Disestablishment of Local Council; Municipal Structures Act Amendment

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Cooperative Governance and Traditional Affairs

25 October 1999
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Meeting report

PROVINCIAL AFFAIRS & LOCAL GOVERNMENT PORTFOLIO COMMITTEE

PROVINCIAL AFFAIRS & LOCAL GOVERNMENT PORTFOLIO COMMITTEE
26 October 1999
DISESTABLISHMENT OF LOCAL GOVERNMENT AFFAIRS COUNCIL BILL; MUNICIPAL STRUCTURES ACT AMMENDMENTS; INTERGOVERNMENTAL RELATIONS

Documents handed out
Disestablishment of the Local Government Affairs Council Bill
Amendments to Municipal Structures Act (Appendix 1)
Intergovernmental Relations presentation (Appendix 2)
Discussion documents on Intergovernmental Relations (Appendix 3)

SUMMARY
The three clauses of the Disestablishment of Local Government Affairs Council were quickly discussed. The Bill will formally disestablish a body that is disused and already wound up. The committee will vote on the Bill on 9 November.

Draft amendments to the Municipal Structures Act were considered. This Bill should be tabled next week.

In its briefing on Intergovernmental Relations, details were given on programmes set up to meet the requirements of Chapter Three of the Constitution. Attention was drawn to the gathering of views on the intergovernmental system produced in a consultative document. A comprehensive audit with recommendations will be available by the end of the year and policy options will be produced by March 2000.

MINUTES
Disestablishment of the Local Government Affairs Council Bill
Mr Fanie Louw of the Legal Section of the Department for Local Government and Provincial Affairs briefed the committee on the Bill. The Local Government Affairs Council began life in 1944 as the Peri-Urban Council. It was set up to administer the peri-urban areas in the Transvaal that did not have full municipal status. These were predominantly white residential areas. During the reconfiguration of the state in the 1980s the Local Government Affairs Act (Act 84 of 1989) replaced the council with the Local Government Affairs Council. The functions and municipalities this body administered to, have since been taken up by transitional local government councils meaning the body has effectively fallen away. The financial affairs of the council have since been wound up and it effectively no longer exists. However the Local Government Affairs Act made it a requirement that the body could only be disestablished by an Act of Parliament. This Disestablishment Bill is made up of three simple clauses:
1. it will disestablish the council;
2. it will repeal the laws that established and administered the council;
3. it empowers the minister to wind up the council and transfer any money left to the National Revenue Fund.

The committee had made no comments on clause one. On clause two the committee was essentially satisfied that the Department could be relied on to repeal all Acts relating to the council. However Ms M Verweord (ANC) wanted to know what the amendments were that had been made to the Local Government Affairs Council Act and why they might have been made. Mr Louw did not have this information available but stated that he would communicate this to the committee.

On clause three Mr P Smith (IFP) wished to know why this clause implied the minister still needed to wind the council up when the committee was being told this had all been done. Mr Louw said that the legal position of the council and the minister's power regarding it, had to be clear. Events may unfold that relate to the council's actions or to the council's staff.

Mr Y Carrim (ANC, committee chairperson) believed that the committee essentially accepted the Bill and it would be voted on, on 9 November following the constituency week. Hopefully the whole committee would just formally endorse it so that there would be no debate in the National Assembly.

Municipal Structures Act Amendments
Mr Lowe said that the amendments had been published for public comment on Tuesday 19 October, the closing date for comments is Friday 29 October. The draft amendment bill was approved by Cabinet on Wednesday and is currently still being checked by the state law advisors. The amendments should be introduced by the end of next week. Mr Carrim stated that they would be considered by the committee on 8 and 9 November to be finished with by 11 November so that the committee programme is not further affected. It is possible the committee will meet after hours.

Mr Louw stated that the amendments should be easy to deal with as they are guided by the Constitution and give effect to the Constitutional Court judgement.
Consideration of the draft amendments were as follows:

Section four

Discussion occurred on subsection 4(2) :
The [Minister] Demarcation Board may determine that an area must have a category A municipality only after consultation with the Minister [the MEC for Local government in the province concerned, SALGA and organised local government in the province].

