Provision of Free Basic Municipal Services: briefings

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Cooperative Governance and Traditional Affairs

20 June 2005
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PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE

PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE
21 June 2005
PROVISION OF FREE BASIC MUNICIPAL SERVICES: BRIEFINGS


Acting Chairperson: Mr S Mashudulu (ANC)

Documents handed out:
Department briefing
Drakenstein Municipality briefing
Naledi Municipality briefing

SUMMARY
The Department of Provincial and Local Government (DPLG) presented on the implementation of free basic services within municipalities. A progress report was provided and challenges expressed. The link to Project Consolidate was elucidated and the role to be played by sector departments explained.

Members asked numerous questions including the tendency for local councilors to avoid responsibility for provision, the need for an enhanced communication strategy, the determination of an average cost for indigent service delivery, the possibility of free energy provision, challenges within rural areas, clarity on the types of free services provided and the path of funding from national level to local municipalities.

A number of municipalities also provided an account of their experiences in implementation of the indigent policy and its obstacles. Common problems included the lack of sufficient financial resources and management capacity, inadequate infrastructure, lack of co-operation from Eskom, the compilation of an indigent register and resistance by certain officials to a developmental mindset.

MINUTES
The Chairperson said the presentation would serve to inform Members of the current national indigent policy. The Congress of SA Trade Unions (Cosatu), SA Local Government Association (SALGA) and certain municipalities had been invited to contribute to the debate and encourage co-ordination.

Department briefing
Mr P Flusk (Deputy Director-General: Free Basic Services and Infrastructure) informed Members that a national conference on free basic services would be held on 25 and 26 July 2005 in Gauteng to which Members had been invited. Sector departments and civil society groups would also be present.

Implementation challenges to the provision of free basic services were outlined and current figures of beneficiaries explained. The lack of adequate communication was cited as a major obstacle and reporting systems needed an upgrade. A plethora of reporting requirements tended to obscure practice at the local level. The disconnection of the indigent contravened the policy and expanded infrastructure was needed to enhance service delivery to the poor. Universal access to electricity would be achieved in 2012. Project Consolidate contained an integration intervention strategy and enhanced billing system. Consultation with communities would be encouraged and the Department would work with sector departments and all three spheres of government. Action plans would be implemented at the district level to facilitate efficacy and co-ordination. Government responsibilities would be aligned to ensure sufficient funding. National Treasury would provide funds in accordance with an audit identifying needs and a common definition of indigence. The provision of free basic services would create a base for all people to participate in society. Operating and capital grants would be utilised to finance free basic services.

Municipalities would focus on service delivery, good governance and the promotion of improved living standards such as transport and housing. All related development would be environmentally sustainable. An indigent register would be established to which all sector departments would have access. Relevant departments would improve the interaction procedure with the indigent and time delays would be reduced. Universal access to essential services would be promoted at the national level. The existence of variable municipal capacity, demographics and available resources would be considered. The maintenance of infrastructure would be a component of the policy. Subsidies could flow from three sources namely, cross-subsidies, property rates and similar charges and national government funding. All three spheres of government would engage in monitoring of implementation and Stattistics South Africa would provide information on the indigent.

Discussion
Ms L Mashiane (ANC) sought clarity on the role to be played by other government departments in the implementation of free basic services. Members received difficult questions during constituency periods and further information was needed to strengthen responses. The tendency for role players to deny responsibility had to be addressed and more public debate was required concerning the provision of free services to the wealthy in certain affluent regions. Clarity was sought on the point of convergence between municipalities and district councils.

Mr B Solo (ANC) argued that an innovative communication strategy was needed to inform citizens at all levels of the proposed policies and procedures. He asked what orientation plans were in place for local government councilors regarding free basic services. The perception that people did not want to contribute towards service provision was false and many people remained trapped in uncertainty. He advocated that Members be involved in ward committee activities to assist local government officials in the interpretation of governing legislation. The priorities within communities such as the eradication of the bucket system had to be identified through improved consultation.

Mr W Doman (DA) asked whether an average cost for municipalities of providing free basic services could be determined based on the needs of the indigent. A norm could be used in discussion with National Treasury. The misuse of the equitable share by municipalities had to be curtailed and the City of Cape Town model where free basic electricity was provided to all was recommended as a solution to excessive bureaucratic red-tape.

Ms M Gumede (ANC) asked whether other energy sources such as paraffin could be included in a free basic energy model. The lack of electricity infrastructure in certain areas would undermine attempts to improve living standards. The creation of infrastructure on farms did not benefit farm workers that relocated as the services provided remained at the original site. She asked whether the Department would follow up progress with municipalities to determine implementation rates.

Mr M Swathe (DA) asked how free basic services could be provided in rural areas with insufficient infrastructure and whether the equitable share system was directed at the establishment of infrastructure within rural communities.

