Local Government Laws Amendment Bill [B28-2007]: Municipal Demarcation Board Submission, Department of Provincial and Local Gove

Meeting report

Local Government Laws Amendment Bill (the Bill): Department of Provincial and Local Government (DPLG) Responses and deliberations
The Chairperson explained the process that needed to be followed before the Bill was approved by the Committee.  He proposed that discussions on the proposed amendments be continued during this meeting and concluded so that final acceptance of the Bill could take place on Thursday, 27 February 2008.

He summarised the progress made during the previous day’s deliberations and the areas of concern that were raised by the Members.

Discussion
Mr Myron Peter, Chief Director: Institutional and Administrative Systems, Department of Provincial and Local Government (DPLG), presented proposals and revised draft amendments to address the concerns raised by the Committee.

In order to allow ward committees to continue to function during a Section 139 intervention, it was suggested that clauses 3(a) and 3(b) were inserted to allow for the appointment of an acting chairperson for each ward committee and that such an appointment be made by the administrator after consultation with the members of the ward committee. Clause 3(c) made provision for the reimbursement of out-of-pocket expenses incurred by the Acting Chairperson in the course of carrying out his/her duties.

Draft amendments to clause 6 were suggested to provide for the development of a policy and criteria applicable to the reimbursement of expenses incurred by employees as well as the calculation of such expenses.  It was felt that the MECs were better placed to monitor the application of such policies and criteria than the DPLG.  In any event, the Bill allowed for future regulations to be promulgated by the Minister.

The DPLG suggested that the period of one year under clause 11 be amended to 6 months.  Clause 13 was aligned with the provisions under the Public Service Amendment Bill that allowed for staff members to be elected to public office and for regulations to be promulgated in order to impose limitations on the election of staff members.  Clauses 19 and 21 were aligned with the Supply Chain Management policies and regulations. The technical changes suggested by the Committee to Clause 17 were included.  Clause 22 allowed councilors a period of 60 days to declare their interests and it was felt that two months was necessary to obtain the required information.

With regard to concerns raised about the wording of clauses 19 and 22, Mr Peter referred to the definition of “in the service of the state” and the prohibition on awards to such persons that were included in the Local Government: Municipal Finance Management Act (MFMA) and the Municipal Supply Chain Management Regulations.  The term “close family member” was referred to in the schedules to the MFMA and it would therefore be consistent to use the term in the Amendment Bill as well.

The Chairperson agreed that consistency in legislation was important.

The proposed amendments to Clauses 5, 6 and 11 were agreed to.

Mr Z Ntuli (ANC, KwaZulu-Natal), with reference to Clause 13, asked why the term “Member of the National Assembly” rather than “Member of Parliament” was used and why there was later reference to “delegates” rather than “members”.

Ms F Nyanda (ANC, Mpumalanga) understood that the term “delegate” was relevant to the National Council of Provinces (NCOP).

Adv Z Adhikarie (Senior Legal Adviser, Parliament) agreed with Ms Nyanda and explained that the NCOP and Parliament were two distinct concepts.  Legislation consistently referred to “Members of Parliament” and “Delegates to the NCOP”. It would create an anomaly if this was changed to “Members of Parliament”.

Mr Peter said that the concern was to align this Bill with the Public Service Amendment Bill and this would not be achieved if different terminology was introduced.

The Chairperson commented that it was important to ensure that the language used in legislation was consistent and to eliminate discrepancies.

Adv Adhikarie added that if different terminology was used, it created uncertainty around the intention of the legislation and it was assumed that the different terms had different meanings.

Mr Peter agreed to re-draft any inconsistent clauses and to re-submit the amendments.

The proposed amendments to Clauses 13, 19 and 20 were agreed to.

Mr Ntuli asked for clarity on the role of the NCOP under clause 17.

Adv Adhikarie explained that subsection 4(a) of section 106 of the Municipal Systems Act was amended to allow either the Minister or the NCOP to request the MEC to investigate incidences of maladministration or malpractice, in a municipality.  Subsection 4(b) was amended to allow for the report to be sent to the requesting party. Therefore if the Minister made the request, the report would be sent to the Minister, and if the NCOP made the request, the report would be sent to the NCOP.

