PORTFOLIO COMMITTEE HEARINGS 9, 10+12 MAY 2000
RESPONSE TO SUBMISSIONS ON PERFORMANCE MANAGEMENT AND LOCAL PUBLIC ADMINISTRATION AND HUMAN RESOURCE CHAPTERS IN MUNICIPAL SYSTEMS BILL

1. PERFORMANCE MANAGEMENT
There is broad support for this chapter from a large number of submissions received. However, a number of points have been raised for consideration. Broadly speaking, these could be categorised into:

1.The objectives and scope of the Performance Management
2.Setting of Key Performance Indicators.
3.Performance reporting.
4.Performance management and interventions.
5.Performance Auditing.

1.1The objectives and scope of Performance Management System
Isandla and GAP argue that section 35 implies that Performance Management System is established for internal structures and thus focuses it purely on organisational/management efficiency questions at the exclusion of external social justice and equity issues. Even though the organisations do not fully explain what is meant by this, it could be inferred that they mean that the Bill does not explicitly state that the Performance Management is established for purposes of ensuring sustainable development that prioritises the plight of the historically disadvantaged and the most marginalised sections of the society.

That the Chapter is not explicit on this is true. But read together with other chapters, especially IDP chapter, Bill is not necessarily silent on the issue. It is important to realise that PMS is about monitoring performance of municipalities on IDPs, which deal with developmental issues. It is for this reason that section 35 says municipalities must establish PMS in line with the objectives, indicators and targets contained in its integrated development plan. It is in the IDP process where the interests of marginalised are dealt with. To this extent section 23 1(b) obliges municipalities to include those "communities which do not have access to basic municipal services". Even more, section 20 of the IDP chapter invokes section 153 of the Constitution, which obliges municipalities to perform its developmental duties.

It is therefore not entirely correct to suggest that Performance Management is internally focussed and does not deal with social justice and equity in developmental terms. On the contrary it could be argued that the entire Bill rests on the principle of transforming local government in a manner that municipalities address social justice and equity. It could also help to look beyond the law and say how the processes provided for in the legislation could be utilised to ensure that these issues are addressed. In particular, IDP and the setting of key performance indicators.

1.2 The setting of Key Performance Indicators
To start with, SALGA argues that they are the ones who should set general Key performance indicators rather than the Minister. This is their long- standing position despite long rounds of discussions with them. This issue needs to be contexualised. In this, it is important to look at what are indicators, what are they used for, who sets them and what are international experiences in this regard. Broadly speaking, indicators are measurement variables used to generate data that could be used for various purposes. Anybody can set indicators, collate data to be used for any purpose. In our case, government which has the responsibility to monitor, support and intervene in local government will set indicators that will yield data to enable pro-active action to remedy the situation, through use of various mechanisms.

There is therefore nothing wrong with government setting national indicators for it is its prerogative. The general indicators the Minister is to set are for government purposes and the process thereof will have SALGA playing a prominent role as an Association of municipalities. This is standard practice internationally where countries have PMS. For example in UK, Australia, New Zealand the governments set KPIs after consultation with associations of local government. There have been instances where associations set indicators but those would either be complimentary to those set by government or set for own limited purposes. In Australia, the associations started performance measurements and would thus set indicators but government is increasingly assuming this responsibility for a number of reasons. In all instances where associations set indicators this was never seen as precluding government from doing so.

It is important to note that internationally, Associations of local government work with government in setting general indicators and support local government in setting local indicators. This is the role we think SALGA should play. Nothing stops the organisation, though, to set own indicators if they so wish but they cannot preclude government from doing so. it would however be desirable that SALGA support the government process of setting a single set of national indicators. The overwhelming support for government setting national indicators by a large number of submissions need to be noted in this regard.

The Gender Commission and Gender Advocacy Group argue that the Bill should recognise the need for KPIs to be desegregated in order to deal with gender questions. This point is noted with appreciation. The question however is, how should this be dealt with? Is it a matter of inserting qualifiers in the Bill or a matter of leaving it to guidelines or regulations? Government would prefer the latter as gender will not only be the variable look at in dealing with various groupings in communities.

1.3 Performance Reporting
IsandIa argue that the Chapter does not consider implications of collating qualitative data given the time and available capacity to do so. This is a real concern. It is easy to collate data on efficiency and output indicators for this come in quantitative terms (figures) and it is the information the municipalities would be in control of. However data on outcomes or impact require research to collate and this usually takes time. Usually, organisations undertakes surveys and in-depth research to do this.

The Bill requires municipalities to report on indicators on an annual basis. It is doubtful if municipalities will manage to produce data on outcome/impact indicators given the time-frames. It would be proposed that Isandla's submission be seriously noted but deferred to regulations as these are matters of detail.

IsandIa further argues that the role of communities in the establishment of PMS, monitoring and evaluation is not clear other than as recipients of the report (yet as part of the public). This is also an important submission given that it is our argument that the system rests on the philosophy that says communities are the key drivers of change at local level. It is important to give life to the provision in section 7(1)(b)(ii) by way of reflecting how communities are to be involved. Also it is important to recognise communities as the primary recipients of the report rather than just as members of the public as implied in the Bill. It is crucial to outline processes of reporting, feedback and recourse if communities are unhappy with performance. Important as they are, all of these points may not be dealt with in the body of the Bill but in the regulations as they are matters of detail. For now it may be necessary to insert the word community structures in section 43(a) for it to read:

"provide copies to community structures and make it accessible to the public...."

1.4 Performance Management and interventions
Cosatu submits that the initial clauses, which provide government recourse in the case of poor performance, have been deleted without justification. Even more, they argue that Chapter 10, which was initially dealing with interventions, has been substantially watered down. What is left is lack of clarity as to what happens when there is perpetual poor performance. The answer to this has been that failure to perform constitutes failure to fulfil an
executive function and in that case, provisions of section 98 will kick in. This is true, but clause 98 remains open-ended. It does not state unequivocally what happens when the MECs investigations point to non-performance. It is also not clear what the relationship is between these steps and those of 139 of the Constitution.

There is a need to clearly link or cross-reference clause 98 with the PMS chapter and even more clarify the provision of this clause with the activation of section 139 of the constitution.

1.5 Performance Auditing
The Auditor-General raises a number of issues in this regard. First, he says the Bill should be clear as to who exactly should undertake performance audits. Clause 41 says municipalities, external auditor or the Auditor-General. This provision came when earlier submissions suggested that it is not always the Auditor-General who undertakes audits but external auditors contracted by municipalities as well. The clause therefor sought to provide flexibility and accommodate all available options. The Auditor-General has however highlighted that his office has the authority over all government auditing and where they cannot audit themselves, they procure auditing services for municipalities. This is therefore how external auditors come into the picture. It is therefore necessary to reorganise clause 41 as to read.

"The results of a performance measurement _______ by the Auditor-General or any other external auditor authorised by the Auditor-General"

This will go a long way to provide the necessary certainty as to who should undertake performance audits.

The AGO also argues that government auditing dealt with in the Auditor-General's Act and therefore it may be inappropriate for the Minister to develop regulations in this regard as clause 4b(f) proposes.

