Cross-Boundary Municipalities Bill; Municipal Systems Bill: hearings

Meeting report

PORTFOLIO AND SELECT COMMITTEES ON PROVINCIAL AND LOCAL GOVERNMENT: JOINT MEETING
13 June 2000
OVERVIEW OF SUBMISSIONS ON MUNICIPAL SYSTEMS BILL; DISASTER MANAGEMENT CONFERENCE; CROSS-BOUNDARY MUNICIPALITIES BILL

Relevant Documents:
Report back on the Disaster Management Conference
Local Government: Cross- Boundary Municipalities Bill [B37-2000]
Proposed amendments to the Cross-Boundary Municipalities Bill
Municipal Systems Bill [B27-2000]
Chapter Three: Public Participation. A response by the Department of Provincial and Local Government to the submissions made during the public hearings hosted by the Portfolio Committee

SUMMARY
The Committee heard a report back on the Disaster Management Conference.

The Department responded to the main arguments that arose from the public submissions on the Municipal Systems Bill. The tabled version of the Bill attempts to address some of the concerns. This Bill (as opposed to the gazetted version) has far less detail in it and the provisions on equity and general development have been taken out. It is now more ‘technocratic’.
The committee deliberated on Clauses 1-3 of the Bill.

Proposed amendments to the Local Government: Cross-Border Municipalities Bill were discussed and agreed to by the committee.

MINUTES
Disaster Management Conference
Mr Solo (ANC) reported back on the Disaster Management Conference held on the 18/19 May 2000 organised by the National Council of Provinces (NCOP) attended by delegates from the National Assembly, the Provinces, SALGA, CSIR, Red Cross and the Weather Bureau amongst other. Input was given from various interest groups as well as by delegates from the USA and Bangladesh.

The main concern of the Conference was the lack of coordination and the need for a targetted response to disaster management. There is a need for permanent structures adequately charged with particular functions.

A full written report will be made available shortly (see document), but already the following recommendations are clear:
-The creation and consolidation of structures is necessary.
- An educational programme on disaster management and capacitation.
- Balanced attention to rural and urban areas.
- Greater cooperation needs to be facilitated.
Mr Solo was uncertain when the Disaster Management Bill would come before Parliament.

Cross-Boundary Municipalities Bill
The Bill is due to be voted on next week. Committee members had indicated in a previous meeting that the Schedule to the Bill was not user friendly and should be in chronological order. These amendments have been effected.

There had also been a contention over the amendment of boundaries. The Chairperson, Mr Carrim (ANC), explained that if any of the boundaries are to be amended it must be done through national legislation. But under certain circumstances a boundary may also be changed through a notice in the provincial gazette in which case the province could avoid having to promulgate the legislation. He suggested that such a situation be dealt with in the Bill and will be looked at the end of this meeting.

Department’s response to Submissions on Municipal Systems Bill
Ms Woodbridge, for the Department, gave an overview of the main thrust of the public submissions:

Public Participation
The views which came out of the submissions is that the Bill handles the issue of public participation in a very procedural manner. It emphasises formal consultation, for instance through complaint mechanisms and so forth. Two sets of arguments emerged. Firstly, that more detail must be added to the Bill, for instance to develop indicators to chart the success of public participation. The second argument was that there should be less detail in the Bill with less focus on procedure and more focus on the outcomes of public participation. Equity issues were also a concern because it was generally felt that the Bill favoured participation by organised groups with resources.

The Chair asked how such an outcomes-based approach would work. The Department said it is unclear why public participation is so desirable in the Bill. Is the aim to involve people in decision-making and if so, at what level? Because the Bill emphasises procedure in its adoption of the formalist model of participation it gives no indication of which outcomes it seeks. Personally, Ms Woodbridge thought it more important to specify why participation is important. Other issues may also arise such as the fact that a specific mechanism may not work well in all the provinces. In relation to equity, who would be allowed to participate? Furthermore, municipalities are obliged to hear but not heed public input.

