Transfer of Water Services: SA Local Government Association briefing

Meeting report

WATER AFFAIRS AND FORESTRY PORTFOLIO COMMITTEE
29 October 2004
TRANSFER OF WATER SERVICES: SA LOCAL GOVERNMENT ASSOCIATION BRIEFING

Chairperson: Ms C September (ANC)

Documents handed out:
PowerPoint presentation by South African Local Government Association

SUMMARY
The South African Local Government Association (SALGA) and the Department both reported budgetary constraints. The current operating and maintenance subsidies were insufficient. At the present rate of transfers of water services, Government delivery deadlines did not look achievable. Operating shortfalls from the start of taking on transfer schemes, hampered the work of municipalities that were unable to cross-subsidise funds to plug debts of the Department. Alleged municipal debts totalled R500 million. SALGA wanted transfer schemes to be more flexible and prepared by case-specific functional assessments. The date for commencement of municipal transfer schemes should be linked to Section 78 (Municipal Systems Act) assessments. The Department complained of insufficient personnel subsidies and overstaffing, taken on board in 1995 from the defunct 'homelands administration system'.

MINUTES
The SALGA delegation consisted of Ms B Pretorius (Director: Water Services); Councillor H Magerman (SALGA Municipal Services Working Group); Councillor W Mzozoyana (Water and Sanitation: Amatole District Municipality); Mr K Mullagie (Director: Parliamentary Affairs) and Mr T Mayosi (Director: Water and Sanitation Operations and Maintenance: OR Tambo District Municipality). A Department delegation fielded questions and concerns of the Committee relating to water services: Mr T Balzar (Manager: National Transfers); Ms Z Mutt (Chief Director: Regional Co-ordination) and Mr W Mokoena (Transfer Officer).

Ms Pretorius briefed the Committee on the progress of SALGA on transfer of water services. She admitted a slow rate of transfer relative to Government implementation targets and deadlines. When picking up the transfer policy in 2002, SALGA had been inexperienced with handling the complexities of an immense delivery project. Municipalities were issued inflexible transfer schemes that had had unspecific functional assessment by the Department. Many had run up huge debts since 2002. Asset refurbishment and replacement costs were not featured in the original schemes, resulting in grossly inflated municipal operating and maintenance costs. Ms Pretorius emphasised the importance of channelling institutional reform, staffing transfers and delivery mechanisms for providing water services through Section 78.

Mr Balzar identified Department stumbling blocks. By benchmark standards, the Department was 30-40% overstaffed for the transfer programme. Funding was insufficient to execute the programme and alleviate municipal debts of R500 million. The Department had requested the National Treasury extend the June 2005 deadline for transferring water services to the municipalities, to 2006.

Discussion
Ms E Lishiva (ANC) enquired how municipal subsidies were monitored.

Mr Mzoyoyana replied that Government had provided local authorities with monitoring mechanisms on funds and subsidies. It was advisable that SALGA instituted its own peer review mechanisms.

Mr M Sibuyana (IFP) was worried that overdue implementation of water services was not up to date with population growth. Pipelines installed today accounted for yesterday's statistics; great numbers of people who were not receiving basic water services.

Mr Balzar answered that local government was responsible for accounting the statistical demands of its constituencies. Achievements depended on how they identified their Integrated Development Plans (IDPs).

Ms D van der Walt (DA) asked if the Municipal Infrastructure Conditional (MIC) grant was focused solely on developing new infrastructure. It was clear that with their equitable share allowances, municipalities had spent diversely. There seemed to be troubles with communicating and co-ordinating objectives between District Councils and Local Municipalities. Who was addressing this?

Ms Z Mutt responded that the MIC grants had experienced 'teething problems', but the Department was reconciling budgeted to actual figures of fund payments. Mr Balzar said that the Department of Local and Provincial Government (DPLG) had managed MIC grants. Unlike previous Sanitation and Water Supply Capital Grants programmes, the MIC grants were not confined solely to spending on new infrastructure; they could be used for protecting existing infrastructures.

