Department Budget briefing

Meeting report

PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE
1 March 2005
DEPARTMENT BUDGET BRIEFING

Chairperson: Ms R Ntsulana-Bhengu (ANC)

Documents handed out:
Director-General’s overview of Department programmes and budget briefing
Department overview of the budget and Fiscal Transfers (Programmes 6 and 7) briefing
Governance, Policy and Research (Programme 2) briefing
Urban and Rural Development (Programme 3) briefing
System and Capacity Building (Programme 4) briefing
Free Basic Services & Infrastructure (Programme 5) briefing
National budget review: Provincial and Local Government Allocations
Support Service
Administration (Programme 1) briefing

SUMMARY
The Committee was briefed by the Department on its Budget Vote for 2005/06. The Department highlighted that in terms of the new equitable share formula, it would now be able to provide meaningful financial assistance to local government and would also ensure that the provincial sphere of government was strengthened. During the discussion, among other issues, the following were raised:
- how the new equitable share formula would deal with the issues of revenue base visa vi the urban and rural municipalities;
- the importance of provincial grants and what effect its removal might have on local government;
- that all provincial ordinances and municipal by-laws, which did not conform to the new order, should be repealed; and
- that an integrated and people-centred development approach should relate to citizens’ problems on the ground.

After the lunchbreak, the Committee expressed that it was important for the Department to implement national policies on affirmative action. It was concerned that some of the figures on people who had benefited under the Department's programmes seemed inaccurate. The allocation of resources seemed to favour urban municipalities. Lack of capacity at local government level remained a major problem. The Department wanted to do a skills audit in all nodal municipalities. The audit would enable the Department to intervene in terms of skills development in a holistic and integrated manner.

The Department had managed to complete draft regulations and guidelines for the Local Government Property Rates Act and these would soon be gazetted. Some of its priorities for 2005/06 included the finalisation and implementation of the payment protocol and supporting municipalities in the implementation of the Property Rates Act. Draft regulations and a framework for disaster management had been published for public comment. Good progress was made in establishing an integrated Disaster Management Information System. It had also prepared a draft Local Government Anti-Corruption Strategy and rolled it out in five municipalities in the Western Cape province.

The Department had finalised the Free Basic Services study and had developed an information portal to assist municipalities to report and share information. 67% of households with infrastructure had access to free basic water. 45% of households benefited from free basic electricity and 2.4 million of these were poor households served by Eskom. An indigent policy had been developed. The Department intended to create awareness among municipalities to use partnerships as an option to accelerate service delivery. It would also hold district wide information sessions on the importance of ring fencing the electricity distribution business.

Minutes

Director-General’s briefing
The Department delegation included Ms L Msengana-Ndlela, Director-General; Mr C Clerihew, Chief Finance Officer; Mr D Powell, Acting Deputy Director-General: Governance, Policy and Research; Ms M Molapo, Deputy Director-General: Urban and Rural Development; Mr E Africa, Deputy Director-General: Systems and Capacity Building; Mr P Flusk, Deputy Director-General: Free Basic Services and Infrastructure; Mr G Mokate, Deputy Director-General: Corporate Services; Ms T Mketi, Chief Director: Human Resource Management; Mr P Matomela, Chief Director: Corporate Secretariat; and Mr O Cupido, Director: Office of the Chief Financial Officer (CFO).

Ms L Msengana-Ndlela (Director-General) took the Committee through her presentation, noting that the aim was to develop and promote a national system based on integrated and co-operative governance to ensure the necessary support for the provincial and local governments. In order to realise that the Department had since refined its Strategic Plan for 2005 so as to position itself in a manner where it would be able to address the needs of South African and thus respond to the challenges of this Second Decade of Democracy accordingly. It was worth noting that the Provinces and Municipalities would receive a bigger share of national revenue as that would definitely maximise the opportunities for accelerated service delivery and development, especially at the municipal level. Acknowledging the important role played by various key stakeholders in the fight against poverty and in creating job opportunities, she invited Members to join hands with government in building a proud South African nation (see presentation). She thereafter called on the heads of the Department’s programmes to make their presentations and outline their respective programmes for the coming financial year.

