Committee Report on intervention in Thabazimbi Local Municipality & State of Municipalities in North West

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Meeting Summary

Documents handed out:
Committee Report on State of Municipalities in North West
[All Committee Reports available under Tabled Committee Reports once published on the ATC]

The Committee met to consider and adopt its draft Report on the inspection in loco, and the proposals for intervention into the Thabazimbi Local Municipality in terms of section 139(1)(b) of the Constitution. the Committee had requested a progress report from the Administrator, which it had received, and one from the South African Local Government Association (SALGA), which it had not. The municipality had been experiencing difficulties since 2011. A DA Member expressed her concern that the period for the intervention was only 90 days and did not think anything could be achieved in this time. Another DA Member proposed that, in view of the past issues, the massive increase in irregular expenditure, and the apparent recognition by the Mayor and Speaker that they could not respond well, that municipality should be dissolved. Local government elections would happen in 90 days but effectively the province was already running the Council. Other Members did not agree on that proposal, and noted that the Committee was today considering the progress report by the Administrator and should not conflate the election process. Another Member proposed that a forensic investigation should be set up. Members discussed the powers under sections 139(1)(a), (b) and (c) of the Constitution and noted that the Committee was limited to acting within the bounds of the section 139(b) notice. The Municipal Structures Amendment Act did not speak to the powers of this Committee to convene by-elections and it was thought that this could not be done. Comparisons were drawn to previous cases of invocation of section 139, and it was noted that matters of constitutionality, inability to exercise the executive obligation and substantive evidence were all required. As a compromise the DA Member then proposed that he would support an intervention in terms of section 139(1)(b) but thought that the MEC should be questioned on whether she had considered a process under section 139(1)(c). Other Members did not agree and summarised what could be delegated, and pointed out that this form of dissolution referred to the political arm, not the administrative, and the challenges that had faced the municipality were of an administrative nature. Some further suggestions were made for points to be added but Members decided that it would be preferable to raise these at a forthcoming workshop. The Members adopted the draft report, with amendments.

The Committee also adopted its minutes of meetings held on 5, 12 April and  4 May 2016 with amendments.

The Committee also adopted its Committee Report on the State of Municipalities in North West. There would still be engagement with the relevant MEC.

Meeting report

Chairperson's opening remarks
The Chairperson noted that due to ongoing Constitutional Court actions, the Independent Electoral Commission (IEC) would not be briefing the Committee. An apology had been tendered from the Member of the Executive Council (MEC) for Cooperative Governance and Human Settlements and Traditional Affairs (COGHSTA)in the North West, who would not be able to brief the Committee on the state of interventions in that Province.

Mr G Michalakis (DA: Free State) asked whether the Minister of Women in the Presidency would attend a meeting, recommending that this should be re-scheduled soon.

The Chairperson said that his office would confirm with the Minister’s office directly, so that the meeting would definitely go ahead.

Draft Committee report on Intervention in Thabazimbi Local Municipality: Deliberations and adoption
The Chairperson noted that the Committee had requested a progress report from the administrator, in relation to the Thabazimbi Local Municipality intervention. It had also required a report from the South African Local Government Association (SALGA) on the support the Association had offered to that Municipality since 2011. Only the administrator had submitted a report; SALGA's was still outstanding.

He noted that the Committee had considered the draft Committee Report quite extensively previously and wanted Members to speak only to whether they supported it.

Ms B Engelbrecht (DA: Gauteng) was concerned that the period for the intervention was only 90 days. She could not see the Municipality having the capacity or the institutional will to make any difference after the 90 days, particularly in view of the challenges, as identified by the administrator, on serious administrative and governance issues. Ms Engelbrecht was not convinced Thabazimbi local Municipality could continue on its own after 90 days.

Mr M Chetty (DA: KwaZulu Natal) said that the Committee had stated emphatically that it would not merely rubber stamp, and would take drastic measures when the need arose. The Committee had realised that the Thabazimbi Council was not recently distressed. In the 2011/12 financial year there had been issues. In that same year irregular expenditure had been R73 million but by the following year it had increased to R209 million. The Mayor's and the Speaker's responses showed clearly that they were not competent to respond to how that Council had to be run and had been quite glad that the Limpopo Provincial Government had intervened to assist Thabazimbi. Given this background, he proposed that the Municipality be dissolved. That move would not cost anything to government. There would be local Government elections after the 90 days set out for the intervention, and no by-elections, since the Council had already been run by the Province since the start of the intervention. Councillors there were drawing salaries but not providing any service to the community.

