Strategies and Progress Report: SA Local Government Association briefing

Meeting report

LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE
23 August 2005
STRATEGIES AND PROGRESS REPORT: SA LOCAL GOVERNMENT ASSOCIATION BRIEFING

Chairperson: Mr S Shiceka (ANC)

Documents handed out:
SALGA PowerPoint presentation
SALGA Chairperson’s Report

SUMMARY
The South African Local Government Association (SALGA) briefed the Committee on progress with the implementation of their business plan and movement towards a unified structure. Officials outlined the restructuring of their national and provincial offices and staff deployment to the provinces. Their audit had been contracted to an outside firm due to internal irregularities. The new levy system had brought in much greater revenues from municipalities than in the past. The budget for the year had been approved. SALGA was involved in numerous local and international initiatives, such as the United Cities for Local Governments in Africa (UCLGA) Conference. Issues of councillor remuneration were crucial and were under discussion. An Office Bearer’s Handbook was being developed. Important strategic issues included the forthcoming local government elections and the municipal wage negotiations with the SA Municipal Workers Union (SAMWU).

The Committee raised concerns over the affordability of levies for poorer municipalities. They also discussed the effects of restructuring, the role of traditional leaders, the need for uniform salary packages, effective performance contracts, and financial accountability of municipalities and the need for an effective communications strategy. They stressed the importance of monitoring municipalities before they reached a crisis state and the need for efficient budgeting between operational and project costs to effect maximum service delivery.

MINUTES

SA Local Government Association briefing
Ms R Mhaule (SALGA Deputy Chairperson) briefed the Committee on progress with the implementation of their business plan. The primary focus of SALGA had been to create a unified institutional framework. All nine provinces were being integrated into the unitary structure, with payrolls, properties and cash resources being transferred to head office. SALGA had been listed as a Schedule 3, Part A public entity in terms of the Public Finance Management Act (PFMA). Discussions had been held with the Minister of Provincial and Local Government to consider a favourable listing of SALGA, and a technical task team was being established to investigate the outcome.

The national and provincial offices had been restructured and staff had been deployed to provinces to assist in capacitating those offices. The national office utilised 41 percent of SALGA staff. Gender distribution across all levels of management needed to be further improved. New, larger and more accessible offices had been leased in Tshwane to cater for additional staff members, more adequate meeting space and to provide an environment conducive to the development of organisational culture.

A ‘Change Management’ workshop had been held in April where strategies around improved communications and reporting within the organisation had been developed. The performance management system, provincial business plans and operational planning were still in the process of being finalised. Provinces were in the process of completing their balanced scorecards.

Outsourcing was decided on for the internal audit function when a number of ‘risky’ contracts binding SALGA for extensive periods were discovered. SALGA had moved from a R20 million deficit in January 2005 to a surplus of some R300 000 in actual terms. The budget for 2005/6 had been approved ensuring provinces could begin implementing their plans. A more affordable levy system was introduced and a steady increase in levies had occurred contributing the highest revenue to the organisation.

SALGA, in partnership with the City of Tshwane, had hosted the successful United Cities for Local Governments in Africa (UCLGA) Founding Congress in May 2005, at which South Africa had been elected president. SALGA also hosted the Summit of Women in Local Government in June. The 2^nd World Summit of the Cities and Local Authorities on the information society would be taking place in Spain. SALGA participated in numerous Intergovernmental Relations (IGR) structures. The Commonwealth Local Government Forum had invited SALGA to participate in a programme to create a database of local government practitioners.

