The Department of Cooperative Governance and Traditional Affairs briefed the Committee on its revised 2015-2020 Strategic Plans, its 2017/18 Annual Performance Plans and its 2017 MTEF Budget Allocations. It also reported back to the Committee on the progress made on the BRRR recommendations of the Portfolio Committee Municipal Infrastructure Support Agent (MISA).
Members noted that there was a decrease in funding for the rural and urban development strategy and questioned whether the Department could operate optimally with this decrease in its budget. Members expressed concern that there was insufficient funding and that municipalities would collapse. What plans were there to do oversight of provinces? Members were still not convinced that the arrears debt of government and provincial departments owed to municipalities was being addressed. Members noted that spending on the Community Work Program (CWP) would increase yet the number of participants would be decreasing.
Members asked what plan the Department had to ensure that the equitable share allocation was used correctly by municipalities. Members asked whether MISA was experiencing challenges which prevented municipalities from fully spending their MIG funds. Members said there were also the cases where projects were incomplete but all the money was utilised and cases where nothing was completed yet the money was utilised.
Members asked if an arrangement, similar to the Eskom one, could not be made to develop an arrangement for the repayment of the debt and to get a report on how much each municipality was owed by specific government departments. Members said it remained MISA’s responsibility to ensure that municipalities were capacitated and were able to deliver basic services but it seemed as if MISA had outsourced this responsibility to municipalities. Could this be explained?
Members were not impressed by the departments response to municipalities underspending. Municipal officials were conniving and looting, especially in the Elias Motsoaledi municipality where officials had businesses. There was no commitment to eliminate corruption. Members said they would be approaching the Minister to provide evidence and they wanted to see whether the Minister would act on the evidence. Members added that there were KZN municipalities that were in flames because the people were angry and were destroying property and cars. The Minister needed to crack the whip.
In reply, the Minister said the Department had come to present what had been asked of it, but would respond to member’s submissions on corruption. He said it was important to understand what MISA’s role was. MISA’s role was to support municipalities, not to take over municipalities.
Members asked what was meant by the reference to the socio-economic transformation of ‘20 communities’. Members were concerned that the document referenced 2030 goals. Members asked whether the Department was addressing the issue of decreasing the number of disputes around traditional leaders by March 2020. Members said no reference had been made to the number of deaths of initiates and the Initiation Bill. Was the Bill not expected to happen this year?
Briefing by Department of Cooperative Governance and Traditional Affairs (COGTA)
Dr Charles Nwaila, Director General, Department of Traditional Affairs, noted that the purpose of this presentation is provide an update on COGTA’s revised 2015-2020 Strategic Plans, 2017/18 Annual Performance Plans and indicative budget allocations. The presentation was divided into three sections:
-Section 1: Department of Cooperative Governance
-Section 2: Municipal Infrastructure Support Agent
-Section 3: Department of Traditional Affairs
He also reported back to the Committee on the progress made on the BRRR recommendations of the Portfolio Committee.
The Department of Cooperative Governance (DcoG) has 8 Strategic Goals that are outcome oriented that it hopes to achieve over the MTSF period 2014-2020.
The Department contributes to the achievement of national priorities as outlined in the 2014-2019 Medium Term Strategic Framework (MTSF). Outcome 9 of the MTSF: A responsive, accountable, effective and efficient developmental local government system.
The Department contributes towards the following sub-outcomes of outcome 9 of the MTSF:
-Sub-outcome 1: Members of society have sustainable and reliable access to basic services;
-Sub-outcome 2: Strengthened Intergovernmental arrangements for a functional system of cooperative governance for local government;
-Sub-outcome 3: Democratic, well governed and effective municipal institutions capable of carrying out their developmental mandate as per the constitution;
-Sub-outcome 4: Sound financial management; and
-Sub-outcome 5: Local public employment programmes expanded through the Community Work Programme
The implementation of the Indigent policy is aligned to Outcome 14 on Nation Building and Social Cohesion, we must ensure that municipalities focus their plans towards the poor and vulnerable groups.
Through the ward committee system, Ward Councillors and ward committees should report to ward meetings about the broad budget plans and consult the residents about programmes and projects that will affect them. This is in line with outcome 14 - all municipalities have recorded processes that demonstrate inclusion of the poor in budgeting processes and has a direct link to sub-outcome 3 of outcome 9 outlined above. Through the Community Work Programme partnerships are formed to ensure the greening and cleaning of cities.
There are 12 Strategic Objectives that will drive the achievement of its Goals over the MTSF period. Amongst others, it includes:
-Facilitate the restructuring of municipal space economy through integrated development planning and spatial targeting by March 2019
-Deepen the relationship between citizens and local government through improved citizen engagement mechanisms by March 2019
-Strengthen the functionality of municipalities through the implementation of administrative and institutional systems by March 2020.