Mr Bhabha (ANC Mpumalanga) asked what the Department wants in the framework to ensure that municipalities do not compromise any aspect of the public participation process. Ms Woodbridge said it would be good to frame the Bill to allow the municipality some latitude while ensuring that certain outcomes, such as equity, are met.

Mr Selfe (DP) had two problems, firstly with capacity and the fact that each province would have a different set of problems. Secondly, the financial implications of capacity building and training. The Department said that the submissions had pointed out that training and capacity building looks like an unfunded mandate so she was sure this would still be a concern.

Mr Bhabha (ANC Mpumalanga) said it must be considered whether an Act is justiciable. There should not be a presumption that all municipalities have the same capacity.

Mr Smith (IFP) said it had struck him that councillors do not go out to the people. The Chair, Mr Carrim, noted that in Australia councillors meet in various parts of the city. The Department said that the Isandla submission had argued that more capacitated and organised groups would find participation easier because they would be better able to formulate a proposal. Mr Smith thought this was a good reason why councillors should go out to areas.

Integrated Development Plan
The submissions showed that there is some tension over the level of detail and specification over who drafts integrated development plans (IDPs) and at which stages people participate in such planning. SALGA and Isandla argued that there is too much detail in the Bill and that there should be less focus on process and more on strategy. Other issues which arose was the question over the difference between a local and a district IDP and the need for budgeting and timing frameworks to be aligned.

Ms Woodbridge said that the way the IDP Chapter is drafted there is a lot of detail packed into what the IDP is as an instrument. You therefore have to be careful how you define an instrument which has so many tasks. There have already been pilots and assessments and a lot has been learned from these projects.

Mr Bhabha (ANC Mpumalanga) said that there are certain general sentiments expressed in the Constitution such as land restitution and because the Constitution already sensitises people to these issues they would not have to be specified.

The Chair thought it highly debatable whether land restitution must be put into the IDP chapter but suggested that the ruling party must formulate a position on the issue.

Mr Carrim asked what people mean when they say the IDP is more conducive to planning, that it is a planning instrument and not a plan?

Ms Woodbridge said that the IDPs do not necessarily force decisions nor do they bring out the crunch issues. Because there is sectoral representation everything is bargained out at sectoral level. IDPs therefore tend to become instruments to avoid taking key decisions. Personally, Ms Woodbridge was not convinced that the IDP is a strategy instrument but the weight given to IDPs is such that they will inform the municipality’s budget and its strategy. Mr Elroy Africa, also from the Department, agreed with Ms Woodbridge’s assessment.

Mr Smith (IFP) asked to what extent the notion of amalgamation is appropriate to the adoption of the outcomes approach. Is there any merit in separating out the strategies of the IDP as it is done in Australia?

The Chair commented that Australia is able to do so because of they have more resources.

Ms Woodbridge said the question which could be asked was why IDPs have not worked so far. Mr Africa added that two concepts could be used to understand IDPs; the mega-plan and the meta-plan. The crucial distinction between the two is that the mega-plan sees the IDP as the overarching plan on which all other plans are pegged while the meta-plan sees it as an all encompassing comprehensive plan. The Department has favoured the IDP as a meta-plan. In the gazetted version of the Bill there were a number of timeframes. These have now been taken out and the Minister has a discretion to set timeframes.

Rev Goosen (ANC) pointed out that the Demarcation Board has clustered a number of municipalities, each with their own IDP. Once the cluster has been formed, this IDP will in totality be different to what each entity has drawn up. Will the small municipalities merge their IDPs according to the big plan?

Ms Woodbridge said that during her involvement in the channelling process in the Johannesburg metro it became clear that you cannot paste together local IDPs to form a coherent district IDP, they will have to be redone.

A committee member noted that there are certain timeframes in the Bill for the process of the adoption of the IDP. What if the MEC did not respond and approve it, perhaps due to inefficiency? Would the notice be taken as read?

