ATC140711: Report of the Portfolio Committee on Cooperative Governance and Traditional Affairs on the Annual Performance Plan and Budget Vote 3 of the Department of Cooperative Governance and Traditional Affairs, dated 10 July 2014

REPORT OF THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON THE ANNUAL PERFORMANCE PLAN AND BUDGET VOTE 3 OF THE DEPARTMENT OF COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS, DATED 10 JULY 2014

The Portfolio Committee on Cooperative Governance and Traditional Affairs (the Committee), having met with the Department of Cooperative Governance (DCoG) and the Department of Traditional Affairs (DTA) on their Annual Performance Plans (APPs) and Budget for 2014/15 financial year, reports as follows:

1. Introduction

The Committee has a mandate to conduct oversight over the Departments of Cooperative Governance and Traditional Affairs (CoGTA) and its entities, namely, the South African Local Government Association (SALGA), the Municipal Demarcation Board (MDB), the Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities (CRL Rights Commission), the South African Cities Network (SACN) and the National House of Traditional Leaders (NHTL). The Committee met with the Departments of (CoGTA) on 8 July 2014 to receive a briefing on their APPs and Budget. During the briefing, it was indicated that allocations were made to the entities. However, the Programme of Parliament did not afford the Committee sufficient time to invite entities to present their APPs and Budgets prior to the budget vote debate. In due time, entities will be invited to brief the Committee fully on their 2014/15 Budget and Annual Performance Plans.

2. Briefing by the Departments of Cooperative Governance and Traditional Affairs on the Annual Performance Plans and Budget

The mandates of the DCoG and DTA are derived from the Constitutions of the Republic of South Africa, and various legislations and international agreements. The primary mandate of DCoG is to develop and monitor the implementation of national policy and legislation seeking to transform and strengthen key institutions and mechanisms of governance to fulfil their development role.

2.1. Vision of Department of Cooperative Governance and Traditional Affairs

The Department facilitates cooperative governance in all spheres of government in order to build a capable state that fulfils its developmental role and supports all spheres of government, including the institution of traditional leadership and associated institutions, through the:

Ø development of appropriate policies, integrated programmes and regulatory mechanisms;

Ø promotion of service delivery support through enabling mechanisms and intergovernmental relations;

Ø achievement of social cohesion through the creation of enabling mechanisms for communities to participate in governance.

Ø monitoring and evaluation of the implementation of cooperative governance policies and programmes;

Ø coordinatation of traditional affairs activities across government through the development of appropriate policies, norms and standards, systems and regulatory framework governing traditional affairs;

Ø the provision of support to traditional affairs;

Ø enhancing the information and knowledge management on traditional affairs; and

Ø promotion of culture, heritage and social cohesion.

2.2. Budget of the Department

Budget Vote 3 is aimed at improving cooperative governance across the three spheres of government in partnership with institutions of traditional leadership, to ensure that provinces and municipalities carry out their service delivery and development functions effectively . As indicated in Table 1 below, there are 7 budget programmes that fall under this Vote.

Table 1 : Overall Budget

Programme	Budget				Nominal Rand change	Real Rand change	Nominal % change	Real % change
R million	2013/14	2014/15	2015/16	2016/17	2013/14-2014/15		2013/14-2014/15
Administration	251.9	252.1	259.2	274.6	0.2	- 14.5	0.08 %	-5.76 %
Policy, Research and Knowledge Management	20.5	21.1	24.3	25.8	0.6	- 0.6	2.93 %	-3.08 %
Governance and Intergovernmental Relations	39 916.9	44 618.8	50 341.3	53 009.6	4 701.9	2 097.0	11.78 %	5.25 %
National Disaster Management	455.4	650.8	657.1	669.3	195.4	157.4	42.91 %	34.56 %
Provincial and Municipal Government Systems	281.6	289.5	300.3	316.5	7.9	- 9.0	2.81 %	-3.20 %
Infrastructure and Economic Development	16 371.4	17 268.6	17 941.7	19 832.8	897.2	- 110.9	5.48 %	-0.68 %
Traditional Affairs	105.2	111.9	116.9	123.7	6.7	0.2	6.37 %	0.16 %
TOTAL	57 402.9	63 212.8	69 640.8	74 252.3	5 809.9	2 119.5	10.12 %	3.69 %

The total allocation for this Vote in 2014/15 is R63.2 billion, which, when taking into account inflation, represents a real increase of 3.69 per cent from R57.4 billion during 2013/14. As seen in the graph below, spending is concentrated on three Programmes: Government and Intergovernmental Relations (Programme 3), Infrastructure and Economic Development (Programme 6), and to a lesser extent Disaster Response Management (Programme 4). These Programmes host sub-programmes on Local Government Equitable Share, the Municipal Infrastructure Grant (MIG) and Disaster Relief Transfers respectively.

