Hearing of evidence on the White Paper on Local Government

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Cooperative Governance and Traditional Affairs

21 April 1998
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Meeting report

CONSTITUTIONAL AFFAIRS PORTFOLIO COMMITTEE
22 April 1998
HEARING OF EVIDENCE ON THE WHITE PAPER ON LOCAL GOVERNMENT: "FROM POLICY TO IMPLEMENTATION: BEYOND THE WHITE PAPER ON LOCAL GOVERNMENT."

The theme of the day's programme was:
Shaping Systems: District Government
.
Two facilitators provided input and they were followed by presentations by twelve stakeholders/organisations.

Documents handed out:
Cosatu submission (Appendix 1)
South African Agricultural Union (Appendix 2)
National Land Committee (Appendix 3)
Leeudoringstad Municipality (Appendix 4)
Pietermaritzburg Transitional Local Council (Appendix 5)
Northwestern Province: Local Government, Housing, Planning & Development Department (oral submission only)
Contralesa (oral submission only)
Indlovu Regional Council (oral submission only)
SALGA Gender Working Group
Afesis-Corplan
Port Elizabeth
South African Local Government Association

Shaping Systems: District Government
Lynelle John, who has been involved with the White Paper Working Committee, stated that national legislation at a local level is difficult, and that there is a need to seek out what can(not) or ought (not) to be legislated. The legislation that emerges should be strict. There needs to be clarity about what should be allowed to develop on its own in a local or ad-hoc manner. District governments should be flexible. There is a need to determine what regulates district and primary structures. National sectoral projects that influence districts and primary structures need to be co-ordinated. The establishment of a demarcation board is essential to the future of municipalities.

Pam Yako, the second presenter, argued that the White Paper is not explicit on how the proposed structures will relate and solve the current problems regarding the developmental role of local government.

The problems with the Integrated Development Planning (IDP) process in the section on Developmental Local Government:
1. It assumes that there is a shared view about what needs to be done and what is the common goal. This does not reflect the general views of South Africans today.
2. There is little capacity in municipalities. Much of the know-how comes from contracted consultants. Are we really building capacity at a local level?
3. When amalgamating urban and rural areas, which IDPs will be taken into account?

CONTRALESA
In the structures that constitute the basics at the local level, there is a need to focus on the role of traditional leaders. There should be a rural council that incorporates traditional and elected authorities. The traditional authority is linked with ownership of land, and such land is really the property of the tribes, not only of the traditional leadership itself.

COSATU
There is a need to avoid actions that might lead to post-apartheid ghettos of the unprivileged. There is a strong interest from COSATU that government should have a definite developmental aspect, especially regarding job-creation. The role of the traditional authority must not undermine the role of the democratically elected officials in local governments.

South African Agricultural Union (SAAU)
The development of local economies is important for the nation and for the rural areas themselves. One must strive towards maximum development.
1. The SAAU is for a third tier local government that will make the contact with the grassroots level as close as possible. They argue that the bigger the bureaucracy, the less delivery there will be.
2. It supports amalgamation because of financial/economic interests.
3. Demarcation of wards must only take place after consultation with the relevant local communities in order to avoid demarcation of non viable areas. Areas which are distinctly similar and have similar needs should be grouped together.
4. The SAAU suggested a zoning of land, where land is divided into zones, which in turn will show what land can be used for residential, industrial and agricultural purposes. The whole of South Africa is dependent on 6 inches of top soil, so taking care of the land is essential. When going through their submission, they stressed the need for funds to follow function, with regard to inter-governmental transfers.

National Land Committee (NLC)
Their major concern with the White Paper is that there were many difficult decisions to be taken, and these were not taken. The White Paper does not provide direction for what local government in rural areas should look like in the long term. The process where municipalities can draw on powers from district governments is not outlined. There is no indication as to whether funds will be made available to enable district councils and municipalities to function effectively in rural areas. The primary municipalities and councils should be closer to the people. The district councils are to play a major role in capacity building. There must be national legislation that states that powers and functions should be decentralised to primary structures. If this is left to the district councils themselves, they will hang on to the power for as long as possible. The NLC supports a consulting role for traditional leadership, but opposes allocating any decision-making powers over land and development matters to traditional leaders, unless they have been democratically elected.

Local Government, Housing, Planning and Development Department: Northwestern Province
The Local Government, Housing, Planning and Development Department of the Northwestern Province in their oral submission agreed with the NLC, in that the White Paper does not provide enough vision and guidance. There is not enough focus on the land issue which is very much under the control of traditional leaders in rural areas.

Indlovu Regional Council
This regional council sees a need to reduce the number of members / councillors. Levies have been removed and the council is struggling because of this.

SALGA Gender Working Group
SALGA is of the opinion that local government legislation should be unambiguous in its support to the process of gender equality. There is a need to take into account the roles of men and women, and through practical strategies make it possible to improve the role of women in local government. It might need to be prescribed for political parties that the composition of the councils must represent the population, thus the parties need to be gender sensitive in their composition. There are many women in the administration, but mostly in the lower structures of the administration. It needs to be realised that women can be bosses as well, and not just secretaries. It needs to be realised that women can have an impact on the way services are delivered.

An issue raised by the Prof. du Toit (ANC) in the debate was the process of demarcation. How is it possible to demarcate when decisions about the models and options of municipalities have not been decided on yet?
Issues surrounding traditional leadership were also raised. One participant stated that traditional leaders are born to rule, and that room should be made for them at a local level.

AFESIS-CORPLAN
This organisation identifies a problem with a lack of tax base, thus making it difficult to deliver services. Municipalities then tend to rely on another sphere of government to bail them out. The presenter states that his organisation welcomes district government replacing rural government. There is a need to develop capacity at a local level, and not have a top-down approach from the national level. Parameters for how levels of governments relate to each other need to be set in place. Small towns need to plan ahead, because many of them will be amalgamated with poorer areas surrounding them.

It stated that the hot issue of traditional leaders in South Africa has been handed down to local level to deal with and that this is a recipe for disaster.

Leeudoringstad Municipality
It opts for the second option in the White Paper: "amalgamated urban-rural municipalities", because of clear social and economic linkages between urban and rural settlements. It will also cut costs of multiple councils operating in the same area, it will increase efficiency of resource allocation, and it will enhance service delivery in neighbouring farms, and it will also broaden the tax base of the new municipality.

Port Elizabeth
There is a need to attract investment to non-metropolitan areas.

There seems to be a conflict between workers and the administration, where the workers look to take what they can from the administration.

Pietermaritzburg
The White Paper does not go far enough to empower local government. The reality is very inconsistent and the vision in the White Paper does not reflect this.

South African Local Government Association (SALGA)
SALGA pointed out the need to be aware that when shaping local government, we must be led by the Constitution. SALGA stressed as many before them had done so, that the White Paper seems to have no clear vision as to how problems are to be answered and solved.

In the debate afterwards, it was stressed that in fact it is not only the urban areas that can suffer in the demarcation and amalgamation process, but that in fact rural areas can also suffer in the hands of urban areas. Dr. Olver stated that this is an important point, and that this situation will be addressed in the bills flowing from this White Paper.

Appendix 1: Cosatu submission

COSATU Submission on the White Paper on Local Government

Presented to Portfolio Committee on Constitutional Affairs

22 April 1998

Contents

Introduction

Local government as an expression of Democracy, Growth, Development and Co-operative Governance

Developmental local government

Tools and approaches for developmental local government

New approaches to service delivery

Co-operative governance

Municipal Finance

Shaping systems

Metropolitan government

District government

Political systems

Demarcation of Municipal Boundaries and Electoral Systems

Local government training and capacity building

Programme for Transformation

Conclusion

Summary of Recommendations

Introduction

COSATU welcomes the opportunity to participate in the public hearings and we wish to thank the portfolio committee for inviting us. We made an extensive input on the Discussion Document on Local Government. Some of the issues we raised in the discussion document have been integrated into the White Paper. We welcome the broad thrust of the White Paper, and will be mainly focussing our comments on areas that need to be reinforced, as well as concerns that we have. Our comment is organised along the lines of the themes of the Public Hearings rather than the structure of the White Paper. COSATU, and the constituency we represent, is a critical stakeholder with a major interest in the transformation of local government. We have close to 2 million members, with many million more dependents, whose quality of life hinges on effective and developmental local government. Scores of our shop stewards and members are local government councillors, and many others are leaders in civic bodies, community policing forums, and others. The largest organisation of municipal workers, SAMWU, is a COSATU affiliate. However, local government is a critical concern not only to public sector unions in COSATU, but affects the lives of all workers, all affiliates and the Federation as a whole. Workers as members of communities and their families have vital interest in ensuring effective services, housing, transport and local economic development.

