REPORT OF THE SELECT COMMITTEE ON
COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS, ON THE OVERSIGHT VISIT TO ABAQULUSI
LOCAL MUNICIPALITY, DATED 11 NOVEMBER 2014
1. Background
1.1
On the 20th March 2013, the Provincial Executive Council
resolved to intervene at Abaqulusi Local Municipality
in terms of section 139(1)(b) of the Constitution, and
assumed the functions specified in terms of section 51, 54A and 56 of the Local
Government: System Act (Act 32 of 2000). On the 04th December 2013,
the Provincial Executive Council noted progress in relation to the turn-around
strategy, more specifically in respect to local economic development, municipal
financial viability, good governance, public participation as well as spatial
development planning.
1.2
However, there were some challenges which remained unresolved, these
included the regression from an unqualified audit opinion to a disclaimer audit
opinion for the 2011/12 financial year; governance challenges in relation to
compliance with laws and regulations. On that basis, it resolved to extend the
intervention until 30 September 2014. The intervention was further extended on
10 September 2014 until 31 March 2015, due to outstanding key intervention
priority areas prevalent
1.3 On the 9th September 2014, the MEC for Cooperative
Governance and Traditional Affairs in KwaZulu-Natal, tabled to the Office of
the Chairperson of the National Council of Provinces (NCOP), a Notice of the
request for extension of intervention in terms of section 139(1)(b) of the Constitution at Abaqulusi
Local Municipality.
1.4 Subsequent
to the tabling, the Chairperson of the NCOP referred the notice of intervention
in terms of Rule 101, to the Select Committee on Cooperative Governance and
Traditional Affairs for consideration and report.
1.5 On
the 21 October 2014, a multi-party delegation of the Committee conducted an oversight
visit to the Abaqulusi Local Municipality.
2. Objective of the Oversight Visit
2.1 The
objective of conducting the oversight visit was to consult and interact with
the internal and external stakeholders of the Municipality, in order to solicit
their opinion with regard to the Notice of the request for the extension of intervention
in the Municipality in terms of section 139(1)(b) of
the Constitution, and thereby report back to the NCOP in terms of Rule 101.
3. Overview of the Oversight Visit to Abaqulusi
Local Municipality
3.1 On the 21st October 2014, the delegation of the
Select Committee on Cooperative Governance and Traditional Affairs had
interaction and a consultative meeting with the internal and external
stakeholders of the Municipality. The stakeholders the delegation interacted
with included the Mayor, Speaker, Chief Whip, senior officials of the Provincial
Department of Cooperative Governance and Traditional Affairs, the Ministerial
Representative and representatives of the Organised Labour and Ward Committee
members and members of municipal political parties.
4. Presentation
on the Justification for Request of Extension of Intervention in Abaqulusi Local Municipality
4.1 The Provincial Department of Cooperative Governance and
Traditional Affairs briefed the Members of the Select Committee on the
background of the constitutional intervention and the resolution of the KwaZulu-Natal
Provincial Executive Council, dated 10 September 2014, to extend the
intervention in terms of section 139(1)(b) of the Constitution.
4.2 The Departmental presentation focused on the background,
reason for the intervention and the terms of reference of the Ministerial Representative
in Abaqulisi Local Municipality.
5. Context
5.1 On
the 20th March 2013, the Provincial Executive Council resolved to
intervene at Abaqulusi Local Municipality in terms of
section 139(1)(b) of the Constitution, and assumed the
functions specified in terms of section 51, 54A and 56 of the Local Government:
System Act (Act 32 of 2000).
5.2 On
the 04th December 2013, the Provincial Executive Council noted
progress and some challenges which still remained. On that basis, it resolved
to extend the intervention until 30 September 2014. The intervention was
further extended on 10 September 2014 until 31 March 2015, due to outstanding
key intervention priority areas prevalent.
6. Reasons for the Intervention
6.1 The
Municipality had regressed from an unqualified audit opinion to a disclaimer
audit opinion for the 2011/12 financial year, highlighting significant
deficiencies in financial management, performance management and compliance
with laws and regulations which reflected a clear failure to fulfil executive
obligations.
6.2 The
Municipality also failed to raise and account for the interest on arrears as
required by section 64(2)(g) of the Municipal Finance
Management Act (MFMA), Act 56 of 2003, and the absence of council resolution to
grant the exemption from charging interest as required by the Act.
6.3 The
annual report was not compliant with section 121 of the MFMA, and there was
also substantial disagreement in the council, regarding the filling of the post
of the Municipal Manager. The Municipality was without a Municipal Manager or an acting Municipal Manager from 31 January 2013 to 05 March
2013, which is a statutory violation.
6.4 Further, the Municipality refused or neglected to opt for
support offered by the Provincial Department of Cooperative Governance and Traditional
Affairs, despite having no top management structure in place.
7. Terms
of Reference of the Ministerial Representative at Abaqulusi
Local Municipality
7.1 The terms of reference
for the Ministerial Representative were as follows:
·
To review any decisions of the municipal council, its committees and
that of the Municipal Manager or managers directly accountable to the Municipal
Manager for the purpose of ensuring legality.