The Chairperson explained that section 139 of the Constitution required the NCOP to be informed of such incidences but the role of the NCOP after that was not described.  Subsection 4(b) was intended to address this weakness in the system and ensure that the MEC completed the process, and that the outcome was reported.

Adv Adhikarie said that clause 17 referred to “maladministration, fraud, corruption or any other serious malpractice” and asked whether anything else needed to be included.

The Chairperson suggested that the point must be re-considered and that any suggestions were submitted at a later stage.

Mr Ntuli suggested that the rest of the clause’s text must be amended to include reference to the NCOP in addition to the Minister, and use wording such as “in the opinion of the Minister or the NCOP”.

The Chairperson, in relation to Clause 22,  explained the need to allow a period of time for a new appointee to gather the information necessary for the declaration of interest.  He asked Members whether 60 days was sufficient for this purpose.

Mr A Manyosi (ANC, Eastern Cape) agreed that 60 days was considered a fair period. 

Mr Ntuli wanted to know what the consequences would be if no declaration was made.

Mr N Mack (ANC, Western Cape) asked why the declaration was required after the person was appointed.  If a candidate’s interests were known before he was appointed it might avoid potential problems later on.

The Chairperson remarked that a declaration of interests was not normally required of all potential candidates.  The intention of the clause was to ensure that any potential conflicts of interest would be known once a person was employed,

Mr Peter said that there were other implications if a declaration of interest was requested prior to appointment, for instance affecting how the position was advertised.  It may also be considered prejudicial and an unfair labour practice in terms of the employment laws.  The declaration of interests was included in the Public Service Regulations and was considered a norm.

The Chairperson confirmed the need to create uniform norms and standards.

Mr Mack said that problems with officials who were involved in many companies could be avoided if the question of interests was asked during the interview, particularly if the position involved the awarding of Government tenders.

The Chairperson explained that such a question may be regarded as prejudicial.

Mr Mack asked why discounts enjoyed by officials were not included in the list of items that had to be declared.  He cited the example of large discounts granted to officials when a vehicle was purchased from a certain car manufacturer.

Mr Peter was not able to answer the question, but said that the list of items under 5A(1) was similar to the schedule applicable to councillors and managers. The Committee was free to add discounts to the list if this was a matter of concern.  In the interests of conformity, the schedules applicable to councillors and managers would then require amendment.

Mr Mack said that Members of Parliament were required to declare discounts greater than R2 500.

The Chairperson said that discounts and vouchers were dealt with in the Regulations.  In principle, any benefits must be declared

Ms Vuyo Ndah, Senior Manager, Legal Services, DPLG, pointed out that 5A(2) dealt with subsequent changes in the nature and details of a staff member’s interests.

Mr A Worth (DA, Mpumalanga) said that clause 14 (1) in effect allowed for the Minister of Public Service and Administration to become involved in matters affecting local government employees.  He asked the Chairperson for his comments on the issue.

The Chairperson said that the Minister of Provincial and Local Government was the responsible Minister and that consultation only was held with the Minister of Public Service and Administration.  The ultimate responsibility and decision-making powers remained with the Minister of Provincial and Local Government.

Mr J le Roux (DA, Eastern Cape) asked why consultation had to take place with the Minister of Public Service and Administration and not any other Minister, such as the Minister of Labour.

Kgoshi L Mokoena (ANC, Limpopo) pointed out that the phrase “may” rather than “must” was used and the Minister was not prevented from consulting with any other Minister.

The Chairperson said that the Minister of Public Service and Administration was considered to have the expertise in this particular area.

Municipal Demarcation Board (MDB) Submissions on the Bill
The Chairperson then invited the Chief Executive Officer of the Municipal Demarcation Board (MDB) to present the Board’s comments and concerns.

Mr Hillary Monare, Chief Executive Officer, MDB,  said that his comments were confined to issues relevant to the mandate of the MDB.  The issues were not new and had been previously raised with the DPLG.  Although some matters had been addressed, others remained outstanding.