-Improve the accountability for performance in the local government system through implementation of policies and programmes in municipalities by March 2020
- Provide 1 million work opportunities through effective and efficient programme management and strategic partnerships by March 2020
According to the 2017 MTEF Budget Allocations, DcoG will have a decrease of R142.725 million in 2017/18, due to budget cuts. The decrease will result in lower operational funding. However, in 2018/19 and 2019/20, there will be increases of R855.308 million and R896.315 million, respectively, related to grants. The average increase in budget allocations of the Department over the 2017 MTEF period will be 8%. The decrease of -28% in the budget allocation for Programme 2: Regional and Urban Development and Legislative Support is due to the phasing-out of the Demarcation Transitional Grant from the 2018/19 financial year.
Looking at the BRRR recommendations, the Committee noted with concern the underspending of the equitable share grant in 2015/16 due to the withholding of the grant from 60 municipalities that failed to pay water boards and Eskom for services provided. The National Treasury withheld the equitable share of 60 municipalities in the March 2015 tranche against the 2014/15 allocations, owing to their failure to comply with section 65 of the Municipal Finance Management Act (MFMA) that requires municipalities to pay their creditors’ invoices within 30 days. Subsequent to this decision, there were numerous engagements held between the DCoG, NT and the affected municipalities to assist municipalities that would comply with set of conditions to resolve the issue of failure of municipalities to honour their financial obligations including that of the settlement of bulk purchases such as water and electricity to water boards and the state owned electricity utility. Part of the resolution was the signing of the agreements with Eskom, and other to sign agreements with Water Boards. In line with Section 23 of the Division of Revenue Act, to date, all affected municipalities were paid back their local government equitable share that was withheld by the National Treasury.
The Committee had advised that CoGTA and National Treasury should monitor adherence to the agreements between municipalities, water boards, and Eskom to ensure that proactive interventions can be made if a municipality fails to pay for services rendered. GoGTA must report to the Committee on a quarterly basis on progress made regarding payment of government debt to municipalities. The total municipal overdue debt has decreased by R699 million in January 2017 from the reported total debt of R10, 2 billion in November 2016. A total of 24 municipalities had payment agreements in place as at August 2016, and that number has increased to 54 as at 31 January 2017.The arrear debt verified through the DPW/DCoG/NT verification process is R4 billion. The total payments made by both the national and provincial departments is R4 .3 billion to date. An amount of R1.2 billion in payments for arrear and current debt was made by national debtor departments. An amount of R3.1 billion in payments for arrear and current debt was made by provincial debtor departments.
A concern was raised that the Department had not finalised the Local Government Laws Amendment Bill which was approved by Cabinet on 16 March 2016. It was requested that the Department should indicate to the Committee all the areas that will be covered by the Local Government Laws Amendment Bill. A decision was taken not to process the Local Government Laws Amendment Bill (LGLAB), but rather to split the LGLAB into separate Bills (that is, the Municipal Demarcation Bill, the Municipal Structures Bill, and the Municipal Systems Bill). It is envisaged that the Demarcation and Structures Bills, Systems Bills will be introduced into Parliament towards the end of the 2017 calendar year.
The Committee noted continued challenges in the administration of the CWP programme. The Department is requested to improve its management of contracts signed with implementing agents. An assets register for CWP that adheres to the minimum requirements for an asset register as prescribed by the National Treasury must be maintained by the Department. The Department is reviewing the human resource capacity of the CWP Branch to ensure that it is adequate to enable the Branch to effectively carry out their IA contract management responsibilities. The Service Level Agreements are being reviewed to include more stringent consequences for non-performance by IAs. An example is the provisions of National Treasury’s SCM Instruction Note No. 3 of 2016/17. A service provider has been appointed at the beginning of March 2017 to assist the Department to address the asset management weaknesses and the gaps in relation to values of some assets on the Asset Registers. CWP management also continues to do spot checks on asset management when undertaking site visits. Furthermore a detailed briefing was also provided to the Portfolio Committee 0n 07 March 2017.
The Department gave a breakdown of the strategic goals and objectives of the Municipal Infrastructure Support Agent (MISA). The 2017/18 Annual Performance Plan for MISA is aligned to the new organisational structure. Implementation of the new structure will be done progressively with priority given to areas with acute shortage of human resources capacity. Its implementation will enable the employment of technical professional as public service employees in accordance with the applicable Occupation Specific Dispensation provided for in the Public Service Act. Functions to be performed under Programme 3 (Infrastructure Delivery Management Support) will be expanded progressively as capacity within the programme is created. The APP has been forwarded to the Executive Authority for approval and signing as prescribed in the relevant Treasury Regulations and the Notice on MISA Operations and Administration.
