ATC191029: Report of the Select Committee on Cooperative Governance and Traditional Affairs, Water, Sanitation and Human Settlements Inspection in Loco on Notice of Intervention, issued in terms of section 139(1)(b) of the Constitution, 1996 in Lekwa Teemane Local Municipality, dated 29 October 2019

NCOP Cooperative Governance & Traditional Affairs, Water and Sanitation and Human Settlements

Report of the Select Committee on Cooperative Governance and Traditional Affairs, Water, Sanitation and Human Settlements Inspection in Loco on Notice of Intervention, issued in terms of section 139(1)(b) of the Constitution, 1996 in Lekwa Teemane Local Municipality, dated 29 October 2019

 

1.         Background and Overview

 

1.1        The Select Committee on Cooperative Governance and Traditional Affairs, Water, Sanitation and Human Settlements, having received the referral from the National Council of Provinces (NCOP), to consider and report on the notice of intervention invoked in Lekwa Teemane Local Municipality in terms of section 139(1)(b) of the Constitution, 1996 the Select Committee reports as follows:

 

1.2        On 6 May 2019, the North West MEC for Local Government and Human Settlements tabled a notice of intervention in terms of section 139(1)(b) of the Constitution in Lekwa Teemane Local Municipality, to the Office of the Chairperson of the NCOP.    

 

1.3        Subsequent to the tabling, in terms of Rule 101 of the NCOP, the Office of the Chairperson of the NCOP referred the notice of intervention by the North West MEC for Local Government and Human Settlements, to the Select Committee for consideration and report. On 27 August 2019, the Select Committee conducted an inspection in loco to Lekwa Teemane Local Municipality.

           

2.         Objective of the Inspection in Loco to Lekwa Teemane Local Municipality

 

2.1        The main objective was to interact with the internal and external stakeholders of the Municipality, in order to solicit their opinions on the constitutional, procedural and substantive matters related to the invocation of section 139(1)(b) of the Constitution.

 

3.         Multi-Party Delegation of the Committee

 

3.1        The Select Committee was composed of the following Members of Parliament and officials:  Hon SE Mfayela (IFP) KwaZulu-Natal; Hon EM Mthethwa (ANC) KwaZulu-Natal; Hon MP Mmola (ANC) Mpumalanga; Hon S Zandamela (EFF) Mpumalanga; Hon TSC Dodovu (ANC) North West; Mr TM Manele (Committee Secretary: Committee Section); Mr N Mfuku (Content Adviser: Committee Section); Mr B Mahlangeni (Researcher: Research Unit); Ms J Le Roux (Researcher: Research Unit); Mr M Mbebe (Procedural Officer: NCOP) and Mr G Mankay (Committee Assistant: Committee Section).

 

4.         General Overview of the Inspection in Loco at Lekwa Teemane Local Municipality

 

4.1        On 27 August 2019, the multi-party delegation of the Select Committee interacted with the MEC for Local Government and Human Settlements, the Administrator, representatives of Democratic Alliance (DA), Economic Freedom Fighters (EFF), and the representatives from the organised labour, Forum for Service Delivery and members of Ward Committees.        

 

4.2        The MEC for Local Government and Human Settlements made a presentation on the constitutional, procedural and substantive reasons for the intervention. The Administrator tabled a progress report on the implementation of the intervention in the Municipality. The representatives of the internal and external stakeholders of the Municipality, tabled their opinions on the invocation of the intervention in terms of section 139(1)(b) of the Constitution.

 

5.         Presentation by the MEC Local Government and Human Settlements

 

5.1        The MEC made a presentation on the status of the intervention in the Municipality. The presentation focused on the purpose, background, procedural matters relating to the intervention, substantive matters relating to intervention, status on appointment of intervention team and recommendations. The proceeding sections report on the matters and justification of the invocation of section 139(1)(b) of the Constitution in the Municipality.       