Ms Woodbridge said that Business SA had expressed such a concern. The Department had accepted their suggestion and the Bill now provides that if the MEC does not respond within 30 days it is assumed that the IDP is approved.

Mr Sledge Selele, from the Department, pointed out that the adoption of the IDP resides with the Municipal Council. The MEC has an oversight function to see that the Council has complied with procedure. The Department has explicitly not said that MEC adopts the IDP. Rather the IDP is brought into effect by the Council.

Mr Bhabha (ANC Mpumalanga) asked what the MEC could do if the District Council brings into effect an IDP which is inconsistent with a local IDP.

The Chair said that it is not the MEC’s work to see that the IDP complies with this Bill. There is no link between the content of the plan and the MEC’s power to approve it. He has only procedural oversight. This will have to be looked at.

Mr Smith (IFP) believed that the Bill only refers to process not substance issues.

Mr Selfe (DP) said that a lot of the procedures and processes are what the municipality has to do. Clause 24 and 25 refer to a process of public participation. He was concerned about the practicality of such participation if it is mechanical and procedural. To what extent will a public submission be listened to? Secondly, the issues the public will take in an interest in are the small issues which impact them locally. To what extent will the smaller issues be taken into account in the broader process?

Ms Woodbridge said that there had been a recommendation by the Gender Advocacy Programme that performance indicators be put into the IDP to measure the success of public participation.

Ms Seaton (IFP) said that public participation will firstly identify needs. Given the vast differences between the haves and have-nots there is a need to prioritise . There will be some tension between capital development projects and maintenance projects. What is built into the Bill to assist municipalities to prioritise?

The Department chose to defer their answer.

Performance Management
The reservations expressed in the public submissions related to two matters. Firstly, who is responsible for performance management? SALGA suggested that half the Chapter must be deleted. There assert that there are different performance management systems for different sectors, for national and local government, but because the Bill does not make this clear there is some confusion about who is responsible for performance management.

Ms Woodbridge said it is important to have the distinction clear because an auditor would look at the outputs of each section. The performance management system to monitor human resources is separated out but the rest are collapsed together.

The second concern was about the municipalities’ capacity to implement the system. There are concerns over the financial implications of this Chapter. As it currently stands performance management is framed as an efficiency mechanism but should it not also be a mechanism to address development?

Mr Smith (IFP) said that in Australia everything is costed, even governance. He also added that efficiency in respect of goals is important.

Ms Woodbridge said the real issue is the way the system is designed. She used the example of a United Kingdom hospital which used a performance management system which required the number of patients coming through the hospital to be counted. After using this system for some time, efficiency in the hospital started to decline. Why did they not count the number of patients who came through the hospital in good health instead? She thinks there is no polarity between development and efficiency.

Mr Sithole (ANC) said there is a general outcry about workers and the delivery of jobs. It seemed to him that performance in respect of delivery is related to elected officials. To what extent can they rely on delegated powers? People doing the job and working for the Council are officials.

Ms Woodbridge replied that the confusion over who is responsible for performance management is partly related to how the different systems are put together. Councillors as elected representatives are responsible for Key Performance Indicators for organisational outputs.

The Chair said that in Australia it is impossible to arrive at national Key Performance Indicators because municipalities are so different to each other in size and needs. The situation in SA, however is not the same because there are certain uniform needs such as water, electrification and so forth. You judge a municipality according to whether they are meeting these needs and this could provide the basis for Key Performance Indicators nationally. For the rest there needs to be some flexibility because there are district councils and other bodies.

Mr Selele said that on the issue of who is responsible for performance management, SALGA’s view is that the system is conflated. The Department is much more interested in developmental outcomes and does not see any conflation. The performance management system should not be seen as an add-on to the functions of the municipality but rather as a tool within the IDP process. SALGA argues that national government does not set key performance targets but believes that they have the task of building the capacity of municipalities. They therefore have to set indicators to measure whether they are building capacity. He said that if SALGA also wants to set indicators this will be acceptable.

On the issue of capacity, he emphasised that because the system is new it will be phased in to test its applicability and the assumptions made. It will be introduced as a pilot project for 3 years.

