Municipal Systems Bill: Chapters 6

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Cooperative Governance and Traditional Affairs

27 June 2000
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Meeting Summary

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Meeting report

PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE; LOCAL GOVERNMENT & ADMINISTRATION SELECT COMMITTEE: JOINT MEETING
28 June 2000
MUNICIPAL SYSTEMS BILL: CHAPTER 6, 7 & 10

Documents handed out
Department's responses to submissions on each of the chapters of the Bill
[if this document takes too long to download, e-mail info@pmg.org.za for it to be e-mailed to you


SUMMARY
The Committee, in a day-long session that lasted until after ten in the evening, began with a conceptual discussion of Key Performance Indicators, Performance Management and Auditing and then moved on to a clause by clause analysis of Chapter 6, 7 and 10.

The Committee decided that there should be a few basic KPI based on national norms which should apply to all municipalities. Municipalities should have the power to develop additional KPI. The KPI in the Bill should be objective and not subjective.

In respect of Clause 38(c) the Committee discussed the provision that an auditor monitor performance on development objectives which was deemed by some to be beyond an auditor's brief. The Department said that auditors would have to be retrained to do this but the Democratic Party said that they did not think that such retraining was possible. The Chairperson said that they would need to discuss this with the Auditor-General.

The DP wanted the performance management system in Clause 35 to be voluntary rather than compulsory and were worried about its cost implications.
The issue of general key performance indicators provoked some interesting discussion around the point that municipalities were not "islands of autonomy", but had to operate within framework legislation which national government drew up to create uniformity amongst all municipalities.

The consequences of municipalities not implementing Chapter 6, whether implementation was an executive or legislative responsibility and whether there would be incentives for those who did implement it were discussed.

The Department gave a brief overview of Chapter 7 on Local Public Administration and Human Resources. The issue of fixed term contracts, which had emerged in the public hearings was extensively discussed as were the key areas of organization of the administration, contracts for municipal managers, and the delegation of powers from the municipal council to the appropriate structure or functionary.

In their discussions, the committee agreed that municipal managers will be responsible for developing and implementing performance management measures for all municipal staff, and that a code of conduct will be created to deal with councillors. The Municipal Structures Act will be amended to facilitate this measure. It was also decided that a special committee will be established to hear appeals from persons whose rights have been affected as the result of a decision taken by a delegated authority on behalf of the council.

In respect of Chapter 10 Provinical and National Monitoring and Standard Setting, the ANC was wary of the MECs ability to intervene in municipalities where a municipality could not fulfill an executive obligation. It was argued that if the delivery of a service was interrupted, the restoration of the service could very well be subject to whether or not the council was meeting at that time, or whether the council would even be able to form a quorum to resolve the problem, and as such, service delivery would suffer. It was submitted that the Constitution made it very clear in 139(1)(b) that if a municipality could not perform an executive obligation that the relevant provincial executive should intervene to assume responsibility for that obligation. To this end, it was suggested that there be an early warning system, whereby at the end of each year, municipalities must submit their IDPs to the NCOP. The NCOP would be able to call the MEC to appear before them to account for what had been done. It was thought this would allow the NCOP to implement intervention to ensure responsibility for proper delivery of services. Members were generally in favor of the idea, although no concrete decision was reached.

MINUTES
Conceptual discussion of Chapter 6
Key Performance Indicators
The committee entered discussions on the viability of establishing a performance management system. Chapter 6 of the Bill provides a tool whereby the performance of a municipality can be kept in check by the public. The committee deliberated on which Key Performance Indicators (KPI) would be appropriate.

The issue of gender equality was discussed. In answer to Sister Ncube (ANC) who asked if they were going to make a specific provision for the gender issue, the Department said that they would consider making a reference to gender but the question was how to factor it in.

The Chairperson noted that the performance indicators must communicate concern for the impact of delivery. When judging the performance of a municipality, one must look at the impact of the municipality on women. According to the Constitution, gender issues must be a consideration by Parliament in all bills.

An ANC member referred to Clause 38(e)(ii) of the Bill which reads:
''external reporting to the public and appropriate national and provincial organs of State''. He said that this clause was ''quite broad'' and they needed to ''tighten it''. He suggested that the reporting be made to the MEC and the Minister specifically. The Chairperson agreed.

Ms Southgate (ACDP) said Clause 35 must include a reference to the community. The community can then have some kind of feedback to measure performance in municipalities. They could add this to the section as subclause (c). The Chairperson said that this concept was in the Bill even if it was not that explicit.