6.         Service delivery challenges as justification for placing the Municipality under section 139(1)(b) of the Constitution

  

• Community unrests, memorandums were sent to the Offices of Local Government and the Premier regarding the Municipality not providing services to communities.
• Failure to remove refuse and develop a dedicated schedule to clean the town and townships.
• Interrupted supply of water due to the lack of maintenance and non-payment to water services.
• Municipality inability to maintain its service delivery fleet, maintain operations and infrastructure.
• Municipal poor expenditure of Municipal Infrastructure Grant (MIG) which affected infrastructure development.

 

7.         Good governance instability as justification for placing the Municipality under section 139(1)(b) of the Constitution   

 

• Collapsed of public participation processes leading to communities not having confidence to its elected councilors.
• Poor audit outcomes, with recurrent disclaimer audit findings for the past five years: 2012/13; 2013/14; 2015/16; 2016/17 and 2017/18 financial years.
• Non-functionality of the Municipal Public Accounts Committee (MPAC), and lack of commitment amongst the MPAC members in scheduling meetings.
• Failure to comply with the legislative requirement of submitting oversight reports to the Provincial Legislature for more than 5 years.

 

8.         Financial management distress as justification for placing the Municipality under section 139(1)(b) of the Constitution   

 

8.1        The implementation of an unfunded budget by the Municipality. The total outstanding debtors as at February 2019 amounted to R657 million, of which R493 million was owed for over 91 days. Collection of some of these outstanding debtors is of a concern, especially household’s debt. Households constitutes most of the outstanding debt at R589 million, followed by debt owed by businesses/commercial and Government at R29 million and R23 million, respectively. The total outstanding creditors as at the end of February 2019, amounted to R240 million, of which R220 million is recorded for other creditors. In terms of Eskom debt management, the Municipality is on current account.  

 

9.         Progress Report on the implementation of intervention in the Municipality

 

9.1        The North West MEC for Local Government and Human Settlements tabled on 6 August 2019 to the council of the Municipality, the terms of reference of the Administrators, approval letter from the Minister of Cooperative Governance and Traditional Affairs and CVs of the Administrators (Intervention Team).

 

9.2        The MEC scheduled a meeting with the municipal organised labour to introduced the Administrators and identify internal labour issues that were presented to the municipal management. Scheduled a meeting with the officials of the branches of the Municipality to develop processes to ensure the functionality of municipal portfolio committees such as Finance & Corporate Services, Community Services & Local Economic Development, Infrastructure Development & Town Planning as well as Municipal Public Accounts.

 

9.3        The MEC conducted one-on-one discussion bilateral, observations and consultations with different stakeholders of the Municipality and the community, in order to discuss problems related to non–compliance of supply chain management processes, allegations of irregular appointment of contracted companies, allegation of advanced payment of R43 million to contracted security company, exorbitant charge fees and doubtful payment to law firm contracted to implement financial management system.

 

  9.4    An assessment was conducted and identified challenges related to municipal cash flow, debt of R13,5 million to SARS, which has been accumulated as a result of not paying monthly statutory deductions to SARS (Unemployment Insurance Funds, Pay as you Earn and Skills Development Levy), Auditor General debt of R5,5 million for the prior year regulatory audits, and usage of overdrafts facilities from year in and out.

 

9.5        An assessment was conducted and identified problems related to lack of systems to guard against fruitless and wasteful expenditures, assets management, sewerage spillage, water meters, non–adherence to spatial development framework, incomplete projects, proper community consultation, prepaid electricity meters, poor solid waste management, maintenance of dumping site, division among council members, litigations, implementation of council resolutions and dysfunctionality of Local Economic Development  (LED) Unit.

 

10.       Opinions of Political Parties and Stakeholders of the Municipality  

 

10.1      During the loco inspection, the Select Committee interacted and solicited opinions of the political parties, internal and external stakeholders of the Municipality. Their opinions are tabled below:   

 

11.        Opinion of the Democratic Alliance (DA)

 

11.1      The representative of the DA tabled an opinion that supported the intervention. However, concerns were raised with non-scheduling of council meeting, lack of discussion on matters arising from the previous proceedings, municipal failure to provide councillors with previous minutes, non-implementation of council resolutions, municipal accounts not standardised, contradiction in opening and closing balances of the municipality and lack of service delivery.           

