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Cooperative Governance and Traditional Affairs

31 May 2004
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Meeting report

PROVINCIAL AND LOCAL GOVERNMENT AD HOC COMMITTEE
6 June 2004
DEPARTMENT BUDGET BRIEFING

Acting Chairperson:
Mr. Y Carrim (ANC)

Documents handed out
Address by the Minister
Address by the Director-General
Department Strategic Plan
Department Budget Vote - National Treasury
Administration - Corporate Services presentation
Governance, Policy and Research presentation
Local Government Transfers and Fiscal Transfers
Urban and Rural Development
System and Capacity Building
Free Basic Services and Infrastructure

SUMMARY
The Minister underscored the fact that the Department has to meet the timeframes the President has set on service delivery. He challenged the Committee to effectively play its oversight role in monitoring that these timeframes are met. The Department aims to significantly increase the stock of public investments in the economy through such programmes as the Expanded Public Works and Municipal Infrastructure Grant.

The Director General reported that the intergovernmental machinery of State is steadily improving. National, provincial and local government are increasingly working together in a co-ordinated manner on key national priority programmes such as municipal infrastructure investment, the provision of Free Basic Services, the Urban Renewal programme and the Integrated Sustainable Rural Development Programme. She noted that the Department's budget has increased from R9.4 billion in 2003/4 to R12, 8 billion in 2004/5 - an increase of 35,8 percent. In view of the need to consistently enable municipalities to deliver their constitutional mandate, more work would be undertaken in this area. The Department would establish a trouble-shooting capacity at national level to un-block bottlenecks inhibiting the transformation of local government. Provinces would develop such capacity in order that both the national and provincial sphere can practically support local government to deliver on its constitutional mandate.

In the afternoon presentations from the directorates of Corporate Services (Administration) and Governance, Policy and Research were given. Discussion concerning the elements of these presentations ensued.

Minutes
The Chair welcomed members and representatives from the Department and more specifically the Minister Mr. F S Mufamadi. The Director General, Ms Lindiwe Msengana-Ndlela, headed the departmental team. Others were Mr Craig Clerihew - Chief Financial Officer, Godfrey Mokate - DDG: Administration, Mr Elroy Africa - DDG: Governance, Policy and Research, Ms Mosa Molapo - Chief Director: Urban and Rural Development, Ms Jackie Manche - Deputy Director: General Systems and Capacity Building and Mr. Patrick Flusk - Chief Director: Free Basic Services and Infrastructure.

Statement by Minister Mufomadi
The Minister introduced the new Deputy Minister, Nomatyala Hangana, and said that the Department looked forward to five years of productive and fulfilling association with the Committee. He noted that the key challenges facing policy design are unemployment, poverty and underdevelopment. These problems are a function of the exclusionary policies, which were an institutional reality of South Africa for many years. He said that the presentation by the Director-General and other officials from the Department would indicate how the Department was gearing itself to ensure that the budget allocated to it for the 2004-05 financial year was put into efficient use.

The Minister pointed out that the President in his recent State of the Nation Address, had spoken about the challenges of exclusion and inclusion, which are occasioned by the duality that characterises the national economy. The geographical spread of economic activity cannot but translate into a stubborn incidence of absolute levels of poverty afflicting households, local areas, regions and ultimately, the nation. The transformation, which has taken place so far, has had some beneficial effects. It has provided the Department with a framework to design a formula for equitable distribution of nationally raised revenue, both between spheres of government and spatially. The transformation has allowed the Department to increase levels of social spending, thereby touching the lives of the most vulnerable sectors of society. This transformation has also led to the capacity building of local government so that the local government sphere could fulfill its task of creating conditions for sustainable local economic development.

The Minister noted that despite many notable achievements, the Department was still faced with numerous challenges both on the qualitative and qualitative scale. He singled out the increase in social spending that has resulted in a balance between social expenditure and investment in growth, which is not right. As a matter of fact, social expenditure is currently threatening to crowd out other forms of expenditure. Needless to say, this has ominous implications for provincial budgets. He noted that government's responsiveness to all these factors and others is aptly captured in the Programme of Action, which was enunciated by the President in the State of the Nation Address. He added that the Department aims to significantly increase the stock of public investments in the economy through such programmes as the Expanded Public Works and Municipal Infrastructure Grant.

