COGTA 2019BRRR

3. BUDGETARY REVIEW AND RECOMMENDATION REPORT OF THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS, DATED 16 OCTOBER 2019

The Committee was briefed by the Department of Traditional Affairs (DTA), Municipal Infrastructure Support Agent (MISA), the South African Local Government Association (SALGA), the Municipal Demarcation Board (MDB) and The CRL Rights Commission, on their 2018/19 Annual Reports, from 8 – 9 October 2019. Having assessed the financial and non-financial performance of the Department of Traditional Affairs (DTA), the Municipal Infrastructure Support Agent (MISA), the South African Local Government Association (SALGA), the Municipal Demarcation Board (MDB) and the CRL Rights Commission for the 2018/19 financial year, the Portfolio Committee on Cooperative Governance and Traditional Affairs, (the Committee) reports as follows: 

1.Background

1.1.Committee Mandate

Chapter 4 of the Constitution of the Republic of South Africa (1996) sets out in detail the powers, functions and procedures of Parliament. It tasks Parliament through its Committees, such as the Portfolio Committee on Cooperative Governance and Traditional Affairs, with the following functions:

• Making laws;
• Maintaining oversight over the National Executive Authority and any organ of state;
• Facilitating public involvement in the legislative and other processes of the National Assembly and its Committees;
• Participating in, promoting and overseeing co-operative governance; and
• Engaging and participating in international participation (participate in regional, continental and international bodies)

In line with the parliamentary oversight functions, Section 5 of the Money Bills Amendment Procedure and Related Matters (Act No.9 of 2009) empowers Portfolio Committees, to assess annually the performance of each national department through an annual Budgetary Review and Recommendations Report (BRRR). The overarching purpose of the BRR Report is for a Committee to make recommendations on the forward use of resources to address the implementation of policy priorities and services as the relevant department may require additional, reduced or re-configured resources to achieve these priorities and services. The Act also gives effect to Parliament’s constitutional powers to amend the budget in line with the fiscal framework. The BRRR process enables a Committee to exercise its legislative responsibility to ensure that the Department and the relevant entities fulfil their respective mandates.   

1.2.Core functions of the Department

The main aim of the Department of Cooperative Governance and Traditional Affairs is to improve cooperative governance across the three spheres of government. The Department must support and strengthen the capacity of municipalities to manage their own affairs, exercise their powers and perform their functions, as envisaged in s154 of the Constitution.

The Department also oversees the following entities:

• The Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities, which promotes and protects cultural, religious and linguistic rights.

• The Municipal Demarcation Board, an independent authority responsible for determining municipal boundaries and also mandated to declare district management areas, delimit wards for local elections and assess the capacity of municipalities to perform their functions.

• The South African Local Government Association, which has a constitutional mandate to assist in the transformation of local government.

• The Municipal Infrastructure Support Agent, whose mandate is to render technical advice, and support to municipalities, as well as strengthen their capacity to provide access to basic services.

1.3.Purpose of the Report

Section 77 (3) of the Constitution stipulates that an Act of Parliament must provide for a procedure to amend money Bills before Parliament. This Constitutional provision resulted in Parliament passing the Money Bills Amendment Procedure and Related Matters (Act No. 9 of 2009) (the Money Bills Act). The Money Bills Act sets out the process that allows Parliament to make recommendations to the Minister of finance to amend the budget of a national department. In October each year, Portfolio Committees must compile the Budgetary Review and Recommendation Reports (BRRR) that assess service delivery performance given the available resources; evaluate the effective and efficient use and forward allocation of resources; and may make recommendations on forward use of resources.

1.4.Method of reporting

This BRR Report assesses the financial performance as well as service delivery performance of the Department of Traditional Affairs, the Municipal Infrastructure Support Agent, the South African Local Government Association, the Municipal Demarcation Board and the CRL Rights Commission for the 2018/19 financial year. Informing the assessment are briefings to the Committee by the Department and entities, and other sources of information such as the Reports of the Auditor-General and Annual Reports.

