presentation to the select committee on finance
DESCRIPTION
PRESENTATION TO THE SELECT COMMITTEE ON FINANCE SUPPORT PROVIDED BY THE DCoG TO MUNICIPALITIES PLACED UNDER ADMINISTRATION UNDER SECTION 139 OF THE CONSTITUTION, 1996. 11 September 2013 Parliament, RSA, Cape Town. PURPOSE:. - PowerPoint PPT PresentationTRANSCRIPT
PRESENTATION TO THE PRESENTATION TO THE SELECT COMMITTEE ON FINANCESELECT COMMITTEE ON FINANCE
SUPPORT PROVIDED BY THE DCoG TO SUPPORT PROVIDED BY THE DCoG TO MUNICIPALITIES PLACED UNDER ADMINISTRATION MUNICIPALITIES PLACED UNDER ADMINISTRATION UNDER SECTION 139 OF THE CONSTITUTION, 1996UNDER SECTION 139 OF THE CONSTITUTION, 1996
11 September 2013 Parliament, RSA, Cape Town
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PURPOSE:
To brief the Select Committee on Finance on support provided by the Department of Cooperative Governance to municipalities that are presently placed under administration in terms of section 139 of the Constitution of the Republic of South Africa, 1996 (“the Constitution”).
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CONTENTS
1.Types of Section 139 Interventions2.Current S139 Interventions3.Nature of the Challenges4.Observations from Interventions5.Additional Support Measures for 139 Municipalities 6.Status of the Intergovernmental Support and Monitoring Bill (IMSI).
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TYPES OF SECTION 139 INTERVENTIONS
• In terms of section 139 (1) of the Constitution the provincial executive has the power to intervene into the local government affairs when a municipality cannot or does not fulfil an executive obligation in terms of the Constitution or legislation. The provincial executive may intervene by taking appropriate steps to ensure fulfilment of the obligation by doing the following:
• Section 139(1) provides for general intervention in instances where a municipality fails to fulfil an executive obligation (this is a provincial discretionary intervention);
• Section 139(4) provides for instances where a municipality fails to approve a budget or any revenue raising mechanism as required by legislation (a mandatory obligation); and
• Section 139(5) provides for intervention in instances where a municipality, due to its financial affairs, is unable to deliver services or meet its obligation (a mandatory obligation).
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2.
CURRENT SECTION 139 INTERVENTIONS
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OVERVIEW OF GENERIC CHALLENGES IN S139 MUNICIPALITIESOVERVIEW OF GENERIC CHALLENGES IN S139 MUNICIPALITIES
Governance
Challenges persist in the political/administrative interface: e.g. conflicts between top management and councillors and political in-fighting; there may be non-adherence to the Code of Conduct for Councillors and inability of a Council to perform as required by legislation. Often cited is poor or non-performance of top management, lack of proper organisational structures and vacant post in key management positions (e.g. technical, engineering, planning).
Financial
Financial mismanagement: this includes a lack of adequate systems and capacity to effectively manage financial resources; e.g. insufficient revenue raising due to weak billing and tariff systems, and weak debt collection policies; poor budgeting; lack of internal controls related to revenue management allowing for fraud, and misuse of municipal funds; lack of controls through internal audit and risk management committees.
Service Delivery
Sections 152 and 153 of the Constitution clearly set out the service delivery obligations of municipalities, this is often highly uneven and may significantly lag demand; there may be high debt levels for bulk water and electricity purchases, and little or no spending on repairs and maintenance, resulting in distribution losses, breakdowns of systems, or services not rendered.
CURRENT INTERVENTIONS
Currently there are 13 municipalities in 4 provinces under administration in terms of S139 (10) and of S136 (3) (MFMA).
