ATC120502: Report on Budget Vote 3, dated 2 May 2012

Cooperative Governance and Traditional Affairs

Report of the Portfolio Committee on Co-operative Governance and Traditional Affairs on Budget Vote 3: Co-operative Governance and Traditional Affairs, dated 2 May 2012

Report of the Portfolio Committee on Co-operative Governance and Traditional Affairs on Budget Vote 3: Co-operative Governance and Traditional Affairs, dated 2 May 2012 .

 

The Portfolio Committee on Co-operative Governance and Traditional Affairs, having considered Budget Vote 3: Co-operative Governance and Traditional Affairs, reports as follows:

 

A. INTRODUCTION

The Portfolio Committee on Co-operative Governance and Traditional Affairs considered the Budget Vote and Annual Performance Plan of the Department of Co-operative Governance and the Department of Traditional Affairs on 13 and 20 March 2012. The Committee considered the Strategic Plans of the entities reporting to it on 28 February and 6 March 2012.

 

B. PARTICIPANTS IN THE BUDGET HEARINGS

Those who appeared before the Committee included:

 

1. Minister of Co-operative Governance and Traditional Affairs and Departments of Co-operative Governance and Traditional Affairs

2. The South African Local Government Association (SALGA)

3. Municipal Demarcation Board (MDB)

4. Commission for the Promotion and Protection of Cultural, Religious and Linguistic Communities (CRL Commission)

5. South African Cities Network (SANS); and

6. National House of Traditional Leaders (NHTL)

 

C. Briefings by Departments and Entities

 

C.1 DEPARTMENT OF CO-OPERATIVE GOVERNANCE ( DoCG ) AND DEPARTMENT OF TRADITIONAL AFFAIRS (DTA)

1.1 Mandate:

The primary mandate of the Department of Co-operative Governances to:

• develop and monitor the implementation of national policy and legislation seeking to transform and strengthen key institutions and mechanisms of governance to fulfill their developmental role;
• develop, promote and monitor mechanisms, systems and structures to enable integrated service delivery and implementation within government; and
• monitor and evaluate co-operation amongst government stakeholders to achieve improved service delivery.

 

1.2 Vision and Mission :

Vision:

An integrated, responsive and highly effective governance system working with communities to achieve sustainable development and improved service delivery.

 

Mission :

The Department’s mission is to facilitate co-operative governance and support all spheres of government, the institution of traditional leadership and associated institutions through:

 

• development and implementation of appropriate policies and regulatory mechanisms to promote integration of government development programmes ;
• achievement of social cohesion through the creation of enabling mechanisms for communities to participate in government; and
• monitoring and evaluation of co-operation amongst government stakeholders to achieve improved service delivery.

 

Department’s Strategic Priorities and Measurable objectives:

The Department of Co-operative Governance developed plans for the 2012/13 financial year aimed at addressing and mobilizing government and society broadly to restore the confidence of communities in the country’s municipalities, as well as building an effective, efficient, responsive and developmental local government. For the 2012/13 financial year, Department of Co-operative Governance will focus its resources and energy on the following key priority issues:

 

• Promoting sound financial management
• Enhancing Good Governance
• Fighting Corruption
• Accelerating service delivery
• Facilitating sustainable infrastructure development.

 

Policy priorities for 2012/13

In 2010 the President signed service delivery agreements with Ministers and, with regard to COGTA, the agreement was based on Outcome 9, which aims to build a “Responsive, accountable, effective and efficient local government system”. The service delivery agreement provides a medium-term commitment from 2009 – 2014 in order to improve governance systems and unlock development potential. The outputs articulated below stem from Outcome 9 of the agreements which plans to achieve a responsive, accountable, effective and efficient local government system.

 

The delivery agreement contains seven outputs, defined as follows: implement a differentiated approach to municipal financing, planning and support (output 1); improve access to basic services (output 2); implement the community work programme (output 3); actions supportive of the human settlement outcome (output 4); deepen democracy through a refined ward committee model (output 5); administrative and financial capability (output 6); and a single window of co-ordination (output 7).

In terms of policy priorities it is noteworthy that even during the past year there were a realization and commitment to allocate more resources to long-term infrastructure investment, as was highlighted by the Minister of Finance in the budget speech when he stated that:

 

“ Over the next three years, the public sector aims to spend R846 billion on its infrastructure programme. Extensive planning and consultation is in progress on infrastructure programmes for the next 10-20 years, in recognition of our long-term development challenges ”.

 

It is important to note that the typical challenge in municipalities, particularly low- to medium- capacity municipalities, is the absence of long-term planning in local government. Subsequently, municipalities are unable to spend and National Treasury then withholds funds - for instance, an amount of R287 million in MIG funds was withheld because of poor spending by municipalities. Another critical challenge in municipalities is the ageing infrastructure which requires maintenance; but municipalities allocate very little funds for that purpose and thus have decaying infrastructure.

 

It is in this context that long-term planning becomes important; hence the President reflected on the National Development Plan (NDP), which has been developed by the National Planning Commission. The NDP seeks to address serious fundamental challenges, including the triple challenges of the current epoch alluded to by the President, which include unemployment, poverty and inequality which require a sustainable solution in order to realise the objective of a better life for all.

 

Against this backdrop, the government has developed the National Development Plan to tackle current and ongoing challenges, as well as the medium- to long-term development path.

 

The priorities for the Department over the medium term include:

• accelerating universal access to affordable basic services;
• significantly reducing infrastructure backlogs;
• supporting provinces and local government to achieve clean audits; and
• supporting municipalities to reduce municipal debt by half.

