Warrenton & Viljoenskroon Interventions: discussion

LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE
8 November 1999
WARRENTON AND VILJOENSKROON INTERVENTIONS: DISCUSSION

Documents distributed
Proposed terms of intervention in Viljoenskroon municipality
Progress report on the Warrenton intervention
Table of current interventions as at 8 November 1999
[Note: These documents are attached to the end of the minutes]

SUMMARY
The committee approved both the request for intervention in Viljoenskroon and the recommendation of the Warrenton progress report that the intervention be continued for a four month period.

One point of contention which arose was whether it was within the authority of the NCOP to play a pro-active role prior to the request for intervention. A discussion on this matter was not entertained and the issue was deferred to another meeting.

MINUTES
The Chairperson was unable to attend the meeting so Mr A Marais (ANC) was elected as acting chairperson.

Intervention in Viljoenskroon
A committee delegation recently returned from Viljoenskroon and filed its report where certain recommendations and terms were proposed (see attached appendix). Questions from the general committee were posed primarily to Ms Z Traut, Parliamentary Law Advisor, who had been a member of the delegation.

Questions and comments by committee members
Ms C Botha (DP, Free State) commented that there were early warning signs in Viljoenskroon as early as two years ago. During the time which had elapsed more debt and more bad feeling had been created between the municipality and the residents of that area. She questioned why it had taken the committee such a long time to respond to the problem and questioned their inaction.

Mr M Sulliman (ANC, Northern Cape) responded by saying that Ms Botha's complaint was unjustified as, in terms of the Constitution, the NCOP can only work on a matter if they have been requested to do so. It is unconstitutional for them to intervene at their own whim.

Mr Durr (ACDP, Western Cape) wanted to know what the income of Viljoenskroon was, what the cause of the existing shortfall was, and whether that area was without any capacity or potential.

Ms Traut responded that, inter alia, there had been bad accounting practices, that most of the skilled staff had been lost, that there had been no tariff increases for the past four years (which meant that income had not increased but costs had), which resulted in the crisis experienced. A major problem was that there was understaffing in one section and overstaffing in another, not to mention the fact that members of staff had been misplaced.

She noted however that they have recently appointed an acting CEO and finance manager who seemed to have a good plan in place and also that this was the first time in two years that they had seen some income as they have only now finished paying off the lawyers for the action taken against non-payers.

Mr Sulliman wanted clarification as to whether parties were still in occupation of the land or whether it was in the hands of the municipality.

Ms Traut replied that the property was still in the possession of the purchasers, who, having paid the deposit and taken possession of the property, had failed to pay any of the balance.

Mr M Makoela (ANC, Northern Province) asked whether they would be able to force the people to pay.

The response was that there would be the usual action for breach of contract and that regard would have to be paid to clauses in the specific contracts signed. It was noted that in future a reversionary clause would be inserted to assist with such problems.

Mr Makoela also asked what had happened to the mayor and the reply was that his term of office had expired. However while the delegation was in Viljoenskroon, he had been present at the meetings in his capacity as ex-mayor (and had provided certain useful information).

The committee agreed that the request for intervention by the Free State, in terms of executive functions, should be approved.

The acting chairperson noted, in response to Ms Botha's earlier comment, that the NCOP had no pro-active role in these matters but that their role prior to the intervention was an important issue which they would bring before the Chair at another time.

Mr P Maloyi (ANC, North West) noted that, although he was not absolutely certain, he thought that S154 of the Constitution did give them this pro-active role to intervene in provincial government.

The acting chairperson decided to defer the matter to another meeting.

Warrenton Intervention
The report detailing the current situation and proposals regarding this intervention was discussed (see report). The town does possess income-generating capacity. It was recommended that there be continued review by the NCOP which entailed reports from the administrator in Warrenton to the NCOP. The Warrenton Council seemed confident that they would be able to complete their goals within a four month period and accordingly this was the period stipulated.

Discussion
In answer to a query, it was stated that the outstanding monies are being paid by the local authority (the municipality itself).

Mr Durr was concerned that even if they did succeed to the point of service delivery, what guarantee did they have that the situation would not revert to the old one. He commented that they were dealing with the symptoms and not the causes of the local community's inability to deal with the problem. He noted that the factor of unlocking the comparative advantages that each town possesses was lacking in their approach.

Mr Makoela commented that he could not address Mr Durr's comments as the principle he was addressing was a broad one. He made his own observation that there was bad town management by the town clerk and that this seemed to be the main problem.

Mr Sulliman responded to Mr Durr's comments by stating that they were in fact dealing with both the symptoms and the causes. He continued that once the demarcation process was completed, the committee would be in a better position to properly address the problem.

Mr Durr replied that he was not suggesting they do anything differently, he was simply concerned that they were not doing enough.

Mr Maloyi commented that all the speakers were accurate in their opinions and that there would be workshops taking place on Friday (12 November 1999) where all these issues would be addressed.

It was noted by the acting chairperson that in terms of the Viljoenskroon intervention the committee required that a business plan be submitted to them by the administrator but the same was not done in respect of Warrenton. He wanted to know why.