Discussion
Mr P Smith (IFP) felt that the Committee would have to be briefed on the new Local Government Equitable Share Formula and thus asked whether the increase in the Division of Revenue Bill reflected the equitable share based on the new formula.

The Director-General said that since the country’s economy had grown tremendously averaging 3.2% per year, it was necessary that the funds that were made available to local government should also be increased in order to ensure that the basic needs of South African citizens were addressed and people therefore derived benefits.

Mr Smith (IFP), pointing to page 192 of the Division of Revenue Bill, asked what significance the equitable share formula had on smaller municipalities, such as Ilembe, and whether the National Financial Year Equitable Share just reflected the allocation made as the result of the Medium Term Expenditure Framework.

The Director-General reminded Members that it was reported last year that the Department, together with the NT and FFC, would develop a programme to ensure the refinement of the local government equitable share and its formula and thereafter drew the Committee’s attention to Chapter 7 of the Budget Review presented by the Minister of Finance. Whilst pointing out that page 157 of the document clearly summarised the key features of the new local government equitable share formula, they would further explain this programme at the Committee’s request.

Mr Smith (IFP) further noting that the municipalities that were serviced by Ilembe Municipality were purely rural in nature, asked the Department to explain why the equitable share of municipalities like Ndwedwe and Maphumulo had decreased over the years instead of increasing since the equitable share meant to address the municipal backlogs.

The Director-General pointed out that if the budget increases were to ignore the challenges faced by smaller and rural municipalities that would have been a contradiction and thus appealed to Members to look at this budget holistically and not in a piecemeal fashion as municipalities received their funding from various sectors, such as the local government equitable share, consolidated programmes of the MIG and other capacity related development programmes.

Mr Smith (IFP) agreed with the importance of provincial grants and the fact that they were useful in capacitating the Provinces so that they could play their supporting role to the municipalities, but asked whether the Provinces were now sufficiently capacitated that they no longer required any further funding to exercise their supporting role to the municipalities.

The Director-General responded that the Department was of the view that to enable municipalities to increase their own capacity and thus perform on their respective mandates, it was important that funds should be transferred direct to them. However this would not mean the end of provincial support as Provinces would continue their co-ordinating role through their provincial equitable shares.

Mr E Africa (Deputy Director-General: Systems and Capacity Building) while acknowledging that there was a need to engage the Committee in this regard, said that it should be noted that this new formula had five components all aiming at addressing various issues relating to the local government equitable share. These components were service delivery of basic needs, development, institution, revenue raising capacity, and stabilisation.

The Chairperson noted that the Department would have to brief the Committee accordingly so that Members could clearly understand the reasoning behind the removal of the grants to the Provinces. Furthermore, they would like to understand the difference between a revenue base for urban municipalities and a revenue base for rural municipalities and how the new equitable share formula proposed to deal with this. Also noting that there were still provincial ordinances and municipal by-laws, which did not conform to the new order based on constitutional democracy, she asked the Department to look at the issue urgently and ensure that those laws conformed to the principles of the Constitution.

Nkosi M Nonkonyana (ANC) agreed that there was only one ‘super law’ in the country and that was the Constitution. Any law, which contradicted the principles laid down in the Constitution, was invalid.

The Director-General said that they had noted the concerns raised by Members and would deal with them accordingly. Furthermore, she assured the Committee that the Department would continue with its rural bias and pro poor policies whilst taking into account migration patterns in the country.

Nkosi Nonkonyana (ANC) felt that it was necessary that the Committee also get SALGA’s view on this new formula.