Mr Selele said that government needs indicators to show to what extent municipalities are impacting on quality of life and to measure outcomes and objectives as set out in IDPs. Indicators are set out in IDPs and municipalities will have to see that their individual staff members have IDPs linked to these indicators. This linkage is important. National performance indicators will ensure uniformity.

Rev Goosen (ANC) said the municipality needs to manage their own performance but in terms of Clause 7(1)(b)(2) the public has a responsibility in measuring the performance of the municipality. The public needs to be involved in seeing whether the municipality is performing to their satisfaction.

Human Resource Management
COSATU and FEDUSA objected to fixed term contracts as well as to Clause 66, the relationship between the Minister’s powers and bargaining councils.
A member commented that gender issues had also been raised in the submissions on human resources. The Chair said that the governing party’s response is that sexual discrimination is not negotiable. Staff of a municipality must be representative of the population within that municipality.

Municipal Services
The issue here was whether this Chapter applies to all municipal services. How do you define a basic service? In the context of the White Paper on Municipal Services Partnerships which was recently gazetted, how do you deal with legislation if policy is still being developed?

Chief Mtirara (UDM) asked whether rural community structures, traditional authorities and the national council of chiefs were consulted in drafting this legislation.

The Chair also needed clarification on the tariff policy and requested that the Department draft a one-pager on the tariff policy as this was very relevant to the problem of non-payment for services. He commented that the governing party has different views on this Chapter. They had problems with defining economic sustainability.

The Chair asked Ms Woodbridge to explain the differences between the gazetted version and the present version of the Bill. What are the implications?

Her response was that the present version is a lot less detailed. Many of the issues raised in the public submissions, especially the concerns of Nedlac, have been addressed. The provisions on equity and general development have been omitted. This version is therefore more technocratic than the previous version.

Ms Jackie Manche, Acting Deputy Director General, added that after public submissions, the Bill had been looked at critically and much of the detail was taken out.

Deliberations on the Bill
The Committee then resumed a clause by clause deliberation on the Bill where they had started on 9/6/2000. The following provisions were discussed:

Clause 1. Definitions
Functionary
This definition is in line with its usage in the Structures Act. It should be noted that a municipal manager is not a functionary.

Internal trading entity
At the time the Bill was drafted the Municipal Finances Management Bill was also being drafted. There is still a lot to be finalised around both Bills. Although the Management Bill will be dealt with in the Portfolio Committee on Finance, a joint committee chaired by Andrew Feinstein (ANC) will also deal with the Bill and Mr Ntshangase (ANC) will represent the Portfolio Committee on Provincial and Local Government there.

The Chair asked what the difference is between an internal trading entity and other bodies. Ms Manche said it implies simply that an internal trading entity can be set up which has its own budget and is not commercialised or privatised.

Mr Smith (IFP) said since the definition refers to a trading entity as opposed to a service provision entity the term ‘provision’ creates ambiguity because the provision of services is a generic function of municipalities while ‘sale’ implies that it is a financial transaction. The narrow view is that they are selling services. Mr Smith’s question was deferred because it will be influenced by the treatment of Chapter 8.

The Chair thought he was raising an important debate and one view of the problem is that means and goals are to be separated. Mr Bhabha (ANC Mpumalanga) thought the Bill seeks to separate special activities from the more general activities of a municipality.

Labour legislation
Ms Manche said that collective agreements imply bargaining council agreements. The Chair said the Committee was saying no to FEDUSA’s request that the definition include bargaining councils because collective agreements include bargaining councils.

Municipal business enterprise
The idea is that a municipal business is still under the control of the municipality. The municipality may also be able to devolve some of their functions, such as the collection of user charges, to another entity. These entities will not enjoy preferred creditor status with municipalities.

Mr Bhabha said that the Banking Council had argued against making a municipality a preferred creditor where you require rates to be paid up from the sale of a bonded house. But SALGA had argued that if this is changed an important source of revenue would be taken away from local government.

