Department of Provincial and Local Government Budget: briefing

Meeting report

LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE
23 June 2004
DEPARTMENT OF PROVINCIAL AND LOCAL GOVERNMENT BUDGET: BRIEFING

Chairperson Mr S Shiceka (ANC)

Documents handed out:
Department of Local Government presentation
Department of Local Government Budget presentation

SUMMARY
The Department of Local and Provincial Government continued with its presentation from 15 June 2004. The Committee was particularly concerned with the remuneration of councillors and traditional leaders. The implication of the Property Rates Act on ratepayers was discussed.

MINUTES
The delegation from the Department included Ms L Msengana-Ndlela (Director-General); Ms J Manche (Deputy Director General: Institutional Reform and Support); Mr Patrick Flusk (Deputy Director General: Free Basic Services and Infrastructure); Ms S Makotoko (Chief Director: Intergovernmental Fiscal Relations); Mr D Manyindo (Special Advisor: Local Government Transformation); and Mr C Clerihew (Chief Financial Officer). Also present was Mr G Bhengu (Special Delegate from KwaZulu-Natal).

Ms J Manche presented Programme 4: Systems and Capacity Building. She pointed out the key achievements and objectives for the financial year. The main focus of the Department was to develop policies and build a financially and economically sustainable system of Local Government

Mr P Flusk presented Programme 5: Free Basic Services and Infrastructure. The presentation touched upon the key focus areas; enhancement of service delivery through integration and coordination; enhanced access to basic services; and enhanced public participation.

Discussion
Mr M Mzizi (IFP) wanted to know who was responsible for the supply of Free Basic Services and Infrastructure. In particular he wanted to know if it was the function of the Department or of the municipalities. Assuming it was the responsibility of the Department to monitor these services how did municipalities handle the supply of Free Basic Services and Infrastructure. He also wanted to know what criteria was in place to distinguish between persons who qualified for Free Basic Services and those who did not. In addition, he wanted to know how the Department was tackling Black Economic Empowerment (BEE).

The Director-General replied that the Constitution and the Municipal Systems Act set out which spheres of government are responsible for the supply of Free Basic Services. Local Government co-ordinated the supply of these services but the Sector Departments had to have the ability to deliver Free Basic Services. Municipalities have a role to foster Black Economic Empowerment (BEE). She commented that it would be unfair to say that BEE is not progressing.

The Chairperson wanted to know if the Department would be creating further bureaucracy in determining persons eligible for Free Basic Services.

Mr P Flusk replied that some municipalities, especially in Gauteng, had adopted an attitude of giving Free Basic Services to all, rather than systematically targeting the poor only. This led to a situation where persons in Sandton and Houghton received Free Basic Services while poor people did not. Therefore the Department found it necessary to target the needy. The Indigent Policy assists in determining which person falls in which category

Mr G Bhengu asked what the Department would do about the financial resources conflict between District and Local municipalities with respect to service supply. He asked about the remuneration of councillors and the bureaucracy created by councillors. He also wanted to know the mechanism used to ascertain whether the grants given to municipalities were used as intended. He asked why in some instances councillors were paid more than mayors.

The Director-General replied that the conflict between District and Local municipalities was challenging. To rectify this situation the Department had at times resorted to road shows to clarify the division of powers between District and Local municipalities. The system of co-ordinating the functions and powers of District and Local municipalities was being implemented gradually. The Department was in its 4^th year of implementing the system.

Ms Manche replied that the remuneration of councillors was a cause of concern. The Department would look at how councillors were currently remunerated. The system in place at local level was not compatible with the system in place at national level. She pointed out that there were municipalities that do not have a tax base. The Department did not want to put municipalities in a position where they have to choose either the remuneration of councillors or service delivery. She said that there were situations were councillors were not remunerated and that these situations required attention.

Mr Z Ntuli (ANC) asked whether the termination of water supply could be challenged in court. He wanted to know if the total absence of water supply in some areas was not an infringement of rights. He also wanted to know if the Department had any mechanism of helping municipalities before government intervention became necessary.

Mr P Flusk responded that municipalities were not meant to cut water supplies but to limit the flow of water to that household. The Department would work to ensure that people's rights were not infringed.

The Chairperson wanted to know if the Department was in a position to determine which municipalities where viable and which were not.

The Director-General replied that there was a perception that certain municipalities were not viable. Municipalities that were considered not viable were in densely populated areas that formed part of the former homelands. There was a lack of infrastructure in the former homelands.