Mr Bhabha (ANC) stated that KPI can be divided into categories of subjective and objective indicators, the community itself being a subjective indicator. Mr Bhabha (ANC) felt that the subjective indicators should not be included in the Bill as they are too fluid. He reminded the committee of the Australian study tour and what they had learned from the Australian system. Subjective indicators give problems. For example, how does a city manager "get on with people"? If one asked a hundred different people for an opinion then one would probably get one hundred different opinions.

There should be some emphasis on community satisfaction but it should not be the primary indicator. When one links satisfaction with available resources, it is even more difficult. This is not something that you put in the Bill because one cannot be rigid about the indicators. He said that they should leave it as it is to allow a kind of flexibility. He concluded by saying ''Don't prescribe too narrowly''.

Mr Bhabha suggested that the Department send to every municipality some type of pro forma contract to show them ''this is how we do it''. This suggestion came from discussions with officials in provinces.

The Chair noted that although South Africa is using the Australian model of performance management as a frame of reference, it must be kept in mind that Australia is much more economically advanced and each municipality has its own key priorities. For this reason national KPI were difficult in Australia. A national norm was hard to establish. In South Africa there are national basic needs, therefore South Africa could have national KPI for high priority services.

Mr Bhabha said that measuring community satisfaction is difficult. For example, if people were not getting water then they blame local government but the task is a national government responsibility. These are basic needs but the responsibility for their provision emanates elsewhere and not from local government. One has to get around this when drawing up the KPI. The Chairperson agreed.

Ms Borman (DP) asked what the difference was between Key Performance Indicators and a Performance Target.

The Department replied by using the example of a housing project. There are different measures for the success of such a project. Indicators are a measurement variable that one looks at such as the number of houses built or the number of jobs the project has created. The target is for example ''50 jobs''.
In every project there are a lot of indicators. The municipality must determine what indicators they want to use. Then set targets.

Thus indicators set what one wants to measure. The actual figure set becomes the target. Setting up KPI is directly linked to the Integrated Development Plan.

The Chair stated that Integrated Development Planning and Performance Management would only happen over time.

Performance Management and Interaction
Mr Bhabha said that it was the way in which performance management was implemented that is important. He said that they must not be too rigid and said that any municipality, no matter their capacity, must apply the KPI from day one.

He noted that the Department had mentioned that they might implement pilot projects and asked them to explain what they meant by this. Would they choose a town and apply all the KPI factors beyond the minimum requirements (as there must be some KPI which apply uniformly and some which go further). Referring to Clause 35 he said that they cannot add on to what is already there. Again, he stressed that it will be a mistake to include subjective indicators in the Bill.

Ms Botha agreed that they need a basic KPI which should be objective and they should leave the power for municipalities to develop additional KPI.

The Department said that they are discussing the idea and nature of a pilot programme. For example, whether KPI will apply nationally but exempts certain municipalities. They said that Mr Bhabha was right that they would have to begin with the most basic essential measurable indicators for services for about the first five years. The result would be a system that will grow.

Performance auditing
Mr Bhabha (ANC) noted that Clause 38 (c) of the Bill makes provision for auditors to test developmental objectives against performance indicators and targets. He feels that auditors are number crunchers and auditing is an exact science and they will be unable to perform this function. He concluded that the auditors are being given too much discretion.

The Department disagreed, saying that auditors do need to move toward a socio-economic impact analysis. The move is away from bean-counting towards a socio-economic analysis. Using not only figures, but taking into account the developmental influences as well. They admitted that this was a major paradigm shift. The Chair pointed out that this will indeed be a monumental task and the Auditor General's staff would need to be retrained.

The Department replied that they are already retraining a few people and noted that an audit relates to verifying matters. For example if someone gives a particular reason why they did not perform then the auditor simply has to verify the reasons given for the lack of performance.

Ms Botha (DP) said that it was completely outside an auditor's brief to analyse the developmental needs of a community. She doubted that they could be retrained to perform this function.

The Chair responded that a meeting will have to be arranged with the Auditor General to discuss this.

The Department commented that when you require a municipality to report, some municipalities fail to do this. Further how would one ensure the integrity of these reports. They realised that to carry out this proposal they had to make a major financial investment in this area. They have already been dealing with donors to fund training and reorientation.