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Province (No.) Municipality (ies)
KwaZulu-Natal ( S139 (1) (b) - 4
S136 Financial Intervention (MFMA) - 3
Imbabazane LM, Indaka LM, Abaqulusi LM, Umvoti LM,
Ugu DM, Uthukela DM, Umzinyathi DM
Eastern Cape (1) Mnquma LM
Mpumalanga (2) Emalahleni LM, Bushbuckridge LM
North West (3) Matlosana LM, Ditsobotla LM, Maquassi Hills LM
3.CURRENT S139 AND S136 (PFMA) INTERVENTIONS:
NATURE OF THE CHALLENGES
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PROVINCE: KZN
DATE OF INVOCATION
DATE OF TERMINATION
REASONS
Indaka Local Municipality
March 2010 Renewed – Still in progress
Governance: Lack of institutional leadership amounting to poor performance; Weaknesses in performance reporting directly affecting the oversight role of council over the executive and management.
Financial: Continuous financial irregularities resulting in the municipality receiving an audit disclaimer; Continuous failure to respond to audit findings and implement audit recommendations.
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KwaZulu-Natal
PROVINCE: KZN
DATE OF INVOCATION
DATE OF TERMINATION
REASONS
Umvoti Local Municipality
July 2013 Still in progress Governance: Continuous struggle and instability due to political differences of elected councillors which also permeated to staff members; Unlawful removal of elected office bearers and unlawful election of new office bearers, including the Speaker; Disruption of council meetings, including the passing of the budget, rendering the meetings in-quorate as a result of walkouts;State of dysfunctionality had forced the presence of members of the SAPS at council meetings and the closure of the municipal offices.
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PROVINCE: KZN
DATE OF INVOCATION
DATE OF TERMINATION
REASONS
Imbabazane Local Municipality
January 2013 Still in progress Governance: Political instability impacting on various aspects of administration and resulting in unstable governance; Tensions and disagreements in council resulting in various walkouts by political parties; Irregular decisions by council, such as continuing employing the Municipal Manager although his contract had terminated by operation of law ; Non adherence to policy, principles and frameworks applicable to council and the administration, such as instances where not all councillors were notified of meetings.
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PROVINCE: KZN
DATE OF INVOCATION
DATE OF TERMINATION
REASONS
Abaqulusi Local Municipality
March 2013 Still in progress Governance: Municipality was without a municipal manager from 31 January to 05 March 2013 and other senior positions remained vacant; Council was failing to fulfil its executive obligations; Council failed to accept an offer of support from the provincial government.
Financial: Municipality received a disclaimer audit opinion for the 2011/12 financial year for various reasons, such as high levels of unauthorised expenditure; Municipality’s annual report not compliant with section 121 of the MFMA.
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PROVINCE: KZN
DATE OF INVOCATION
DATE OF TERMINATION
REASONS
Umzinyathi District Municipality(MFMA S136)
April 2013 Still in progress Governance: Appointment of staff was not conducted in line with the recruitment policy, resulting in non-suitably qualified staff being employed and the appointment of a consultant as CFO ; Failure to comply with the section 139(1)(a) directive issued by the Provincial Executive in relation to the municipality’s obligations to Uthukela Water.
Financial: Lack of budgetary control which was evident from the income and expenditure statement for the 2011/12 financial year , reflecting over-expenditure; Material discrepancies between section 71 reported figures for the 2011/12 financial year and figures in the financial statements; Non-payment for services rendered by Uthukela Water.
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PROVINCE: KZN
DATE OF INVOCATION
DATE OF TERMINATION
REASONS
Uthukela District Municipality(S136)
May 2013 Still in progress Financial: Disclaimer audit opinion in the 2011/12 financial year which highlighted significant deficiencies in financial management including insufficient cash to cover operations, under-budgeting, discrepancies between section 71 reported figures and figures in the financial statements; unspent conditional grants of R126,3 million, irregular expenditure amounting to R14, 6 million and weak budgetary control which resulted in unauthorized expenditure of R62,147 million; Disaster Relief Fund of R4 million not spent for the purpose; inability of the municipality to pay its creditors.
Governance: Failure to ensure that the municipality was structured and organised in a manner suitable to undertake its constitutional obligations.