This may be true only to the extent that the regulations encroach on the powers of the Auditor-General. If it is the regulations dealing with peculiarities of municipal performance auditing not dealt with in and aforesaid Act, there should not be any problem with the Minister developing regulations to give practical effect to the provisions of his Act. This would naturally be done in consultation with the AGO.
Further, the AGO makes comments on specific clauses.

Clause 42
It would not be necessary to insert the proposed wording as the concern is covered in clauses 31(a) and 38(d) of the Bill. The municipalities are required to review performance of the previous year against targets and take steps. Besides the regularities will deal extensively with the performance reports. The insertion about statements by the Auditor-General and the period within which to report will also be dealt with in the regulations.

AGO argues that clause 45 should have an additional sub-clause requiring the Minister to state intended remedial action by government given the performance of local government. This can be done by way of inserting 45(_) reading"

"The report must include intended remedial action"

The AGO would furthermore like to understand what happened to the earlier version, which provided for the auditing of the Minister's report. This was deleted because we felt that it may not be necessary as the Minister's report will be based on audited original reports by municipalities.

2. LOCAL PUBLIC ADMINISTRATION AND HUMAN RESOURCES
There is also a broad support for this chapter save for a number issues raised in the submissions. These could be organised into six broad categories.

1Fixed term contracts and implications for existing CEO's.
2.Disclosure of salaries and benefits of Municipal Managers.
3.Jurisdictional issues.
4.Powers and functions of the municipal managers.
5.The code of conduct
6.Definitions

2.1 Fixed term contracts and implications for existing CEO's
Bill proposes that municipal managers and the second layer be employed on fixed term contracts and that municipalities should find a way of implementing this provision. Consequently, a number of issues have been raised including the issue of what happens to existing CEO's who already have long-term contracts.

This is an issue and requires careful consideration. The current legal opinion is that moving anybody from long-term contract to short-term one amounts to alteration of conditions of service. Further, that can only be done in consultation with people concerned and that this should be accompanied with improvement in the rewards to make up for possible loss in the case of the contract not being extended.

There are two possible ways to deal with this issue. One is to go by the legal opinion and say municipalities should deal with the issue and government should provide guidelines in line with the applicable labour legislation. These will include the need to consult, negotiate and make sure that the contracts provide for favourable reward conditions. The legal opinion says if the municipalities can satisfy these requirements, they will not loose a case if the incumbent institutes legal proceedings.

This option may, however, have short term cost implications for municipalities as their salary bills may be affected.

The second option would be an extreme one. That is, to look at the opportunities offered by the restructuring of local government, especially the Demarcation process and the implementation of the Municipal Structures and Systems Acts respectively. The Demarcation process is going to change municipal boundaries and thereby change the job scale for managers. The Municipal Structures Act and System Act impose new responsibilities and thereby change the job scope for managers. On these basis, it can be argued that the municipal managers posts become new posts (from the old CEO's/Town Clerk) posts and can therefore be advertised as such. The Municipal Systems Bill has a new name for the head of the municipal administration any way. Nobody has a claim to that post yet.

The current crop of CEO's can therefore be re-deployed in different roles in the administration. This is the route some big municipalities like Johannesburg are already following. In any case this is going to happen anyway as municipalities amalgamate. The question that has arisen is whether these CEO's will not charge municipalities with constructive dismissal. The legal opinion is that if this happens, municipalities will win as they have the prerogative to create new posts requiring a new set of skills and capacities. Clearly the municipal manager's post is to be different from what CEO's are traditionally accustomed to. The problem will only arise if their salaries and benefits are negatively affected. It would therefore be advisable to re-deploy them at their current packages. Because these managers are likely to be in the second layer of management, the issue of contracts for them will still arise. In this instance, option one will kick in. That is, municipalities will have to negotiate with them and keep them at the current or better packages. Government will provide guidelines in this regard.

Therefore, either way, there will be costs to municipalities. These would however be necessary costs.

2.2 Disclosure of salaries and benefits
Submissions received suggest that this may be unconstitutional as it encroaches on the right to privacy. It is certainly not the intention of the Bill to intrude on people's privacy. There is however a need to balance that right with the need for transparency and accountability by those entrusted with the responsibility to manage public funds. The idea is not to disclose specifics about the remuneration of particular managers but to disclose salary and benefit scales associated with senior posts for citizens to know how their money is utilised. This happens in the public service where government stipulates the scales when advertising posts. This can only assist to bring about accountability as communities will engage with municipalities in this regard.

Perhaps the current clause is strongly worded and could cause anxieties. It is therefore proposed that it reads:

"cause the salary scales and benefits associated with the posts of the municipal manager and eve...."

2.3 Jurisdictional issues
Fedusa argues that the Bill cannot deal with the issues in Clause 62 and that on the issues raised in clause 66 these are Bargaining Council issues. They propose that the least the Minister can do is to ask the Bargaining Council to deal with the issues. Two points need to be made in this regard. First, the Minister has a right to legislate on any matter relating to transformation of local government, including the internal administrative matters as long as the provisions do not conflict with existing legislation.

The Constitutional court ruling on the Municipal Structures Act is instructive here. Second the Minister cannot require the Bargaining Council established by agreement between labour and employer organisations in terms of the Labour Relations Act to do anything. What he can do is to place obligations directly on municipalities and it will be for them to find ways of ensuring that the obligations are fulfilled. If they would want to pursue the issues through collective agreements is up to them to determine. The Minister can only hold municipalities accountable and not the Bargaining Council. This position was also explained by the Executive Director of NEDLAC, Mr Dexter at the hearings.

The ILGM contends that the Bill should not deal with delegations as this has been dealt with in the Municipal Structures Act. They argue that the version in the Bill is slightly inconsistent with the one in the Act. This is just a case of information. After the Structures Act was passed it was agreed that the sections on delegation will be lifted into the Systems Bill which will effectively repeal the provisions in the former Act. This is what the Bill seeks to do therefore.

Salga has also argued that the Bill cannot legislate Batho Pele for Local Government when this is not the case for national and provincial government. The Batho Pele principles form the basic foundation of the transformation of the South African State and all its constituent parts. Moreover, the White Paper on Local Government asserted a need to extend the Batho Pele principles to local government.

There cannot be any question, therefore, as to whether it is appropriate to extend the principles to local government or not. Even so the Department did not just transplant these into the Bill but selected the most critical and relevant ones to local government. This is not just a rehashing of principles but an identification of critical values needed in transforming local government administration.

POWERS AND FUNCTIONS OF THE MUNICIPAL MANAGER
The Durban Metro submits that there is a potential conflation of roles between the municipal manager and the executive mayor as their functions are the same in terms of the Bill and the Structures Act. This is a real concern. It should however be remembered that the executive mayor is a politician who would be assuming the role previously played by the executive committee while the municipal manager is the head of the administration.

Logically, the municipal manager undertakes the responsibilities as delegated by Council and the executive committee or executive mayor as Council, Executive Committee and executive mayor assume overall responsibility for the municipality. The wording of the Bill needs to be consistent with this understanding.

