Local Government Laws Amendment Bill: briefing by Department of Provincial and Local Government

Meeting report

LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE
24 October 2007
LOCAL GOVERNMENT LAWS AMENDMENT BILL: BRIEFING BY DEPARTMENT OF PROVINCIAL AND LOCAL GOVERNMENT

Chairperson: Mr S Shiceka (ANC, Gauteng)

Local Gorvernment Laws Amendment Bill

Audio recording of meeting

SUMMARY
The Department indicated that the Bill was not meant to address core fundamental policy issues but was instead aimed at refining and aligning policy provisions in recent legislation, strengthening enforcement measures and improving technical/legal matters.

Members expressed concern about providing municipal managers with five-year contracts, given the fact that the municipal councils served terms of four years. This meant that upon the election of a new municipal council, the old municipal manager would still remain in his position for a year. This could be problematic where the municipal manager was from a different political party to the municipal council.

Members also felt that there was a need to develop clearer guidelines with regard to the ‘out of pocket expenses’ granted to councilors. This was because this area had in practice proven to be a breeding ground for corruption.

MINUTES
Introductory comments by the Chair
Mr Shiceka said that the Bill had been tagged as a Section 75 Bill. The present meeting was an informal discussion since the Bill was not formally before the Committee yet. tt was still being debated by the National Assembly.

Briefing by Department of Provincial and Local Government
Mr M Peter (Chief Director: Institutional and Administrative Systems) explained that discussions on policy issues had been held back due to the White Paper process which was currently underway.

The Bill was aimed at refining and aligning policy provisions in recent legislation, strengthening enforcement measures and improving technical/legal presentations.

The legislative process had included inter-departmental consultation, which had resulted in amendments to the Bill. It was then submitted to Cabinet to be approved for public comment.

The comments received highlighted problem areas and the Bill was further amended to incorporate measures to address these problems. With regard to the Municipal Systems Act (MSA) the following problem areas were identified:
-Improving planning and budgeting for service delivery
-Improving alignment with the Constitution and implementation of policy to strengthen the role of ward committees
-Enhancing the performance management system in primary legislation
-The duty of Provinces to conduct investigations on cases of non-performance and maladministration of municipalities
-The old schedules of the MSA were outdated and lenient in addressing potential corruption in procurement processing
-Ambiguity with regard to the participation of municipal officials in elections for the National assembly, provincial legislatures and municipal councils
-Municipalities required advance payments before issuing such a certificate, which placed a heavy financial burden on consumers
-In the Mkontwana judgment, the Constitutional Court ruled on the need for municipalities to provide owners of properties with copies of electricity and water accounts sent to tenants

With regard to the Municipal Property Rates Act, the following problem areas were identified:
-Differential rating
-The need for national government to protect ratepayers through setting limits of rates revenues

The Department introduced amendments to address the problem areas identified in these Acts.

Mr Peter said that the Bill would repeal the Jan Kempdorp Act of 1964 and the Promotion of Local Government Affairs Act of 1983.

Due to time constraints Mr Peter then read briefly through the portion of the presentation which dealt with the ‘Amendments made to the first version of the Bill by the Portfolio Committee on Provincial and Local Government’.

Discussion
Kqoshi K Mokoena (ANC, Limpopo) asked why the Bill had been tagged as a Section 75 Bill when the issue of demarcation affected provinces and municipalities directly.

The Chair agreed that the Bill affected the provinces directly, as these issues were often driven by the MECs. Tagging the Bill as a Section 75 Bill deprived the provinces from the chance to interact with it. It seemed like Section 75 provided a short-cut to ensure the speedy adoption of the Bill.

Adv Z Adhikari (Parliamentary Legal Advisor) said that Section 75 was often referred to as the default clause, as it referred to issues not found in Section 74 (which dealt with constitutional amendments) or Section 76 (which referred to matters affecting provinces or upon which provinces could legislate). Schedule 4 referred to concurrent competencies. Thus a Bill would be tagged as Section 75 if it was not part of the categories listed in Schedule 4 or Section 76 (3).