·
To devise a turn-around strategy for the Municipality, including a
strategy to promote good governance and ensure implementation of the council
resolutions by the administration.
·
To implement a system to control and approve all expenditure.
·
To implement all governance systems and procedures including appropriate
council oversight mechanisms.
·
To ensure implementation of financial systems, policies and procedures.
·
To review the organisational structure of the Municipality and undertake
all steps of the section 54A and section 56 of the Local Government: Municipal
Systems Act.
8. Presentation on the Intervention Progress Report
8.1 The Ministerial Representative briefed the delegation of the Committee
on the municipal progress report since the intervention, and the challenges
which are the basis for the request of extension of intervention in terms of
section 139(1)(b) of the Constitution. The
presentation focused on the five key performance areas of the five-year Local
Government Strategic Agenda, namely, institutional development and municipal transformation;
municipal financial viability and management; good governance and public
participation, basic service delivery and local economic development.
9. Institutional Development and Municipal Transformation
9.1 The
Municipality developed its process plan for reviewing the IDP for 2015-2016,
and adopted by council on the 27th August 2014. The process plan was
advertised on the 4th of September 2014, and the IDP Representative Forum
was scheduled to take place on the 11th September 2014 and was
rescheduled to November 2014.
9.2 The
Municipality drafted its Service Delivery Budget and Implementation Plan (SDBIP)
for the 2014/15 financial year in a session with the following as attendees:
Executive Committee, Speaker, Chairperson MPAC, Chief Whip and MANCOM. The
point was to inculcate a culture of common purpose. The SDBIP was approved by
the Mayor on the 18th June 2014, and submitted to council on the 26th
June 2014. The first quarter departmental performance assessments were
conducted from the 13th to the 17th of October 2014.
9.3 The
review of the Human Resources Policies has been completed but was scheduled for
a workshop of all councilors, before final adoption. An assessment was currently
conducted for the annual skills development for all the employees and has been
finalized. An annual training plan has been finalized and it was due for the
Training Committee.
9.4 A procedural
document in compliant with section 75 of the MFMA, that regulates the
information to be published on the municipal website has been drafted, the
website was being updated.
9.5 The
Employment Equity Plan has been drafted and was due for the managers to make
comments, and shall be presented to the Union members for consultation processes,
before approval and submission to the Department of Labour.
10. Financial Viability and Management
10.1 The
Municipality’s revenue for the month of August 2014 was 20,5%
of budget. Trading services revenue was 15,7% of
budget. The revenue collection rate for the month of August was higher due to
the 1st tranche of the equitable share having been received during
July. Stricter credit control of zero tolerance on agreements and
disconnections has been implemented. Plans were underway to solve that and
embark in a study for alternative revenue sources.
.
10.2 Expenditure
for the month to August 2014 was 11,6% of budget. This
was due to the payment for Eskom being made during the month of August, for the
July account, as Eskom was paid in arrears. The prior audit report showed a
significant improvement in the SCM and expenditure controls.
11. Good Governance and Public Participation
11.1 Council
has for the current year adopted an annual program for the sitting of council,
EXCO, Portfolio and Municipal Public Accounts Committee. However, during the
first quarter of the current financial year, committees did not sit as
scheduled due to the instability within the institution, which was created by
the dismissal of the MEC’s appeal at the Constitutional Court. The reviews
of the Rules of Order, and the Orders of Delegation
have been completed and await a workshop and council approval. A workshop of
councilors on Roles and Responsibilities including the Code of Conduct has been
conducted by the Department of Cooperative Governance and Traditional Affairs.
11.2 All Directors concluded performance contracts by end
July 2014 and the one of the Chief Financial Officer will be concluded in
December 2014, and all copies were submitted to Department of Cooperative
Governance and Traditional Affairs in August 2014.
11.3 The annual
financial statements implementation plan and corrective action has been
stringently adhered to. All processes and committees have been put in place to
deal with the Auditor-General’s requirements. The fourth quarter dashboard by
the Auditor-General has confirmed that the Municipality is in a better stead to
achieve a better audit opinion.
11.4 The risk
management situation in the Municipality has improved drastically in that
Provincial Treasury has concluded the risk register which each of the
departments, and now it was in the process of departments monitoring and
reconciling other risk areas to be addressed. The risk chapter will be included
in the monthly reports and departments will report progress on risk. The Audit
Committee was fully functioning and has met the seating requirements and will
continue to meet going forward by the end of the financial year. Management has
advertised the two vacancies in the committee, and the advert was closing on
the 28th of September 2014, the process of filling the vacancies
will be concluded in October 2014.
12. Local Economic Development
12.1 The
Municipality has not yet developed its Local Economic Development Plan, but has
committed to complete the Plan in December 2014.
13. Basic Service Delivery
13.1 Municipality was in the process of developing draft social
assistance policy to be completed by November 2014. It has facilitated a
partnership with the Development Bank of South Africa (DBSA) on support, including its comprehensive Infrastructure
Plan.