Apartheid created ethnically and racially based local government structures. The economic logic of apartheid geography was based on a colonial relationship between formerly white and black areas. Commercial and industrial centres were located in white areas falling under the jurisdiction of the White Local Authorities. Black townships were essentially reservoirs of cheap labour for mining and industry based in white areas. In short, the apartheid spatial form and its resultant local government institutions were not based on addressing the need of communities, but vehicles for entrenching the subordination and exploitation of residents of these communities.

Local government as an expression of Democracy, Growth, Development and Co-operative Governance

This section provides commentary on three sections of the White Paper namely, developmental local government; new approaches to service delivery and cooperative governance and growth and development. In our view, the notion of developmental local government has be located within the notion of a 'developmental state, which act as a catalyst and strategic co-ordinator in the transformation. The developmental state seeks to utilise its own resources, authority and capacity to energise, empower and leverage a broad range of other resources behind a transformation effort. It intervenes in the economy and society to achieve its developmental objectives. In our context, the RDP is a concrete expression of a programme for development and envisages extensive state intervention in a variety of areas, and a leading role of the state in others.

The RDP is a programme that integrates reconstruction, economic growth and development. Economic growth in the Reconstruction and Development Programme is not pursued as an end in itself, but is related to redressing past imbalances and building a foundation for a new equitable society. Its vision of local government is rooted firmly in this approach. Critics of this vision, however, want to move the government away from a developmental approach, to one based purely on growth and the market. The last few years have exposed the fallacy of the trickle down approach that construes development to be subtracted from growth. The low level of net private industrial investment over the past decade and the spectre of job-loss growth, demonstrate that the private sector left on its own cannot address the developmental needs of our society.

This raises the broader question of the relationship between the state and the market. There are voices in our society that dichotomise the state and the market. Such a polarisation of the state and the market is misleading. It misunderstands the need for an active state to transform, not destroy the role of the market, in line with our developmental priorities.

Linked to the above are efforts by business interest to foster a free market approach to local government. The tenet of such an approach is a view that there must be cut-throat competition between municipalities so that business have access to cheap municipal services, privatisation of state assets and labour flexibility, ostensibly to attract investments. Invariably this approach opposes redistribution and cross-subsidisation to the poor and is situated in a context that those who are materially resourced shouldcontinue to enjoy disproportional access to services. Paradoxically, this approach to attracting investments amounts to redistribution, but to the rich. In the final analysis this approach will perpetuate inter and intra municipal inequality and will lead to a race to the bottom, with local government becoming the hostage of local business interests.

A further important issue is the relationship between democracy and growth. In our view there should be no contradiction between people-driven development and economic growth. Development should geared to the improvement of the quality of life of the people, is essential to ensuring their active participation in the economy and all spheres of society.

Failure to this will inevitably act a s a brake on economic development.

Developmental local government

The Constitution is unequivocal in its prescription of what constitute developmental duties of municipalities and the objects of local government. In line with this, the following should drive local government:

Provision of essential services;

Investment in infrastructural development;

Local economic development;

Creation of livable, integrated cities, towns and rural areas;

Job creation through amongst others community public works programmes;

Implementation of a progressive procurement policy;

Human resource development and affirmative action programmes; and

Poverty reduction and alleviation.

In our view the White Paper is line with the approach outlined above. And give concrete expression to the vision of the Constitution. The developmental outcomes envisaged in the White Paper are:

Provision of household infrastructure and services;

Creation of livable, integrated cities, towns and rural areas; and

Local economic development.

In principle, COSATU supports these characteristics and outcomes mapped for developmental local government. However, we would like to register a number of concerns and offer recommendations. The first concern relates to the statement that "local government is not directly responsible for creating jobs" (p.18). Immediately prior to this statement the White Paper declares that "municipalities ... need to have a clear vision forthe local economy, and work in partnership with local business to maximise job creation and investment." There is a contradiction between these statements. In our view, local government, and the state in general contributes to employment creation directly as employers, and indirectly through a range of interventions which promote employment creation. Job creation to us is an important yardstick to measure the efficacy of social policy.

Recommendation:

We therefore recommend deleting the statement that "local government is not directly responsible for creating jobs." It creates the impression that destruction of jobs at a local level is not in itself a problem for local government since this is not their responsibility. In the context of the national crisis around unemployment, and the forthcoming job summit such statements are problematic and undermine government's commitment to employment creation. Secondly, "a basic level of service" is not defined in the WhitePaper. In our submission to the Discussion Document we critiqued the MIIF approach as it mentions 'affordability' but exclusively emphasises 'ability to pay as a basis for service delivery'. The basic level of services proposed in the MIIF ignore the fact that this approach has adverse effects on the poor who lack the necessary capacity to provide for their own infrastructure. The danger to be avoided is the germination of "post apartheid ghettos" which locks the poor in a vicious syndrome of underdevelopment and under-privilege. The MIIF has to be subject to public discussion as it has serious ramifications for provision of basic household infrastructure and services, the economy and the health system.

Recommendation:

We recommend

That the MIIF be subjected to broader discussions to subject its basic philosophy and proposals, to public scrutiny;

That the Consolidated Municipal Infrastructure Programme (CMIP) takes into account the infrastructure backlogs that municipalities face. We note the proposals in the White Paper for ensuring at least a basic level of services to those who have no access through inter alia local cross-subsidization and mobilising private investments in municipal infrastructure. Nevertheless, there has to be a recognition that national and provincial governments have a fundamental role in assisting municipalities to eradicate the infrastructure backlogs.

Further, we welcome initiatives that would add to local economic development outlined in the White Paper, viz.: reviewing existing policies and procedures to enhance employment and investment: reviewing procurement procedures; rezoning as part of spatial framework which identifies land for residential, commercial and mixed development; and the establishment of user-friendly ones stop shops which can advise and deal with single accounts for all municipal services to increase the quality and efficiency of local service;provision of special economic services: provision of marketing and investment support in order to attract secure potential investors; provision of support service for small business; municipalities might provide targeted assistance to a particular sector in the economy which has the potential to expand and provide training; and placement services to help people to acquire skills they need to find work, or to find jobs once they have the skills.

It is important to emphasise that the targeting of sector(s) that have a potential to grow, should occur within the national development programme and should not be done on the basis of sacrificing labour standards. The White Paper commits the government to a review of existing legislation which impedes LED, but falls short of providing timeframes within which this will occur.

Recommendations:

The annexure appended to the White Paper of all legislation affecting local government is a useful tool to guide the legislative review process. We recommend that the transformation process outlined in the White Paper provide timeframes within which legislative review would occur and specify priority legislation.

Tools and approaches for developmental local government

The White Paper identifies three important tools and approaches for developmental local government geared towards changing the manner in which local governments operate. These tools are:

Integrated Development Planning (IDP);

Performance management; and

Working together with local citizens and partners

Integrated Development Planning is significant as a planning tool and strategic framework to help municipalities fulfil their mandates. It will empower municipalities to prioritise and strategically focus their activities and resources. The White Paper stipulates what is required of municipalities in developing IDPs. First, municipalities would have to develop a strategy and clear objective and secondly, develop action plans and budgets. In their IDPs municipalities should spell out how they will implement the RDP within their localities guided by provincial and national developmental priorities. As such IDPs have to fall within nationally developed norms and standards.

COSATU supports the White Paper's view that integrated development planning should be seen as a normal and required municipal function and as such should not be 'farmed' out to consultants. Secondly, the commitment that future legislation will endeavor bring the various planning requirements of municipalities to ensure that IDPs incorporate other planning requirements into a single cycle" is welcomed.

Recommendation:

The development of IDPs should be made mandatory for municipalities with clear penalties for failure to comply. Part of the legislative review process should address the issue of ensuring legal enforceability of IDPs. This should be linked to rewarding municipalities that adhere to the requirements of developing IDPs.

The statement in the White Paper (p.30) that provincial governments should monitor the extent to which municipal budget priorities reflect the IDP, using existing conditional grants mechanisms as incentives to local government is important in this regard;

National government should develop guidelines for municipalities on how to develop IDP'S and their parameters;

National and provincial governments should assist municipalities that lack the capacity to develop Integrated Development Plans. This should be asserted in the White Paper as it is in line with co-operative governance.

Performance management is also an important tool. It is critical to ensure that plans are being implemented, that they are having the desired development impact, and that resources are being used efficiently. This improves the accountability of municipalities, as communities would know before hand what services would be delivered by local government within which timeframe. Therefore, community participation and consultation with workers in developing municipal Key Performance Indicators (KPIs) is of paramount importance.

