Budget Report and Discussion of Fifth Constitutional Amendment Bill

Constitutional Affairs Portfolio Committee
9 March 1999
Budget Report and Discussion of Fifth Constitutional Amendment BILL

Documents distributed:
Draft Report of the Portfolio Committee on Budget Vote 7 (see Appendix)
Local Government Y2K Questionnaire
Letter to Committee Members from the Chair on Y2K preparations

SUMMARY
The Committee briefly considered the budget report and scheduled a debate on the report for 12 March. The Committee then addressed the Fifth Constitutional Amendment Bill, and decided that consensus would not be reached in time to pass the Bill before the end of the Parliamentary session. A subcommittee was directed to consolidate the opinions and positions that had been expressed in the course of debates on the Bill, in order for discussions to continue smoothly after the elections.

MINUTES
Budget Report
The Chair asked for comments on the budget report.

Ms Seaton (IFP) said there are points the IFP does not agree with in this report. Section B.1 says "The Ministry and Department have responsibilities in respect of the development and implementation of the Constitution, Constitutional education, the provincial system, local government, co-operative governance and intergovernmental relations, and disaster management." Ms Seaton said the provincial governments also have responsibilities in that regard.

Professor du Toit (ANC) said the wording is not exclusive, so there is no problem. It does not say that only the Ministry and Department have those responsibilities.

An MP (NNP) suggested that the sentence read "The Ministry and Department have certain responsibilities."

Professor duToit said that would actually be incorrect. The Ministry and Department do not have "certain responsibilities" regarding implementation of the Constitution, they have "responsibilities" regarding implementation of the Constitution.

The Chair suggested that a sentence be added at the end to clarify the point Ms Seaton made, about these responsibilities not being confined to the Ministry and Department.

Professor du Toit said he objected to that suggestion. Section B.1 is currently a correct statement of fact. There is no need to bring IFP provincial propaganda into the matter.

Ms Seaton objected to Professor du Toit’s comment.

The Chair said Professor du Toit was exaggerating. He suggested that the matter be deferred until later discussion. He added that the report is probably a little too long – it could be five or six pages instead of nine. He said the debate on the report would be held Friday, 12 March, at 9h00.

Fifth Amendment Bill
The Chair gave a brief summary of progress. The opposition parties have submitted a proposal that there is no need for a separate clause for addressing mixed or hybrid bills. Where a bill even remotely addresses the provinces, it should go through Section 76 procedures. To deal with the potentially laborious process that could cause, the Minister would be given the power to split the bill at some point. Adv Meyer, Parliamentary Law Advisor, had said that this proposal was not tenable.

The Chair continued by informing the Committee that if consensus was not reached today, a vote could not be taken on Friday. This would mean that the Amendment would lapse and would have to be reintroduced next session. So even if consensus cannot be reached, the Committee should focus its energies on consolidating the progress of its discussions, so next term they could pick up where they had left off.

Professor du Toit said the ANC position is that a mixed bill must have a predominance of Section 76 issues in order to go the Section 76 route; the opposition is saying any provincial issue should force a Bill to the Section 76 route. He thinks the positions are still far apart, and serious negotiations are needed.

Ms Seaton said it did not seem as if consensus would be reached by Friday. The IFP will not support the ANC proposal.

Mr Eglin (DP) said he was frustrated because the opposition had brought serious and considered proposals to the Committee, but the ANC had not responded. The subcommittee has not met in three weeks, and the ANC has not given a reply to the opposition proposal of 23 February.

The Chair said Mr Eglin’s statements were not entirely accurate. The ANC replied to the opposition proposal through Adv Meyer at the Committee meeting on 23 February. The reply was that the opposition proposal was not tenable.

Mr Eglin said the ANC may have replied verbally, but it has not given a written reply or any alternative proposal. The process cannot move forward if the ANC refuses to participate.

The Chair asked that the subcommittee work together over the next two weeks to consolidate the opinions that have been expressed in the course of debates on the Fifth Amendment. The meeting was adjourned.