The Chairperson asked what SALGA and that Department could relate to the Committee about government targets for delivery of public services. What national decisions would they be taking with these targets in mind? There have been reported inefficiencies in the delivery of municipal services to rural areas and farm dwellers, especially relating to water. Could the delegations comment on this?

Mr Magerman replied that the municipal services working groups responsible for housing, in conjunction with the Integrated Rural Settlement Development Programme, should provide ample support for farm issues. At the moment, there were too many policy gaps for SALGA to guarantee meeting the government target of transferring water services from the Department to local authorities by June 2005.

Mr Balzar added that the Department was focusing on strengthening the sustainability of services, not merely on passing targets. The transfer programme did overlap in places with the old Sanitation and Water Supply Programme, so there was an existing template for the Department to build on. Of the required R720 million for securing the 2008 deadline, the Department had gained R500 million through the National Treasury. It was confident of acquiring the remainder in due time for executing its 2008 responsibility.

Mr J Arendse (ANC) asked if an audit had been conducted on the previous Water Supply Programme, which could give pointers for the current one. SALGA and the Department did not appear to be working together cohesively. He was hearing mixed reports. Government targets did not seem to be addressed seriously by either SALGA or the Department. Did they appreciate that the President had set the 2008 target for public service delivery long before setting the June 2005 transfer deadline? If SALGA had a peer review, could they please forward it?

Ms Pretorius answered that SALGA had investigated the likelihood of achieving targets. An internal municipal audit had drawn a 74% response from Water Services Authorities, which was positive about installing 300 000 toilets in targeted settlements by this financial year-end. SALGA was robustly monitoring municipalities' implementation of services, but they could not be sure of meeting longer-term targets. She was confident in the co-operative governance polices of SALGA that debated matters healthily with other parties.

Mr Mzoyoyane indicated that occasional disagreements occurred between SALGA and the Department. On Section 78 there were slight discrepancies involving figures. He was certain that a series of meetings with the Department would resolve differences. He could make the Peer Review available to the Committee. Funding for MIC grants, which were supposed to replace the old 'bucket system', was insufficient.

Mr M Masala (ANC) was concerned about staff transfers from the Department to local government. Were SALGA and the Department consulting labour institutions about the problem of excess staff? What was the role of water suppliers in the transfer programme?

Mr Balzar confirmed that the Department had sought advice from labour institutions, trade unions and shop stewards.

Mr Mzoyoyane responded that SALGA had involved labour institutions in their project, as well as trade unions and the water boards. They had negotiated with one another on aspects of water transfers.

Mr L Greyling (ID) said that many municipalities lacked the technological capacity to provide free basic water services to all. Could the delegates elaborate on why certain municipalities were unable to cross-subsidise funds to compensate debts? He hoped that programmes existed in the Department for retraining staff that were transferred to local government.

Mr Balzar responded that the Department did not have a good register of municipal assets. It had to use original functional assessments as a point of departure for specifying asset transfers and adjusting budgets in individual cases. One had to bear in mind that in 2002 there was no budget for asset refurbishments. Policy gaps had been discovered that could not have been anticipated in 2002 when the programme began.

The Chairperson asked for clarification on the suggested dates for commencement of municipal transfer schemes. Also, how did SALGA glean their statistics on the status of personnel?

Mr Balzar replied that the Department had made audits of personnel in the transfer schemes, and had benchmarked their results against contemporaries in the field, and had found that they were 30-40% overstaffed. Benchmarking focused on conditions of services in urban areas, rather than rural areas where much of water services infrastructure was situated. There was a social plan in place for staff moving out of the Department, but not all staff could simply be transferred to local government.

Mr Mzoyoyane contributed that the crucial factor in transferring services to local government was the condition of schemes arriving at the municipalities. If schemes were initially flawed, the Department needed to raise money to remedy them, or their implementation would increasingly be distorted. It was vital that the Department came up with a social plan to resolve the issue of overstaffing.

The meeting was adjourned.