It is therefore important to clarify these linkages by wording Clause 51 in the following manner. "As head of the administration the municipal manager of a municipality is, subject to the policy directions of the Municipal Council and as delegated by executive committee or executive mayor, responsible and accountable for

The second Issue raised by FEDUSA is the constitutionality or legality of the municipal manager reviewing the staff establishment, the remuneration and conditions of service on his own. This is in Clause 61(d). Clearly the municipal manager cannot just willy-nilly change, in particular the remuneration and conditions of services. He/she will have to do that subject to Council policy, collective agreements and in terms of applicable labour legislation. Therefore Clause 61 should read:

"A municipal manager, within policy framework determined by the Municipal Council, and subject to collective agreements and applicable labour legislation".

2.4 Code of conduct
Cosatu insists that the Code of Conduct should be submitted to the Bargaining Council before its inclusion in the Bill. We wish to confirm that this correct but also remind them that the Code of Conduct was submitted to the Bargaining Council early last year and to date there has never been a response in spite of numerous follow ups by the Department. We however thought that the discussions at Nedlac were sufficient for purposes of the Bill.

GAP asserts a need to have a clause dealing with sexual harassment in the code of conduct. This issue has been adequately dealt with in the Labour Relations Act and the Basic Conditions of Employment Act where it is considered an unfair labour practice and unfair discrimination respectively. For purposes of the Bill, we believe that the general provision in 2(e) of the Code, deals with the issue.

Definitional issues
FEDUSA argues that the word compulsory in Clause 66(f) should be defined. This clause is worded in a confusing way. It is not the intention of the Bill to compel employees to be members of the provident or pension funds as the section seems to suggest. The intention is to introduce the requirement that those who want to be members must register with registered funds in terms of applicable legislation. Therefore the clause needs to be reorganised to read:

"compulsory registration of provident and pension funds and medical schemes".

FEDUSA further argues that "Bargaining Council" needs to be added to the definition of collective agreements. This is not necessary as collective agreements in the context of labour matters would naturally refer to Bargaining Council agreements.

They also contend that the words "functional or business units" in clause 48(g) should be defined. The intention is to enable municipal managers to organise the administration in line with new organisational design approaches that could include project teams or business units. The intention is clear and there may not be a need to define these. The least we can do is to delete "including departments, functional or business unit " as the clause is complete without this.

The Durban Metro suggests that "close family" in the Code of Conduct be defined as this may be culturally specific. It is doubtful if this is necessary.

___________________________________________________________________

COMMENTS ON THE SERVICE DELIVERY CHAPTER: SYSTEMS BILL
General Comments about the inputs
Generally the Department is of the opinion that positive feedback has been received from the range of stakeholders that presented at the hearings.

In order to process the inputs properly the Department has Categorised them broadly along the following themes

(a)alignment of the municipal service partnership with the national framework agreement.

(Comments from IMATU/COSATU)
Comment to be made: This is reasonable request from IMATU and COSATU. However it needs to be brought to the attention of the Portfolio Committee to remember that not all matters raised in the framework agreement can be captured in legislation. The consultation process with labour on the service partnership policv document will attempt to iron out some of the areas of disagreement. A committee inclusive of labour will ensure that the appropriate provisions in the framework agreement are captured in the policy document when it is launched as a White Paper in July
2000.

Some of these matters will be handled in the implementation programme which the department will design 10 capture issues around the capacity of municipalities and ensuring that municipalities involve labour in their activities. Salga needs to also answer to what extent they have been able to monitor the implementation of MSPs in relation to the framework agreement.

(b)service delivery to be gender sensitive and ensure just and equitable delivery. This matter has not been captured in the Systems Bill as it was in the Local Government White Paper

(Comments from the Gender Commission and GAP)
Comment to be made: The Department in consultation with the Portfolio Committee will make the necessary changes to reflect these principles which the Department thinks are critical and fundamental.

(c)municipal services to be provided by water committees and more emphasis needs to be given to community based service providers

(Comments by Mvula Trust)
Comment to be made: The Department is sympathetic to the water committees that are service providers, however, these need to be in line with the provisions contained in the draft white paper (i.e. they need to be a legal entity etc) The Department agrees that there is a need to emphasise the municipal community partnership option as articulated in the draft White Paper. The Department in consultation with the Portfolio committee will make this more explicit particularly as part of the local economic development strategy.

(d)conditions of staff where another service provider takes on the municipal workers

Comment to be made: The principle that the same or better " package" to be provided by the new service provider is supported and is already included in the draft white paper The Department will have to look at the possibility of legislating this matter in consultation with the Portfolio committee
(e)minimum basic levels to be defined/universal coverage for the poor

(Inputs by COSATU/SANCO)
The debate on the minimum basic levels has been going on for some time. COSATU suggests insertion of the definition in the national Framework Agreement " the minimum level of service necessary to ensure acceptable and reasonable quality of life which takes into account health and environmental considerations. No person shall fall below this minimum level of service."

Comment to be made: The inclusion of the insert from the framework agreement can be accepted as far as considerations. The remainder of the
sentence could be difficult to implement. The Department will capture this issue in the White Paper on partnerships

(f)Regulations on limiting tariff increases. The concern here has been the powers of the Minister to limit the tariff increases

(Input by MIIU)
Comment to be made: The Department is prepared to delete Subsection (c) of
Section 86 as this has been a major area of concern in the preparation of
MSPs.

(g)definition of municipal service partnerships

Comment to be made: ln consultation with the Portfolio Committee the Department will define all definitions.

(h)legislation that may need to be amended as a result of this chapter

Comment to be made: The Department will be consulting with the relevant national Departments on this matter with the aim of reaching agreement on what legislation will be amended as a result of the Systems Bill in relation to MSPs. This consultation process will be conducted by July 2000.

___________________________________________________________________

MUNICIPAL SYSTEMS BILL

CHAPTER 3: PUBLIC PARTICIPATION

A RESPONSE BY DPLG TO THE SUBMISSIONS MADE DURING THE PUBLIC HEARINGS HOSTED BY THE PORTFOLIO COMMITTEE

INTRODUCTION
The Department departs from the premise that says Municipal Councils must work with communities to ensure accountability, good governance, improved service delivery and sustainable development. This is generally in keeping with the local governance paradigm, which has been in phenomenal ascendancy in the international local government discourse in the past ten years. It is this paradigm that informed and framed the debates in conceptualising the position and role of local government during the White Paper process. An attempt was, consequently, made to institutionalise this paradigm during the process of crafting the Municipal Structures Act by way of having provisions dealing with public participation. An agreement was reached, however, to hold the issue over for the Municipal Systems Bill process. This Bill is therefore an attempt to create a regulatory framework within which the public can meaningfully interface with local government structures.

At the public hearings, different organisations raised a number of questions and proposals on this chapter. These could broadly be organised into four categories, namely; the concept of participation, forms of participation, management of participation and duties of Councils in promoting participation. This submission will therefore pick on issue raised using this as a frame of reference.

THE CONCEPT OF PUBLIC PARTICIPATION
The key question asked in this regard was what is the Department's theory or conception of participation. In other words, what theoretical framework informs our approach to public participation. A number of theories have been posited to frame these kinds of debates. These range from classical pluralist and elitist theories to contemporary representative and participatory theories of democracy. These theories have been utilised to explain power relations as represented in the interface between the state and non-state actors.