 

The Performance and Service Delivery Information

 

In the previous year the Department elucidated the several priorities. In summary, the short- term priorities are mainly around ongoing support, promulgation and enforcement of legislation and regulation, and integrated planning and co-ordination. In the medium term, however, more ambitious priorities are emphasized, including significant reduction of infrastructure backlogs; provision of affordable basic services to all citizens; formalisation of all informal settlements; having clean cities (through the management of waste) to create employment and wealth; and improvement of municipal financial and administrative capacity through monitoring municipal financial viability. These are in turn linked to or embedded in several programmes or strategies of DCOG i.e. LGTAS, Operation Clean Audit, the Community Works Programme, and the Siyenza Manje programme.

 

In terms of providing support, it must be noted that the Department established provincial offices with technical support personnel to render assistance to municipalities. These units have helped municipalities to develop their own tailor-made Municipal Turnaround Strategies (MTAS). However, the development and adoption of MTAS and their incorporation into Integrated Development Plans is uneven across provinces

With respect to legislation and regulations, the Department promulgated the Municipal Systems Amendment Act, which was signed into law in 2011. This Amendment Act is a great step forward in municipal governance regarding professionalization , and the fight against fraud and corruption.

 

Regarding the stated medium-term objectives, as stated earlier, they are difficult to quantify due to difficulties that obtain in relation to reliable and verifiable statistics. However, in terms of infrastructure spending, the Department reports improved Municipal Infrastructure Grant spending to R11.5 billion. Linked to infrastructure spending is the provision of basic services, which is reported as follows:

 

• Universal access to basic water services: 1.75 million
• Community lighting: 546 537
• Universal access to sanitation services: 1.7 million
• Number of households reached with roads from public sector: 1.9 million

 

In terms of implementation of clean towns and cities, the Departmental target was 32 participating cities per year, but only eight participated in the 2011/12 reporting period.

 

Lastly, the improvement of audit outcomes has been indicated by the Auditor-General in June 2011. The Consolidated Audit Outcomes reflected that seven municipalities received clean audits. Those that received clean audit reports are the Ehlanzi district municipality, the Steve Tshwete and Victor Khanye municipalities (all three in Mpumalanga), the City of Cape Town, Metsweding ( Gauteng ), Frances Baard (Northern Cape) and the local municipality of Fetakgomo (Limpopo). A total of 57 municipalities had improved audits compared with the previous financial year, while 15 had audit reports that were worse than in the previous year

 

 

Strategic Goals

The Department’s Strategic objectives and goals for 2009-2014 are set out as follows:

• Strategic Goal 1: A policy platform that provides a differentiated approach to municipal financing, planning and support is implemented ;
• Strategic Goal 2: Improved access to basic services ;
• Strategic Goal 3: Implementation of the Community Work Programme (CWP);
• Strategic Goal 4: Local democracy through a refined Ward Committee model is deepened;
• Strategic Goal 5: Administrative and financial capabilities of municipalities are enhanced;
• Strategic Goal 6: Strengthen the co-operative governance and provide oversight of and support to provincial and local government;
• Strategic Goal 7: Strengthen the capacity and capability of the Department to deliver on its mandate;
• Strategic Goal 8: Improved co-ordination of interventions impacting on local government; and
• Strategic Goal 9: Facilitate Economic Development at local level

 

Programme Performance Plans

Budget of the Department

 

The funding priorities of the Department must be consistent with the policy priorities to ensure that the Department delivers on its mandate.

 

Programme	Budget		Nominal Increase / Decrease in 2012/13	Real Increase / Decrease in 2012/13	Nominal % change in 2012/13	Real % change in 2012/13
R million	2011/12	2012/13
Administration	205.4	201.4	-4.0	-15.2	-1.95	-7.41
Policy research and knowledge management	41.5	46.1	4.6	2.0	11.08	4.90
Governance and intergovernmental relations	34476.6	37981.9	3505.3	1389.2	10.17	4.03
Disaster Response management	816.2	555.2	-261.0	-291.9	-31.98	-35.77
Provincial and Municipal Grant Systems	249..9	284.7	34.8	18.9	13.93	7.58
Infrastructure and Economic Development	12331.4	15544.2	3212.8	2346.8	26.05	19.03
Traditional Affairs	83.8	102.1	18.3	12.6	21.84	15.05
TOTAL	48204.7	54715.6	6510.9	3462.5	13.5	7.18

 

 

The total allocation for the Department in the 2012/13 financial year is R54.7 billion, which represents a 7.18%% real increase from the R48.2 billion in the previous year. Notably, the largest increase is in the Infrastructure and Economic Development Programme which received an increase of 19.03% in real terms.

 

There are three programmes that take up a larger share of the budget. Governance and Intergovernmental Relations received R34.2 billion in the previous year and has been allocated R38 billion in the current year, which represents a 4.03% increase in real terms. The Disaster Response Management programme also got a substantial decrease from R816 million in the previous year to R555.2 million in the current year. It is unclear why such a decrease has occurred in light of recurrent waves of floods and other disaster associated with climate change. Further, cognisant of the need for construction of District Disaster Management Centres , the budget allocation for this programme should be increased instead of being cut.

 

The Departmental budget allocation is expected to increase to R63.8 billion in 2014/15. Over the medium term, expenditure is expected to increase from R48.2 billion in 2011/12 to R63.8 billion in 2014/15, at an average annual rate of 9.8%. This increase is driven by higher spending on the transfers to local government through the equitable share and the municipal infrastructure grant, as well as greater allocations for disaster relief. The additional allocations over the MTEF period include R2.2 billion for the local government equitable share, R3.5 billion for the community works programme to increase participants to 250 000 in 2014/15, and R274.1 million for the municipal infrastructure grant to improve rural sanitation. Between 2008/09 and 2014/15, spending on consultants is expected to increase from R39.7 million to R244.8 million, at an average annual rate of 35.4%, as a result of infrastructure work done by contractors employed by the Development Bank of Southern Africa to provide technical assistance to municipalities in infrastructure development.