The Chair said that he preferred the Committee to interact further on this issue at a later stage.

Kgoshi Mokoena referred to Clause 6 in terms of which out of pocket expenses of ward councilors incurred in the performance of their duties would be paid from the budget of the municipalities in question. He asked what form this assistance would take.

Mr Peter replied that the Bill provided that the assistance would take the form of ‘resources’ and ‘funds’.

Mr A Worth (DA, Free State) expressed concern that the amount allocated for out of pocket expenses should be agreed to by the municipal council. There was not clarity as to how this amount would be determined. In addition, he referred to Clause 6(d) and asked for clarity on the words ‘development’ and ‘within the framework of the law’. This clause was too vague. In addition he asked how municipal managers would be held accountable for their spending and asked what prevented them from, for example, deciding to serve champagne at every meeting.

Mr J Le Roux (DA, Eastern Cape) agreed that leaving this amount to be determined by the Council was not wise. He felt that there had to be a better way to determine the amount and suggested that it could be calculated on a fixed scale.

Mr Peter responded that the initial proposals at public hearings had been that two percent of the ward committee budget should be allocated for this purpose. The Department felt that it was difficult to allocate a percentage, as the budgets of the committees varied greatly. Also, there was a huge difference in distances traveled by rural managers as opposed to their urban counterparts. It was preferable to merely include the principle, as the Department did not wish to micromanage the municipalities. The provision gave the Department the scope to come up with guidelines later. With regard to the issue of accountability, the municipalities had to put in place policies and procedures, for example managers should provide receipts for expenses incurred. This was a form of accountability which fell within the prescripts of the Municipal Finance Management Act (MFMA).

The Chair was not sure if the term ‘out of pocket expenses’ was defined in legislation.

Mr Peter said that the term could be defined in regulations if necessary. It generally included transport costs to and from the meeting as well as food.

The Chair felt that a policy needed to be developed on how to determine this amount. It was important to obtain clarity, since this could be a breeding ground for corruption. He felt that municipalities should develop these policies, which the Department could check to determine if these were reasonable.

Kgoshi Mokoena expressed his approval of the provision which provided municipal managers with a fixed five-year contract. He asked if it was possible to include a provision enabling them to be ‘bought out’ if they failed to perform.

Mr Peter replied that the contract was comprised of a fixed term and performance contract. Any employment contract contained clauses dealing with the right to terminate by either party. This was governed by both contractual and labour law.

Mr Worth asked if it was at all possible for the incoming municipal council to terminate the contract of the municipal manager. He referred members to the situation in the Western Cape in this regard.

Mr Le Roux added that the job of a Member of Parliament ended after the election occurred and a new party took over. The same applied to the corporate sector where a corporate take-over resulted in the replacement of senior management. He could not understand why it was different in the case of municipal managers, who would be allowed to stay on for one year after the new municipal council took office.

The Chair said that he understood why the municipal managers were not replaced immediately once the new council took up its position and explained that this was due to the fact that it was in the interests of preserving institutional memory and knowledge management. However he did not feel that it was necessary to keep the manager in the position for an entire year. One could not ignore the political considerations, for example, if the manager was from a different political party to the incoming council, distrust could be created between the mayor and the manager (as was the case in Cape Town). In addition it left the mayor and the new Council with only four years to implement their party’s agenda and programmes.

Mr Worth also cautioned that this situation could result in the Councils offering the managers expensive buy-outs in order to get rid of them- this often amounted to millions and would be at the tax-payers’ expense.

The Chair said that the main issue was therefore that the one year proposed by the Department was too long.

Mr Peter responded that the Department held felt a year to be reasonable and necessary owing to the need for the municipal business to continue after the election of the new council. Appointing a new person could take more than five months taking into account that the position had to be advertised. There may also be a need to test candidates, which would mean that the process would take even longer. However the appointment of a new manager should not be rushed, as this person would hold the position for five years once appointed. The problem was that while the appointment process was underway, there remained important interim business, which needed to be dealt with. This included preparation of financial statements, publication of reports and audits etc. It was therefore necessary to retain institutional memory in order to perform these tasks in the meantime. The Department felt that one year was a reasonable time for this purpose. The council could always end the contract during the year if they felt the time was right.