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PROVINCE: KZN
DATE OF INVOCATION
DATE OF TERMINATION
REASONS
Ugu District Municipality(MFMA S136)
May 2013 Still in progress Financial: The Auditor General’s report for the 2011/2012 financial year highlighted that the municipality regressed from an unqualified audit opinion to a qualified audit opinion; Unauthorised expenditure of R45, 4 mil, an irregular expenditure of R18, 4 mil, current liabilities exceeded current assets and conditional grants were not cash-backed. 134 cases of deviations of the SCM regulations, high salary and overtime costs; the ratio of current assets to current liabilities was below the norm of 2:1; failure to pay creditors within 30 days, and loans totalling an amount of R285, 5 mil.
Governance: Numerous changes in top management with middle managers acting in critical posts.
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The following specific challenges were identified for the local government in KwaZulu Natal Province which affects S139 Municipalities Coalition government at municipal level within the Province creates political instability. Strained relations between politicians and officials, as well as interference in administration in some municipalities, resulting in the tensions between the Council and the Municipal administration. High vacancy rates in most municipalities. Ineffective public participation, which was demonstrated through community protests in some parts of the Province.Councillors failing to perform continuous oversight responsibilities over service deliveryPoor spending on MIG, exacerbated by poor planning and slow procurement processes, result in the late implementation of infrastructure projects. Most rural municipalities are solely dependent on MIG for capital projects. Incomplete infrastructure projects, in the areas of housing, roads, electricity, water and public facilities. Maladministration with regard to employment of local communities in the municipalities and on infrastructure development projects (e.g. nepotism and favouritism).
KZN SPECIFIC CHALLENGES
Current Section 139 Interventions: North West
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PROVINCE: NW
DATE OF INVOCATION
DATE OF TERMINATION
REASONS
Maquassi Hills Local Municipality
April 2013 Still in progress Governance:Poor governance and management of council matters by council; Infighting in council, which grossly affects administration and service delivery (Poor relationship between Mayor and Speaker);Poor leadership and oversight by Council; Breach of code of conduct by Councillors; Poor relations between council and the administration; Deterioration of service delivery resulting in sporadic service delivery protests; Poor administrative leadership and lack of capacity.
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PROVINCE: NW
DATE OF INVOCATION
DATE OF TERMINATION
REASONS
Ditsobotla Local Municipality
April 2013 Still in progress Governance: Poor governance and management of council matters by council (Infighting and divisions in council); Poor leadership and oversight by council (Appointment of the Municipal Manager was highly irregular); Breach of Code of Conduct by Councillors; Poor relations between council and the administration (Poor relationship between Mayor and Municipal Manager); Deterioration of service delivery; Poor administrative leadership and lack of capacity.
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PROVINCE: NW
DATE OF INVOCATION
DATE OF TERMINATION
REASONS
Matlosana Local Municipality
April 2013 Still in progress Financial: Financial crisis which had resulted in municipality not honouring its statutory obligations during the 2012/13 financial year;Non-payment of the bulk electricity and the bulk water accounts to Eskom and Midvaal Water Board; Failure to collect municipal rates resulting in the debtors book standing at about R960 million; Use of revenue from sale of electricity to subsidise other services for which the consumers were not paying;Poor administrative leadership and lack of capacity.Governance: Non-enforcement of debt collection and credit control policies; Lack of management and leadership capacity.
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The following specific challenges were identified for the local government in North West Province which affects S139 Municipalities:
Political differences and disagreements in the implementation of section 139 interventions (i.e. Political structures not supportive of EXCO decisions to invoke section 139 interventions, which resulted in delays in the implementation of interventions).High level of resistance from affected municipalities, resulting in threats to take legal action against Provincial government Poor understanding of section 139 interventions by some councils and administration (e.g. The MM in Maquassi Hills does not recognise the authority of the Administrator, resulting in duplication of processes such as recruitment of section 56 posts).
The municipalities claim that the Provincial government has no basis for invoking the interventions and that proper procedures were not followed before the interventions were invoked (in all instances, the MEC for Local government has engaged with the councils, highlighting the problems in the municipalities and the need for councils to take action, but this was not done by councils, hence the decision to invoke section 139 interventions).