 

The Department is responsible for managing and transferring the municipal infrastructure grant and provides support to provinces and municipalities in implementing municipal infrastructure grant projects. This conditional grant aims to accelerate the eradication of basic services’ backlogs in poor communities. Allocations for the municipal infrastructure grant increases from R7.2 billion in 2008/09 to R15.8 billion in 2014/15, at an average annual rate of 14.6%. In 2011/12, 1.8 million people were provided with access to water services and 1.3 million given access to sanitation services. In terms of community infrastructure, 1.3 million households were reached through the extension of road access and 616 186 households have benefited from community lighting.

 

Programme analysis

 

This part of the report provides a detailed analysis of programme allocations with emphasis on the reasons for the evident increases or decreases, as well as performance- related information for the year just ended. As will be demonstrated below, some programmes have actually declined and some remained steady in terms of increases, whilst others have increased substantially, namely Governance and Intergovernmental Relations and Infrastructure and Economic Development. It is important to note that some increased steadily in the MTEF period whilst others declined, namely the Disaster Response Management.

 

Programme 1: Administration

 

This programme is the apex of the Department. It is supposed to steer and provide impetus to the strategic direction of the Department in order to achieve the results of Outcome 9, as well as the MDGs . The Budget for this programme has actually decreased from R205.4 million to R201.4 million in the current year. The decreases emanate from the reduction of the allocation to the Ministry’s and Chief Operations Officer’s sub- programmes . Compensation for employees has also decreased from R97 million to R80.8 million in the 2012/13 financial year.

 

Over the medium term, expenditure is expected to increase to R225.5 million, at an average annual rate of 3.2%, to provide for increased accommodation and to build capacity in support services to accommodate the growing number of personnel in the Department for the traditional affairs function. Over the medium term, spending on consultants is expected to increase to R14.1 million, at an average annual rate of 7.7%. The consultants will be used to review the risk management strategy.

 

Programme 2: Policy, Research and Knowledge Management

 

The overall objective of this programme is to improve research and policy analysis, and improve reporting and monitoring as well as information management through Information Communication Technology. The total allocation for this sub-programme is R46.1 million. A substantial increased is recorded for the Information, Communication and Business Technology, which amounts to R24 million. This represents a 4.92% real increase from R21.6 million in the 2011/12 financial year. Over the medium term, the focus will be on improving the Department’s ICT infrastructure aligned to the knowledge management strategy.

 

Programme 3: Governance and Intergovernmental Relations

 

Essentially this programme focuses on sound intergovernmental relations, good governance and sound intergovernmental fiscal relations. This programme involves transfers to municipalities through the Local Government Equitable Share, as well as transfers to statutory entities such as the South African Local Government Association and the Municipal Dermarcation Board. Needless to say, the largest portion goes to transfers, particularly to the Local Government Equitable Share, which takes up R37.9 billion in the current year.

 

Programme	Budget		Nominal Increase / Decrease in 2012/13	Real Increase / Decrease in 2012/13	Nominal % change in 2012/13	Real % change in 2012/13
R million	2011/12	2012/13
Management: Governance	2.9	3.0	0.1	- 0.1	3.45	-2.32
Intergovernmental Relations and Coordination	8.5	9.5	1.0	0.5	11.76	5.54
Intergovernmental Fiscal Relations	277.5	12.1	- 265.4	- 266.1	-95.64	-95.88
Governance and Public Participation	5.7	6.2	0.5	0.2	8.77	2.71
South African Local Government Association	25.5	26.7	1.2	- 0.3	4.71	-1.13
Municipal Demarcation Board	38.5	40.4	1.9	- 0.4	4.94	-0.91
South African Cities Network	5.3	5.5	0.2	- 0.1	3.77	-2.01
United Cities and Local Government of Africa	4.9	5.1	0.2	- 0.1	4.08	-1.72
Local Government Equitable Share	34 107.9	37 873.4	3 765.5	1 655.5	11.04	4.85
TOTAL	34 476.6	37 981.9	3 505.3	1 389.2	10.2	4.03

 

Over the medium term, total expenditure is expected to increase to R43.8 billion, at an average annual rate of 8.3%. Over this period, the Green Paper on Co-operative Governance and the refined legislative framework for ward committees will be finalised in March 2012. The programme will also finalise the Municipal Property Rate Amendment Bill for tabling in Parliament. The Bill seeks to regulate the rating of property by assessment and rating of properties.

 

 

Programme 4: Disaster Response Management

 

Parliament passed the Disaster Management Act (52 of 2002) and the central tenets of this legislation is around preventing, responding to, mitigating and adapting mechanisms to natural and human-induced disasters. In the recent past, Mpumalanga and later KZN experienced floods which caused damage to infrastructure ,and property and loss of life. Despite this reality, the total budget decreased by-35.77% from R816.2 to R555.2 million. The most significant cut is in the Disaster Relief Transfers sub-programme from R775 million to R510 million. The reduction of the total budget is a result of decrease in the Disaster Relief Grant.

 

Programme	Budget		Nominal Increase / Decrease in 2012/13	Real Increase / Decrease in 2012/13	Nominal % change in 2012/13	Real % change in 2012/13
R million	2011/12	2012/13
Management: Head of Disaster	4.3	2.9	- 1.4	- 1.6	-32.56	-36.32
Legislation, Policy and Compliance Management	6.6	7.2	0.6	0.2	9.09	3.01
Planning Coordination and Support	15.6	9.9	- 5.7	- 6.3	-36.54	-40.07
Intelligence and Information Systems	14.7	25.2	10.5	9.1	71.43	61.88
Disaster Relief Transfers	775.0	510.0	- 265.0	- 293.4	-34.19	-37.86
TOTAL	816.2	555.2	- 261.0	- 291.9	-32.0	-35.77

 

 

All sub- programmes had a decrease in their allocations, with the exception of the Intelligence and Information Systems and Legislation, Policy and Compliance Management, which increased from R14.7 million to R25.2 million and from R6.6 million to R7.2 million respectively. The increase in the Intelligence and Information Systems sub-programme represents 61.88%, whilst the Legislation, Policy and Compliance Managementallocation increased by 3.01%.

