Cross-Boundary Municipal Laws Repeal Bill; Municipal Demarcation Board Annual Report: briefing

Meeting report

LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE
19 October 2005
CROSS-BOUNDARY MUNICIPAL LAWS REPEAL BILL; MUNICIPAL DEMARCATION BOARD ANNUAL REPORT: BRIEFING

Chairperson: Mr L Tsendli (ANC)

Documents handed out:
Cross-Boundary Municipalities Laws Repeal Bill [B36-2005]
Municipal Demarcation Board presentation: Part1 and Part 2
Municipal Demarcation Board Annual Report [available shortly at www.demarcation.org.za]

Relevant minutes:
Provincial and Local Government Portfolio Committee meeting of 18/10/2005

SUMMARY
The Municipal Demarcation Board (MDB) presented detail on the disestablishment of cross-boundary municipalities and the timeframe involved in completing the process. Specific case studies of proposed changes were provided and technical aspects of the legal process explained. Financial information on the Board was presented including projected overspending. The Auditor-General had provided a qualified audit report. Municipal capacity assessment processes and the MDB's current strategic plan were outlined.

Members asked various questions including the resolution of the Matatiele discrepancy, factors influencing the decision to disestablish cross-boundary municipalities, the existence of a suitable timeframe, the funding of the annual budget deficit, the availability of municipal assessment reports to Members, the issue of unforeseen expenditure and the use of consultants.

MINUTES
Dr V Mlokoti (MDB Chairperson) provided detail on the timeframe in place to disestablish cross-boundary municipalities before the proclamation of the local government elections. Information was provided on various proposed changes for municipal boundaries. Emphasis was placed on the situation prevailing on the Eastern Cape/Kwazulu-Natal border. Section 12 notices would accompany the establishment of new municipalities. The potential impact of the disestablishment of cross-boundary municipalities on the local government elections was elucidated.

Discussion
The Chairperson asked for a summarised version of developments and criteria used to determine the need for disestablishment of particular cross-boundary municipalities. Additional information would assist Members in deliberating on the Bill.

Mr M Mzizi (IFP) asked what decisions had been taken on the future of Carltonville and whether it would move to the North-West province. He asked which section 12 notices would be revisited.

Mr J Le Roux (DA) asked whether the Matatiele issue had been resolved and what process would be followed to address outstanding issues.

Mr A Moseki (ANC) sought clarity on the future of Kalagadi and asked whether it would be placed in the Northern Cape.

The Chairperson declared that relevant provincial governments should hold public meetings to discuss proposed changes. He asked what steps would transpire in the case of provincial disagreement with MDB resolutions to resolve an impasse. Appropriate timeframes for Parliament to process the legislation had to be in place. Stakeholders had to be given adequate time to understand all the implications of proposed legislative amendments.

Dr Mlokoti replied that Carltonville would be moved to Gauteng province and some submissions had been received that opposed this move. The MDB was the only authority responsible for the re-determination of municipal and ward boundaries. Section 12 notices would accompany the re-determination process. The Maluti issue remained unresolved and opposing groups were contesting the process. Provincial governments had to concur with final decisions once the process had been completed. The MDB would publish justification reports to explain all decisions taken and to show that a sound consultative process had been followed. Time constraints meant that the process would have to be completed as a matter of urgency. The local government election proclamation date would be announced in careful consideration with the Independent Electoral Commission and the Minister.

Mr Mzizi sought detail on the factors influencing the decision to disestablish cross-boundary municipalities.

Mr le Roux stated that time was of the essence and a completion date should be fixed to avoid a potential constitutional crisis. He asked why difficult issues had now arisen at this stage.

Dr Mlokoti responded that cross-boundary municipalities had been created in 2000 after an assessment of need based on common services, co-existence and common programmes. Magisterial districts and tribal authorities had been discontinued in certain instances. The establishment of cross-boundary municipalities was viewed as a mistake in hindsight. The existence of two administrative role-players, two pieces of legislation and two provincial influences had caused confusion and obstacles. MDB agreed that the time-factor was crucial. An important meeting with the Department had only taken place in April 2005. The National Assembly should decide how best to manage the remainder of the process.

