SALGA, Municipal Demarcation Board, National House of Traditional Leaders: Budget plans 2006-07

Meeting report

PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE
14 March 2006
SALGA; AND NATIONAL HOUSE OF TRADITIONAL LEADERS BUDGETS; MUNICIPAL DEMARCATION BOARD BUDGET REVIEW: BRIEFING:

Chairpersons: Mr Y Carrim (ANC) and Mr T Tsenoli (ANC) (after 15:30)

Documents handed out:
SALGA’s Budget Review 2005-2006 Financial Year
SALGA’s Budget Review 1 July – 31 December 2005: Part 1 & 2
SALGA’s Annual Report: 2004-2005
NHTL Budget Report to the Portfolio Committee
Municipal Demarcation Board

SUMMARY
The Committee were briefed on the financial and operational review of the South African Local Government Association (SALGA) for the 2005/06 financial year. The report covered the progress made against each strategic objective. As time was of the essence, only key aspects were focused on by the CEO of SALGA in order that thorough discussions could be held. The meeting was adjourned until 3.30pm.

The draft Annual Report for the National House of Traditional Leaders was then presented. The report differed from previous years in that Provincial Houses were actively participating in the affairs of the National House of Traditional Leaders; there had been more cooperation between the National House and the Ministry of Provincial and Local Government.

The Municipal Demarcation Board presented its budget review. Members raised various issues including the write-off of assets from the register, the Board’s role within Project Consolidate, steps to assess capacity at the local government level, the use of consultants to assist with various projects, problems of under-funding and the need for increased visits to rural municipalities.

MINUTES
SA Local Government Association briefing
Dr Makhosi Khoza, SALGA Chief Executive Officer, reported that SALGA’s mandate was derived from Section 169 of the Constitution. It was generally defined it as a representative body and resource for local government at national, regional and international forums. It was entrusted with promoting and protecting the interest of local government institutions. Accordingly, its mandate comprised of the following:
- The effective representation of local government in the legislative processes of all spheres of government, and in inter-governmental processes;
- A support and advisory role – defining needs of members; lobbying for, leveraging, demanding and providing support and advice in terms of those needs;
- To act as an employer body;
- To act as a knowledge and information centre for municipalities;
- To help develop capacity in municipalities;
- To unite local government in given developmental obligations;
- To act as custodian of shared experiences within local government;
- To act as a partner for government in driving its transformation programme.

Dr Khoza noted that since October 2004, SALGA had undertaken a transformation and restructuring process, adopted a new constitution, and unified all programmes for one body. In January 2005, it had undergone a vision process for the purpose of restructuring. SALGA’s vision was to be an association of municipalities at cutting edge of quality and sustainable services. Its mission was to be consultative, informed, mandated, credible and accountable to its membership, and to provide value for money. SALGA’s values are to be responsive, innovative, dynamic and excellence.

Dr Khoza confirmed that SALGA had the following strategic objectives:
- To increase SALGA’s effectiveness and efficiency to enhance sustainability of organized local government and quality of service to its members. To this end, the advertisements on television before the local government elections had highlighted service delivery issues. As opposed to the media’s estimated electorate turn-out of 40%, there had been a 49% voter turn-out. This indicated that SALGA had fulfilled its mandate, although there was still room for improvement.
- To foster policy, strategy and operational integration;
- To foster planning, reporting and budgetary context for the organisation as a whole;
- To facilitate the strengthening of the system of communication in local government;
- To ensure that SALGA enhances and maintains a high profile position locally, regionally and internationally. SALGA had revamped the ‘Voice’ magazine for more indigenous languages, and introduced a SALGA newsletter.
- To facilitate and support the capacity of member municipality locally, and through continental and international exchanges and peer learning key areas. SALGA had held a successful congress last year and adopted a guide for local government. SALGA was developing its international relationship strategy.
- To mainstream issues of gender, youth, people with disabilities and HIV/AIDS as central cross-cutting issues in local governmental developmental agendas. A resolution had been taken in November 2004 at a conference, adopting the 50: 50 campaign.
- To promote a governance system that would enable service delivery in a development-oriented state. The Local Government sector was currently unstable and was recently voted the worst employer by the Congress of SA Trade Unions (COSATU). Four meetings were held per year and every municipality was represented. The National Executive Committee (NEC) met every month. Since adopting a unified administrative structure, provincial directors had been promoted to Deputy CEOs.
- To promote credibility and relevance of the local government agenda in national policy and programmes;
- To promote the enhancement and mobilisation of existing capacity within the local government sphere to share responsibility for its own development;
- To facilitate the implementation of a labour and human resources dispensation in municipalities that enhanced service delivery;
- To advocate ‘labour peace’ in the sector; and
- To ensure municipal compliance to workplace legislation.