The pluralist theory contends that society is made up of organised interest groups that contest for various things at different times and the battle is won by the strongest interests. This approach assumes the dispersal of power that oscillates between powerful groupings at different times. In the context of local government this approach suggests that municipalities are constantly in contest for power with organised groupings and that their decisions are a product of co-determination with other powerful interests. The elitist theory proposes that society might be made up of organised interests but the state, that has the authority, dominates at all times. In other words, even though the state interacts with these interests, it still retains considerable power to decide inspite of persuasions of all kinds. This is a control-oriented form of participation.

The basic tenets of contemporary theories of representative and participatory democracy are, in many ways traceable from the classical theories dispensed with above. The representative democracy assumes that it is enough to participate by way of casting a vote. That is, those elected have the right to govern on their own as they have been given a mandate by the electorate. It argues that those who have been elected are acting on behalf of the citizens or communities and that it is not necessary to actively interact with them.

On the other hand, participatory democracy asserts that voting cannot be enough as a form of participation. It argues that those in power, still have to interface with the electorate to solicit their opinion on various issues on a continuous basis to ensure continued accountability, transparency and good governance. In other words although the authority of those elected is recognised and acknowledged, it remains crucial for them to create an environment of exchange with local interests without usurpation of power.

The pluralist approach is correct to the extent that it argues that society is made up of organised interests but it does not properly capture the power - relations between local government and these interests. The local government structures are elected bodies with political authority to make decisions not necessarily in consultation with these interest but after consultation. The elitist approach is helpful only to the extent that it recognises the authority of the state bodies as elected entities with decision-making powers. It however falls short in suggesting that the state can wilfully ignore the views of the interest groups and make decisions. The representative democracy approach is also correct in noting the authority of the elected people but it tends to exaggerate their power and shun participation. The participatory democracy approach seems to recognise the authority of the elected people but also the significance of continued interaction with the public.

The participatory democracy approach is the one that informs our concept of public participation. This is as expressed in the introduction of the Chapter (Clause 7). It is the Department's view that Municipal Councils are elected bodies and therefore have the right to govern the affairs of the municipality. We however insist that in governing, the municipal council must facilitate processes of interaction with local interests to solicit opinions and ensure accountability on a continuous basis. It is however the view of the Department that this interaction should still allow the Council to make final decisions having due regard other views. Therefore in our view public participation cannot become an endless exercise and decision-making cannot be an exercise of co-determination between Council and local interests. In other words, local interests have a right to express opinions but the Council has a right to decide.

FORMS OF PARTICIPATION
A number of submissions made several points in this regard. These include the charge that our notion of forms of participation is narrow and that the Chapter simply confirms current conventions in participatory approaches.

The forms of participation is an issue inextricably linked to matters around which participation has to happen as well as who participates. This is an important premise because the form of participation is dependent upon the kinds of issues that are involved and in turn these inform the nature of engagement by various interest groups.

In relation to matters around which participation has to happen, various submissions raised points like, there is a need to agree on a framework that determines the issues around which participation must be mandatory and so on, show how public participation is infused into Chapters like IDP's and PMS, develop a framework of how subject areas link to different role-players and therefore shape forms of participation.

With regard to the issue of who participates, the submissions raised concerns like there is no internal consistency in the application of terminology in the Chapter, there is a tendency to assume equality of power and rights for different interest groups and that there is a bias towards groups over individuals.

There is therefore a need to develop a framework that builds linkages between these issues with a view to further the clarify forms of participation envisaged. The issue of subject areas around participation happens is a good starting point for it will help clarify who participates and in what forms should participation happen.

The issue raised above are valid and important. The Bill has, however, dealt with some of the issues raised albeit not exhaustively and not in so many words. First, Clause 7(b), highlights some of the areas around which participation should happen. It however does not expressly make these mandatory but refers to them as some of the issues to be taken up as the public engages. There is a need to isolate issues for which participation is mandatory.

Second, the assertion that participation is not visibly carried through into the IDP and PMS Chapters is partly true. The PMS Chapter does not articulate the role of different roleplayers in respect of various elements of the proposed system. The IDP Chapter does express the role of local stakeholders in Clause 25. It is however important to note that this is only limited to the process of developing IDP's. The chapter is rather silent on the role of stakeholders in implementing and reviewing the IDP's as expressed in Clause 7(b). The latter element (review) could easily be understood as a subset of Performance Management. There is therefore a need to carry the provisions of Clause 7(b) throughout the Bill and in particular the Chapters on IDP's, PMS and Municipal Services. It is also true that there is a need to develop a framework that links areas around which participation should take place to different roleplayers and therefore explain forms of participation.

The observation that there is no internal consistency in the application of the terminology especially as it refers to roleplayers is true. There are significant definitional differences in the use of terms like the public, community, citizen, resident, ratepayer and stakeholder. The differences are by and large a function of the scale of application, matters involved and rights of different categories of participants. There is however a tendency to confuse the use of terms (eg community and service groups NGO's) be silent on the reference to certain categories (eg citizens) and be silent on the definition of other categories (eg public and stakeholder). This accentuates a need to develop a framework that provides a common dictionary of terms, identify matters around which participation should happen, clarify the role of different categories of roleplayers and the different forms of participation.

In line with this, the Department would like to put forward the proposals on the following:

DEFINITIONS

The definitions above assist to set a framework for determining forms of participation. Clearly the municipalities should have obligation to its local citizens residents and ratepayers, communities, service organisations and members of the general public in that order. This is a hierachy of rights approach. In reality, though, the nature of interaction between the municipalities and these groups and the application of rights is dependent upon the matters involved. It is therefore important to look at matters involved, rights for participation by stakeholders and forms of participation.

To start with, the Department would propose that over and above participation in the elections municipalities must ensure participation in the identification of needs, determination of strategic priorities, allocation of financial resources (IDP's), monitoring and review of performance (PMS), policy and legislative development and dealing with internal matters as prescribed in law (eg labour disputes). These are non-negotiables. The municipalities may want to invite participation on other areas as well.

Below is an attempt to present a framework dealing with the issues raised above.

The framework above deals with matters around which participation has to happen, participation rights of different roleplayers and forms of participation envisaged. This framework should inform provisions of the Bill. The Department will attempt to review the Bill using the framework. It is however important to note that the Department titled the Chapter "public participation". This was a deliberate move as the public includes anybody who is outside and within the municipality at a given time. The use of the word "public" is consistent with the view that all the roleplayers are ultimately members of the public.

A question has also been raised that the Bill seem to be in favour of organised rather than individual participation. This is not entirely true for the Chapter consistently refers to individuals and organised groups. However it is our view that it is not necessarily a bad thing to favour organised participation for a whole range of reasons including, manageability considerations for municipalities. The other issue raised is the fact that the interests of marginalised groups tend to be ignored by the Bill. This is not entirely true because the Bill places an obligation on Municipalities to ensure participation by disadvantaged groups (Clause 8). However the framework above invokes notions of citizenship and thus impose a further obligation on municipalities to ensure that all citizens enjoy citizenship rights. How this will happen is a challenge to municipalities.

The two latter points lead to the next set of issues namely; management of participation and duties of municipalities in promoting participation.

