ATC200717: Report of the Portfolio Committee on Cooperative Governance and Traditional Affairs on the 2020/21 Special Adjustment Budgets Of The Departments of Cooperative Governance and Traditional Affairs, and The Affected entities Reporting to them, Dated17 July 2020
REPORT OF THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS ON THE 2020/21 SPECIAL ADJUSTMENT BUDGETS OF THE DEPARTMENTS OF COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS,AND THE AFFECTEDENTITIES REPORTING TO THEM, DATED17JULY 2020
Having met with the Departments of Cooperative Governance and Traditional Affairs, and the Municipal Infrastructure Support Agent, on their Special Adjustment Budgets in response to the COVID-19 pandemic, the Portfolio Committee on Cooperative Governance and Traditional Affairs reports as follows:
In response to the COVID-19 pandemic, Government has re-ordered the spending priorities proposed in the February 2020 Budget. This is to fast track the normal budget process in order to provide resources to frontline services, provincial and local government, as well as firms and households. Municipalities are responsible for implementing many aspects of the national COVID-19 response, including providing improved access to water and sanitation in informal settlements and rural areas, providing temporary shelter for homeless people, and sanitising public transport facilities. Consequently, the local government share of nationally raised revenue increases from 8.6 percent to 8.9 percent due to the additional allocation of R20 billion to municipalities.
Thus, in line with the President’s announcement in April, the Special Adjustment Budget provides additional funding to municipalities to the value of R20 billion, which includes an increase of R11 billion to the Local Government Equitable Share to enable municipalities to respond to local needs, including the provision of temporary home shelters. Prior to this provision, municipalities had to stretch their already depressed budgets to finance these shelters, despite this being a concurrent function with Provincial Government. The other portion of the R20 billion, which amounts to R9 billion, consists in re-purposed spending within conditional grants already allocated to municipalities.
In brief, the net effect of these adjustments on the Department’s February 2020 Budget is that it increases from R96.2 billion in February to R107.1 billion in June. The Money BillsAmendment Procedures and Related Matters Act (2009) empowers Parliament to recommend, reject or amend budgets of National Departments and Organs of State. The Act also enjoins Committees of Parliament to compile and adopt Budget Vote Reports, based on interactions with the relevant Departments - and Entities reporting to them - on their Strategic Plans, Annual Performance Plans and Budgets.
The Portfolio Committee on Cooperative Governance and Traditional Affairs has a constitutional mandate to exercise oversight over the following Departments and Entities:
- Department of Cooperative Governance (DCoG), which seeks to ensure that municipalities perform their basic responsibilities and functions without comprise.
- Department of Traditional Affairs (DTA), which provides a national traditional affairs governance system in support of cooperative governance for an improved quality of life for South Africans.
- Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities (CRL Rights Commission), which fosters the rights of cultural, religious and linguistic communities to freely observe and practice their cultures, religions and languages.
- South African Local Government Association (SALGA), which seeks to be consultative, informed, mandated, credible and accountable to its membership and to provide value for money.
- Municipal Demarcation Board (MDB), whose objective is to create spatial conditions for sustainable development and transformation of local communities through municipal and ward boundary demarcation.
- Municipal Infrastructure Support Agent (MISA), which provides integrated municipal infrastructure support services to municipalities through technical expertise and skills development towards efficient infrastructure delivery systems, processes and procedures.
From 09 – 14 July 2020, the Portfolio Committee met with DCoG, the DTA, and MISA to receive briefings on their Special Adjustment Budgets in response to the COVID-19 pandemic. This Report consolidates the key highlights from these briefings, and summarises Committee observations, and recommendations in line with the requirements of the Money Bills Amendment Procedures and Related Matters Act (2009).
- SYNOPSIS OF THE SPECIAL ADJUSTMENT BUDGET
- Department of Cooperative Governance
As stated earlier, the net effect of the Special Adjustment Budget on the Department’s February 2020 Budget is that it is revised upward from R96.2 billion in February to R107.1 billion in June. Below is an illustration of the adjustment trend in tabular form.
Source: National Treasury (2020)
Programme 1 provides strategic leadership, management and support services to the Department. In February, the allocation to the Programme had increased by 0.6 percent in real terms. The net effect of the special adjustment is a further upward revision of the Programme’s budget from R294.8 million in February to R303 million in June. This is not surprising, considering the increased administrative load on the Department in respect of administering the Disaster Management Regulations to curb the spread of COVID-19.
- Regional and Urban Development and Legislative Support
Programme 2 provides policy analysis towards improving local government and cooperative governance. In February, the Programme saw an allocation increase of 5.8 percent in real terms, from R970.2 million in 2019/20 to R1 072.1 billion in 2020/21. The bulk of the increase related to the Integrated Urban Development Grant (IUDG), which increased by 6 percent in real terms, from R856 million in 2019/20 to R948 million in 2020/21. The re-purposing and reprioritisation of conditional grants towards the national COVID-19 response has resulted in a slight downward revision of the Programme budget, from R1 072.1 billion in February to R1 065.6 billion in June.
