Upper Limits of Total Remuneration Packages for Municipal Managers; Councils establishment: Department of Cooperative Governance update

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Cooperative Governance and Traditional Affairs

30 August 2016
Chairperson: Mr N Masondo (ANC) (Acting)
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Meeting Summary

The Department of Cooperative Governance and Traditional Affairs (COGTA) briefed the Committee on the upper limits of total remuneration packages payable to Municipal Managers and managers directly accountable to Municipal Managers. It also updated the Committee on the consolidated database of municipalities.

The Minister published Notice No. 287 in Government Gazette No. 40000 on 19 May 2016 as a draft for consultation, and invited comments from various parties. The main issues raised by the key stakeholders were that the final Notice should be gazetted on or before 31 March 2016 to allow municipalities to include remuneration of senior managers in their 2016/17 budgets and the insertion of item 10 (salary progression) in the draft Notice through secondary legislation.

The Minister published Notice No. 381 under Government Gazette No 40118 on 1 July 2016 , after consultation with key stakeholders prescribed in Section 72A of the Municipal Systems Act. This item has been amended to highlight the purpose of the Notice which includes the need for ensuring that the upper limits constitute an integral part of the human resource value chain. This is aimed at building resilient administrative institutions to enable municipalities to attract, employ and retain appropriately qualified and competent personnel necessary for effective performance of their functions.

Items 2, 3 and 4 of the Notice provide a formula for determining the categorisation of a municipality and if the municipality gets a categorisation higher than it did immediately prior to the Notice, it may, subject to the recommendation of the MEC for local government and approval by the Minister, implement such new categorisation. The categorisation is reached by adding together the points awarded for total municipal income, total population and total municipal equitable share and putting them in categories from 1 to 10. Item 9 of the Notice provides guidelines on the offer of remuneration on appointment. Item 10 of the Notice introduces a remote allowance. This allowance replaces the rural allowance provided for in the 2015/16 Notice. One of the challenges faced by municipalities is to ensure that persons with the right skills are attracted and retained in all municipalities. This does not affect the validity of an existing employment contract of a senior manager appointed before 1 July 2014.

The Department further updated the Committee on the consolidated database of municipalities. After the Local Government Elections that were held on 3 August 2016, the Department engaged with Provinces with the view to developing a database of all municipalities. Not all municipalities were able to submit all the required information. Provinces are in the process of supporting municipalities with various establishment processes. The Department would submit an updated database to the Committee once all provinces and municipalities had submitted all the required information.
 

Members wanted to know how many municipalities had not been established and what steps would be taken to ensure they are established. They asked how the Department was going to deal with collusion by political parties. One DA Member asserted that the ANC was proposing to change the rules of proportional representation, and is busy sabotaging the process of establishing municipalities because it is losing. Members wanted to know more about the situation at the Idumbe Municipality and the councils of Jozini and Thabazimbi, including the attachment of property, but the Chairperson urged them to bear in mind that the Department could not answer political questions. They asked how the Department was going to address the issue of getting the right people in remote areas, and whether there were special allowances. There was a suggestion that the Department should come up with a new way to elect councillors as the current approach was causing problems.
 

Meeting report

Total Remuneration packages (upper limits) payable to municipal managers and those directly accountable to Municipal Managers: Department of Cooperative Governance (DCOG) briefing
Mr Tebogo Motlashuping, Acting Deputy Director-General, Department of Cooperative Governance, briefed the Committee on the upper limits of total remuneration packages payable to Municipal Managers and Managers directly accountable to Municipal Managers. The Minister published Notice No. 287 in Government Gazette No. 40 000 on 19 May 2016 “Notice 278), as a draft for consultation and invited comments from various parties. Written comments were solicited from the key stakeholders prescribed in Section 72A of the Municipal Systems Act on 14 May 2016.

The main issues raised by the key stakeholders, were summarised as including:
- The final Notice should be gazetted on or before 31 March to allow municipalities to include remuneration of senior managers in their 2016/17 budgets
- Concerns were raised with regard to the insertion of item 10 (salary progression) in the draft Notice through secondary legislation
- It was suggested that there be a review of item 11 (relating to payment of remote allowance) to allow provinces to add list of qualifying municipalities that have been excluded from the draft Notice
- There was a request to insert an item that obliges MECs to sign-off on information submitted to the Minister.

The Minister published Notice No. 381 under Government Gazette No 40118 on 1 July 2016 (“Notice 381”), after consultation with key stakeholders prescribed in Section 72A of the Systems Act. This item has been amended to highlight the purpose of the Notice which includes the need for ensuring that the upper limits constitute an integral part of the human resource value chain in building resilient administrative institutions underpinned by the intent to enable municipalities to attract, employ and retain appropriately qualified and competent personnel necessary for effective performance of their functions.