 

12.       Opinion of the Economic Freedom Fighters (EFF)  

 

12.1      The EFF tabled an opinion that did not supported the invocation of section 139(1)(b) of the Constitution. The representative contended that the Department of Local Government and Human Settlements was currently under section 100 of the Constitution, and therefore does not have a constitutional right to place municipalities under section 139. The representative further urged that the department should provide support to the Municipality in terms of section 154, instead of invoking section 139(1)(b) of the Constitution.   

 

13.      Opinion of the Independent Municipal and Allied Trade Union (IMATU)

 

13.1   The representative of the Union tabled an opinion that supported the intervention. They raised concerns related to occupational health and safety of the workers, unequal allocation of resources, waiving of the qualifications of the municipal manager, non- payment of SARS and skills development levies, non-appointment of general workers at the bottom level, last minute cancellation of the training of traffic officers, management tendency of instilling fear among the municipal workers.        

 

14.      Opinion of the South African Municipal Workers Union (SAMWU)

 

14.1      The Union supported the intervention. They contended that service level agreements with companies doing business with the Municipality should be reviewed.

 

15.        Opinion of Forum for Service Delivery (F4SD)

 

15.1     The representative of the Forum for Service Delivery supported the invocation of section 139(1)(b) of the Constitution in the Municipality. However, concerns were raised with regard to the lack of improvement on service delivery, adherence of the rules of hiring for the Public Works Programme by the administration, non-application of by-laws, non-functionality of district mobile clinic and meter readers not reading meters properly.     

 

16.       Opinions of Members of the Ward Committees (MWC)

 

16.1      The representative of members of Ward Committee (Ward 1-8), generally tabled opinions supporting the invocation of intervention in terms of section 139(1)(b) of the Constitution in Lekwa Teemane Municipality. However, concerns were raised with regard to the constitutional obligations of the Municipality within the communities.  The main concerns raised included the lack of impact of the Public Works Programmes, lack of service delivery, non-collection of rubbish, lack of socio-economic development, functionality of council meetings, non-completion of projects, under staffing in the Fire Department within the Municipality, problem of water reading metres and leaking of sewage plant system.   

 

17.         Findings and Observations of the Select Committee  

 

17.1      The Select Committee has noted on procedural and constitutional matters that the Minister of Cooperative Governance and Traditional Affairs was notified within 14 days of the invocation of intervention in terms of section 139(1)(b) Constitution.

 

17.2      The MEC for Local Government and Human Settlements notified the Municipality of the procedural and substantive matters of intervention on 6 July 2019, and introduced the Intervention Team and terms of reference to the Municipality during a council sitting dated 8 July 2019.

 

17.3      The Select Committee has noted that the substantive matters related to the invocation of section 139(1)(b) of the Constitution centred around the collapse of service delivery, instability on good governance and administration and distress on financial viability and management.

 

17.4      The Select Committee has further found and noted that the appointed Administrator has made progress on the implementation of section 139(1)(b) of the Constitution in the Municipality, on matters related to the scheduling of consultative meetings to introduce the terms of reference of the Administrator, assessment to identify institutional challenges and the development of a turn-around strategy.   

 

17.5      The Select Committee has noted with concerns during the stakeholders’ engagement, the existence of political divisions in the council, lack of disciplined political leadership among the councillors representing the African National Congress.

 

17.6      Despite the level of political divisions, the Select Committee has noted that most of the Ward Committee Members and political parties represented in the Municipality, have during the stakeholder’s engagements, tabled opinions that supported the intervention in the Municipality, in order to ensure municipal stability and provision of service delivery within the communities.    