14. Opinion of the Member of Democratic
Alliance (Party Whip)
14.1 The
member of Democratic Alliance raised concerns with regard to the manner in
which the intervention was issued. Some of the major concerns raised related to
the non-implementation of projects during the period of the intervention and
the municipal requirement for the current councillors to repay monies committed
by the previous councillors.
15. Opinion
of the Member Inkatha Freedom Party (Party Whip)
15.1 The
Inkatha Freedom Party member raised concerns with
regard to the justification of the intervention and extension. The major
concerns raised related to the manner in which section 56 managers have been
recruited and appointed, municipal requirement for current councillors to repay debts committed by
previous councillors and the dismissal of 25 municipal employees.
16. Opinion
of the Member of National Freedom Party (Party Whip)
16.1 The
Member of the National Freedom Party raised concerns with regard to the
intervention. The major concerns raised related to the
report of the Ministerial Representative on the projects implemented by the councillors
and the implementation of decisions by the Ministerial Representative.
17. Opinion of the Member of African National
Congress (Party Whip)
17.1 The
African National Congress member expressed support and welcomed the progress
made in the Municipality in terms of section 139(1)(b)
of the Constitution. The major progress reported included the improvement of
political relations among councillors, reconciliation during the strategic
planning workshop held in February 2014 and the restoration of political
stability and governance.
18. Opinion of the Representative of Organised
Labour
18.1 The
senior official of the South African Local Government Association (SALGA)
pledged on behalf of the office bearers, support of the request for extension of
the intervention in terms of section 139(1)(b) of the
Constitution. The Association welcomed the progress made by the Ministerial Representative,
more especially with regard to governance, municipal administrative and
political stability and the processes around restructuring and municipal
amalgamation.
19. Opinion of Labour Unions
19.1 The
representative of the labour Union submitted a joint opinion of the IMATU and SAMWU
supporting and welcoming the progress made since the intervention was invoked. Although
acknowledging the progress made with regard to the functionality of local
labour forum, organised labour raised concerns with regard to unfair dismissal
of 25 municipal employees, employers decision to take the matter of dismissed
employees to the labour court and legal costs incurred by the Municipality in
that regard.
20. Committee
General Observations and Opinion
20.1 The
Committee has observed and noted that the Provincial Department of Cooperative
Governance and Traditional Affairs has failed to comply with the resolution
passed by the NCOP during the Fourth-Parliament, which required the Department
to table quarterly progress reports in respect of intervention issued in terms
of section 139(1)(b) of the Constitution in Abaqulusi
Local Municipality.
20.2 The
Committee has also noted that on the 20thMarch 2013, the Executive
Council resolved to intervene at Abaqulusi Local
Municipality in terms of section 139(1)(b) of the Constitution, and assumed the
functions specified in terms of section 51, 54A and 56 of the Local Government:
System Act.
20.3 On
the 04 December 2013, the Provincial Executive Council noted the progress and
the challenges which remained in the Municipality. On that basis, it resolved
to extend the intervention in terms of section 139(1)(b)
of the Constitution, at the Municipality until 30 September 2014. The
intervention was further extended on 10 September 2014 until 31 March 2015, due
to the outstanding key intervention priority areas.
20.4 The
Committee has observed and noted that the intervention priority areas which
becomes justification for the request of extension of intervention until March
2015, which related to strategic objectives of local government namely, institutional
development and municipal transformation, financial viability, good governance
and public participation, local economic development and basic service delivery.
20.5 The
Committee has noted and welcomed the progress made by the Municipality in
developing the 2014/15 SDBIP, conclusion of performance contracts of section 26
managers; completion of the review of the Rules of Orders and delegation and
the role of the Provincial Department of Cooperative Governance and Traditional
Affairs in conducting workshops for the Councillors.
20.6 Despite
the progress made in respect financial viability, good governance and public
participation, the Committee was of the opinion that the Ministerial Representative, needs to fast-track the process of
developing the municipal Local Economic Development Plan and Social Assistance
Framework, in order to deal effectively and efficiently with challenges related
to basic service delivery.
20.7 The
Committee has further observed and welcomed the proactive role played by SALGA
and the part played by the Provincial Monitoring Task Team on the interventions
in the KwaZulu-Natal Province.
21. Committee Recommendations to the NCOP
21.1 Having
conducted the oversight visit to Abaqulusi Local
Municipality in response to the request of extension of intervention terms of
section 139(1)(b) of the Constitution, the Select
Committee recommends to the Council as follows:
20.1.1 The NCOP approves the request of the extension of intervention in
terms of section 139(1)(b) of the Constitution in Abaqulusi Local Municipality, until March 2015.
20.1.2 The Ministerial Representative
should fast track the process of developing the municipal Local Economic Development
Plan and Social Assistance Framework, for consideration and adoption by the Municipality.
20.1.3 The KwaZulu-Natal Provincial
Department of Cooperative Governance and Traditional Affairs should table an
exit report on the intervention in Abaqulusi Local
Municipality to the NCOP by April 2015.
20.1.4 On
cross-cutting issues with regards to women and youth that were raised during
the oversight visit, to be referred to the Department of Women in The
Presidency and the National Youth Development Agency (NYDA).
Report to be considered.