A government consensus had been reached on the critical role of municipal councillors with a commitment to resolving the issue of councillor remuneration and support. An Office Bearers Handbook was being prepared to replace the outdated Mayoral Handbook. The book would provide guidance and conformity on the roles and responsibilities of all relevant office bearers. Local Government Elections presented SALGA with numerous challenges. The ability of Municipal Managers in functioning as neutral municipal electoral officers had been under discussion. SALGA had been involved in salary negotiations with the SA Municipal Workers’ Union (SAMWU) around the proposed six percent salary increase across the board. After mediation, SALGA accepted the proposals but the union did not. The union’s demands were considered too high for municipalities with large financial backlogs. Damage to property and persons were being investigated following the strike. Other strategic issues included the development of a policy framework for dealing with HIV/AIDS within the workplace.

Discussion
Mr D Worth (DA) asked what criteria had been used for determining municipal levies and how the new levy system had become so much more efficient and streamlined. Mr J Le Roux (DA) wondered what happened to municipalities who where unable to pay, even beyond extension periods, and whether SALGA enforced payments. Mr K Mokoena (ANC) felt that the levy collection figures reflected a ‘one size fits all’ approach and asked if all municipalities were paying the same amount despite differing levels of wealth. He also requested clarity on the ‘development levy’ issue, which was often raised as a problem by poorer municipalities during Committee oversight visits.

Ms Mhaule apologised that the Chairperson’s report had not been consolidated for the Committee noting that it outlined the levy collection criteria in detail. She explained that the levy amount under the new system was much smaller, and that had enabled many municipalities to make the payments more easily. Municipalities with insufficient funds were considered for exemptions. Mr K Kekana (SALGA Chief Director) added that the levy formulae had created space for smaller municipalities. R46 million of the total R91 million levy had already been collected since the beginning of the financial year.

Mr Z Ntuli (ANC) queried the water policy for schools, having heard examples where schools were being charged the same rates as companies. Ms Mhaule responded that SALGA’s committee dealing with service policy reviews would investigate the issue and ensure a reformulation.

Mr Ntuli asked if water services would be cut when a resident was unable to pay. Ms Mhaule noted that municipalities were not permitted to cut services without warning. Once the situation had been brought to the attention of the municipality and the individual was found to be unemployed, they would fall under the Indigent Policy and receive free water.

Mr Le Roux requested a gender and race breakdown of SALGA’s staff complement. Ms Mhaule noted that all race groups and women were represented though there was a shortage of white female employees. Only the percentages shown on the presented chart were currently available.

Mr A Moseki (ANC) asked how the restructuring process and staff redeployment had affected the different provinces and head office. Ms Mhaule explained that the first phase of deployment to provinces had been voluntary. SALGA would not force employees to relocate and in the future redeployment requests would be negotiated. New posts would be advertised in provinces when skill shortages had been identified. No staff would be retrenched. Greater capacity was needed in provinces so staff would be retrained, and redirected to meet those needs.

Mr Moseki questioned why the internal audit had been contracted outside the organisation. Mr Kekana explained that once the new CEO had come into office and discovered through the due diligence audit that some irregularities had occurred, it was agreed that an outside auditor would be better placed to resolve that situation. After the year’s contract, the audit function could become internal again.

Mr Le Roux asked for clarity on the term ‘risky contracts’ mentioned in the report. Ms Mhaule explained that there had been irregularities such as a case where a building had been purchased without the required documentation. SALGA had felt that it would be more appropriate to contract an outside auditor to rectify the situation.

Mr Moseki emphasised the importance of SALGA developing partnerships with traditional leaders in their lobbying and advocacy work. The Chairperson asked if a traditional leaders council was being established by SALGA. Ms Mhaule responded that SALGA needed to strengthen its relationship at a national level, but at a municipal level it was already very effective. In provinces such as Limpopo and Mpumalanga, which had a high component of traditional leaders, many sat on the local councils and participated actively at municipal level.

Mr Moseki asked if SALGA had considered the issue of remuneration by the relevant authorities for the ward committee members. The Chairperson raised the need for uniformity in councillor remuneration whatever the municipality’s level of wealth and asked if remuneration was the responsibility of the National Treasury or the individual municipalities. He wanted clarity on the issue of full-time and part-time councillors. Ms Mhaule acknowledged that ward committee members worked hard as volunteers receiving no salary except for expenses and that a change in legislation was needed to alter the situation. The Chairperson’s report provided more detail on proposed figures for councillor remuneration. It had been recommended that councillors be paid from the National Treasury.