 

Over the MTEF period, at an estimated cost of R5 million, the programme will continue to support the establishment and functionality of the 50 disaster management centres and the expansion of components of the national disaster management information systems to provinces and municipalities.

 

Programme 5: Provincial and Municipal Government Systems

 

The Programme has received a budget increase from R249.9 million to R284.7 million in the 2012/13 financial year, which represents a 7.58% increase in real terms. The significant increases are in the Management: Provincial and Local Government Support, which rose from R5.3 million in 2011/12 to R26.8 million in the current financial year. Another substantial increase is in the Development Planning sub-programme, which received an increase from R4.9 million in the 2011/12 financial year to R8.5 million in the current financial year.

 

Programme	Budget		Nominal Increase / Decrease in 2012/13	Real Increase / Decrease in 2012/13	Nominal % change in 2012/13	Real % change in 2012/13
R million	2011/12	2012/13
Management: Provincial and Local Government Support	5.3	26.8	21.5	20.0	405.66	377.49
Provincial Government Support and Intervention	9.4	9.0	- 0.4	- 0.9	-4.26	-9.59
Local Government Support and Intervention	10.0	10.3	0.3	- 0.3	3.00	-2.74
Development Planning	4.9	8.5	3.6	3.1	73.47	63.80
Municipal Systems Improvement Grant	220.2	230.1	9.9	- 2.9	4.50	-1.33
TOTAL	249.9	284.7	34.8	18.9	13.9	7.58

 

The Municipal Systems Improvement Grant has increased from R220.2 million in 2011/12 to R230.1 million in 2012/13 financial year. Even though the increase is substantial in nominal terms, in this sub-programme, there has been a negative growth – 1.33 due to the impact of inflation. Transfers from this sub-programme (Municipal Systems Improvement Grant) are used by municipalities to train staff in the areas of financial management, improve the efficacy of administrative systems and assist with the implementation of ward participatory systems. Over the medium term, expenditure is expected to increase to R314.7 million, at an average annual rate of 8%, due to the increase in allocation for the municipal systems improvement grant as support for the municipalities to develop their own turnaround strategies. The qualitative difference of the MSIG remains questionable given the weak systems and capacity in most municipalities.

 

Expenditure on consultants, which accounts for 0.5% of expenditure in this programme in 2011/12, is expected to increase from R1.2 million in 2011/12 to R3.1 million in 2014/15, at an average annual rate of 38.5%. The consultants were hired to develop and maintain Gapskill , a web based skills audit system that supports the department capacity building initiative in provinces.

 

Programme 6: Infrastructure and Economic Development

 

This programme is one of the most critical programmes in order for government to be able to expedite service provision and meet the MDGs by 2014. This will be achieved through a vigorous programme of infrastructure investment, maintenance and development planning. The Municipal Infrastructure Support Agency is expected to eliminate infrastructure backlogs through dedicated technical capacity to municipalities in order to intensify infrastructure development and thus improve service provision as well as free basic services. These programmes have received R15.5 billion, of which a large portion is for the Municipal Infrastructure Grant amounting to a total of R13.9 billion. The Community Works Programme also receives a substantial increase from R653 million in 2011/12 to R1.4 billion in the current year.

 

Programme	Budget		Nominal Increase / Decrease in 2012/13	Real Increase / Decrease in 2012/13	Nominal % change in 2012/13	Real % change in 2012/13
R million	2011/12	2012/13
Management: Infrastructure	23.4	3.0	- 20.4	- 20.6	-87.18	-87.89
Local Economic Development Planning	9.0	9.8	0.8	0.3	8.89	2.82
Infrastructure Development	10.0	13.2	3.2	2.5	32.00	24.65
Municipal Infrastructure Grant	11 443.5	13 881.6	2 438.1	1 664.7	21.31	14.55
Community Work Programme	653.5	1 439.9	786.4	706.2	120.34	108.06
Special Purpose Vehicle	192.1	196.6	4.5	- 6.5	2.34	-3.36
TOTAL	12 331.4	15 544.2	3 212.8	2 346.8	26.1	19.03

 

Over the medium term, expenditure is expected to increase from R12.3 billion in 2011/12 to R18.7 billion in 2014/15, at an average annual rate of 15%. This increase is mainly due to the Community Work Programme ’s funding, which is expected to grow at an average annual rate of 61.1%, to R2.7 billion over the MTEF period, with the aim of creating 250 000 job opportunities and growing the total number of sites participating in the programme.

 

The expenditure on goods and services also increases from R301.6 million in 2011/12 to R1.6 billion in 2012/13. The primary reason for this increase in goods and services is the continued utilisation of consultants, as articulated hereunder. Expenditure on consultants increased from R4 million in 2008/09 to R49.3 million in 2011/12, at an average annual rate of 131.4%, due to community work programme implementation at local level done by implementing agents. This is expected to grow to R209.3 million by 2014/15, at an average annual rate of 61.9%.

 

Programme 7: Traditional Affairs

 

Although the Department is a separate one from the Department of Co-operative Governance, the budget still falls under the Department of Co-operative Governance.

 

The strategic goals and objectives of the Department of Traditional Affairs are as stated below:

· Strategic goal 1: Empowered traditional communities

· Strategic goal 2: Effective governance system for traditional affairs

· Strategic goal 3: Sustainable partnerships and collaboration for service delivery

· Strategic goal 4: Effective Department of Traditional Affairs

· Strategic goal 5: Transformation of Traditional Authorities.

 

The endorsement of the establishment of the Department of Traditional Affairs as a separate department was promulgated through a Presidential proclamation in 2010. However the institutionalization of the Department is long overdue.

