Provincial and Local Government Laws Amendment Bill [B28-2007] public hearings

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Cooperative Governance and Traditional Affairs

08 October 2007
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Meeting Summary

A summary of this committee meeting is not yet available.

Meeting report

 

PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO COMMITTEE
9 October 2007
PROVINCIAL AND LOCAL GOVERNMENT LAWS AMENDMENT BILL [B28-2007] PUBLIC HEARINGS

Chairperson:
Mr S Tsenoli (ANC)

Documents handed out: (those discussed marked with *)
Khanya African Institute for Community Driven Development: submission*
Khanya African Institute Powerpoint Presentation*
Mr D White submission*
Association of Democratic Alliance Councillors submission*
Mr L Magcoba submission*
Meritax submission
Nkangala District Municipalities submission*
South African Municipal Workers Union submission
Independent Municipal and Allied Trade Union submission
Agri-SA  submission
Nelson Mandela Bay Municipality submission
City Valuation Office submission*
Department of Local Government and Traditional Affairs submission
Cape Bar Council submission
Submissions on behalf of the City of Cape Town*

Local Government Municipality Structures Act No. 117, 1998.
Local Government Municipality Systems Act, No. 32, 2000
Local Government Municipality Marcation Act No 27, 1998
Local Government Municipality Property Rates Act, No. 6,2004


Audio recording of meeting [Part 1] & [Part 2]

SUMMARY
A number of institutions appeared before the Committee to make submissions on the Provincial and Local Government Laws Amendment Bill. Khanya African Institute for Community Driven Development argued that there was a need for strengthening of community driven development, and posed a number of options that could be used in South Africa, based on tried and tested models. Pilot studies had shown that 98% of funding was used correctly, and he suggested that community investment funds should be linked to the ward system, that the legislation be changed to reflect that local government should directly support wards to undertake their own activities, and proposed that an additional clause should be inserted, requiring municipalities to make allocations of at least 2% of the municipal budget to ward committees. Questions of clarity were asked on the models suggested, the comparisons with other countries, and the position of councillors.

Mr Des White noted the inadequacies of the way in which the Municipal Property Rates Act was being applied, particularly in Cape Town, and suggested the need for the Department to develop and institute a single rating system that better served the needs of the country. He disputed that there was any need to limit a municipal manager from serving more than a five-year term. He suggested that a time limit be placed on the valuation appeal process. He proposed that a Body Corporate should be entitled to instruct an agent to collect rates on behalf of the municipality.

The Association of Democratic Alliance Councillors felt that the lack of delivery could better be corrected through capacitation rather than legislation. The current approach did not address the wide divergence between municipalities. It suggested, in relation to clauses 6 and 7, that ward committees should not be mandatory. If this proposal did not find favour, then it suggested greater flexibility, more diverse representation, policy frameworks for sector representation and administrative support. Clause 15 was rejected. Fears were expressed that a centralised public service would take away accountability from local councils. Comments were made on the implementation difficulties for the Municipal Property Rates Act amendments, and the rating of schools. Concern was expressed that Clause 14 could lead to conflict with the Municipal Structures Act. It suggested that clause 16 be deleted. Clauses 21 and 23 should be amended to cover intellectual property.

Mr Luvo Magcoba, making a presentation in his personal capacity, proposed an amendment to Section 118(4) of the Municipal Systems Act. He noted that there was a discrepancy since failure to pay municipal debts by an individual buying a house could lead to eviction, whereas failure to pay municipal debt on a government-funded house did not attract the same penalty. The Committee confirmed they would discuss the contradiction.

Meritax proposed that there be amendments to Sections 8 and 19 of the Municipal Property Rates Act to allow residential properties to be assessed in the same way as commercial properties, where differential rates should be allowed. He explained that many city councils seemed to be unaware that they could use alternative systems of rating, even extending to using geographical systems or “valuation bands”. 

A comprehensive written submission was made by the Kwazulu Natal Department of Local Government and Traditional Affairs, addressing a number of clauses. In addition, that Department proposed three further amendments; the first being an amendment to Section 106 of the Municipal Systems Act, to correct unintended consequences, the second being a proposal that the Minister should be able to make regulations to cover the discipline of Section 57 managers, as contemplated by Section 67 (1)(h) of the Municipal Systems Act, and the third relating to section 84(1)(j) of the Municipal Structures Act. The Department attached a comprehensive summary detailing all the local government legislation which, in its view, needed to be addressed.

The Nkangala District Municipality suggested changes to the wording of Clause 12, which it felt could lead to uncertainty as to periods of contracts. It undertook to forward a more detailed submission to the Committee.