- Institutional Development
Programme 3 seeks to build institutional resilience in the local government system. In February, the allocation to this Programme had increased by 3.7 percent in real terms – from R69 billion in 2019/20 to R74.7 billion in 2020/21. The increase mainly related to the Local Government Equitable Share (LGES), which increased by R2.5 billion in real terms to accommodate population growth of over one million people between 2018 and 2019, and household growth of nearly 500 000 over the same period. The LGES accounts for 99.9 percent of the budget allocation to this Programme.
The Special Adjustment Budget introduces an increase of R11 billion to the LGES to enable municipalities to respond to local needs, including the provision of temporary home shelters. This means that the LGES increases from R74.6 billion in February to R85.7 billion in June - an increase of 14.7 percent. This gives effect to the President’s announcement in April pertaining to additional funding to municipalities.
- National Disaster Management Centre
Programme 4 promotes an integrated and coordinated system of disaster prevention, mitigation and risk management. The overall budget allocation to the Programme in February decreased by 17.5 percent in real terms, from R696.3 million in 2019/20 to R599.6 million in 2020/21. However, the Disaster Relief Grant, which constituted the bulk of the Programme’s budget allocation, increased from R466.4 million in 2019/20 to R492.million in 2020/21.
Given that the Programme is the nerve centre of the national response to the COVID-19 pandemic, it would be reasonable to expect that the adjustment would see the allocation to the Programme revised upward, including further increased allocation to the Disaster Relief Grant. Instead, the allocation to the programme sees a downward revision from R599.6 million to R593.8 million. The rationale underlying this downward revision may need explanation.
- Local Government Support and Interventions
Programme 5 conducts performance monitoring, support and interventions in municipalities and Provincial Departments of Cooperative Governance that will drive Back to Basics activities. In February, the anticipated expenditure on this Programme had decreased by 5.3 percent in real terms, from R15.3 billion in 2019/20 to R15.1 billion in 2020/21. The Municipal Infrastructure Grant (MIG) accounted for approximately 96 percent of the allocation to the Programme.
The Special Adjustment Budget identifies the MIG as one of the conditional grants, which Government has re-purposed and reprioritised for COVID-19 interventions. The MIG reprioritisation aims to provide water to households and sanitise public transport facilities in municipalities that do not receive the Public Transport Network Grant. The reprioritised MIG funds amount to R4.4 billion, which reduces the February allocation from R14.6 billion to approximately R10.2 billion. The net effect of this adjustment is a slight downward revision to the overall Programme allocation, from R15 129 915 billion to R15 117 449 billion.
- Municipal Infrastructure Support Agent
One of the consequences flowing from the reprioritisation of the MIG is the reduction in funding to the Municipal Infrastructure Support Agent (MISA) to the value of R5.9 million. The entity’s budget therefore reduces from R359.7 million in February to approximately R353.7 million in June. The key function of MISA is to provide technical support to municipalities, which involves the placing of technical personnel. The reprioritisation of the MIG means that there will be less support required from MISA on the MIG expenditure front, which explains the budget reduction to MISA. The budget reduction will affect three output indicators in MISA’s approved 2020/21 Annual Performance Plan – two under the Technical Support Programme and one under the Infrastructure Delivery Management Support Programme.
MISA will therefore need to table a revised 2020/21 APP that removes the three indicators, thus bringing the total indicators down from 32 to 29. The removal of these targets will mean that MISA will place zero artisans in municipalities in 2020/21, in contrast to the initial target of placing 20 artisans. Secondly, MISA will place zero water and wastewater controllers, contrary to the initial target of 50. Lastly, MISA will conduct zero feasibility studies to address misalignment of bulk water and reticulation in prioritised Water Services Authorities (WSAs), as opposed to the initial target of six studies.
- Department of Traditional Affairs
In February, the DTA had a nominal budget increase of R173.4 million for 2020/21, up from R168.4 million in 2019/20. As tabulated below, the net effect of the special adjustment budget on the Department’s overall allocation is a downward revision in the Vote’s allocation from R173.4 million to R170.4 million. This affects all the three Programmes in the Vote.
Source: National Treasury (2020)
The Programme provides strategic leadership, management and support services to the Department. In February, the overall allocation to the Programme increased by 3.7 percent in real terms, from R50.5 million in 2019/20 to R54.7 million in 2020/21. The special adjustment has resulted in a slight downward revision to R54 million, mainly due to the suspension of R587 000 for COVID-19 purposes.
- Research, Policy and Legislation
This Programme seeks to develop, review, coordinate and monitor the implementation of traditional affairs policies and norms and standards, and support traditional affairs entities to restore the integrity and dignity of traditional leadership. In February, the overall allocation to this Programme decreased by 5.7 percent in real terms, from R19.3 million in 2019/20 to R19 million in 2020/21.With the special adjustment, the allocation further decreases to R18.7 million, due to the suspension of R302 000 for COVID-19 purposes.
