Department of Local Government Annual Report 2021/22

Meeting report

The Chairperson welcomed everyone. He noted the attendance of the Western Cape Minister of Local Government and the Head of the Department, saying the Committee valued their presence and accountability.

Mr Graham Paulse, Head of Department (HOD), Western Cape Department of Local Government, said the year under review had been a demanding period, especially around local government elections and the COVID-19 pandemic. He noted that additional funding of R50 million had been provided to assist municipalities in providing public employment in recovering from the pandemic.

The Chairperson said the Standing Committee on Public Accounts (SCOPA) dealt only with Parts C and E of the annual report. He invited Members to ask questions about Part C. 

Discussion: Part C

Mr D America (DA) referred to page 88 which dealt with enterprise risk management (ERM). One of the risks was decreased access by citizens to services through the Thusong Programme. It was stated that this would directly impact the citizens, especially if government departments withdrew from the programme because buildings were deemed unsafe. Mr America said that was true and they had elected to go elsewhere in some instances. He had attended some centres and engaged with their directors. The financial state of many municipalities was dire because of increased service delivery demands. Not enough budget was allocated to maintenance, leading to asset degradation. One Thusong centre was located opposite the notorious Chicago hotspot in Paarl. People were physically threatened. There was a need to consider how safety plans could be rolled out to protect the area.

Mr A van der Westhuizen (DA) asked how the funding of the centres was managed. To what extent did the property belong to the local municipality and the province? He said he expected the annual report to list a number of key emerging risks on page 89 rather than the emerging risks that had been reviewed. What previous risks were taken off the list? What were the current key emerging risks? “I trust that the debate would have already started six months after the financial year.”

Ms L Maseko (DA) asked about the reference on page 88 to a question relating to uncertainty about municipalities’ ability to sufficiently implement disaster risk reduction measures. The Department acknowledges the lack of capacity in municipalities to coordinate and implement disaster risk reduction. She understood that the Department provided hands-on support, but who implemented mitigating factors if the capacity was not there? This was one of the key issues. How did one deal with disaster management in municipalities like Cedarburg? “You might offer training and the people a template. But if you do not have a person responsible for monitoring, there will be risks within the municipality.” Ms Maseko acknowledged the clean audit opinion. 

Mr C Murray (DA) referred to page 87, dealing with the Enterprise Risk Management Committee (ERMCO). It showed that Ms B Sewlall-Singh, Chief Financial Officer (CFO) and Risk Champion, attended only one of the quarterly meetings. This was concerning. Were there any specific reasons?

Ms N Makamba-Botya (EFF) said page 87 showed that  Ms E Barnard, Chief Director: Municipal Performance Monitoring and Support, attended only two meetings. Why did she not attend the other meetings?

She referred to the Broad-based Black Economic Empowerment (B-BBEE) compliance information on page 97. It talked about the development and implementation of provincial procurement policy and gave a detailed explanation about why there was no response on this issue. Would the Department consider working with small service providers with little experience? Would the Department rotate suppliers? She noted that the Department reported only one chase of fraud and corruption on page 90, when other departments reported up to 40 cases. She applauded the corruption strategy of the Department and said that such good practices could be shared with other departments.

Responses

Mr Paulse responded to the questions about risk management. He said the Department consistently rearticulated and reworded the risks in sessions with the ERM team and the chief directors. Referring to the local government elections, he said there was concern about the possible impact of political coalitions. This was not yet identified as an emerging risk but was being discussed.

He said he was concerned about the state and the rate of vandalism in municipalities. There had been two sessions with ESKOM the previous day. There were a lot of complaints about electricity outages due to vandalism and cable theft. This was an emerging transversal risk because the City of Cape Town’s structure was vandalised.

He added that his team was dealing with service delivery issues related to transport and water resilience across the province.

The absence of the CFO from ERMCO meetings was due to operational and personal reasons. The CFO always ensured that the director for financial management represented her.

Ms Nozuko Zamxaka, Chief Director: Integrated Service Delivery, agreed that the Thusong centre in Paarl East was located adjacent to Chicago, a gangster-infested place. She said it was ironic that the centre had been located at a central point of access for the community. She added that anchor departments placed in Paarl East were moving towards digitisation. There were some scheduled services in Paarl East by key departments such as the SA Social Security Agency (SASSA).

The Thusong centres were developed in 1999. Unfortunately, with technology, things have changed. Municipalities that were now the custodians of the Thusong centres did not have the capacity to house the departments. It was not nice when key departments left for town. Municipalities did not always have the funds to accommodate the additional requirements and upgrades of the departments.