The legal advisor to the City of Cape Town noted the City’s objection to Clause 6 of the Bill. This sought to impose a statutory obligation on municipalities to establish ward committees. The City of Cape Town believed that this would encroach on the constitutionally ordained institutional autonomy of the local sphere of government, and objected to the clause. The provisions of the Constitution were discussed,  with particular reference to Chapter 7 of the Constitution.  The Municipal Structures Act as presently worded was considered to be consistent as it provided for different types of municipalities that may be established under each category.  Members commented on community participation, the principles of devolution, and the powers that needed to be given to ward committees to make them effective.

The City Valuation office questioned the necessity for Clause 33, which it noted could mean that if the value of machinery and equipment were discarded, then owners could be left with a non-economical dysfunctional shell with a low value. Although the Valuation Office had not had a chance to consider the matter in detail, it wished to put forward some proposals about the valuations. The Committee agreed that these should stand over as they did not directly affect the substance of this Bill.

 

MINUTES
Khanya African Institute for Community Driven Development (Khanya) submission
Dr Ian Goldman, CEO, Khanya reported that this institute worked in a number of countries around community driven development. He argued that there was a need to strengthen community driven development, ensuring communities were involved in managing their own development. This had not yet been tried in South Africa, apart from some community based planning. Poor people, with sufficient support, could undertake their own activities locally, and had a greater stake. They clearly had organising skills, as evidenced by churches being built, and many services at local level were provided for poor people by each other. There were a number of approaches, ranging from service delivery, to intermediary models, through to empowerment, where government was rather a facilitator. He summarised the developments in Mexico, Brazil, Indonesia and Zambia. In South Africa there were ward committees, but these were often weak. Community based planning had been adopted although there was some question on the roll out. In 2001 there had been a pilot in Mangaung, using R50 000 to support voluntary action, and later expanded to eight pilots. 98% of the funds ha been spent correctly and the funds were used effectively There was large political capital as a result of the involvement. The lessons suggested that there needed to be a scale-up, but that the ward must choose what should be done. It was further suggested that 2% of municipal capital budget be allocated to wards. Municipalities had often struggled to find this funding, but Khanya had undertaken some research. Four models were suggested; a community investment fund, foundations, trusts and community based natural resource management. All of these models seemed to be relevant. It was recommended that the community investment funds, which could be applied at scale, be implemented, linked to the ward system. This would build the social contract between municipalities and communities. Khanya therefore proposed that the legislation be changed to create a presumption that the local government should directly support wards to undertake their own activities. It proposed an additional clause that would require municipalities to make allocations of at least 2% of the municipal budget to ward committees or any project committee appointed by the ward committee. The ward committee would be accountable to the population of the ward and the municipality.

The Chairperson noted that this would be relevant to the amendments to the Local Government: Municipal Structures clauses of the Bill.

Discussion
Mr S Mshudulu (ANC) noted that South Africa was still undergoing transition, in particular in terms of policies. He asked what interventions were suggested to help sustain the Mangaung example. There were institutional challenges with local government. He understood the principles, but would like further elaboration on the realities and the budgeting.

Dr Goldman noted that he had chosen these comparisons deliberately. Although there were other countries in Africa who were not cited, but had used the models successfully, he had illustrated the countries chosen because their economies showed similar wide disparity between rich and poor. He noted that this was not a theory, but a proven practice. The will of the people would determine continuing success

Mr B Solo (ANC) noted that there were three service delivery models, and he requested expansion on the third.

Dr Goldman noted that Khanya was working around involving communities in service delivery processes, and community based planning. He could expand more on this model.

Mr W Doman (DA) asked if the wording suggested for the amendment was a final draft. He noted that he would have a problem with putting this in the legislation. He felt that it would be difficult to determine who was the population of the ward, and who must be satisfied with service. He noted that there was sound theory, but he was not sure how effectively it would translate into practice.

Dr Ian Goldman noted that accountability must be both upwards and downwards. The ward committees must account through public meetings, which would be recorded and minuted, and local governments must also be accountable towards committees. There was an attempt to promote this in the models suggested. He noted that the final wording could be finalised by legal drafters, but he felt it was a good basis.

Mr M Likotsi (APC) noted that there had not been any mention of other proportional representation (PR) councillors, who might feel that they were being sidelined, especially when it came to situations of ward committees. He asked how they could be included.

Dr Goldman replied that the Mangaung example had used PR councillors who could be assigned to wards to participate in the community-based structures. The stress was placed on the committee, rather than the ward councillor. The ward committee must be a representative structure.