Appendix : Draft Report of the Portfolio Committee on Budget Vote 7

Draft Report of the Portfolio Committee on Constitutional Affairs on Budget Vote 7:

Constitutional Development, dated 9 March, as follows:

The Portfolio Committee on Constitutional Affairs. having considered and examined Budget Vote 7: Constitutional Development in terms of Rule 52 (1) ( c ) of the Standing Rules for the National Assembly, reports as follows:

A. Introduction

1. The budget review of the Ministry and Department of Provincial Affairs and Constitutional Development was undertaken on 2 and 3 March 1999. The Committee would certainly have preferred more time to consider the department's budget, but this was not possible in view of the brevity of this final session of parliament. However, the Committee intends to organise further briefings with the Department later in the year to pursue matters further. The Committee particularly wants to have a meeting with the National House of Traditional Leaders in about six months time to take up issues more comprehensively.

2. Those who appeared before the Committee included Minister M V Moosa, Director-General Mr Z Titus, Deputy Directors-General Dr C G Olver and Mr R K Sizani, Chief Directors Mr L J Buys, Mr C A Clerihew (Financial Manager), Ms J Manche, Ms G Moloi, Mr T F Seboka, Mr P A Stopforth, Mr R G Willemse and Dr A P Botha (Acting), Directors Ms M Fatyela-Lindie, Ms R Engela (Acting) and Mr D Powell (Acting), and representatives of statutory bodies funded from the department's budget, the National House of Traditional Leaders, Local Government Education and Training Board, Demarcation Board and Volkstaat Council.

3. Last year in its report to parliament the Committee expressed concern that it received the Annual Reports of the department and the statutory bodies too late to undertake a proper evaluation, and urged that all reports reach the Committee at least ten day's before budget review meetings. Unfortunately this call was not heeded. The department's Annual Report reached Committee members only on the day before the budget review meetings. However, the Department did provide its business plans for the new financial year two weeks previously. The Committee observes though that the department's Annual Report is very comprehensive and extremely well done and congratulates the department. The Local Government Education and Training Board also submitted its report on the day before the budget review meetings. The National House of Traditional Leaders brought its written report to the meeting. The Volkstaat Council submitted its report in good time. The Demarcation Board, which has been established a month ago, has done very well to submit a written report to the meeting and present a fairly detailed programme for the year ahead. Following a discussion on parliament's oversight role, the following was decided:

i. The Committee would have further discussions with the department and the relevant office bearers of parliament to define more precisely what the Annual Reports to Parliament, particularly of the statutory bodies, should focus on and what their format should be.

ii. Should the statutory bodies not submit appropriate Annual Reports at least ten days before the budget review meetings, provided they have received at least a months notice of the dates of these meetings, the Committee would seriously consider not endorsing their budgets in accordance with the rules and conventions of parliament.

iii. The department is also urged to submit its Annual Report at least ten days before the budget review meetings so that members of the Committee can properly evaluate how it spent money allocated to it the previous year and arrive at a better sense of its needs for the year ahead. While other documents submitted by the Department can be very useful, timeous submission of the Annual Report is vital if members are to properly fulfill parliament's oversight role. The department also agreed to seek to align the financial statements in its documents more closely with the documents on the budget tabled by the Department of Finance to facilitate evaluation by Committee members of its budget.

B. Overview of Ministry and Department

1. The Ministry and Department have responsibilities in respect of the development and implementation of the Constitution, Constitutional education, the provincial system, local government, co-operative governance and intergovernmental relations, and disaster management. The Ministry and Department also have to cater for the statutory bodies mentioned above.

2. Among the bills that the Ministry and Department are working on are the following: Municipal Systems, Property Tax, Disaster Management, Repeal of the Volkstaat Council, Sections 100 and 139 of the Constitution (intervention of one sphere of government in another), the Section 185 "Cultural Rights Commission" and Amendments to the Remuneration of Office Bearers Act and the National House of Traditional Leaders Act.