Dr Khoza noted successes such as:
- improvement in membership levy collections from 40% to more than 95% by March 2006;
- improved staff turnover from 47% to 13.8% by the end of the last quarter;
- more visibility of SALGA in Inter Governmental Relations (IGR) structures;
- comprehensive involvement in the Cross-boundary Municipalities Bill, and the Constitutional 12^th Amendment Bill;
- two rulings on disputes with unions related to accrued leave and micro-lending deductions from payroll;
- the launch of a performance management system toolkit and workshops in seven provinces;
- new guidelines on HIV/AIDS in the workplace;
- continuously improved relations with stakeholders;
- the reversal of risky contracts and the reimbursement of some funds paid;
- the adoption of a new strategy and systems.
- financial statements were consolidated with all its provincial structures for the first time in 2004/05 financial statements;
- the fully independent Audit Committee was fully functional;
- macro- and micro-risk assessments had been completed;
- internal auditors had developed their audit plans informed by risk assessment;
- the CEO and her Executive task team had visited all provinces, meeting the Municipal Managers (MMs) and Chief Financial Officers (CFOs) of municipalities to assess, among others: the state of affairs in municipalities, SALGA’s provincial capacity to meet municipal needs, areas of immediate intervention by the CEO and co-operation with sector departments provincially and nationally;
- signing a Memorandum of Understanding (MOU) with its sister organisation in Mali; and
- making some strides in finalising a single Pension Fund in Local Government.

Dr Khoza proceeded to highlight the challenges faced by SALGA, namely:
- the twinning arrangements and the exchange of best practices;
- the lack of an international relations strategy;
- the listing of SALGA as a schedule 3A public entity, which in turn limited its ability to be self-sufficient and generate its own income and ensure sustainability;
- the lack of integrated systems between the SALGA national and provincial offices;
- the poor response from the donor community;
- risky contracts and the disclaimer of the audit opinion for the 2004/05 financial year.

Dr Khoza confirmed that, in terms of these challenges:
- their intranet was due to go live the end of March 2006,
- a revised membership formula had been implemented leading to improved collection of membership levies,
- risky contracts had been reversed but had in certain circumstances been settled and certain monies recouped;
- the auditor’s recommendations were being continuously implemented. Although the attributes of the disclaimer were known, and the issues addressed, this had had a negative impact.
- SALGA had gained the confidence of municipalities with a 132% recovery of levies experienced for the past financial year.
- all DCEOs had been appointed, and that
- more checks and balances were now in place.

Discussion
A Member enquired the reasons for the number of acting Municipal Managers and what SALGA intended to do about this. He further enquired about the spending trends of the municipalities, noting that the municipalities’ lack of capacity to spend. He also asked more about Community Development Worker (CDW training and numbers in the field.

Mr Le Roux asked about the R10 million paid in one of the risky contracts. What had happened to those funds and which firm was it paid to? The municipalities were suffering from capacity problems, and a lack of knowledge and expertise. What was SALGA doing to strengthen capacity? Had it compiled a database for increasing such expertise?

Mr Sicelo Shiceka enquired whether, in terms of provinces’ lack of capacity, a strategy had been developed. He further raised conflicts between Speakers, Managers and Mayors, and asked whether SALGA had addressed this issue. He requested a report on what programmes in what areas were being implemented and how SALGA intended to ensure sustainability of such programmes. On the issue of finances, he queried whether SALGA had any future intention of becoming self-sufficient, or whether it intended to remain reliant on continuous donor funding. His last enquiry was whether SALGA had any knowledge retention strategy.

Mr Mokoena wished to establish whether SALGA’s ‘house was in order’, and whether it would be attending Parliament daily and participating in the legislative programme of the NCOP. He further asked about the municipalities under Project Consolidate, and whether there were proactive mechanisms to identify problem municipalities and assist collapsing municipalities.

Chief Nonkanyane said that steps to address previously raised these issues should have been indicated in the report. He also asked about the criteria for appointment of DCEOs. He further wished to source the auditor’s report. On the issue of Project Consolidate, he asked whether SALGA had integrated these reports and, if so, what SALGA had done so far to assist these municipalities. In terms of evictions and the collection of rates from the poor, he wished to know what steps SALGA had taken. His last query was whether there had been any interactions between SALGA and traditional leaders.