Mr D Ximbi (ANC: Western Cape) supported the intervention by the provincial Government in Thabazimbi already and disagreed on the proposal to dissolve the Municipality council. He proposed that the draft Report of the Committee (the Report) be adopted as it was.

Mr Chetty interjected on a point of order. The Committee must take cognisance that people’s lives were at stakes. It could not be correct that the Committee could not take a collective decision merely because there were ongoing local election campaigns. 

The Chairperson said that the arguments had to be on the details of the progress report by the administrator and the Committee's in loco inspection and not local election campaigns.

Mr S Thobejane (ANC: Limpopo) said he differed slightly from Mr Chetty, noting that all stakeholders had presented to the Select Committee during its in loco inspection in Thabazimbi; and that they had showed some level of acceptance over the section 139(1)(b) intervention. He proposed that the Committee had to adopt its draft Report with the original resolution, as proposed. In addition, the resolution could also include the establishment of a forensic investigation into benefits lost by residents of that Municipality as a result of the maladministration.

Mr Michalakis supported Mr Chetty’s proposal for  the dissolution of the Municipality council.

Ms T Wana (ANC: Eastern Cape) supported Mr Thobejane’s proposal into setting up a forensic investigation into benefits lost by residents of that Municipality as a result of the maladministration.

The Chairperson said that part of the Committee’s responsibility was to receive a notice as provided by the Constitution. That notice was not determined by the Select Committee; it would only receive the notice. The MEC drafted the notice in line with the resolution of the Provincial Executive Committee (PEC). The Committee could only act on the prescripts of the notice, as set out in section 139(1)(b) of the Constitution, and not section 139(1)(c). That notice went to the Chairperson of the National Council of Provinces (NCOP) who then referred it to the Select Committee in terms of rule 101. Rule 101 only allowed the Committee to deal with (1)(b) of section 139. It could not deal with section 139(1)(a) (a directive) nor with section 139(1)(c) (a dissolution). The Committee could not introduce or invoke anything else, as the Constitution did not give the Committee the power to do that.

He added that the Local Government: Municipal Structures Amendment Act. No 1 of 2003 (LGMSAA) had stipulations on the timing for by-elections, and what determination could be made in terms of that Act. Nowhere in that Act was there any provision for the Select Committee to convene a by-election and he cautioned that the Committee had to be wary of taking any resolutions that were not in line with the Constitution. Whilst the Committee would have liked to see many changes within Thabazimbi Municipality, it was bound by the substantive evidence and procedure when doing its work.

He commented that immediately after the PEC had come to its resolution, it must notify the Minister and the NCOP of the intention to invoke section 139(1) (a) or (b) or (c). The Committee had to check whether that notice had been done in the required timelines, as stipulated in the LGMSAA. He reminded the Committee that in the case of the Makana Local Municipality, the invoking of the section was withdrawn because of procedural incorrectness. Substantive evidence that the Committee must consider would, for instance, include under-performance in terms of finances, supply chain management, or governance issues. The constitutionality aspects covered whether the municipality was unable to exercise its executive obligation. Only if that was found could the Committee act.

Ms Engelbrecht agreed with the Chairperson’s earlier sentiments that by-elections and upcoming elections need not be part of the consideration of the Committee's draft report around its in loco inspection. Whatever decision the Committee took, that would influence the operations and ability of the Thabazimbi Municipality to recover. The Committee had to be realistic about whether the administrator would be able to turn around Thabazimbi within 90 days. She would not support the intervention suggested by Mr Chetty, as she did not believe that it would be in the interests of long term sustainability of Thabazimbi.

Mr Chetty wanted to clarify his remarks when he said that there would be no by-election, if the 90 days for the intervention ended with the holding of a local Government election nationally, That was not intended to suggest that the Committee must convene a by-election. There still would be no additional cost to Government if the municipal council was dissolved during the intervention.