3. The main policy issues being worked on at present are the following: Local Economic Development (LED), Integrated Development Plans (IDPs), service charges for the indigent, Regional Services Councils levies, rural infrastructure, Consolidated Municipal Infrastructure Programme (CMIP), vertical division of revenue, municipal international relations and municipal service partnerships. There are also discussion documents being processed on Intergovernmental Relations, Traditional Leadership, Section 100 and 139 of the Constitution, the Section 185 "Cultural Rights Commission", constitutional education, and the resolution of boundary disputes.

4. A major focus of the Ministry and Department this year is the finalisation of outstanding legislation to implement the new local government system. The Municipal Systems Bill and the Property Tax Bill are to be submitted to parliament in the second half of this year. A high priority of the Ministry and Department is to give whatever support is possible to the Demarcation Board to ensure that it fulfills its major responsibility of re-demarcating the boundaries of municipalities throughout the country in good time for the next local government elections due by November 2000.

5. The Ministry and Department are working closely with the Ministry and Department of Communication and the Deputy President's Office to ensure that municipalities are "Y2K prepared". The Minister has issued regulations amending the Local Government Transition Act to make it compulsory for the CEOs of municipalities to co-operate with the Y2K Centre. Following the Minister's input in this regard, the Committee decided that all its members will play a role in monitoring and encouraging municipalities in this respect, and established a sub-committee of the Portfolio Committee to facilitate this.

6. The department is now mainly responsible for Disaster Management and has created a Directorate on Disaster Management. A White Paper on Disaster Management has recently been published and legislation is to follow later in the year. The Director-General of the Department appeals for the co-operation of MPs in working with the department around disaster management issues.

7. The majority in the Committee is very impressed with the quality of the manuals and other documents published by the department (for example, on LED, IDPs, guides to White Papers, and so on), and urges that the department ensures that all of these reach members of the Committee, and where possible all MPs.

8. The overall budget of the department has been very marginally increased from R 3 038 622 000 last year to 3 199 646 000 this year. The biggest chunk of this - R 1 673 000 000 - is made up of the "equitable share" of the national revenue allocated to local government, and the department transfers this to local government directly. The Volkstaat Council is to disband at the end of March and has therefore not been allocated any money for the new financial year. The Section 185 "Cultural Rights Commission", which is to be established later this year, has been allocated R3 645 000. The newly established Demarcation Board has been allocated R19 000 000, and is to apply for a roll-over of the unspent balance of the R15 000 000 it was allocated last year. Consistently, within all programmes, personnel expenditure has been reduced. The department’s budget for personnel has been cut by over R3 848 000.

C. Structure and Composition of Department

1. The department has three branches: Constitutional Development. Local Government and Corporate Services. The Constitutional Development Branch has Chief Directorates in respect of Constitutional Affairs, Co-operative Governance and Provincial Affairs, and Traditional Affairs. The Local Government Branch has Chief Directorates in respect of Local Government Development and Support, Infrastructure and Planning, Finance, and Disaster Management. Corporate Services caters for the management services of the department, communication services, support for the statutory bodies and other matters. The department also oversees the Represented Political Parties Fund.

2. The Committee observes that the department has come a very long way since April 1994. The Annual Report usefully captures its development from the early eighties as a think tank within the Office of the President. At present the Department is structured along clear and well-defined lines, and there is a much better alignment between its internal structure and its policy pre-occupations than in the past.

3. While the Committee appreciates the difficulties in ensuring representivity of the staff, it expresses concern that women make up only 11,6% of the management level of the department. The Committee would like to see greater representivity of the staff in all respects. It suggests that the department work closer with universities and other higher education institutions to seek to ensure that people are being appropriately trained to take up posts in the department. The Committee suggests that advertisements for vacancies in the department also be sent to Committee members who can draw the attention of suitable candidates to these vacancies.

4. The Committee notes with interest that the department is negotiating performance agreements with the Director-General and senior management.

5. The majority in the Committee is of the view that given the department's range of responsibilities, its staff complement is limited. That the Department is able to achieve what it does is commendable in the circumstances.