Councillor Johnson noted that the core function of SALGA related to it being a lobbying body and representative of municipalities. Restructuring was required to achieve these specific objectives. On the issue of acting municipal managers, he noted that local government had undergone a unique transformation process. This and new legislation had made local government unstable. SALGA was thus putting new systems into place and stabilising local government to ensure capacity. On the issue of spending capacity, SALGA had different financial cycles but that certainty would be created.

Councillor Johnson continued that the issue of risky contracts had become litigious. In terms of municipality capacity problems, twinning agreements had been entered into where municipalities were partnered together to share knowledge and expertise. Where one municipality had an overabundance of capacity, such capacity would be used in another to cover shortfalls.

Councillor Johnson stated that on the issue of a provincial framework, ability to exercise powers and functions changed from municipality to municipality. However, SALGA was looking into formulating frameworks. The problem of Parliamentary participation was also being worked on. However, it required councillors to be present, and they risked losing constituency support if the majority of their time spent in Parliament. To this end, a special mechanism needed to be found.

Dr Khoza noted that the role of SALGA needed to be further clarified. In terms of its constitution, SALGA was supposed to be a representative body. However in practice, it was maintaining municipalities. Turning to the tensions between the mayors, managers and speakers of municipalities, she noted that governance strategies had been prioritised. Joint committees needed to be sensitised and that some of the major factors contributing to governance issues were not under the control of SALGA. Although SALGA had come up with a payroll guideline, as it was not part of the bargaining structure, municipalities could not be forced to comply with the guidelines. An executive leadership programme had been implemented, earmarking Executive Committee Members, Section 57 employees, and municipal managers.

Dr Khoza further stated that the high turnover of employees impacted on continuity and stability. To this end, SALGA’s five-year Councillor Development Programme provided joint training for political leaders in government. It was essential to be adaptable, so municipalities were being trained together to determine best practices.

Dr Khoza said that as SALGA was a Schedule 3A public entity, it was not entitled to charge fees. Until this changed, it could not become self-sufficient. SALGA also did not have large resources. Regarding the Millionsure saga, a forensic audit had been completed. In terms of the building contract, R7 million had been recovered.

Dr Khoza further stated that Joint and Select Committees should meet to look at the audit. It was SALGA’s intention to meet expectations. Systems were being put in place, as indicated by the reduction of the high staff turnover.

Councillor Johnson noted that the CDWs had undergone accredited training and been deployed within wards, although no significant progress had been made in terms of full-time employment. At ward level, there was still much work to be done. Support and business units needed to be implemented. He confirmed that institutional learning programmes would be undertaken in the next month through the People’s Academy for Continuous Learning. The CDWs would act as alert mechanisms and provide an early warning system of problems.

Dr Khoza said that appointments had been made in terms of SALGA’s own strategic objectives.In terms of salaries, she had to ensure that they were not worse off than from where they had been.

Ms Gumede queried whether the institutional memory pilot project had been rolled out. She also asked whether a reduction in staff at national level, and an increase at provincial level, had occurred. Dr Khoza confirmed these had occurred.

Councillor Johnson noted that, regarding participation in Parliament, only Gauteng had amended its rules. It was therefore not in the hands of SALGA to change the rules. On Project Consolidate, he noted that various meetings had been held to ensure that Councillors understood the nature of the environment.

On the question of evictions, Extension of Tenure legislation was not in favour of the poor and, to this end, the Department of Land Affairs needed to be engaged about community destabilisation. Closer relationships were being forged with traditional leaders.

National House of Traditional Leaders briefing
Mr I Msimela, (Chairperson) presented the draft Annual Report for the National House of Traditional Leaders (NHTL). The report differed from previous years in that:
- Provincial Houses were now actively participating in the affairs of the NHTL;
- There was more co-operation between the NHTL and the Ministry of Provincial and Local Government;
- The human resources capacity of the NHTL had improved; and
- The NHTL was much more focused due to its strategic plan upon which the report was based.

Mr Msimela confirmed that the mandate of the NHTL was to enhance unity and understanding among traditional communities, and deepen co-operation between the National House and the various Provincial Houses. Such communication between the National and Provincial Houses and Traditional Councils and Communities, assisted in the joint planning and joint quarterly reporting to evaluate achievements, and provided a checks and balances system for any underperformance and interventions required by the Provincial Houses. This system included the attainment of autonomy listed in the Public Finances Management Act (PFMA). The achievement of autonomy status was imperative.