In respect of the Department Traditional Affairs, the following strategic objects were enumerated (together with indicators and outputs):
-To increase the number of functional structures of traditional leadership by 31 March 2020
-To promote transformation agenda and socio-economic development within traditional leadership structures and communities by 31 March 2020
- To enhance information management of faith structures, traditional leadership institutions and communities by 31 March 2020
-To improve departmental corporate governance systems by 31 March 2020
-To reduce the number of traditional leadership disputes and claims by 31 March 2020
-To reduce the number of deaths and injuries resulting from cultural initiation practice to zero by 31 March 2020
As part of its Annual Performance Plan, the Department of Traditional Affairs has, amongst others, undertaken to do the following:
-It will develop1 publication on customary law of succession and genealogy for kingship/queenship/ principal traditional leadership
-8 provinces will be capacitated on the framework for resolution of traditional leadership disputes and claims
-2 traditional communities will be capacitated on Food Security
-4 awareness campaigns on customary initiation practice will be conducted
-100% of actions in the Integrated Management Plan (PAAP and MPAT improvement Plan) implemented
The 2017 MTEF Budget allocation for the Department of Traditional Affairs was briefly presented.
Prof N Khubisa (NFP) noted that there was a decrease in funding for the rural and urban development strategy and questioned whether the Department could operate optimally with this decrease in its budget.
Mr K Mileham (DA) noted that there was a 28% decrease in the regional and urban development programme which was tied to the transitional demarcation grant. He had already expressed concern two years ago, that there was insufficient funding and there were many municipal amalgamations proving unsuccessful. If there was a decrease in funding municipalities would collapse. He saw nothing in the plans regarding the need to oversee the performance of provinces. What plans were there for provinces? Regarding the recommendations, he was still not convinced that the arrears debt of government and provincial departments owed to municipalities was being addressed. The debt had increased to R3b. He noted that spending on CWP would increase yet the number of participants would be decreasing.
Mr E Mthethwa (ANC) asked what the Department’s plan was to ensure that the equitable share allocation was used correctly by municipalities.
Mr Themba Fosi, Deputy Director General: Local Government Support and Intervention Management, DoCG, addressed the question about the decrease in the budget for the grant allocation, and said that the budget was for funding and supporting the establishment activities for issues on HR and management systems to prepare for the new municipal entities.
On the impact of programmes in the urban development framework, he said it was a government wide programme and not solely a Department programme. The grant allocation had covered the initial costs. The grant was not meant to fund the viability of the new amalgamated municipalities.
On the oversight of provinces, he said one needed to look at what the role of the Department was. The national department monitored the provincial COGTA department. The Department looked at whether the provincial COGTA APP’s were aligned and that the provincial departments reported back through MinMecs on the work that they did in terms of oversight responsibilities. The Department could not deal with functions such as provincial health and education for example, because other national departments oversaw such areas.
Mr Mileham said he did not believe that the challenges facing amalgamated municipalities had been overcome and that municipalities would get worse and that the Department was wilfully ignoring its own mission statement. On the matter of provinces, it was not a question of overseeing the line functions of provinces but rather having oversight on the “big picture”.
An official of the Department said the decrease in revenue was the reason for the decline in CWP job opportunities because there had been serious belt tightening. The target was to create 1m job opportunities and the decline was a concern to the Department.
The Acting DDG for Institutional Development said the debt consisted of two parts. The current debt and the arrears debt. The current debt was not stagnant and the main challenge was arrears debt and the allocation of funds such that it could not service the older debt.
On the statement that revenue for the CWP was decreased, Mr Mileham said the budget allocation in the MTEF increased, so where did the statement that CWP revenue was decreased come from? In addition, despite the increase in revenue, the number of people on the CWP was dropping by 50 000.
Mr Mileham questioned when rates increases were introduced by municipalities and said that the amount of debt owed by departments and provinces was increasing on a quarter to quarter basis, hence municipalities were in crisis.
The Acting DDG said that the quarterly reports of the Treasury were developed in arrears so July to September was quarter one for municipalities.
Mr Des Van Rooyen, Minister of Cooperative Governance and Traditional Affairs, said there were newly amalgamated municipalities having challenges and struggling. The Department was focusing on arrears debt owed to these municipalities to assist them. The Department was eight months into this process and would present a report to the Committee. The improvement of the debt owed to municipalities was not straightforward. There were challenges in terms of the verification of the disputed figures and the Department of Public Works was working on the matter. There were plans to deal with the underspending by the Department which centred around technical skills. MISA had been working with these municipalities to make sure municipalities had the capacity to do the conversions.
Mr Andries Nel, Deputy Minister of Cooperative Governance, said the Department would need to cross check the figures regarding the budget for the CWP and the work opportunity targets because it appeared there was an inconsistency in the figures. He said that while the MTEF budget was increasing, the Department did not believe it was sufficient to attain the targeted 1m work opportunities.