Mr Flusk responded that the sector departments such as Water Affairs and Forestry, Minerals and Energy and Finance would play a major role at the national conference. Project Consolidate would provide the means to create a team approach and a self-reflective attitude on the part of participants. Staff should be deployed by sector departments to facilitate implementation of policy and assist municipalities in capacity building and policy development. Municipalities needed adequate credit control to ensure that financially viable consumers paid for services. The policy did not intend that the indigent would be disconnected as a result of a contravention of prescribed procedures. Relationships were developing between district councils, local authorities and provincial governments.

A handbook on the indigent policy would be launched at the national conference and further engagement with local government would ensue to communicate aspects of the policy. The Inter-Ministerial Committee would be used to promote Project Consolidate. Civil society organizations should be engaged in ward committees to present issues and reduce incidents of unrest and conflict. Ward committees served as a valuable vehicle to communicate with communities and manage implementation. The bucket system would be eradicated within two years due to demarcated finance and enhanced capacity. R130 per month per household had been identified as an average cost for free basic services. Municipalities that abused the equitable share grant would be identified by means of the Auditor-General's reports.

The City of Cape Town model of cross-subsidies was a sound approach and could be expanded to other categories of municipalities. The notion of free basic energy in the absence of adequate infrastructure was commendable and municipalities could devise alternative methods to ensure energy sources for residents. The mobility of farm workers was a concern and the level of permanency within rural areas would be ascertained through research. Municipalities should lead and guide the implementation of the indigent policy based on sound contextual knowledge and identification of the poor. The Department would support municipalities through resource allocation and capacity enhancement to achieve the stated objectives. Ward committees should be utilised to improve communication and implant a collective approach.

Mr M Likotsi (PAC) asked what types of free services were provided and whether statistics were available. The introduction of the VIP toilet system should not be regarded as a permanent solution and anger could arise if a more entrenched apparatus was not established. Municipalities tended to discredit community complaints by blaming the Department for imposing the VIP system on local government and the Department should reconsider the system.

Ms Mashiane asked for detail on the flow of money from the Department to municipalities in order to facilitate the provision of free basic electricity. She asked what percentage of money was paid directly to Eskom and the eventual destination of unused money. She asserted that rural communities had addresses to assist in the administrative process to acquire free basic services. The Voters Roll had been compiled in rural areas. Members should conduct an investigation during the recess to determine the level of addresses within rural municipalities.

The Chairperson declared that Members should attend Integrated Development Plan (IDP) meetings in their constituencies as a matter of protocol. The Office of the Speaker should provide a list of all ward committee meetings to Members to assist in logistical arrangements. Municipalities were empowered to raise their own revenue and grants should not be perceived as the only source of funds.

Mr Flusk responded that the VIP system was not a panacea for the sanitation problem and the IDPs would guide the identification of suitable solutions in line with budgets and available resources. Uniformity in provision would be promoted to avoid potential conflict between neighboring communities. The Department encouraged municipalities to sign service agreements with Eskom as the service provider and then facilitate payment. Allocated resources should be used by municipalities solely to serve the needs of the poor. The Department encouraged all municipalities to sign funding agreements with Eskom. Statistics South Africa (Stats SA) was engaged in a process to provide addresses for all citizens. The proposed average cost of R130 could be supplemented by municipalities if required but municipalities should not use grants to fund management fees. The provision of enhanced management capacity within municipalities remained a concern.

Municipalities’ briefings
Mr C Pillay (Tchatchadu Municipal Manager) provided background on attempts to implement free basic services within the municipality's jurisdiction. Nine local municipalities provided six kiloliters of water to all and only two provided free basic electricity of 50 kilowatts. The continuous update of indigent registers was problematic due to migration and alternating economic circumstances. A common definition of indigence was required to improve service delivery. Improved information technology systems would assist in the provision of free basic services. The presence of debt within municipalities undermined attempts to service the poor. The presence of aging electrical infrastructure compromised efforts and upgrades would require additional funds. The Department should consider appropriate methods to improve municipal infrastructure. The establishment of an information management system would assist in the expansion of the indigent policy to the wider community. The council would produce a plan to provide free electricity to farm workers and additional funding was needed to reduce infrastructure backlogs.

Mr T Nosi (Frances Baard District Municipality Manager) stated that a challenge remained the rollout of services to all farm workers in the district. Approximately 97% of households had access to free basic services. The migration of farm workers into urban areas meant that the placement of rural infrastructure could be wasted. Audits should be conducted to establish rural infrastructure needs to assist free basic services provision. A maintenance unit had been established to maintain infrastructure and a relevant official had been appointed to manage the process. Alternatives to national policy should be tolerated to allow for specific conditions within different municipalities. For example, the municipality would subsidise two state pensioners living together as opposed to the national approach of supporting only one. The arrangement would be funded from municipal funds and no interest would be charged on arrears.

Mr J Devenga (Greater Tzaneen Chief Financial Officer) stated that free water and electricity were provided to all households in accordance with the Cape Town model. R30 per month was provided to the indigent and a credit control policy was in place to ensure that the able paid for services rendered. Water was provided by means of a step tariff with increased quantities generating additional fees. The first 50 kilowatts of electricity was available free to the indigent only. Further documentation would be provided to the Committee in due course detailing the implementation problems experienced with free basic service. The maintenance of a regular and updated indigent register was problematic but crucial to the success of the policy.