As indicated above, all three sub-programmes receive very large amounts of funds. As a result the problem of under-spending tends to be more pronounced in these areas. In 2013/14 the Minister of Finance noted that the, ‘the withholding of local equitable share funds to municipalities where conditional allocations from previous years have not been fully spent, unspent disaster relief grants, delays in the Community Work Programme (CWP), and slower than anticipated spending on school infrastructure backlogs are the main areas of spending underperformance.’

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2.3. Programmes of the Department of Cooperative Governance and Traditional Affairs

Programme 1: Administration

This Programme provides management, leadership and administrative services to the Department of CoGTA.

In 2013/14 the overall budget allocated to this Programme showed a real increase of 5 per cent. In 2014/15 there is a real decrease of -5.8 per cent. This is largely an effect of the radical real decrease of almost 20 per cent in the Corporate Services sub-programme where the bulk of the Programme budget is concentrated. This sub-programme has been showing substantial fluctuations. Its allocations in 2013/14 were increased substantially, amounting to a 22 per cent real increase. The fluctuations have been attributed ‘to the personnel changes caused by the departmental restructuring in 2009 and the security personnel whose contracts ended in March 2014 .’

Programme 2: Policy, Research and Knowledge Management

The Programme provides specialised support services to the Department in the areas of research and knowledge management, policy formulation, monitoring and evaluation, and information, communication and business technologies. In 2013/14 this was the smallest Programme in the Department with 4 sub-programmes and a total budget of R49.5 million in 2013/14. In 2014/15 the Programme has diminished further, with only 3 sub-programmes and a total budget of R21.1 million.

The sub-programme on Information, Communication and Business Technology, whose allocation amounted to R29.8 million in 2013/14, contained the bulk of the Programme’s budget allocation. This sub-programme does not feature in 2014/15, which explains the overall reduction in programme size and budget.

Programme 3: Governance and Intergovernmental Relations

This Programme is meant to improve the vertical and horizontal coordination and alignment between the three spheres of government. It also promotes public participation in governance through regulatory mechanisms as well as provides oversight, intervention and support programmes to provinces, municipalities and associated institutions. The Programme constitutes 70.5 per cent of the Department’s total allocation for 2014/15 and this is perhaps where Parliament should be vigilant, especially in terms of oversight.

The Management: Governance sub-programme shows substantial variance. The estimated allocation for the sub-programme for 2013/14 was R16.2 million. This appropriation was later adjusted to R8.9 million for reasons that are not immediately clear. In 2014/15 the allocation has once again increased to R16.5 million.

There is also a substantial variance in the allocation to the Intergovernmental Fiscal Relations sub-programme, which decreases by -54 per cent in real terms. The variance has been attributed to ‘a budget augmentation in the 2013 adjustment process for a once-off payment to non-returning councillors whose term ended after the May 2011 Local Government Elections.’ The sub-programme also showed radical variance during the previous financial years, from a total budget allocation of R142.8 million in 2012/13 to R13.5 million in 2013/14. A roll-over allocation in 2012/13 for once-off gratuity payments to 3 456 non-returning councillors was also cited as a reason for this variance.

Under-spending in this sub-programme remains a challenge. The Department has attributed this under-spending to ‘the delays with the start of some planned projects as a result of consultations with different stakeholders’ and ‘the offsetting of the Local Government Equitable Share in terms of Section 21(4) of DoRA in respect of some municipalities in consultation with National Treasury ...’ Under-spending amounted to R713.7 million for the financial year ending on 31 March 2013.

Programme 4: Disaster Response Management

This Programme gives effect to the Department’s strategic goal of strengthening, coordinating and supporting effective integrated disaster management and fire services. In this vein, it seeks to promote an integrated and coordinated system of disaster risk management that places special emphasis on prevention, mitigation and preparedness on the part of national, provincial and municipal organs of state, statutory functionaries and other role players involved in disaster risk management.

