Municipal Systems Bill: hearings

Meeting report

PROVINCIAL AND LOCAL GOVERNMENT PORFOLIO COMMITTEE; LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE
9 May 2000
MUNICIPAL SYSTEMS BILL: HEARINGS

Note: Afternoon session available on 16/5/2000

Relevant submissions:
South African Local government Association (SALGA)
Institute of Municipal Finance Officers
Federation of Unions of South Africa (FEDUSA)/ Independent Municipal and Allied Trade Union (IMATU)
Institute for Local Government Management of South Africa
Development Bank of South Africa

SUMMARY
The above organisations made their submissions. Each organisation expressed satisfaction with the general framework and the principles of the Act and most of the submissions focussed on specific provisions. A discussion followed.

MINUTES
The attendance of the Minister, provincial MECs, departmental representatives including the Director General, Mr Z Titus, representatives from the House of Traditional Leaders and from various NGOs were noted.

The Chair, Mr Y Carrim (ANC) remarked that, while it had been intended that the programme would be organised thematically, this had not been possible due to practical constraints. Consequently there would be a slight awkwardness about the manner in which organisations had been grouped together.

Institute for Local Government Management of South Africa (ILGM)
Mr Matolo and Mr Bosman delivered the ILGM presentation. The ILGM supported the Bill entirely.

Regarding Chapter 1 of the Bill, Mr Matolo said that the definition of a 'municipal business enterprise' indicates that it is to be financed from sources other than municipal revenue. He submitted that the definition be amended to allow municipalities to provide the initial funding for such enterprises, as they will be dependent on such financial assistance in their initial stages.

He noted that definition of 'service utility' involves the control of these utilities through by-laws. There are difficulties with the use of by-laws in this context and submitted that it would be more appropriate to provide for the control and regulation of such entities by regulations rather than by-laws.

Regarding Chapter 4, he pointed out that the Constitution, specifically parts B of Schedules 4 & 5, implies that legislation is required to flesh out the general areas (for example, air pollution, child care facilities etc.) of local government as set out in the Schedules.

He noted that Chapter 7 deals with local public administration and human resources. He submitted that the requirement that certain officials' salaries and benefits be disclosed breaches the constitutional right to privacy.

Part 3 of Chapter 7 deals with a delegation system that municipalities must have in place. Mr Matolo said that there were a number of problems with the delegation of certain powers to councillors, including the blurring of the distinction that the Bill is supposed to make between the role of councillors as policy- and decision-makers and the role of officials as administering the implementation of such policies.

Regarding Part 4 of Chapter 7, Mr Matolo submitted that a similar system to the one currently being used to pay councillors should be applied to the remuneration of employees.

Mr Bosman said that there were a number of technical difficulties in Chapter 8. He submitted that the word 'sectoral' in s 72(c) is vague and requires definition or clarification.

It was suggested that the reference in s 74(1)(c) to the procedure set out in Part 4 of Chapter 8 should be substituted by a reference to Part 3.

He submitted further that s 75(2)(f), which provides for the relevant local authority to take over the municipal service, including the assets, when a service delivery agreement expires, should also provide for the taking over of the staff of the service provider.

Regarding Chapter 9, Mr Bosman noted that there were problems with s 94. The possibility of crediting payment to one account in cases where the municipality's customer has specified that such payment should be credited to another account is inequitable and untenable for a number of reasons.

Regarding Chapter 11, s 101(1) provides that a municipality may submit to arbitration any matter other than a matter involving a decision on its status, powers or duties, or the validity of its acts or by-laws. He submitted that there needs to be a clearer indication of what category of 'act' is being referred to in this section.

Mr Bosman concluded by noting that the provisions of s 52(1) result in a duplication of the powers between the Municipal Manager and the Executive Mayor. The remaining points in submission are of a technical nature and were not dealt with by Mr Bosman.

Institute of Municipal Finance Officers (IMFO)
The Vice President of the Institute, Mr H Venter, briefly set out the background and activities of the Institute which aims to protect and promote the interests of the profession of Municipal Finance Officers and the finances of local government in general. Their submission would focus on the financial management and accounting-related issues in the Bill.

Regarding Chapter 1, Mr Venter said that the definitions need to be aligned with the definitions in the draft Local Government Municipal Finance Management Bill.

Regarding Chapter 3, he submitted that s 11 should provide that relevant stakeholders be invited to certain meetings (as opposed to the meetings being open to the public at large) so as to control numbers of persons admitted to meetings.