Clause by clause analysis of Chapter 6: Performance Management
Clause 35 Establishment of a performance management system
Ms Borman proposed that the word ''must'' be changed to ''may'' so that it reads:
''A municipality must administer its affairs in an economical, effective, efficient and accountable manner, and may for this purpose establish a performance management system …'' She said that if they use the word ''must'' then that would be prescriptive.

Ms Borman (DP) stated that performance management is like any other tool. What if municipalities wish to use another tool? Ms Borman felt that the section was restrictive, in that it locks people in.

Ms Borman said that in terms of Section 156 (5) of the Constitution they did not have the right to be prescriptive: ''A municipality has the right to exercise any power concerning a matter reasonably necessary for, or incidental to, the effective performance of its functions.''

The ACDP felt it imperative that the section stays as it is. Sensing the DP opposition to the section, the Chair requested a viable alternative to performance management. Ms Borman could not answer this but said that the municipality may want to choose another system.

Ms Botha (DP) interjected to say that what Ms Borman meant was that the performance management system was the current management tool but in time perhaps a different system will develop which the municipality may want.

The Chair made the point that performance measurement procedures were already in place in the private sector; the public sector is lagging behind.

The Chairperson said that the performance management system is not a brand name like a popular brand of cigarettes. He said Ms Borman's underlying concern seemed to be whether the municipality had a choice and the capacity. He explained to her that conceptually they had decided that all municipalities must have an ideal. The question was what the model of the IDP would be. The model of performance management will be the one best suited to its circumstances. He assured her that they did not have a ''one size fits all'' approach. The municipality has a choice which is linked to its IDP.

The Chairperson said that they would ''go for this'' and retain the current phrasing because the opposition party could not present an alternative system.

Ms Botha brought up the cost implications of implementing such a system and asked if national funding would cover this.

The Chairperson said that all agreed that the system would have great financial
implications but in the long term as the system begins to work they would save money. He said that they must not let money outweigh the broader impact.

Mr Bhabha said that generally costs will be incurred. On this point he thought that they would save because at present "we have a management system that is neither here nor there''.

Clause 36 Developing of performance management system
No discussion

Clause 37 Monitoring and review of performance management system
It was agreed that "may" had to be replaced with "must"

Clause 38 Core components
Ms Borman felt that too much emphasis was being placed on performance management and development and too little was placed on maintenance of municipalities and provision of services.

Mr Bhabha said that, whilst "development" was a social, technical as well as a legal term, in the spirit of the Constitution it was an all encompassing concept, which covered maintenance and service delivery.

The Department suggested that this point could be emphasised by making reference to development priorities and objectives.

Ms Botha felt that 38(b) should come before 38(a).

The Department said that one could not set performance targets without setting performance indicators and therefore 38(a) and (b) should remain as they were.

Ms Botha disagreed

Clause 39 General key performance indicators
Mr Bhabha said that the ANC disagreed with SALGA's view that SALGA should set general key performance indicators and not the Minister.

Ms Borman said that the DP felt that Clause 39 was unconstitutional. She said that local government was a sphere of government and Clause 39 gave the Minister sweeping powers to cause interference in local government.

The Department said that the Constitution did not prohibit the regulation of the affairs of municipalities, by way of national and provincial legislation. If one looked at 155(7) of the Constitution, it said that the exercise of executive authority by municipalities could be regulated through national and provincial legislation. This was direct authority for a provision such as Clause 39 as a typical regulating measure.

Mr Bhabha added that the way the Constitution was constructed "did not mean that municipalities were little islands of autonomy that did not form part of a nation state. One was not creating 200 or 300 volkstaats as a result of the Constitution." The operative word here was "autonomous and interdependent and the key was interdependent". He felt that there was a definite place for framework legislation which national government drew up to create the uniformity between all municipalities in the country.

Within parameters and the framework that was drawn, municipalities were entitled to exercise their authority related to municipal affairs. Without framework legislation, the country would be divided and there would be secession. This was the theme and the balancing act that Chapter 3 of the Constitution accomplished.

The constitutional argument could perhaps apply to whether the band of the framework legislation was too wide or too narrow. National government would always have the legislative authority and right to draw national legislation and framework legislation.

Ms Botha asked if "general key performance indicators" was setting a minimum standard. Did this imply that there were minimum key performance indicators.

Ms Manche said that these were core indicators around which one would want to measure performance.

Mr Sekele said that there was a distinction between an indicator and a standard. In Chapter 10 standards were dealt with. It was necessary to have general indicators which cover strategic priorities of national government. Municipalities set there own indicators locally but took on board some of the general and strategic priorities of government.