Mr Mshudulu agreed that a reference to a ward committee could not exclude the councillor. The Development Facilitation Act protected rights. Whilst it was true that politically all representatives were deployed, there was a question around their obligations. He again questioned implementation, noting that a  Councillor was accountable to the collective. Even with ward-based plans on Integrated Development Plans (IDPs), councillors must recognise the obligation on the ward committees.

Mr Des White submission
Mr White noted that he was making this submission in his personal capacity, as he had been involved in the rates process, and was a ratepayer. He wished to address the application of the computerised rates valuation system CAMA, as well as rebates and the valuation appeals board.

Mr White noted that the Local Government: Municipal Property Rates Act was a good piece of legislation, but complained that it had been abused by the City of Cape Town (CCT), who seemed not to understand the implications of the Act, and were using it as a new method of raising extra revenue. Clearly the CCT was entitled to raise rates, but they appeared to have forgotten the words "impose rates for services provided". There was a need to redress past inequalities, and the City must provide water, sanitation and lights for the sectors of the community still lacking in these facilities. He believed that no poor person should pay rates or water charges. He noted that many ratepayers had a problem on paying rates on the "market value" because of soaring property prices. Many commercial buildings were completely undervalued using the CAMA computer system. He cited the BP Building, and properties in Clifton, as examples. He therefore suggested that the DPLG should develop a national system, by South Africans, for South African valuations. The current system was developed by an individual from America, and had apparently cost R200 million, and he criticised both the system and the amount paid. Any system should also allow for geographical areas to be taken into consideration, and a single system should be used.

Furthermore, he noted that the Valuation Appeal Board provided for in the Act had not yet been established in CCT, and nobody could explain why it was not in existence. CCT itself had called for Members of the Board to make application to the City Valuer, although the legislation stated that this should be done by the MEC. There were currently 37 000 objections, and only about 1 000 had been dealt with over the last five months, despite the fact that objections were to be dealt with "promptly".

Mr White noted that the Bill’s amendments sought to provide that the Municipal Manager should not serve more than five years. He did not agree that there was any reason for an experienced manager not to serve longer. He suggested that a time limit be placed on the valuation appeal process. He thought that the Sectional Title provisions contained a mistake, as the Bill said "no managing agent may collect rates on behalf of the municipality". He suggested that if the Body Corporate wanted the agent to collect the rates, then the agent should be allowed to do so.

Discussion
Mr Solo noted that the Bill was trying to address past problems, which had arisen because of the inability of municipalities to collect from Agents.

Mr Mshudulu noted that the Act would override other by-laws. He suggested that perhaps the Committee should be briefed on the implementation of the Municipal Property Rates (MPR) Act systems, and whether these had been successful in South Africa as a whole. He also felt that there was a need to discuss the market rates. The valuations were intended to benefit those in rural areas.

Mr Doman noted that Section 45 of the MPR Act dealt with the amendment criteria, and that neither this, nor the provision in relation to the body corporate instructions, was contained in the Amendment Bill.

Mr White confirmed that he was suggesting that both matters should be included and dealt with in this Amendment Bill.

Association of Democratic Alliance Councillors (ADAC) submission
Mr Fred Nel, National Chairperson, Association of Democratic Alliance Councillors, noted that there were a few amendments to the written submission.

ADAC welcomed any clarification of local government legislation. However the legislation was trying to address lack of delivery at local government level, and Mr Nel suggested that this should rather be done through capacitation of councils, rather than through legislation. There needed to be better flow of resources. The current framework provided for a "one size fits all", which did not address the wide divergence between resourced and under resourced municipalities. A number of functioning municipalities would be handicapped by this legislation. Provinces should be allowed to adopt more suitable legislation to allow them to overcome restrictions.

Clauses 6 and 7 of the Bill (Sections 72 and 73 of the Municipal Structures Act), related to ward committees. ADAC suggested that the ward committees should not be mandatory, and the municipalities should have a choice whether to implement them. In Northern Cape it was not feasible to have committees, in view of the travelling distances. However, if there was insistence on mandatory committees, there should be more flexibility on size, perhaps ranging from 5 to 20 members, which would allow for more diverse representation, and take local conditions into account. There should also be policy frameworks for sector representation, and voting should be restricted to registered voters in a ward. The function of ward committees was to represent views of residents, and political power-play should not be allowed. There should be administrative support provided for committees. Proportional representation councillors should be included. Ward Committees were often used as the arm for public participation, which was in conflict with their role as committees of Councillors.

ADAC rejected the provisions in clause 15. It believed that the single public service debate should be concluded before the Department of Public Service and Administration was included. The local government legislation already provided for intervention where there was non-functioning, and ADAC believed that the Minister should be exercising existing powers to assist where there was non delivery. It was concerned about the impact on employment costs, especially to smaller municipalities, when standardising payments. Affordability was a major issue in local government. It feared that centralised public service would take away accountability from the local councils. Municipal councils were there to represent the residents and ensure that officials remained on track and delivered the mandate they were there to enforce.