The Chairperson stated that the tendency for departments to attempt to force legislation through Parliament in haste should be discouraged. Members would discuss the appropriate way forward for the process at the next Committee meeting. The National Council of Provinces should take the lead in resolving the process. MDB shared valuable information with relevant stakeholders such as the Local Government SETA.

MDB Annual Report presentation
Mr R Monare (CEO) explained the composition of the Board and provided detail on the financial system and available resources. Currently, the Board would incur overspending of R1,9million due to the need to complete the delimitation process. An additional amount of R15 million had been sought but only R5,5 million had been received. Progress in achieving objectives was elucidated and certain administrative issues discussed. MDB had received a qualified audit report from the Auditor-General and full reconciliation with the asset register had been achieved. Capacity assessments of municipalities were conducted on an annual basis. A strategic plan was in place and information on consultants was provided. A breakdown of the budget was provided.

Discussion
The Chairperson asked for a breakdown of the staff complement and the role of women in management positions. The Committee would meet with the MDB to discuss the nature of capacity assessments conducted within municipalities and the key factors involved.

Mr D Worth (DA) asked how the annual deficit was funded and whether the internal audit unit was functioning effectively. He asked whether municipal assessment reports could be made available to Members for assistance in oversight duties.

Mr le Roux sought clarity on the need to balance the asset register and what decisive steps had been taken. Further explanation on audit fees was required and the number of staff at Head Office.

Mr Mzizi referred to general expenses recorded within the Annual Report and asked what other items were involved. He asked how the total expenses of R28 million had been arrived at. Ward boundaries should not be regarded as cast in stone and a regular review of ward boundaries should be encouraged. Clarity was sought on the amount of unforeseen and unplanned expenditure that occurred in recent years. He asked why such events could not be planned for.

Mr Moseki referred to contingency funds and asked whether the Minister would provide funds to meet needs. Clarity was sought on the review process for re-determination in relation to the timeframe in place. He requested detail on specific factors focused on to assess municipal capacity. A wide group of consultants should be used to broaden participation and avoid familiarity.

The Chairperson sought detail on knowledge management strategies and the effectiveness of the internal audit unit.

Dr Mlokoti stated that the staff breakdown would be provided to members and numerous requests had been received from the Department to furnish findings of studies undertaken in various sectors including transport infrastructure and Metro capacity. Internal auditors had been appointed due to termination of services of an external auditing company for poor performance. The final demarcation of all wards would be declared in December. Contingency funds were in place but were never enough to deal with all possible eventualities. The Department’s Director–General had been informed of all unplanned expenditure and adjustments would be made in terms of the adjustment budget to reduce unplanned spending.

Certain criteria were followed in the delimitation of wards such as the number of registered voters and councilors. A 15% variation from the set norm presented a problem. Wards consisted of variable geographic space and the viability of wards had to be viewed in a specific context. The assessment of municipal capacity focused on the quality of the Integrated Development Plan, necessary infrastructure to perform functions, staff capacity and an adequate budget to meet requirements. The MDB could not enforce recommendations made to municipalities to improve service delivery. The powers and functions of a particular municipality had to inform the IDP and budget. New consultants were added to the data-base on an annual basis.

Mr Monare stated that the additional R15 million had been requested for the ward delimitation process but only R5 million had been provided. A new Chief Financial Officer had been appointed to address financial irregularities. A list had been compiled of non-reconcilable assets and these had been written off. A list of general expenses would be provided to members including administration costs. MDB had incurred expenditure of R28 million in the past financial year. The Board expected service providers to pass on crucial skills to staff and municipal officials as part of a knowledge management system. High audit fees would be reduced in future.

The Chairperson asked that information on justification reports be forwarded to Members to explain reasons for the re-determination of municipal boundaries. The Committee would request presentations in future on Metro capacity assessments and municipal evaluation processes. Continuous overspending was unacceptable and steps would be taken to amend the budget to prevent an unbalanced budget in future. A broad based pool of consultants was necessary to avoid a small group of beneficiaries. The Committee would provide leadership in the re-determination process.

The meeting was adjourned.