Deputy Minister’s address and Department of Provincial & Local Government Strategic Plan and Budget 2008/9

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Meeting Summary

Ms Nomatyala Hangana, Deputy Minister: Provincial and Local Government, briefly addressed the Committee on the pertinent issues with which the DPLG was working. There was strong emphasis on the reality that there were not enough resources to provide adequate services to all South Africans, and that this was the Department’s major challenge. She noted that monitoring was important as the municipalities were the coalface of delivery. The Policy Review Process that would engage on various issues would proceed.

Various members of the Department then responded to questions posed by the Committee in the previous meeting.

The Committee posed several further questions to the Department and requested written responses. These included what the ideal structure for the Department could be, local government’s role in housing, backlogs, building a non-racial society, the appointment procedures, one man parties, demarcations and the performance of municipalities after projects were consolidated. The Committee asked if the Department could transfer their reporting capacity to municipalities so that they could produce unqualified reports as well.

Meeting report

Address by Deputy Minister of Provincial and Local Government
Hon Nomatyala Hanagana, Deputy Minister of Provincial and Local Government, apologised to the Committee on behalf of the Minister for previous and current absences due to a busy schedule and much traveling. She stated that intergovernmental relations were very important to the Department. She commented on a perceived paradigm shift in the capacity of local government. Problem in delivery were said to arise due the fact that the cake must now be shared among all South Africans, not just among a select few. This was the reason that infrastructure could not cope with demand as it was never meant to serve all South Africans. Expanding it would be the principal challenge. She referred the Committee to the Policy Review Process that was meant to engage on various issues. This would not be an easy ride. In relation to the performance of municipalities, she said that the policies were in place, but they must now be implemented. Monitoring would now come into play and was important as the municipal level was the coalface of delivery. She and the Minister wanted to leave a foundation for their successors to take local government forward so that it could thrive. She recounted her own childhood experience of poor services and stated that each and every household must have a flushing toilet and running water. The unfortunate reality was that at this time the resources were simply not sufficient.

Department of Provincial and Local Government (DPLG) Briefing
Ms Lindiwe Msengana – Ndlela, Director General: DPLG, said that she and her team would be responding to the set of questions posed at the previous meeting, and she outlined the form the responses would take.

Mr Themba Fosi, Executive Manager- Governance, Policy and Research, divided the questions into three sets. The first consisted of unfunded mandates, the oversight role of provinces over local government, non viable municipalities with no tax or revenue base, metros not being able to focus on communities, the need to review functions that needed to be devolved to local government level and the need for the department to engage further with the committee on these matters. These questions related to the Policy Review Process. The Director General (DG) had presented a detailed report on responses and the DPLG had submitted this to the January Lekgotla.

The second set of questions focused on the development of a credibility framework. He noted that a toolkit had been released to this end and that there was a role for Parliament to promote corporate governance.

The third set of questions concerned capacity building in the Premier’s office including what the ideal structure for the DPLG could be. He referred to the 2006 Capacity Assessment study that had been used to develop an improvement framework. The trend that had emerged was the separation of the housing function from local government due to the funding bias toward housing over local government.

Mr Elroy Africa, Deputy Director General, DPLG, responded to the question on unfunded mandates. He noted that according to the Municipal Systems Act (MSA), there was a particular procedure that national departments and Ministries must go through in order to assign new powers to municipalities. He said that the DPLG must put a tracking system in place to check compliance with this, as non-compliance was a major issue.

Previously the question had been asked concerning the South African Local Government Association (SALGA), as to whether there had been an evaluation, and whether the country did get value for money. He said that local government was established on a constitutional basis, with Parliament providing oversight. SALGA had to report in terms of the Public Finance Management Act (PFMA) and was audited by the Auditor-General. The DPLG had a close relationship with SALGA but there was no legislative basis for monitoring, except in the case of the transfers SALGA received from the DPLG.

On lack of capacity, he replied that local government’s strategic agenda focused on capacity strongly. The DPLG provided hands-on support. It was a priority and the number of professional personnel deployed so far was approximately 1 100. The DPLG, together with the local government Sector Education and Training Authority (SETA) and SALGA, were undertaking a skills audit to be completed in 2010. The DPLG was looking at recruitment and retention strategies with the National Treasury. Retaining expertise was a priority for 2008 and the DPLG was finalising a proposal in the next budget.

On the matter of the performance contracts, the DPLG had performance management regulations. All municipal managers were required to sign performance contracts. The approximate percentage stood at 74% of managers who had signed. Steady progress was being made but the drive would continue until the Department reached 100%.