Recommendation:

In measuring the efficacy of government policy at national, provincial and local level, the envisaged performance system should include the following inter-related indicators:

eradication of poverty and narrowing inequality;

job creation;

economic growth and development;

investment in infrastructure development and the extent to which backlogs have been addressed;

access to services particularly by those who lacked them, historically.

COSATU supports the thrust of the section on how municipalities should work together with local citizens and partners. The White Paper delineates four levels where municipalities require active participation by citizens inter alia as voters, as citizens, as consumers, as end users and as organised partners involved in the mobilisation of resources for development.

New approaches to service delivery

First it is important to underline the principles outlined in the White Paper that underpin service delivery:

Accessibility of services;

Quality of products and services;

Accountability for services;

Integrated development and services

Sustainability of services;

Value for money

Ensuring and promoting competitiveness of local commerce and industry; and

Promoting democracy

Secondly, the White Paper advances a set of approaches to service delivery which should be guided by clear criteria such as coverage, cost, quality and the socio-economic objectives of the municipality. Delivery options which municipalities can consider, include:

Building on existing capacity;

Corporatisation;

Public-public partnerships

Partnerships with CBOs and NGOs

Contracting-out;

Leases and concessions (public-private partnerships);

Transfers of ownership (privatisation)

We will divide our comments into two parts. Firstly, we will look at public options of service delivery (building on existing capacity, public-public partnerships and corporatisation). Secondly, we will consider measures to mobilise private sector participation in municipal service delivery (partnerships with CBOs and NGOs, Contracting out, leases and concessions and transfers of ownership).

We support the notion of public-public partnerships, which also allows for horizontal co-operation between municipalities and parastatals. Further, we believe that national and provincial governments have a central role to play in advancing this programme of public-public partnerships with local government. COSATU's preference is for public sector delivery of municipal services. Therefore priority should be given to building the capacity of local government to deliver services. Against this background, we welcome the commitment to building on existing capacity of municipalities through management reform and mechanisms to improve performance as well as through public-public partnerships. Management reforms envisaged in the White Paper include but are not limited to:

The introduction of performance-based contracts for senior staff;

Revising or developing codes of conduct; and

Affirmative action.

Measures to improve performance identified in the White Paper include but are not limited to:

Empowering and enhancing the skills of frontline workers;

Decentralisation of operational management responsibility; and

Developing strategies together.

In broad terms COSATU supports these measures. We further concur with the White Paper that management reform goes hand in hand with worker empowerment. Two elements of worker empowerment are isolated in the White Paper viz. human resource development and the decentralisation of operational responsibility.

Recommendation:

We would like to add the issue of employment equity as forming part of measures for worker empowerment. In this respect, affirmative action should not be seen solely in terms of changing composition of management. A key component of employment equity put forward by COSATU is the issue of closing the wage gap. Therefore local government should be subject to the provisions of the Employment Equity Bill once it is passed. Further, it is also important that Affirmative Action policy developed for the public service be applied in local government.

COSATU is not opposed on a blanket basis to the private sector involvement as a mechanism to leverage resources for service delivery. However, it is important that we closely scrutinise assumptions made around the question of private sector involvementin municipal service delivery.

The motivations offered for public private partnerships are amongst others, that it moblises capital, management capabilities, technical skills etc. These benefits are not automatic as international evidence cogently demonstrates. Many perceived benefits of private sector involvement are to be found in the public sector. We must remember that local government and other parastatals were able to deliver top class services to sections of the population. It is self-defeating to seek to involve the private sector in direct service delivery without first attempting to assess areas of weakness and formulate a strategy to strengthen the capacity of local government.

Private operators invariably require 'market related' returns - that is profits. This frequently adds to the cost of service provision (public sector providers in principle are not driven by the profit motive), and excludes those who cannot pay the service charges necessary to generate profits. A strong argument is put forward for the introduction of a regulatory framework to ensure that private sector involvement in local government service delivery is strictly monitored. Such a framework must at least make it mandatory to ensure worker and community participation in the process as well as laying down the criteria which should be met by the private sector.

In addition, the regulatory framework should encapsulate the following:

Commitment to technology transfer to build the capacity of the public sector;

A commitment to labour standards which proscribe the 'casualisation' of labour;

A commitment to training workers;

Clearly spelt-out contract period;

An environmental and social impact study;

The provision of a 'life-line' service; and

Against this background the following processes outlined in the White Paper (pp 100 - 1) are important and welcomed by COSATU:

"National government is developing a regulatory framework for the development of public private partnerships to ensure public accountability and the protection of consumer and workers' rights;

A commitment that informed by the current reality of South Africa, the transfer of ownership is not an option for core municipal services, particularly water, electricity and solid waste collection and disposal;

The adoption of any option should be based on a critical review of existing services delivery mechanisms, the requirements for service delivery put forward in the municipal IDP, and a comparative assessment of the performance of other municipalities or other service providers. An overall plan for the way in which the municipality will provide service (the institutional plan) should be developed. The Municipal Council should consult with affected stakeholders in the development of their institutional plans, and National and provincial government will collaborate on the development of a major capacity-building initiative to assist municipalities in developing and implementing plans to improve service delivery systems as well as plans to launch the Municipal Infrastructure Investment Unit."

Recommendation:

There must be a negotiated framework to define what constitutes 'non-core assets' that may be privatised as envisaged in the White Paper. We note that national guidelines will be issued around this question and that each Municipal Council will need to make its own assessment in relation to the strategic direction put forward in the municipal IDP;

Stakeholders should participate in shaping the regulatory framework for public private partnerships currently being developed by government.

Co-operative governance

The Constitution elevates the status of local government as an explicit political sphere of government. This is a significant departure from how it was conceived in the past. Local governments are given relative autonomy within a framework of co-operative relations between the three spheres of government. As their capacity increases municipalities would increasingly claim this status conferred by the Constitution. The three spheres of government should not work independently of each but within a national framework which also caters for measures for intervention when provincial and local government violate national frameworks. Hence it is important that national government play a central role in setting up policies, norms and standards within which both provincial and local governments are required to operate.

A related question is the issue of inter-municipal competition and co-operation. There are voices especially in business that argues that municipalities should compete amongst each other so as to attract maximum investment from the private sector. This view also contends that municipal competition is essential as it provides a mechanism through which the county inserts itself in the global economy. Making competition the lodestar of municipal policies is detrimental to sustainable development since it perpetuate inter and intra municipal inequality and raises costs for the community by diverting resources to attracting investments and supporting business. In contrast to this approach, innovation, creativity and flexibility of municipalities should be encouraged by enabling municipalities to respond to their local conditions, albeit within a national developmental framework. Against this backdrop, COSATU supports the thrust of the White Paper on the question of co-operative governance. This lays the basis to construct intergovernmental relations, taking into account the interdependence and inter-relatedness of the different spheres of government. We welcome the commitment that national departments should work with local government. This cooperation should be aimed at building municipal capacity and create synergies between the programmes of the different spheres of government. National and provincial government can build the capacity of local government through the way they execute their own programmes and working with local government. The White Paper identifies various ways in which this can be achieved, viz.:

Integrating programmes of national departments and provinces into municipal IDPs; and Co-ordinated decentralisation and the assignment of powers.

Municipal Finance

We are guided by the following broad considerations on the question of municipal finance. The starting point is that local governments require sufficient resources to carry out their developmental programmes and service delivery objectives. The resources to achieve the duty imposed on local governments should match any responsibility devolved to local governments by other spheres of government. Unfunded mandates should be avoided as they handicap municipal capacity. Secondly, the macroeconomic programme of the state should not undermine or compromise the development programmes of municipalities by imposing undue constraints. A macroeconomic programme reliant on arbitrary fiscal deficit targets will impose severe constraints on the ability of municipalities to fulfill their developmental mandate. The revenue raising capacity and the base from which such revenue is raised is another key element of ensuring adequate resources for local governments. There is a need therefore to look into the revenue structure of local government to assess their fiscal powers conferred by the Constitution as well as the system of intergovernmental fiscal relations. It is imperative that local governments budgets be determined by their developmental programme expressed in their Integrated Development Plans. The introduction of multi-year budgeting is an important planning tool for local governments and would allow for rational planning of their infrastructure and service delivery programmes. Multi-year budgeting encourages municipalities to take a broad long term strategic view based on their IDPs. Linked to the reform of the budget process is the need for effective and sound financial management systems which include effective credit control, proper accounting and adequate financial reporting procedures (both internally and externally). Training as well as the design of new institutional systems for municipal finance are key to building the capacity of local governments. Credit-control measures must be linked with improvement of billing systems so that people receive accurate accounts. The Masakhane Campaign is also important in building proper partnerships with communities and encourage them to pay for services. Nonetheless the original spirit of the Masakhane Campaign needs to be revived due to the one-sided fixation on payment of services and the consequent de-emphasis on service delivery and the building of partnerships with the community. While affordability and cost recovery considerations are important for sustainable service delivery, they should not be used to exclude poor households. There is a need for mechanisms for poverty relief and assistance to indigent households. Intergovernmental transfers and intra municipal cross-subsidisation from the rich to the poor should be used to provide quality service to the poor. The tariff structure should therefore have a strong redistributive element based on cross-subsidisation from industrial to residential users, from urban to rural areas in short from the rich to the poor. Therefore a national tariff framework for water, electricity, refuse removal, sewerage should be developed. This should ensure that a nationally coherent and consistent tariff is applied throughout the country and that variation should be within the context of a national framework.