The Chair thought that municipalities would make a greater effort to collect outstanding rates if they are not preferred creditors.

Ms Manche responded to these concerns, saying that the issue is dealt with in the new Property Rates Bill. They recognise that sometimes the amounts owing for rates and taxes may be more than the value of the house. They are saying that the municipality should only be able to claim arrears for two years.

Mr Smith (IFP) asked whether a tariff would be a levy or a duty.

Ms Manche said that at tariff would be a user charge in so far as the municipality cannot devolve decisions around tariff setting.

Afternoon session
Municipal Council
Mr Selfe (DP) proposed that the definition be changed so that reference be made only to section 157(1) of the Constitution. It was thought unnecessary to include s157 in its entirety, since the rest of the clause dealt with elections of members to Municipal Councils and electoral systems. The committee agreed.

Municipality
Mr Smith (IFP) asked why the definition of municipality was restated in clause 2 of the Bill. Dr Petra Bauer of the Department stated the definition in clause 2 was specific to municipalities as corporate entities. The term also appeared in the definitions clause as it was necessary to make the distinction between a municipality as a corporate entity and as a geographic area. He referred Mr Smith to Section 76: Service utilities and municipal business enterprises, which addressed the two distinctions. The Chair acknowledged the difference between the two concepts, and it was agreed the definition would remain unchanged.

National organ of state
Mr Selfe (DP) noted this term was defined differently than organ of state in Section 239 of the Constitution. He pointed out that the constitutional definition included administration in the national, provincial and local sphere of government, whereas the Bill only refers to any department of State. In addition, the Constitution uses the term legislation, while the Bill uses law. Mr Selfe (DP) asked for clarity on the differences.

Dr Bauer pointed out that the difference was due to the fact the definition in the Bill relates solely to the national sphere of government. The Constitution makes reference to all three spheres. Administration was not included because there were no such things as national administrations. Mr Selfe (DP) recommended that the definition should be consistent with the Constitution. Mr Smith (IFP) agreed with the DP, stating that the reader would relate the meaning to the appropriate sphere. No agreement was reached.

Ownership control
Ms Manche said this definition was to be read in conjunction with the definition of municipal business enterprise. Mr Smith (IFP) suggested that "entity" be replaced by "enterprise", since entity implied enterprise, and because enterprise was used consistently throughout the Bill.

Mr Selfe (DP) questioned whether ownership control required owning more than 50% of an enterprise, since the definition stated it included the power to cast a majority of votes, or control a majority of the voting rights. Mr Smith (IFP) stated this was not the case, but that ownership control refers to having a larger percentage of the enterprise than any other stakeholder.

The Chair commented that the Department needed to have complete and concise answers to these questions since the interpretation of these definitions were paramount to understanding the context of the Bill. He stressed the need for legal representation from the Department to be present to clarify these concerns.

Prescribe
The Chair asked for clarification on the difference between regulations and guidelines. Ms Manche replied that guidelines were issued by the Minister, but act only as recommendations, whereas regulations were prescribed, and must be followed. Mr Selfe (DP) argued the word "prescribe" must be removed from the definition since it cannot apply to guidelines. He suggested that the definition be rephrased to " prescribe by regulations or issue guidelines in terms of section 112." The committee agreed.

Ms Verwoerd (ANC) asked whether it could be written into the committee’s report that any regulations to the Bill should pass through Parliament. She stated this was not so Parliament could disapprove of the regulations, but rather so members could be made aware of them. The Chair agreed with the concept, but felt it would be better for the regulations to be sent to the appropriate parliamentary committee instead.

Ratepayer
Mr Selfe (DP) asked if it was the intent of this clause to include juristic persons as part of the meaning of the word "person." If it was not, then person needed to be separately defined to state that juristic persons were not included. Dr Bauer replied that in accordance with the Interpretation Act, juristic person is included as part of the definition of person.