 

Programme	Budget		Nominal Increase / Decrease in 2012/13	Real Increase / Decrease in 2012/13	Nominal % change in 2012/13	Real % change in 2012/13
R million	2011/12	2012/13
Management: Head of Traditional Affairs	8.6	10.0	1.4	0.8	16.28	9.80
Policy and Legislation for Traditional Affairs	13.7	12.3	- 1.4	- 2.1	-10.22	-15.22
Institutional Support and Coordination	13.6	13.0	- 0.6	- 1.3	-4.41	-9.74
National House of Traditional Leaders	14.7	21.1	6.4	5.2	43.54	35.54
Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities	22.4	34.2	11.8	9.9	52.68	44.17
Commission on Traditional Leadership Disputes and Claims	10.9	11.4	0.5	- 0.1	4.59	-1.24
TOTAL	83.8	102.1	18.3	12.6	21.8	15.05

 

 

The overall budget for this programme in the current year is R102.1 million, which represents a 15.05% increase from the previous allocation of R83.8 million. The bulk of the increases are allocated to the CRL Commission and the National House of Traditional Leaders. Over the medium term, expenditure is expected to increase to R112.4 million, at an average annual rate of 10.3%, due to additional funding allocated to the Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities for policy research and capacity building.

 

Expenditure on consultants represents 7.9% of goods and services in 2012/13, and is expected to decrease from R5.7 million in 2011/12 to R5.5 million in 2014/15, at an average annual rate of 1.3%. This is due to the Department terminating the contract of a consultant hired to review current traditional affairs legislation aimed at the consolidation of national legislation into a single Bill.

 

C.2 SOUTH AFRICAN LOCAL GOVERNMENT ASSOCIATION (SALGA)

The SALGA five-year strategic Plan 2012-2017 has been developed against the backdrop of South Africa ’s third successful Local Government elections. Numerous achievements have been noted in Local Government. The Review of Local Government undertaken by government in the periods prior to the Local Government elections highlighted a number of challenges that still remain and which the new leadership needs to tackle, eg . a local government policy and fiscal framework that requires review in light of challenges experienced by the sector; leadership and governance challenges, including responsiveness and accountability to communities; financial and fiscal management, etc.

The strategic plan is aligned to its policy mandate and it commits the organization to be member-centricity, to engage in meaningful partnerships, to align and position the organization for high performance and to ultimately demonstrate seriousness and commitment to growing and developing the sector.

 

The strategic objectives are as follows:

 

• Strategic objective 1: Accessible, equitable and sustainable municipal services delivered by local government :

• Strategic objective 2: Safe and healthy environment and communities ,
• Strategic objective 3: Planning and economic development at local level
• Strategic objective 4: Effective, responsive and accountable local governance for communities
• Strategic objective 5: Effective human resources management in local government
• Strategic objective 6: Financially and organizationally capacitated municipalities
• Strategic objective 7: Effective and efficient administration ,.

 

Performance and Expenditure trends

Between 2008/09 and 2011/12, the association facilitated the development of guidelines on ward committees among all local municipalities. By 2011/12, with the assistance of the association, all local municipalities had adopted a delegations’ framework. The association also co-facilitated a summit and expo on the green economy and climate change innovation to raise municipalities’ awareness of the issues and to ensure that they factor in climate change into their plans.

 

In 2010, the association lobbied for metropolitan municipalities to be granted level 2 accreditation to accelerate housing delivery within local government . It also provided hands-on governance support through legal opinions, workshops and seminars to a 150 municipalities.

Over the medium term, the association will provide support to 75 municipalities in developing spatial development frameworks. In addition, the association will advise and support 200 municipalities to implement the impact of the climate change framework. The association has identified efficiency savings of R1.2 million in 2012/13 to be realised through savings on contracted services. The association has also introduced other cost savings measures, including updating the travel and accommodation policies to require booking of economy class tickets and lowering the grade of car hire. The use of member- municipalitie’s facilities is encouraged in an effort to minimise costs for venue and facilities hire.

 

Energy efficiency measures have been put in place to minimise the costs of municipal charges for water and lights. The association will continue to minimise costs on catering.

The spending focus over the medium term will be on providing support to 75 municipalities in developing spatial development frameworks. In addition, the association will advise and support 200 municipalities in implementing the impact of the climate change framework.

 

The association derives revenue from membership fees paid by municipalities, transfers from the Department and donations from foreign donors. R224.3 million was received in membership fees in 2011/12, which accounts for 79.5% of total revenue in that year. Between 2008/09 and 2014/15, total revenue increases from R150.2 million to R435.2 million, at an average annual rate of 15.5%, mainly due to an increase in membership fees in 2011/12 and the re-inclusion of Kwazulu-Natal’s membership levy income into revenue estimates.

 

Expenditure is expected to increase from R177.7 million in 2008/09 to R413.1 million in 2014/15, at an average annual rate of 15.1%. The increase is mainly to provide for increased support to municipalities and the Municipal Demarcation Board in preparation of the 2011 municipal elections. Spending on compensation of employees is expected to increase from R141.4 million in 2011/12 to R192.6 million in 2014/15, at an average annual rate of 10.9%, due to the appointment of additional staff. Consultants are used on a short term basis, for example, to review legal documents and for IT services.

 

C.3 MUNICIPAL DEMARCATION BOARD (MDB)

It was reported that MDB had existed for 11 years and had sometimes carried out contentious work. The Board had carried out demarcation work prior to the local government elections and were the silent partners to the Independent Electoral Commission in the conduct of those elections. The Board was aiming to restructure itself to optimise its work in future. The Board would need to have interaction with COGTA in order to discuss legislation needed to assist in the process of municipality demarcation. The issue of demarcation was emotive and the process needed to be streamlined.
The Board aimed to perform in such a way as to empower municipalities to fulfill their constitutional mandate.

 

The MDB had established six themes for its strategic plan.