Without the proposed amendments the Demarcation Board would follow the terms of Demarcation Act, including an elaborate consultation process, to determine recommendations on municipality type. The minister would then determine municipality type but would have to consult further with MECs, SALGA and organised local government before determining that an area should have a category A municipality.

With the proposed amendments the Demarcation Board would still have to follow the elaborate consultation process set out in the Demarcation Act before determining municipality type. Mr Louw believed it was unnecessary to include the consultation process in both Bills and more importantly saw no need for the Demarcation Board to go through both this process and further consultation process with MECs, SALGA and organised local government over category A municipalities.

Mr Carrim requested that the relevant sections of the Demarcation Act be reproduced in this Bill. He knows that in principle text from the Constitution or other Acts are not included in Acts that make use of them as a practice. However when the Act comes to be applied, it is rare than an official sits down with the Constitution or with both Acts. It would be harmless to repeat the relevant sections of the Demarcation Act in this Bill. Mr Louw accepted this comment but said that the relevant passage from the Demarcation Act had not been included in the original Act and that the committee could not have felt this issue was so important.

Mr Smith (IFP) accepted that the Demarcation Board did follow a rigorous process but saw no reason why a previously included procedure should now be removed. Mr Carrim suggested that the process should perhaps be left in as the consultation process set out in the Demarcation Act does not specifically include MECs, SALGA or organised local government.

In his response Dr Crispian Olver (previously with the Department and now acting Director-General: Tourism and Environmental Affairs) agreed that consultation with MECs, SALGA and organised local government could remain in the Bill. The issue of determining Metros is a sensitive issue whilst being fundamental to the Act. Therefore it could be vested with a special process. The idea of extra consultation when determining Metros is not a bad one. The reason it was struck out was because the Demarcation Board follows its own procedures set out in the Demarcation Act, including a consultation process. The judgement now allows the Board to set out and establish Metros which they are now doing without having to consult with MECs, SALGA and organised local government. To add the process to the Bill may be unduly binding to the Board but more importantly it would lead to Metros existing that had been established in two different ways. The actual finding of the court was that you could delete sections four and five entirely and by reading sections two and three with section 25 of the Demarcation Act, the Board would still have the powers and the ability to do its job. However this does leave an element of uncertainty and therefore the drafters have still assigned a clear decision-making power in the new section four.

In summary Mr Carrim said that there were two issues to consider. Firstly that there must be a consultation process clearly outlined regarding the sensitive area of Metros and maybe the explicit reference to MECs, SALGA and organised local government as outlined in the original sub-section 4 (2) should remain. However secondly the legal consequences of not changing sub-section 4 (2) must be considered.

Dr Olver believed that retaining the old sub-section 4 (2) would have no legal consequences and was merely a policy issue. He stressed the need for the committee to meet with the Board and see what impact they believed might be felt by retaining the clause. In essence from the date the President signs the amendments the process of establishing Metros will change. This will have no retrospective effect so it is possible that Metros established in two different ways will exist. This is unnecessary according to the judgement yet would provide special provisions for Metros.

The committee agreed that they would consult with their parties and agree on a position on clause.

Section 6(2)
As with the amendment to Section 4, powers are transferred from the minister to the Demarcation Board, this time regarding declaration of district management areas. Previously the Board would make recommendations to the minister who would then consult with the MEC for local government in the province concerned before declaring the area. Now the Board will follow the investigation and consultation processes set out in the Demarcation Act and establish district management areas according to section 26 notices. To retain explicit consultation with MECs would mean that the board could not continue to publish draft boundaries for public comment, it would simply welcome comments and then publish boundaries. As with Section 4 the committee agreed to discuss this with their parties before deciding which line to take.