The Chair said that the Committee still felt that a year was too long and that a shorter period could achieve the same purpose. One could not ignore political considerations. He referred to the example of the Western Cape where the DA took over the council, but an ANC manager remained. There was distrust between the mayor and manager due to political allegiances. Also, it left the mayor with only the remaining four years during which to govern with a manager she trusted in order to implement her party’s programmes and agenda. This was not fair. He insisted that the one-year period should be reduced. He referred to Mr Peter’s comment that the manager’s comment could simply be terminated during the one-year period and said that this was not possible, since labour laws applied. He felt that six months sufficed.

Mr L Fielding (DA, Northern Cape) agreed. If the mayor was entrusted with the management of huge amounts of money, there was no reason s/he could not be trusted to with the appointment of a manager.

Kgoshi Mokoena said that the municipal manager was not the only person who could perform these interim duties, since there were many acting managers who were involved in their performance. Thus the retention of institutional memory did not present such a big challenge. He said that although the Bill was not formally before the Committee yet, he was giving notice to the Chair that he would be proposing the amendment of this clause once it was put before the Select Committee.

Mr E Africa (Deputy Director-General: Systems and Capacity Building) said that the original legislation had provided that the manager’s contract continued two years into the new term to allow for administrative and technical considerations. There were not just political considerations to be taken into account. The Department had felt that one year was reasonable.

Mr Z Ntuli (ANC, KwaZulu-Natal) asked if the ward committees would continue to operate if the ward council was to be dissolved. He asked how these committees would function and to whom they would report.

The Chair said that the issue of public participation needed greater attention, since there was no requirement in legislation for Provincial Government to consult the community before dissolving the ward council..

Mr Peter suggested that the legal advisors should get together to discuss this issue and report to the Committee at a later date.

Mr Africa appealed to the Committee to draw the line between the purpose this Bill wished to achieve and the more fundamental policy issues. This Bill aimed to deal only with necessary short-term amendments. The issues being raised by the Committee on the public participation model fell into the scope of policy considerations and outside the scope of this Bill. This was a policy issue and not a legal one.

The Chair said that it could be dealt with as a policy issue or legal amendments could be made within the current advisory model.

The Chair referred to Slide 14 on page 5 of the presentation document, saying that this contradicted the other public service legislation. In terms of the Bill, a municipal official would have to resign from office (i) if s/he became a candidate for election to the National or Provincial Assembly; (ii) on the date s/he is nominated as a permanent delegate to the NCOP or (iii) on the date s/he is issued with a certificate in terms of the Municipal Electoral Act indicating that s/he has become a candidate for the election. In terms of other legislation officials only had to resign once they were elected to the new position.

Mr Fielding agreed, adding that this provision was far too severe, as the person was not even sure if they would be successful in obtaining the new position.

The Chair suggested that the Department should consult with the Department of Public Services and Administration on this matter in order to determine their approach to such matters.

Mr M Manyike (Chief Director: Fiscal Relations) said that he wished to add to the following comments to the briefing: He referred to Clause 25 and briefly explained that municipalities were not compelled to value public service infrastructure where there was no intention to levy rates on such infrastructure. He also referred to Clause 30 of the Bill and said that the proposed amendment allowed the Minister to intervene to ensure that excessive rates did not harm economic activity in the country.

The Chair asked if there was urgency to finalise the Bill within this term.

Mr Africa answered in the affirmative and added that one of the reasons for the urgency was the roll-out of property rates provisions.

The Chair suggested that the Department could ensure the smooth passage of Bills in future if they engaged the Committee early in the process. In this way the issues raised in the Bills could be addressed long before the Bills actually reached the Committee formally. It also would enhance relationships between the Department and the Committee.

The Chair adjourned the meeting