NORTH WEST SPECIFIC CHALLENGES
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The current status of the implementation of the interventions is as follows:
1.Maquassi Hills Local MunicipalityThe Administrator and a team of experts started in April 2013 but has been met with high resistance from the Municipal ManagerThere is some progress registered however, due to the resistance, some of the gains may be reversed once the intervention is liftedThe NCOP select committee supports the intervention 2.Ditsobotla Local MunicipalityThe Administrator and team of experts was appointed but has not started with the actual intervention (due to political disagreements about the process)The team has conducted an assessment and the report is due for tabling before council prior to the actual implementation of the intervention The time remaining before the intervention lapses is too minimal to make any meaningful impact in the municipality. The NCOP select committee supports the intervention.
NORTH WEST: STATUS of INTERVENTIONS
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3. Matlosana Local Municipality:
The municipality objected to the intervention and council took a resolution to that effect (not to accept the intervention).The Administrator (financial team) has never been introduced to the municipality since the EXCO decision in March 2013 as a result.Nothing has been done in the municipality with respect to the intervention. The municipality has issued summons to the Provincial government in objection to the intervention (same day as the NCOP SC visit)
The NCOP select committee indicated a need for the decision by the Provincial EXCO and the Minister of COGTA to be revisited (the municipality indicated to the NCOP that the reasons for the decision to intervene are no longer applicable as the financial situation of the municipality has improved) However, the debt owed to the municipality continues to escalate and is estimated at R980 million.
NORTH WEST: STATUS of INTERVENTIONS
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PROVINCE: MPUMALANGA
DATE OF INVOCATION
DATE OF TERMINATION
REASONS PROGRESS
Emalahleni Local Municipality
April 2013 Still in progress Four main findings- Infrastructure and service
delivery collapsed; Municipal capacity to
function disintegrated; Financially at the point of
collapse; Break down in trust
between communities and government.
Governance: Rrelationship between the
Mayor and Municipal Manager had deteriorated to such an extent that it had paralysed the functioning of the municipality;
LLF not functional; Interference of unions in
administrative functions; Deterioration of audit
outcome (Disclaimer).
Labour stabilised, agreements with unions and staff consultation process, LLF established.
Investigation into allegations of corruption, fraud and collusion initiated.
Performance management system being developed- aim to change culture to being performance orientated.
HOD forum launched. Members of mayoral committee
with directors pulled in as part of turnaround team.
Shift system reviewed and agreement signed.
Section 80 committees established.
Staff capacity strengthened. Audit Remedial Action Plan
Reviewed.
MPUMALANGA
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PROVINCE: MPUMALANGA
DATE OF INVOCAT-ION
DATE OF TERMINAT-ION
REASONS PROGRESS
Emalahleni Local Municipality
April 2013 Still in progress
Restoring relations with communities :Series of public meetings. Programme from administration to visit wards to discuss issues.Open door to delegations from communities.Relationship with local press renewed, using news papers to convey messages.Social media employed as instrument to get immediate feed back and to give real time information. Extremely positive response.Weekly discussions by directors on issues on Emalahleni FM.Publishing challenges and programmes to communitiesIn process of developing new call centre to promote efficient communication. Funding from donors committed for this purpose.Engagement with key community groups on issues e.g. Planning forum to mobilise expertise. Mining sector/ organised business. Informal settlements – responded to demands
within time lines and agreed on a joint working committee.
Ensuring that personal attention to reported problems are provided and that teams respond immediately to service delivery reports.
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PROVINCE: MPUMALA-NGA
DATE OF INVOCATION
DATE OF TERMINATION
REASONS PROGRESS
Emalahleni Local Municipality
April 2013
Still in progress
Service Delivery• Waste management sporadic and
severely impaired – only one truck out of 15 operating.
• Water provision poor and quality shocking – interruptions 3 out of every 7 days, at least 30% shortfall, water bursts daily.