Section 13
This section allowed the minister to determine guidelines to assist MECs in determining which type of municipality would be appropriate for an area. This was declared unconstitutional but by repealing it, no guidelines are available to aid MECs. Mr Carrim wondered if there was some way to provide a broad guideline to determine whether an executive mayoral system would be better than a collective executive system. No consideration of guidelines would be enforced. Mr Smith said that guidelines could be provided but should not be put into the legislation. Mr Selfe (DP) accepted the need for guidelines but the court judgment had declared Section 13 unconstitutional and all the section did was to allow the minister to determine guidelines. Mr van Deventer (NNP) did not agree that there was a need for guidelines and suggested that it would simply look like national government was ignoring the judgement made.

Mr Carrim replied that such undermining of the judgement was not intended. However there was a clear need to understand why the law made two executive systems possible for the same category of municipality. MECs should choose a system that they know is best and not the one they prefer. The executive mayor system is a system new to South Africa and to developing nations. It can have a place here but how and when it is appropriate, is not clear. Consultation and consensus should occur within a municipality before it is established. Mr Olver commented that the judgement had made it clear that establishing a municipality was a local and provincial issue alone but was unclear on what influence national government might have in this. As far as producing guidelines the Structures Act sets out some criteria that must be followed in Section 33 but these are not unfettered and are very broad.

Section 24
Power to call a local government election is now to rest with parliament and not the minister. Mr Olver explained that the judgement on section 24 was unclear. It declared that the original Act gave too much power to the minister but did not state whether this power should be reduced or whether the minister must have no control at all. The amendment does the simplest thing, it removes power from the minister and declares a term as five years and allows ninety days discretion for elections.

Mr Carrim said that committee members must look over the amendments with their parties and the department should investigate the areas discussed before the amendments are considered again.

Intergovernmental Relations (IGR)
Mr R Sizani and Mr D Powell from the Directorate: Intergovernmental Relations, Department of Constitutional Development gave a presentation on Intergovernmental Relations. Originally Minister Mufamadi was to attend and give his vision on the restructuring and future of provincial government. However he was unable to attend but as he will talk on this issue at a later date it was not covered by the presentation. The Department has produced ten discussions documents on intergovernmental relations and co-operative government. The issues in these documents must be considered by the committee as they will be responsible for considering planned legislation.

Mr Sizani explained that the intergovernmental environment arose from the creation of three tiers of government in 1994. This decentralisation of government required the support of several structures. The Constitution furthered this decentralisation by creating three very separate spheres of government each with their own powers. These three spheres are semi-autonomous (this is very unusual situation internationally) and much coordination is needed if the system is to be coherent. The three spheres must have the means to meet and work together to create an effective policy process for all South Africans. The Constitution sets out important requirements for intergovernmental relations that must be observed. The discussion documents made available to the committee provide an intended framework by which the Department will implement the Constitution. The challenges of the last five years have made it clear that the three spheres must be realigned if they are to work more effectively together. The allocation of roles and responsibilities must be clearer and fiscal decentralisation to fit this allocation must occur. Although the Department of Constitutional Development is an important body in developing a strategy on IGR, Mr Sizani stressed that it was not the key player and much of the work it was doing was on an agency basis for the executive.

Mr Powell gave details on the Directorate programmes set up to meet the requirements of Chapter Three of the Constitution.
- An Intergovernmental Forum (IGF) representing national and provincial levels of government and structures supporting IGR has met annually since 1994. However a bi-monthly forum has now been set up. This is chaired by the President and is a meeting of the top executives at national and provincial level to discuss current government priorities.
- An Intergovernmental Audit has been set up to look at IGR structures, how they are coordinated, how efficient coordination is and how sustainable the system of structures is.
- Section 100 interventions are under review. It is agreed that national intervention in provincial and local government should be a last resort and that problems of capacity do not equate to provincial or local government failure. Legislation on section 100 is planned.
- Legislation on section 139 is also planned and in the meantime a manual on section 139 is being produced so that guidelines are available for local and provincial government.
- The development of mediatory procedures on IGR disputes.
- A Provincial Affairs and Intergovernmental Relations Centre is to be set up. An agreement (in principle) with a donor agency has made the necessary funding available so this should be up and running by next year. This will be an institute to aid government on IGR issues.
Brief details of other programmes were included in the presentation.