Chief Financial Officer’s briefing
Mr C Clerihew (CFO) briefly highlighted the main features of the Department’s 2005/06 budget, noting that while there had been no increase in their operating budget for this current financial year, there had been a significant increase in their overall budget and transfers amounting to 18.5%. It should be borne in mind that since the project management grant had now been incorporated into the Municipal Infrastructure Grant (MIG) the Department would not be transferring any grants to the Provinces in this financial year (see presentation).

Discussion
Mr Smith (IFP) felt that the figures reflected in slide 5 were simply nominal figures and did not reflect real increases in the MTEF trends. He asked the Department to provide the Committee with real figures, which would reflect real increases in the MTEF trend.

Mr Clerihew noted that they would provide the figures to the Committee in due course.

Mr W Doman (DA) asked the Department to provide a detailed reason for allocating R61 million to consultants and contractors for this financial year.

The Director-General noted that the Department would provide the Committee with an explanation in this regard.

Mr Dorman (DA) asked what criteria was used by the Department to allocate bursaries.

Mr Clerihew noted that the Department did not provide bursaries for outside use, it only provided bursaries to its staff in terms of its policy to ensure their development.

Governance, Policy and Research briefing
Mr D Powell (Acting Deputy Director-General: Governance, Policy and Research) outlined the purpose, objectives and the role of the GPR division, noting that their aim was to promote a governance system that would strengthen service delivery, provincial performance and accountability throughout South Africa. Thus, much of their work was policy related research divided into five sub-programmes headed each by a Chief Directorate. He explained their estimates of expenditure for 2004 and 2005/06 based on their outputs and target indicators and what progress was made in 2004/05 and new priorities for 2005/06 (see presentation).

Discussion
Mr Smith (IFP) asked for clarity on the nature and purpose of the budget allocated to the programme as reflected in slide 21 of the document.

Mr Powell responded that while the budget data related to personnel and the operating budget for the programme, the greatest allocation would be made to personnel.

Mr Smith (IFP) noting that over the last decade much of the work of the Department focused on the local aspects of government, asked the Department to clarify what mechanisms they had in place to ensure that the provincial sphere of government was also strengthened during this decade.

In his response, Mr Powell said that it should be noted that the Provinces and municipalities were conceptually and constitutionally different from one another and as such, the Department always tried to ensure that it worked with all the spheres of government in addressing the challenges facing South Africa. In order to achieve that a number of programmes and initiatives had been designed to help the Department to work directly with each sphere of government, including provincial government.

Nkosi Nonkonyana (ANC) noting that out of six Provinces, which were required to table their Implementation Framework Bills to the legislature, only five were ready to do that, and asked what the target date was for this process.

In response, Mr Powell said that it should be noted that while the target date was accelerated to January 2005, the initial target date was March 2005 and thus all the Provinces concerned could still meet it.

Nkosi Nonkonyana (ANC) asked whether would it would be possible for the Committee to be briefed by the Commission on Disputes and Claims regarding its programme.

Mr Powell noted that while he was not in the position to speak for the Commission, if the Committee made such a request to the Chairperson of the Commission, he was sure that the Commission would appear before the Committee and present its programme.

Nkosi Nonkonyana (ANC) asked exactly when in 2005 the Cabinet memorandum on the LED Strategy would be submitted and to whom.

Mr Powell responded that while their intention had been to have the LED Strategy adopted by Cabinet last year, Cabinet never adopted a framework. They would ensure that it went through that process within the next coming two months but that also depended on Cabinet’s programme. Furthermore, it should be noted that there would be a variety of institutions responsible for the LED process, ranging from government departments to other key role players.

Mr M Lekgoro (ANC) noting the importance of the LED in governmental issues, asked which Government institution would be responsible for financing the real work of the LED.

Mr Powell responded that while there were various Government instruments affecting the LED process, such as the MIG, EPWP and the like, their objective would be to give a fully fledged government process to the programme and thus see to it that capacity was built at the local level of government.

Nkosi Nonkonyana (ANC) asked whether the Department had prepared guidelines for the corporate governance of new Traditional Councils and the Local Councils of Traditional Leaders.