Prof Khubisa said MISA was the engine room for the operations of the Department. Municipalities were failing to spend their MIG funds. Projects were not completed and money was returned to Treasury. What were the challenges? Were there challenges with MISA as an organisation?
Mr C Matsepe (DA) said there were also the cases where projects were incomplete but all the money was utilised and cases where nothing was completed and the money was utilised.
Mr Mthetwa said that seeing that municipalities were struggling with finances and settling their debts, could a similar arrangement, as had been done in the case of Eskom, not be made to get a report on how much each municipality was owed by a specific government department and to develop an arrangement for the repayment of the debt. He said it remained MISA’s responsibility to ensure that municipalities were capacitated and were able to deliver basic services but it seemed as if MISA had outsourced this responsibility to municipalities. This did not make sense and could he get an explanation.
Mr Ntandazo Vimba, Acting CEO, MISA, addressed Prof Khubisa’s question on MIG spending by municipalities, and said it was a combination of a number of things. Most of the municipalities struggling to spend MIG grants centred around procurement and the long length of time to agree on which projects had to be implemented. It was not a technical problem; it was a problem of prioritising. There was also not proper planning once a project had been agreed. Therefore, one of the strategic goals of the Department was that MISA had to support municipalities in terms of procurement and infrastructure management. The other challenges were the stability of the institution itself.
On Mr Matsepe’s question he used the example of a municipality where because of poor financial management MIG money was used to pay the staff salaries.
He agreed that it remined MISA’s responsibility to capacitate municipalities. Municipalities did not absorb apprentices and young graduates. So, the support was such that municipalities would be the employer, not MISA. MiSA would deploy young graduates to municipalities that were struggling.
Mr Timothy Seroka, Chief Director, said sector departments sometimes did not come on board, which stretched the capacity of MISA in dealing with municipalities. It was not about the lack of capacity at a technical level, it was more about issues around institutional arrangements.
Regarding incomplete projects yet the money was all used up, he said the Department was doing spot checks and site visits. He said the Department worked with Treasury to recover monies from municipalities where.
Mr Matsepe said he was not impressed by the Department’s response. Officials were conniving and looting especially in the Elias Motsoaledi municipality. He said the unit that was supposed to investigate was at the municipalities for less than a week. Officials and politicians were laughing saying that nothing would happen. There was no commitment to eliminate corruption. He would go to the Minister and he would provide a stack of evidence to the Minister and he wanted to see whether the Minister would act on the evidence.
Prof Khubisa said there were KZN municipalities that were in flames because the people were angry and were destroying property and cars. The Minister needed to crack the whip.
Mr A Masondo (ANC) said the Department had to engage with members so that members could convey information and any additional data they had.
The Minister said the Department had come to present what had been asked of it, but would respond to member’s submissions. He said it was important to understand what MISA’s role was. MISA’s role was to support municipalities, not to take over municipalities.
Prof Khubisa asked what was meant by the reference in the presentation to the socio-economic transformation of 20 communities. Did this mean 20 tribes, 20 villages or 20 traditional authorities? He said traditional authorities were affected by matters of conflict and this was an important issue that needed to be dealt with.
Mr Mileham said he was concerned that the document referenced 2030 goals. Would it take 14 years to complete issues around traditional leaders mentioned on pages 76 to 81 of the presentation?
With reference to the question on 20 communities, Mr Nwaila said it meant a village with its headman. It was phrased like those because a village would already have a headman leading that community. The intention was that many of these communities were being ripped off with regards to mining activities happening in their villages. These issues were also raised at the United Nations where big companies went to rural communities and the communities did not benefit from the economic activity. That was why they phrased it as such. This also links to the goals being set for 2030.
On the matter of goals being set for 2030, he said that the goals were linked to the UN Sustainable Development goals which were set for 2030 as well as the NDP 2030 goals.
He said there needed to be a harmonisation process because traditional leaders and their areas operated within municipalities had to be drawn “wall to wall”.
Prof Khubisa said more had to be done or the definition of a headman had to be changed.
Mr Matsepe said that perhaps the Department should be dealing with the areas within which traditional leaders operated rather than trying to define what a community was.
Mr M Bara (ANC) said that during public hearings on the TLKB, one objective was to decrease the number of disputes around traditional leaders by March 2020. He asked whether the Department was really addressing these issues. Regarding the number of deaths of initiates, he said no reference had been made to it and the coming Initiation Bill. Was the Bill not expected to happen this year?
Dr Nwaila said the Department was making an impact, but as they resolved disputes otherwise would arise and sometimes matters had to go to court. The Department wanted to institutionalise the process.
He said the initiation bill was in the operational plans of the Department but not in the annual performance plan because the Department had no control on when the bill would be finalised.
Mr Masondo reminded the Department that it had to follow up on the matter of provincial oversight, on the issue of corruption and on money owed to two municipalities by national departments and the provinces.
The meeting was adjourned.
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