The Minister undertook to work with the provinces in order to ensure that they too pay systematic attention to issues of economic development. Of much greater importance, will be the task of mobilising the rest of society to play a role in matters of governance and development. The Committee played an important legislative role in putting in place the necessary legal framework for this venture. He noted that the Department already has in various municipalities, Ward Committees of different functions and strengths. The Department hopes to join hands with members of the Committee as it goes out to connect with these Ward Committees in order to add to their strength in mobilising the people.

Discussion
Mr Smith (IFP) sought the Minister's view on the anomaly that most departmental programmes lay emphasis on local government at the expense of the provincial government structures.

The Minister acknowledged the awkward situation the local government structures find themselves in but was quick to explain that these factors should be viewer from their proper historical perspective. However, the local government sphere deserves greater attention since it has the constitutional mandate to support other structures. He regretted that this imbalance would persist for some time but that there was a need to support the provincial sphere. The provincial development strategy should be harmonised with the integrated provincial plan in order to effect better growth and that support from the national government was crucial here. The area of shared responsibility begs the question whether the provinces themselves have developed enough capacity to support municipal structures. If not, it is then the responsibility of the national government to intervene and offer the needed support. This matter would crystallise as members go through the Inter Governmental Relations (IGR) Bill. The Minister noted that the evolution of relationships must be influenced by the national government policies. The question as to how functions and powers are distributed among spheres of government would determine the manner in which resources are distributed.

Mr Mshudulu (ANC) asked the Minister to highlight the monitoring capacity of the Trouble-Shooting Unit that has been created within the Department. He also asked the Minister to state his position on the vexing question of cross-border municipalities.

The Minister observed that some municipalities have indeed succeeded in delivering basic services to the people and even extended these services to those who in the past did not access them. All kinds of problems in part arise as a result of the success that has been made in this endeavour. The local government share of external revenue has been increasing steadily. There is however, a need for municipalities to supplement this revenue with their own local levies. The Department has been undertaking situational analysis and has come to the conclusion that certain municipalities have particular problems that are peculiar to them. This intervention ensures that problems are limited to specific areas to avoid generalisation. In which case the Trouble-Shooting Unit brings together people who are an embodiment of different competencies. This establishment is then replicated in the provinces thereby facilitating an interaction that would help provinces to stop the habit of over-dependency on the national government.

Mr Mfundisi (UCDP) wanted clarity on who had made the decision to establish the troublesome cross-boundary municipalities.

The Minister explained that Parliament, at the behest of Cabinet, took the decision to establish the cross-boundary municipalities. It is now clear that these structures are proving to be problematic on the ground. Two provinces have however responded well from the point of view of planning and budgeting. These structures are however very difficult to administer and Cabinet needed to take a decision to amend the Constitution in order to do away with municipalities that straddle two provinces. He promised that the Department would at an opportune time come to the Committee regarding this matter.

Mr Komphela noted that the President, in the State of the Nation Address, had underscored the importance of the crosscutting nature of departmental function. He wanted to know to what extent, if at all, the Department has factored this feature in its strategic plan, particularly with regard to effective management of water resources.

The Minister reiterated that the Department has undertaken to meet the timeframes the President has set on service delivery. He challenged the Committee that if indeed it is in agreement that these timeframes are important, it should position itself to effectively play its oversight role in monitoring this. The Minister, however, noted that no single department is in a position to effect the timeframes unless every other department plays its role effectively. The entire government is, therefore, as strong as its weakest department. The local government sector needed to ensure that it is not responsible for the failure by government to meet its stated timeframes. Success in this case is also dependent on the strength of provincial and municipal structures. These structures are at differing states of readiness and hence the need for government to intervene to support those that are in bad shape. It is in this context that the importance of Mr Komphela's question should be seen.

The Chair agreed with Mr Smith that the Committee often finds itself in a quandary in dealing with matters arising from provinces when the NCOP is in place. A forum should be created for stakeholders to thrash out these issues. Indeed local government structures have an important role to play in the envisaged Expanded Public Works Programmes and called on the Department to position itself accordingly in order to facilitate the objective of job-creation. Mr. Komphela's question has been canvassed by the Committee at various forums and that there was need to phase in water resources into the municipal structures.