In terms of the amendments to the Municipal Property Rates Act, ADAC believed that the amendments did make sense, but noted that implementation within twelve months in a metro could prove to be unrealistic. It therefore suggested that larger municipalities should be given more time. It was also concerned about the rating of schools, and how these were valued, because there was no comparable market-related data. It therefore suggested either zero rating or a flat rate to accommodate the issue.

ADAC was concerned that Clause 14, inserting a new section, might cause conflicts with the Municipal Structures Act. The alternative would be to replicate a section of the Municipal Structures Act in this amendment.

Clause 16 was questioned, as ADAC felt that by-laws were subordinate to national legislation and would be repugnant if inconsistent. It was suggested that this clause be deleted.

Clause 21 of the Bill did not cover immovable and intellectual property. ADAC suggested that "the supply of property" be used instead of the current wording. The same applied to Clause 23.

Discussion
Mr Mshudulu noted that the time limits were intended as a guideline. He did not think these provisions were prescriptive.

In relation to the ward committees, Mr Mshudulu noted that in Kwazulu Natal and Western Cape there had been some opposition to ward committees. The provisions now included were trying to address the inconsistencies. He would see a contradiction between the proposed increase in numbers (to ensure greater outreach) and the suggestion that there should be a choice. People had been given enough time to implement. He said that this was a political issue and needed to be debated further.

Mr Nel noted that these comments were related. The proposal was that ward committees be governed by national legislation. He pointed out that not all ward committees were properly functional. ADAC would like to see flexibility and choice. Communities should have more say in councils. Public participation was not good enough, and ward committees must be the way to facilitate such public participation. A ward committee seen as a committee of Council was not public participation. The other issue was that the existence of ward committees raised expectations that issues would be addressed, whereas there were in fact no quick fixes. Where the committees were implemented, there should be flexibility in size. Some groups had no residents' associations, whereas others might have three or four. There was not an issue with the PR Councillors, and these were not necessarily deployed prescriptively. They could participate on ward committees where they lived or had their constituency. He agreed that they should be involved in all committee structures.

Mr Mshudulu understood "goods and services" to be an economic term, and wondered whether there was a need to change it.

Mr Nel said that the legal advisors could be asked to deal with this; he merely wished to point out that there was a possibility that intellectual property might have been left out.

Mr Doman asked for clarity on the references.

Mr Nel apologised and said this should have been a reference to Section 21(2) of the Municipal Structures Act.

The Chairperson noted that the comments about lack of delivery were not backed up with specific proof. This was a complex matter, and the Committee was interested to hear how the legislation was working. He questioned the role of the ward committees. It was often presumed that public participation was only important when there was disagreement. Clearly this was not correct.

Mr L Magcoba submission
Mr Luvo Magcoba, making a submission in his personal capacity, suggested an amendment to Section 118(4) of the Municipal Systems Act. Currently, this Act required municipalities to have a credit collection and by law policy to cater for indigents. Because of the interpretation, the current situation was that some houses were being sponsored by government, whilst others were privately paid for or owned. Failure to pay a municipal debt by an individually-paying owner could lead to a sale in execution. A house owned by a sphere of government was protected under subsection (4) and no sales in execution could be applied, despite the fact that the circumstances might be directly the same. He suggested that this disparity was unjustified and unfair.

The Chairperson thanked Mr Magcoba and noted that this would be discussed in committee.

Meritax submission
Mr Peter Meakin, Director: Meritax, said that he was a valuer by profession. He had developed a geographical valuation system called Meritax, which could reduce valuations and encourage jobs. He noted that none of the municipalities were currently using his system.

Mr Meakin noted that municipalities had a discretion to decide what systems could be used, and if certain calculations could be shown to be inaccurate, the City could use any other valuation system that it wished. This even extended to using "valuation bands" rather than valuing individual houses. A geographical system would assume that everyone in area X would pay a flat rate per square metre, which would cut out the need for individual (often manifestly incorrect) valuations. Currently some of the municipalities did not understand that they were free to explore those options.

Although he had some other problems with the Valuation Act, he wished in particular to propose an amendment to sections 8 and 19 of the Municipal Property Rates Act to allow municipalities to deal with residential properties in the same way as commercial properties. Differential rates were currently not allowed for residential properties. However, they were allowed for shopping centres, or schools, or farms, which was fair because it anticipated that a flat percentage rate of income from rentals could be spent on rates. In respect of residential properties, there was a disallowance of different rating systems. This meant that people were paying over different proportions of their rents as rates - some might be 90% of the rent, and others might be 5%. This was clearly not correct. In Cape Town there were a number of people affected badly by the increase of rates. Rates were a charge on property. Rentals would be increased similar to inflation, as rates rose. However, the market value of the property was a multiple of rates.