Mr Powell responded that the Department would produce a number of guidelines in this regard and the preparations were being made.

Mr M Swart (DA) asked whether other community structures would be involved during the IDP hearings scheduled to take place between March and May 2005 throughout the country.

Mr Powell responded that the Department was working very closely with Provinces and municipalities in this regard to ensure that the public was widely represented during the hearings.

The Chairperson noted that the terms "integrated development approach" and "people centred development approach" were not new as they had been in existence since 1994, although the reality on the ground did not reflect the existence of such approaches and she therefore felt that it was the Department’s responsibility to co-ordinate and facilitate an integrated development approach by all government institutions and organs to ensure coherence in service delivery.

Mr S Mshudulu (ANC) was concerned about the manner in which the provincial departments of local government were structured differently from province to province and thus asked the Department to rectify this as it created confusion at times, especially when it came to accountability.

The Director-General said that the Department had noted the concerns raised by the Committee and some of them would be addressed later through other programmes’ presentations, such as the one dealing with integrated sustainable rural development and the urban renewal programme. However, she acknowledged the enormous task faced by the public service in translating government’s strategic objectives into quick implementation plans.

The Chairperson noted that the Department would have to brief the Committee on how IDPs really attacked the problem of infrastructure and thus ensured that facilities became accessible to more people.

The Director-General said they noted the Chairperson’s request and informed Members to take note of the fact that the Presidency and the Social Cluster would be releasing a study document on micro-social analysis which, amongst other things, also dealt with issues of infrastructure and social development.

Integrated Sustainable Rural Development and Urban Renewal briefing
Ms M Molapo (Deputy Director-General: Urban and Rural Development) in outlining the purpose, objectives and the key principles guiding the programme on Urban and Rural Development noted that they aimed at eradicating poverty and underdevelopment and thus implement government’s vision of developmental local government and the developmental state to ensure sustainable development and integrated planning throughout the three spheres of government. She explained the progress that had been made in 2004/05, who the ultimate beneficiaries of the URP and ISRDP were and their new priorities for 2005/06 (see presentation).

Discussion
After the lunchbreak, Mr S Mshudulu (ANC) asked if it was possible for the Department to make some of the guidelines referred to available. The Committee had the responsibility to monitor the Department and also empower the communities. It also had to run workshops on Integrated Development Plans (IDPs) and development. He also asked if the Department could furnish the Committee with information on skills that were required in the labour market. Access to information and information sharing remained a major challenge. One should find a way of ensuring that reports were produced from local level to national government.

Ms Molapo replied that the Department would make the information referred to available. The Department was revamping its website and a lot of information would be put on it. She took note of the information requirements around guidelines to assist Members with their oversight roles. The Department would welcome input from the Committee on guidelines.

Mr M Nonkonyane (ANC) made a comparison between progress on Urban Renewal Programmes
(URP) resource targeting and progress on Integrated Sustainable Rural Development programme (ISRDP) resource targeting. Under URP resource targeting an amount of R2.2 billion was allocated to six municipalities with URP nodes. R1.3 billion of the money allocated was from the equitable share. Under ISRDP resource targeting the equitable share amounted to R1.9 billion. Urban bias remained a problem. He asked if the Department had any unspent money that was allocated to its programmes.

He also made a comparison between URP beneficiaries and ISRDP beneficiaries for 2004. Although one would expect to find many poor people in rural nodes, the number of beneficiaries was very small when compared to beneficiaries in urban areas. There was a need for a debate on resource allocation to urban and rural municipalities if there was an unequal allocation of resources.

Ms Molapo replied that the Department had spent the whole of its allocation. The expenditure trends for last year were affected by the fact that not all positions where filled. Hence the allocation for 2004/05 was adjusted to R9 million. The expenditure had slowed down due to vacancies that existed at the time. All vacancies had been filled and the whole allocation would be spent.

