Immovable Asset Management Bill: Minister’s response to Committee’s suggestions

PUBLIC WORKS PORTFOLIO COMMITTEE
19 September 2006
IMMOVABLE ASSET MANAGEMENT BILL: MINISTER’S RESPONSE TO COMMITTEE’S SUGGESTIONS

Chairperson: Mr F Bhengu (ANC)

Documents handed out:
Letter from Minister Sydney Mufamadi to Minister Thoko Didiza (see Appendix)
Government Immovable Asset Management Bill [B1-2006]

SUMMARY
The Minister of Public Works appeared before the Committee to respond to the Committee's request to re-draft the Government Immovable Asset Management Bill to include not only national and provincial government but local government as well. The Minister said that she had consulted with the South African Local Government Association and the Minister of Provincial and Local Government. It was felt that the Committee’s suggestion to insert an additional chapter into the Bill would create difficulties in terms of the separation of powers. Further it meant a duplication of already existing legislation, the Municipal Finance Management Act. Some members agreed that such guidelines would be helpful but raised concerns around how binding they would be. The Committee explained that its suggestion stemmed from insight gained from its oversight visits. It had witnessed lack of control over local government assets. The Committee would consider the Minister’s input at their next meeting.

MINUTE
The Chairperson said that due to the Committee's suggestion had made in terms of the Government Immovable Asset Management (GIAMA) legislation, the Bill was still “below the line” i.e. not yet before Parliament again. The Committee had felt that the Department of Provincial and Local Government (DPLG) and National Treasury were not sufficiently involved in the process. The Committee had asked that a clause dealing with matters related to provincial and local government be included in the legislation. The South African Local Government Association (SALGA) had at the time felt that it could not comment on the Bill since it made no reference to local government. The Department of Public Works (DPW) would that day explain how far it had progressed in terms of making the proposed inclusion. He re-emphasised that the Bill was still “below the line” and had not yet been pushed “above the line” to be rejected. If the changes were satisfactory, the Committee could request the Speaker to refer the Bill back to them.

The Minister of Public Work’s response to the Committee’s suggestion
The Minister of Public Works, Ms Thoko Didiza, said that since she had taken office the DPW had had discussions with their colleagues in DPLG and SALGA. DPLG was still “a bit uneasy” about the proposed inclusion of the local government sphere. They felt that the current legislation relating to asset management at local government level adequately covered the Committee’s concerns. The DPW had also had discussions with the Minister of Provincial and Local Government, Mr Sydney Mufamadi, and Minister Didiza had met with the SALGA Executive to discuss the issues.

Minister Mufamadi indicated that because local government was another sphere of government, taking the route the Committee had proposed would present difficulties. Section 63 of the Municipal Finance Management Act (MFMA) adequately provided for the management of assets at municipal government level. If the Bill were to be redrafted to include additional chapters on local government there would be a duplication of already existing legislation. This might further delay its adoption since the Committee would have to involve other parliamentary committees.

She said that DPLG had proposed that the guidelines should be strengthened to ensure that they provided for asset management, which would then assist municipalities in implementing the already existing legislation. She had suggested to the Chairperson that something similar to the maintenance strategy framework, which was developed with the intention of managing state assets, might be useful. The framework outlined responsibilities of each sphere of Government and how they could manage their assets. It also gave an indication of what DPLG and Treasury needed to do in terms of ensuring that all spheres of Government put a maintenance budget in place. She suggested that if people were still “very scared” about the way in which such assets were being managed at a local level, such a framework could be out in place.

She continued that the DPW would still prefer that the Bill be passed in its current state, and that guidelines be used to assist municipalities as far as implementing the current legislation. If the Committee felt that such guidelines were still inadequate, a “framework-type of arrangement” that would indicate what the responsibilities of each of the different spheres were in relation to the management of assets could be considered.

She said that it was important to indicate that the matter had been discussed at the two last MINMECs. Both times, MECs had felt that it might not be possible to continue in the manner the Committee had suggested. They felt the proposed inclusion would require new consultation with SALGA, provinces and MECs for local government. At the end of the day even the authority for drafting the Bill, which impacted on local government, would be placed under pressure for interfering with another sphere of government. MECs too felt that it might be better to proceed with the Bill in its current structure and to strengthen the guidelines with regard to the MFMA.

Discussion
Mr l Maduma (ANC) felt that guidelines would begin to address the matter. He explained that the Committee’s suggestion had been informed by its experience from oversight visits.