In answer to Ms Botha request for an example of what the Minister would prescribe as a general key performance indicator, Mr Africa used the example of job creation.

Clause 40 Notification of key performance indicators and performance targets
No discussion took place.

Clause 41 Audit of performance measurement
Mr Carrim said that there was an amendment from the department, which the committee had accepted when it looked at the conceptual document.

Clause 42 Annual Reports
In relation to the reference in 42(c) to the Municipal Finance Management Act,
Mr Carrim said that he had met with the Department of Finance and it appeared as if this Bill would not be passed until 2001. Cabinet or a cabinet committee was supposed to have looked at the Bill earlier in the day but had decided to defer consideration. The Department of Finance had said that they would try to get this Bill back on the agenda of Cabinet, however if this did not happen it would not be appropriate for them to brief the committee on the Bill in June. The Committee would know about this in the next few hours.

The inclination would be, unless one really knew what was in the Municipal Finance Management Act and unless the committee was convinced by the Department of Finance, that reference to the Act should not be made.

The Department agreed with Mr Carrim and said that it was inappropriate to refer to a Bill that was not before Parliament. As far as the department knew, (b) and (c) would definitely be dealt with in terms of other legislation such as the Municipal Finance Management Bill. All which needed to be said in this Bill would be that the annual report of a municipality must include certain things and performance management could be referred to.

The Director General agreed with this and added that one could, instead of referring to a specific Act, simply refer to "the law relating to whatever".
A team had been established to determine whether any inconsistencies existed. Ms Manche could report on the progress of this team.

Ms Manchie said that there was agreement that there were in fact no inconsistencies and there was only one outstanding issue which needed to be addressed by the two departments.

Clause 43 Publication
Mr Carrim said that SALGA wanted this deleted.

Ms Borman said that "tabling of its annual report" should be changed to "agreement of its annual report" since there could be a difference in time span between tabling and agreement as it would have to go before a council meeting.

The committee agreed that "tabling" should be changed to "adoption".

Clause 44 Reports by MEC
Mr Carrim said that SALGA wanted this deleted.

If the report of the Minister was published in the gazette, he asked why the MEC's report could not appear in the provincial gazette.

Clause 45 Reports by Minister
Mr Carrim said that SALGA wanted this deleted. No further discussion took place.

Clause 46 Regulations
Mr Carrim said that the committee had decided to defer this.

Mr Bhabha asked what would happen in the event that the municipalities did not comply with Chapter 6.

Mr Carrim said that performance management was not a punitive system, but rather a way of alerting one to under performance which could necessitate intervention and remedial action. Moreover there had to be a system of incentives which encouraged people to do IDPs. The more they fulfilled a performance management system appropriately, the more national and provincial government would be supportive and the Department of Finance would be more sympathetic. So it was a system of incentives.

Mr Bhabha asked if incentives were not enough then what should they be complemented with. Sometimes it was precisely because municipalities did not do what they were supposed to, that they required more attention and reward from national. In a perverse sort of way therefore, what one would be doing then would be rewarding ineptitude. Thus incentives could be a problem.

Mr Carrim said that the idea was that the more a municipality did promptly what was required of the Bill, the more it would be rewarded.

Mr Lyle asked if a municipality was dominated by opposition party members who decided not to comply with the provisions, what would be done?

Mr Bhabha said that if one complied with Chapters 6 and 7 in maintaining infrastructure, then a municipality's reliance on central government grants would be less. If one did not comply, then infrastructure fell into disrepair and more was required from national government. Thus in a perverse sort of way, one would get more attention from national government if one did not comply.

Ms Botha said that Chapter 6 said that a municipality "must" establish a performance management system and so surely municipalities could not be given an incentive to do what was legally required of them.

Mr Carrim said that the law said that one "must have a performance management system, but the law did not say how well one should fulfil it. He argued that those municipalities which implemented it 100%, would get some sort of incentive, but he did not know what. Those who did not implement it 100% did not get penalised, but could not get the incentive.

He noted that the Department had said that in the regulations, the Minister had something about incentives to apply the IDP system. It was agreed that the Minister could decide what the nature of the incentives were, but the notion of incentives had to be in the Bill itself. When Mr Bhabha said that if one did not do things properly, then you would get more attention from provincial and national government, Mr Carrim pointed out that the attention one would get, was the attention of rescue.

In answer to Mr Carrim's question if the Bill spelt out that there was an incentive system in place, Ms Manche said that it did not.