The Chairperson said that there were 13 rural nodes and eight urban nodes. She was of the opinion that rural nodes had to benefit more than urban nodes. Urban nodes had existing infrastructure that only needed to be upgraded. However, one had to start from scratch in rural areas and this required more resources. There were imbalances in the allocation of resources between rural and urban areas.

The Chairperson said that the implementation of national policies did not reflect a rainbow nation. She noted that the Integrated Sustainable Rural Development and Urban Renewal Programmes branch seemed unrepresentative of all racial groups. It was important for the branch to be gender sensitive. As much as the government was implementing affirmative action it was important not to discriminate against males. The branch seemed to be "too black" and there were no people with disabilities. There were national policies of employing people with disabilities and they had to be implemented. It was important to know what the staff complement of the Department was and if vacancies were having an effect on how the Department performed its functions. In future, the Committee did not want to be told that the Department did not have capacity due to a shortage of staff. It was more interested in dealing with challenges that had nothing to do with shortages of staff. The Department should indicate which posts were vacant and when they were likely to be filled.

She said that she would have serious problems if the beneficiaries under ISRDP who were not specified were males. She believed that the integrated development approach was related to skills development. This meant that the Department of Labour had a role to play in every project in terms of training and capacity building. She asked how the Committee could find out that the Department was playing its roles. There should be an indication of the training which enabled the community to participate in the project. A legacy should be left behind by projects. People should get skills that would allow them to go into the labour market after the implementation of the project. She could not believe that there could be 874 youth beneficiaries and 4 196 disabled beneficiaries in terms of the ISRDP. The number of people with disabilities could not exceed the number of the youth.

Ms Molapo agreed that the figure seemed inaccurate. She would verify it and report back to the Committee. She suspected that the unspecified people were males. She would verify the information and get back to the Committee. With regard to the integrated development approach, she said that the Department wanted to do a skills audit in all nodal municipalities. This was in line with directives articulated in the State of the Nation Address in relation to the capacity of the State to implement development programmes. The Department should be able to indicate which skills were lacking in a particular municipality. A skills audit would enable the Department to intervene in terms of skills development in a holistic and integrated manner. Part of the skills development drive was to be able to give people a window of opportunity for employment. It was important to understand how to uplift the communities in which the programmes were being implemented. It would also be vital to use the information from the skills audit in interfacing with institutions of higher learning.

On the issue of the composition of her branch, she agreed that it was not representative of all races. There were some male staff members and one coloured lady. The branch staff composition was linked to the typical profile of the rural nodes. This did not mean that the Department should not look at correcting the imbalances. The Department could still rectify the situation when filling the layer below managers.

With regard to the disjuncture between figures of beneficiaries with disabilities and the youth, she said that she was also concerned with the figures. They seemed inaccurate especially when one looked at the profile of the country. She would verify the figures and report back to the Committee.

Mr Mshudulu said that whenever there was going to be a project the Department of Labour would provide the Committee with a questionnaire. The Committee would then announce through Counsellors that all people without certificates should visit the Committee. The Committee would then identify them and call Departments to conduct trade tests so that people could be credited for their skills. Most people did not succeed in tendering because they had no certificates. Those who had the certificates but no experience employed those who did not have certificates and paid them "peanuts".

Mr P Smith (IFP) said that reference was made to a joint work plan and the DPLG was the lead Department. He presumed that there was co-ordination. The Department's budget only reflected the Department's actual expenditure. He asked where one could get a holistic budgetary picture of the programme. It was difficult to see how much was spent on nodal programmes.

Ms Molapo replied that the challenge was that the government had not done spatially referenced budgeting in the past. There was no system of geographic budgeting. There would be geographically referenced system of budgeting because the Department wanted all clusters to indicate how they would support the nodes. Clusters were composites of Departments. One would probably have a situation where Departments would identify cluster priorities and develop strategies to address them. The strategies would have to be funded and directed to the nodal programmes. One would be able to show how much was dedicated to programmes should the model with regard to the financing protocol work.