 

• Theme 1 : determination and re-determination of municipal boundaries and categorisation and re- categorisation of municipalities.
• Theme 2: assessment of the capacity of metropolitan, district and local municipalities.
• Theme 3 : implementation of effective and efficient organisational processes, systems and practices.
• Theme 4 : ensuring good governance.
• Theme 5: ensuring sound financial management.
• Theme 6: improving stakeholder relations.

Performance and expenditure trends:

 

The Board’s activities focused mainly on delimiting wards in preparation for the 2011 local government elections. The Board held consultative meetings with stakeholders to reach consensus on the preferred set of wards. In addition, the Board finalised and handed over 4 227 wards to the Electoral Commission to prepare for the elections. It also finalised a spatial database for handover to the Commission.

 

Over the medium term, the Board’s focus will be to review the outer municipal boundaries to adjust boundaries for technical realignment. This will be finalised by 2013. The boundary redetermination is also an opportunity for re- categorisation and creation of new municipalities. Over the medium term, the Board will open the broader public and stakeholder engagement to share results of the boundary reviews. The Board will also review the current demarcation framework to ensure that the process provides stability, consistency and sustainability of wards and municipal boundaries.

 

The Municipal Demarcation Board had a total budget of R39.2 million in 2011/12, of which 66.2% was used for goods and services. Over the MTEF period, savings of R239 000 were identified from the Board’s baseline allocation. In 2011/12, the Board implemented the following measures to realise these savings: introducing telephone management systems to reduce the telephone expenditure, scrutinising all expenditure incurred for cost effectiveness and necessary approval, ensuring that all expenditure incurred is value adding, discarding expenses that do not add value, and ensuring good financial management practices.

 

Over the MTEF period, savings of R239 000 were identified from the Board’s baseline allocation. In 2011/12, the Board implemented the following measures to realise these savings: introducing telephone management systems to reduce the telephone expenditure, scrutinising all expenditure incurred for cost effectiveness and necessary approval, ensuring that all expenditure incurred is value adding, discarding expenses that do not add value, and ensuring good financial management practices.

 

The spending focus of the Municipal Demarcation Board over the medium term will be on broadening public and stakeholder engagement to share results of the boundary reviews. The Board will also review the current demarcation framework to ensure that the process provides for the stability, consistency and sustainability of wards and municipal boundaries.

 

Expenditure is expected to increase from R24.6 million in 2008/09 to R39.2 million in 2011/12, at an average annual rate of 16.8%, due to growing organisational structure to support of the mandate of the institution. Over the MTEF period, expenditure is expected to increase to R45.7 million in 2014/15, at an average annual rate of 5.2%, due to an increase in the staff complement required to undertake the redetermination of boundaries and municipal capacity assessments of municipalities.

 

Expenditure on compensation of employees increased from R8.2 million in 2008/09 to R12.4 million in 2011/12, at an average annual rate of 14.6%, to provide for improved conditions of service. Over the same period, expenditure on goods and services increased from R15.7 million to R26 million, at an average annual rate of 18.4%, due to increased spending on consultants and travelling and subsistence in preparation for the 2011 elections. Spending on consultants increased from R296 000 to R1.1 million between 2008/09 and 2011/12, at an average annual rate of 18.4%, due to the need to the use consultants for ward delimitation, boundary redetermination and capacity assessment. Over the medium term, expenditure on consultants is expected to increase to R2 million in 2014/15, due to the need to use consultants for ward capacity assessment towards the 2016 elections.

 

The Board’s main source of income is government transfers. Other sources of income include the sale of maps and interest income generated from investments with banks. Transfers received increased from R25.4 million in 2008/09 to R38.5 million in 2011/12, at an average annual rate of 14.8%, due to additional allocations for improved conditions of service. Over the MTEF period, transfers received are expected to increase to R45.1 million, at an average annual rate of 5.2%. Between 2008/09 and 2011/12, the Board delimited wards in preparation for May 2011 local government elections. The ward delimitation process which was started in 2009 and adopted an inclusive and participatory approach with the stakeholders thus enabling the Board to publish the revised ward delimitation map in 2010.

 

C.4 COMMISSION FOR THE PROMOTION AND PROTECTION OF THE RIGHTS OF CULTURAL, RELIGIOUS AND LINGUISTIC COMMUNITIES (CRL COMMISSION)

The Commission was mandated to strengthen constitutional democracy and to protect and promote cultural, religious and linguistic community rights. The Commission would seek to institute seven programmes in order to meet its strategic objectives. The Commission was unable to provide budget allocations for each of its proposed programmes . The business plan would be formulated after the Commission had received additional funds which it anticipated.

 

• Programme 1 : Investigation and conflict resolution
• Programme 2 : Research and Policy development
• Programme 3: Public Education and Advocacy
• Programme 4: Community Engagement
• Programme 5: Secretariat and Corporate governance
• Programme 6: Corporate Services
• Programme 7: Financial Administration

 

Performance and expenditure trends

The Commission investigated a total of 33 complaints on cultural, religious and linguistic matters between 2008/09 and 2011/12. Over the same period, the Commission undertook 321 engagements with communities as a way of promoting dialogue among cultural, religious and linguistic communities. The Commission investigated a claim of cultural genocide and violation of the indigenous people’s rights lodged by the Khoisan community, and held two public hearings on public holidays and religious holydays.

 

The Commission also produced a report on the male initiation schools and held consultative meetings in the Eastern Cape , Western Cape , Free State , Limpopo , North West and Northern Cape .

 

Over the medium term, the Commission will focus on producing research that is relevant and insightful into the challenges faced by different cultural, religious and linguistic communities. The Commission expects to increase its research output to 18 research papers by 2014/15.

 

The Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities had a total budget of R22.5 million in 2011/12, of which 60.7% was used for compensation of employees.