Discussion
Mr Mshudulu noted that municipalities were saying that there was a shortage of valuers. He would like to hear more about what the valuers had been doing to trying to assist with implementation. He noted that a number of valuers had in fact participated in the process of the valuation legislation. However, after the Act was passed, the problems of capacity arose.

The Chairperson noted that this was a useful observation, and noted that the implementation of the Act, would need to be discussed.

Mr Doman clarified that the earnings ratio shown on the chart presented related to rental. He noted that if this was used as the declaration value, then this could affect freedom of choice. He pointed out that a person might choose to drive an old car, but own a new house, and put more money into property. He wondered if determination by rental would not create problems in terms of what rental could be obtained for individual properties, which he feared could also lead to distortion.

Mr Meakin replied that the person with an old car and a new house would not be affected. If the Act was changed so that the Municipality had the right to use the price/earnings ratios, then those could simply be picked up and applied. If this was not used, then the alternative determination would be an arbitrary one, and that was what was happening at the moment.

Mr Mshudulu wished to place on record that the Property Rates Act had a section on reduction, rates and rebates. One of the resolutions previously taken by this Committee related to the need for more time to deal with this Act. People who were not part of the original process might not understand the full implications.

Mr Meakin said that he did not proposing any changes to rebates and reductions.

Department of Local Government and Traditional Affairs, Kwazulu Natal submission
Mr Heinz Kuhn, Manager: Legal Services, Department of Local Government and Traditional Affairs, Kwazulu Natal (KZN) wished to raise three issues not noted in the original written submission.

He proposed that Section 106(2) of the Municipal Systems Act, dealing with an investigation by a provincial MEC into maladministration in a municipality, needed to be addressed. This section dealt specifically with the powers of the person appointed to investigate. The MEC in KZN was recently involved in a court case on the interpretation of this section. The Supreme Court of Appeal stated that Kwazulu Natal was in the position of having a Provincial Commissions Act. Because the section was worded “in the absence of applicable provincial legislation” it was held that the MEC should have requested the Premier to appoint a commission of Enquiry. This was clearly not the intention of Section 106, and the KZN Department therefore proposed the deletion of “in the absence of applicable provincial legislation” to avoid the unintended consequences of these words.

A further suggestion was made in relation to performance regulations governing municipal managers. Section 67(1)(h) of the Municipal Systems Act (MSA) stated that each municipality should have its own code. The SALGA collective agreement (which in any event had expired) was not applicable to Section 57 managers. The KZN Department suggested that Section 72 of the MSA should be amended by inserting a clause that the Minister could make regulations to provide for a disciplinary code, where no code existed as contemplated by Section 67(1)(h), and perhaps there could even be a catch all that these regulations would be deemed to apply until such time as the municipality had its own code.

Another proposal he wished to add related to amendments to Section 84(1)(j) of the Municipal Structures Act to deal with fire fighting functions. There was an ongoing argument as to what was intended to be provided. At present, section 84(1)(j) referred to fire-fighting services serving the district municipality as a whole, but there were differing interpretations of what were included. In the Western Cape there had been arguments that District Municipalities performed only those functions stipulated in 84(1)(j), whereas other provinces ruled differently. It was understood that capacity was a problem. The KZN Department therefore recommended that section 84(1)(j) should be amended by deleting the words "which includes", which would assist in clarifying the matter. He agreed that this was a policy issue that the Committee would have to consider.

Mr Kuhn noted that the further comments on the Bill were set out in detail in the written memorandum and he touched on them only briefly. He noted that ward committees had been established wherever possible. With regard to the Municipal Property Rates Act, eight municipalities in KZN were implementing it in 2007/08. 27 would implement it in 2008/09. The province was involved in driving the process and a provincial steering committee had been meeting for the last three years.

In relation to Clause 2, KZN Department agreed with the rationale, but cautioned that it could have some unintended consequences if it could only be implemented in the next financial year. .A suggested amendment of the wording was tabled.

Similar comments applied to clauses 6, 9 and 10.