Mr Sekele said that the department had thought through this and it was felt that it may not be best to provide for incentives in legislation since it was a fairly contested issue. The Department was however convinced that if municipalities were going to succeed in doing what one wanted them to do, then one had to devise some kind of incentive system.

Mr Bhabha felt that to avoid a situation where municipalities "landed in ICU" and needed intervention by national government, there had to be an early warning system where an injunction came from the top, so that one did not have to wait until people's electricity started being cut and they did not have water.

The Department said that there was a framework (and a booklet) drafted in conjunction with the NCOP to guide the provinces and municipalities in developing an early warning system.

Chapter 7: Local Public Administration and Human Resources
Mr Sledge Sekele briefly presented the following points on this chapter, elaborated on in "The Department's response to submissions on Chapter 7":
Reasons for the chapter:
Policy and legislative vacuum
Administrative reform
Admin/council relationship
Staff peformance/conduct

Logic:
Principles in conduct
Principles in establishing admin
Admin/council relationship
Appointment/functions of managers
Staff performance
Support

Issues raised:
Jurisdictional issues
Fixed term contracts
Disclosure of salaries
Municipal managers/exemayor
Code of conduct
Definitions

Discussion on Department's response to submissions on Chapter 7
2.2 Disclosure of salaries and benefits (Clause 53)
Mr Carrim said that the Institute for Local Government Management of SA as well as FEDUSA said that the disclosure of salary invades privacy and may be unconstitutional. He disagreed. Both the President and the Director General's salary was known to everyone.

The Department said that if an individual has to disclose his salary, then it could be unconstitutional, however the intention was not to disclose specifics about the remuneration of particular managers but to disclose salary and benefit scales associated with senior posts.

2.3 Jurisdictional issues
Mr Carrim said that the issues concerned the relationship in the Bargaining Council and the Labour Relations Act. He felt that such matters were catered for and the Minister would not intrude.

Powers and Functions of the Municipal Manager
Where there was an executive mayor, the issue was whether it was distinctly clear what the role of an executive mayor was as opposed to that of the CEO. This was why CEO had been changed to municipal manager, guided to some extent by SALGA and others.

2.4 Code of conduct
Mr Carrim said that COSATU had insisted that the Code of Conduct had to be submitted to the Bargaining Council before its inclusion in the Bill and the Department pointed out that it had sought to do so but had no response and this was COSATU's responsibility.

The Gender Advocacy Programme had said that there had to be a clause dealing with sexual harassment. The Department's response was that 2(e) in the Bill dealt with this adequately. Mr Carrim said that an explicit reference to sexual harassment was requested and 2(e) was a general point about equal treatment. He asked if the department still held their initial view that 2(e) covered sexual harassment. Ms Manche replied that it had been agreed that the Bill could be more explicit.

2.1 Fixed term contracts and implications for existing CEOs (Clause 52)
The Department said that Clause 52 (Employment contracts for municipal managers & managers accountable to the municipal managers) could only be applied to the new municipalities when they appointed their municipal managers. The new municipalities would then have to comply with Clause 52 and enter into an employment contract. The CEO of any existing municipality could not insist on being appointed as the municipal manager of the new municipality. These would be new entities and therefore new posts.

With regard to the managers accountable to the municipal managers, there could be a problem. It could be that many of the existing CEOs may be appointed to this second tier of management. These managers had existing contracts with the municipality and one could not change an existing contract without the agreement of the incumbent. This situation would be difficult, unless one could argue that even these posts were new. The Department was not sure about this.

Mr Bhabha said that if Municipality A and Municipality B amalgamated to form Municipality C, a new legal entity has come into being. The first question was whether the legal contractual obligations of Municipality A and Municipality B are carried over to Municipality C. If they are not carried over then what would happen to the workers? Could they exercise any legal rights since they were no longer employed by a legal entity. Secondly if the obligations were carried over to Municipality C, to what extent are they carried over.

Mr Bhabha said that one did have some idea of the challenges as restructuring had taken place in 1995. He remembered one town council into which four municipalities had amalgamated. In the restructuring, some of these town clerks had claimed constructive dismissal because they had not received the top position but they had lost the case. There was some legal certainty that one could re deploy people to other places and positions but on the same level of benefits.

In municipalities, however there were two types of workers. There were some CEOs who had existing written contracts and others who did not have them and they were regulated by the Labour Relations Act. If the obligations were carried over, then the first question was whether the written contracts had to be fulfilled. Secondly where there was no contract and the LRA applied, it was unclear what would happen. Thirdly at a political level, if these questions were not addressed, many of the objectives in the Bill would run aground. Some form of solution had to be found.