Devolution of knowledge for national to Provincial and Local Houses would enable the NHTL to link good practices to improve Africa’s Continental House of Traditional Leaders (COHTLA). A number of countries had been visited to gain support for the establishment of the COHTLA. Furthermore, meetings with government departments and Parliament had been held to learn more on the processes undergone in establishing the Pan African Parliament (PAP). He requested the Committee to assist in securing appointments with the Parliament Speaker and House Chairpersons. President Mbeki had approved the establishment of the body and requested the Minister to facilitate the acquisition of funds to successfully establish the SADC Regional House later this year, and the COHTL to be established next year. The objectives of the COHTLA were to:
- Promote African democratic principles;
- Promote and protect institutions of Traditional Leadership;
- Promote and protect African cultures and traditions;
- Encourage the participation of Traditional Leaders in peaceful conflict resolutions with the continent;
- Promote and protect human rights and gender equality;
- Participate in peaceful conflict resolutions in Africa;
- Advise and the African Union (AU) and the New Economic Partnership for African Development (NEPAD) on the various needs of Traditional Communities of Africa;
- Ensure effective mechanisms for policy implementation of the objectives of the AU;
- Popularise the objectives and programmes of Africa’s regional and continental bodies;
- Work towards realising the African Renaissance through appropriate programmes;
- Work with AU programmes, especially on the oversight part of good governance; and
- Establish regional structures of the COHTLA.

Mr Msimela noted that the challenges included co-operation with various countries and governments and budgetary constraints, although he hoped that with the assistance of the Portfolio Committee, these funds would be attained. As regards other autonomy, funds would also be needed for the employment of a sufficient staff compliment, the maintenance of its own Chamber and committee rooms, the acquirement of its own legal library, and the employment of all members of the House full-time.

Mr Msimela stated that at present, interventions could not be made from an informed position of authority due to the fact that the relevant Act needed to be amended to grant autonomy. The National House was not able to lead by example and thus play an oversight role over the Provincial Houses. The NHTL had also been excluded in conflict resolution and cross-border legislation. Parliament and Government had ignored the role played by Traditional Leaders in ensuring that the smooth transition. Municipalities needed to work more with Traditional Leaders, and this Portfolio Committee should be involved in such discussions.

Mr Msimela confirmed that money allocated had been used to ensure that the objects set out in the Act were achieved. Agreement had been reached with the President on the establishment of steering committees in preparation for the establishment of COHTLA; the development of a strategy for the implementation of the Framework Act, and Provincial legislation and continuous engagement with all structures necessary to attain the objects of the Act.

Discussion
Ms Gumede asked about the staff compliment of the NHTL in relation to gender ratios, as no breakdown had been provided.

Mr Msimela noted that the Act establishing the NHTL stipulated that Provincial House elect three representatives. It could not dictate who these delegates were, but could only make recommendations. It accordingly could not force these houses to elect women or disabled people.

Ms Gumede asked more about situations where rural Headmen were refusing to recognise Councillors. Mr Msimela noted that the attitude of some Headmen was a national problem. The wanted to serve communities in a unified manner, and did not want inconsistency in policies. The undermining of women was not accepted by the NHTL and where such problems were found, the NHTL would correct this.

Chief Nonkanyane wanted to establish whether the NHTL was happy with the ‘paralleling’ of traditional structures with elected ones. He further asked about what lessons the NHTL had learnt since its establishment. Mr Msimela noted that they had fought against the ‘disfranchisement’ of the NHTL. Municipalities were required to be supported by the NHTL, but the NHTL had no power to vote, were not consulted with, and therefore could not co-operate equally.

Chief Nonkanyane enquired where the House opening whould be. Mr Msimela noted that the NHTL’s position had not changed. They wanted a chamber in Parliament in Cape Town. However autonomy could still be achieved under any department. The NHTL wanted a Chief Financial Officer and own auditor. The idea of a Parliamentary Officer had been raised for commenting on Bills and liaising with the House and Portfolio Committee. He thus asked about the NHTL’s interaction with the relevant committees between institutions and Parliament structures.

Mr Msimela noted that now that the Framework Act had been passed, there was still a perpetuation of violation of rights that would cause serious conflict with municipal and traditional structures. By the time NHTL had had a meeting with the President, provinces had already passed legislation inconsistent with the ‘framework of natural justice’. Some of the provinces were not concerned with the passing of legislation but were preoccupied with new Traditional Council. Most provinces had excluded traditional leaders in the drafting process. To date, KwaZulu-Natal had still excluded the traditional leaders from this exercise.