The Minister reported that the Department has carried out studies with National Treasury on how the issue of water resources should be handled. The same has been submitted to Cabinet. There was need for some departments that are crucial to service delivery to have a presence one way or other in the Trouble-Shooting Unit. The Unit enables the Department to relate to issues in ways that are helpful. Through the Unit , the rest of government would then have a finger on the pulse of the situation.

The Chair noted the striking synergy between the trajectory of what the Department has set out to achieve and what the committee aims to achieve. He was pleased that the Department echoes the sentiments the President expressed and that this thinking would make the Committee's oversight role far much easier to accomplish. He thanked the Minister for his input and wished him well in his five-year term in office.

Statement by Director General
Ms Lindiwe Msengana-Ndlela said that 2004 has provided an opportunity for South Africans and all sectors of society to have a collective appreciation of the dividends of the ten years of democracy. In the context of provincial and local government, democracy has brought with it fundamental transformation and a change in people's lives for the better. She outlined the major achievements the Department has made between 1994-2004 and noted that the most significant achievement in the area of governance has been the dismantling of the Apartheid State and the establishment of a non-racial, democratic, unitary state. She pointed out that support for local government transformation, national and provincial spheres, received particular focus in the second term of this democratic government. This has resulted in the establishment of a progressive policy, an institutional framework and a regulatory environment conductive to developmental local government. She reported that the intergovernmental machinery of State is steadily improving. National, provincial and local government are increasingly working together in a co-ordinated manner on key national priority programmes such as municipal infrastructure investment, the provision of Free Basic Services, the Urban Renewal programme and the Integrated Sustainable Rural Development Programme.

She pointed out that the year 2004 has provided the Department with an opportune moment of strategic reflection, informed by the voices of the people during the election period. The budget for the 2004/5 financial year and the medium-term has been informed by the electoral mandate that the government has received from the people and the appreciation of the road South Africans have traversed so far. She also reported that the Department's budget has increased from R9.4 billion in the 2003/4 to R12, 8 billion in the 2004/5 financial year, representing an increase of 35,8%. The detailed report for the past year and financial statements reflect that the department has utilised 99,7% of its budget and has gone a long way to improve the quality of spending. She added that of the R12, 8 billion total budget the Department has received for this financial year, R7,6 billion represents the equitable share that will be transferred directly to municipalities. In view of the need to consistently enable municipalities to deliver constitutional mandate, more work will be undertaken in this area.

Touching on the regional and international fronts, she noted that the Department has taken steps to ensure greater participation within the formal structures of SADC. The SADC Local Government Forum of Ministers, under the Chairperson of Minister Mufamadi recently affirmed a decision to institutionalise the local government structure within SADC. It is hoped that through this programme, South Africa will contribute towards the successful implementation of regional and continental priorities. With regard to the continent, the current departmental focus is on contributing towards the establishment of a technical committee to the African Union, comprising Local Government Ministers continentally. In the long term, international initiatives will bring further impetus to the domestic programme on good governance.

She concluded that the present task of consolidating and sustaining the new system of local government requires all the stakeholders to find innovative ways of organisation and engagement at practical levels. To this end, the Department will establish trouble-shooting capacity at national level to unblock bottlenecks inhibiting the transformation of local government. Provinces will develop such capacity in order that both the national and provincial sphere can practically support local government to deliver on its constitutional mandate.

Discussion
Mr Smith (IFP) asked if the issue of rates had been resolved.

The Director General noted that the electricity issues are still outstanding and that the same would be discussed under the Free Basic Service Programme.

Mr Komphela (ANC) thanked the Department for what he called a good and broad perspective on the budget. He particular singled out the 22 million budget set aside for traditional leaders and pointed out that this is in recognition of the role of traditional leaders as custodians the country's cultural value. He noted that some of this money goes toward infrastructure development. He asked if part of the budget go toward transformation of the institution of traditional leadership.