SALGA was aware that rural municipalities had enormous challenges and covered vast geographical areas, yet were often paid much less than those in urban areas. The need to increase the number of full-time councillors was urgent; otherwise, service delivery problems would persist. Most mayors had other full-time employment. The Chairperson noted that since 1996 the gap between rich and poor had increased. This was reflected in salary packages in the different municipalities. A uniform salary package for municipal managers needed to be introduced. Mr Worth asked whether there was a standardised retrenchment package and Ms Mhaule responded that it needed to be resolved.

Mr Mokoena emphasised the need for an effective communications strategy, as the public was unaware of the positive work done by SALGA. Ms Mhaule noted that all community protest action had resulted from a lack of communication with municipalities. SALGA needed to strengthen communication through holding community meetings with stakeholders and ensuring ward committees were functioning properly. The redeployment of communication officers to provinces would assist with that process.

Mr Mokoena asked how the six percent wage figure offered by SALGA to the unions was derived at. Ms Mhaule explained that National Treasury limited municipalities to spending no more than 33 percent of their budget on salaries, thus resulting in a figure of six percent.

The Chairperson requested that the relationship between SALGA head office and the provinces be more clearly defined. Ms Mhaule explained that the role of SALGA head office was to co-ordinate all national activities and SALGA representation on IRG structures in line with the Constitution. The provincial offices were responsible for working closely with the municipalities. Mr Kekana added that the head office also provided research and human resource services for provinces.

The Chairperson noted that the financial accountability of municipalities was poor and queried how SALGA would improve the Auditor-General’s qualified opinion. Ms Mhaule agreed that issues around financial accountability of municipalities were a major challenge for SALGA and they were working hard to capacitate the municipalities to improve the situation. Mr Kekana added that the implementation of District Area Finance Forums would assist in improving financial accountability and the qualification of audits.

Mr Worth queried SALGA’s view on consultants. It was possible that municipalities would collapse once consultants were removed and it might be more effective for SALGA to provide training directly to the provinces. Ms Mhaule responded that municipalities were encouraged to make use of SALGA expertise.

Mr Mokoena noted that the Committee had been inundated with MECs’ requests for intervention when the municipalities where already in a state of collapse. It would be more effective if SALGA could detect the dire state of municipalities earlier. Ms Mhaule responded that power was vested in the MECs of provinces and SALGA could not intervene directly. SALGA often received reports from municipalities that glossed over the real problems and so did not know the situation. A close relationship between MECs and SALGA Chairpersons at province level would be of enormous assistance. MECs signed all reports and once problems were picked up, SALGA would be informed and could offer assistance.

Mr Mokoena asked if action was being taken against individuals who had caused damage to property or persons during the strike, and not only the Union. Ms Mhaule responded that in cases where employees choosing to work had been killed or injured, the responsible individuals faced legal action.

The Chairperson raised examples where inadequate performance contracts were making it impossible for ineffective councillors to be disciplined or reviewed. SALGA should be providing assistance to municipalities in drawing up performance contracts. Ms Mhaule cited examples where new councillors and mayors had been afraid to challenge the old performance contracts of established municipal managers. In some cases, managers did not have a performance contract at all. SALGA had investigated the problems and they were currently being resolved.

The Chairperson noted a trend since 2001 where operational costs had increased in relation to capital expenditure. Operational costs were intruding into the project budget resulting in less delivery of services. Ms Mhaule noted that politics was involved in that issue and new councillors needed assistance from SALGA in drawing up business plans and capacitating managers.

The Chairperson requested any outstanding documents be sent to the Committee. The Committee would request further meetings with SALGA to discuss issues in the future.

The meeting was adjourned.