A Member asked who the national political champions were and why local political champions were excluded. He also asked if the technical champions referred to local government or private sector technocrats.

The Chairperson said that the whole concept of a political champion had to be unpacked.

Ms Molapo replied that a political champion was a serving political office bearer. At national level this would be Ministers and Deputy Ministers assigned to provide mentorship to nodal municipalities. Such Ministers would have to attend to blockages around programmes assigned to them. They would also leverage any opportunities for the development of the nodal municipalities. Premiers and Mayors were other layers of political champions in the provincial and local government spheres. They could delegate their responsibilities to other officers. The idea was to have a layer of political support for programmes across all spheres of government because the programmes were implemented by all spheres of government.

She added that the whole concept of technical champions was designed along the lines of political champions. The technocrats were responsible for the actual implementation of the programmes. One would find that a team at national level would constitute a co-ordinating team working in conjunction with other sector Departments. There were guidelines that sought to ensure that all Departments had a person to interface with other Departments. Provinces and municipalities already had such people in the form of the premiers and municipal managers or other designated people. There were forums where different issues were discussed.

The Chairperson said that at first glance the whole concept of political champion seemed to suggest political interference. She understood the presenter to be saying that the role of the champions was to see that things were happening as scheduled. Those champions were responsible for unblocking any blockages in the programmes. The reason why such people were appointed at national level was that they sat at high level decision making structures which decided on resource allocation.

Ms H Mpaka (ANC) asked when the process of confirming provincial political champions would be finalised.

Ms M Gumede (ANC) said that the breakdown of the number of beneficiaries under ISRDP did not add up to 216 857. She was concerned this might make headlines in newspapers. There should be a link between the number of beneficiaries and the money allocated or spent. People would ask where the rest of the money was spent if the Department could only account for 12 000 beneficiaries. She noted that all nodes had reviewed their current IDPs. All nodes had business plans and or strategy documents in place to guide the implementation of the programme. She asked when the programme would be implemented. She also asked the Department to explain how it would improve the poor uptake of reporting systems.

Mr Smith was of the opinion that 'beneficiaries' referred to people who got work experience and not access to basic services. He asked, if his opinion was true, why only 4 339 were permanent jobs. He asked if the Department considered this figure to be reasonable. It was striking that Mitchell's Plain contributed three quarters of the total permanent job opportunities in the urban programme. He asked if this was a factual statement or a measurement error. It would be understandable if Mitchell's Plain had three quarters of funding, training and capacity building. He wondered if the figures were inclusive or exclusive of extended public works programmes.

The Chairperson said that the Municipal Infrastructure Investment Unit (MIIU) was charged with the responsibility of facilitating private sector involvement in the development of infrastructure and service delivery in municipalities that had no capacity. She asked the Department to comment on the impact of the MIIU. The Committee was the Department's lobbyists when it came to resources allocation. It was vital for the Department to present what it required in terms of resources in order to enable the Committee to see a true picture of the Department's challenges. The Department might have more challenges than the resources allocated to it. The Committee should understand all challenges relating to programmes, resources allocated to them and the institutions put in place to assist the Department in achieving its goals.

Ms Msengana Ndlela replied that the MIIU had submitted a report and the Department was still studying it. The Department would report back to the Committee once it had fully discussed the report. The Department would also present its impression of the MIIU once the Ministry had formalised its response.

The Director-General said that there were two important issues. The first was the budget as presented by Minister Manuel and the budget that was the subject of discussion by the Committee. The second was the discussion raised by the January Lekgotla and the President about the need to review the capacity of government and its implementation agencies. The Department was very active in the review of capacity as it co-chaired the governance and administration cluster. It had also had experience of some of the challenges that the implementation agencies were facing. The government had already advised that, over and above what was reflected in the State of the Nation Address and the Budget Speech, there would be an ongoing task to review and assess capacity.