 Clause 12 related to the term of office of municipal managers had already been raised. Municipal managers and Section 57 managers were in a unique situation as certain sections of both labour law and contract law applied to them, as illustrated by a recent Constitutional Court judgment. Although the Court ruled that a summary dismissal, under contract law, was fair, compensation was to be paid until the end of the contract. The amendments proposed in clause 12 in relation to termination one year after an election could be in conflict with the contractual provisions. He agreed that continuity was of great importance and he questioned why it should be necessary to terminate an appointment where the manager was doing a good job. He proposed that a contract should be able to be renewed or extended. Mr Kuhn also suggested that it would be useful for the Committee to consider placing a cap on any payout to a municipal manager whose contract was terminated, as the law gave no guidance.

In relation to Clause 15, Mr Kuhn was pleased that the issue of guidelines versus regulations was covered in the Bill. He stressed that section 120 of the Municipal Systems Act should be amended to provide that the Minister may make regulations to provide for a disciplinary code for municipal managers.

In relation to clause 18, he noted that Section 106 was of concern because it lacked enforcement provisions. Although the MEC could institute an investigation, and may find maladministration, if this fell short of a situation that would entitle him to institute steps in terms of Section 139 of the Constitution, there was nothing further he could do. Perhaps the Committee needed to consider if any further steps might be necessary.

Mr Kuhn noted that he understood the rationale for Clause 19, but it was suggested that the period might not be sufficient., considering the backlog in the Deeds Office. A further provision should be inserted to cater for the situation where the Certificate expired.

In respect of clause 20, it was suggested that since the Municipal Finance Management Act contained similar provisions to those of the Local Government Municipal Systems Act, similar clauses should be inserted in the former Act.

In respect of Clause 22 it was recommended that the MEC be allowed to institute an investigation even where the municipality had done so, if the MEC felt that the municipality’s investigation was not correctly or adequately done, or did not agree with the outcome of the investigation.

In clause 24, KZN Department recommended a further statement that officials should declare gifts above a certain value.

In clause 26(a) it was recommended that the word "determine" should be used instead of "identify", and that similar content should also be included in the proposed amendment to Section 15(4). A similar comment also applied to clause 29.

In respect of Clause 32, KZN Department suggested that the Minister must set up limits for percentages to increases in municipal budgets and rates.

In respect of clause 33 it was suggested that the whole relevant section be redrafted to remove the double negative which had created problems in interpretation, especially by valuers.

Mr Kuhn noted that a further document was attached, being a draft briefing document by the KZN Department, which was drawn up after extensive consultation. Certain challenges in existing legislation had been identified, including conflicts, apparent omissions and so forth, and he requested that the Committee give consideration to the points made.

The Chairperson noted that there would be a number of pieces of legislation reconsidered after the review of the White Paper. The Committee had the responsibility to oversee implementation of legislation.

Discussion
Mr Mshudulu commented on the labour related matters. The concerns were noted, but there was still more that needed to be engaged upon. It would be necessary to deal with various issues.

Mr Doman asked whether the three oral submissions could be sent through to the Committee. Mr Kuhn confirmed that he would do so.

The Chairperson noted that in respect of the proposals for section 84(1)(j) there was already a process to engage with the fire brigade legislation, and this was an option.

Mr Kuhn confirmed that there was a process to redraft the Fire Brigade Services Act but the structures would require confirmation from the Committee. He suggested that it might be more opportune to do this before the new Fire Brigade Act was implemented, as this could take another 18 months.

The Chairperson responded that because it was a policy matter, it might not be possible at this stage of this Bill. He noted that if matters were particularly urgent they could be fast-tracked.

Mr Doman thanked Mr Kuhn for a comprehensive contribution. He asked about the payouts and what could be suggested as “reasonable amounts” if contracts were cancelled. He noted that it was difficult to stipulate amounts in legislation.

Mr Kuhn responded that labour legislation, including the Labour Relations Act and the Basic Conditions of Employment Act (BCEA), stipulated that where a retrenchment was effected, one week’s wages for each year of service could be used. He wondered if this could effectively be implemented for municipal managers, who fell into higher pay categories than those contemplated by the BCEA. He could not give a final answer, but suggested that perhaps some linkage to the BCEA would be appropriate. He agreed that amounts should not be given in the legislation, but perhaps a formula could be used, such as a percentage of the annual salary for a municipal manager who had served only a small portion of his contract. He further pointed out that there should be a duty on that employee to mitigate the loss and that was why he had suggested a cap. 

The Chairperson asked for Mr Kuhn's comment on the provisions of the contracts.

Mr Kuhn noted that the employment contract of a municipal manager was specific. It could include a period of probation; that would not be incorrect.

The Chairperson asked about Section 72 and the prevalence of codes. He also asked if the guidelines would apply only if a municipality did not have its own municipal code.