The Department has now met with over ninety role-players to gather views on the intergovernmental system and has produced a user-friendly document as a result. A comprehensive audit with recommendations will be available by the end of the year and policy options will be produced by March 2000.

In conclusion Mr Sizani stressed the importance of IGR - duplication is not efficient, arguments are not productive and problems need not occur.

Questions
Both Mr Magashule (ANC) and Ms Lobe (ANC) wished to know whether local government had any role in the new bi-monthy forum.

Mr Powell explained that only top executives from national and provincial level attended because these were pressing issues at executive level that were discussed, for example, the demarcation process, the Structures Act judgement, unfunded mandates. That there was no direct local government representation reflects the role provincial premiers should be playing in assisting local government. Mr Powell also stressed that this new forum will not be replacing MINMEC. Several committee members expressed concern that there was no direct local government representation and suggested that room be made for SALGA representatives.

Mr Solo (ANC) spoke of the need to capacitate role-players and whether this was being done by the bodies that have been set up.

Mr Powell explained that capacity building was a key discussion in the IGR system the department is trying to create. The need to share information is realised and the department works by the motto of 'think global, act local' in an attend to increase the role of national and provincial government at local level.

The meeting was concluded.

Appendix 1:
Proposed amendments to the Municipal Structures Act and Department memorandum on the objects of the Act:

BILL
To amend the Local Government: Municipal Structures Act, 1998, in order to vest the power to determine whether an area must have a single category A municipality or whether it must have municipalities of both category C and category B in the Municipal Demarcation Board; to vest the power to declare a part of the area of a category C municipality as a district management area in the Municipal Demarcation Board; to determine the term of municipal councils; to repeal section 13; and to provide for matters in connection therewith.

BE IT ENACTED by the Parliament of the Republic of South Africa, as follows:-

Substitution of section 4 of Act 117 of 1998
1.
The following section is hereby substituted for section 4 of the Local Government: Municipal Structures Act, 1998 (hereinafter referred to as the principal Act):

"Application of criteria
4. (1) The [Minister Demarcation Board must apply the criteria set out in section 2 and determine whether an area in

terms of the criteria must have a single category A municipality or whether it must have municipalities of 1,oth category C and category B; and

(1) determine the boundaries of the area in terms of the Demarcation Act.

(2) The [Minister] Demarcation Board may determine that an area must have a category A municipality only after consultation with the Minister.

[The MEC for Local government in the province concerned, SALGA and organised local government in the province].".

Repeal of section 5 of Act 117 of 1998
2.
Section 5 of the principal Act is hereby repealed.

Amendment of section 6 of Act 117 of 1998
3. Section 6 of the Principal Act is hereby amended by -

(a) the substitution for subsection (2) of the following subsection:

"(2) [The Minister, on the recommendation of the Demarcation Board and after consulting the MEC for local government in the province concerned] The Demarcation Board may declare a part of an area that must have municipalities of both category C and category B as a district management area if the establishment of a category B municipality in that part of the area will not be conducive to fulfillment of the objectives set out in section 24 of the Demarcation Act."; and

(b) the substitution for subsection (3) of the following subsection:

"(a) [The Minister, on recommendation of the Demarcation Board and after consulting the MEC for local government in the province concerned The Demarcation Board may by notice in the Government Gazette withdraw the declaration of an area as a district management area.

(b) When such declaration is withdrawn, the MEC for local government in the province concerned must, in accordance with any boundary determinations or re-determinations of the Demarcation Board and with effect from the date of the next election of municipal councils -

(i) establish a local municipality for that area in terms of section 12; or

(ii) include that area into another- local municipality in terms of section [16] 17".

Repeal of section 13 of Act 117 of 1998
4. Section 13 of the principal Act is hereby repealed.