An advocate from the Department said that one had to go back to the Municipal Structures Act. Section 14 of the Bill as introduced in Parliament provided for the "retrenchment or transfer of staff" by the MEC when establishing the new municipality. The reference to retrenchment was later deleted. What remained in the Act was that "the transfer of staff" in terms of the Section 12 notice must take place in accordance with the LRA. In Section 197 of the LRA it states that a transfer could take place without the approval of the employee, as long as it was on the same terms and conditions. If one wanted to change these conditions then you have to have the permission of the employee, unless one negotiated with the trade union. In terms of the Section 12 notice, the department did draft a pro forma notice for the MECs. This document had no legal status but was an assisting proposal. The proposal was that all existing staff should be transferred from the existing municipalities to the new municipalities on the same terms and conditions so that one did not affect the LRA. If this was applied to the existing CEOs they would be employed by the new municipality on the same terms and conditions that they were presently employed.

Section 14 of the Municipal Structures Act dealt with obligations and the transfer of rights. Where one had existing contracts, these would become the liability of the new municipality. In putting together the administration for the new municipality, those managers with fixed term contracts would be in the same position as bus drivers transferred to a new municipality which does not have a bus service. The monetary liability may be the same, but the position for the old CEO would be the same as the bus driver who did not have a bus to drive.

Mr Carrim asked where the notion of a constructive dismissal came in and why there was that problem in 1995/96 if the situation was as straight forward as this.

A legal representative from the Department said that another well known case was the Town Clerk of the former East London. Government created a new entity and the town clerk became a second line manager. The salary and the job description changed. As government had constructively changed something it was argued that he had been constructively dismissed. However this argument was rejected since government was busy with the whole transformation of municipalities.

Mr Bhabha asked what the position was with those who did not have contracts. What was their fate? Could they be compelled to sign fixed contracts? Where did this compulsion come from? Basically he wanted to know what municipalities were going into. Many of the new restructuring committees operating at municipal level were still very confused. He urged that as a matter of urgency that there had to be a practical guide sent out immediately from the department to councillors on what to do. He said that what had happened in 1995 was that every municipality had to bear the cost of individual cases and each municipality had conslulted their own lawyers to get different opinions.

A notice had to be sent out to municipalities stating the legal opinion. This would guide many of the councillors. Secondly the committee had to have a database of the court cases so that the committee could learn from this. The committee had to have a common understanding of what could and could not be done.

Ms Borman asked who bore the costs if the process went the route of a package to get rid of the CEO, or if the CEO wanted to stay at the same salary level in a lower position.

The department said that there was a process under way, looking at how the local sphere could be assisted with the transitional process.

It was agreed that an extensive legal opinion including the implications of Clause 52 of the Municipal Systems Bill and Section 14 of the Municipal Structures Act as well as the LRA was needed to illustrate clearly the existing legal position.

Clause by clause analysis of Chapter 7
Clause 47: Basic values and principles governing local public administration
SALGA proposed that 47(2)(c) and (d) be deleted since they are addressed by Promotion of Access to Information Act and Promotion of Administrative Justice Act. The subsections refer to municipalities striving to give communities full and accurate information pertaining to the level of and management of municipal services. The Chair stated although they were covered by other legislation, it was necessary to include them for the purpose of clarity.

Clause 48: Organization of Administration
Ms Southgate (ACDP) suggested that it to be included that municipalities must organize their administration in a manner that enables them to "provide an equitable, open and fair working environment". The committee agreed.

Clause 49: Inconsistency with applicable labour legislation and Clause 50: Roles and responsibilities
These were accepted as stated.

Clause 51: Municipal Managers
Ms Southgate (ACDP) felt there must be responsibility on municipal managers to develop and implement performance management measures for all staff. The Chair believed this was adequately covered by 51(1)(a). Ms Southgate felt it needed to be more specifically addressed. Ms Manche stated it would be dealt with in the regulations.

It was also decided that reference to key performance indicators (KPI), as discussed in Chapter 6, should be addressed in this clause.

