Independent Demarcation Authority Bill: DCoG briefing; with Minister

Meeting report

Independent Municipal Demarcation Authority Bill

Dr Kevin Naidoo, Deputy Director-General (DDG): Institutional Development, Department of Cooperative Governance (DCoG), briefed the Committee on the Independent Municipal Demarcation Authority Bill [B14-2022].

He said the amendments to the Local Government: Municipal Demarcation Act were based on inputs from the present and previous Boards; lessons learnt from previous municipal boundary changes and ward delimitation processes; litigation; and inputs from various stakeholders. The process started in July 2017 and the Bill was published in the Government Gazette in June 2020 for public comment. Various engagements were convened, including workshops in March 2017 for stakeholders, and workshops convened in December 2020 to consider comments received on the Bill. The many proposed amendments necessitated that Act No. 27 of 1998 had to be repealed and replaced with a "new" Act introduced to the National Assembly in June 2022.

The Bill comprised five chapters:
Chapter 1 covered the Definitions and Purpose of the Act [Sections 1 to 2];
Chapter 2 covered the Independent Municipal Demarcation Authority [Sections 3 to 22];
Chapter 3 covered the Municipal Boundary Demarcation [Sections 23 to 46];
Chapter 4 covered the Municipal Capacity Assessments [Section 47]; and
Chapter 5 covered Miscellaneous [Sections 48 to 52]

Some of the key features of the Bill were that the naming of the Bill -- Independent Municipal Demarcation Authority (IMDA) -- aligned with provisions in the Constitution; that the Authority comprised the Board and the Administration; that the term of the Board was aligned with the term of Municipal Councils; that the views of the people and communities living in an area had to be taken into account; that major redeterminations would occur only after every ten years; that no redeterminations would take place after the formulae for the number of councillors was determined and published; that the delimitation of wards may not deviate by more than 30%; that the Demarcation Appeals Authority provide access and limit the number of cases subjected to judicial processes; and that the Minister may request the Authority to conduct assessment when authorising municipalities to perform the functions of potable water and bulk electricity supply, domestic water and sewage disposal systems and municipal health services.

The Minister, who was present, indicated that she would leave the meeting at 10 am to brief the National Council of Provinces (NCOP).

Discussion
Mr C Brink (DA) said the Committee had previously dealt with dysfunctional municipalities from the merger of unviable and viable municipalities. In the past, the Municipal Demarcation Board (MDB) had underestimated the need to take into account the higher salaries, wages and benefits paid to officials after a merger, which had a devastating effect on municipalities, and the extent to which mergers caused institutional disruption. He noted the ten-year limit on major demarcation reviews, but asked what other provisions were in the Bill to avoid the above-mentioned mistakes.

He said Section 23(1)(e) had an additional point on the objectives of the determination and redetermination of boundaries. Why would the capacity of the municipality be assessed based on the Minister's or Member of the Executive Council's (MEC's) allocated powers? In Section 23(2), under objectives to be reached by determination and redetermination of boundaries, he said an additional point was included that spatial justice should be accommodated in terms of the Spatial Planning and Land Use Management Act (SPLUMA). He feared these were fairly broad concepts. What specific points in the SPLUMA would indicate the legislative intent?

In Section 2, the MDB had to take a number of additional factors into account. One of them was Section 24(m), indicating the need for common geostatistical building blocks which supported standard geographical hierarchy. He could not find the definition of the term in the Bill -- and what did this term mean? In Section 24(n) on relevant national development policies and plans that might impact the nature of local government and its boundaries, he felt that this was a very broad and vague term to take into account. What was the policy purpose that this clause was seeking to achieve? He asked that if the national or provincial government had a policy, would that the policy be a factor in determining municipal boundaries, as such a scenario would have a constitutional impact and could be used to undermine local authorities who adopted policies that were not completely in line with national and provincial governments.

On the regular assessments of capacity, he asked for an assurance that the MDB could make regular assessments, as it had been relatively poor in its assessments of capacity of newly formed municipalities.

He said there were three omissions in the new Bill compared to the old one. The old Bill's Section 13(3)(b) referred to when a member of the MDB was elected to a party political position, stating they would automatically cease to be a member. While there was a prohibition of members of the MDB holding party political positions, there was no automatic mechanism for the removal of such members -- why was this clause omitted? A case in point currently was Mr Thabo Manyoni, Chairperson of the MDB, who was contesting the post of provincial chairperson of the ANC in the Free State. The second omission was Section 5(2) of the old act on the prohibition of the MDB borrowing money. There was no prohibition in the new legislation. The third omission was Section 6(3)(b) of the old act on the composition of the MDB, which had to reflect regional diversity. He did not see anything like this in the new legislation.

Ms D Direko (ANC) said there had been community protests regarding the demarcation processes and that some dysfunctional municipalities became more dysfunctional when merged. How would the Bill resolve current demarcation challenges, and what was expected from the local, provincial and national government to make the Bill successful? What informed the proposed change of the MDB to an independent municipal demarcation authority?