The Director-General confirmed that the budget made available to local government had increased and that people's needs exceeded available resources. There was a need for a balanced approach to addressing the needs. Just as much as there were limited resources lack of capacity was the greatest challenge. Hence the Department had proposed a capacity building programme. When the Department visited provinces, it was established that funds transferred to provinces and municipalities were not used for a number of reasons. Some of the reasons given ranged from planning, the decision making process and bureaucracy. If one was to have a balanced view about increasing resources allocated to local government, one must equally invest in municipalities so that they would be able to provide leadership and administrative capacity to absorb and utilise resources. Project Consolidate was an urgent support programme that should help in addressing the problem of capacity. It was hoped that the Committee would allow the Department an opportunity to come back and make a briefing on work already done in this regard.

The Chairperson said that a municipality like eThekwini had factories that paid levies. It had many employed people who could pay for different services. It would seem right for the eThekwini municipality to pay for its services. Some municipalities would find it difficult to pay for services due to lack of sources of revenue. The question was whether it was fair for municipalities that did not have revenue sources to be required to fund service delivery and also pay their councillors and staff from the revenue collected. She wondered why councillors in rural municipalities were paid less than councillors in developed municipalities. Rural municipalities had more needs that developed municipalities.

The Director-General replied that there were only two full-time and nine part-time councillors in the Mbashe municipality, for instance. Metropolitan councils had more full-time and part-time councillors. The government should look at the remuneration and number of councillors. It was also important to look at further development of the Ward Committee system.

The Chairperson said that it was important to unpack the issue of social cohesion and moral regeneration. Moral regeneration was very important. She had not yet seen practical implementation of the moral regeneration programme. The Department should brief the Committee on how the programme was being implemented especially given that there was a question to Deputy President J Zuma in the House on this. The response that was given was that all Departments were responsible for ensuring that this programme was part of their programmes. She was aware of what the problem was but not sure of the programmes that were designed to solve it. The Department would be called to come and unpack its programmes on moral regeneration.

Branch: Systems of Capacity Building: Programme 4
Mr E Africa (Deputy Director-General) made the presentation on systems and capacity building. The branch focused on, amongst others, building systems and providing support and capacity building. It was not directly involved in service delivery, programme management or implementation. The branch had managed to complete draft regulations and guidelines for the Local Government Property Rates Act and these would soon be gazetted. It was in the process of finalising a payment protocol for government departments. Some of its priorities for 2005/06 included the finalisation and implementation of the payment protocol and supporting municipalities in the implementation of the Property Rates Act. A draft Local Government Employees Bill and a report on the remuneration of councillors had been prepared.

Draft regulations and a framework for disaster management had been published for public comment. Good progress was being made in establishing an integrated Disaster Management Information System. It was hoped that functional structures for the implementation of the Disaster Management Act would be established by March 2006.

The branch had also prepared a draft Local Government Anti-Corruption Strategy. It had commenced the roll-out of the draft strategy in five municipalities in the Western Cape province. Plans to extend the roll-out to other municipalities were at an advanced stage.

Branch: Free Basic Services and Infrastructure
Mr P Flusk (Deputy Director-General) made the presentation. The purpose of the branch was to provide support to local government to enable it to deliver sustainable infrastructure and increased access to basic services, including free basic services. The branch had finalised the Free Basic Service study and had developed an information portal to assist municipalities to report and share information. 67% of households with infrastructure had access to free basic water. 45% of households benefited from free basic electricity and 2,4 million of these were poor households served by Eskom. An indigent policy had been developed. Some of the branch's priorities for the year 2005/06 were to create awareness among municipalities to use partnerships as an option to accelerate service delivery. It would also hold district wide information sessions on the importance of ring fencing the electricity distribution business.

Branch: Support Services
Mr G Mokate (Deputy Director-General) made the presentation. The purpose of the branch was to strengthen the corporate capacity and capability of the Department by providing the necessary resources, establishing appropriate systems and ensuring that State resources were utilised appropriately to improve the performance of the Department in achieving its strategic objectives. Risk and audit management capacity had been increased to ensure effective corporate governance. Good financial management standards were maintained and this resulted in the Department receiving an unqualified audit report. The Department improved on and in some case exceeded its employment equity targets.