Ms Botha (DP) asked who was responsible for appointing staff members. Mr Bhabha (ANC) said this was covered in 62(1)(a) where it states a municipality must adopt procedures for the recruitment, selection, and appointment of staff members. The Chair disagreed, stating the council was ultimately responsible for the appointment of staff. Ms Borman (DP) was wary of allowing the council to appoint staff, believing it would drastically slow down the selection process. She suggested that the task of interviewing people be given to the Human Resources Department. The department stated that the process of recruitment was a power of the council, but that Clause 54 on delegation made it possible to delegate the task to another structure or individual. Ms Manche proposed that they defer to the Employment Equity Act for guidance.

Clause 52: Employment contracts for municipal managers directly accountable to municipal managers
Mr Smith (IFP) queried whether the performance objectives and targets of employment contracts referred to in 52(2)(b) were also applicable to the extended two year contracts in subsection 3. Dr Bauer of the Department responded that they were not applicable since 52(3)(a) states that contracts cannot exceed a period ending two years after the election of the next municipal election. Mr Smith argued the clause as written was ambiguous. Dr Bauer stated it had to be worded in such a manner so to convey that terms were not fixed for a seven year period, but could be extended up to that length.

Clause 53: Remuneration of municipal managers and managers directly accountable to municipal managers,
Agreed to as stated.

Clause 54: Delegations
This was taken from the Municipal Structures Act.

Clause 55: Delegation of certain powers to councillors or officials disallowed
SALGA raised concern that this clause limits the power of delegation beyond Section 160 of the Constitution. They proposed that 55 be changed to read: "A delegating authority may not delegate to an individual councillor or official, excluding institutions such as the Executive Mayor, the power to-".

The Chair asked if it was SALGA's intention to put the Executive Mayor above the executive council. SALGA responded their concern was with 55(b), which would allow a manager to determine or alter their own remuneration and benefits.

Mr Bhabha (ANC) denied that a council should delegate power to an Executive Mayor to make decisions on the matters set out in this clause, due to the nature of their importance. SALGA replied that their intent was not to invest power in a single individual but rather the executive mayor as an institution. Mr Bhabha rebutted that the clause was specific to individuals, and as such, reference to an executive mayor would be construed to mean the individual.

The Chair stated there were two issues before the committee. First, to decide whether the powers outlined in 55(a) through (c) should be delegated to an executive mayor, and second, whether this clause should go further than Section 160 of the Constitution. The NNP argued that delegating such powers to the executive mayor would be investing too much power in the hands of one person.

Mr Smith (IFP) asked what was the exact meaning of delegation. He queried whether the intention of the clause was to state that everything not done by a council would be delegated to committees. He further asked whether expropriations as outlined in (a) would include servitude. Dr Bauer responded the power to expropriate property laid with the municipality, and as such was the duty of officials. The Chair then asked if this meant that these matters were being delegated to officials. Dr Bauer responded the clause only deals with who is responsible for making the decision to expropriate. He added that Section 25 of the Constitution restricts the terms by which property can be expropriated. The committee could not come to a consensus. The clause will be referred to the sub-committee for further discussion.

Clause 56: Referral of matters to delegating authorities for decision
Agreed to as stated.

Clause 57: Appeals
SALGA argued it would not be practical for full councils to hear appeals in metros or large municipalities. It was proposed that an appeals committee be appointed to hear all appeals. The committee agreed.

Clause 58: Duty to report to delegating authorities
SALGA proposed that the terms by which a person or structure who was delegated a task must report to the delegating authority should be subject to their own arrangements, and not to legislation. The Chair did not believe that the legislation was setting out rigid guidelines, however SALGA felt the fact the clause made mention of "all decisions" was prima facie to obligation. Mr Smith suggested the removal of the word "all" from the clause. SALGA and the committee agreed.

Clauses 59, Withdrawal, amendment or lapsing of delegation or subdelegation, and clause 60, Review of delegations,
Accepted as written.

Clause 61: Staff establishments
Mr Smith (IFP) asked how municipalities would approve a staff establishment if they had not created a policy framework. Dr Bauer responded that this section does not apply to the hiring of staff, but rather forces municipalities to determine how many staff are required, provide job descriptions and assign remuneration to each post in line with the relevant labour legislation.

Clause 62: Human resource development
The Chair noted the Gender Awareness Program (GAP) had requested that municipalities adopt a sexual harassment policy. Ms Manche replied that this had already been established in the Code of Conduct.

The committee agreed to add procedures for disciplinary hearings.

There was confusion surrounding the use of the term "representative union" in 62(4). It was thought that "recognized union" would be more appropriate. Mr Sithole (ANC) stated that recognized union was used in Section 11 of the Labour Relations Act. The department was asked to clarify which term was meant.