• Road infrastructure disintegrating – not a street without potholes or with working robots.
• Electricity supply interrupted – every second day, 20% overload.
• Sanitation problematic –pollution levels high and sewage spillages daily.
• No law enforcement - Illegal activities escalating.
• Housing backlog – 27 informal areas.
• Maintenance of assets non existent.• No capacity for growth or for even
to service current population
The immediate provision of potable water has been stabilised through better system management.
Problems on network addressed with short turnaround times. Total wastage of water reduced with 60%.
Sanitation remains an issue and strategy has been in the short term to ensure quicker responses to problems. Turn around improved and long outstanding issues being addressed.
Waste removal back on track as the main problem of vehicles have been resolved.
Roads – pothole programme developed and own budget supplemented by Provincial Department of Public Works.
Electricity plans for improvements being made. Immediate focus on immediate problem solving as problems occur
Vehicle fleet management changed and fleet getting in shape. However, still a challenge.
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PROVINCE: MPUMALA-NGA
DATE OF INVOCAT-ION
DATE OF TERMINATION
REASONS PROGRESS
Emalahleni Local Municipality
April 2013 Still in progress
Financial: Financial instability – Disclaimer:•Creditor payments – R346 million outstanding.•Debtors’ at 79%. Total outstanding R981 million.•Cash-flow estimated to be negative R93,7 million.•Total net negative R439,8 million.•Supply chain management waste full and severe issue.Income unsatisfactory:• Nearly R40 million under
recovery on water and electricity.
• 37 000 households not metered for water, 13 000 electricity not metered.
• Large scale illegal water and electricity connections.
•Expenditure out of control• Over utilisation of
contractors.• Overtime abused• Purchases inflated
Financial turn around strategy adopted. Audit plan developed and issues being
addressed. Aim at addressing all issues which led to a disclaimed audit.
Financial controls over supply chain strengthened.
Cash flow projections done daily. Cash flow still negative but improving. Debtor management improved. Clean up creditors, e.g. agreement with
Eskom. Over R20 million in long outstanding debt
paid to creditors. 60% of creditors paid within prescribed
dates to date. Additional financial expertise employed. Programme launched to ensure all are
metered. Need to replace and install 37 000 water meters and 13 000 electricity meters.
Addressing illegal connections. New tariff structure approved. Indigent
population’s plight relieved. Fines being imposed and enforced . More
than R1 million already levied. With above initiatives aims at improving
revenue stream with R25 million per month and reduce expenditure with R5 million per month.
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PROVINCE: MPUMALA-NGA
DATE OF INVOCATION
DATE OF TERMIN-ATION
REASONS PROGRESS
Bushbuck-ridge Local Municipality
April 2013 Still in progress
Governance: •Critical vacancies in municipality•Disclaimer Audit OutcomeFinancial: •Inability of the municipality to honour its financial commitments to the Bushbuckridge Water Board, resulting in the latter cutting off its water supply. • The outstanding debtors was an
amount of R993mil and the outstanding creditors amounts to R351mil. The R351mil is unconfirmed and might increase.
• The Municipality billed consumers up to March 2013 a accumulative amount of R298mil and only collected an amount of R50,6 mil for the same period. The MIG allocation for the year was R286mil of which all was transferred to the municipality. Only R93mil spent.
• The balance of R192 mil was not cash backed.
• SCM unit not functional.
• Technical Director Appointed
• Audit Remedial Action Plan Developed
• National, Prov. Treasury and COGTA developed financial turn around strategy
• Tariff structure reviewed• Data Cleansing exercise in
process• IT environment audited and
support provided to link cash offices electronically
• SCM units established and trained
• MIG projects prioritised and service providers appointed
• Systems developed and implemented.
• The Municipality’s financial position is steadily improving.