Mr Mtemune (Dr JS Moroka Municipality Manager) stated that free water would be provided to 9 500 households in the near future and no free electricity was provided at this juncture. Financial resources had been allocated to put bulk water meters in place. However, the bulk system did not indicate the consumption per individual household and some houses could receive less than the stipulated amount. No service agreement with Eskom was in place and the municipality had no control over Eskom’s activity in the region. Eskom claimed that insufficient detail on indigent households prevented a rollout of free electricity. VIP toilets had been provided but the allocated resources were now depleted. The identification and management of the indigent remained a challenge and inadequate capacity within the municipality was a concern. The discrepancies in delivery between more affluent municipalities and the more disadvantaged caused tension and conflict. People would ask why free services could not be provided in rural areas. The subsidisation of the rich in metropolitan areas was a contravention of the policy objectives. Project Consolidate had to initiate infrastructure provision where needed to facilitate free services. Available information on the indigent within sector government departments should be shared with local government to assist in free basic services. Grants should be directed at both operating and maintenance requirements to ensure sustainability.

Mr K Mogale (Drakenstein Municipality Manager) asserted that free water was provided at a cost of R4 million and a service agreement was in place with Eskom to supply electricity. R85 was allocated to each indigent household in the form of grants. A primary challenge was to arrange free services for farm workers and negotiations were underway with agricultural unions to address the need. The majority of ward committees were functional and served as vehicles for transformation. Financial resources were needed to address infrastructure weaknesses and under-spending on capital budgets remained a concern. Measures were in place to improve the collection of bad debts and a performance management system would be implemented in July 2005 to promote accountability amongst councilors.

Mr T Kebotlhale (Naledi Local Municipality Manager) stated that the indigent register still had to be compiled and a service agreement would be signed with Eskom before the end of the year. Information was provided on the current tariff policy and indigent relief initiatives. Six kiloliters of water was provided free to all households but only the indigent would continue to benefit in future. The budget processes of all three spheres of government had to be synchronised to ensure effective implementation.

COSATU briefing
Mr E Paulus, COSATU Parliamentary Officer, stated that a common poverty line had to be established to avoid different interpretations and applications of policy by municipalities. The stipulated living wage made it difficult for workers to pay for services and assistance had to be provided to close the gap between the advantaged and disadvantaged.

The recent adoption by the Department of the United Nations Development Programme (UNDP) definition of poverty was welcomed to initiate transformation of prevailing mindsets within local government. An enhanced list of basic needs was required to generate realistic policy. Additional resources should be provided to Project Consolidate to give impetus to the initiative. The high population and low revenue capacity within B4 municipalities facilitated high levels of migration to better resourced areas thereby placing additional strain on urban municipalities. Members required a briefing on the national spatial development perspective to better understand the challenges of migration. The City of Cape Town used credit bureaus to determine access to indigent policy that was a contravention of accepted policy. Grants should be allocated to financially weak municipalities to facilitate free basic services. Local councilors should be held accountable for lack of free services and reduce the tendency to blame Treasury and provincial governments.

SA Local Government Association briefing
Mr Mulajee, SALGA Parliamentary Officer, concurred that inadequate resources within municipalities hindered the potential to deliver free services. Municipalities had to undergo transformation to adopt a developmental approach to service delivery. Lack of capacity also undermined the ability to meet policy objectives. National working committees had been established to share sound practice and common problems with local government. Sector departments should be engaged through the Min/Mec structure and discussions should be held with provincial governments to initiate progress. Interaction with all tiers of government would continue to identify solutions to persistent anomalies.

Discussion
The Chairperson declared the value for Members of the various presentations to assist in understanding challenges and providing data to the Department. Members should devise an appropriate method to interact with municipalities and monitor implementation. The Department and SALGA would provide written assessments of the meeting for Members and produce recommendations to introduce effective implementation.

Mr Doman suggested that Members each produce ten recommendations at study groups to contribute to the process.

Ms P Bhengu (ANC) stated that the position of municipal workers with regard to the indigent policy had to be clarified and Cosatu should assist in the process. She asked whether municipalities had plans to deal with the migration of farm workers and the concomitant change in settlement patterns.

The Chairperson asserted that the sharing of experiences and case studies between municipalities had to occur in a well-structured manner. He asked what support the Department provided in this regard.

Mr P Smith (IFP) asked for further detail on the current funding regime with particular reference to the equitable share formula. Members had to play a significant role in the implementation process but participation could be difficult due to certain constraints. An appropriate strategy for Members’ contribution should be devised to facilitate intervention and ensure meaningful progress.

Mr Flusk acknowledged the important role to be played by Members in the implementation process. The collection of revenue by municipalities had to be enhanced and opportunities for further funding were outlined within the Division of Revenue Act. Issues would be incorporated within the national conference and all municipalities would be encouraged to sign service agreements with Eskom.

The Chairperson agreed that a discussion around the equitable share formula had to occur to clarify the link to free basic services and determine levels of funding. Members would determine the optimal way forward at the next Committee meeting.

The meeting was adjourned.


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