Definitions of the following words have been inserted in the Notice to ensure consistent interpretation and application of the Notice across all municipalities:

remote allowance
remoteness index
total population
upper limits.

Items 2, 3 and 4 of the Notice provide a formula for determining the categorisation of a municipality. This formula takes into consideration the following factors:

total municipal income
total population
total municipal equitable share.

Factors determining the categorisation of municipalities are measured in terms of the principles of:
reliability
fairness
objectiveness
credibility
consistency
sustainability

The data used is easily accessible and verifiable from the municipal annual financial statements and data for population, as gazetted by the Statistician-General. Item 5 of Notice 381 determines the municipal size using three factors of: total municipal income, total population and total municipal equitable share. These are respectively 2, 3 and 4.

After identifying the numbers of points that a municipality will obtain for each of these criteria the points are added together, and the total of all the points will inform the actual categorisation of the municipality. The municipal categorisation groups municipalities into 10 categories, where 1 is the lowest municipality and 10 is the highest municipality.

In anticipation of a possible increase in the salary bill of senior managers owing from the implementation of changes in the categorisation of municipalities, a new item 6 has been introduced in the Notice to curb a sudden increase in salaries.

The Notice further provides that if the categorisation of a municipality as determined in accordance with item 5 of the Notice results in a categorisation higher than the categorisation that had applied immediately prior to the effective date of the Notice, the municipality may implement that new category, subject to the recommendation of the MEC for local government in a province and with approval by the Minister.

Item 9 of the Notice provides guidelines with regard to the offer of remuneration on appointment. There is a minimum, mid and maximum salary range. This will be commensurate with the skills, expertise, competencies and qualifications that the senior manager displays or possesses on appointment.

Item 10 of the Notice introduces a remote allowance. This allowance replaces the rural allowance provided for in the 2015/16 Notice. One of the challenges faced by municipalities is to ensure that persons with the right skills are attracted and retained in all municipalities. Many municipalities are located in remote areas and therefore have difficulties in attracting and retaining suitably qualified and competent senior managers. A remoteness index covering all municipalities in the Republic was developed with the assistance of Centre for Scientific and Industrial Research (CSIR). It calculates the remoteness of municipalities from all municipal seats in the country to higher order service centres , which are regional service centres and metropolitan municipalities.

In terms of item 11 of the Notice, read in conjunction with section 107 of the Municipal Systems Act, every municipality must, not later than 30 September 2016, submit a report containing the following information:

Total approved posts
Total filed posts
Total vacant posts
Name of incumbent
Designation
Gender
Nature of contract (i.e. permanent or fixed term contract)
Date of expiry of contract
Total remuneration packages
Any allowance(s) payable to a senior manager

 

The Notice does not affect the validity of an existing employment contract of a senior manager appointed before 1 July 2014. A municipality may, in exceptional circumstances and with the recommendation of the MEC for local government in the province, apply in writing to the Minister to waive any of the prescribed requirements as set out in this Notice.

 

(Tables and figures were shown to illustrate the categorisation of a municipality, remuneration packages of municipal managers and managers directly accountable to municipal managers, and statistics on contract period of municipal managers and managers directly accountable to municipal managers)


Consolidated database of municipalities

Mr Motlashuping also updated the Committee on the consolidated database of municipalities. After the Local Government Elections that were held on 3 August 2016, the Department engaged with the Provinces with a view to developing a database of all municipalities. Not all municipalities were able to submit all the required information. Provinces are in the process of supporting municipalities with various establishment processes, such as:


- The holding of the first council meetings
- Dealing with challenges in “hung councils
- Supporting the process of electing appointed councillors to district councils
- Work undertaken by provinces and municipalities with regards to preparing for the Integrated Councillor Induction Programme

The database would be updated as further information is received from provinces and municipalities. He asked that the Committee takes note of the database being developed by it and said that the Department would submit an updated database to the Committee once all provinces and municipalities had submitted all the required information to allow for that database to be finalised.
 

(Tables were shown to illustrate the consolidated database of municipalities per province)


Discussion

Mr K Mileham (DA) remarked he is concerned with the incomplete information the Department has given regarding the number of councillors in all the municipalities, because this formula is determined by the Minister and ratified by the MEC. He asked how many municipalities had not been established and what steps would be taken to ensure they would how be established. He further asked what the Department is doing about the property of the Thabazimbi Municipality that has been attached. Lastly, he enquired about the status of grading in municipalities.