Mr Manyindo responded that intervention was uncommon. The Department avoided intervention because of the drastic impact caused by dissolving a whole municipal council. Where there were indications that the municipality was not coping, the Department intervened through the Municipal Support Programme to assist these municipalities.

Kgoshi L Mokoena wanted to know if the Department had a plan to deal with municipalities that were not viable. He asked from which government sectors the government debt was recovered. He commented that in capacity building there was a tendency to group all categories of municipalities together. Often category A and B municipalities were better equipped than category C municipalities. He suggested that the Department should separate the different categories when capacitating municipalities. He commented that the remuneration of councillors would go a long way in helping prevent corruption. He asked why traditional leaders were not remunerated when they participated in municipalities together with the councillors. He wanted to know what would replace cross-boundary municipalities. He asked when the billing system problems would be finally rectified. He also wanted Mr Flusk to clarify what was meant by the ability to pay for services as opposed to the willingness to pay for services.

The Director-General responded that the National House of Traditional Leader (NHTL) had funds directed to it. Some of these funds were directed towards capacity building. She said that institutions were not the same. Capacity building addressed the fact that these institutions had different capabilities. Each and every municipality was profiled. The challenges faced by each municipality were identified. The resource strategy of the Department was twofold. Firstly, transferring funds from National Revenue to municipalities and secondly assisting municipalities to create a revenue base and opportunities for economic development. She said that these huge challenges affected the remuneration and funding available to Local Government. She also said that the Department was working with the National Government to review the revenue allocation formula. She emphasised the need to provide municipalities with a revenue base. The Director-General said that unviable municipalities were caused by Apartheid backlogs. There were 284 municipalities each faced with different challenges. Until the end of the 5-year tenure of the 284 municipalities, the Department would provide increased support and funding to these municipalities.

Ms Manche replied that service delivery challenges in cross-boundary municipalities needed to be addressed.

Mr Manyindo responded that the Department had recovered R900m from the government debt of R1.4bn. The government's payment protocol dictated that the National Department of Public Works bears the responsibility of paying rates for all government property across the country. In some provinces the Department of Public Works was responsible for the payment of services as well. The Department was working towards a new payment protocol to make government departments responsible for the payment of services wherever they were situated. The issue of billing systems involved the individual identification of who and how many people live in a particular household. The Department had been systematically working with 12 municipalities towards creating an efficient billing system.
The Chairperson commented that councillors, especially ward councillors were underpaid and under resourced. He said that this undermined effectiveness. He asked whether the Department was considering creating permanent offices for ward councillors. He also asked if the Department would consider capacitating ward councillors.

Mr A Moseki (ANC) wanted to know to whom capacity building was targeted. He asked what specific tools would be used to capacitate ward councillors. He also asked if there would be road shows to foster communication between the Department and the public. He wanted to know if the Department would monitor the use of funds allocated for infrastructure development.

The Director-General replied that certain institutions do not spend the funds allocated to them in the manner in which there were supposed to. With regard to the Municipal Infrastructure Grant (MIG) she said that before the grant was allocated certain prerequisites needed to be met. Those municipalities that failed to meet the prerequisites were not allocated funding. This forced municipalities to comply with the requirements for the allocation of funding and assisted the Department in monitoring and evaluating the use of funds.

The Chairperson wanted to know if the Department had any programme of informing the public of the benefits and implications of the Property Rates Act.

The Director-General responded that the implications and benefits of the Property Rates Act required explanation. The Act had the potential to augment the revenue base. She said that the Act should not have a negative impact. Any negative perceptions of the Act were incorrect.

Ms S Makotoko replied that the Property Rates Act provided relief to the poor. It provided for a mandatory relief of R15 000. The Department had developed a communication strategy that targeted all ratepayers. The implications of the Act would be discussed at an Indaba to be held in August with mayors, councillors and officials.

Mr J Le Roux (DA) wanted Ms Manche to clarify what she meant when she said that the main focus of the Department was to develop policies and to build a financially and economically sustainable system of Local Government. He also wanted to know if the Local Economic Development Grant was meant for infrastructure development only.

Ms J Manche replied that the Department had different programs in place to achieve its objective of developing policies and building an economically sustainable system of Local Government. One of these instruments was the Property Rates Act that intended to ensure a long-term financially and economically sustainable system of Local Government.

The meeting was adjourned.