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PROVINCE: MPUMALA-NGA
DATE OF INVOCATION
DATE OF TERMINATION
REASONS PROGRESS
Bushbuck-ridge Local Municipality
April 2013
Still in progress
Service Delivery:•municipality was unable to discharge its responsibility of providing its communities with constant water, refuse removal and electricity.•The failure to provide water to its communities has been the low point in terms of its financial capability.•Failure to provide water is as a result of a crisis in its financial affairs; it is in serious or persistent material breach of its obligations to provide basic services and is unable to meet its financial commitments.•Bushbuckridge Water Board cut water supply to the municipality as from the 23 November 2012 due to municipality admitting to be unable to honour its commitments.•After several meetings the water supply has been restored for few days with no end in sight.
• The Minister and the Premier have intervened in accelerating the implementation of the water reticulation programme by engaging Rand Water to become an implementing agent.
• The tri-partite agreement is about to be signed, but Rand Water has already begun with the construction process.
• The Acornhoek bulk line has been completed
• The rest of the water bulk infrastructure will be completed this financial year
• Dedicated maintenance teams are being set up. The existing municipal water tankers fleet is being overhauled and about 4 new trucks will be procured the next two month.
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PROVINCE: MPUMALA-NGA
DATE OF INVOCATION
DATE OF TERMINATION
REASONS PROGRESS
Bushbuck-ridge Local Municipality
April 2013
Still in progress As far as Bushbuckridge Water Board is concerned, the Municipality is concluding a negotiated process to repay BWB over a period of time in such a way that the cash flow situation of BBR does not deteriorate further, and the debt does not escalate at the same time.
PROVINCE: EASTERN CAPE
DATE OF INVOCATION
DATE OF TERMINATION
REASONS
Mnquma Local Municipality
March 2013 Still in progress but E Cape province have reported that the intervention has been very effective, and they may soon be withdrawing the intervention.
Governance: Two factions, one led by the Executive Mayor and the other led by the Speaker and the Chief Whip, were running two parallel administrations headed by the Municipal Manager and a so-called Acting Municipal Manager, respectively; Council meetings were adjourned regularly due to disagreements on the adoption of the agenda; The Executive Mayor, the Speaker and councillors had contravened the provisions of the Local Government Municipal Structures Act of 1998 (such as section 36(5) which prohibits councillors from simultaneously holding the positions of Executive Mayor and Speaker), as well as the Council Rules of Order.
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EASTERN CAPE
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4.ADDITIONAL SUPPORT MEASURES
Available through the department:•Deploy critical technical skills through MISA•Monitor rigorously the implementation of the amended Municipal Systems Act.•Strengthen oversight structures like s79 Committees, Audit Committees and Ethics Committees.Not within the control of the department:•The political environment in municipal spaces: e.g. coalitions, which can lead to continuous chopping and changing of Mayors and speakers; plus overall problem of political in-fighting and tensions and interference in the political/administrative interface.•Rectifying financial mismanagement, holding to account, ‘consequences’ and technical support for financial turnaround.
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Broad strategies to address challenges
ADDITIONAL SUPPORT MEASURES
The proposed support measures will vary in application from one municipality to another, but categories of support will be ‘clustered’.
• DCOG will liaise closely with Provinces, who are the guardians of municipal support measures.
• Certain measures will require leadership from intergovernmental partners (e.g. Office of the Auditor-General; National Treasury, Provincial Treasuries).
• Other selected stakeholders may also be approached for support.
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APPROACH FOR PROJECT COLLABORATION
Project Management InitiativeVerify accuracy of data and information on municipalities under S139, S136, and establish records.
Create simple system for Monitoring and Evaluation to determine a)Progress of the S139 intervention;b)Support measures adopted; andc)Effectiveness of support measures.
1. Assess ‘state of play’ and agree proposed priority support measures required per category.
2. Agree approaches with stakeholders.
3. Agree key indicators per category (Governance, Finance, Service Delivery) between DCOG, Provinces, Treasuries, AG and stakeholders.
4. Establish shared platform for reporting by government and stakeholders on progress with implementation of support measures.