In 2014/15, a new sub-programme is introduced – the Municipal Disaster Recovery Grant – which is a conditional grant aimed at repairing infrastructure damaged by disasters that occurred in 2009 and 2010 in Limpopo, KwaZulu-Natal and the Western Cape. This sub-programme is largely responsible for the decrease of -13 per cent in the overall programme budget allocation for 2014/15. The grant was introduced in the 2013 Division of Revenue Bill and amounted to R118.3 million. In 2014/15 the grant allocation is indicated as R37.3 million. The reasons for this variance are not immediately clear.

Programme 5: Provincial and Municipal Governance Systems

The Programme provides oversight, supports programmes and evidence-based regulatory mechanisms for provincial and municipal government and associated institutions, and facilitates effective service delivery.

There is a substantial decrease (-41.41 per cent) in allocation with respect to the Development Planning sub-programme, which is responsible for the development of the Integrated Urban Development Framework (IUDF). The decrease may be related to the fact that the bulk of activities on the IUDF – such as commissioning research papers, compiling a discussion document and hosting a consultative conference – were undertaken in 2013/14.

Programme 6: Infrastructure and Economic Development

This is one of the most critical programmes in terms of government’s broader policy priorities around promoting economic support and development, investing in infrastructure, creating jobs and enhancing local government capacity.

In 2014/15 the MIG allocation decreases by -3.8 percent in real terms. In 2013/14 this allocation also showed a -2 per cent decrease. The reduction, as the Minister of Finance noted in the 2013 Medium Term Budget Policy Statement (MTBPS), supports ‘reprioritisation towards bulk water projects.’ However, under-spending on the MIG remains a concern.

There is a substantial real increase of 22.8 per cent in the Community Work Programme. This relates to funds that were rolled-over from the previous financial year. This sub-programme also incurred an irregular expenditure of R276 million in relations to the awarding of contracts. The Programme also sees the introduction of the Municipal Infrastructure Support Agency (MISA), which was proclaimed as a government component in 2013. It replaces the Special Purpose Vehicle sub-programme.

Programme 7: Traditional Affairs

This Programme will soon be a separate stand-alone Vote, with effect from 2015/16. The overall allocation to this programme has increased by 0.16 per cent in real terms, which is an improvement from the real decrease of almost 3 per cent seen in 2013/14. This is mainly the effect of the notable increase (24.2 per cent) in the allocation to the National House of Traditional Leaders

2.4. The Department’s Contribution to the National Development Plan (NDP)

The NDP recognizes the importance of a responsive, accountable and efficient local government system, as a building block towards the realization of a capable and developmental state. It proposes measures to move intergovernmental relations forward through improving clarity in a differentiated system - regionalising services where there are capacity constraints. A more coherent set of powers for metropolitan municipalities should be provided. The role of provinces should be more focused and a proactive approach must be sought to identifying and resolving challenges.

2.5. The Department’s Contribution to the Medium Term Strategic Framework (MTSF) 2014 - 2019

The Medium Term Strategic Framework (MTSF) outlines work that will be done to implement the NDP over a five year period. The sub-outcomes spread across the different chapters of the National Development Plan that are particularly important towards improving local government performance, ensuring quality service delivery and ultimately putting the local government sector on a positive path to achieving the vision are as follows:

Ø Members of society have sustainable and reliable access to basic services.

Ø Intergovernmental and democratic governance arrangements for a functional system of cooperative governance are strengthened.

Ø Sound financial and administrative management.

Ø Promotion of social and economic development.

Ø Local public employment programmes expanded through the CWP.

2.6. Key elements for the Department from State of the Nation Address

The key directives from the State of the Nation Address in June 2014 include the following:

Ø Government will revitalize local government through a plan of action to provide support to several municipalities.

Ø Infrastructure development (municipalities are to provide and maintain adequate core set of basic services).

Ø Job creation (CWP to provide 1 million work opportunities by 2019).

Ø Addressing corruption and fraud.

Ø Managing urban development.

2.7. The Department’s Priorities and Commitments for 2014 - 15

Ø Improve information reliability and availability to support the strategic goals of the Department. Roll-out and monitor the implementation of the local government performance Management System. Develop and implement an integrated monitoring and evaluation system for provincial departments of local government and municipalities.