Mr Chetty then commented that the Committee knew what powers it had in the case of the Makana Municipality, and the recommendation could be from the Province of Limpopo. In Makana, the MEC in the Eastern Cape had had to be assisted as well. He stood by his opinion. Furthermore, the fact that the Committee only had the administrators’ progress report, and not SALGA's, showed that there was a disconnected effort in Thabazimbi.

Mr Chetty said that whilst primarily he maintained his view on the dysfunctionality of Thabazimbi, he was prepared to suggest a compromise as a way forward. He thus proposed a further provision to the resolution of the NCOP to approve the section 139(1)(b) intervention. He asked whether the MEC had considered dissolving the Municipal Council, since there was a pending election. He would support the intervention as long as the resolution had a provision questioning the relevant MEC in Limpopo whether she had considered a section 139(1)(c) dissolution.

The Chairperson reminded Mr Chetty that previously the MEC had been asked directly as to why she had not opted to use section 139(1)(c) instead of 139(1)(b). The MEC had responded that there had been a promise that change would happen after the report of the Rapid Assessment Task Team had been tabled, particularly since that Task Team included officials from the Provincial Treasury in Limpopo. She had also alluded to the fact that that Municipality had struggled because of the vacancies in senior municipal manager, and prioritised dealing with the organogram.

Mr Chetty said that his view was now vindicated by the Chairperson's explanation, because it was clear that the Province of Limpopo was running the Thabazimbi Council. There was now involvement of every other sphere to run the Council whilst those who were elected to do so were not, because they had failed in their task. He reiterated that he would be prepared to support a section 139(1)(b) intervention, but with a rider that questions must be put to the MEC whether she had considered section 139(1)(c) or not.

The Chairperson said some matters were up for debate. However, Chapter 3 of the Constitution said that even if the intervention was warranted, it would have to be done without encroaching on other officials’ responsibilities. A section 139(1)(b) intervention was not a complete takeover of the running of the municipality, because section 160(2) of the Constitution provided that a Municipal Council could not delegate the following:
- the passing of by-laws
- the approval of budgets
- the imposition of rates and other taxes, levies and duties
- the raising of loans.

In the Thabazimbi case the Committee also would have to be cautious about resolving on an approach. If dissolution took place, that related to the political arm of the Municipality, whilst the administrative arm must carry on.  He reiterated that the MEC had said that the challenges in Thabazimbi had been administrative in nature. It would be possible to address those challenges through the enhancement of other spheres of Government, since South Africa was a unitary state. Nowhere could a province be found contesting local government, but the spheres should complement each other. That was the reason for using section 154 regardless of any other intervention, including one under section 139.
Ms G Manopole (ANC: Northern Cape) differed on the inclusion of the rider that Mr Chetty was proposing should be added to the original resolution to invoke section 139(1)(b) only. She thought that the rider would be contradictory to the original resolution. She felt that the Committee had to be very cautious that it was not generalising on the observations made by the Committee during the in loco inspection, taken in conjunction with the principles around constitutionality, procedures and substantive evidence. It should also be wary of comparing Makana and Thabazimbi. The fact that the MEC had seconded a provincial specialist who took three months to analyse the financial challenges and compiled a report showed the thoroughness of the work that had been done there. The entire Committee had supported the work done by the administrator since being seconded by the MEC. She would therefore support Mr Thobejane’s proposal that the original resolution be kept as it was, without any rider. SALGA had also made a verbal presentation and the fact that it had not submitted a written report did not mean there were stakeholders that had not already been heard by the Committee.

The Chairperson proposed that nothing discussed today should be discounted when making the final recommendations. The Committee would develop recommendations for the NCOP that would note that issues like concerns about capacity were prevalent not only in Thabazimbi, but in Oudtshoorn as well. The resolutions under the Recommendations section of the draft Report had to emphasise the roles of the Province and SALGA within a particular period. Specific workshops had to be conducted.

The Committee had raised the following issues in the Report:
- SCM; in most cases there were irregularities being alleged. In terms of Municipal Finance Management Act (MFMA) regulations those were supposed to be addressed. The Committee could then specify that the MEC, together with SALGA, had to hold capacity building programmes for councillors and officials within Thabazimbi Municipality
- In relation to the salary bill; the Committee would recall that the term ending at the end of May was the Council term, but the PEC and National Government would remain. There would therefore be time to follow-up on other issues including that Bill. The Committee should resolve that the MEC for COGHSTA and provincial treasury in Limpopo had to conduct a workshop with municipal officials on compliance with matters of finances, including salaries and the tariff structure as that had also been an issue according to the draft report. The resolution would also say that the Committee had to also spearhead provincial workshops on Section 139. 