Ms T Nwamitwa-Shilubana (ANC) added that the Committee’s oversight visits as well as requests from local governments had revealed that some assets had been neglected. She too felt that guidelines would be of much assistance.

Mr B Radebe (ANC) welcomed the Minister’s attempts to address the issue. He was concerned about the extent to which guidelines would be binding. While the MFMA made provision for certain aspects, implementation remained a problem. He was concerned about all the assets that were being sold despite the existing legislation.

Minister Didiza responded that legislation was already in place so new legislation for local governments was not necessary. The letter from Minister Mufamadi suggested that DPW could assist DPLG to develop guidelines that would enable municipalities to better implement the legislation. She agreed that some municipalities were breaking the law as far as asset management was concerned.

She said that municipalities might lack detailed guidelines for what they had to do as far as the management of assets. One also had to consider how councils interfaced with their officials. Capacity needed to be imporved so that when councils took resolutions they knew what the impact of those resolutions would be. In addition one should also consider how councils dealt with the oversight of their municipal officials. These issues could, in part, be covered in guidelines or a framework. Since municipalities were accountable to DPLG, DPW would have to assist that department in developing such guidelines.

Mr S Opperman (DA) said that the Committee needed to look at the MFMA to ascertain whether there were any shortcomings in relation to the Bill.

Mr Radebe said that the GIAMA legislation aimed to address the operational aspects of asset management and guidelines might assist in addressing these needs. There was no better authority than Public Works to develop such guidelines.

The Minister said that the DPW would be able to work with the DPLG in developing such guidelines and said that DPLG as well as SALGA was open to being assisted. She admitted that some of the SALGA executive members had been perturbed by the Committee’s suggestion to add clauses that would affect local government without having consulted SALGA. One mayor had even said that it appeared as though the Committee was unaware of how the spheres of Government worked. She had tried to explain that the Committee was not unconcerned about the different spheres of Government, but that members were concerned about the management of state assets. She pointed out that these role players would not be averse to assistance because if the Department of Finance were harsher in terms of the application of the MFMA, local governments would be found wanting. Guidelines would assist them in doing what they had to do.

Mr Kishore Harie, Executive Manager of SALGA (KwaZulu Natal) said that SALGA had received a presentation and had considered the GIAMA Bill. They had not submitted comment on the Bill earlier because initially the Bill had not impacted on local government. The views expressed by Minister Mufamadi were similar to SALGA’s views. They supported that the Bill be passed as is and that there be drafting and implementation of guidelines that would support municipalities in ensuring proper asset management, maintenance and record-keeping.

The Chairperson proposed that the Committee consider the Minister’s response at their next meeting. He commented that the Committee had not been impressed by the earlier briefing it had received from DPW on the GIAMA Bill. Members had not been convinced by the case presented by the officials representing the Department. He said that the Committee was very grateful for the Minister’s intervention as well as Minister Mufamadi’s commitment to develop guidelines. He assured the Minister that the Committee was eager to see the matter finalised.

The meeting was adjourned.

APPENDIX

12 September 2006
From: Mr F S Mufamadi: Minister for Provincial and Local Government

To:         Ms A T Didiza: Minister of Public Works

EXTENSION OF THE SCOPE OF APPLICATION OF THE GOVERNMENT IMMOVABLE ASSET MANAGEMENT BILL (B1-2006) TO INCLUDE LOCAL GOVERNMENT

Thank you for your letter dated 30 June 2006 regarding the above matter.

After investigations by the Department of Provincial and Local Government (the DPLG) in collaboration with Department of Public Works, it was established that adequate legislative provision is made within section 63 of the Municipal Finance Management Act, 2003 (Act No. 56 of 2003) to ensure that the municipal assets are adequately planned for and managed.

It should also be noted that the redrafting of the Bill with the introduction of the additional chapter on local government would be a duplication to existing legislation and could delay the finalisation of the Bill considerably due to the provisions in section 154 (2) of the Constitution and section 4 of the Municipal Finance Management Act, 2003 (Act NQ. 56 of 2003).

The current legislation can be strengthened with the introduction of guidelines on asset management, which will assist municipalities to implement existing legislation. The guidelines will be drafted by the DPLG in collaboration with sector departments.


The discussions between the two departments also revealed that the South African Local Government Association (SALGA) and relevant sector departments should be consulted first before we meet to discuss the way forward to this matter. I also recommend that the chairpersons of the Local Government and Public Works Portfolio Committee, as well as SALGA, should be invited to attend our meeting.

Kind regards