1.5.Report outline

The structure of the Report is as follows: section two provides an overview of key policy focus areas during the 2018/19 financial year. Section 3 provides key financial and performance recommendations of the Portfolio Committee on COGTA. Section 4 of the Report provides an overview and assessment of reported financial and service delivery performance for the 2018/19 financial year. Section 5 of the Report focuses on the Portfolio Committee’s observations on governance, technical, service delivery and financial performance information. Section 6 tabulates additional reporting requests by the Portfolio Committee. The Report concludes with recommendations in section 7.

2.POLICY OVERVIEW

Informing the work of the Cooperative Governance and Traditional Affairs Portfolio during the year under review were the following policy priorities:

• The Municipal Demarcation Board continued implementing its mandate of conducting capacity assessments of municipalities, consulting with affected stakeholders on municipal boundary misalignments, and determining municipal geographical and spatial boundaries.
• The CRL Rights Commission focused on resolving disputes arising from cultural, religious and linguistic differences and particularly those relating access to burial land and graves, especially on farms and private property. The findings of the Commission’s Report on the Commercialisation of Religion and Abuse of People’s Belief Systems, as well as findings of the Report on deaths and injuries that occur during traditional initiation ceremonies, continued to occupy the centre stage in the work of the Commission. The Commission also sought to mobilise stakeholders on the indigenisation of the law making process.
• The South African Local Government Association placed emphasis on examining South Africa’s current energy landscape, analysing the emerging trends and defining the future role for local government in energy supply. There was also a campaign for broadband to become the fifth utility in municipalities – in addition to water, electricity, sewage and property – in order to promote high quality and reliable service provision and infrastructure investment. The challenges relating to the constitutional authority for electricity distribution - in view of the electricity distribution dispute between Eskom and municipalities - was another key area of intervention.
• The Municipal Infrastructure Support Agent continued to prioritise technical support to needy municipalities, including establishing district support teams, comprising experts in planning, project management, finance, and institutional governance, to intensify support to affected municipalities.
• The Department of Traditional Affairs intensified its contribution towards strengthening traditional leadership institutions, promoting the cultural and customary way of life, social cohesion and nation building in line with Chapter 15 of the National Development Plan.

3.SUMMARY OF PREVIOUS KEY FINANCIAL AND PERFORMANCE RECOMMENDATIONS OF THE COMMITTEE.

4.OVERVIEW AND ASSESSMENT OF FINANCIAL AND SERVICE DELIVERY PERFORMANCE 2018/19

4.1.Department of Cooperative Governance

The Portfolio Committee has not assessed the service delivery, financial performance, audit findings, the reported achievements and challenges of the Department of Cooperative Governance. The Department had not yet tabled its Annual Report at the time of the BRRR process. In an explanatory letter to the Portfolio Committee, the Director-General of DCoG cites the Auditor-General as the reason for the delay.

4.2.Department of Traditional Affairs

The DTA amended its Annual Performance Plan in the course of the financial year, resulting in a mismatch between the targets set at the beginning of 2018/19 and those set later in the financial year. Despite this, the Department saw an achievement rate of 95 percent (20/21) on the performance targets set. The Auditor-General assessed the reliability, validity, accuracy and completeness of the performance information and did not identify any findings on its usefulness and reliability of the information.

4.2.1.Financial performance

The Department did not incur any irregular, fruitless and wasteful expenditure during the year under review.

4.2.2.Audit findings

4.2.3.Key reported achievements

• Achievement of a clean audit for the third consecutive financial year.
• Implementation of a Programme of Action on the involvement of Traditional Leaders in Agrarian Revolution and Community Works Programme.
• Published two books on customary law of succession and genealogy
• Implemented the National House of Traditional Leaders’ Women Empowerment Project in five provincial houses of traditional leaders

4.2.4.Key reported challenges

• Underspending amounting to R9 043 000 or 5.6 percent of the Department’s total budget of R163 306 000, which the DTA attributes to the end of term of office for the Commission on Traditional Leadership Disputes and Claims.
• Delays in the finalisation of the Traditional and Khoi-San Leadership Bill, which contributed to the DTA’s under expenditure during the year under review.