The previously highlighted issue of fighting between municipal managers and mayors came down to a range of problems. The DPLG was seeing how it could refine and strengthen the performance management contracts to clarify this relationship and the respective powers between politicians and officials. SALGA was conducting research on the political – administrative interface and the DPLG would watch that study carefully.

On the question related to the Vuna awards and the performance of municipalities who had been awarded, Mr Africa responded that the DPLG did not have a tracking mechanism for this. The lessons that could be learnt from the Vuna awards could be found in a short document on the best practices of the winning municipalities, which was distributed to municipalities.

There was a perception that corruption was rife. The Committee had asked how effective the anti-corruption strategy was. Mr Africa responded that the DPLG had a national strategy in place. Five provinces had already launched and were committed to it. There was an attempt to undertake a global assessment of the impact of the pilot project but the measurement of corruption was difficult.

The Committee had asked if the DPLG had engaged the Special Investigations Unit (SIU) in this regard. Mr Africa reported that the Department used the Municipal Systems Act, which made provision for the MEC of provincial government to respond to allegations of corruption. Certain municipalities had agreements with the SIU and the Department was discussing options with them, but no conclusions were reached as yet.

Mr Africa then referred to the question relating to whistle blower protection and noted that there was legislation that protected whistleblowers. He acknowledged that training would be needed in the implementation.

Mr Mizilikazi Manyike, Executive Director: Intergovernmental Fiscal Relations, DPLG, spoke to the tax base of municipalities, the related concern that local government would continue to be dependent on national government handouts and the issue of re-demarcations.

Mr Manyike said that statistics were bandied about that municipalities generated 90% of their own revenue internally, but the bulk of revenue generated from rates went to provincial or national government. Municipalities would continue to be dependent, in part, on national government. The reason was that certain municipalities would not be able to generate sufficient revenue, due to their location in impoverished areas, even if they were assigned tax powers. Some responsibility would have to be borne by national government. This was the reality on the ground.

The Committee had asked if the local government needed a “one size fits all” approach regarding the equitable share. Mr Manyike responded that the presentation might have caused confusion. Revenue was not distributed on a geographical basis, but rather the allocation was formula driven. This formula was based on statistics of the features of a province. The formula approach was meant to promote transparency and to ensure that the issue would not become politicized, so it was an objective basis. Formulas were not static but would be refined over time to benefit municipalities.

The Committee had also queried the fact that Regional Services Council levies were not reaching municipalities, and Gariep municipality was noted as an example. Mr Manyike explained that the Minister of Finance had abolished this levy for local municipalities. The DPLG was attempting to find a replacement for this revenue stream.

The Committee had asked what the DPLG's role in achieving macroeconomic objectives such as inflation targeting was. Mr Manyike replied that the Ministry was responsible for the implementation of the Municipal Rates Act and this was one of the areas where the Department would make a contribution. This legislation would allow other sectors of the economy to query the administration of rates if they felt that this administration infringed on the national economic policies.

In relation to unfunded mandates, Mr Manyike reported that the DPLG contributed through the Cabinet process and were investigating proposed policies to improve the financial health of municipalities.

There was previously a comment by a Member about the funding of clinics in Ethekweni. Mr Manyike replied that this legislation was not peculiar to this municipality but applied across the board. It was defined as an exclusive provincial function and was no longer funded by municipalities - thus it became an unfunded mandate.

Mr Yusuf Patel, Deputy Director General: Free Basic Services and Infrastructure, DPLG, said that the targets and millennium goal were being dealt with in a targeted approach, following on from the bucket eradication programme. The DPLG was assisting with achieving targets for water, sanitation and electricity, and was working with municipalities on a planned link with Integrated Development Planning (IDP).

The Committee had asked what the bulk services needs were. They also asked for a consolidated national overview. Mr Patel replied that the DPLG was accelerating toward the individual targets. The Department had proper interim measures in place with municipalities. There were still difficulties and the Department was trying for better sectoral integration. There was progress toward decent sanitation, and bucket eradication was a step toward this. There were some challenges where areas were not clearly defined. He said that sometimes backlogs were eradicated but then new backlogs emerged, meaning areas had to be revisited.
 
On the management of the Municipal Infrastructure Grant (MIG), Mr Patel responded that spending had improved significantly. Spending capacity had doubled to about R 7 billion in the financial year. 100% had been spent in certain municipalities and there was an average spending rate of approximately 98%. The Department had stopped municipal grant funding to 37 municipalities. 34 of them were able to improve spending and the DPLG was then able to transfer funds again. The three where spending did not improve did not receive their allocations.