Chief Nonkanyane asked about the role of kings and how far the NHTL had gone with the President in addressing the issue of the Proclamation. Mr Msimela said that the role of the kings was determined by provincial legislation. He did not at this stage know the outcome of the visits.

Chief Nonkanyane asked about the programmes for HIV/AIDS. Mr Msimela noted that this issue was addressed in the report.

A Member asked about what amendments to the Act were required by the NHTL. Mr Msimela noted that as he did not have the Act with him, he could not specify, other than to say such amendments that would grant autonomy.

Mr Mshudulu (ANC) enquired what experience the NHTL research unit had drawn from other countries. Mr Msimela said that they had learned much, including that in Zimbabwe, Traditional Leaders were represented in the main house and in the Senate.

Mr Mshudulu (ANC) further enquired what the NHTL had done to challenge gender customs. Mr Msimela noted that they required assistance in the implementation of gender laws.

Mr Mshudulu (ANC) asked about the Chiefs’ involvement in the development programme. Mr Msimela noted that at present, they only had a ‘gentleman’s agreement’ in place and needed the constitution to amend this. They were currently working with municipalities in terms of this agreement, but only 20% could participate and they had no voting rights. At a President’s Co-ordinating Council meeting, it had been resolved that traditional leaders could take up their 20% seats in municipalities. However there was concern from both sides as to the capacity of each party. Autonomy could be achieved in terms of the minutes as set out in this meeting.

The meeting was adjourned until 3.30pm, after which Mr Tsenoli took over from Mr Carrim as chairperson.

Municipal Demarcation Board presentation
Mr Rapulana Monare (CEO) provided detail on concerns and queries raised during the previous financial year. Information was provided on receipts for the year and the allocation of funding. Expenditure patterns were outlined and output and developments clarified. The medium term strategic plan was explained and detail relayed on the various budget programmes.

Discussion
Mr J Le Roux (DA) claimed that the write-off of R1 million from the register was unacceptable and further information was needed to satisfy the oversight responsibility of this Committee.

Mr S Mshudulu (ANC) declared that the MDB should play a role in Project Consolidate to assess the distinction between powers and functions at the local government level and research resources and capacity at municipalities. The recent cross-boundary disturbances had shown a clear lack of consultation with affected communities and he asked whether steps were in place to correct the process. He asked whether research documents could be made available to Members.

Mr K Moekoena (ANC) questioned the argument that consultants were less expensive than the appointment of additional internal staff. He also commented that the government did not consult widely enough on the cross-border municipality issue that had led to recent local government unrest.

Mr A Moseki (ANC) asked whether three Board Members should rather be placed on a full-time basis. The poor level of consultation was due to inadequate staff complements. He asked whether the review of provincial Boards would be completed. Finally, he sought real reasons for the level of under-funding.

Mr S Shiceka (ANC) noted a discrepancy between performance of municipalities and assessment processes. He asked whether the MDB had any plans to build local government capacity. The capacity of the Department to assess local government performance was also questioned. The present allocation of powers and functions was not appropriate. He asked whether costs accrued to consultants was a regular expenditure or only incurred when specific skills were required. The MDB needed to increase the level of visits to rural areas and smaller towns.

Mr Monare replied that the R1 million was not lost but was due to an incorrect asset registration. A software update had been recorded as an asset which was not correct. The problem lay with the maintenance of the asset register rather than with the loss of assets.

Dr V Mlokoti (MDB Chairperson) stated that annual assessment reports of local government capacity were sent to the respective provincial MECs. Recommendations were made in terms of powers and functions. A misalignment currently existed in many municipalities and districts in terms of powers and functions. The distribution of water had been assigned to district authorities on a permanent basis. The assignment of functions to the local level tended to be counter-productive as the services were localized to the detriment of the wider district. A distinction would be made between mandatory and discretionary functions.

Dr Mlokoti said that the cross-boundary issue could have been handled differently and certain lessons had been learnt. Ward delimitations had been clarified first before provincial boundaries were considered. The MDB had engaged in extensive consultation around ward demarcations. Different versions of maps had been published at different times. Consultants were employed on a seasonal basis. The MDB would now concentrate on powers and functions. The Minister had to decide whether full-time staff would be appointed to the Board. Certain capacity constraints existed within the department to assess local government performance. More funding was required to facilitate better interaction with the public and broaden consultation. The Board felt that consultants were less expensive than additional full-time staff.

Mr Shiceka confirmed that both the National Assembly and the NCOP Committees would assist the Board in acquiring further funding.

The meeting was adjourned.