Discussion
Mr Smith asked if municipal debt had increased. He asked if the Local Government Employees Bill dealt with the issue of the remuneration of municipal managers. It was puzzling why the Disaster Management Act had been passed but it seemed as if much of it was still not in force. He found it difficult to believe that 45% of households had access to free basic electricity.

Mr Africa replied that the debt reduction programme was still ongoing. The Department was not in a position to reveal figures on the state of municipal debt. The Committee would be updated on this in the near future. The Department was working with six metropolitans in order to understand the debt profiles and overall financial situations. It was also working with seven municipalities so that it could come up with an approach for the entire country. With regard to the Local Government Employees Bill, he said that the bill would address the issue of the remuneration of municipal managers.

Mr B Solo (ANC) said that there was very slow progress on the operationalisation of disaster management. There had been quite a number of disasters but no risk reduction efforts. It was embarrassing to see what had happened in the Joe Slovo informal settlement. One would have thought that such a disaster would be avoided since the Disaster Management Act was in place. It seems that there were no efforts to improve the competency of volunteers to react to disaster. It was not clear how much allocation was made for this programme. There were also no clear reports on the successes and challenges of the programme. This made it difficult to weigh the responsibilities of the programme against resources allocated to it. There was a need to engage on the extent to which the indigent policy impacted on the budget.

Mr Africa replied that it was agreed that the Act would be implemented in phases. The Department had prepared regulations on the issue of volunteers. The Department was also working on disaster management as part of integrated development plans. It would use the integrated development plans review process to begin to entrench the importance of disaster management plans. Progress with regard to structures that were supposed to be put in place was not as the Department had expected. A range of interim structures was operational across the country. There were also memoranda of understanding between government and key institutions on disaster management.

Mr M Lekgoro (ANC) noted that the Department intended moving into a new building. He asked if there was any national discussion taking place on the use of State owned buildings. Pretoria had about six State owned buildings which were not in use. Such buildings were a threat to the city's safety. Departments looking for buildings did not go to the city. The use of such buildings was important for the regeneration of the inner city. He asked if there was any deployment of trained people from the communities to assist in dealing with disasters like fires.

Mr W Doman (DA) asked what was the staff complement of the Disaster Management Centre. He also asked for a brief comment on the involvement of Eskom in the delivery of free basic electricity.

Mr Africa replied that the Department did not have a Disaster Management Centre as envisaged in legislation. However, there was a Chief Directorate which performed the functions of a Disaster Management Centre.

The Chairperson said that there was a policy of free basic water of six kiloliters. There were escalating tariffs as applied by municipalities. The question was what was the impact of escalating water tariffs on free basic water. It was important to know if people could still feel that they were getting six kiloliters free despite the escalating water tariffs. She also asked if South Africa was moving towards free basic water for all irrespective of affordability levels and if this was sustainable. She was of the opinion that energy referred to, amongst others, paraffin and gas to households that did not have electricity. It was important to understand if the 45% of households referred to in the presentation referred to households that had benefited from free basic "electricity" or energy in general. It would take time to build the necessary infrastructure in rural areas. Hence the need to find ways of making communities benefit from other sources of energy.

The Chairperson asked how the establishment of the regional electricity distributors would impact on the revenue base of municipalities. She also asked how free basic services, particularly electricity, would be managed if the regional electricity distributors took over the distribution of electricity from Eskom and municipalities. It was also important to know how removing electricity distribution from municipalities would be compensated for.

Mr Flusk replied that the regional electricity distributors were designed to ensure that the municipalities became the distributors of electricity. There was a debate on what would happen to Eskom's assets and why Eskom should not be part of the regional electricity distributors. The policy of free basic electricity remained in place.

The meeting was adjourned.