Borrowing from private sector institutions and public intermediaries such as the Development Bank of Southern Africa represents another source from which municipalities can leverage resources. The creditworthiness of local governments should be improved so that the private lenders can have confidence to lend to municipalities. It is also important that monetary policy facilitates rather than hinders local government participation in the capital market. A regime of high interest rates pursued by the Reserve Bank is a serious impediment to local government participation in the capital market by making loans expensive. They also impose additional constraints on the national fiscus, via an increase in debt servicing obligations. We note the slight drop in interest rates over the past few months; however, there is still a need to review monetary policy in line with our developmental objectives.

Against this background we welcome the White Paper's proposals as an important step in the transformation of municipal finance. The principles of the new system proposed in the White Paper are in line with our approach:

Revenue adequacy and certainty;

Sustainability;

Effective and efficient resource use;

Accountability, transparency and good governance;

Equity and redistribution;

Development and investment; and

Macroeconomic management.

The White Paper identifies four areas in which the municipal fiscal and financial system need to be restructured:

Local revenue instruments and policies;

National-local intergovernmental transfers;

Gearing in private investments; and

Budgeting, accounting and financial reporting systems.

In terms of local government revenue instruments and policies, the White Paper proposes that a percentage of the fuel levy be assigned to local government. Within the guidelines to be developed by a framework to be developed by national government one of the principle is that fuel taxes are best suited for recovering the maintenance cost of roads. In so far as user charges are concerned we will like to reiterate our position that the principle of cost recovery should not translate into the exclusion of the poor or provision of low quality infrastructure to the poor. In this vein, the principles to guide tariff policy mapped in the White Paper are important.

Government will look into implementing a simpler and uniform valuation for property rates as well as alternative(s) to the RSC and JSB levies. With regard to property rates government will need to address four main issues:

Bringing currently untaxed areas into the tax net;

Variation in the rating system with regard to the tax base;

Valuation periods; and

The need to develop the criteria for evaluating alternative property valuation systems, within the framework of alleviating and addressing poverty.

Recommendations:

COSATU in principle supports the need for a process to investigate aspects of local revenue instruments and policies including the fuel levy. The recommendation we wish to put on the table is the need for clear timeframes within which this will happen. The result of the investigation should also be subjected to a public process so that we can participate in shaping the local revenue instruments and policies.

We welcome the specific proposals for financing municipalities in rural areas, specifically the need to expand their tax base via the extension of property tax and allocating a substantial portion of the share of the national fiscus reserved for local government. We further note specific proposals to reform intergovernmental transfers. Key in this process is the envisaged new system of intergovernmental transfers to address two key issues: the 'vertical division' of revenue and the 'horizontal division' of this revenue. COSATU looks forward to making an input to shaping the new system of intergovernmental transfers within the overall budget reform process.

The proposals geared towards leveraging additional investment in the municipal sector are important but should not supplant allocations from the fiscus. These include borrowing and investment powers of municipalities, credit enhancement and concessional loan finance. In addition, we fully support reforms in the budgeting, accounting, financial reporting and management systems. Most importantly these measures will improve

accountability and the planning processes of municipalities.

Shaping systems

This section deals with metropolitan government, district government and political systems for local government. We are guided by the need to build new municipal institutions, which are unified, non-racial, have, a single tax base and transcend the urban-rural split. The section on the current reality in the White Paper is essential as it offers a synopsis of local government reality around which the new system should be developed. It defines the challenge facing local government as having to deal with:

Skewed settlement patterns;

Extreme concentrations of taxable economic resources in formerly white areas;

Huge backlogs in service infrastructure;

Creating viable municipal institutions for dense rural settlements;

Greater spatial separations and disparities between town and townships

and urban sprawl;

Creating municipal institutions that recognise the linkages between urban and rural settlement.

These challenges have to be kept in mind when designing new systems. An important point to emphasise is new institutions should not perpetuate the inefficiencies and inequities of apartheid local government.

Metropolitan government

COSATU concurs with the White Paper on the need for metropolitan government. Metropolitan government will play a significant role in integrating our cities fragmented by apartheid policies that proved to be unsustainable. In their land planning, transport planning as well provision of housing infrastructure metropolitan government will play significant role. In order to achieve this, national policies must begin to be adjusted to address the geographical legacy of apartheid planning.

This entails making available land and housing in well located areas to bring the poor into the urban core and bring workers closer to their workplace. Workers spend a good proportion of their time and income travelling to and from work. This has negative impact on productivity and consequently on economic growth. The White Paper proposes three reasons for the establishment of metropolitan governments.

Metropolitan government creates a basis for equitable and socially just metropolitan governance,

Metropolitan government promotes strategic land-use planning, and co-ordinated public investment in physical and social infrastructure; and Metropolitan government is able to develop a citywide framework for economic and social development, and enhance the economic competitiveness and well being of the city.

Further the White Paper envisages the following roles for Metropolitan Council:

City-wide spatial integration and socially inclusive development;

The promotion of equity, social justice and economic prosperity;

The promotion of local democracy; and

The provision of affordable and efficient services

In terms of metro government institutions, two options are proposed, which may be chosen by cities according to their preference:

Metropolitan government with Ward Committees; and

Metropolitan government with Metropolitan Substructures

The unifying characteristics of the model is the fact that Metropolitan Councils will have more original municipal power and may choose to devolve certain responsibilities to its substructures or ward committees. COSATU supports the need for strong Metropolitan Councils and accepts that it may be necessary to devolve certain responsibilities to Ward Committees or Substructures informed by local realities.

The legislative process should be clear on how Metropolitan Councils devolve powers and responsibility to Ward Committees and Substructures.

We note that as an interim measure the White Paper proposes that Metropolitan Councils will ensure continuity by delegating powers and functions in ways which will reproduce the existing metropolitan government architecture. Over time these can be adjusted to better suit the operational and efficiency requirements of metropoles.

District government

District Government in our view is critical to building integrated local government in non-metropolitan areas. Over the past few years District Government were faced with the challenge of building municipal capacity in areas where effectively it was non-existent. COSATU therefore recognises the need for District Government geared towards building effective local government in rural areas and as a mechanism to link rural and urban areas. The envisaged roles for District Government are:

District government should be re-organised around a set of standard planning and developmental regions and given key responsibility for district wide integrated development planning, including land-use planning, economic planning and development, and transport planning;

The role of district government as infrastructural development agents should be continued through the retention of RSC levies.

District government should also provide bulk-services where required;

The ability of district government to provide on-demand assistance,

as well as systematic capacity building to municipalities will be promoted. The capacity-building role of district government should be focused on increasing the capacity of Category (B) municipalities to assume municipal functions;

In areas where municipalities with inadequate administrative capacity are established, the capacity of district government to provide and maintain appropriate levels of municipal services will be legally permitted and actively fostered.

Three municipal institutions are proposed in areas with District Government, viz.:

Urban Municipalities;

Amalgamated urban-rural municipalities; and

Rural municipalities

With regard to Rural Municipalities, COSATU supports the proposal that they be allocated a minimum of executive and legislative powers, but are able to 'draw down' powers from the district government as they demonstrate sufficient administrative and financial capacity to administer the power. In relation to Amalgamated urban-rural municipalities, it is important as proposed in the White Paper that the needs of rural areas are not subsumed or overwhelmed by urban areas. In this vein, we note the option in the White Paper to establish a rural committee of Council, which would operate as a rural chamber for the municipality. COSATU also supports the view in the White Paper that there is a need to redraw boundaries of urban municipalities to encompass the full extent of the continuously built up urban area so as to bring informal settlements and other peripheral settlements within the urban core.

