and benchmarking.
 

Discussion
Mr Mthethwa asked when the HR issues which remained a problem, would be resolved. He was also concerned about their investment in ICT.

Mr Hlengwa asked what the implications of section 81 were for traditional leaders who also sat on municipal councils because it caused a problem. What were the challenges when two traditional areas comprised one ward. On the amalgamation of wards in Johannesburg, there were issues around consultation. He asked what consultation processes had occurred and what had the MDB done to engage with the communities.

Mr P Mapulane (ANC) asked for the MDB to return to give a more detailed briefing of the Annual Performance Plan. On the previous CEO, he asked if the board had taken any steps regarding the monies paid to the attorneys who charged an exorbitant amount for two months’ work.

Mr C Motsepe (DA) said that in determining the voting stations, he asked where the MDB got its information to determine where in a ward they would place voting districts (VDs).

Mr Mileham asked why there had been a 40% increase in the compensation of staff costs. He asked when the outstanding legal matters before the board would be settled.
 
Ms Thupana replied that the MDB had nothing to do with the VDs which was with the IEC.

She said in 2011 there were 130 wards and now there were 135 wards. This meant five new wards but the space had remained the same. As a result 60% of wards had boundaries changed. There were arguments arising about splitting communities and what the public wanted but the criteria for the MDB was the law.

She said the City of Johannesburg had engaged with the leadership of the ward. They now knew the problem and had responded. The MDB was doing a quick analysis of such areas and continued to engage with the people.

Regarding the previous CEO, she said she was not in a position to talk about how the legal costs had escalated, lawyers were already working on the process.

Mr Mapulane requested that the board follow up on the escalation of legal costs as the attorneys had been paid R600 000 for two months’ work.
 
Mr Ashraf Adam, Deputy Chairperson, said the MDB would furnish a reply on the legal costs.

Mr Oupa Nkoane, MDB CEO, said the increase in compensation was because of the appointments of the CEO and CFO and the board was strengthening ICT, research and other core function areas. There had been HR challenges but the MDB was filling the HR portfolio position.

Regarding ICT, he said the MDB wanted to be a centre of excellence on spatial hubs. It wanted to ‘electronify’ maps.

He said there was still one legal matter outstanding and this would be going to court in April while the Limpopo province matter would be in April also.

Mr Adam said that when the board took office, it had to deal with a range of issues. The boundaries had been finalised but section 22 had taken a lot of time. He said ward based planning was a mistake and creating unreal expectations. He said the MDB was conscious of the challenges and needed to consider issues of urbanisation, of secondary cities, of mining in preparation for 2021.

Commission for Promotion and Protection of Cultural, Religious and Linguistic Communities

Ms Thoko Mkhwanazi-Xaluva, Chairperson, spoke to the focus areas of the CRL Rights Commission for
2015/16. This covered the cultural practices of Ukuthwala, the recycling of graves and the commercialization of religion where it had covered five provinces. The CRL was concerned with the structures of governance and not the doctrinal issues. The CRL felt there should be a peer review to hold the sector to account because some churches were exploiting the problems of the poor and the poor’s beliefs were being abused.

 

Identified Critical Pressure Points 2016/17
- Regulation of the religious sector - this focus would continue
- Deaths in initiation schools
- Tribalism - Race: a threat to national unity
- Language as a tool for exclusion for self determination - a threat or not to nation building/unity? i.e. Promotion and protection of linguistic rights
- Discrimination, trafficking and killing of people living with albinism
- Capacity building training workshops for community councils on conflict resolution, developing constitutions, and financial management.
- Propose legislation, policies in line with C-R-L Rights
Draft Bill on initiation
Draft Bill on graves
- Creating organisational efficiency: internal controls/systems to address audit findings / electronic leave system / case ware system / upgrading Pastel.

Annual Performance Plan: Summary Per Programmes 2016/17
- Public Education Unit
 18 capacity building workshops/training for community councils
  9 conflict resolution clinics
 12 cultural, religious and linguistic rights campaigns
- Research and policy development
4 Research Reports on C-R-L matters
- Legal Services and Conflict Resolution
 3 proposed draft Bill
 100% of cases received will be handled
 100% review of bills tabled in Parliament
 Guideline on indigenisation of law making process.
- Office of the Chairperson
4 plenary meetings
4 sections 22 committees
Portfolio committee meetings and presentations
Institutions of higher learning project
Strategic meetings with relevant stakeholders

Discussion
Mr Mileham asked what the programme for the year 2016/17 would be.
 
Ms Xaluva said the CRL would be having hearings on deaths at initiation schools. It would also be looking at tribalism, race and languages issues. In KZN, near the border areas, there had been a new phenomenon of people ordering the body parts of albinos and taking them back home over the border. The CRL would be working with traditional leaders and healers to educate them on this. The CRL was looking at building the capacity of community councils to settle conflict and also in financial management. It would be looking at the re-use of graves and give guidelines on the indigenisation of the law. Legislation needed to take into account culture and language. The budget for the CRL was R38m.

Mr Mthethwa asked what structures the CRL used, to counter the ‘street corner flyer’ churches.

Mr Mapulane said the CRL was entering a space that had not been regulated before. How would the hearings process be conducted? Could the CRL intervene when it recognised that clear abuse or contravention of laws was taking place? There appeared to be an influx of ministers from other countries into South Africa to make money. Was there something that could stop this?

Mr Hlengwa asked which other state institutions the CRL was collaborating with.

Regarding the flyers, Ms Xaluva said the CRL was talking to the Advertising Standards Authority (ASA) and local government. However the main threat was newspaper advertisements because they looked more credible.

On pastors from other countries, she said it was proposed that regulations be established. Was it a scarce skill needed in South Africa? Scientific proof needed to be given for the claims made by the pastors. She said the Department of Social Development said that many churches register but then vanish and did not provide financial statements. Another issue that needed to be looked at was the question of what made people gullible and UNISA was doing a study on this.

She said the CRL was looking at partnerships with government departments, organised churches and foundations.

Mr Renier Schoeman, Commissioner, said the CRL had appointed a chapter 22 committee to engage with business, the diplomatic community and the international community to generate funds.

The meeting was adjourned.

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