Ø Promote Competitive, Inclusive and Sustainable Local Economies. Review and develop policy and assess impact of internal legislation and sector legislation on Provincial and Local Government legislation . Enhance the regulatory, institutional and support framework for LG across provinces and municipalities .

Ø Implement initiatives to improve financial sustainability, revenue management and audit outcomes in Local Government. Manage the implementation of the Municipal Property Rates Act (MPRA) by implementing the regulatory framework, monitoring and supporting municipalities regarding compliance with the MPRA.

Ø Strengthen the capacity of municipalities to deliver sustainable infrastructure and increase access to basic services, including provision of free basic services to the poor. Effectively manage the MIG Programme. The Department envisages a “Back to basics on service delivery” approach where support will be provided to all municipalities that spent less that 80% of the MIG in the previous financial year. The Department will also support forty municipalities on mechanisms to provide Free Basic Services (FSB). It will also develop an MIG performance and monitoring reporting system and align MIG projects and water infrastructure backlogs.

Ø Coordination of effective fire services by enhancing the legislative framework for fire services to respond to changing conditions. Promote a culture of disaster risk reduction to build community resilience. This involve the development of a Disaster Management and Fire Services Monitoring and Evaluation System to ensure improved disaster management and fire services coordination.

Ø Strengthen the professionalization and performance of local government.

Ø Effective and efficient management and administration of CWP. Provide and maintain 1 million work opportunities in all municipalities. Establish and maintain partnerships to create sustainable job opportunities for CWP participants.

Ø A draft strategy for the promotion of culture and heritage within traditional affairs will be developed . Monitoring the implementation of 5 existing active partnerships and collaborate with other stakeholders for economic development in traditional communities. Information on Proclamations establishing jurisdictional areas of traditional councils will be gathered in 5 provinces. Reports on the implementation of the Framework for the participation of traditional leaders in municipal councils in 8 provinces will be provided.

Ø Intervene and act on critical failures.

Ø Promote good governance.

2.8. The Department’s achievements during the period 2013 – 2014

Over the 2013 MTEF the spending focus of the Department of CoGTA was on ‘facilitating infrastructure delivery programmes and job creation, providing operational support to municipalities, strengthening technical and institutional capacity in local government, responding to disasters, and providing targeted and specialised support to traditional communities.’ [1] Specifically, the Department sought to:

Ø Facilitate the implementation of a policy framework that provides for a differentiated approach to municipal financing, planning and support: 9 provincial workshops and 23 district workshops were conducted to improve development planning capacity in municipalities outside metros and secondary cities. The result of these workshops was that municipal officials have an improved understanding of Development Planning processes.

Ø Facilitate improved access to basic services and sustainable infrastructure development: The Department supported 3 municipalities with the development of integrated waste management plans. MISA has been supporting more than 18 identified municipalities with acceleration of Grant Funded Projects (MIG, MWIG and RBIG) in areas of water and sanitation, roads and storm water, electricity, solid waste, housing, planning, community projects. The Chief Albert Luthuli LM, Alfred Nzo DM and Amathole DM were supported to address water quality. Vhembe District Municipality was supported with the deployment of 54 artisans that focus on water process controllers, waste process controllers and artisans to undertake operations and maintenance of water and sanitation infrastructure. MISA was appointed by the Department of Human Settlements as an implementing agent for the Bucket Eradication Programme in the Northern Cape. To date, out of a total of 5500 buckets planned for eradication, 1200 have been eradicated. MISA currently has 61 technical (engineering and planning) professionals deployed to support a total of 121 municipalities throughout the country.

Ø Facilitate implementation of the CWP and sustainable economic development at local level : Against the target of 171 500, the Department created and maintained 205 494 work opportunities through the CWP.

Ø Strengthening the effectiveness of cooperative governance through the development and roll-out of policies and legislation: The Department developed and submitted the Intergovernmental Monitoring, Support and Intervention (IMSI) Bill to the Ministerial Cluster. The Bill will be processed through the parliamentary processes in 2014/15.

Ø Strengthen measures to fight corruption and unethical conduct: The Department has finalized and promulgated the Regulations governing the appointment and the appointment criteria of Municipal Managers and managers directly accountable to municipal managers. It has also created a database of municipal staff members dismissed for misconduct or resigned prior to the finalisation of disciplinary proceedings in all nine 9 provinces. The figure at the end of the financial year stood at 36 officials.