District governments are strategically positioned to respond to the needs of farm workers. Farm workers continue to be vulnerable and exposed to harsh working and living conditions. As their bargaining power is weak, local governments can play a significant role in improving their lives through the manner in which they deliver services, as part of their overall rural development strategy to ensure land redistribution and ensuring their security of tenure. District governments would have to respond to the drive by farmers to rezone land. This process excludes farm workers and undermines the development strategy of District governments.

Recommendations:

Part of the Intergovernmental transfers should be used to build the capacity of Rural Municipalities;

Timeframes should be spelt out as to when national legislation to provide a mechanism to facilitate allocation of powers and functions between Category (B) and (C) municipalities will developed and published for public input;

Amalgamated urban-rural municipalities should as part of the IDP develop a rural development strategy informed by national policy. The role of the envisaged rural committee of the Council should be to oversee the implementation of such a strategy;

Within the rural development strategy, municipalities should spell out how they will meet the needs of farm workers and foster their participation in the political life of the area;

District government should endeavour to curb unilateral action by farmers such as land rezoning which have an impact on the developmental programme of municipalities. The actions of farmers should be brought in line with developmental programmes of local governments.

We recognise that traditional leaders play a role in rural areas. However, it is important that local governments in rural areas take into cognisance the need to ensure that elected representatives have the necessary political power to formulate and implement policy. Caution should be exercised that unelected representatives do not exceed elected ones and have overriding powers. It is also inappropriate for traditional leaders to become directly involved in political activity. Traditional leaders should be given ex-officio status in local government structures. We therefore welcome the proposal that there will be elected local government in all areas falling under traditional leaders. According to the White Paper the role of traditional leaders will include attending and participating in meetings of the Council and advising Councils on the needs and interests of their community. The question whether traditional leaders will have voting rights alongside the elected councilors will be determined after further consultation and research into the constitutional provisions.

Political systems

The premise from which we move is that political representatives of the people should be empowered to have control of municipalities and provide policy direction. Accordingly the preponderance of public servants especially the Chief Executive has to be curtailed and subsumed under the political leadership of elected representatives. A second consideration is the need for an oversight over the executive. COSATU notes the two options on the structure of the executive at local government level. The White Paper proposes two options for the structure of local government executive:

An Executive Mayor, elected from and by the members of the Municipal Council. The Municipal Council would delegate executive powers to the Mayor. The Mayor could be allowed to appoint a limited number of Council members to his/her cabinet, depending on the size of the Council, or

An Executive Committee, elected from and by the members of the municipal Council. The mayor would be the Chairperson of the Executive Committee. The municipal Council would delegate executive powers to the Executive Committee. Both options will be catered for in future legislation. In both options, the municipal Council would also elect a Chairperson. The Chairperson would preside over meetings of Council. The Council Chairperson would play a separate and distinct role from that of the Mayor. Each municipality would decide which powers should be delegated to the Executive Mayor or the Executive Committee. The Constitution [s.160 (2)] states that the following functions may not be delegated, viz., the passing of by-laws, the approval of budgets, the imposition of rates and other taxes, levies and duties and the raising of loans. In addition, national legislation may prohibit the delegation of other functions such as the approval of municipal integrated development plans.

In terms of the White Paper municipal committees can have either delegated powers or advisory powers or a combination of both. Council committees can play a number of roles: management and supervision of a municipal function, management and supervision within part of a municipal area and policy formulation. All municipalities will be required to establish an Audit Committee and a Tender Committee to enhance municipal accountability with the exception of very small municipalities, which will be required to establish an audit and tender function.

COSATU recognises that municipal committees will vary as they play substantially different roles compared to Portfolio Committees in the National Assembly and the committees of the NCOP and provincial legislation. This is further informed by the limited legislative role that municipalities play. In our view, municipal committees need to play a significant oversight role over the executive as well as facilitate public participation in the municipal council.

Recommendations:

In order to facilitate the oversight role of committees it is important that members of the executive be given specific responsibilities. Thus a committee may be given a specific oversight function over the portfolio occupied by a member of the executive;

Council / committee proceedings should allow for the public to address the Council/committee especially on critical areas such as the Budget and the Integrated Development Plan. This should be investigated further in order to determine how the public participates in influencing major decisions of the Council.

Demarcation of Municipal Boundaries and Electoral Systems

We note the White Paper proposals for an electoral system for local government. However, we reserve our comments on this issue. COSATU notes that the government has fast tracked the question of demarcation of municipal boundaries by introducing the Local Government Municipal Demarcation Bill [B36-98]. In the main the Bill will establish the independent Municipal Demarcation Board to determine municipal boundaries. The Board will be charged with the task of the actual demarcation of boundaries. The demarcation of municipalities is important to redraw municipal boundaries in line with our new dispensation and eradicate apartheid boundaries. The criteria set out in the White Paper, for the Municipal Demarcation Board to take into account are important to ensure that municipal boundaries integrate rather than further fragment local governments.

Local government training and capacity building

Capacity building is a common thread that runs through the White Paper. The unprecedented focus on capacity building for local government in supported and encouraged. COSATU supports the new training system for local government which has integrated the requirements of the Skills Development Bill. However we want to put forward the following proposals to strengthen the White Paper:

Recommendations:

the development of information systems should be included in the core administrative capacities to support development. Information is critical for development programmes and enable government to evaluate the impact of such programmes;

Through collective bargaining a basic package of training for workers should be developed;

Managers and Councillors should receive training in labour relations,

which is essential to changing adversarial labour relations inherited from apartheid;

We welcome the following interventions as important in organisational development:

The appointment of the Chief Executive Officer and the first three reporting levels of senior management be made subject to the approval of the Council. Where performance contracts are introduced, the term of these contracts should be linked to the term of office of the Council;

The employment practices of all municipal Councils, with respect to both contract and permanent appointments, should be guided by the principles of the Labour Relations Act and the Employment Equity Bill;

The establishment of the South Africa Local Government Bargaining Council. This will go a long way in creating uniform labour standards and conditions of employment for municipal workers. Both SALGA and trade unions should be trained and receive sufficient support to build their capacity.

Programme for Transformation

The inclusion of a chapter dedicated to mapping out the transformation process is a useful tool to alerting society on how local government transformation will pan out. The three legs of the process are important: building on the past five years, establishing a stable framework and support mechanisms for municipal transformation. National and provincial governments have a duty to ensure that all local governments advance the policy thrust contained in the White Paper. Their restructuring effort should be brought in line with this policy and provincial and national governments should use their constitutional powers.

Conclusion

A number of proposals were put forward in this submission and we hope that the portfolio committee will take them on board. It is important to also emphasise that the legislation proposed in the White Paper have to be developed as soon as possible in the light of the fact that parliament will rise earlier to prepare for national elections in 1999. We look forward to making contributions to the evolving legislative and policy processes. Once again we thank the portfolio committee for inviting us to participate in the public hearings. We are available to discuss any issue raised in our submission or any issue pertinent to local government transformation.

Summary of Recommendations

Local government as an expression of Democracy, Growth, Development and

Co-operative Governance:

We therefore recommend deleting the statement that "local government is not directly responsible for creating jobs." It creates the impression that destruction of jobs at a local level is not in itself, a problem for local government since this is not their responsibility. In the context of the national crisis around unemployment, and the forthcoming job summit such statements are problematic and undermine government's commitment to job creation;

We recommend that the MIIF be subjected to broader discussions to subject its basic philosophy and proposals, to public scrutiny;

That the Consolidated Municipal Infrastructure Programme (CMIP) takes into account the infrastructure backlogs that municipalities face. We note the proposals in the White Paper for ensuring at least a basic level of services to those who have no access through inter alia local cross-subsidization and mobilising private investments in municipal infrastructure. Nevertheless, there has to be a recognition that national and provincial governments have a fundamental role in assisting municipalities to eradicate the infrastructure backlogs;

The annexure appended to the White Paper of all legislation affecting local government is a useful tool to guide the legislative review process. We recommend that the transformation process outlined in the White Paper provide timeframes within which legislative review would occur and specify priority legislation;

The development of IDPs should be made mandatory for municipalities with clear penalties for failure to comply. Part of the legislative review process should address the issue of ensuring legal enforceability of IDPs. This should be linked to rewarding municipalities that adhere to the requirements of developing IDPs. The statement in the White Paper (p.30) that provincial governments should monitor the extent to which municipal budget priorities reflect the IDP, and using existing conditional grants mechanisms as incentives to local government is important in this regard;

National government should develop guidelines for municipalities on how to develop IDP'S and their parameters;

National and provincial governments should assist municipalities that lack the capacity to develop Integrated Development Plans. This should be asserted in the White Paper as it is in line with co-operative governance;

In measuring the efficacy of government policy at national, provincial and local level, the envisaged performance system should include the following inter-related indicators:

eradication of poverty and narrowing of inequality;

job creation;

economic growth and development;

investment in infrastructure development and the extent to which

backlogs have been addressed;

access to services particularly by those who lacked them,

historically.