MANAGEMENT OF PARTICIPATION
A number of issues were raised in this regard. First, is the issue of closure of meetings to the public. There are numerous variables to this but the key point made is that municipalities should not close meetings to the public. The Bill makes provision for Council meetings not to be closed unless it is necessary to do so and if so the Council should notify the public in advance. The Bill also says that Exco may close all of their meetings. The Department believes that the provisions should remain as they are because Exco operates more like Cabinet and in line with the principle that political leadership of Council have the right to make decisions, having due regard to other opinions, we think the provision is correct. It is also important to note that the Bill still makes it possible for the public to participate depending on Council's decisions. We therefore think that the provisions have struck the right balance between the rights of the public and those of Council.

The Department would however agree that there is a need for a clause that deals with the end-point of participation as it cannot be an endless excerise. We also recognise that there has to be a clause dealing with feedback aspects of participation as well as the rights of the public during Council meetings.

DUTY OF MUNICIPAL COUNCIL
Questions raised in this regard relate to the role of Council in promoting participation of the disadvantaged groups, in building Capacity of roleplayers and in funding roleplayers.

As alluded to earlier, the Bill provides for municipalities to find mechanisms to ensure participation of women, the disabled and the poor. This is a sufficient provision. The only thing left is to develop indicators that measure the extent tot which municipalities are succeeding. Similarly there is a provision dealing with the obligations of the municipalities to building capacity of the disadvantaged groups.

The issue of funding is a complex one. On the one hand people are saying a provision like that will burden municipalities and on the other they say an obligation should be placed on municipalities to fund participation. The position of the Department is that the benefits of participation are worthy of an investment by and therefore municipalities. We would however like to leave funding strategies and mechanisms to local government. The Department would therefore recommend that a clause dealing funding of participation be considered strongly. It could have a qualifier that says " … within its financial capacity".

_______________________________________________________________

DEPARTMENT OF PROVINCIAL AND LOCAL GOVERNMENT

DRAFT REPLY TO COMMENTS ON CHAPTER 5: INTEGRATED DEVELOPMENT PLANNING OF THE SYSTEMS BILL (23 MAY 2000)

1.Introduction
Comments made by stakeholders at the Portfolio Committee hearings on this chapter have been grouped into various themes. Key reasons and explanations are provided which indicate the position of the Department in relation to particular themes and concerns raised.

2.Over-Regulation and Over-Prescription (SALGA, Isandla Institute)
· Concerns have been raised that this chapter attempts to regulate too much detail; time frames are too onerous and only minimum requirements regarding Integrated Development Planning should be stated in the Bill.

Most of the organisations who raised these concerns have clearly not studied the latest draft of the Systems Bill. The major difference between the latest draft and earlier drafts is that details around timeframes (e.g. the time required to prepare an IDP) and the minimum content requirements of IDPs are deleted in the latest draft.

It is submitted that the minimum set of requirements regarding the planning process and the content of IDPs should be outlined in primary legislation. This is critical if the objective of establishing a common basis and approach to local government development planning is to be achieved throughout the country.

Moreover the provision for the Minister to phase in different parts of the (Bill) Act and make it applicable to different categories, types and kinds of municipalities is precisely aimed at addressing contextual differences between and within provinces.

3.Integrated Development Plans should be Mandatory (SALGA)
· The argument was made that the preparation of Integrated Development Plans should be mandatory.

Section 22(1) indicates that "each municipal council must" prepare an IDP.

4.Inconsistency with the draft White Paper on Spatial Planning (SALGA)
· It was contended that there may be inconsistency between some of the positions emanating from the draft White Paper on Spatial Planning (Department of Land Affairs) and what is contained in this chapter of the Bill.

The Department of Provincial and Local Government has followed the drafting of the draft White Paper on Spatial Planning very closely. The Department participated in meetings of the Development Planning Commission, which drafted the precursor to this draft White Paper. The critical difference and linkage between the draft White Paper and chapter 5 of the Systems Bill is that the latter focuses on municipal Integrated Development Planning while the former focuses on "spatial planning".

Both Departments agree that spatial planning is one critical component of integrated development planning. The Systems Bill recognises this and also goes further to stipulate that spatial development frameworks must include guidelines for a land-use management system. If there are any inconsistencies between the draft White Paper and the Systems Bill it is submitted that these are of a minor nature.

5.Responsibility for the Preparation of IDP Guidelines (SALGA, Western Cape Local Government Association)
· It was implied that the Minister of Provincial and Local Government together with SALGA should be responsible for the preparation of further guidelines and regulations for integrated development planning.
· It was submitted that the provision for the national Minister to regulate the details of the IDP is unconstitutional.

The primary responsibility for local government integrated development planning should be vested with the national Minister for Provincial and Local Government. The Minister is not precluded from consulting with key stakeholders such as other national Ministers, SALGA and/or provincial MECs for Local Government and Development Planning.

The constitutionality of the national Minister regulating the details of the municipal IDPs is defended in terms of the concurrent functions allocated to the national and provincial spheres of government. The legal opinion of the Department must also be studied on this same general question.

6.Alignment with Other National and Provincial Legislation (Auditor –General, KwaZulu Natal Provincial Department of Local Government and Development Planning)
· Questions were asked about the alignment of this chapter to other pieces of legislation addressing development planning, e.g. Development Facilitation Act 1996, Provincial Development Planning Legislation and Ordinances.

At a national level, there are some issues of refining the alignment between the Systems Bill and other pieces of legislation. Examples are the Development Facilitation Act-1996 and the Water Services Act-1997. Processes are underway to address any inconsistencies that may be existent. The assessment of the Department is that the apparent inconsistencies are resolvable.

The manner in which provincial and national legislation should be aligned must be informed by the primacy of national norms and standards regarding the core systems for local government nationally. Some provinces have proceeded to prepare development planning legislation, while others are waiting for the finalisation of the Systems Bill. Still other provinces do not seem to intend to draft development planning legislation.

The Systems Bill in its current form does not preclude or prohibit provinces from drafting provincial legislation or issuing regulations that is consistent or complimentary to the Bill.

7.Preparation of New Integrated Development Plans (Business South Africa)
· Clarity was sought on how often a new Integrated Development Plan should be prepared and whether this was necessary after every local government election.

The key issue is that municipal councils must be held accountable for their municipality’s IDP. It is for this reason that there is a strong direct link between the 5-year IDP and the political term of office of councillors.

If a new council chooses to adopt, wholly or partially, the IDP of a previous council it is not prohibited from doing so. Section 22(1) compels every council "within a prescribed period of its elected term" to adopt an IDP.

8.Public Participation and Consultation Process (Business South Africa, Urban Sector Network)
· A specific question was asked as to whether stakeholders could comment on the consultation process that was adopted by the municipal council.
· It was also enquired whether the IDP will be published for final comment before it is served before council.

The Bill does not make specific provision for stakeholders to comment on the consultation / participation process that has been adopted by the council, that will be utilised in the plan drafting process. An amendment can be made to make provision for this, however the final legislative and executive authority for the IDP process rests with the council.

A similar provision can be made to accommodate final comments from the public before the council adopts a local IDP. It must be noted that an elaborate consultation process would have been embarked upon before the final draft of the IDP is submitted to council.

9.Role of the MEC in Assessing Integrated Development Plans
· It was enquired what would happen if the MEC in a province does not provide a response to a municipality within the required period of 30 days.

The Systems Bill makes provision for the municipal council to adopt its IDP (Sections 27(1) and 29(1)). This adopted IDP is then submitted to the MEC for comment to assess its alignment and consistency with this Act and other development plans.