Ms Fortunate Makhubu, Executive Manager: Municipal Infrastructure Grant, DPLG, responded to the queries on bucket eradication. The DPLG had specifically engaged with Mpumalanga and had agreed that a site visit to the constituency office was warranted. Members were welcome to join the DLPG in this visit.

Ms Tumi Mketi, Deputy Director General : Monitoring and Evaluation, DPLG,  reported that the DPLG now had identified problems and intervened timeously and were working with SALGA on this.

The Committee had wanted to know who evaluated the DPLG. Ms Mketi responded that this was undertaken within government. All departments and provinces took a standardised approach through the process of the  Isimbizo. The DPLG worked with other departments to co-ordinate progress.

Mr Tozi Faba, Deputy Director General: Corporate Services, DPLG, commented on the accuracy of the asset register and supply chain management. He reported that the DPLG had a detailed asset register that met with minimum National Treasury requirements and also had an asset control committee. The excess assets from the disposal process had been donated. There had been a challenge around the unserviceable IT equipment. National Intelligence Agency (NIA) needed to “sanitise” the IT equipment first, and some of it had now been scrapped. The asset register was being updated accordingly. There was a review of the Asset management System and the Department had retained outside services to this end. He also highlighted their move from cash based accounting to an accrual based accounting system.

Supply chain management was in place and was lead by a team comprised of the DG and the DDGs.

Mr Faba noted that with regard to bid adjudication and awarding of tenders, all responsibilities were delegated in writing. DPLG did report to the National Treasury on a monthly basis. According to the National Treasury reports, R38.3 million had been awarded in total and R29.7 million of that was awarded to black enterprises.

Mr Faba then moved on to report on the financial statements. The DPLG had zero instances of financial misconduct and had submitted their annual report to the Financial Services Commission. The Department had launched an internal corruption campaign as well as their leadership and management programme.

The DPLG’s skills development project was targeted mainly at technical groups. Seminars were held to workshop the senior management team. This included in-house and resource training. In 2007/8 DPLG had done well on training, spending 1,3% of budget (more than the requisite 1%) on training. Training was going according to the financial plan for the financial year. The internship programme had trained 33 people in total and two of these were absorbed into the DPLG.

Mr Faba said that the Department experienced problems with the recruitment of suitably qualified candidates.  Responses were outsourced but interviews were conducted internally. Human Resources was working with line functions to source better staff, concentrating on the recruitment of the people with disabilities and IT staff. The high staff turnover led to constant pressure to recruit. An impediment to this was the lengthy process involved in appointing staff to posts.

Mr Faba noted that in relation to customer service, staff were encouraged to provide good and friendly service.

With regard to infrastructure, the Department was managing the relationship with the Department of Public Works (DPW). Monthly and quarterly meetings were held with management. An inhibiting factor was that the DPLG operated out of four separate buildings. To overcome this problem, regular imbizos were held to stay in touch with all staff.

Mr Faba finally reported that the DPLG communications strategy included print media, radio and television, but he commented that the print media was very biased

Discussion
The Chairperson left the DPLG with the following questions to be responded to in writing:

-What was the ideal of the department in order for them to be able to discharge their responsibilities. This was related to the configuration of the ministries and the MECs and the linkages with national government.

-Housing was a very important issue and required dedication from local government. He asked what the possible linkages could be.

-Backlogs had not been quantified in South Africa and this meant that contributions and progress could not be measured. The DPLG should engage as this was on their level.

-The Chairperson commented on the Auditor General’s reports that the municipalities were performing poorly. He said the challenge here was for the DPLG to transfer their capacity to municipalities as they regularly received qualified reports.

-The issue of building a non-racial society was a municipal issue and could be achieved through planning to reverse the separate development of the past. He said that development was not government driven. He stated that the DPLG should require mixed land use and mixed development of municipalities. He added that lessons in this could be learnt from Botswana.

-He asked why other districts could not learn from those that were doing well.

Kgoshi L Mokoena (ANC; Mpumalanga) pointed out a contradiction in the DPLG reporting, in that the remark was made that they handled their own recruiting, yet also there was an acknowledgement that they outsourced response handling. He asked for clarity on this.

Mr N Mack (ANC; Western Cape) raised a concern peculiar to the Western Cape. He said that they could not restrict one man political parties. The situation was such that these parties often ended up with deciding powers. This destabilised the municipalities as all alliances were constantly changing. He asked how the DPLG could address this challenge.

Mr Z Ntuli (ANC; Kwazulu-Natal) asked for a progress report on the performance of municipalities after projects were consolidated.

The Chairperson referred to demarcations that changed every 5 years and asked if this was helpful in the deployment of resources.

These questions would all be responded to in writing.

The meeting was adjourned.

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