Regarding Chapter 4, he noted that s 13 raises the issue of unfunded mandates and submitted that the section should provide that the standard of the new function be set and the funding should then match the standard.

Mr Venter emphasised that the detail in Chapter 5 is to be welcomed.

Regarding Chapter 6, Mr Venter submitted that s 51(1) should be reconsidered. This section provides for audited financial statements to be available within four months of the financial year-end. He noted that, in practice, it would take a few years to adjust processes and systems to comply with this section.

Regarding Chapter 7, he said that Parts 2 & 3 should not duplicate the draft LGMFM Bill. He noted that the IMFO would support the implementation of Part 6 (the training of staff) in its entirety and would provide assistance where possible.

Regarding Chapter 8, Mr Venter asked whether the Bill is in line with other pieces of legislation that provide for the delivery of municipal services and whether there had been any studies in this regard. He noted that s 91(a) allows for local authorities to invest in shares and stated that the draft LGMFM Bill should regulate this very carefully.

Mr Venter stated that Chapter 9 is supported in its entirety, but questioned whether it would not fit better with the LGMFM Bill. He noted that s 112 provides for the reporting to the Council by a Councillor while the LGMFM Bill provides for similar reporting by the Treasury. He noted that there needs to be alignment between the two Bills.

Mr Venter concluded with an offer to assist in compiling the list of legislation to be repealed. There were no further comments regarding the remaining chapters of the Bill.

Western Cape Provincial Development Council
Mr A Sayers, an Executive Director of the Council, stated that the submission would focus on Chapter 3, which deals with public participation. He noted that the Chapter adheres to a "minimalist approach" and that a number of aspects of the Bill reflect traditional notions of public participation.

Regarding s 7, he said that the omission from the Bill of definitions of 'public participation' and 'governance' were critical omissions.

Regarding s 8 (Mechanisms, processes and procedures for public participation), Mr Sayers remarked that the Bill tends to refer to traditional participatory mechanisms while not accommodating those that are evolving globally. He noted that the benefits of more structured relations involving consultative forums have been ignored. He added that these provisions are very vague.

Regarding s 9 (Promotion of public participation), Mr Sayers said that best practice examples from other countries emphasise the need for capacity building if these arrangements are to have any real impact.

Regarding ss 10 & 11 (Public notice of meetings / Admission of the public to meetings), Mr Sayers noted that these provisions provide for greater transparency and assist in the process of decision-making.

He stated that the Bill provides a flexible and complementary framework within which the processes of public participation in decision-making specified by the national frameworks could take effect. He noted that the flexibility of the framework accommodates and encourages provincial and local government structures to design mechanisms and processes where consultative decision-making between government and civil society could take place.

Mr Sayers noted that it is not only important the Bill be approved but also that codes and guidelines be formulated to remove some of the vagueness in the Bill.

South African Local Government Association (SALGA)
Mr T Mokwena, said that the two most important issues were public participation and service delivery and noted that the central concern is how the Bill advances these issues. He stated that SALGA is supportive of the key matters of the Bill which had to be practical, legal and implementable.

Mr Mokwena noted that the provisions of the Bill that empower the Minister to make regulations should be considered carefully. He noted that Local Government has the capability to set out its own guidelines and that these matters should not be left entirely to the National Government.

Mr Mokwena listed the various objectives the Bill should achieve and the elements it should contain and set out the process to be followed in determining what local government legislation is required.

He went on to highlight a number of definitions which are problematic and submitted refinements. These included a revision of the definition of 'delegation' and the tightening of the definition of 'internal trading entity'. A definition of 'municipal service' is required.

Regarding Chapter 2, Mr Mokwena submitted that the legal nature of municipalities needs to be clarified. Regarding clause 4, he noted that it would be problematic to place upon councils the unqualified duties listed in s 4(2). The clause 4(2)(g) should be deleted as the obligation imposed may not be constitutionally justified. Further, he submitted that clause 5(1)(g) should be revised.

Regarding Chapter 3, he said that SALGA was in agreement with most of the provisions. He submitted that there were a number of changes to be made, including a similar substitution of the mandatory 'must' by 'must strive to' in ss 7 - 9 and the deletion of ss 11(2).

Chapter 4: Mr Mokwena submitted that s 13 be revised and proposed an alternative. S 14 is supported. He stated that the notion of the right of local government to adopt regulations in terms of its by-laws should be re-introduced in s 16. He proposed a rewording of s 17.