Mr Kuhn said that less than 5% of municipalities had codes that applied to municipal managers. All tended to have used the SALGA code - that did not apply to municipal managers. This was the reason why KZN Department had recommended regulations, not guidelines, that should apply unless the municipality was able to prove that it had its own code that substantially complied with the regulations. |

The Chairperson noted that even if the SALGA code had not expired, it would still not be applicable.

Mr Doman noted that the national Minister could already force MECs to take action. He asked why this was not enough.

Mr Kuhn supported the amendment proposed to section 106. However, his suggestion was that section 106(2) be amended. He confirmed that If there was sufficient evidence for a section 139 intervention in terms of the Constitution, then that could be followed. However, this was rarely applicable. If there was not sufficient evidence to justify this procedure, then although there may have been mismanagement, the matter could go no further. A report could be submitted to the Municipality, but there were no enforcement measures if the municipality declined to comment. He did not have any specific wording in mind at present; the concept required a paradigm shift on how to deal with maladministration.

The Chairperson noted that if the provision were to be given “teeth”, then there could be accusations that there was interference on matters that fell under local government competence. He was not sure that the powers should be given and cautioned against crossing the boundaries. He also felt if would be useful to hear the SALGA reaction to this suggestion.

Mr Likotsi noted that there seemed to be some disparity between the municipal managers and section 57 managers, especially when it came to their contract period. Section 57 managers could get bonuses, and municipal managers might not.

Mr Kuhn noted that there was a collective agreement for all employees below municipal managers, and the situation was similar to the public service where Senior Managers were treated differently from levels 1 to 12. He was not suggesting that there should must be a separate code, but rather that there must be a code to deal with problems.  In respect of bonuses, all managers did qualify for a performance bonus, so there was no discrimination between different managers.

Mr Mshudulu noted that government was an employer, but it would be wrong for any employer to have one level of procedure applying to one sector and another for other sectors. Discipline must be uniformly applied. He agreed that there were problems due to the specific nature of the mixing of contractual and labour issues.

Nkangala District Municipality Submission
Ms I Ranape, Manager: Corporate Services, Nkangala District Municipality, noted that the Bill was generally supported by the Municipality. However, it had some queries over the wording of the period of employment in relation to Clause 12. The provisions stated that the period of employment could not continue for a period of more than one year after the election of a Council. The section was open to interpretation, and she asked that this should be clarified, so that it did not bring unintended consequences. If that was clearly clarified, then the provision could be implemented uniformly across the whole government sphere.

The Chairperson asked that a more detailed submission on the suggested wording be forwarded to the Committee. He noted that as a general principle, those making submissions should put matters as fully as possible.

 

The City of Cape Town (CCT) Submission

The presentation on behalf of the City of Cape Town was made by its legal representative, Mr Ashley Binns-Ward SC, Chairperson of the Cape Bar Council. Mr Binns-Ward stated that he had been asked by the City of Cape Town to address the committee in respect of clause 6 of the Bill only.  Under the current legislation, municipalities of a type that allowed for a ward participatory system had a choice whether to establish ward committees. The Bill sought to alter this clause and impose a statutory obligation on municipalities to establish ward committees. The City of Cape Town objected to this amendment, because it believed that it would encroach on the constitutionally ordained institutional autonomy of the local sphere of government. 

 

Mr Binns-Ward said that under the democratic constitutional dispensation adopted in 1996, local government formed part of the three spheres of government. All spheres of government must respect the constitutional powers and functions of government in other spheres, and not encroach   on the geographical, functional or institutional integrity of other spheres. 

 

Mr Binns-Ward said that he wished to highlight some relevant provisions within the constitution.   He pointed out sections within Chapter 7 of the Constitution and specifically referred to the written representations, emphasizing the rights and powers of the municipality.  He drew attention to the National Legislation, stating that it could provide the criteria for determining whether municipal councils may elect an executive committee or any other committee.  He said that the word “may” corresponded with the wording of the Municipal Structures Act but if the word were changed to “must” then there was danger of creating a contradiction with the provisions of the Constitution.  .

 

He summarized  that the object of the provisions in the constitution was not to prescribe to municipal councils how to conduct their affairs,  but rather to regulate the extent to which councils may devolve the original and plenary powers invested in terms of the Constitution.  He told members that regulating a power was an exercise distinguishable from prescribing an obligation. There was no provision in the Constitution that permitted national or provincial legislation to prescribe to a municipal council that it must devolve its plenary executive powers.

 

Mr Binns-Ward further noted the provisions of Section 7 of the Municipal Structures Act, noting that these were consistent with the explanation of the constitutional context previously given. He emphasised that it provided for different types of municipalities that may be established under each category of municipality. 