The Chair expressed concern that the House of Traditional Leaders often submits reports to the House that fall far short of what is expected of that institution. He wondered whether in view of this under-performance the allocated budget is far too much for the institution. He asked the Department to assist the traditional leaders to answer to Parliament in the way they are expected to.

The Director General explained that the Department has been in discussion with the House of Traditional Leaders to understand the needs of this institution and that the budget to this institution is based on these consultations. She added that a new Unit has been established to deal specifically with issues to do with traditional leadership. She hoped this directorate would help improve the workings of this institution.

Mr Doman (DA) wanted to know to what extent the provinces had been consulted in the creation of the Trouble-Shooting Unit.

The Director General pointed out that in the previous financial year the Department was busy with legislation which work is completed. The current financial year would be dedicated to transforming the local government structures. It is expected that both national and provincial spheres would focus on the issue of transformation. The role of provinces would definitely come into play during this exercise. The necessary environment for these processes to unfold has been created. The Trouble-Shooting Unit should be viewed from this perspective.

Mr Nonkonyana (ANC) congratulated the Department for spending 99.7% of its budget but wanted to know the sectors that under spent to cause the 0.3% balance.

The Chair overruled Mr. Nonkonyana and noted that this matter had been extensively canvassed at the ANC study groups and the position was very clear to ANC members. In any event, he said, 99.7% expenditure is an excellent performance going by expenditure trends in other departments.

The Director General said that the details on the level of the Department's spending are outlined in the budget estimates.

Mr Nonkonyana expressed worry regarding the legal framework for the Trouble-Shooting Unit. He wanted to know whether the Department had put in place adequate monitoring mechanisms.

The Director General explained that the Department operates on the basis of co-operative government since South African is a unitary state. The Trouble-Shooting Unit operates within the confines of the Constitution.

Mr Sithole (ANC) asked to what extent, if at all, legislation hampers performance by the Department on the ground. He also wanted to know to what extent the Department involves community development workers in its programmes. He sought the Director General's comments on the performance of the SETAs.

The Director General reported that the Department strives to engage both young and old people in its learner ship programmes. The role of community development workers has been defined. There is no evidence to suggest that policy decisions hamper delivery in local government. Indeed the Department is moving towards strengthening inter-governmental systems with emphasis on monitoring and performance. She did not have the details of each and every SETA but noted that all SETA are obligated to perform. Where there are bottlenecks and limitations they would be resolved quickly.

Mr Ramphele (ANC) wanted to know to what extent, if at all, rural development plans take on board the needs of people who reside on farms. He also sought to know the extent to which the Department interacts with the Department of Land in the rural development structures.

The Director General agreed that local government and agriculture should focus on land reform and move to check the rural-urban migration. The Department would develop practical programmes, which would provide mechanisms and instruments to support farm communities.

The Director General pointed out that the Department came in full force to show readiness and commitment to work with the committee especially during the tour of the provinces. The managers present would listen to the committee's concerns and act on them accordingly. This assignment would be taken very seriously.

The Chair said the committee appreciates the size of the Departmental; delegation. He added that the Department's strategic plan was most welcome especially for its level of clarity. He lauded it for conveying more user-friendly programmes noted that the level of presentation has continued to improve every other year. He underscored the importance of the committee's oversight role. He noted that most of the members were new and hence the report may not be examined with much rigour at this stage. He welcomed announced that the Director General had requested to take an early leave to address an urgent conference and would therefore not be in attendance during subsequent committee deliberations on the budget.

Afternoon session
Corporate Services directorate
Ms T Mketi, an official of DPLG, outlined the duties of Corporate Services within DPLG, its achievements during 2003-2004, its administration budget, communication strategy, its structure and staff, and its priorities for 2004-2005. She explained that the Budget increase of 17.4% for the current year was due to a restructuring exercise that was finalized in March 2004, and the acquisition of three new office buildings. An effect of restructuring, which aimed at streamlining functions within the Department, had also resulted in a massive recruitment drive. As of 31 March 2004, there was an employee approved structure of 751, as compared to 278 approved posts at 1 April 2003. Ms Mketi noted the significant achievement made by her Department in terms of employment equity, in spite of the difficulty they were experiencing in employing individuals with disabilities. There had also been a focus on building capacity within DPLG through recruitment of new staff and development of existing staff through training.