Mr Olifant (ANC) said it was not possible to develop a system to deal with the demotion of staff, as addressed in 62(1)(e). Dr Bauer replied that the Public Service Act had established a procedure to deal with demotions of staff. He added there must be a procedure to follow, but not necessarily a system in place. SALGA suggested that "systems" be deleted from 62(1). The department stated systems must be retained since it was relevant to many of the concepts listed. Mr Smith suggested that 61(1) be rewritten as "a municipality must develop systems and procedures, if applicable". The committee agreed.

Clause 63: Capacity building
Accepted as stated.

Clause 64: Code of conduct for municipal employees
The DP argued that a code of conduct be created to deal with councillors. The current clause deals solely with every staff member of a municipality. The Chair stated the Municipal Structures Act made provision for a code of conduct for councillors. The DP said it had not. The Chair said the Municipal Structures Act would be amended to include councillors.

Clause 65: Code of conduct to be provided to staff members
65(1)(a) was changed to read "staff member" instead of "member of the staff".

Clause 66: Regulations and guidelines
This was held over.

Chapter 10: Provincial and National Monitoring and Standard Setting
Mr Bhabha (ANC) was wary of the MECs ability to intervene in municipalities where the municipalities could not fulfill an executive obligation. He argued that if the delivery of a service was interrupted, the restoration of the service could very well be subject to whether or not the council was meeting at that time, or whether the Council would be able to form a quorum to resolve the problem. He recited numerous times where MECs had failed to take the appropriate measures necessary, and as a result, service delivery had suffered. He further argued that the Constitution made it very clear in 139(1)(b) that if a municipality could not perform an executive obligation that the relevant provincial executive should intervene to assume responsibility for that obligation. He suggested that other measures needed to be in place to ensure that service delivery would remain uninterrupted. To this end, he suggested that there be an early warning system, whereby at the end of each year, municipalities must submit their IDP to the NCOP. The NCOP would then, in terms of Section 66 of the Constitution, be able to call the MEC to appear before them to account for what they had done. It was thought this would allow the NCOP to implement intervention to ensure responsibility was taken for proper delivery of services.

The IFP was in favor of establishing an early warning system.

SALGA's view was that there be comprehensive legislation to address Section 139 of the Constitution that took into account the capacity of municipalities as outlined in Section 154 of the Constitution. It was their proposal that such legislation take a similar form to Section 100 of the Constitution. Section 100 deals with national supervision of provincial administration.

The Department stated that in the initial drafting of the bill attempts were made to address intervention. However, through the process of redrafting, intervention was replaced by monitoring. This Chapter does little more than continue on from 10(i) of the Local Government Transition Act (1995), which gives power to the MECs to obtain information.

Clause by clause analysis of Chapter 10
Clause 97: Provincial monitoring of municipalities
Mr Bhabha (ANC) criticized 97(2) as being inadequate. The section allows for MEC's to ask for information from municipalities. Mr Smith (IFP) agreed stating that it did not address what MEC's could do with the information they received. The Chair agreed saying the that the section had to be given "more teeth".

Clause 98: Non-performance and maladministration
Dr Bauer said this clause gives power to MECs to acquire information from a municipality, or designate a person to investigate a matter, if it believes the municipality is unable to perform an executive obligation, or if fraud or maladministratrion has occurred. It also states that municipalities must bear the cost of any investigation of this section.

The committee was concerned that the clause only dealt with the monitoring of the executive level of municipalities and not the administrative level. It was put forth that the clause make reference to both. The department suggested that "executive obligation" be replaced by "statutory obligation". The committee agreed.

Mr Bhabha (ANC) argued that municipalities must not be made to bear the costs of an investigation, since often the failure of municipalities was a direct result of failures at a provincial level. He proposed that 98(3) be removed. SALGA agreed.

Mr Smith (IFP) agreed with Mr Bhabha (ANC) but felt that municipalities must be held accountable for all costs when fraud or corruption has taken place.

The matter could not be resolved and was referred to the sub-committee for further deliberation.

Clause 99: Furnishing of information
Agreed to as written.

Clause 100: Essential national and minimum standards
Members were confused as to the relevance of 100(b). It states that the Minister may establish essential national standards and minimum standards for the performance by MECs after consultation with organized local government and the MECs for local government. There was concern this clause was unconstitutional, since it appeared to delegate the monitoring role of local government away from the provinces. The matter was also referred to the sub-committee for clarification.

The meeting was adjourned.

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