Amendment of section 24 of Act 117 of 1998
5.
Section 24 of the principal Act is hereby amended by the substitution for subsection (1) of the following subsection:

"(1) (a) The term of municipal councils is no more than five years as determined by [the Minister by notice in the Government Gazette], an Act of Parliament calculated from the day following the date or dates set for the previous election of all municipal councils in terms of subsection (2);

(b) The Act of Parliament contemplated in paragraph (a) shall be enacted not later than 31 August 2000.".

Short title
6. This Act is called the Local Government: Municipal Structures Amendment Act, 1999.

MEMORANDUM ON THE OBJECTS OF THE LOCAL GOVERNMENT:
MUNICIPAL STRUCTURES AMENDMENT BILL, 1999
The object of the Local Government: Municipal Structures Amendment Bill is to give effect to the judgement of the Constitutional Court in the cases:

Executive Council of the Province of Western Cape versus the Minister for Provincial Affairs and Constitutional Development and Another (Case CCT 15 of 1999); and

Executive Council of Kwazulu-Natal versus the President of the Republic of South Africa and Others (Case 18 of 1999).

In its judgement the Court found that sections 4, 5, 6 (2), 13 and 24 (1) of the Local Government: Municipal Structures Act, 1998 (Act 117 of 1998), were unconstitutional and accordingly declared those sections invalid. The declaration of invalidity of section 6 (2) was suspended for one year.

Section 4 of the Act allowed the Minister responsible for local government to apply the criteria set out in section 2 in order to determine whether an area should have a category A municipality or whether it should have municipalities of both category C and B. The Court found that the Constitution by necessary implication vests this power in the Demarcation Board. Clause 1 of the Bill accordingly re-aligns section 3 with this constitutional requirement.

Section 5 of the Act enabled the Minister to declare an area that in terms of the criteria must have a category A municipality as a metropolitan area, and to fix nodal points within the area around which boundaries must l)e drawn. As the power to determine the category of the area and the power to determine the boundaries of the area are constitutionally both vested in the Demarcation Board which the Board must exercise as components of the process of boundary determination, there appears to be no need for the formal declaration of such areas as metropolitan areas as either before or after the determination of the outer boundaries. Clause 2 of the Bill consequently proposes the deletion of section 5.

Section 6 (2) of the Act provided for the declaration by the Minister of district management areas within category C municipalities where the establishment of a local municipality is not feasible. The Court held that the establishment of district management areas impacts on the boundaries of municipalities which is a function that constitutionally must be performed by the Demarcation Board. Clause 3 of the Bill gives effect to the Court's ruling by vesting the power to declare district management areas in the Demarcation Board.

Section 13 of the Act which allows the Minister to issue guidelines to MECs for local government to assist them in choosing the type of municipality that would be appropriate for a particular area, was declared invalid by the Court on the ground that it impinges on the power of provinces to decide on the types of municipality to be established in the province. Clause 4 of the Dill accordingly repeals this section.

Section 24 (1) of the Act allowed the Minister to determine the term of municipal councils by notice in the Government Gazette. The Court ruled that this section constituted an impermissible delegation of parliamentary power and that in terms of the Constitution only Parliament could fix the term. To rectify the matter clause 5 of the Bill amends section 24 (1) by stating that the term of municipal councils will be five years calculated from the day following the date or dates set for the previous election of all municipal councils.

Appendix 2:
INTERGOVERNMENTAL RELATIONS
PRESENTATION BY RK SIZANI
INTRODUCTION
- The creation of a new Portfolio, the Ministry for Provincial and Local Government.
- Integrating of Programmes and functions impacting on the development of Provincial and Local Government in line with the need to integrate and enhance service delivery.
- Higher profile for the IGR function in the work of the Ministry.

INTERGOVERNMENTAL ENVIRONMENT
- + 70 Structures
- Formal Statutory: Budget Council
- Informal Statutory: Forum of DG's; Intergovernmental Forum (IGF)
- Sectoral: MIN MECs
- Proliferation of Structures; Management of Evolution of System and Rationalisation required.