Discussion
Ms L Mashiane (ANC) enquired about what mechanisms had been put in place to retain staff from leaving once they had been trained.

Ms Mketi responded that a retention strategy had been developed to retain employees longer, and commented that in spite of the figures presented, there was not a serious problem of staff turnover.

Ms M Gumede (ANC) referred to the decrease in the number of disabled individuals being employed in relation to the Public Service and DPLG targets, and asked for a timeframe by which this situation would be addressed.

Ms Mketi explained that the Department had developed a strategy to address the situation of the decrease in the number of disabled individuals being employed, and this would be presented later on in the year. A unit had already been established to address issues relating to individuals with disabilities, and the Department was working with organizations focusing on the disabled. Furthermore, when a new Departmental building was acquired, physical structures would be placed to make it 'disabled-friendly'. Ms P Bhengu (ANC) added that a Disabilities Desk had also been created in local governments to address this issue.

Mr I Mogase (ANC) asked about the representivity of employees leaving the Department.

Ms Mketi responded that there were an equal number of men and women leaving the Department.

Mr P Smith (IFP) asked about programmes and relationships to various branches.

Mr W Doman (DA) noted that there were a lot of vacancies within DPLG, and asked for a breakdown of approved posts for 2004, as well as the mechanisms available when employees had to leave such as severance packages.

Ms Mketi explained that the vacancies in the SMS category were approved in February 2004, and this structure would be implemented in an incremental manner over the next three years. The number of Deputy Director Generals had been increased from three to six, with one position remaining vacant. She added that severance packages were not offered in the Public Service and that all those who left the Department had resigned. She noted that the majority of staff who had left found employment in local government and therefore it could not be considered a loss.

The Acting Chair enquired about the progress made on municipal managers performance contract, the impact of the restructuring exercise on powers and functions within DPLG, and how skills could be retained by the Department.

Ms Mketi replied that these issues would be addressed by other members in her Department at a later stage in the briefing.

Governance, Policy and Research branch
Mr Elroy Africa, Deputy Director General of Governance, Policy and Research (GPR), outlined the mission and role of the GPR division, as well as the achievements and objectives (priorities) for 2004-2005 of the six branches within this Department, which were each headed by a Chief Directorate. He explained that most of the work of his branch was of a policy/ research nature.

Discussion
Ms Mashiane (ANC) enquired about what concurrent processes had been created to empower officials in municipalities, and the reasons for the delay of the Framework.

Mr B Solo (ANC) referred to the Local Economic Development (LED) Fund and its incorporation into the Municipal Infrastructure Grant (MIG), and asked how the LED projects were impacting on the localities in which they taking place.

Mr I Mogase asked how many jobs had been created in the Department and what percentage of these had been given to vulnerable groups such as women and youth.

Mr A Fray, Chief Directorate: LED, explained that the LED Fund was not project based, and that it was an integration of different factors. It was originally estimated that the LED Fund would create 3,200 jobs but in fact this target had been exceeded as approximately 3 500 jobs had been created. Of this figure, 1 500 posts were permanent, and 1 989 were of a temporary nature. He added that through this Fund, 1 772 women, 490 youth (14%) and 51 (2%) disabled individuals had been placed in employment.

Mr Y Patel, Chief Directorate: Development Planning, added that there was a critical need to implement a national policy regarding LED. It was important that the three spheres of government work together in developing such a policy, and municipalities should have a strategic facilitating approach in working with LED.

Mr T Ramphele (ANC) referred to LED, and issues of social exclusion when focusing on certain nodes.

Mr W Sobahle, Chief Directorate: Traditional Leadership and Rights of Communities, clarified that the Government had never stated that efforts to improve quality of life would be focused exclusively on the 21 designated nodes. However, there were special reasons why these 21 nodes had been chosen.

Mr M Swathe (DA) enquired why there was a focus on Urban Strategy in 2004 within the Governance, Policy and Research branch, and not on issues relating to rural communities.