D. Local Government Finances

1. The Committee expresses its serious concern that local government is allocated an "equitable share" of only 1% of national revenue (R1 673 000). Of course. it is understood that local government also receives additional conditional grants from national government (R 2 080 000). But neither the "equitable share" nor the money allocated as a whole is adequate for municipalities to fulfill the increasing responsibilities being thrust on them. In effect, there is a decrease in the overall allocation to local government. The common notion that local government can raise between 90 and 95% of its revenue from its own sources has to be seriously questioned. The Committee is very keen to get a Clearer sense of the criteria used to decide on local government's "equitable share". It is not clear to the Committee that the "equitable share" is based on an adequate fiscal equalisation approach or sufficiently grounded on the need for basic service provision to the indigent. It can also be questioned whether it is appropriate that the allocations to the R293 towns and to SALGA are included as part of the "equitable share" instead of being separate grants. The horizontal division of revenue also needs to be considered for whether it is really "equitable" and takes sufficient account of the differing capacities of municipalities to collect municipal taxes and of people to pay for services. The Committee proposes to pursue these and related issues further with the Department of Constitutional Development, Department of Finance, Portfolio Committee on Finance, Finance and Fiscal Commission, South African Local Government Association (SALGA) and other relevant stakeholders during the course of the year. The Committee welcomes the study being undertaken by the department of the "equitable share". Clearly, considerations of the "equitable share" have to also be situated in the context of a review of the overall taxing and revenue-raising powers of municipalities.

2. The "equitable share" is essentially targeted as a subsidy for municipal services to poor households, particularly those earning less than R800 per month. The Committee feels that the department should seek, within its constraints, to monitor more clearly that the money is used for the purposes it is intended and in terms of the appropriate criteria. The Committee is interested that the Department is working on guidelines relevant to this.

3. The Committee notes the restructuring of the electricity industry and expresses its concern that there is not enough debate taking place on the impact of this on local government finances. The Committee proposes to discuss this further with the Department of Constitutional Development, Department of Mineral and Energy, Portfolio Committee on Mineral and Energy, SALGA and other relevant stakeholders.

4. The Committee's concern about the state of local government finances has to also be situated against the background of the latest "Project Viability" report which reveals that 273 of the Current 843 municipalities are experiencing severe financial difficulties. 82 of these are facing "imminent financial failure". The Committee recognises however that some of these difficulties will be attended to through the new re-demarcation of municipal boundaries. Clearly though, the Committee has to pursue more thoroughly with the department issues relating to local government finance, bearing in mind the considerable fiscal constraints within which government as a whole is operating in at present.

E. Local Government Infrastructure

1. The Consolidated Municipal Infrastructure Programme (CMIP) has been allocated R695 500 000. This is far from adequate and will not allow the government to wipe out the historical backlogs in service delivery within ten years. It is questionable whether the private sector will come up with all the outstanding investment necessary. The Committee is encouraged though by the positive evaluation of the department's municipal infrastructure programmes by international expert Dr Mona Serageldin of Harvard University.

2. Concerns raised by the Committee about CMIP include the following: the urban bias; the nature of the link with the housing programme; the sustainability of the infrastructure; and that projects are funded on the basis of applications rather than need. The Department indicates that a major study on improving rural infrastructure is being completed and all these issues are being addressed in a review of the Municipal Investment Framework and a refinement of CMIP.

3. The majority in the Committee welcomes the "Framework for Restructuring of Municipal Service Provision" negotiated between the government, SALGA and COSAW. However, it is important that the agreement be implemented appropriately, and that difficulties such as those surrounding the Dolphin Coast proposals be avoided. The Committee commits itself to engaging with the Framework Agreement and pursuing matters further with the Department in this regard. The Committee is also interested in the Regulatory Framework for municipal service partnerships being developed by the department.

4. The Committee notes the department’s ongoing work on refining approaches to IDPs and LED, and is interested to engage with the department around this. These issues will also be dealt with in the Municipal Systems Bill.

5. The Committee feels that the department should co-operate with other departments and the IEC in setting up its GIS system in order to save costs and rationalise resources. The department explains that it is moving in this direction.