Ms Manopole said that the President had assented to the Public Administration and Management Act (PAM) and possibly the select Committee could engage with the Department of Cooperative Government and Traditional Affairs (COGTA) and the Department of Public Service and Administration (DPSA) on the implementation plan of the PAM, as one of its core functions related to capacity enhancement of municipalities. 

The Chairperson accepted and noted that the PAM Act would then have to be spearheaded by COGTA nationally in a similar manner to what he had proposed in terms of workshops.

Ms Engelbrecht requested that the Committee should request that, within 30 days, it must be given a report as to whether the salaries of Thabazimbi municipal officials had been adjusted in line with National Treasury (NT) guidelines. These guidelines said that the salaries should not be more 25% of the Municipality’s revenue. The Committee was aware that the salaries had been, to date, double that percentage.

The Chairperson accepted that resolution as proposed.

He suggested that the Committee also could simply take note that the report of the Administrator in Thabazimbi Municipality had been presented to the Committee, but the SALGA written report was outstanding.

Ms Engelbrecht noted that the Administrator's report had not mentioned the challenges with Eskom tariffs and she requested that this point be added.

The Chairperson said that he thought that the workshops that the MEC and Limpopo Provincial Treasury had to hold with Thabazimbi had covered that issue of tariff structures.

Ms Manopole agreed that the one point was sufficient, and there was no need to add anything about the tariffs.

The Chairperson said that alternatively the Committee could delegate a few Members to attend the workshops, where they could raise these issues directly.

Ms Manopole moved for adoption of the report, with the proposed amendments on salaries, and Mr Chetty indicated that he would second the report.

The Committee's draft Report on intervention in Thabazimbi Local Municipality was then adopted, with amendments.

Draft Committee Report on the State of Municipalities in North West
The Chairperson tabled the draft Report on the state of municipalities in North West, and suggested that  the Committee could note the report. There would still be engagement with the MEC of COGHSTA in that Province.

Members adopted the report on the state of municipalities in North West, with the added note that the Committee would still engage the MEC of COGHSTA in that Province in a future meeting.

Committee minutes: 5 April, 12 April, 4 May 2016 
The Committee considered and adopted its minutes for the 5 April without amendments.

The Committee considered the minutes of the meeting of 12 April

Mr Thobejane asked whether a Select Committee was allowed to adopt the minutes of a meeting that was held jointly.

The Chairperson replied that the meeting of 12 April was not a joint meeting per se; if it had been then an official “joint meetings” notice would have been issued. The Portfolio Committee on Cooperative Governance had simply felt that it would be fair and useful to participate in that session. COGTA had simply felt that it was fair to participate in that sitting and therefore the capturing of the minutes had to reflect it as a Select Committee meeting and not a joint meeting.
Ms Engelbrecht said that she wanted it recorded and reflected that the Deputy Minister for Cooperative Governance, Mr Andries Nel, had assured her that no one would be barred from voting even if there were still outstanding addresses on Election Day.  

The Chairperson said that had to be contextualised. There had also been reference made to the ongoing case involving the IEC and therefore any review would be subjected to the outcome of that litigation process. Moreover the commitment by Mr Nel was based on the hope that the outcome of that litigation would be in favour of the IEC.

Ms Wana asked that the proposal by Ms Engelbrecht not be included in the amended minutes, since the  matter was sub judice.

The Chairperson replied that the manner in which he had just elaborated on Ms Engelbrecht’s request for capturing covered everyone and therefore there was no need to exclude it.

The minutes of the 12 April were adopted with amendments.

The Committee also adopted minutes of the meeting on 4 May 2016.

The Chairperson announced that Ms Penny Gaolaolwe had become the new MEC for COGHS in North West.
Mr Thobejane announced that the Select Committee on Petitions and Executive Undertakings was to have held a hearing on the Traditional Leaders’ petition from the Western Cape on 11 May 2016, but a postponement had been requested by the Western Cape Premier. The hearing would be held in the following week.

The meeting was adjourned.   

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