The MDB was concerned that the proposed amendment to Section 23 of the Municipal Demarcation Act would result in delays and cause problems with service delivery.  Mr Monare explained that as soon as a boundary was determined, the MDB advised the Independent Electoral Commission (IEC).  The IEC determined whether voters were affected by the boundary determination or not.  If voters were affected, the boundary change took effect from the next municipal election date.  If voters were not affected, the MEC decided on the effective date and must publish a notice to this effect.  The proposed amendment now required the MDB to inform the Minister of Finance at least 6 months prior to the commencement of the municipal financial year (July each year) of a boundary determination.

Mr Monare explained that in effect, the effective date of a boundary change could therefore only take place on one of two dates – either the date of the next municipal election or the beginning of the following municipal financial year.  The current provision for the MEC to determine the effective date of a boundary change therefore fell away.  The onus was now placed on the MDB to inform the Minister of Finance of a boundary change.  However, once the determination process was completed, the MDB had no further role to play.  In addition, it was no longer possible to deal with urgent cases or implement a necessary change at short notice.

The Board had submitted its programme for the 2009 and 2011 elections to the DPLG.  Amendments to the Municipal Demarcation Act at this point in time would be detrimental as the district boundaries for the 2009 elections were scheduled for handover in August 2008.  Should the amendments be passed, the earliest effective date of a boundary determination would be July 2009 and this would be too late to align the boundaries for the 2009 local government elections.  If the amendments had to be made, the Board requested consideration of its written suggestions to allow the issues with the National Treasury to be dealt with in a less rigid way.

The MDB suggested that Section 34 of the Municipal Structures Act be repealed rather than amended.  In this case the determination process would become effective. The need for the MEC to resolve a council as a result of a boundary change would fall away should the IEC consider such a change to affect voters.

The Board’s objections also applied to the proposed amendments to Sections 84 and 85 of the Municipal Structures Act, which included the six-month notice period to the Minister of Finance as well.  The MDB suggested that the period was shortened as 6 months had a negative impact on the timeframe.  The Board was unable to make recommendations to a municipality earlier than at the end of the year and this does not allow sufficient time for the recommendations to be included in the municipal budgeting process before the start of the next financial year.  In addition, if there was a change in responsibility (e.g. for the supply of basic services such as water), the change could not be implemented before the start of the following financial year.

The Chairperson said that he had discussed the issues with the chairperson of the MDB and had received a letter from him, outlining the Board’s concerns.  He said that the problem was the determination of the effective date of a boundary change.  The date would be either the date of the next local election or the beginning of the municipality’s next financial year.  The requirement for the MDB to advise the Minister of Finance at least 6 months prior to the effective date was to allow the Department of Finance to prepare a budget.

Mr Monare proceeded to read out the proposals from the MDB for amendment of sections 84 and 85.

The Chairperson asked for copies of the Board’s proposals to be made and distributed to the Members of the Committee and the delegates from the DPLG.  He expressed his concern over the gradual erosion of the provinces’ authority and said that if the MDB had to take over the role of the MEC in this matter, it further undermined the MEC’s authority.

Mr Peter explained the rationale behind the proposed amendments.  The DPLG and National Treasury determined the equitable share for distribution to municipalities.  A formula was applied, taking into account for instance the provision of free basic services and the population of the municipality.  The equitable shares were published in the annexures to the Division of Revenue Act.  There were both operational and legal issues involved when boundaries were changed.  If it was necessary for the equitable share to be re-allocated, a change to the Division of Revenue Act was required.  The DPLG had received a request from the Department of Finance to streamline the process, to avoid changes to the Division of Revenue Act every time there was a boundary change.  The Department of Finance had included provisions to cater for boundary changes in the Municipal Fiscal Powers and Functions Bill, but agreed to leave the clauses out provided the changes were made to the other local government laws.  He suggested, if possible, that a representative from the National Treasury explain the issues to the Committee.

The Chairperson explained that the budget process started 18 months before the commencement of the financial year.  He asked what would be the situation if there were no financial implications to a boundary change.

Mr Monare agreed that this was technically possible.

The Chairperson said that responsibility for ensuring that the applicable laws were changed was delegated by National Treasury, and it was important that the trust placed in DPLG by Treasury was not violated.  It was important that a good law was passed that allowed for the ability to respond.  He proposed that Mr Monare and the legal representatives met during the lunch break to consider the MDB’s proposals.