 

Discussion

Mr Mshudulu asked what the situation was in Cape Town and the reason why the committees may not have been implemented.  He reasoned that the object was to make sure that such an establishment was being regulated through an act of parliament and that communities should be seen as participating.  He believed it was important to entrench the culture of community participation into a reality.  He also asked if there was any other problem besides the legal interpretation. 

 

The Chairperson commented that Mr Binns-Ward, being the legal representative of the municipality, could not necessarily respond to these questions.   

 

Mr Doman commented that when the MSA was originally drawn up, the possibility of ward committees was left as a choice for municipalities.  He stated that the City of Cape Town was arguing that even at that stage, parliament did not have the right to enforce ward committees. It was not arguing that parliament had given certain leverage to municipalities that could not now be taken away.  He also commented on devolving powers and duties.  He stated that if the ward committees’ existence was intended only for the public to participate in council matters, no obligations were put on the committees to give their views on council positions or to participate in any decision making of council whatsoever.  He then asked if the argument implied that there were powers and duties devolved to committees, which would fall away. 

 

The Chairperson summarized that Mr Doman was enquiring whether there was a presumption of devolution..

 

Mr Likotsi noted that the purpose of the ward committees was to try and promote the issue of public participation.  He wanted to know what the City of Cape Town would put forward as a balance between public participation, and what should be done for ward committees.  He asked what powers those ward committees needed to be given to be effective. 

 

Mr Binns-Ward stated that he was not a personal representative of City of Cape Town and that he was mandated to speak on the constitutional aspects only. He commented on community participation in government and said that members were correct - it should be a principle that there was as much participation as possible in government issues.  He said that the MSA allowed municipalities to create mechanisms to facilitate participation.  The City of Cape Town was in the process of putting up ward forums to fulfill this purpose.  There was a difference between ward committees and those mechanisms. A ward committee was expected to fulfill executive legislative powers of the municipal council at a localised level.  He stated that this was something different from community participation; it was devolution of municipal power on a lower level.  He noted that this was an opportunity for the local community to challenge the municipal council.  The power of devolution may be regulated by national legislation. 

 

Mr Mshudulu expressed concern that a different interpretation would be given. 
 

Mr Solo said that he understood the concerns of Members. He stated  that 80% of local authorities in the country had ward committees.  He commented that it was unfortunate that members did not have the opportunity to evaluate them as it had been discovered in past years that there was value in having ward committees. 

 

The Chairperson agreed that members had not had the opportunity to evaluate the issue of ward committees. 

 

Mr Doman cautioned that it was important to look into whether part of the plenary executive power of council would be devolved if ward committees were implemented.  This was an important issue that would need to be considered in future meetings.

 

City Valuation Office: Briefing

Mr Emil Weichardt,  Manager: Valuation Operations, CCT, dealt with the valuation issues in the Bill, noting that he would be concentrating on the amendments in  He informed the committee that he would be concentrating on clause 33 , dealing with the Amendment of Section 46 of the Property Rates Act.

 

Mr Weichardt said the Valuation Office wished to comment on the removal of the words “the value of” from the Section 46(3)(a) of the Property Rates Act (PRA). According to the original legislation, and in context to market value, the value of machinery and equipment would be discarded.  The proposed change would mean that old buildings and structures could be used for any alternative purpose.  If machinery and equipment were discarded then the owners would be left with a non-economical dysfunctional shell that would have a very low value.  He stated that in effect structures like nuclear power stations could have a nominal valuation on a valuation bill. 

 

Mr Weichardt expressed confusion as to why the amendment was put forward. 

The Chairperson asked whether the Valuation office had tried to understand the amendment from a different point of view. 

Mr Weichardt answered that he had not had a chance to consider the matter in detail because the document had arrived very late, but that he wished to make a few proposals about the valuations. 

The Chairperson stated that if these proposals would not affect the Bill at that point then the proposals should wait. 

 

Discussion

Mr Mshudulu stated that it had taken many days to concentrate on public infrastructure and that he would like to hear more of the argument.

 

Mr Solo agreed and stated that presenters should look at the situation in all contexts.  He was concerned that there were serious economic factors that needed to be considered and that they often raised matters of policy.  Mr Solo warned that this was a national issue with serious economic implications.

 

The Chairperson urged Members to see the administrative burden that was placed on municipalities. 
 

Mr Doman asked for clarity concerning the document that Members had received.

 

Mr Weichardt replied that the Valuation Office was still waiting on the Appeal Boards’ decisions,  and that this was a critical issue for the City of Cape Town, but that he did not want to impede the passing of the Bill. 

 

The Chairperson asked committee Members to reflect on the submissions, and noted that the meeting would resume the following day to discuss the Bill.

 

The meeting was adjourned. 

 

                

 

   

 

      

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