Mr Colin Deiner, Chief Director: Disaster Management and Fire Brigade Services, agreed that municipalities were not fully capacitated when it came to disaster risks. The provincial disaster risk had a very wide profile running beyond informal settlement fires, wildland fires and flooding. It extended to issues such as COVID-19 and avian influenza affecting seabirds. It would be difficult for any municipality to have proper resources to deal with all of the issues. Disaster management was a function of the district which would then work with the local municipalities.

The province had created a disaster risk profile where every single possible risk was looked at. The profile was geolocated and consisted of a very comprehensive information system to monitor any road, street, pipeline, school or hospital in the province. After the risk profile, disaster management plans would be developed with the municipalities through training and information sessions. A mutual aid agreement also allowed neighbouring municipalities to assist each other during incidents such as wildfires.

The province also provided resources. It had spent approximately R60 million in the past six or seven years providing emergency vehicles to municipalities. An amount of R180 million was spent on aerial and wildfire support in the past ten years. There was also a joint operations system that included all the stakeholders and role players in the province in managing disasters across the province.

Ms Barnard said she had not attended two ERMCO meetings because she had been on leave. There were measures in place to ensure that somebody stood in for her if she could not attend a meeting.

An official of the Department provided details of the one case of fraud and corruption reported. He said the Department needed service providers to clean community development workers’ offices. A tender request went out and the internal controls picked up that a husband and a wife who each owned a company were quoting collusively. The matter was referred to the provincial forensic services and the conclusion was there were irregularities. The tender was not awarded and was re-advertised.

He highlighted that the Department was a B-BBEE agent. The Department’s accounting office system governed how the preferential procurement regulations were implemented. He gave an assurance that the Department definitely procured from small businesses and rotated its suppliers.

The reason the Department had indicated on page 97 that it had no response on developing and implementing a preferential procurement policy was because of how the question was phrased. The Department was never going to be in a position to develop or implement. However, the national government would ask for the Department’s input about the regulations and frameworks.

Discussion: Part E

Mr America said the clean audit opinion was remarkable. He asked about recoverable expenditure shown on page 179 of the annual report. He asked for a detailed explanation of leave and assets. How did assets form part of recoverable expenditure? Were people not returning assets that belonged to the Department? Did they leave the Department? He said that this was one of the departments with no irregular expenditure for the past financial year. What was the secret? How did they get it right?

Mr Van der Westhuizen also congratulated the Department and said that underspending was not necessarily an illness. “We are getting into a situation where people save money and we say it is not good. It is good if you can achieve your objectives and targets.”

He said it seemed that there were delays in appointing people for training of councillors. There had been some expectations that the local government elections would be postponed. Fortunately, they took place in November, five months before the financial year. It was important to train councillors at the beginning of a five year period. Why was the training not rolled out? What caused the delay?

He said other departments also had shortages of computers due to COVID-19 regulations in China.

He asked about unspent funds for salaries due to vacant positions in the Department. Why were there suddenly more vacancies than in the past? Why was the Department struggling to fill those vacancies? He added that the salaries and wages shown on page 172 for the two financial years remained the same. It emphasised what the Minister had said, that in the past, to a large extent, the budget had not kept up with inflation and increased departmental demands. If the basic salaries were the same from one financial year to the next, then the allowances people received would be more or less the same. Yet, there was a 25 percent increase in non-pensionable allowances. What is the reason for the anomaly?

Ms Makamba-Botya said she was concerned about the variances in the administration programme shown on page 157, which resulted from delays in filling vacant posts. It was shown as savings in the report. Why was underspending called a saving? Savings were made on purpose. In this case, it was not on purpose.

She commended the Department on outsourced services shown on page 173. “The figure is quite low and that is a very good thing, considering that as the EFF, we are against outsourcing employees.” How did the Department keep outsourcing services so low compared to other departments?

She asked about the amount of R2.5 million used for training and development. She argued that low-skilled workers had not been offered any training. Why was that not done? Page 176 referred to other material losses written off. How did five government vehicles get damaged? Was it through negligence by employees? What steps did the Department take to address that?

Ms Maseko asked about the reported transfers to municipalities from the Community Development Worker Operational Support Grant. What were the criteria for these allocations, because her constituency, Bergrivier, was not there?

Responses

Mr Heinrich Magerman, Director: Community Development Worker (CDW) Programme, said that the Bergrivier Municipality chose not to enter into an agreement with the Western Cape Department. It was one of two municipalities which made that choice. The other was Swellendam. The irony was that the CDW programme worked well. The Department would continue to engage with the municipalities, but it understood that it was their prerogative not to participate.

Ms Maseko asked how the exclusion of the two municipalities affected outputs on the ground. How did it affect the community if there was no agreement? That grant was for the benefit of the community.

