Municipal Fiscal Powers and Functions A/B: Policy issues & deliberations

Meeting report

The Chairperson welcomed all to the meeting.

He indicated that the Committee would look at the outstanding policy issues. There was a draft report but they needed to see what came out of today’s deliberations before the report is circulated for voting.

Policy Issues

On the issue of the constitutionality of the Municipal Fiscal Powers and Functions Amendment Bill (the Bill), the Chairperson said that he was not sure where this could be taken further. He asked if Members, specifically Mr Ryder, had anything new to say in this regard.

Mr Ryder was temporarily disconnected and could not respond.

The Chairperson noted that Members had received an email that was sent from Adv Jenkins and asked him to take Members through it.

Adv Frank Jenkins, Senior Parliamentary Legal Advisor, Constitutional and Legal Services Office, said he was asked to look at the City of Cape Town’s responses to the amendments in the Bill, specifically clause 9F.

The first question was whether Clause 9F had been placed correctly as the CoCT thought that it should be in the Spatial Planning and Land Use Management Act (SPLUMA). Section 49 of SPLUMA deals with the process before approving an application for the development of land, whereas the Bill is the agreement that must be made between the developer and the municipality after such approval has been given. These are two different matters. He agreed with National Treasury’s analysis of the comment to say that the clause in 9F of the present bill is a legal matter that needs to be dealt with so that you have that agreement that needs to be concluded between the developer and the municipality. A lot has been said in the media about unhappy people buying property in a development and they can not hold a developer to account because of the lack of such an agreement between a developer and the relevant municipality. He affirmed that the clause was placed correctly and there was nothing further to add.

The second matter was about sub-clause 9F(v). He agreed with National Treasury’s response and it appeared as if the City misread the provision.

Mr D Ryder (DA, Gauteng) said that Clause 9E takes the Bill outside of a pure financial bill and pushes it into a space where it is impinging on the authority of the municipality by somehow giving directives to the local municipalities.

In a recommendation, the Chairperson said that the Committee should add in the report that the submission of the CoCT is taken seriously as this is a major metropolitan city that is important to the country. Notwithstanding this, the Committee does not agree with the submissions.

The Chairperson added that there is a need for more active intervention of national and provincial, governments in such a way that does not undermine the important role of local government. But this requires a review of powers and functions granted by the Constitution. There is a need for a review of the powers and functions so that national and provincial governments can actively intervene as part of a developmental orientation, without undermining the crucially important role of local government.

Proposed Amendments to the Bill

Ms Mmachuene Mpyana, Senior Economist: Local Government Finance Policy, National Treasury, took the Committee through the proposed refinements to the Bill. Starting with Clause 1, page 2 in line 18 which is the definition of “capital infrastructure asset” where National Treasury is proposing an insertion of ‘parks and open spaces or a municipal service’ after service.

The second one is page 3 from lines 1 – 13 to substitute the definition of development charges for the following definition: development charges means a charge levied by the municipality in terms of Section 9A (1) (a) of the Bill, which is contemplated in Section 49 of SPLUMA which must contribute towards the cost of capital infrastructure assets required to meet increased demand for existing and planned external engineering services or the cost referred to in paragraph (a) and the cost of land for parks and open spaces if the land development application provides for the use of land for residential purposes or the cost referred in paragraph (a) and (b) with the approval of the minister, the cost of municipal services other than engineering services.

Under Clause 4 on page 9 in line 8, National Treasury is proposing the omission of “not”; and on the same page from lines 37 – 40, the substitution of Clause 9I for the following: where a bulk or link engineering service is intended to service subsequent developments and transverse the internal boundaries of the land development by an applicant, the municipality and the applicant must agree that the service must be regarded as external or internal engineering service or if the municipality and the applicant do not agree as contemplated in paragraph (a), the municipality’s determination applies.

An official from National Treasury explained that the last time the Department presented, it only presented A and the B is additional. It realised there could be a challenge if an applicant and a municipality can not agree. It was decided that the latter’s determination would apply. That was the amendment made since the last presentation.

The Chairperson asked if the National Treasury needed more time and if they could expect additional changes.

Ms van Schoor responded that these were the only changes made and it was based on the CoCTs input.

Ms Empie van Schoor, Chief Director: Legislation, National Treasury, said National Treasury did not need more time. What was done was to have a double check on the proposal which came from the CoCT’s comment. And the point raised by the National Treasury is that if there is no agreement, this is something that was picked after relooking at the proposed wording.

The Chairperson said that the Committee can only formally vote on the Bill in another meeting.

Clause-by-Clause

Ms Mpyana went through each clause.

Members were invited to make inputs.

The Chairperson said there is a need to return to the wording and definition of capital infrastructure for amendment.

On community participation in clause 9C, the Chairperson said that certain municipalities by public participation, just put things on a random website and regard that as community participation. It has been said that such communication should be done through local radio stations and newspapers in different languages. And when trying to intervene, the provincial and national government has been limited because of the constitutionality thereof as far as the autonomy of municipalities.

On 9G, subsection 7 on the second line of the Bill, the 'not' must be removed.

The Committee informally adopted the Bill and the Chairperson and the Committee agreed on a meeting to formally adopt the Bill.

The meeting was adjourned.