Ø Strengthen, coordinate and support effective integrated disaster management and fire services: The Department developed the Disaster Management Amendment Bill, completed the consultation processes directed by Cabinet and submitted the Bill to Cabinet for processing. In implementing the existing legislation, the Department declared disasters in the following provinces, namely, KwaZulu-Natal, North West, Northern Cape, Limpopo and Western Cape, affected by floods and drought and supported them with securing funds for immediate disaster relief.

Ø Deepen participatory democracy through a refined committee ward model: Against a target of 2000, the Department increased the development and implementation of ward level operational plans in 2059 municipal wards out of the 4277.

Ø Enhance the administrative and financial capabilities of municipalities: Against the target of 30, the Department assessed the credit control and debt collection policies of 30 municipalities, identified and communicated to relevant municipalities policy gaps requiring corrective action. Against the target of 120 municipalities the Department supported 128 municipalities to implement the infrastructure projects funded through MIG. Against the target of 30, the Department assessed the rating practices of 30 identified municipalities and monitored their compliance with their rating practices on Regulations on rate ratios promulgated under the Municipal Property Rates Act.

3. Key Challenges facing the Department

Ø Despite the departmental efforts on monitoring and supporting municipalities to fill critical posts with suitably qualified and competent persons, some municipalities have continued to fill such posts without due regard to the regulations on minimum competency requirements. The Systems Act requires the MEC to take appropriate steps to enforce compliance which may include an application to court for a declaratory order on the validity of the appointment. If the MEC fails to do this, the Minister may take the same steps.

Ø The intermittent departmental restructuring processes have resulted in the loss of critical skills and the shrinking of the staff establishment, thereby rendering the department unable to deliver on its mandate. The Department is engaging with the DPSA and the National Treasury to review DCoG’s organisational structure and the financial requirements to address the above.

Ø There are limited human and financial resources to develop and maintain systems and processes necessary for the enhancement of CoGTA’s ability to fulfill its role as a champion of cooperative governance.

4. Committee observations

a) Information presented by the Department was appreciated and interrogated by Members of the Committee. Members indicated that additional engagement is needed as soon as possible with the Department of Cooperative Governance, the Department of Traditional Affairs and entities.

b) The Committee commended the Department for spending on its budget.

c) The Committee noted that the Department has reported that 21 initiates have died in the Eastern Cape, Mpumalanga and the Western Cape Provinces. The Committee noted that addressing this problem should also be the responsibility of the community, including the parents of the initiates.

d) The Committee noted with concern that the amount of buckets eradicated in previous financial year was very low and in this regard, more should be done as to preserve human dignity. However the Committee noted that this was a complex problem and an important component to resolving it is linked to functional water and sanitation systems.

e) The Committee noted that municipalities with non-functional Project Management Units (PMUs) MIG funds are not spent. The Committee noted the Department’s envisaged initiative to strengthen the capacity of municipalities including providing support to all municipalities that spent less than 80 per cent of the MIG in the previous financial year.

f) The Committee expressed concern on whether the 61 technical support experts deployed by the MISA will be sufficient to support all municipalities throughout the country.

g) Finally, the Committee noted with concern cases of municipalities that still use their MIG allocation to finance operational expenses. How the department was addressing this challenge needed clarification.

5. Recommendations

· There should be closer cooperation between the Departments of Traditional Affairs and Health with regard to the problem of medical male circumcision. Measures should be put in place to ensure zero fatalities. Government, the institution of traditional leadership, and communities should work collaboratively in this regard.

· The Department should report to the Committee on a quarterly basis on their monitoring and evaluation of municipalities so that the Committee can address these challenges proactively.

· The Department should present a plan to assist those municipalities that do not have functional Project Management Units (PMUs) as well as a plan to address the use of conditional grant funding for non-approved purposes. In this regard, the Department should also possibly consider special funding for municipalities with no revenue base.

Based on the engagements between the Portfolio Committee on Cooperative Governance and Traditional Affairs and Department of Cooperative Governance and Traditional Affairs on 08 July 2014, the Committee accepts the 2014/15 Budget and Annual Performance Plan of the Department of the Cooperative Governance and Traditional Affairs.

Report to be considered.