It is submitted that should a MEC fail to provide comments to a municipality in the stipulated period of 30 days, that IDP shall remain in force as originally adopted by the council.

10.Local Economic Development in the IDP (Durban Metro)
· Given the importance of economic development, it was argued that the Bill must make specific reference to this in the minimum content requirements of the IDP.

The temptation to make reference to "sectoral plans" in the IDP has been avoided. The identification of the core contents of the IDP has been kept to a minimum in the Bill. This has been done on the assumption that the regulations and guidelines will provide additional detail regarding what should be included in an IDP.

11. Gender Disaggregated Data in the IDP (Gender Commission, Gender Advocacy Programme)
· Recommendations were made for the IDP to include gender specific data.

This provision is an important one which should be catered for in the IDP. However, it is unclear whether this should be stipulated in the Systems Bill (Act) or whether this can be addressed in the regulations and guidelines.

12.Conservation Plans in the IDP (Botanical Society of SA)
· It was recommended that the IDP must make specific mention of the need to include Conservation Plans.

The importance of Conservation Plans should be recognised. However, it is submitted that this is more appropriately addressed in regulations and guidelines.

13.Human Resource Plans in the IDP (COSATU)
· It was recommended that the IDP must make specific mention of the need to include Human Resource Plans.

The importance of Human Resource Plans has already been recognised as a critical component of the IDP. This has been identified in the IDP Manual that was published in 1998. In terms of the current conceptualisation, Human Resource Plans are part of the operational strategies to be put in place by the council. Again it is submitted that this is better dealt with in regulations and guidelines.

14.Land Restitution and the IDP (Commission on the Restitution of Land Rights)
· Due to critical issues regarding land restitution, it was argued that this must included in the minimum set of requirements to be included in the Bill.

The Bill makes provision for a spatial development framework to be included in the IDP. The consensus reached with the Department of Land Affairs is that all matters pertaining to spatial / land-use planning and development should be addressed in legislation to be promulgated by that Department.

Again the importance of this issue is recognised, however the appropriateness of specifying this in this Bill is uncertain. It is submitted that all spatial development / planning matters should be addresses by the Department of Land Affairs. The Systems Bill simply needs to recognise this linkage.

15.Integrated Development "Plan" or "Strategy" (Isandla Institute)
· It was argued that the IDP should be seen more as a strategic instrument, rather than as a fixed robust plan.

The understanding of the Department has always been that the IDP is a high-level strategic management instrument for municipalities. The tension, which is evident, in the Bill is that the IDP must be firm and strong in its strategic direction, yet flexible enough to inform daily decisions and other contingency matters.

Any suggestions to prevent the IDP from being viewed as a static inflexible plan in the legislation will be welcomed. The reference (Section 20(2)) to the Development Facilitation Act acknowledges that the IDP must be driven by a range of normative objectives.

16.IDPs for Different Categories of Municipalities (Municipal Demarcation Board)
· A request was made that the Bill should make provision for IDPs to be prepared for different categories of municipalities.

This need for differentiation between different kinds of municipalities and staggered implementation has been acknowledged by the Bill (Sections 34 and 112). A process is already underway in the Department to prepare non-mandatory IDP guidelines for the three categories of municipalities. This matter could also be addressed in the regulations.

17. Non-Compliance with IDP Requirements (Municipal Demarcation Board)
· A question was asked as to how non-compliance with the IDP requirements will be addressed.

The issue of non-compliance with the IDP requirements is equally valid for non-compliance with other provisions in the Bill as a whole. No special provisions have been made to address non-compliance with the requirements set out in the IDP Chapter. The recourse that is open to national and provincial government addressing non-compliance with this chapter applies to the Bill as a whole.

19.Linkage Between local IDPs with District, Provincial and National Development Plans (Municipal Demarcation Board)
· Questions were asked about the linkage between local, district, provincial and national development planning.

The Municipal Structures Act (1998) makes provision for District Municipalities to prepare a district-wide IDP framework for all local councils. The Bill reinforces this provision (Section 23 (2)). However, the Bill is legally flexible to allow IDP preparation to commence either at the local or district level (Section 28 (3)). What is clear is that any municipal IDP must take into account,
· The development plans of adjacent or other affected municipalities (Section 21); and
· National and provincial development programmes.

Moreover, national and provincial organs of state are mandated to assist municipalities to comply with any planning requirements that emanate from these spheres.

20.IDP Committees
· It was enquired what institutional mechanisms for participation in the IDP process is envisaged.

The experience of the Department in studying various IDP processes throughout the country suggests that there are many institutional options for securing public participation and consultation. It is submitted that these diverse institutional arrangements are better outlined in guidelines, manuals and maybe in regulations.

________________________________________________________________
RESPONSES TO SUBMISSIONS ON THE MUNICIPAL SYSTEMS BILL
BUSINESS SOUTH AFRICA SUBMISSION

CHAPTER 8
"Section 87 (1): The concept of user pays has been incorporated in the chapter, but the detailed approach to tariff policy needs further clarification. Any subsidies or grants provided from another sphere of government or external source must be taken into account when calculating tariffs at the local level. There is no requirement to re-invest in the service for which tariffs are being charged. This needs attention."

ANSWER:
Section 87 (e) states specifically that tariffs must be set at levels that facilitate the financial sustainability of the service, taking into account subsidisation from other sources other than the service concerned. By implication, this section does encourage re-investment in the service because it stipulates that "financial sustainability" must be facilitated which in effect means the use of tariffs received from a service in a manner that the service can be rendered without losses over the long term.

Many municipalities are empowered to address this issue and in fact are doing so. Almost all do re-invest in the provision of current services for which tariffs are received. It is up to the municipality to decide on such matters according to their overall revenue and expenditure needs for all of their functions and responsibilities. This may take the form of cross-subsidisation between and across services in order to maintain overall provision of all of the services it renders. This matter should be left to the municipality which should take into account the specific conditions it faces and areas of backlogs in certain services that require urgent address through the use of income from other services.

This issue could be given more teeth in Section 85 (1) which empowers the Minister to make regulations on 85 (1) (s) on "any matter that may facilitate (i) the effective and efficient provision of municipal services or (ii) the application of this chapter.

The Department is in the process of preparing Guidelines for Municipal Tariffs which will take a flexible approach in respect of re-investment decisions because the nature of finances of each municipality differ vastly across the country.

"Section 75 (1)(d) provides for the responsibility for setting and adjustment of tariffs to remain the responsibility of the municipality. However, Section 75 (2) allows the municipality to assign this responsibility to the service provider. This approach is not supported."

ANSWER
The Section 75 (2) merely says that a "service delivery agreement may authorise a municipality to review and adjust tariffs (see 75 (2)(b). It does not assign to the service provider the power to review and adjust tariffs in the service delivery agreement. It merely says that in such an agreement the municipality can be the authority that reviews and adjust tariffs. If the agreement does not include this authority it does not mean the power is assigned to the service provider because only 75 (2)(a) assigns responsibilities to the service provider and it does not include the review and adjustment of tariffs.

"Section 83 (1) Powers which are not normally delegated to subcommittees of the Council, like the setting of tariffs or the alienation of property, should not be delegated to the governing bodies of municipal service districts."