Mr Peter remarked that there was pressure from municipalities when boundaries were changed and their financial base was eroded as a result.

The Chairperson responded that poor municipalities could not be condemned to be poor forever and the goal was for all municipalities to become financially independent.

After the lunch break, Adv Adhikarie gave feedback on the discussions held with the MDB over the lunch break. 

Adv Adhikarie noted that agreement was reached on the proposed amendments to Section 23 but there was not enough time to debate the amendments to Sections 84 and 85.  She requested permission to discuss the amendments to the latter two clauses after the meeting was adjourned.

With regard to the proposed amendments to Section 23, the MDB was concerned that there was no provision for exceptional cases to be included in the budget for the next financial year.  She agreed that it was unreasonable not to make provision for exceptional cases and it was suggested that an additional clause 4(c) was added to allow both the Minister of Finance and the MEC to determine the effective date of a boundary change that would give rise to a shorter notice period to the Minister of Finance under exceptional circumstances.  Six months was still considered to be reasonable, but the MEC would have discretion under exceptional circumstances.

Mr Peters added that although the MEC would have the power of determining the effective date of a boundary change, both the MEC and the Minister of Finance had equal footing when dealing with the issue of funding.

The Chairperson asked Mr Monare if the proposal was acceptable.

Mr Monare replied that he was not entirely comfortable with the proposal but could live with it.

Mr Le Roux asked Mr Monare to explain what he was not comfortable with.

Mr Mack asked for clarity on what was considered to be an exceptional circumstance, who would determine that it was to be regarded as such and whether it would be dealt with urgently.

Mr Monare replied that although he was unable to explain what would be considered to be exceptional circumstances, it was clear that the preference of the Minister of Finance would prevail, as the Minister had more power than the MEC.  He wondered what would happen if there was no agreement between the Minister and the MEC on whether a case showed exceptional circumstances or not.  He conceded that the six-month notice period would remain.

The Chairperson asked whether the six-month notice period was acceptable to the MDB.

Mr Monare replied that the rationale was acceptable.

Adv Adhikarie said that the determination of “exceptional circumstances” needed to be phrased in such a way that it was at the discretion of the Minister of Finance and the MEC.

Mr M Ncolo, State Law Advisor, Office of the State Law Advisor, suggested that a phrase like “exceptional circumstances” should be avoided when dealing with the giving of discretionary powers to the Minister and the MEC, to avoid controversy.

Mr Peters said that in general, legislation allowed for consultation between Ministers and the Executive.  It should be expected that they would act in a manner of mutual interest rather than in a way where one would dominate the other.

The Chairperson said that Members’ interests lay primarily with the Provinces.  He was concerned by the steady erosion of the powers of the MEC.  He asked Members to consider the arguments and either accept or reject the proposed amendments.

Mr Mack said that he supported his province and region.  His first port of call would be the MEC, before he would go to the Minister.  He supported the Chairperson’s views on this matter.

Ms Nyanda agreed with Mr Mack and the Chairperson.

Mr Le Roux said that in practice, there could be exceptional circumstances where there will not be enough time to arrange funding.  In such cases, the MEC would in any event have to consult with the Minister.  He was happy if the powers were left with the MEC but pointed out that the MEC would not be able to do anything without the co-operation and financing from the Minister of Finance.  The current boundary changes were mostly District Management Areas (DMAs) and at this point in time, the boundaries were known and there was enough time to finalise changes.  He did not consider that there was an immediate problem.

The Chairperson suggested that the debate was continued the following day but urged Members to make a decision on this point.

Mr Monare said that he had to return to Pretoria the same day but he had submitted written argument. 

The Chairperson requested that he considered delaying his return so that he was present to give his input.

Mr A Moseki (ANC, North-West Province) said that this Amendment Bill placed Members in a very tight corner as they should be allowed the opportunity to take up the issues with their provinces and were not given the opportunity to do so.  The views of the Provinces were therefore not being accommodated.

Mr Monare thanked the Committee for the opportunity to present the MDB’s view.  He pointed out that other issues of major concern were excluded from the Bill, especially the issues around the municipal capacity assessments.

After general discussion around the position of the provinces, the Chairperson said that consideration of the Amendment Bill would continue the next day.

The meeting was adjourned.