We would like to add the issue of employment equity as forming part of measures for worker empowerment. In this respect, affirmative action should not be seen solely in terms of changing composition of management. A key component of employment equity put forward by COSATU is the issue of closing the wage gap. Therefore local government should be subject to the provisions of the Employment Equity Bill once it is passed. Further, it is also important that Affirmative Action policy developed for the public service be applied in local government;

There must be a negotiated framework to define what constitutes 'non-core assets' that may be privatised as envisaged in the White Paper. We note that national guidelines will be issued around this question and that each Municipal Council will need to make its own assessment in relation to the strategic direction put forward in the municipal IDP;

Stakeholders should participate in shaping the regulatory framework for public private partnerships currently being developed by government.

Municipal Finance:

COSATU in principle supports the need for a process to investigate aspects of local revenue instruments and policies including the fuel levy. We recommendation that there should be clear timeframes within which this will happen. The result of the investigation should also be subjected to a public process so that we can participate in shaping the local revenue instruments and policies.

Shaping Systems:

Part of the Intergovernmental transfers should be used to build the capacity of Rural Municipalities;

Timeframes should be spelt out as to when national legislation to provide a mechanism to facilitate allocation of powers and functions between Category (B) and (C) municipalities will developed and published for public input;

Amalgamated urban-rural municipalities should as part of the IDP develop a rural development strategy informed by national policy.

The role of the envisaged rural committee of the Council should be to oversee the implementation of such a strategy;

Within the rural development strategy, municipalities should spell out how they will meet the needs of farm workers and foster their participation in the political life of the area;

District government should endeavour to curb unilateral action by farmers such a land rezoning which have an impact on the developmental programme of municipalities. The actions of farmers should be brought in line with developmental programmes of local

governments. In order to facilitate the oversight role of committees it is important that members of the executive be given specific responsibilities. Thus a committee may be given a specific oversight function over the portfolio occupied by a member of the executive;

Council/committee proceedings should allow for the public to address the Council/committee especially on critical areas such as the Budget and the Integrated Development Plan. This should be investigated further in order to determine how the public participates in influencing major decisions of the Council.

Local government training and capacity building: the development of information systems should be included in the core administrative capacities to support development. Information is critical for development programmes and enable government to evaluate the impact of such programmes;

Through collective bargaining a basic package of training for workers should be developed;

Managers and Councillors should receive training in labour relations, which is essential to changing adversarial labour relations inherited from apartheid;

Appendix 2: South African Agricultural Union

THE SOUTH AFRICAN AGRICULTURAL UNION

SUBMISSION ON THE WHITE PAPER ON LOCAL GOVERNMENT

1. PREAMBLE

Local economic development is important, not only for the inhabitants of rural areas, but also for the economic welfare of the county. Just as economic development over the entire spectrum of most of the economy is important for a well-balanced and stable economy, it is equally important that economic growth in rural areas be well distributed and balanced. Local government is thus regarded as a development instrument in rural areas to provide service in support of the government's GEAR strategy. Local authorities should thus strive at all times towards the maximum development and building of the economy within their sphere of influence.

2. DISTRICT GOVERNMENT

· The South African Agricultural Union (SAAU) is in favour of a third tier local government which is as close as possible to grassroots level.

· The SAAU is in support of the principle of amalgamation of municipalities. Rural municipalities should be able to amalgamate across magisterial districts and with their surrounding hinterland. We further believe that the amalgamation option will provide the necessary flexibility and adaptability to accommodate the unique circumstances of each area, district and province. The diversity in circumstances between provinces will thus be recognised and permit provinces to choose the most appropriate system for its own particular circumstances.

· The option expressed in the White Paper to ensure dedicated attention to rural development matters by establishing a rural committee for Council which would operate as a rural chamber for the municipality is greatly supported.

· The successful implementation of the new local government system will require that the demarcation of wards take place after consultation with the relevant local communities in order to avoid the demarcation of non viable areas. Only areas which are distinctly similar and have similar needs should be grouped together. In this way rural municipalities will be able to fulfil their functions effectively and provide for good local government.

· To deliver a sound rural management system for South Africa the SAAU is in support of the concept of zoning of all land and to accommodate this, the following zones must be considered in legislation:

· conservation areas

· agricultural land

· afforestation areas

· residential areas

· small holdings

· industrial area

· communal areas

3. POLITICAL SYSTEM

· Citizens need to register in order to participate in local government elections. This is necessary so that a voters role can be compiled of people who live in a particular area to ensure that only people who reside in a specific ward can vote for a specific candidate in that ward by means of a single vote.

· We support the principle of an executive committee elected from and by the members of the elected Council. The Mayor should be the chairperson of the council and ceremonial head. The Council should appoint a Chief Executive Officer as head of the administration. The Constitution clearly states that the executive authority of a municipality is vested in its municipal council (section 151(2)).

· The SAAU supports the electoral system proposed in the White Paper which is structured on a basis of 60% ward representation and 40% proportional representation. This system has two good features, i.e. the element of representivity and the element of accountability.

4. MUNICIPAL FINANCE

The SAAU is of the opinion that the following Sources of revenue for local government should be utilised:

· Inter-government transfers

· Betterment tax

· Inter-departmental transfers

· Payment for services rendered

· RDP-funds

· Outsourcing of services

· lnter-government transfers: The National Government will have to make an allocation to the Provincial Government to enable it, in turn, to make an allocation to Local Government. The financing of Local Government functions by means of inter-government transfers must come from the tax base. Section 227 of the constitution entitles local government to an equitable share of nationally raised revenue.

It is clear that government should realise that most local governments will, at least until services have been upgraded and standardised, be dependent on national and provincial government assistance. Local government should therefore be directly supported during this phase.

· Betterment tax: This is considered a better method of financing real decentralised development and/or local infrastructure. The imposition of a betterment tax whereby rural communities first identify projects and agree upon the financing thereof, amongst themselves, is, in the SAAU's opinion a method whereby local development can be stimulated.

· Inter-departmental transfers: Certain services cannot be provided without inter-departmental transfers. Examples of these are health and library services and roads. The extent to which a department will commit itself to such transfers must be dear so that local governments can budget realistically. The national department must also realise that most local governments will rely on these contributions until such time that their services have been upgraded and standardised Local governments must therefore also be financed directly by means of inter-departmental transfers for specific mandates.

· Payment for services rendered: The principle of uniform tariffs for uniform services within the jurisdiction of a local authority, should apply. Provision should be made for a local government to - within limits - apply tariff differentiation where standards of services differ. The principle that payment be made for services rendered, must be applied consistently.

In the case of indigent people,. social services are important and should be funded from the broad fiscal base.

Service tariff structures should reflect the principle that when a specific consumer makes use of a service, that consumer should pay the full cost of the service without having to be subsidised by the rest of the community. Each user of a service must therefore pay for it on a cost-recovery basis.

Consumers who cannot pay for their services, must be assisted with funds from the National budget. The costs must not be covered by other payers in the community.

· RDP-funds: Local government must have access to adequate RDP-funds in order to deal. effectively with backlogs in services and for maximum infrastructure development.

· Outsourcing of services: The provision of services can be outsourced and allocated on a tender basis.

Land Tax

The SMU acknowledge that the viability of rural municipalities depends on adequate funding for the required services. In this regard a balance should be found between affordability (not over-exploiting the tax base) and the needs of rural communities. Investigations indicated that a rural land tax could have a devastating effect, not only on landowners, but also on the viability of rural economies (e.g. job losses). This requires innovative ways of finding more equitable and non-distortive financing instruments other than a land tax for rural municipalities, as well as devising framework legislation to prevent the harmful implementation thereof.

 

Appendix 3: National Land Committee

NATIONAL LAND COMMITTEE

Submission to the Department of Constitutional Development on the White Paper on Local Government

April 1998

The White Paper is a comprehensive document which attempts to address issues of considerable depth and complexity. The National Land Committee (NLC) applauds the Department and the Working and Political Committees for the extensive consultation process, to which the NLC made numerous oral and written inputs. We are pleased that rural issues are paid more attention than has previously been the case, and we feel that the differing circumstances in the rural areas have been considered in the creation a flexible model.