Mr Makoela responded that a business plan was only important at the time when the intervention was being started. In the case of Warrenton they were only reviewing something that was already in place. Accordingly, requesting a business plan at this stage was beyond the competence of the committee.

At this time the committee agreed to the recommendations and the meeting was adjourned.

Appendix 1:
INTERVENTION IN THE VILJOENSKROON TRANSITIONAL LOCAL COUNCIL BY THE FREE STATE PROVINCIAL GOVERNMENT IN TERMS OF SECTION 139(1)(b) OF THE CONSTITUTION

A BACKGROUND TO INTERVENTION
1. Viljoenskroon has a population of approximately 23 000. After 1995, a series of resignations of highly skilled key personnel placed the capacity of the Viljoenskroon Transitional Local Council (the council) under considerable strain.

During November 1997, the Provincial Government of the Free State deployed a management support team to the council. A number of recommendations were made, some of which were implemented. A payment rate of 50% for services exacerbated the council's capacity problem.

2. Financial situation
As at 31 March 1999, the total amount owing to creditors was R9 045 244,87. The outstanding amount owed to the council was R7 532 474, 59.

During June 1999, the creditors of the council, including Sanlam, the Free State Municipal Pension Fund and Eskom either instituted, or threatened to institute, legal action for the recovery of the amounts owing.

The council's budget situation contributed largely to its current financial crisis. It had resolved four years ago to decrease its tariffs by 14%, and no increases have been phased in since then.

Furthermore, staff salaries account for approximately 66% of the total budget of the council.

3. Service delivery
Financial difficulties, coupled with low staff morale, have led to a deterioration in the level of service delivery. The problems experienced in this regard are mainly as a result of the following factors:

The council's inability to pay staff benefits.
Staff and/or trade union representatives not being kept informed of developments within the council.
A lack of appropriate training for staff.
Equipment not being maintained and repaired regularly.

4. Political Situation
The community has lost faith and trust in the councillors because it is not being kept informed of developments. The absence of communication has led to allegations of corruption, abuse of council assets and misappropriation of council monies. These factors have, in turn, contributed to the non-payment for services.

The council therefore cannot fulfil its executive obligations in terms of the Local Government Transition Act, 1993 (Act No. 209 of 1993).

TERMS OF INTERVENTION
The Free State Provincial Government appointed an administrator to take over the executive functions of the council. In terms of the provisions of section 139(1)(b) of the Constitution, the Cabinet member responsible for local government affairs approved the intervention on 7 October 1999. The MEC for Local Government Management and Housing, on behalf of the Free State Provincial Government, notified the National Council of Provinces of the intervention, in terms of section 139(2)(b), on 13 October 1999.

The Free State Provincial Government is seeking approval for its intervention on the following terms:

Provision of services
The administrator must ensure that:-
the water supply is maintained;
water purification standards are met;
the electricity supply is maintained;
refuse removal services are rendered on a regular and sustainable basis; and
all other services are maintained.

Financial Management
The administrator must ensure that:-

rates, fees, levies and other outstanding monies due to the municipality are collected;
the necessary financial systems and procedures are put in place and maintained;
(3) the financial obligations of the municipality are met; and
the municipality is placed in a position to comply with the provisions relating to financial management as outlined in section 10G of the Local Government Transition Act (Act 209 of 1993).

Administrative Procedures
The administrator must ensure that:-

policies and procedures relating to human resource practices and conforming to relevant legislation are put in place and maintained and/or reviewed;
a communication strategy for ongoing communication with staff is developed and adhered to;
policies and procedures for the use of assets and services of the municipality are adhered to;
municipal services and assets are used solely for the purposes for which they were intended;
all current immovable property sales contracts are reviewed for non-payment of the balance of the purchase price and reversionary clauses are included in all future contracts; and
the affairs of the municipality are conducted in an open, transparent, accountable and responsible manner, in consultation with all role-players.

Election of mayor
The Administrator must facilitate the election of the mayor.

Appointment, training and development of staff
The administrator must ensure that:-
(1) systems are put in place for staff to be trained and developed to
efficiently and effectively perform the functions assigned to them;
(2) vacant key positions are filled within a reasonable time. The Administrator must identify internal candidates to be trained for these positions, where possible.

Training and development of councillors
The administrator must ensure that systems are put in place for councillors to be trained and developed to perform the functions assigned to them efficiently and effectively.

7. Co-operation of town clerk
The town clerk must co-operate fully with the administrator and must render all reasonable assistance to the administrator in carrying out his functions.

8. Meetings of councillors and administrator
The council and the administrator must meet once a week to discuss matters of mutual interest. At this meeting, the administrator must submit a written progress report to the council.

The administrator, together with councillors, must keep the community abreast of developments during the intervention, by means of an appropriate communications programme. Meetings with the community must be held on a monthly basis.

9. Co-operation between councillors and administrator
The administrator and councillors must carry out their respective duties in a co-operative manner. However, in the event of a dispute between the parties, it must be resolved through mediation by a representative of Salga. Should the matter remain unresolved, it must be decided by the MEC for Local Government Management and Housing of the Free State Provincial Government.