Mr Africa explained that the findings of the National Spatial Development Perspective (NSDP)
study commissioned by the Presidency, indicated that absolute poverty resided in urban areas and not rural areas. Furthermore, urban areas showed the greatest potential for development. A State of the Cities Report, which was recently released, stated that nine urban cities were the bedrock of the national economy in South Africa. Mr Africa also mentioned that the majority of the population in South Africa was urbanized, and that urban and rural development should not be viewed as being juxtaposed entities.

Mr P Smith (IFP) asked whether there had been a process of public comment on the draft Intergovernmental Relations (IGR) Bill and Framework, and at what stage this bill would become a public document. He also asked about the institutionalization of local government in Southern African Development Community (SADC), which he noted had been listed as an achievement by the International and Donor Relations section of the Governance, Policy and Research branch.

Mr Patel explained that the Integrated Planning Framework, which was part of the draft IGR Bill and Framework, was scheduled to have been submitted to Cabinet by September 2003, but this had now been delayed to 2004. Mr. Fray added that part of the reason for this delay had been the necessity to receive inputs from three Departments, including National Treasury and DPSA, in order to produce the Framework. He noted that this Framework had not been submitted to Cabinet as yet due to it being a multi phase process. At present, his Department was planning to look at the definitional problems within the draft Framework. He added that the IGR Bill could therefore not be brought into the public domain until it had been approved by Cabinet.

Mr Africa explained that SADC had recently gone through a restructuring exercise, resulting in the creation of more than four directorates in that organization. However this restructuring process had not dealt with matters of local government, and therefore an aim of his Department was to see how SADC could better deal with such issues.

The Chair referred to the 47 Planning Implementation Support (PIMS) Centres which had been established in municipalities, and asked how many had been successful and about the challenges facing these Centres.

Mr Patel explained that PIMS Centres had been primarily established to support municipalities with integrated municipal planning. However, there had been a challenge with staff turnover in these Centres, and there had been a realisation that there was a need to make the environment more conducive so as to retain such staff.

Mr Sobahle clarified that his Directorate was focusing on implementing the Traditional Leadership Framework Act in Provinces. An Section 185 Commission had been established to promote and protect cultural, religious and linguistic communities. The offices of this Commission had been established in Johannesburg in January 2004, and his Department was providing this body with ongoing support. He mentioned that the Commission was in the process of consulting with the Minister to appoint suitable Members to the Commission, and a National Conference focusing on cultural, religious and linguistic issues would be held in November/ December 2005.

Regarding the KhoiSan community, Mr Sobahle, stated that a Task Force had been appointed in 2004 to tackle issues pertaining to this community. There was a need, at present, to update information on the KhoiSan, and once this had been gathered, a policy could then be developed. Ongoing discussions, however, were taking place regarding the KhoiSan becoming traditional leaders or being given a new dispensation.

Mr B Solo (ANC) indicated that there was a need for greater information/data on urban and rural development, and enquired about how the impact of the LED Fund could be measured when it was not directly linked to projects.

The Chair noted that a recent study had shown that people living in informal settlements in the cities had a rural identity in spite of living in an urban context. This, therefore, seemed to contradict the findings of the Cities Network report. He also felt that the matter of LED had been under-emphasized in
Mr Africa's presentation.

In response to both these questions, Mr Africa explained that the SA Cities Network report had been only one source in his Department's research into the issue of urbanization, and they were conducting their own research into this matter.

Mr Africa added that a Chief Directorate would be focusing on the LED matter in this financial year. His Department had realized that there was a need to attend to this issue since it was felt that municipalities were not tackling this matter.

Ms L Mashiane asked why the S185 Commission had decided to open up its offices in Johannesburg.

Mr Africa replied that the Commission was an autonomous organization, and his Department could therefore not comment on why it had decided to open its offices in that city. He indicated that perhaps a factor behind this decision was the proximity of the SA Human Rights Commission to the S185 Commission offices.

Mr Smith (IFP) enquired about which branch was responsible for looking at reviews to policies and amendments to the law.

Ms J Manche, Deputy Director: General Systems and Capacity Building, responded that there were no plans to amend existing legislation this year unless there was a technical glitch. The IGR Bill was the only legislation to be introduced this year.

The meeting was adjourned.

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