Challenge Initiative
Imbabazane DM, Umvoti LM, Ditsobotla LM, Maquassi Hills LM, Mquma LM and Emalahleni LM: Challenges with council; political differences of the elected councillors which also permeated to staff members; unlawful election of office bearers, including the Speaker; disruption of meetings as a result of walkouts and poor governance and management of Council matters; poor leadership and oversight by council; breach of code of conduct by councillors; poor relations between council and the administration; deterioration of service delivery.
Two factions, one led by the Executive Mayor and the other led by the Speaker and the Chief Whip, were running two parallel administrations; contraventions of the provisions of the Local Government Municipal Structures Act of 1998 and the Council Rules of Order, respectively.
Governance: Develop comprehensive Councillor Handbook in collaboration with SALGA and Provinces. Conduct workshops to implement Councillor Handbook in collaboration with stakeholders Monitor implementation.
Mobilise political intervention where necessary.
ADDITIONAL SUPPORT INITIATIVES BY THE DEPARTMENT
Challenge Initiative
Ugu DM and Uthukela DM:Majority of staff have inadequate skills
SD: Governance:Mobilise support from LGSETA to determine whether municipal workplace skills plan is addressing the requisite skills gap. Mobilise additional financial resources to fast track skilling for critical posts.
Uthukela DM
IDP not credible and failure to approve the annual budget and the IDP for 2013, respectively.
Send a team to facilitate the address of IDP and SDBIP challenges.
Uthukela DM: Excessive amounts .spent on overtime
Using SALGA HR Policy Handbook and in collaboration with SALGA assist the municipality to develop an Overtime Policy that addresses the challenges they face. Monitor approval and implementation of the Policy.
ADDITIONAL SUPPORT INITIATIVES BY THE DEPARTMENT
ADDITIONAL SUPPORT INITIATIVES BY THE DEPARTMENT
Challenge Initiative
Umzinyathi DM, Matlosana LM, Indaka LM, Emalahleni LM and Bushbuckridge LM:
Staff not having access to accounting systems and lack of monitoring of work as service providers get paid without having done the work and financial crisis resulting in municipality not honouring its statutory obligations;
Non-payment of bulk electricity and bulk water accounts to Eskom and Midvaal Water Board; failure to collect municipal rates resulting in the debtors book standing at about R960 million; use of revenue from sale of electricity to subsidise other services for which consumers were not paying; poor administrative leadership and lack of capacity; non-enforcement of debt collection and credit control policies, respectively.
Finance and Governance: Mobilise support from National Treasury and LGSETA to address capacity constraints.
Mobilise political intervention where necessary.
Administrative Challenge Initiative
Strengthen coordination of support at sector and provincial level:
Service Delivery: Service Delivery: MISA structures in provinces: better MISA structures in provinces: better coordinate information, monitoring and coordinate information, monitoring and action regarding the range of challenges, action regarding the range of challenges, implementation of which types of support, implementation of which types of support, and overall recovery profile.and overall recovery profile.
ADDITIONAL SUPPORT INITIATIVES BY THE DEPARTMENT
Challenge Initiative
Enhance Financial and Governance Competencies
Consolidate the provision of initiatives by provinces, National Treasury, Auditor-General, LGSETA, IMFO and determine areas not yet being addressed / the reason why impact is not yet requisite and put a inter-sectoral plan in place to address challenges.
ADDITIONAL SUPPORT INITIATIVES BY THE DEPARTMENT
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5.OBSERVATIONS FROM PAST INTERVENTIONS
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a) The limitation of section 139(1) regarding ‘failure to fulfil an executive obligation’ has led to difficulties in interpreting (a) what constitutes this, and (b) when intervention is permitted.
b) Most interventions are conducted in terms of section 139(1)(b). However, some Provincial Executives will appoint an administrator to assume the authority over the entire municipal administration under this clause - which is Constitutionally only really allowed only in (1)(c)); however it allows for S56 managers to report to an objective third party.
c) Improved information flow between provinces and DCOG on progress and recovery status is needed.
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(d) Pre – intervention Directives in terms of section 139(1)(a) may not always have been issued prior to the intervention.