Mr Smith (IFP) thought it was problematic to include (b) and (c) in the definition, since they state a ratepayer is someone who pays a tax, duty or levy imposed by a municipality or pays for a service provided by a municipality. Mr Smith argued that this would then include tourists who paid entrance fees to museums. The Chair agreed the definition was too broad.

Ms Manche responded that the Department had wanted to incorporate in the definition persons who did not own property, but still benefited from services offered by the municipality. Mr Smith stated the Department should follow Section 229 of the Constitution, since it was very clear on what a ratepayer was. Ms Manche admitted the term needed to be more clearly defined.

Resident
There was confusion over what stipulates that a person is "ordinarily resident" in the municipality. Members wondered how the term would apply to individuals that live in one municipality during the week and another on the weekends. The committee could not come to a consensus.

Service Delivery Agreement
Mr Smith asked if the agreement between the municipality and a third party included private business enterprises, as it was not mentioned in 70(c). Ms Manche replied that the private sector was included under 70(c)(viii), which states "any other person legally competent to operate a business activity. " Mr Smith thought this was not made clear.

Mr Smith asked what "either for own account" implied in relation to the agreement? Ms Manche said it referred specifically to the "revenue stream" by which the money was collected for services provided.

All other definitions were accepted by the committee.

Chapter 2
2. Legal nature
Ms Manche said this clause looks at the legal nature of municipalities and the relationship to its structures, administration, communities, residents and ratepayers. It also makes provision for the municipality having a separate legal personality which excludes liability on the part of its communities, residents and ratepayers from the actions of the municipality.

Mr Smith felt it was problematic to include individual members of the community in a clause that deals specifically with the legal nature of corporate entities. Ms Manche thought that the content of the clause was correct, but that the title of the clause may be too narrow. She suggested that "Nature of municipalities" would be more accurate.

Mr Bhabha (ANC) stated it was important to look at corporate entities in proper context to the Bill. He said members of the community were equivalent to directors of a corporation. Directors are not held liable if their corporation is sued. This clause merely states that members of the municipality will not be held liable if a lawsuit is brought against the municipality.

The Chair stated there may be conceptual problems that arise from 2(d), and that legal input was necessary.

3. Co-operative Government
Ms Manche stated this clause seeks to integrate municipal legislative and executive authority in line with the policies and programmes of the national and provincial spheres of government.

Mr Bhabha (ANC) asked what measures had been taken to deal with non-compliance by municipalities. He was concerned that intervention as it was stated in terms of Section 139 of the Constitution would not be sufficient. No reply was given.

Mr Smith felt that the use of the word "must" in 3(1) was problematic, since it was obliging municipalities to fulfill the functions set out in (1)(b) and (1)(c). He thought that this might raise constitutional issues. Ms Manche said the intention of the clause was to make local government’s function in relation to the other spheres of government. The Chair stated the committee would seek constitutional advice on the matter.

Mr Smith also questioned the meanings of "agreements" and "mandate" in 3(c). The Department was unable to respond.

The Chair stated that South African Local Government Association (SALGA) must be present for these discussions. He asked whether they were obliged to be here since they received funding from Parliament. SALGA had been contacted several times, but had failed to return any calls. He asked what the law was regarding local governments joining SALGA?

Mr Bhabha (ANC) responded that local governments were not obliged to join SALGA, but that it was in their best interests if they wanted to benefit from being part of the collective.

The Chair said that there were complex issues within the Bill, and that it would be imperative for future discussions to have legal representation present to be able to address all the problems that were raised.

Local Government: Cross-Boundary Municipalities Bill
The committee discussed the proposed amendments to the Bill. The first was the inclusion of a new clause that dealt with the re-determination of boundaries. The clause stipulates that boundaries of a municipality may only be re-determined with the concurrence of the legislatures of the provinces involved, and if the re-determination is authorised by national legislation. Secondly, the long title was amended to include provision for the re-determination of boundaries of municipalities authorised by this Act. Thirdly, a new Schedule was proposed. The committee agreed to all three amendments.

The meeting was adjourned.