Mr Motlashuping commented firstly on the question of incomplete information, and said the Department could have had complete information in terms of local municipalities and metros, and it was still within the time limits set for this. The Department should have by now collated all the data and would be able to present a complete picture. With regard to those municipalities not yet established, he was aware that the Jozini Municipality is besieged by problems. He does not have information and exact numbers about the other municipalities in Mpumalanga and Northern Cape. If the municipalities are not established, the Department has spoken to the MECs of the affected provinces to give a directive, and if there is still no progress, the MEC should invoke Section 139 because the Municipal Structures Act does not stipulate any guide. In regard to the grading of municipalities, he reported that all municipalities have been graded and there has been attention paid to the newly established ones. The list would be forwarded to the Committee. He was not aware of the attachment issue in the Thabazimbi Municipality. The responsibility lies with the accounting authority. The Municipal Council should crack the whip on the accounting authority.

 

Ms B Maluleke (ANC) wanted to know who is responsible for giving the Department complete information on municipalities.

 

Mr Motlashuping said the Department had written to provinces to report on the challenges encountered by municipalities, including those that have been established.

Ms N Mthembu (ANC) remarked that if information is not complete, that is going to affect service delivery. She urged the Department to make sure complete information is relayed.


Mr Mileham remarked that in Jozini and Thabazimbi, the ANC is busy sabotaging the process of establishing municipalities. This is an undemocratic process and has affected the district municipalities. There is a need to re-look at the Municipal Structures Act. All municipalities around the Jozini and Thabazimbi areas “are held to ransom by the ANC shenanigans”. Section 139 should be invoked so as to dissolve the councils of Jozini and Thabazimbi. The ANC councillors were present for the inauguration at Jozini, but walked out during the election of the Speaker and never returned.

Mr E Mthethwa (ANC) wanted to find out how the Department is going to deal with collusion by political parties and resigning councillors at the Idumbe Municipality.

The Chairperson commented Members could not expect the Department to answer on political problems, for these issues had to be discussed and resolved within the political parties. The Department is doing its administrative duties. He urged the Department to revert to the Committee with the complete information regarding the establishment of municipalities.

Mr Mileham responded to this by saying the Idumbe Municipality matter is finalised. Problems are only in the Council. The municipality has been established, but in Jozini there is no municipality.

Mr A Mudau (ANC) suggested the Department should come up with new ways for the ratio of electing councillors, because the current approach seems to be causing too many problems.

Mr Mileham remarked that the ANC is proposing to change the rules of proportional representation because it is losing. When it was winning, it never said anything, and he said that this was sour grapes. He asked what the Department is doing to ensure the establishment of the Jozini Municipality.

The Chairperson responded that the debate about electing councillors should be deferred to a later date. He said the Jozini issue is a political problem. It cannot be solved by the Department.

Mr Motlashuping answered on the Jozini Municipality problem, stated the Department has advised the MEC to give a directive and, if there is nothing happening, to invoke Section 139. There are, of course, processes that should be followed before invoking Section 139, which provides for the dissolution of the municipality. The Department does not control what the political parties do, but it only looks at the administrative issues. The Department agreed with Mr Mileham’s proposals on the need to amend the Act.

Mr Mthethwa wanted to know what the “municipal income” refers to.

Mr Motlashuping explained that this refers to efforts by the municipality in collecting revenue. It also refers to the gross income as indicated in the financial statements. He made the point that this excludes grant transfers.

Mr Mileham raised concerns about the 47 vacancies for municipal managers around the country, especially in KwaZulu-Natal. He also wanted to know how many contracts are expiring at the end of 2017, because municipal managers have fixed terms of contract not extending beyond 2017.

Mr Motlashuping said the Department was working with municipalities to find solutions. He further added that the salaries of municipal managers would be regulated according to category grades for municipalities, ranging from 1 to 10. Work experience and qualifications would determine into which category they fell. In regard to the contracts expiring at the end of 2017, he stated the Department has requested MECs to intervene and have corrective measures in place because any contract that goes beyond 2017 is illegal in terms of legislation. According to the legislation, the terms of municipal managers’ contracts could not exceed 12 months after the August local government elections. He added that he was aware that MECs had written to municipalities asking them not to make any appointments before the elections, especially of senior staff members.

He said any appointment without a final word from the MEC and Minister is illegal. After 14 days, when a candidate has been identified and interviewed, the MEC has to submit a recommendations report to the Minister about the municipal manager. If the Department is not happy, it takes the report back to the MEC for rectification. The Department monitors the whole process. This monitoring also applies to the advertisements that are put out for the appointment of senior managers. The advertisements have to carry certain mandatory information, for instance around income bracket, contract period and other points.

Mr Mudau wanted to establish how the Department is going to address the issue of remoteness because people move from rural municipalities to cities to earn more money, even though they work equally or do the same job and have got the same experience and qualifications.

Mr Motlashuping explained that remoteness is not part of the formula that determines the allowance to be given to a person who wants to work in a rural area. The issue of qualifications has been determined already, whether a person will enter at entry, mid or senior level. If a person worked in a rural municipality and was, for instance, in category 4, s/he would still get paid according to their qualifications and experience, similar to the counterpart who was working in a city.

The meeting was adjourned.

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