 

The spending focus over the medium term will be on producing research that is relevant and insightful into the challenges faced by different cultural, religious and linguistic communities. The Commission expects to increase its research output to 18 research papers by 2014/15. In addition, spending will be geared towards hosting a national consultative conference, as mandated by the Commission’s governing act.

The Commission’s main source of income is government transfers and earnings from interest income on investments. Transfers received grew from R20 million in 2008/09 to R22.4 million in 2011/12, at an average annual rate of 3.8%, and are expected to increase over the medium term to R35 million, at an average annual rate of 16%. The growth over the MTEF period is attributable to increased allocations of R28 million to enable the Commission to increase its personnel numbers to 43.

 

Between 2008/09 and 2011/12, expenditure increased from R22.2 million to R22.5 million, at an average annual rate of 0.4%, due to an additional allocation made for improving the conditions of service. Expenditure is expected to increase to R35.1 million over the medium term, at an average annual rate of 16.4%. Spending on compensation of employees increased from R11.1 million in 2008/09 to R13.6 million in 2011/12, at an average annual rate of 7%, and is expected to increase over the medium term to R20.9 million, at an average annual rate of 15.3%. The increase is due to 13 more posts to be filled in 2012/13.

 

Over the medium term, spending will be geared towards hosting a national consultative conference, as mandated by the Commission’s governing act. The conference will provide a platform to consult with the stakeholders regarding religious, linguistic and cultural issues.

 

No savings have been identified. However, the Commission has effected cost savings in respect of communication costs by limiting cellular phone contracts. Over the medium term, the Commission will identify further cost containment measures.

 

C.5 SOUTH AFRICAN CITIES NETWORK (SACN)

It was reported that the SACN existed to promote good governance and management in South African cities, to analyse strategic challenges facing cities, and to promote shared learning partnerships between the different spheres of government to support the management of South African cities. In the period 2011-16, the SACN would endeavor to understand member-city typology. It would place emphasis on broadening its programmatic reach to non-traditional SACN member cities including cities in the Southern African Development Community (SADC).

 

The Network would seek to change policy response and practitioner behavior across the spheres of government by deepening knowledge-sharing. The SACN had been allocated R26 million for the 2011/12 fiscal year and stated that it was R1.2 million below its required target. Member municipalities had mostly paid up their subscriptions, with some exception. The SACN described how it viewed the typology of South African cities. There were five categories which existed in the typology of the country.

 

The first were city-regions characterised by large multi-nodal urban complexes with more than one million people and with significant and diverse economies. The second were cities characterised by multi-nodal areas with more than 400 000 people serving a bigger region and with high service indexes. The third were regional service centres made up of medium- or high- order towns, relatively high service indexes and towns which offered key service functions in more remote areas. The fourth were service towns with a narrow range of services and served to fulfill a service function for communities within the vicinity of that town. The fifth were local/niche towns, smaller in terms of population and economic activity and which differed in economic rates.

 

The SACN highlighted the urban corridors and mega-regions in the world and showed how South Africa and the SADC region compared to the rest of the world in terms of urbanisation . The Network highlighted the spatial and population density gaps in certain municipalities where services were not provided to people living on the outskirts of urban centres due to a disparity in infrastructure development. Most major urban centres received more funding than rural centres . The Network identified three key research agenda issues for local government in the form of three work streams:

 

Workstream 1 (Acting with Better Understanding)

Adopting an urban development policy regime which strengthened productive and sustainable urban spaces. Providing local government indicators that allowed better governance and interpretation at varied scales.

 

Workstream 2 (Changing Built Environment Function)

Addressing issues of land and land-use management and increasing city efficiency by improving public transport.

 

Workstream 3 (unhesitant in dealing with Vulnerability)

Understanding better and improving its financing model, improving management of its natural resource base and improving its understanding of rural/urban interdependence and interface. It would have to build dedicated and focused human capacity and promote socio-political stability. It would have to address land and land-use management. It would have to ensure dedicated and focused human capacity for local government. It would have to improve the public transportation system, and work with the Department of Human Settlements to create social cohesion.

 

The SACN would look to implement four programmes which would target different areas to help it conduct its operations. Programme A would target metro cities; Programme B would target 21 of South Africa ’s large municipalities. Programme C would target SADC and the African Continent and Programme D would target international cities .

 

C.6 NATIONAL HOUSE OF TRADITIONAL LEADERS (NHTL)

The NHTL is a part of the Department of Traditional Affairs and derives its budget from there.

The National House of Traditional Leaders represents the interests of traditional communities and traditional leaders, and provides advice to government on policies and programmes impacting on them. The regulatory framework for the National House of Traditional Leaders Act (2000) was refined, which resulted in the amendment Act being introduced in Parliament in March 2011. This sub-programme had a staff complement of 12 and a total budget of R14.7 million in 2011/12, of which 47% was used for compensation of employees. In 2012/13, co-operative relations and synergistic partnerships with the Department will be fostered with government at the national level in the area of development and service delivery. No expenditure cuts have been identified in this sub-programme in 2012/13.

 

The strategic priorities of NHTL are as follow:

• To promote co-operation between provincial houses and the NHTL in order for the houses to achieve their goals
• To promote effective involvement of traditional leadership on matters of service delivery and rural development
• To promote effective participation in policy and legislation development and implementation affecting traditional leadership
• To promote the custodianship of culture, customs, traditions and values in communities.