Mr G Mpumza (ANC) said a number of communities had been protesting about the MDB's determination of outer boundaries, where some municipalities were demarcated outside of their town into another town in rural areas, creating problems. He said the vision of the White Paper of a viable municipality was of a municipality that could raise its own revenue and build its own economy, but the objective reality was that many were relying on their national grants. He asked whether there would be no tampering with municipalities for ten years to create stability, as the re-creation of outer boundaries had not assisted the process of building stable municipalities. He asked if the regular assessments would not impact the stability and capacity building of the municipalities. He said Section 6(3)(b) of the current act provided for the composition of the MDB, but the new Bill did not provide for regional diversity.

Mr K Ceza (EFF) said the development of rural municipalities was important to him. A municipality in the Eastern Cape was so extensive that a councillor could not cover the entire area to provide services. The AG had said there were only 52 municipalities that provided credible financial statements, which illustrated the state of dysfunctionality of municipalities, so how would the Bill change this situation and result in proper municipal services being provided? He said the SPLUMA did speak to gender parity in the composition of the MDB. Section 9(1) spoke to the composition of the Board, but did it speak to the representation of women? On Section 6(2), he asked whether risk management would be taken to ensure that appointments of board members by administrations were not based on political affiliation, but were merit-based appointments. How would the Bill achieve this? He wanted clarity on Section 7, which stated that the Minister determined the number of members of the Board. What were the Minister's criteria?

Ms S Buthelezi (IFP) referred to the functions of the Authority in Chapter 2, Section (5)(c), on rendering an advisory service, and asked if the Authority would follow up on the implementation of the advisory reports and how the Bill would mandate that proof of implementation was provided to the Authority. Regarding the Authority as set out in Chapter 2, Section (5)(d), on conducting municipal capacity assessments, how often would these assessments be conducted and how would the Bill mandate the frequency of these capacity assessments? On the rules of procedure in Chapter 2, Section (15)(b), on keeping minutes, she asked if these would be made available as public records and, if not, how the Board would be held accountable. On the delegation and exercise of powers by the Board in Chapter 2, Section (17)(1)(a), on the delegation of any of its powers to an employee, she asked how access to financial records would be regulated.

Ms H Mkhaliphi (EFF) said she still wanted to understand the independence of the demarcation authority and the issue of the Minister appointing the board members. She said the chairperson of the Board used to be a Member of Parliament (MP) -- would this mean he would not qualify to be the chairperson because he belonged to a political party? Another concern was that the MDB did not have resources. Would the Bill address the issue of resources, as the MDB officials would use the offices of the Mayor or Speaker, and some people would not express themselves freely if they were called to the Mayor or Speaker?

DCoG's response

Dr Naidoo said the Bill was informed by inputs from various stakeholders, including past and present boards.

Regarding viable/unviable municipalities and the consequences of higher salaries being paid, section 12 clearly states that MECs establish municipalities. The amalgamation of municipalities should have resulted in the best municipal manager and the best chief financial officer (CFO) etc, and the higher salaries were because of salary gradings. He said institutional disruption and instability had taken place and required careful management.

On section 23(e) and the division of powers, he said currently, the division of powers was according to what the MDB had recommended, but in future, if the powers and functions of a municipality were adjusted, this had to be considered when the independent authority determined municipal boundaries.

On whether the Board knew what criteria to apply when conducting municipalities' capacity assessments and on the regularity of the assessments, he said the Board must conduct at least one capacity assessment during the term of a local government. These assessments were important, as they had to be considered when the Board determined municipalities' boundaries. In the past, capacity assessments were heavily relied on by stakeholders such as provinces, indicating staff numbers that needed to be in place. Different methodologies have been used.

He had noted the omissions raised by Mr Brink on the automatic resignation of public office bearers if they held party political office, as they were not allowed to hold office in the MDB in the old act and, if necessary, this clause could be brought back.

On clause 5(2), on the provision of borrowing money, he said the current provisions, including the Public Finance Management Act (PFMA), outlawed it and were therefore superfluous in the Bill. If this was not the case, it would be included to strengthen governance.

On the Board reflecting regional diversity, he said the understanding was that the Board had to have a representative from each province, which impacted getting a diverse board covering all aspects.

Community protests were also a result of split communities and poor service delivery. If it was a result of split communities, it was hoped that the proposal for a 30% deviation from the norm could keep communities together and limit community protests.

On naming the Bill as the Independent Authority and not the MDB, he said the case had been made regarding the alignment with section 155 of the Constitution.

Major redeterminations occurred every ten years to minimise disruption and ensure stability. Even if a single ward had to move, it could be done only after the ten-year period.

He said the matter of municipalities' capacity assessments had to become high on the agenda again.