We do, however, have serious concerns about the content of the White Paper, some of which are as follows:

1. The section on district government (pp.69-77) does not give a vision for what local government in rural areas should look like in the long term. Is it one in which district councils play a central role in service provision and planning, or one in which primary tier municipalities fulfil those functions? This indecision is exemplified in points 3 and 4 on page 70: point 3 states that district governments are to play a crucial role in building the capacity of municipalities, while point 4 strongly encourages district government to provide "appropriate levels of municipal services", with no indication as to whether this function should ultimately be transferred to municipalities.

While there is considerable diversity in rural circumstances and flexibility is consequently desirable (particularly in terms of time frames), this indecision leaves provincial and local governments without clear direction. In our submission to the Department, the NLC stared that in the long term the two-tier system should see most local government functions vested in primary municipalities, with the functions of integrated development planning, bulk service provision, and capacity-building left with district councils.

2. The process whereby (particularly rural) municipalities can "draw down" powers from district government is not outlined. The NLC believes that the natural tendency of district governments will be to retain powers and functions rather than transfer them to municipalities with the proven capacity, and that a mechanism should therefore be developed which would allow municipalities to have an equal say as district councils in the decision--making process around the "drawing down" of powers.

3. There is no indication as to whether funds will be made available to enable hugely under-resourced district councils and municipalities to function effectively in the rural areas. Principles for the allocation of funds among municipalities are provided, but there is no commitment to providing the absolute minimum needed to build the administrative arid tax capacity of rural municipalities. Without this commitment, the development and implementation of IDPs will not be possible.

4. The NLC is disappointed that the White Paper has shown little leadership on the issue or local government and traditional leaders. The current overlap of responsibilities of traditional authorities and municipalities is mentioned (page 77), but rather than grasping the nettle, the White Paper evades the issue with the inclusion of the troubling phrase: "Traditional communities will be entitled to vest the responsibility for general administration and the allocation of their land in the institutions of their choice, which may include traditional authorities" (page 77). The lack of clarity reinforces the current impasse and does not show a way forward.

If the purpose of local government elections is for people to choose their leaders, then why advocate a separate process? Will there be two elections? If so, will not the election for "institutions of their choice" make local government elections irrelevant? We believe that if rural residents in communal areas wish to have traditional leaders deciding on local matters, they be allowed to indicate their choice through the mechanism available to all South Africans: democratic local government elections.

While we therefore support the statement in the White Paper that district and local municipal councils must consult traditional leaders on municipal projects, we are opposed to allocating any decision-making powers over land and development matters to traditional leaders unless they have been democratically elected.

Appendix 4: Leeudoringstad Municipality

SUBMISSION ON THE IMPACT WHICH THE WHITE PAPER ON LOCAL GOVERNMENT WILL HAVE ON SMALL TOWNS: SHAPlNG SYSTEM: DISTRICT GOVERNMENT.

PREPARED BY C.R. MOGOGANE (MAYOR: LEEUDORINGSTAD)

DATE: 22 APRIL 1998

INTRODUCTION

The transformation process in South Africa is underway. Local Government is no exception, it has to adopt to the new dispensation, in order to ensure that this important sphere of government works according to the principles enshrined in the Constitution - that is, to create a sustainable Local Authority which provide communities with a decent quality of life and meet their social, economic and material needs. This is, I believe, the ultimate aim of this White Paper.

SHAPING SYSTEM - DISTRICT GOVERNMENT

I will make a submission on Municipal institutions outside Metropolitan areas - specifically on District Government. in our town, Leeudoringstad, we are faced with many challenges in the area of socio-economic development. our locality is not vet developed industrially, and this create unemployment and lack of business competition. The Integrated Development Planning, will be to a great advantage if there will be a clear distinction between the short, medium and long term goats, If not, it can create expectations.

It is Imperative, therefore, that the lDP be a statutory requirement of alt District Government. We agree that the anticipated District Government can also address most of the challenges, especially in spreading resources and improving '1scaie economies" of services delivery to financially weaker Municipalities.

Leeudoringstad Municipality is, in my opinion, categorised in section D.3.3(B) Municipal institution. This category proposes three alternative options of governance. we opt for the second option, which is termed "Amalgamated urban- rural Municipalities," because we have clear social and economic linkages between urban and Rural settlement. The town is surrounded by many farms, which means that it is mainly agricultural and it can be capacitated by the District Government. Farmers do their business in town and provide jobs to many people from the town. we are attracted to the second option because:

1. It will obviously cut costs of multiple councils operating in the same area;

2. It will increase efficiency of resource allocation;

3. It will enhance service delivery in neighbouring farms and;

4. It will broaden the tax base of the new Municipality.

Even if we support this option, we anticipate some problems. we believe that an extensive research has to be undertaken before such a step i~ taken. Some of the existing Municipalities to date are experiencing financial difficulties, brought about by poor administration and the inability to encourage communities to pay for the services rendered. These Municipalities therefore, are administered on a deficit The amalgamation will obviously Impact negatively on the municipalities which are presently being soundly and efficiently administered. we submit that before the anticipated amalgamation can be done, those towns which are identified as efficient in their administration be considered and given preference in the district government irrespective of size.

One factor which is going to have both negative and positive impact on Local Government, Is the devolution of functions from provincial Government. should this be done without financial and personnel support from provincial Government, it will badly Impact on Local Government. on the other hand Municipalities will be more capacitated if functions are devolved with finances and personnel provided for by the provincial Government. (Some Municipalities cannot even maintain these functions without help of District council.)

Establishment of transport authorities will only be viable if there is a provincial Government backing it up. (In other words this should be the function of District Government). it is not cost effective to establish transport authorities on local level without it being driven by the provincial Government which is more capacitated.

We are concerned that District government will not be in a position to develop bulk infrastructure until such time when the entire community have access to services. if they have to manage bulk services, financially, whereas internal infrastructure are still lacking, they will not be in a financial position to take up such a responsibility.

We are concerned about the tax base of the newly anticipated District Government, especially the tariff structure of the various towns.

It is imperative that the Demarcation process be completed as soon as possible, so as to ensure that Municipalities that will form the District Government can come together to co-ordinate all activities, such as integrated development pianning1 personnel, etc.

In conclusion I would like to quote the words of Abraham Lincoln said in 1865: "You cannot build character and courage by taking away man's initiative and independence."

I thank you.

Appendix 5: Pietermaritzburg Transitional Local Council

THE WHITE PAPER ON LOCAL GOVERNMENT

SUBMISSION BY THE PIETERMARITZBURG-MSUNDUZI TLC

1. Introduction

Thank you for the opportunity afforded to us to present this submission to the Portfolio committee. We want to make it abundantly clear, right at the outset that we generally and enthusiastically endorse the White Paper on Local Government. It certainly points us in the right direction, if we are to empower Local Government not just to live up to its constitutional mandate, but in fact to become the leading sphere of government in building a truly new South Africa.

If we have one general and over-riding criticism, it is that the White Paper does not go far enough in its quest to give effect to our new constitutional dispensation, insofar as it affects Local Government. In a nutshell, we believe it is imperative that Local Government legislation is not just enabling but indeed empowering.

We are not convinced that the White Paper, and the country in general, fully appreciates the significance of Local Government, or that the enormity of the challenges confronting local government is fully comprehended.

We question the assertion, on page 11 3 of the White Paper, that "on average, municipalities have sufficient revenue raising powers to fund the bulk of their expenditure, and finance 90% of their recurrent expenditure out of own revenues". This may well have been valid prior to the amalgamation of cities and their townships, but the backlogs in the latter invalidate the assertion of financial viability.

Although the White Paper records, on page 109, that "the aggregate size of the municipal budget in South Africa is substantial", it tends to underestimate the significance particularly of our large cities by stating that municipal budgets make up "about 7.5% of South Africa's total gross domestic product".

If we add in the private sector activity in our country's major urban areas, then it will be recognised that Local Government is not just important, it is critical to the well-being of our country. While not ignoring or overlooking our rural areas, our large cities are our economic power houses, and the crucibles in which our new democracy economy, society - in fact nation - is being forged.

If our cities falter or fail, so too, will our country.

2. The Pietermaritzburg-Msunduzi TLC in a national and regional context

Pietermaritzburg is one of the country's leading urban areas, and with the Durban Metropolitan area constitutes the economic heart of KwaZulu-Natal.

The Pietermaritzburg-Msunduzi TLC has jurisdiction over an area of 250 km2 within which we estimate 500,000 people reside. However, the real or effective population of the city system i.e. the population which works and shops in the city on a daily basis, is some 700,000 people. In other words, as many as 200,000 people who are closely connected to and dependent on the city currently live outside the TLC's boundaries in a mosaic of areas which are tribal, rural or high income in character. Recently, high-income earners have moved just beyond the city's boundaries, while the migration of poor people into the city continues unabated.