WHY IS INTERGOVERNMENTAL RELATIONS IMPORTANT?
- There are Three Interdependent Spheres of Government with Interlocking Functions. IGR is about the Relationships that must occur to Achieve Governance and Service Delivery

SECTION 41 OF THE CONSTITUTION
- An Act of Parliament must
* Establish or Provide for Structures and Institutions to Promote and Facilitate
Intergovernmental Relations
* Provide for Appropriate Mechanisms and Procedures to Facilitate
Settlement of Intergovernmental Disputes
- The Audit will Put Government in a Position to Decide Next Year on what Elements of the System Require Policy and Legislation

CURRENT STRATEGY

- To promote focussed debate on co-operative government and intergovernmental relations with a view to strengthening the national consensus on what these concepts mean in practice;
- To provide strategic and administrative support to intergovernmental structures within the jurisdiction of the Directorate; and support to other departments, in particular the co-ordinating departments;
- To audit the current experience of intergovernmental relations with a view to developing a policy framework, and which can deliver certain short term positions;
- To make certain immediate policy and legislative interventions where political necessity dictated; and
- To build and strengthen a research and support network amongst South African Universities.


CHALLENGES OVER THE NEXT FIVE YEARS
- Institutional Realignment of IGR Structures
- Integrating Activities of Government
- Monitoring and Evaluation
- Integration of Service Delivery
- Rural Development
- Poverty Relief
- Institutional Capacity-building

PROGRAMMES
- Intergovernmental audit
* Purpose is to Map Intergovernmental Structures in all Three Spheres of
Government
* To Raise Options for Strategically Aligning the Structures to Achieve
Integrated Service Delivery
- Discussion Document on S100 Interventions

- Legislation on S1OO and 139
- Discussion Document on IGR Disputes
- Discussion Document: Strategic Issues and Policy Options
- Discussion Document on the Intergovernmental System
- Capacity-building for Provincial Coordinators
- Workshops
- Manual
- Section 139 Manual
- Intergovernmental Publications Series / Newsletter
- Video Conferencing
- Forum Between Ministry for Provincial and Local Government and the Premiers
- CIU Social Sector Cluster
- IGFI FOSADI Forum
- Applied Policy Research Capacity
- Provincial Affairs and Intergovernmental Relations Centre

OUTCOMES - 1999/2000
- COMPREHENSIVE AUDIT REPORT WITH RECOMMENDATIONS BY 31 DECEMBER 1999
- DISCUSSION DOCUMENT SETTING OUT POLICY OPTIONS BY MARCH 2000

Appendix 3:
Intergovernmental Relations Discussion Documents

1. THE SETTLEMENT OF INTERGOVERNMENTAL DISPUTES
2. INTERGOVERNMENTAL RELATIONS AND PROVINCIAL GOVERNMENT: FOSTERING MUTUAL COOPERATION : AN ANALYTICAL REPORT
3. REPORT ON THE PROCEEDINGS OF THE CONFERENCE ON INTERGOVERNMENTAL RELATIONS AND PROVINCIAL GOVERNMENT: FOSTERING MUTUAL CO-OPERATION
4. PRINCIPLES INFORMING THE APPLICATION OF SECTION 139 OF THE CONSTITUTION
5. INTEGRATED REPORT ON PROVINCIAL SYSTEM OF GOVERNANCE BY RICHARD HUMPHRIES AND KEHLA SHUBANE
6. INTERGOVERNMENTAL RELATIONS : A REPORT BY DR RONALD WATTS
7. INTERGOVERNMENTAL RELATIONS : AN INTERNATIONAL COMPARATlVE STUDY
8. STRATEGIC ISSUES AND OPTIONS FOR POLICY ON CO-OPERATIVE GOVERNMENT AND INTERGOVERNMENTAL RELATIONS : DISCUSSION DOCUMENT
9. DISCUSSION DOCUMENT : AN ANALYSIS OF THE CONSTITUTIONAL PROVISIONS OF SECTION 100 OF THE CONSTITUTION
10. PROVINCIAL SUPERVISION: MANUAL FOR THE APPLICATION OF SECTION 139 OF THE CONSTITUTION

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