- Institutional Support and Coordination
The aim of this Programme is to provide comprehensive support to the institutions of traditional leadership, including Khoi-San leadership structures, to coordinate traditional affairs across all three spheres of government. In February, the overall budget allocation to this Programme decreased by 3 percent in real terms – from R98.6 million in 2019/20 to R99.8 million in 2020/21. The special adjustment budget proposes a further decrease of R2.1 million, from R99.8 million to R97.6 million.
- COMMITTEE OBSERVATIONS
- It was not acceptable for the Director-General of the Department of Cooperative Governance to be absent without justification and delegation of authority while the Committee was engaging the Department on a key event in the fiscal reporting framework. Having to reschedule the Committee Programme to accommodate the Director-General’s diary was a subversion of the established accountability order, and was indicative of deficiencies in the process of inducting the DG into the Department’s accountability arrangement with Parliament.
- The presentation by the Department of Traditional Affairs was welcome and appreciated. The Department would do well to add timeframes to some of the revised targets, including the finalisation of the Handbook and Training for Traditional Leaders.
- The DTA’s contribution to the maintenance of traditional council infrastructure was non-existent, resulting in some traditional leaders having to pay for this maintenance out of their own pockets.
- The DTA was still not placing sufficient emphasis on the role of the institution of traditional leadership on matters relating to women, patriarchy and gender-based violence. The role of the Department of Cooperative Government with regard to gender-based violence also needed clarification.
- The DTA’s interventions on the resolution of disputes and claims at the level of Senior Traditional Leaders was ineffective, resulting in some royal families opting to consult other structures, rather than Government.
- The resourcing of traditional leaders to enable them to participate meaningfully in government structures was a matter of concern. Some traditional leaders are unable to attend Municipal Council and District Command Council meetings due to lack of means. The challenges around the remuneration of Headmen in KwaZulu-Natal remained unresolved.
- It was not acceptable that the Municipal Infrastructure Support Agent had still not attended to the water crisis in Ward 6, Msinga, despite the undertaking by the Chief Executive Officer to resolve the matter. It has been almost a year since the Committee has been raising the matter with MISA.
- There was still a lack of detailed information on the cost incurred on the Community Work Programme versus the benefit derived. Given the large amounts involved, a cost-benefit analysis of the Programme would assist the Department of Cooperative Governance to exercise fiscal prudence and obtain value for money.
- A clearer definition of the District Development Model was still lacking, and there are concerns around whether the Department of Cooperative Governance had sufficient capacity to implement the model.
- The explanation regarding the remodelling of the CWP was still not satisfactory. It was as though the Department had not prepared to answer questions about the redesigned CWP model.
- The amount of questionable expenditure in municipalities in relation to COVID-19 funds was disturbing. There was a need for the Department of Cooperative Governance to provide assurance that it was exerting more effort to safeguard these funds. The Department’s response to this question was not inspiring the confidence that it was serious about addressing this issue.
- It was not acceptable for the Department of Cooperative Governance to aim for a target of 80 percent in respect of functional Municipal Public Accounts Committees and Audit Committees of municipalities. It was imperative and non-negotiable for all 257 municipalities to have functional MPACs and Audit Committees.
- COMMITTEE RECOMMENDATIONS
- The Department of Cooperative Governance must afford its new Director-General thorough induction into its accountability arrangement with Parliament, to foster the understanding that unjustified absence during key events in the fiscal reporting framework was below the acceptable standard of engagement.
- The Department of Cooperative Governance must furnish the Committee with a report, explaining the unjustified absence of the Director-General during a critical time when the Committee was set to consider the Department’s special adjustment budget.
- The Department of Traditional Affairs must brief the Committee on all the existing provincial frameworks governing the institution of traditional leadership, to facilitate better understanding of the dynamics that breed the inter-provincial inequities in the resourcing of the various Kingships/Queenships.
- The Department of Traditional Affairs must, within two weeks of the special adjustment budget meeting, compile and submit to the Committee a status report on the participation of traditional leaders in government structures.
- Within seven days of the special adjustment budget meeting,the Chief Executive of the Municipal Infrastructure Support Agent mustfurnish the Committee a written response relating to the measures it is undertaking to address the complaint about lack of water in Ward 6, Msinga.
- Within two weeks of the adoption of this report, the Department of Cooperative Governance must furnish the Committee with the Diagnostic Reports on lessons learned during the piloting of the District Development Model.
- The newly appointed Team Leader for the remodelling of the Community Work Programme must submit to the Committee a full report on the remodelling exercise as soon as it is ready.
The Economic Freedom Fighters (EFF), objected to the report.
Report to be considered.
 Taking into account the impact of inflation.
No related documents