On the regional scale, Pietermaritzburg is the all-important economic hub of the KwaZulu-Natal Midlands. So much so, that economic activity in the city contributes no less than 90% of the RSC levies which accrue to the lndhlovu Regional Council. A healthy Pietermaritzburg is, therefore, absolutely critical to the well-being of the entire midlands region.

It follows from the above, that the TLC's boundaries will have to be redrawn so as to enclose our urban fringes, but this will only magnify the challenges confronting Local Government in our city. At present it is estimated that only 20% of the city's households can be classified as middle and upper income. The extension of our boundaries will only exacerbate this imbalance.

Clearly then, cities, such as Pietermaritzburg, will struggle to make ends meet, much less prosper, if: the overwhelming majority of their residents are low-income earners, whose properties contribute little to the city's rates base; the poorer residents cannot afford to pay the full user costs of services; and, the city's municipality can barely meet basic needs. Yet, that is our current reality.

3. The City as a sphere of Government

We cannot emphasise enough that local government in our country is still, despite our new Constitution, a creature of statutes, of Provincial Ordinances and of Town Planning Schemes. Local Government, therefore, operates in a highly regulated, almost stifling, straight-jacket, environment. This is not to give up before we have started, but to accurately portray our current reality in which there is little room for innovation, or new mandates, when the other two tiers of government largely dictate how you operate, set your budget increases - at the inflation rate, so that there is no developmental capacity in real terms - even determine guide lines on Councillors' allowances, lay down cumbersome land sale and land use procedures, and ultimately veto many Council decisions.

Unfortunately we are not currently experiencing any cutting of red tape. On the contrary, controls, reports and audits are increasing, and although some of these may be necessary full compliance with them will not, in itself, address the underlying and fundamental local government problem: under-funding and resourcing. We need a new generation of pro-active, development-oriented, problem-solving local government practitioners, rather than bureaucratic paper-pushers. It is critical, therefore, that legislation liberates, rather than inhibits, local government officials.

Furthermore, the fact that Local Government is rarely consulted, on health, education, welfare and security issues compounds and re-affirms Local Government's inferior, or bottom of the ladder, position.

Theoretically, an IDP can resolve much of this, but if each of the national and/or provincial departments operates within restricted budgets, there is little positive on-the-ground spin off from co-operative governance. Currently for instance, we are having to make good for the fact that schools in our former township areas have no playing fields, libraries and are not connected to water borne sewerage.

Moreover, the promotion of adult education, skills training, pre-primary educare and arts and culture has been largely left to NGOs/CBOs and Local Government. No matter how closely we work together, adequate funding is simply not available.

We find all of this entirely inconsistent and incompatible with our supposed new Constitutional status as a sphere of government. We, therefore, fully concur with the statement on page 42 of the White Paper that "in many instances these ordinances contradict the new Constitution. As part of the transformation process provincial governments need to re-formulate their regulations with respect to Local Government to ensure that they are both constitutional and support the new vision of developmental local government".

Surely if Local Government is to play a developmental role then any regulation which inhibits and restricts the ability of local government to be an effective developmental facilitator, if not a developer itself, should be repealed. The final arbitrator in the local sphere of government must surely be the people, and the Council which it has elected and mandated - not the provincial sphere!

The solution is surely to once and for all recognise Local Government as a fully-fledged sphere - as specified in the Constitution. In the context of a large city this surely means that the urban municipality is to all intents and purposes, the Government within its sphere of influence. The national sphere sets national policies but within cities it is up to the municipality to implement these policies. Clearly implementation will be better facilitated by strong and direct links between national and local spheres with respect to large urban areas. An IDP will only bear full fruit if the local sphere has a funded mandate to co-ordinate all of the government activities within its sphere of influence.

This is not to downgrade the provincial sphere for surely their main preoccupation should be our much neglected and incapacitated rural areas.

From a developmental point of view the role of the provincial sphere of government, we submit, is primarily to act as a conduit for national policies and resources. Whereas the local sphere, particularly if it has the capacity, is the implementor - not in a rigid, top-down manner, but with sufficient flexibility control and resources to adapt to local circumstances.

We believe that our proposals are logical rather than radical, and merely give full effect to the Constitution. In this regard we believe that the statement on pages 52 - 53 of the White Paper does not go far enough. "If Local Government is to govern effectively and play an integrating co-ordinated role at the local level, some of the activities of these structures may need to be brought under Local Government authority".

By contrast, the Constitution clearly grants municipalities executive authority over Part B of Schedule 4 and Part B of Schedule 5, and further stipulates in Section 156(4) "The national government and provincial governments must assign to a municipality by agreement and subject to any conditions, the administration of a matter listed in Part A of Schedule 4 or Part A of Schedule 5 which necessarily relates to local government, if -

(a) that matter would most effectively be administered locally; and

(b) the municipality has the capacity to administer it.

The Constitution, therefore, clearly envisages that municipalities which have the capacity will become a fully-fledged sphere of government, and we would hope that legislation will permit this to happen. Current ideas on District Health Authorities, and Regional Electricity Distributors, are compatible with the notion of cities as fully-fledged spheres of government.

We are disappointed, therefore, that the White Paper assigns urban municipalities to Category B, or municipalities within district governments. The inference is that large urban municipalities will fall under district councils

- we find this unnecessary and unacceptable, if not unconstitutional.

4. Urban Municipalities as Development Facilitators

Although we fully subscribe to the developmental role of Local Government, which is spelt out in Section B of the White Paper, development requires resources, particularly for investment, and this is in short supply. We, therefore, submit that direct unimpeded access to revenue is critical to putting Local Government firmly on a developmental footing and path. Currently, and at best, Local Governments balance their budgets so there is little, if any, resources available for development. In addition, our sights - or vision - have been lowered by financial constraints such that we now tend to aim at meeting basic needs to ensure a minimal quality of life. Holistic development, on the other hand, requires investment in people, in land and in marketing. Thus, even with the best will in the world, an inspired team of officials and councillors, an innovative and widely supported IDF, and full payment of rates and service charges, virtually all Local Government capital is needed to maintain existing assets. If we take into account, as we must, the impact capital expenditure has on operating costs in ensuing years, we should not be developing new assets at all.

Additional revenue is, therefore, urgently needed to kick start development, to adequately maintain assets, to attract private sector partners and to compete globally. Sound concepts, and fine words on paper, are simply not enough.

It is difficult and expensive enough to compete if your city is already on the map, and has globally competitive activity but very few, if any, of our cities are in that position. Sizeable investment therefore, is needed to rectify this situation. Yet, the Pietermaritzburg-Msunduzi TLC currently expends only 0.07% of its operating budget on tourism promotion, and 0.01 % on industrial promotion.

Many of our city's residents, if not the TLC itself, are trapped in a circle of poverty and although we have made considerable progress in meeting the needs of all of our communities, we need to, if you will pardon the pun, change gear, and grow our local and regional economies. This is the main lesson we have learnt from our Resource Cities partnership with the city of Hampton, Virginia, USA. In essence, we have to initiate a cycle of prosperity which can be diagrammatically illustrated, thus:

[Ed. note: illustration not included].

We have recognised local economic development as our primary goal. Not that development is the panacea for all of the city's ills, but economic development, and only economic development, generates the increased revenue which enables the municipality to improve services and upgrade infrastructure, which enhances quality of life, which, in turn, stimulates more economic activity. This is easier said than done, during a period of jobless growth and global competition, and, as is the case in South Africa, when the weak link in the chain is that connecting local economic development with the city's revenue base.

It stands to reason, therefore, that if Local Government is to become developmental, it needs to be the direct recipient of the revenue benefits which accrue from increased local economic activity.

This is clearly not the case at present where our city contributes 90% of the RSC levies but receives only 20% of those levies in return. We, therefore, welcome the acknowledgement in the White Paper that Local Government should receive additional levies, such as an equitable share of the fuel levy We believe that a local tourism levy would also be beneficial, and assist in the restructuring of local economies, and in so doing that of the nation.

We might add that, internationally the most successful cities have at least two common characteristics: firstly, they are "masters in their own house", when it comes to developmental decisions; and, secondly they are actively involved, and adequately funded, for the provision of other functions such as education and security.

5. Conclusion

There is much to commend in the White Paper, and there is little to disagree with. But, empowering local government to fulfil its new Constitutional mandate, by becoming the government, within its sphere or geographic area of jurisdiction, while transforming itself from a regulatory and service-provider into a developmental organisation, will undoubtedly require that more resources become readily available to local government. We urge that draft legislation enables and empowers local governments to do just that, and we trust that we will have ample opportunity to comment on the Bill.

CITY HALL

PIETERMARITZBURG

15 APRIL 1998

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