F. Local Government Transformation Programme

1. The Committee welcomes the transformation programme to prepare municipalities for the new local government system.

2. The Committee is concerned about the slow pace of transferring staff and functions from the provinces to R293 towns. Of course, the Committee is aware of the difficulties, particularly in negotiating for staff to move from provinces to municipalities, but feels that more has to be done to effect the transition. The Committee notes with interest that the department is to work closer with the provinces to ensure this.

G. Co-operative Governance and Provincial Affairs

1. The Minister and senior officials of the department have visited the Provinces to assess the effectiveness of the current system of provincial government. A report is to be presented on this later in the year.

2. A Discussion Document on IGR is to be launched at a conference to be convened by the department later this month. This is to be the start of a White Paper process. It is intended that the White Paper be published by March 2000.

3. An audit is being conducted of all IGR Structures and processes in the country.

4. While recognising the complexities, the Committee would like to see appropriate progress in respect of IGR issues.

H. Constitutional Affairs

1. The department is finalising a document on the Section 185 "Cultural Rights

Commission" and intends to table legislation regarding this later this year. The

Committee congratulates the department on the highly successful Heritage Day

Conference organised last year.

2. The Committee notes the valuable work being done by the department in terms of Constitutional Education and commits itself to offering whatever support it can to implement programmes in this respect

3. The department is to organise an African Renaissance Conference on Constitutional Democracy in Southern Africa by September this year

I. Traditional Affairs

1. While it is recognised that this is a complex and difficult area, the Committee would like to see greater progress in finalising the audit of traditional leaders and institutions, remuneration policy and the Green Paper on Traditional Leadership. The department intends to publish a Discussion Document on Traditional Leadership by July this year, a Green Paper by November and the White Paper by January next year.

2. The Committee welcomes the department’s work on "indigenous" communities (such as the Khoi, San, Nama and Griqua). It might be useful to give more publicity to this work.

J. National House of Traditional Leaders

1. The National House of Traditional Leaders has been allocated R3 445 000 for this year as against R3 250 000 last year. The House continues to have administrative

problems, and is being assisted by the department to resolve them. The Committee recognises the important role the House can play in reconciling traditional leadership and democracy. However, it feels that the House, for various reasons, is not properly fulfilling its role, and would like to discuss matters further with the House and

department in about six months time.

K. Volkstaat Council

1. The Volkstaat Council is to disband at the end of March. Arrangements are being made for it to hand over its final report to the President The issues being pursued by the Council can be taken forward through the Section 185 "Cultural Rights Commission" to be established later this year.

2. The Council is commended for its very prudent and efficient use of funds.

3. The Committee recognises the value of the Volkstaat Council in contributing to the relatively peaceful transition of our country to democracy and reinforcing a commitment to pursuing political goals through constitutional means.

L. Local Government Education and Training Board

1. The Board has been allocated R9 000 000 this year as against last years R8 500 000. The Board has undergone a period of considerable restructuring and is now organised on a new footing. The Committee would like a more precise report on how effective the training Programmes have been on building the capacity of the municipalities, especially in respect of financial management capacity.

M. Local Government Demarcation Board

1. The Demarcation Board, which was inaugurated on 2 February this year, provided a fairly detailed programme of its proposed work. It hopes to finalise its policy statements on rationalising municipalities and draft frameworks for demarcation by late June, metropolitan and district boundaries by 31 August, other municipal boundaries by 31 January next year, and ward boundaries by 31 May next year in order to give the IEC enough time to prepare for the elections due by November 2000. The Committee feels that this Board has a gigantic task to fulfill and wishes it well.

2. The Board expresses an interest in reporting regularly to the Portfolio Committee. The Committee is very keen on this, and will offer whatever co-operation to the Board that is appropriate.

N. Conclusion

1. The Committee notes with appreciation that in its Annual Report the department referred to the key issues raised in the Committee's report to parliament last year and set out how the department tried to address these issues over the past year.

2. Overall, the Committee feels that the Ministry and department are doing well and are to be commended.

3. The Committee expresses its appreciation to the Minister, Director-General, department officials and staff for their co-operation.

9 March 1999