ANSWER
Section 79 (1) and (3) state clearly that when a municipality establishes an internal service district, the municipality may

"in order to finance the service in the district impose a surcharge in the district for the service or increase the tariff in the district for that service" . This clearly retain the power of tariff control and setting in the hands of the municipality over the governing body of an internal municipal service district. Also it says " in order to finance the service in the district" which means that the municipality is the provider of the service.

However, Section 83 (1) refers to a governing body of a multi-jurisdictional service district which can only be established by two or more municipalities by agreement (Section 80) and it is participating municipalities that compose the governing body and therefore by inference is accountable to the participating municipalities (see Section (84) (1)(a)).

Pakade this issue must be checked with Fanie Louw about the Constitutionality and whats in the Structures Act on the delegations of powers and functions to "juristic persons"

INSTITUTE OF MUNICIPAL FINANCE OFFCIERS (IMFO)
HENNIE VENTER
Comments on Chapter 8
" The delivery of Municipal Services is provided for in various other pieces of legislation
i.e regarding Health, Electricity, Water, Procurement etc. and the question is, if this Bill is in line with the others applicable, did anyone made a study of it?"

Various consultations have taken place with Stakeholders in the Electricity and Water Sector. In many of these consultations discussions have entertained aspects of legislation in other Acts dealing with the regulation of these matters. Section 86 (1) provides for regulations in which the Minister can issue regulations for establishing mechanisms and procedures for the co-ordination and integration of sectoral requirements in terms of legislation with the provisions of this chapter, and the manner in which municipalities must comply with these (see Section 86 (1) (h).

AUDITOR GENERAL
Page three
point 11
"Clause 110 (1)(b)
Only property related charges and not consumer charges should be recovered before the transfer of property is allowed. This is necessary to prevent the owners of property wanting to dispose thereof, from being held liable by a municipality for the payment of defaulting tenant’s water and electricity charges."

ANSWER
Many municipalities are having problems recovering outstanding payments from consumers. This has precipitated, in many instances, a financial crisis for these municipalities. Consumer normally pay for services drawing from their income. If a consumer defaults repeatedly debts accumulate. This debt can only be recovered, albeit other credit control measures, when the income to a consumer on the sale of his or her property is realised through profits or gains from the sale. Future income is therefore capitalised in profits from the sale of a property. Therefore, by insisting that all accounts owing to the municipality be paid before a transfer is made allows for the consumer or owner to re-capitalise the payment through profits realised from the sale of the property. At the same time it allows for the municipality to recover debts which in many instances cover a span of more that three years. Debts can span up to more than five to six years. These instances are very common in debt recovery problems. Seldom do municipalities write of debts and invariably they are reflected as income in the budgets.

The clause is reasonable as it stipulates only amounts due preceding three years the date of application for transfer.

It must be remember that the property may also have increased in value due to improvements or benefits derived from investment by municipalities in upgrading services in the area in which that property is situated. These improvements are capitalised into the value of the property. These improvements may also be as a result of investment of regular payments by other citizens of the community.

COMMISSION ON GENDER EQUALITY
Page 9
4.1 (4) " Tariff and Indigence Policies : Strengthen the section that prescribes " in general the amount the user or consumer must pay for services is in proportion to their use of that service" (68(2)(b)). We recommend to institutionalise higher charges for higher rates of consumption in a way that does not disadvantage the poor.

ANSWER
In short, the regulations to be made by the Minister will take care of this. However, it must be noted that this is an issue best left to municipalities to be determined according to their own specific circumstances. Higher rates for higher consumption may negatively affect local enterprises in which production is intensively water dependent, eg. health products and farming products. Thus certain types of economic activities may be affected. This recommendation will therefore have to be applied by municipalities, perhaps to certain categories of users and consumers of water.

The poor may not be necessary affected. Subsidisation measures are provided. The block rising tariff system instituted by the Department of Water Affairs makes provision for lower charges or a free block to poor households. Higher charges will discourage excessive consumption but this needs to be applied with incentives and disincentives by municipalities.

" 5. Poor Households must have access to al least basic services through.........(68(2)(c). This reference to poor households emerges suddenly in the Bill and is not repeated. While we note the attempt to make concessions in terms of socio-economic conditions, it is important that the Bill also defines what is a poor household is. This definition must take into account the different impact of socio-economic factors on women. Further, it is necessary it is necessary to determine what constitutes ‘basic services’"

ANSWER
It is extremely difficult to define what a poor household means because of the vast variety of factors that will have to be taken into account in such a definition. The are currently different interpretations of what should constitute or describe a poor household. This question is not been entirely settled by experts nor government.

However, many policy documents of government describe or define "poverty" , " poor", "the poor household" etc. Different programmes of government define differently the poor in terms of income status. The Equitable Share for instance uses less than R800 per month, while the Welfare Department uses another cut-of point, and Housing so to.

It would not be prudent at this stage to legalise the definition of poor in a piece of law simply because government would then be accountable to a definition that circumscribes the parameters of its efforts at poverty alleviation. If the economy of the country changes drastically, positively or negatively, the definition may become outdated and government may not be able to move outside its parameters to adjust it response to poverty alleviation when such drastic changes occur. For now it would suffice that municipalities use the statistics of STATSA do define the poor. However, it must be remembered that many municipalities have differing socio-economic conditions and for better targeting of the poor municipalities should combine national norms with local conditions. The definition of the poor could be approach in guidelines for municipalities which provide for a series of options in determining which are households can be regarded as poor in their jurisdiction.

Basic services have been defined in a number of policy documents issued by government but related to specific type of service or services. The MIIU has on several occasions done this. Municipalities can use these as guidelines.

It is accepted that in many cases poor households are headed by women. Therefore, targeting poor households through subsidies will impact on the lives of women and female children.

The Department has attempted to address this question but, in the case of tariffs, it was realised that they are, in general, gender neutral. Further, not definite methodology exists yet for the gender to be incorporated into the technical methodologies used for targeting and setting tariffs.

ISANDLA INSTITUTE
PAGE 4
MUNICIPAL SERVICES
" We propose that S 68 (2)(a) should be deleted as it is covered by s 2 (c) &(i) and S 68 (3) (subject to the amendment mentioned below)

Section 68 (2) (a) mentioned a principle that is accepted in the application of tariffs – it emphases vertical and horizontal equity. The term "equity" does not necessarily mean "equal treatment". It means the application of tariffs for different categories of consumers and users but that it be done in a manner that across a specific category users are treated equitably in terms of the tariff rate or structure that is applied to the specific category.

In Section 68 (1) (c) the key term is " at least basic services" and is merely focusing a municipalities tariff policy on this issue. This section was extensively discussed with NEDLAC and is incorporated in the Bill in terms of the Framework Agreement with NEDLAC and SALGA and the Department.

Section 68 (2)(i) emphases "disclosure" which is not the same thing as equity in the application of tariffs.

GREATER JOHANNESBURG METROPOLITAN COUNCIL
SCHEDULE
POINT 3.1.1 (ii)
If blatant inconsistency arises, the regulations could be amended to deal with such problems. It is not prudent to regulate this matter in a set of regulations which can be much more speedily and easily amended that if they were in the Bill itself.