An official of the Department said the Western Cape was the only province with a CDW grant. The Department did not have its own offices in the 30 municipalities. Therefore, it entered into agreements with the municipalities to house CDWs. Amounts of less than R20 000 per CDW were provided for operational costs, including accommodation, photocopies and minor procurement costs. The Department used the transfer payment agreement to regulate the transfer of grants and to allocate CDW activities in the municipalities. The CDW time allocation was split into a 60 to 40 ratio - 40 percent of the time was dedicated to municipal activities and 60 percent was dedicated to national and provincial government activities. When a municipality chose not to enter into an agreement, the CDW work would proceed. The Department had entered into an agreement with the West Coast District Municipality because the Bergrivier Municipality had written to say they did not want to do so. The West Coast District Municipality provided the office space, but the Bergrivier municipality continued to be serviced.

Mr Anton Bredell, Western Cape Minister of Local Government, said there were perceptions that community development workers were politicised. While there might be some “naughty children'' that entered the political space and made things difficult for other people in the programme, the Department was working hard to get the CDW programme out of the political space. It could also encounter a stubborn mayor that refuses to cooperate. “I still believe that there is a lot of space for improvement and we will keep on working on it.’

An official of the Department responded to the question about training of municipal councillors. The Department went out to tender three times. The first and second tenders came in at R80 million and R40 million. The Department had now finally appointed a service provider. At this stage, it would only be able to give training to 20 councillors in a pilot programme on minimum municipal competencies. However, there have been two seasonal school intakes for this year. There were 78 councillors in the first intake and 162 in the second one.

Mr Paulse responded to the questions about underspending on compensation of employees. He said the Department received money from the provincial treasury for filling posts related to the Joint District and Metro Approach methodology run in the province. Despite advertising and headhunting, they were unable to fill senior posts.

Mr Paulse asked other officials to respond to questions about the financial statements. 

Regarding the recoverable expenditure on page 179, the Committee was told that this could be read as possible income for the Department. A case still under investigation concerned damage to a laptop that cost R28 000. The income tax debt due by staff occurred when officials received a bonus and left the Department. The system would recalculate the tax and it would become problematic to trace the official. The leave without pay amount of R339 000 involved 12 cases.

The amount of R2.5 million for training raised by one Member related to the training provided to municipalities in committee work and firefighting. Members were assured that this did not mean the Western Cape Government did not offer training to its lower-skilled staff. The provincial treasury had separate training programmes. A list of available training was provided. It was of a technical nature and also offered soft skills to junior and senior management. There was a lot of training for officials in the Department and at the national school of government, which included ethics training and modified cash standards.

The pensionable allowances depended on the salary allowances from the prior year.

The Committee was told that the Department preferred to build internal capacity rather than outsource services. It built capacity through institutional knowledge. Some experts with critical skills were sometimes contracted. This provided more value for money because the training prices were exorbitant.

The damaged vehicles came from the Government Garage. The amounts were quite small. The Department normally pays 10 percent of the damage. When an official was found liable, the State Attorney would advise the Department on what should be done.

The increase shown in audit costs was not due to an increase in audit fees, but to different audit timeframes which resulted in overlapping bills for work done from one year to the next.

The Chairperson asked why indigenous people were not included in the budget. Was it anticipated that there would be traditional leaders in the province? Why were they not included in consultations or public processes?

Mr Paulse said there was a programme that dealt with traditional leaders. The legislation was now activated and the Department was in the process of appointing three staff members to research recognition and acknowledgement of the KhoiSan groups. There had been an official launch around the Western Cape on the KhoiSan legislation to create awareness of the group application process. The groups that thought they qualified and had authenticity about their existence could apply.

Mr Albert Dlwengu, Director of Policy and Strategic Support, said the Traditional KhoiSan Leadership Act of 2021 had certain processes and phases. The first one was the establishment of a commission on KhoiSan matters. The responsibility lay with the national Department. The provincial level was responsible for identifying gaps in the legislation and forming policy. Institutional capacity to implement the act would be developed. The provincial Department had to provide financial and administrative support to the recognised leadership. The leadership would be included and involved in municipal councils. Particular dates had been put in place. The commission was established on 1 September 2021. It would comment on the application process. The application dates were opened from 30 March 2022 until 29 April 2024. The provincial treasury had allocated the Department R2.5 million for 2021/22, R106, 9 million for 2022/23 and R2 million for 2023/24 to accommodate research and policy development.

The Minister said it was always good to have these kinds of interactions to understand the oversight role of the Department. He thanked everyone for their participation. The HOD thanked everyone for their efforts.

The Chairperson said that accountability was effective when it was done collectively and cooperatively. He thanked everyone for engaging.

The meeting was adjourned.