 

18.        Opinion of the Select Committee

 

18.1      Section 152 (1)(b) of the Constitution provides that the municipality must ensure the provision of services to communities in a sustainable manner. Section 152(1)(d) of the Constitution provides that the municipality must promote a safe and healthy environment. The Select Committee is of the opinion that the service delivery failures of the Municipality have triggered the invocation of section 139(1)(b) of the Constitution.  

 

18.2      Section 153(a) of the Constitution provides that a municipality must structure and manage its administration, and budgeting and planning processes to give priority to the basic needs of the community, and to promote the social and economic development of the community. Section 129 of the MFMA, a municipality must consider annual reports and adopt oversight reports.

 

18.3      The Select Committee is of the opinion that the instability related to good governance as captured in the notices tabled to the NCOP, the Minister for CoGTA and the presentation made by the MEC on 27 August 2019, has provided justifiable substantive reasons for putting the Municipality under section 139(1)(b) of the Constitution.

 

18.4      Section 153(a) of the Constitution provides that a municipality must structure and manage its administration, and budgeting and planning processes to give priority to the basic needs of the community, and to promote the social and economic development of the community. Section 95 of the Municipal Systems Act provides that the Accounting officer must put systems and controls in place for credit control and debt collection.

 

18.5      The Select Committee is of the opinion that the financial distress of the Municipality, inability to submit annual financial statements and ensuring alignment of the budget with the Integrated Development Plan (IDP), has to a large extent, triggered the rational and motivation for invocation of the section 139 in the Municipality.  

 

18.6      The Select Committee has noted during its deliberations on the matter, the majority of political parties in this house such as the African National Congress (ANC), Economic Freedom Fighters (EFF), Inkatha Freedom Party (IFP) and the Freedom Front Plus (FF+), supports the intervention on the basis of the substantive, procedural and constitutional matters in the Municipality. It is only the Democratic Alliance (DA) which has requested that its rejection of the intervention be recorded.

 

 

 

 

19.        Recommendations of the Select Committee

 

19.1      Having conducted the oversight visit to Lekwa Teemane Local Municipality and interacted with internal and external stakeholders, the Select Committee on Co-operative Governance and Traditional Affairs, Water, Sanitation and Human Settlements recommends as follows:   

 

19.1.1   The NCOP approves the intervention in Lekwa –Teemane Local Municipality in terms of section 139(1)(b) of the Constitution.

 

           19.1.2    The Administrator should develop measurable municipal turn-around strategy, aligned with the terms of reference, and provide the MEC for Local Government and Human Settlements and the municipal council with regular reports on the implementation of the intervention. The administrator must ensure investigation and implementation of consequence management.

 

             19.1.3. The department of CoGTA in the province must ensure security and safety of all appointed administrators in collaboration with the relevant state security agencies.  

 

19.1.3   The Administrator should ensure that the developed turn-around strategy amongst others, focuses on plans to comply with the legislative requirements of submitting oversight report to the provincial legislature, development of an action plan to deal with 2017/18 audit outcomes, implementation of council resolution, functionality of Municipal Public Accounts Committee and the local labour forum.   

 

19.1.4   The North West MEC for Local Government and Human Settlements, in collaboration with the National Minister for CoGTA, should in terms of section 154 of the Constitution and other relevant legislative prescripts, provide continuous support and monitoring to the Municipality.  

 

 

 

19.1.5   The North West MEC for Local Government and Human Settlements should provide the NCOP and the North West Provincial Legislature with quarterly reports on the progress made in respect of the implementation of intervention in the Municipality.

 

19.1.6   The North West MEC for Local Government and Human Settlements should table the report on the termination of the intervention in terms of section 139(1)(b) of the Constitution to the NCOP and the North West Provincial Legislature.

    

19.1.7   The Select Committee on Co-operative Governance and Traditional Affairs, Water, Sanitation and Human Settlements in co-operation with the relevant Portfolio Committee in the North West Provincial Legislature, should after six months or termination of the intervention, whichever comes first, conduct a follow-up oversight visit to the Municipality in order to evaluate the impact of the intervention in accordance with the terms of reference of the Administrator.

 

Report to be considered.