 

COMMITTEE OBSERVATIONS, RECOMMENDATIONS AND CONCLUSION

Progress on recommendations made in the budget report of 2011:

 

Recommendation	progress
Steps should be taken to speed up post-disaster assessment processes, so that any resources agreed to must be speeded up to avoid compoundment on late disbursement of resources. Outstanding disaster management funding should be resolved in three months.	The Department has appointed the head of the disaster management centre recently. The Department will brief the Committee on progress.
After completion of the report, of the Commission dealing with traditional leadership, the Committee must be briefed on its findings.	The Committee received a briefing from the Commission and follow up meetings must be done as there are still some issues that needed clarity.
The role and effectiveness of the CRL Commission and its funding must be reviewed.	The funding for the CRL Commission had be reviewed.
The matter between Kwanaloga and SALGA should be resolved by September 2011.	This matter has been resolved.
Debts owed to municipalities by government should be paid in the first year of new councils. New councils should sort out the billing systems, etc, and a progress report to be submitted to the Committee by October 2011	Inroads have been made on the issue of Intergovernmental debt. This is an ongoing process and the Committee will be getting regular updates on the progress.
The monitoring and supervision of infrastructure rolled out must be monitored more robustly and on a regular basis. Pro-active planning on where people must reside when moving from rural areas to cities must be clearly identified and people-sensitive.	The Department has introduced MISA to look into the issue of infrastructure. Regular progress reports will be submitted to the Committee.

 

 

 

RECOMMENDATIONS BUDGET 2012

OBSERVATIONS	* RECOMMENDATIONS	TIMEFRAME
With regard to the Portfolio Committee’s 2011 recommendation we observe that the disbursement of disaster funding has been slow and unco-ordinated . Damage re-occurs and people remain in the same or in a worse situation than before.	A more effective and efficient way of assessing disaster areas and dispersing of disaster funding should be formulated.   Intervention strategy should have:   Immediate Term Strategy – evacuation, temporary shelter, feeding, clothing and medical assistance. Medium Term Strategy – Assistance with Social Services and reissue of identity documents. Long Term Strategy – Repairing of infrastructure and rehabilitation. Maintenance of infrastructure.   The Department should make a clear distinction on the roles and function with regard to intervention on disaster management between the three spheres of government.	Immediately disaster strikes       6 Weeks   Strategy should be ready in 3 months with a role out programme
With regard to the Portfolio Committee’s 2011 recommendation we observe that progress has been made on intergovernmental debt however there are still monies owed to municipalities.   In most instances current accounts are being honored but the challenge still lies with old debts. The previous report recommended that this situation be finalized by September 2011.	A report by the Department be submitted to the committee depicting the following:   Outstanding debt that is owed to municipality per province, Period of arrears Departments owing the outstanding amount If payments were made, the history, Challenges regarding the settlement of these accounts, and Timeframe to address these challenges or settlement of the accounts	Report to be submitted at the first meeting of the 3 rd quarter
Monitoring and supervision of infrastructure rolled out remains a challenge, as stated in the previous report. MISA was introduced to assist vulnerable municipalities with infrastructure development, the identification of these municipalities are still in the process of being finalized.   It must be noted that there have been many similar interventions to address infrastructure development.	The process of MISA should be fast tracked. The lessons learnt from previous interventions should be used as a basis for MISA	Quarterly reports with notable progress should be submitted to the Committee.
The Department envisage a differentiated approach on municipal financing, planning and support to municipalities.	Finalisation of the Equitable share formula by the Department of Co-operative Governance and National Treasury, taking into account the recommendations made by the FFC.	September 2012
The Department in its plan to promote good governance will review local government policy and legislation to strengthen co-operative governance.	A report on the White Paper on Co-operative Governance processes, all other legislation and those under review to be submitted to the Portfolio Committee.	On a quarterly basis
The Anti-corruption inspectorate has been established within the Department; however the Committee observes that the roles and functions of this inspectorate are not well defined in relation to other structures dealing with corruption.   The Department also recommended that all municipalities should establish an ethics office.	The roles and functions of the Inspectorate to be finalized as a matter of urgency.         That a report be given on this recommendation per municipality, per province.	Immediately             Report in September 2012
With regard to accelerating and improving access to basic services, the Committee has observed that in instances bulk services are in place but there are challenges regarding the utilization thereof. Examples would be the Nandoni Dam, roads, and incomplete RDP houses.	There should be proper, co- ordinated planning between sector departments.   Effective monitoring mechanisms should be put in place to ensure value for money.	Quarterly reports to be submitted to committee
The Committee notes that the Department of Co-operative Governance should take a lead in working together with sector departments and support provinces and municipalities to improve access to basic services.	In supporting other spheres of Government, the rand should also be tracked. The Department should provide a cost benefit analysis.	Quarterly basis.
In 2009 Traditional Affairs became an independent department from Cogta , however the budget has not been separated.	That National Treasury speeds up the process of ensuring that the Department of Traditional Affairs has its own budget and budget vote.	Finalized on the 2012 -2013 financial year.
The Municipal Demarcation Board is responsible for the determination of municipal boundaries and certain processes are followed before finalizing the determination. It has been observed that the public is not very aware of the MDB and their roles and functions.	The MDB should have a robust public participation programme to inform communities of its roles, functions and processes in order to empower communities to participate fully.	on an on-going basis
In the 2011 Budget report the Committee recommended that the role and effectiveness of the CRL and its funding must be reviewed. It is our opinion that this situation has not been addressed.	This be reviewed as a matter of urgency	September 2012
The Committee noted the decrease in the budget of the Administration programme. How will this affect the operations of the department in relation to the observation made in the AG report with regard to poor leadership?	The Department should fill all crucial vacancies, eg . Director-General, as a matter of urgency	Immediately
Committee notes that many of municipalities have not completed their Municipal Turn Around Strategies. What are the reasons for the outstanding strategies and how is the Department assisting this process?	The Department should submit a report to the Committee on all outstanding MTAS and what support they are providing to municipalities that struggle with this.	July 2012

 

* The Minister of Co-operative Governance and Traditional Affairs should ensure that the above recommendations are implemented.

 

 

Conclusion:

 

The Portfolio Committee on Cooperative Governance and Traditional Affairs supports the Budget Vote 3: Department of Cooperative Governance and Traditional Affairs and recommends that it be approved.

 

Report to be considered.