Chapter 5: Regarding the integrated development planning provisions, Mr Mokwena noted that there should a broad framework. He submitted that the Bill goes into too much detail concerning Integrated Development Plans (IDP).

Chapter 6: Mr Mowena noted that SALGA agrees strongly that municipalities should be required to establish performance management systems. He noted that there were, however, a number of difficulties with the Chapter.

Chapter 7: Mr Mokwena stated that the general thrust of the Chapter was supported, but proposed a number of changes.

Chapter 8: Mr Mowena noted that there should be some definition of what municipal services are. He noted that alternative mechanisms for the provision of services (Part 2) are currently the subject of intensive debate within SALGA.

Chapter 9: He submitted that ss 89(1)(c), 91 & 92 need to be addressed.

Chapter 10: Mr Mokwena submitted that there should be a number of changes including the revision of Part 1 and the deletion of s 100(2).

Mr Mowena concluded by highlighting some legal matters in Chapter 11 and raising miscellaneous points under Chapter 12.

FEDUSA/IMATU
Mr L Grobler, the Vice President of IMATU (affiliated to FEDUSA), stated that the Bill was generally supported. He noted that there were, however, a number of matters of grave concern and that there were a number of specific comments to be made.

Specific criticisms of the Bill included the submissions that, amongst others, ss 52, 53, 61(1)(d), 62, 72(4)(a) should be reformulated. Mr Grobler noted that there are a number of difficulties with s 66. There were a number of further specific criticisms.

Mr Grobler concluded by commenting that FEDUSA and IMATU believe that if their submissions are accepted, effective delivery of services would be ensured as would the continuation of labour peace in the sector.

The Chair noted that SANCO, scheduled to make its submission next, had requested that they make their submission on Friday. He noted that there would be no submission by the National House of Traditional Leaders.

Development Bank of Southern Africa (DBSA)
Mr D Mmakola said that the DBSA views the transformation of local government as a critical factor in ensuring the success of sustainable development. He praised a number of provisions of the Bill, particularly those relating to service delivery, consultative decision-making and improved municipal management. However, improvements in these areas were suggested.

He noted that the Bill goes some way in addressing the critical issues regarding the enhancement of the financial sustainability, and therefore "bankablity", of local government. He set out a number of proposals regarding co-operative governance, particularly regarding the conditions under which national and provincial government could intervene in local government affairs. He submitted that the Bill should expressly identify the principles on which intervention is to take place.

Mr Mmakola expressed appreciation for the opportunity the DBSA had had to participate in the drafting of the legislation and noted that the DBSA would support the implementation thereof.

Discussion
It was suggested that a new paragraph (c) should be added to s 8(1) which would provide for the funding of local government initiatives. It was noted that this is at the heart of the notion of developmental local government. It was noted that the concept of participation in the Bill should imply strong, and not weak, forms of participation.

Mr P Smith (IFP) raised two issues. Firstly, he noted that SALGA had suggested that the phrase 'must' in Chapters 2 & 3 (regarding the obligations of municipalities) should be replaced by 'must strive to'. He questioned whether such an injunction would have any legal affect. He submitted that this would create no binding obligations. Secondly, he stated that he did not understand SALGA's input concerning the splitting up of s 13.

Mr M Bhabha (NCOP Committee Chair, ANC) emphasised that the Bill must be implementable. He stated that the definitions in this Bill must be aligned with the definitions in the Local Government: Municipal Finance Management Bill. He asked whether there is alignment and whether, if there is non-alignment, the alignment should take place in this Bill or in the Finance Management Bill.

Mr B Ngubeni (ANC) criticised the proposal by the IMFO that s 11 be revised so that stakeholders are to be invited to meetings (to avoid the difficulties of providing additional facilities where meetings are open to the public). He expressed his concern that the matter of public participation would be reduced to a question of the availability of rooms and seats. Further, he asked what 'applicable stakeholders' meant.

Mr T Ncalo (ANC) pointed out that SALGA's proposal concerning s 89(1)(c) (suggesting that provision for indigent debtors be addressed in terms of national and provincial government social welfare functions) is not clear and submitted that the issue should be lined up with the Poverty Relief Fund. He suggested that there be provision for the interest of municipalities to be unfrozen.

SALGA responded first. Mr Mokwena responded to Mr Smith's question concerning the legal impact of 'must strive to'. He stated that the Bill is dealing with a number of duties and responsibilities of governmental structures that are not prescribed by the Constitution. He stated that 'strive to' is a more practical formulation - some obligations simply will not be able to be met if 'must' is used.