(e) Procedures for intergovernmental monitoring as prescribed in S139 may not be pursued by a province e.g. the required review by Councils and recommendations that should be made to PEC.
(e) Unknown degree to which Provincial Legislatures exercise oversight over the Provincial Executives’ actions in regard to section 139 interventions;
(f) District municipalities have not determined their support role: e.g. request progress reports on S139 municipalities at their IGR Forums, determine areas of support; escalate matters to LG MinMec.
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h) An intervention should be used as a ‘last resort’; ‘early-warning’ and improved monitoring and provincial ‘up-scaling’ of the problem might assist.
i) Provinces may lack the capacity to deal with their mandate of monitoring and supporting local government in terms of personnel, funds, institutional knowledge, and expertise;
j) The provincial duty to monitor and support local government is largely viewed as an unfunded mandate, due to no fiscal allowance for this.
k) The sustainability of an intervention is questionable, often due to the complexities of the causes, and the need for a review of viability i.r.o some municipalities.
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6.THE IMSI BILL
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Longer-term Recommendations to Strengthen the Longer-term Recommendations to Strengthen the Application of S139Application of S139
Development of the Intergovernmental Monitoring, Support and Interventions Bill (IMSI):
Objectives of the Bill:
To provide for support and intervention measures to strengthen the capacity of each sphere to fulfil its executive obligations in respect to
oversight and support of municipalities.
The IMSI Bill
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Objectives:
Stabilise the interventions environment through:
a) Clearer procedures and processes for undertaking both S100 and S139 interventions;
b) To establish, together with DPME, a range of sector norms and standards for service delivery to better define executive obligations;
c) To ensure that interventions are used as a ‘last resort’ and prevent ‘conflictual interventions’ through providing pre-intervention measures for provision of support.
The IMSI Bill
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Objectives:
Stabilise the interventions environment through:
d) Providing for a consistent and uniform approach to the application of an intervention at both provincial and local level (and rationalising procedurally, re both S139 and S100);
e) Section 139(8) legislation would complement the provisions of the Municipal Finance Management Act, which provides a detailed framework for (section 139(4)&(5)) ‘financial’ interventions.
Status of IMSI Bill
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The IMSI Bill was presented before the African National Congress NEC Subcommittee on Governance on 5 February 2011. Approval was granted to continue with the technical work subject to any political deliberation and decisions to be taken on the Bill.
• The IMSI Bill was presented to the Technical G&A Cluster on 01 September 2011: approval was granted to present it before a Cabinet Committee meeting, subject to any inputs from members being considered.
Status of IMSI Bill
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Delays in processing of the Bill:
•The Bill was submitted to Ministry for further submission to Cabinet twice in 2012 (August, September), and withdrawn from the Cabinet agendas: also withdrawn from the MinMec agenda of 12 November 2012.
•The Bill was due to presented to the Portfolio Committee on Public Service and Administration in March 2013; meeting was cancelled.
• The Bill was presented to the CoGTA Parliamentary Select Committee on 18 June 2013, who requested ‘speedy’ finalisation.
•The Bill was submitted to Ministry three times during 2013 in preparation for submission to Cabinet.
The Bill has been submitted to the State Law Advisor (SLA), for its constitutionality, on two occasions; most recent certification: 15th March 2013.
Insert when work began on the Bill – and should we mention the new emphasis that arose re S100, as a result of the findings of the Limpopo TT?
Status of IMSI Bill
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Re: S100 and S139:
In November 2012, the Minister, CoGTA, received notification that the DPSA recommended that S100 legislation be separated from the current IMSI Bill, and further developed and promulgated by the DPSA.
Bi-laterals were to be held between the Ministers of CoGTA and DPSA to discuss these matters.
Upon receiving a draft S100 Bill, the Chief SLA advised that there was no apparent need to separate the Bills.
The DPSA S100 draft Bill was submitted to FOSAD Technical Cluster ; it was agreed that resolution be found between the two ministries.
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