The Committee met to consider the adjusted appropriation budget of the Department of Local Government. During the discussion, the Committee touched on the status of the energy resilience project and the fact that most departments had to carry the wage bill due to fiscal consolidation.
The Committee inquired into the reason as to why some of the funds were being reallocated for other purposes. The Committee expressed concern about whether the Department will be able to spend its entire budget.
The Committee deliberated on Vote 14: Local Government in the Schedule to the Western Cape Adjustments Appropriation Bill, 2023. The Vote was supported, with the ANC voting not to support it.
The Chairperson welcomed everyone to the meeting and explained that they would be deliberating on Vote 14: Local Government in the Western Cape Adjustments Appropriation Bill, 2023.
Minister Opening Remarks
Mr Anton Bredell, Western Cape Provincial Minister of Local Government, Environmental Affairs and Development Planning, said that during the adjustment estimate of the 2023/24 financial year, the original budget of R369m increased with R41m, including the budget that the Department would dismantle today.
Mr Graham Paulse, Head of Department (HOD), Western Cape Department of Local Government, said that given the fact that the Department collaborates concerning energy resilience in the province, particularly with municipalities, it has identified a town and that was Riversdale which was part of the initiative to have a load shedding-free town. Extensive work had been done over the last couple of months since last year and the council in Hessequa was now tabling that for consideration and approval. However, based on the work the Department had done with the engineers on both sides, the energy council had also allocated some funding. From the adjusted budget, there was R64 million going to the energy resilience project for the first year.
Concerning Hessequa, the Department has R5 million and in addition, R64 million will be transferred. A total of R69 million will be transferred to Hessequa for the first phase of the project. As part of the fiscal consolidation of the wage bill, the departments had to carry the adjustments. This was one of the reasons why an intergovernmental dispute had been declared and the strategic decisions made to defer some of the projects to the outer years over the Medium Term Expenditure Framework (MTEF). R25 million had been deferred as part of those initiatives but one can see in the outer years that it gets back a narration of R22.4 million given the fact that the negotiations with provincial treasury to defer some of those projects to the outer years.
Ms C Murray (DA) commended the Department on the work that it had to do. It had been very difficult knowing the current challenges and the challenges anticipated in the medium term. She asked for better details on the energy resilience changes, particularly as they relate to infrastructure.
Mr P Marran (ANC) asked why a large amount of money was being shifted for the utilisation of the appointment of the designated investigators in terms of section 106 of the Municipal Structures Act.
Mr Paulse, in reply to Ms Murray, said that the Department received funding for the energy project which was about R5 million. In the baseline, it has received about R2 million from a professional service provider in the form of a transaction advisor to help municipalities with the energy resilience initiatives and also received funding for internal capacity to appoint engineers on a temporary basis for two to three years, and that was also to help municipalities with the energy resilience project but also it has money to assist municipalities in terms of electrical master plans.
The cost of supplies for municipalities started with the recruitment and selection process for the engineers. The Department was not going to use the entire amount and so it has given some of that money to treasury to defer that to the outer years. The Department has also worked with the Department of Infrastructure, and has R40 million also for transactional advisors and so on. On that basis, it has decided not to use that money in the year but has got three million in the outer years. R4 million had been given, R2 million for the internal capacity municipal capacity and then for the energy project itself it has a total of R30 million. This confirmed that a lot of work had been done.
Initially, the Department wanted to have six municipalities. However, the work it had done with Hessequa brought it to identify a loadshedding-free town and so it has tabled with the energy council together with the BBC and Cabinet. Cabinet endorsed that given the work it had done, the costing that came from the market and the work that engineers had done. Part of the project was to do a ten-megawatt solar plant in Hessequa with a ten-hour battery storage facility that was dispatchable and would be implemented over three years, so the total value of the project was about R193 million. In the baseline, the Department has R30 million over the next three years and the additional amount of R143 million is additional to the baseline of the Department. The municipality will contribute a total of R40 million to the project and obviously, the fact that it was sold on demand of Eskom will decrease and obviously will make a lot of savings.
That was part of what the Department was doing as part of the energy resilience as a province. It worked very closely with other departments like the Department of the Premier, among others. Mr Paulse said that the Department was earmarked to get additional funding in the outer years as it rolled it out, but it was well in control of the money it had and the initiatives that must be implemented concerning the energy resilience project. It assists municipalities with electrical master planning and is approaching external sources to help them with the cost of supply studies for municipalities concerning energy resilience in municipalities.
Mr Gary Birch, Director: Special Support, said the R1.3 million was expenditure relating to litigation and the appointment of external investigators. The majority of that amount concerned actual expenditure that had already been incurred on various litigation matters. The majority of these cases challenged various unlawful decisions regarding the appointment of senior managers by municipalities.
Mr Marran, referring to page 332 on development and budget spending, said that 18% of the budget had been spent in the last six months. He was concerned about whether the Department will be able to spend the entire sum of money within the following six months if it has only spent 18% so far.