4.3.Municipal Infrastructure Support Agent

MISA achieved 91 percent (29/32) of the annual performance targets set for the 2018/19 financial year, which is a significant improvement in comparison to the achievement of 63 percent in 2017/18. The Auditor-General did not raise any material findings on the usefulness and reliability of the reported performance information. One of the non-achieved targets was under the Administration Programme, while the other two were under the Technical Support Services Programme. The former related to spending 84 percent of the allocated budget instead of the envisaged 98 percent. This was the cumulative effect of delays in the implementation of some key projects in the previous financial years. The two other deviations pertained to conducting four of the five envisaged district basic service-delivery backlog assessments, as well as the development of two instead of ten envisaged municipal infrastructure sector plans.

4.3.1.Financial performance

4.3.2.Audit findings

4.3.3.Key reported achievements

• An unqualified audit opinion with no emphasis of matters (clean audit) for the first time since establishment in 2012.
• An achievement of 91 percent (29/32) of the 2018/19 Annual Performance Plan Targets, which is a significant improvement in comparison to the achievement of 63 percent in 2017/18.
• Zero irregular expenditure, compared to irregular expenditure amounting to R12.1 million in 2017/18.
• The vacancy rate decreased from 75% in 2017/18 to 24% by the end of the 2018/19 financial year.

4.3.4.Key reported challenges

• Retention of technical officials has proven difficult due to scarcity and competitive remuneration packages in the sector.
• Failure to attract Persons with disabilities.

4.4.South African Local Government Association

During the year under review, SALGA achieved 98% (54/55) of the targets set in its 2018/19 APP – a 3% percent increase compared to the previous financial year’s achievement. The Auditor-General did not raise any material findings on the usefulness and reliability of the reported performance information. There was only one reported deviation from the planned performance targets, namely under Programme 2: Economic Growth and Spatial Transformation, where the Association did not achieve the performance target of developing a funding model for municipal health services.

4.4.1.Financial performance

4.4.2.Audit findings

4.4.3.Key reported achievements

• Ninety-eight percent (98%) achievement of predetermined objectives in the Annual Performance Plan (APP).
• The development of a Consequence and Accountability Framework for municipalities, particularly in light of the regression in audit by more than a third of municipalities over the past year.
• The seventh consecutive clean audit, with no emphasis of matters.

4.4.4.Key reported challenges

There were reported instances of control deficiencies relating to procurement and information technology governance and control systems. However, such matters reported were not material.

4.5.CRL Rights Commission

The CRL Rights Commission achieved 100 percent of the targets set during the period under review. The Auditor-General did not raise any material findings in respect of the reliability and usefulness of the reported performance information.

4.5.1.Financial performance

4.5.2.Audit findings

4.5.3.Key reported achievements

• The hosting of a National Consultative Conference (NCC) in compliance with the CRL Rights Act. There has been instances where the Commission was unable to host the NCC due to financial constraints.
• Organising a Religious Consultative Summit to create a platform for the religious sector to finally deliberate on some contested recommendations by the Commission.
• Achievement of 100 percent of targets set during the period under review, with no material audit findings on the usefulness and reliability of the reported performance information.

4.5.4.Key reported challenges

• The Commission’s human resource capacity of approximately 30 staff members constrains its ability to meet the increased demand for its services.
• Insufficient budget also negatively affects the Commission’s oversight work.

4.6.Municipal Demarcation Board

During the period under review, the Demarcation Board achieved 96 percent of the Annual Performance Plan (APP) objectives, thus improving performance by seven percent, from 89 percent in 2017/18. There was only one reported deviation from the planned performance targets, namely under Programme 1: Administration, where the payment of audit invoices was not within the prescribed 30-day period. The Auditor-General did not raise any material findings on the usefulness and reliability of the reported performance information.