SANCO
page 3
point 6
" We must accept World Bank Reports that conclude that means tests and so-called lists of poor just does not work, and here we must implement progressive block tariffs that ensures a life line tariff and special tariffs. Furthermore, in as much as we must encourage investment by business, these incentives of special tariffs must not become the norm, and must not result in the ordinary consumer subsidising business. Furthermore, as in section 68 (2)(i), special tariffs to business must also be fully disclosed. "

ANSWER
Section 68 (1) states that ....a tariff policy......must be adopted by a municipality .......which complies with the provisions of this Act .........and any other sectoral legislation. The legislation of the Department of Water Affairs provide for a rising block tariff to be implemented in the provision of water. The section therefore takes into account the concerns of SANCO.

The matter of special tariffs for business resulting in the ordinary consumer subsidising business can be taken care of through regulations (Section 86 (1)(s)(i) and (ii), The matter of special tariffs may thus be regulated by national government. Further, Section 86 (1)(c) provides for regulation of limits on increases where the ordinary consumer is adversely affected through special tariffs for business.

ASCORA (ATTERIDGEVILLE/SAULSVILLE CONCERNED RESIDENTS ASSOCIATION)

POINT 2 Tariff policy

68 (1)(c)

"We propose that this subsection be linked to the National Governments’ Poverty Relief Fund. "

The conditions of accessing this fund are wide and varied. While this is a good idea and the intention is recognised it may not be wise to do this in law. As the fund is for a variety of projects the entire fund may not be sufficient to cover funding municipalities on this question. We must be careful not to make the provision of services to the poor entirely grant dependent as them municipalities will not internalise this matter into their finances to fulfil their developmental responsibilities as an independent sphere of government (Section 153 of the Constitution). Further, this may undermine the financing mechanism of cross-subsidisation of the poor from revenue generation from all services rendered and taxes from all sections of the residents.

MIIU
The MIIU is raising serious concerns about the power given to the Minister to effect upper limits on tariff increases. They allege that this may seriously put the initiatives on municipal service partnerships (PPP’s) in jeopardy due to reservations by potential investors since this introduces great uncertainty into the financeability of any municipal infrastructure dependent, in whole or in part, upon tariff revenues.

These concerns are quite valid and the department will reconsider its position on this matter.
___________________________________________________________________
Chapter 9: Credit Control

The Banking Council
The concerns of the Banking Council have been noted. It is indeed the objective of the Department to ensure that municipalities implement sound financial practices especially when it comes to collection of outstanding amounts in respect of rates and service charges.

Municipalities provide services to communities mainly on credit basis. As a sphere of government, municipalities are to an extent obliged to provide at least a basic level of services to all households, including the poor. This in a way denies them the power to engage new consumers who apply for service agreements into a screening process so as to measure their creditworthiness, as is the case in the private sector. The decision to provide residents and/ or ratepayers with municipal services has to a large degree very little to do with the creditworthiness of those particular persons.

Furthermore, the political dynamics surrounding the provision of services and the payments for such services rendered have a long history in this country. In most cases municipalities succumb to too much pressure that they find themselves helpless and the increasing civil disobedience is also adding insult to injury. Municipalities therefore manage to collect what is due to them when the property is being transferred for at least up to three years. This is the only effective weapon of dealing with the recalcitrant consumers. To take this weapon away from them flies directly in the face of the need to implement effective credit control measures.

The argument that municipalities may adopt lax policies in regard to credit control due to the preference claim they enjoy on transfer of property holds very little water because any municipality that may be doing that would definitely go bankrupt. The transfer of ownership of property is something that happens infrequently, and therefore any reliance thereon for collecting monthly service fees does not make any rational business sense.

In conclusion the Department wish to recommend that should the Portfolio Committee feel strongly about the bank’s concerns, the reduction of the preference period by a period of one year to 2 years be considered rather than scrapping out this provision.

Business South Africa
A similar response to that given to the Banking Council applies here as well.

Cosatu submission

Cosatu is proposing that "Section 95 must be amended to include mechanisms for debit order payment rather than agreements with employers to deduct outstanding amounts owed to the municipality from salaries or wages."

This proposal can be accommodated in the bill by changing the word "agreement" and replacing it with the word "arrangement".

SANCO
Sanco’s proposals are covered in section 68 of the bill. However, national legislation can not be prescriptive in this instance since constitutionally municipalities have powers to promulgate tariffs. What the bill does is to set a policy guideline for setting of such tariffs including taking cognisance of the needs of the poor through lifeline tariffs and indigent policies.

SALGA
The comment by Salga that the responsibility for social welfare functions is a national one is noted. However, local government, as a sphere of government responsible for providing essential services to communities, has to take into consideration the fact that this community by its very nature is heterogeneous. Taking into account the needs of the poor is not something new to local government and it has been done through cross-subsidisation and other redistribution strategies for some time in memorial. The key thing is that the amount of subsidy must be recovered somewhere and in this instantance, national government is providing additional assistance through the "Equitable share" allocation. The level of this subsidisation and the extent to which it is implemented still is a decision which rests with each individual municipality. When deciding on this subsidy level, each council must consider affordability and the extent of cost recovery as mentioned above.

Greater Johannesburg Metropolitan Council
Basically the council is proposing that there must be some kind of rationalisation of the provisions of various pieces of legislation when it comes to enactment of by-laws. This will make it easier for municipalities when all regulations dealing with credit control by-laws are in one legislation to avoid confusion.

This proposal is supported and will be investigated further and relevant Departments approached to reach consensus on this.

NEDLAC
Business view on section 110 " Preference claim on transfer of property" is similar to that of the banking council. Therefore our previous comment on this matter prevails.

IMFO
The need to align the Municipal finance Management Bill with the Systems bill is supported. However, the Municipal Finance Management Bill is still to be published for comment and it is going to take sometime to reach the stage where the systems bill is. Any changes in the MFM bill after the system’s bill has been passed is beyond the reach of this department.

Institute for Local Government Management of SA (ILGM)
The discretion to allocate payment to various accounts by the municipality is supported for the following reasons:

· Firstly, past experience has shown that consumers play a lot of payments games when it comes to payment for services rendered. The knowledge that non-payment will lead to disconnection of services leads to them to paying only for those services that are likely to be disconnected e.g. electricity and water and leave out rates and taxes. This creates numerous problems for municipalities since alternative measures are usually very lengthy and expensive to implement, e.g. legal action.

· Secondly, it is quite a laborious task for municipalities to try and divide payments according to each consumer’s needs when an integrated billing system is in use. Furthermore, most municipalities, especially the big ones prefer the consolidated billing system since it is easier to maintain due to volumes of transactions that are processed.

· The municipality as a service provider has a right to stipulate its conditions like any other supplier in its credit agreement ( service agreement) as long as this is done within the ambit of the law.

Unicomm
Section 108 & 109
This is an old version of the bill. This concerns have been addressed already.

The comment on indigence policy being a welfare function is addressed in a similar manner as that of SALGA.

Section 114 in the old version of the bill was subsequently deleted.

Commission on Gender Equality
The provisions of previous section 118(2) of the gazetted bill are catered for in section 68(3) of the latest version which reads as follows:

" (3) A tariff policy may differentiate between different categories of users, consumers, debtors, service providers, services, service standards, geographical areas and other matters as long as the differentiation does not amount to unfair discrimination."