Ms M Maseko (DA) asked whether the Head of Department saw sustainability measures put in place to deal with the shortfall of the wage bill happening in the next financial year on the main budget. Was the Department going to be able to cushion the pressure of that wage bill?
Mr Paulse said that the Department had been able to cushion the pressure of the wage bill in the current year given the various savings in recruitment and selection. It managed the situation and kept some of the recruitment and selection processes back so it was in a region of about R13 million that it could actually cushion in the 2023/2024 financial year but next year, it has serious sustainability challenges. There were a number of posts vacant, and an assessment was done to determine the effect of filing those posts and also to see the extent to which the Department could afford it. Most probably, the initial indications are based on discussions with provincial treasury that the Department was not able to afford it or absorb it unless it keeps a significant amount of posts vacant and it actually deals with an impact on projects. The discretionary funds that the Department had were very little. It requires additional funds to support and assist municipalities with an array of challenges. It implied that it would reduce capacity which was already struggling because not the entire staff establishment organisation structure was funded. About 2/3 was funded and based on the wage bill, it wanted to keep more posts unfunded just to manage the increase in the wage bill. Therefore, the Department is constrained given the existing capacity within the organisation and to keep the additional posts vacant was going to have serious sustainability problems. The concern has been raised with the provincial treasury and it will continue to do so with the PGM.
Ms Bhavna Sewlall-Singh, Chief Financial Officer, said that the 18% spend on development planning was because the bulk of the money on transfers was setting in. So the R64 million on the resilient energy project was in there as well as the R15 million on aerial firefighting which would also go out in terms of the stand-by costs and the flying time. The Department also has R10 million for water resilience projects that will also be transferred out and have been gazetted. In total, there will be R100 million that will flow for the next few weeks and those are on transfers predominantly. She said that the Department anticipated that there would be full spend on the project at that stage.
Mr Marran said he asked the question about the 18% because the spending at the same time in the previous year was better. Only 85% was spent was spent for the whole year. He was concerned whether the Department would be able to spend the full amount. On page 336, table 14.6, summary of transfers and subsidies per programme, there was R376 000 for NGOs. He was concerned that the Department seemed to shift money from specific programmes and those programmes would then be unable to be completed in the current financial year if monies were shifted. Why was the Department moving money to NGOs? On page 337, table 14.7.1, on administration, he asked what areas of corporate services would be affected by the cut.
Ms Sewlall-Singh said the Department had not moved any money to an NGO. That money had actually been appropriated in the main adjustment, so it was the way that it had always been, and it was a transfer between the departmental agencies.
She said that they had not transferred any money within corporate services. What it had done was that money came in as a rollover and the other adjustments related to savings were moved within the broader Department on the COE due to the delay in the filing of posts. There was no service delivery implication or support impact that had affected the Department related to the way in which it was being managed so there was not any adverse reaction to the broader Department. In terms of the COE savings within the units that were affected by the delay in the filling of posts, the Department would have taken the pressure but other than that, there had not been any.
Mr Colin Deiner, Chief Director: Disaster Management, said they had the Sea Research Institute for Life Saving and SS so they have a drowning prevention programme they had been running for a while in collaboration with those two. The funding was not only to assist them to be able to do a lot of awareness but also to train lifeguards and to deploy lifeguards to certain areas, specifically outside of the city where there are a lot of challenges over the December period but also for sea rescue. There was no capability outside of sea rescue for any critical rescue work for about ten nautical miles off the coastline. So sea rescue was basically their resource to carry out that kind of rescue operation, so it was really just funding they provide to them to enable them to deal with maritime-type incidents.
Minister Bredell said it had been a very difficult year where the Department had a lot of challenges. He was grateful for the expertise and the willpower within the Department because they managed to pull through. It expected a difficult Christmas season but had all hands on deck to support the municipalities. He wished the Committee and everyone in the meeting a happy festive season.
Mr Paulse said he shared Minister Bredell's sentiments that it had been a difficult year. The balance of the year, particularly during December or January, would be challenging for various reasons. He expressed his thanks to the Standing Committee as well as the entire team within the Department.
The Chairperson thanked the Department, the Minister and everyone involved for the kind of work that they had been doing as a Department. The Chairperson thanked and released the Minister and departmental officials from the meeting.
Committee Report on Vote 14: Local Government in the Schedule to the Western Cape Additional Adjustments Appropriation Bill, 2023
The Chairperson said that the Committee had deliberated on Vote 14 and asked Members whether they supported the Vote.
Ms Murray said she supported the Vote and Ms Maseko seconded the Vote.
Mr Marran said that the ANC did not support that particular Vote for the moment and asked that the report capture those sentiments.
The Chairperson asked the report to be flighted, and read it out loud for the Committee to note.
The report was adopted.
Minutes dated 08 August 2023 and 16 October 2023 were considered and adopted.
The Committee also adopted its report on the 2022/23 Annual Report of the Western Cape Department of Local Government, Second Quarterly Report and Tracking Document.
In the absence of any resolutions from the Members, the Chairperson thanked everyone for their attendance and adjourned the meeting.
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