4.6.1.Financial performance

4.6.2.Audit findings

4.6.3.Key reported achievements

• Finalisation of technical municipal re-determinations.
• Completion of municipal capacity assessments for the first time since 2011.
• Hosting of the conference on 20 years of demarcation, which highlighted the MDB’s contribution to the transformation of municipal spaces, including lessons learned.
• The receipt of a ‘clean’ audit for the first time since establishment.

4.6.4.Key reported challenges

• During the period under review, limited funding constrained the Board’s ability to implement some of its key projects, including the establishment of a regional footprint across the country.
• A number of employees resigned in search of better opportunities, partly due to the Board’s inability to implement the job evaluation results, which indicated that it was underpaying the employees in the evaluated posts.
• The envisaged review and amendment of the Municipal Demarcation Act (Act no.27 of 1998) is yet to materialise, and this could have a negative impact on the preparation for the 2021 local government elections.
• Inadequate spatial description of traditional council areas.
• Public misunderstanding of municipal demarcation processes.

5.COMMITTEE OBSERVATIONS

Based on the foregoing developments, the Portfolio Committee on Cooperative Governance and Traditional Affairs observes as follows:

• Notes and congratulates the MDB and MISA for obtaining ‘clean audits’ for the first time since establishment. Further appreciates SALGA and the DTA for sustaining their ‘clean audits’, and for the quality of the information presented to the Committee.

• Notes the lack of cooperative governance and the ‘silo’ approach in the COGTA portfolio where there is no regular information sharing on effective governance and control systems, resulting in non-uniform audit outcomes.

• Notes and appreciates the work of the CRL Rights Commission, but believes that the Commission could improve by raising the profile of its work and activities around linguistic matters to be on par with its work around religious and cultural matters.

• Notes that the CRL Rights Commission has high potential to attract and raise funding from other sources, particularly given the community oriented nature of its work.

• Notes and appreciates the honesty in which the leadership of the CRL Rights Commission admitted to wrongdoing in relation to the irregular procurement of protection services for the former Chairperson.

• Concerned that the legal fees incurred during the period under review are too high and urges the Commission to investigate whether or not the legal fees are inflated.

• Notes and expresses disappointment at the repeat late tabling of the DCoG Annual Report, the quality of the explanation provided for the late tabling, as well as the absence of the DCoG Accounting Officer in the BRRR meetings.

• Concerned that it is becoming the norm for DCoG to submit its Annual Financial Statements late, thus disrupting the entire Programme of Parliament.

• Notes the lack of consequences management on the part of DCoG’s Executive Authority, and that it seems to be business as usual for the institution.

6.TABLE OF COMMITTEE’S REPORTING REQUESTS

7.RECOMMENDATIONS

• The Minister should ensure that the CRL Rights Commission raise the profile of its work and activities around linguistic matters to ensure balance vis-à-vis its work and activities around cultural and religious matters.
• The Minister should ensure that the CRL Rights Commission improve the implementation of its post-audit action plan to prevent stagnation of audit opinion.
• The Minister should encourage the CRL Rights Commission to consider raising supplementary income from other funding sources, as it has a high potential to do so.  
• The Portfolio Committee on Cooperative Governance and Traditional Affairs should develop mechanisms to ensure that there are consequences for inadequately explained failures to adhere to the prescribed timeframes for the tabling of Annual Reports.
• The Portfolio Committee should commence with the process of introducing the proposed amendments to the Demarcation Act as a Committee Bill to ensure that the Bill is in time for the post 2021 municipal demarcation cycle.
• The Portfolio Committee should make it a standard Committee agenda item for Committee Members to report on the current issues affecting their constituencies, instead of waiting for petitions.
• The Portfolio Committee should engage more robustly with the work of the National House of Traditional Leaders and assess the House’s impact on traditional communities.

8.APPRECIATION

The Committee wishes to thank the Department of Traditional Affairs, CRL Rights Commission, Auditor-General of South Africa, SALGA, Municipal Demarcation Board, and MISA for their fruitful, cordial and constructive engagements. The contributions of Committee Members, as well as Committee support staff is highly appreciated.

Report to be considered