Regarding Mr Ncalo's question concerning s 89(1), Mr Mokwena noted that the Bill suggests that local government must have an "indigent policy". He noted that this is a matter concerning the "equitable share" allocation of funding. He stated that welfare functions are not local government functions. Regarding Mr Ncalo's concern relating to the unfreezing of interest, he noted that the Bill requires that there be clear policies. The strategy is clear. He stated that, in terms of the system of the Bill, municipalities are empowered to acquire their revenues robustly.

Regarding Mr Ngubeni's question concerning the IMFO's proposed changes to s 11(2), Mr Mokwena stated that SALGA is not in favour of allowing municipalities to escape their responsibilities by selecting whom to invite to meetings.

The IMFO responded to a number of the questions. Regarding Mr Bhabha's questions concerning the alignment of the definitions, Mr Venter noted that this Bill is on the table, but the Finance Management Bill has some way to go before it reaches the Committee. He suggested that the better route might be to be vague in this Bill and insert references to the Finance Bill where the issue would be clarified.

The Chair noted that there would be difficulties with this approach. The effective implementation of this Bill will be dependent upon the other Bill.

Mr Venter addressed the matter of the submission of financial statements within 4 months of the end of the financial year. He stated that it will take some time to reach the point where this would happen and the question is how to manage the interim phase. He suggested that the answer may be to phase in different provisions of the Act at different stages. Regarding the issue of unfounded mandates, Mr Venter stated that standards should be set out and funding must be provided so that municipalities can comply with these standards. He stated that if residents within a particular area want activities to match different standards, the residents should fund these activities themselves.

Regarding s 11, he remarked that the legislation should not allow the councils to decide who may and may not attend meetings.

The Chair invited comments from the Department. The Chair asked whether using the phrase 'must strive to' would result in the particular matter being justiciable.

The Department replied that this phrase does not provide a clear-cut basis for taking the authority to court. It creates a value to be adhered to. It was stated that this concept is an important part of local government processes.

The Chair asked whether it was unconstitutional invasion of the right to privacy to require that local government managers' salaries be published. The department responded that the intention is not to cause the financial position of each manager to be divulged. The intention is merely to provide publication of what managers in the various classes are generally paid. It was stated that this is merely a matter of transparency rather than an invasion of privacy. The department indicated that it did not think that this provision is unconstitutional.

The Chair noted that he agreed with the publication of salaries. He noted that the salary of the President is made known to the public. He stated that the public is paying the money and that the public is entitled to know where it is going.

He asked whether s 11(1) and s 63 are constitutional. The Department responded that it did not belief that there are any constitutional problems.

The Chair asked why the framework for municipal development is not included. Ms Maloi from the Department stated that the Department is moving towards a far more comprehensive policy document. She stated that she would encourage labour to engage with the department regarding policy document formulation.

The Chair invited further questions. Mr Smith asked about IMATUs submission that the transfer of staff only occur with the concurrence of the employees. He questioned whether the giving of a veto could be justified.

It was questioned whether there needs to be a definition of local government development. Mr Bhabha noted that in past years, senior employees have been reluctant to move around - they did not want to lose their positions as a result of restructuring. He noted that the weapon of constructive dismissal had been used in the past. He asked for clarity of the 'equal or better' provision providing for the movement of employees suggested by IMATU.

My Grobler responded that the 'equal or better' provision is in alignment with the s 197 of the LRA. Regarding the movement of employees and the weapon of constructive dismissal, Mr Venter noted that if employees are asked to change their duties, there is the right to claim redundancy. He stated that there is enough in the Labour Relations Act to cater for Mr Bhabha's concerns.

Regarding a question raised by Mr Smith concerning tariffs and long-term concession contracts. He stated that the principle is that the municipalities should have the final say in the setting of tariffs - the service authority should remain within the municipality. Otherwise the matter is taken out of the democratically elected people's hands.

Regarding Mr Smith's question concerning the requirement that an employee is required to concur in the decision to move him or her. He stated that when a person has moved, reasons must be given to him/her. He noted that if there is a dispute, this must go through the dispute resolution procedures. He said that workers in municipalities are not like ordinary state workers who can be moved around the country - It was maintained that there must be a basis of concurrence.

The Chair noted that the Committee would like to engage with the Western Cape Development Council, but since they were not present, this could not be undertaken. He made some concluding remarks regarding consultation. He noted that in any annual report there should not simply be a mention made of what consultation was undertaken. There should also be a report on the effects of such consultation.

End of morning session.