Referring to the composition of the panel and the board members and the inclusion of women on it, he said the panel would be chaired by the person appointed by the Chief Justice. It had to develop its own processes and operations, and how board members were appointed.

On how risk management and politics would be managed, he said people holding political office would not be considered for the Board, and that the Board would look at the factors that had to be considered when looking at the demarcation of boundaries.

On determining the number of members by the Minister, he said section 7 said that the Board comprised no fewer than seven and no more than ten members, and must reflect the broad composition of South African society.

On the issue of the Minister appointing board members, he said the legislation was clear that there was a selection panel that was appointed to do the process of board appointments, and the appointments themselves were made by the President.

On the issue of independence, he said that people that held political office were excluded as members of the Board.

The lack of resources of the Board had resulted in the Board not having decentralised offices. This was a Treasury process and a funding matter.

Mr Siyanda Nkehli, Manager: Local Government Institutional Establishment, COGTA, responded to the question about the wide geographical size of a municipality making it difficult for councillors to travel to do their duties. He said this was covered in the Structures Amendment Act, which permitted the MEC to deviate by 20% in concurrence with the Minister.

Mr Aluwani Ramagadza, Acting Chief Executive Officer: Municipal Demarcation Board, said they had made a number of inputs based on their experiences. Among the factors that needed to be considered in clauses 24(m) to (p), he said the Department could better define the term 'geostatistical building blocks'. It was broadly similar to the enumerator areas that Statistics SA used.

On relevant national policies and plans, he agreed that the term was very broad, but the MDB had developed indicators that were minute and covered specific matters that needed to be covered. The intent was that national, provincial and local governments might have relevant development policies regarding the spatial make-up of areas which would have to be considered. These could not be ignored or gone against.

He said it was important to look at each area's natural environment, notwithstanding its social or spatial history, to allow areas to have a proper revenue base in the short term.

He said that the Bill tried to resolve some of the challenges causing community protests. In the current legislation, public participation issues were not explicit, so public participation and how it should be done had been elevated in the Bill. The Bill also provided an appeals authority to ensure that the MDB followed the processes and minimise dissatisfaction.

On whether the MDB had the capacity to do municipalities capacity assessments according to the proposed intervals, he said it was important that the system be elevated, even though currently it did not have the funding.

The above issue was linked to capacity building and the ten-year period before re-demarcation, because five years was not enough for a municipality to establish itself and build its capacity to function properly. Most of the issues municipalities experienced had very little to do with boundaries or spatial make-up, but were rather about governance, mismanagement and financial issues.

On the delegation of functions of the Board to employees or committees, he said that on committees, it was standard procedure concerning the PFMA, but the Board could not delegate its decisions on municipalities or ward boundary determinations. The PFMA governed the delegation of administrative functions.

On the definitions of geostatistical building blocks and geographical hierarchy, Ms Lisa Naidoo, Senior State Law Advisor, said the definitions could be inserted.

The functions allocated by the Minister and MEC to municipalities were not included, as reference was made to the Structures Act, but this could be cleaned up so that that provision could be very clear.

Regarding membership of the Board, she said clause 9(2) of the Bill captured that a board member ceased to be a member through disqualification. However, if this was not clear enough, it could be made more specific.  

On the appointment of board members, she said clause 10(3) provided that the selection panel determined its own procedure, which had to be fair and transparent. It had to be read in conjunction with section 9(1) on disqualification of board members and section 10(1).

On the board borrowing money, she said section 5(2) of the current act had been enacted in 1998, and the PFMA in 1999. The Board already operated under the PFMA, but it was felt that it had to be formalised. Under the PFMA, it could not borrow money, but if the Committee wished, it could be officially imported into the Bill.

On information held by the authority and how this would be accessible to the public, she said the Promotion of Access to Information Act (PAIA) Act was enacted in 2000 and was extensively regulated. The default was that should a person request information, it would be done according to the PAIA.
On the delegation of functions to employees and the access to financial records, she said it was an internal decision for the Authority to determine and base on their security policies, but if the Committee wished, it could be included in the Bill.

On the factors regarding the determination and redetermination of boundaries in the new Bill, Mr Brink referred to the response of the Department on the term "geostatistical building blocks." He said that these were already factors to be considered in the Bill. It was not clear what the act was trying to say.

On clause 24(m) and (o), he said one of the criteria now to be considered would be relevant national and provincial policies and legislation regarding the re-organisation of local government. The risk was that the MDB was a constitutional entity considering constitutional issues. The risk of specifying that relevant national and provincial policies should be considered would potentially subordinate constitutional issues to policy matters. This would complicate the work of the MDB and lead to possible abuse.

Dr Naidoo said all inputs would be considered. Further engagements could be included, as the Bill could be tagged as a section 76 bill.

The Chairperson said it was just the start of proceedings, and there would be further engagements.

The meeting was adjourned