10. Business plan
The administrator must submit a business plan to the MEC for Local Government Management and Housing by 15 December 1999. The National Council Of Provinces must receive a copy of the business plan.

11. Reports by Administrator
The administrator must provide the MEC for Local Government Management and Housing with a monthly written report on the intervention and the readiness of the council to resume its normal functions. The National Council Of Provinces must receive copies of these reports.

12. Competency of councillors
Councillors remain competent to carry out their legislative functions.

13. End of intervention
The intervention must end when the National Council Of Provinces is satisfied that the council is able to resume its executive responsibilities, that the council is financially viable, that the financial control policies are consistently implemented and that staff and councillors are being trained properly.

Recommendations
The Committee recommends that the intervention in the Viljoenskroon Transitional Local Council by the Free State Provincial Government be approved.

Appendix 2:
PROGRESS REPORT OF THE SELECT COMMITTEE ON LOCAL GOVERNMENT AND ADMINISTRATION ON THE WARRENTON INTERVENTION

On 26 October 1999 members of the Select Committee on Local Government and Administration visited Warrenton as part of its function, in terms of section 139 of the Constitution, to regularly review the intervention.

The delegation comprised the following persons: Mr M Bhabha, Mr M Sulliman, Mr J Horne, Ms D Le Roux (Procedural Services Manager: NCOP), and Mr E De Koker (Committee Clerk).

The Provincial Government has appointed a Municipal Support Team to complement the work of the Administrator.

The Committee reports as follows on the progress in Warrenton:

Provision of Services
Services are being rendered on a regular basis. Monthly audits on water consumption are taking place. All illegal bypasses have been fixed and broken water meter boxes have been replaced.

Electricity meters have been replaced where necessary. A second suction tank truck has been purchased to improve service delivery.

Financial Management
Successful debt settlement procedures have been negotiated with creditors. A credit control policy is in place. Outstanding creditors have been reduced from R5,8m to R2,4m and the bank overdraft has been settled.

Overtime payments have been stopped. Telephone accounts have been reduced.

Since the appointment of an accountant on 15 June and a treasurer on 1 July, there has been improvement in that department. Municipal service accounts are now sent out between the 21^st and the 25^th of each month.

There is however still an amount of R15m owed by debtors to the Municipality. A monthly debtor's control system has been implemented which is intended to reduce this amount. An indigent policy is in place and being implemented.

Councillors complained about not being kept informed of the Municipality's financial situation.

Administrative Procedures
A new filing system has been adopted and implemented and registry staff is receiving training.

Human Resource policies are in place and staff morale is gradually improving.

Cooperation of the Town Clerk
The relationship between the Town Clerk and the Administrator is not a good one. The Town Clerk is receiving some training, but there are doubts on the part of the Administrator and the Council as to his ability to be trained to function as a Town Clerk.

Meetings of Councillors and Administrator and Cooperation between Councillors and Administrator
The Council has now adopted Standing Rules of Order and has received training in this regard.

The Councillors complained that the Administrator was not being cooperative in providing them with regular written reports. They therefore felt that they were not aware of the progress of the intervention. They are, however, pleased with the overall performance of the Administrator.

Competency of Councillors
The Council is still in office and performing their functions as Councillors. Council committees have been restructured to involve each Councillor in a committee which deals with a specific area, e.g. Public Works, Executive Committee, etc.

Outstanding matters
Ongoing training of Councillors
Ongoing training of all staff who are in need of training
A labour relations policy

Recommendations
That the Administrator keeps the Council informed of the Municipality's financial decision by means of a written report on a monthly basis.
That the situation of the Town Clerk be resolved as soon as possible.
That the intervention continues for at least 4 months, subject to the continued review thereof by the NCOP.

Appendix 3:

TABLE OF CURRENT INTERVENTIONS
Warrenton: Northern Cape
Date of intervention: 17 February 1999
Date of approval by: 23 March 1999
Duration of intervention: 8 months, 2 weeks and 1 day
Stage of Review: Review report submitted for consideration by House

Ogies: Mpumalanga
Date of intervention: 11 May 1999
Date of approval by: 23 July 1999
Duration of intervention: 5 months and 4 weeks
Stage of Review: Progress report requested

Tweeling: Free State
Date of intervention: 19 July 1999
Date of approval by: 23 August 1999
Duration of intervention: 3 months, 2 weeks and 6 days
Stage of Review: Progress report requested

Stilfontein: North West
Date of intervention: 3 August 1999
Date of approval by: 21 September 1999
Duration of intervention: 3 months and 5 days
Stage of Review: Progress report requested

Wedela: North West
Date of intervention: 3 August 1999
Date of approval by: 21 September 1999
Duration of intervention: 3 months and 5 days
Stage of Review: Progress report requested

Noupoort: Northern Cape
Date of intervention: 20 August 1999
Date of approval by: 21 September 1999
Duration of intervention: 2 months, 2 weeks and 5 days
Stage of Review: Progress report requested