Department, Municipal Demarcation Board, Commission for Promotion & Protection of Rights of Cultural, Religious & Linguistic Com

Meeting report

PORTFOLIO COMMITTEE ON PROVINCIAL AND LOCAL GOVERNMENT AND THE SELECT COMMITTEE OF LOCAL GOVERNMENT AND ADMINISTRATION
17 October 2006
DEPARTMENT, MUNICIPAL DEMARCATION BOARD, COMMISSION FOR PROMOTION AND PROTECTION OF RIGHTS OF CULTURAL, RELIGIOUS AND LINGUISTIC COMMUNITIES ANNUAL REPORT

Chairperson: Mr S L Tsenoli (ANC)

Documents handed out:
Annual Report of the Department of Provincial and Local Government, 2005/2006: Part1 & Part 2
Department of Provincial and Local Government PowerPoint Presentation
Chief Financial Officer: Presentation
Implementation Plan for the Five Year Local Government Strategic Agenda (2006-2011)
Annual Report of the Municipal Demarcation Board, 2005/2006 (available at www.demarcation.org.za)
Budget Review: Municipal Demarcation Board PowerPoint Presentation Part 1, Part 2
Annual Report of the CRL Rights Commission, 2005/2006: Part1, Part2 & Part3
CRL PowerPoint Presentation

SUMMARY
The Joint Sitting of the Portfolio Committee on Provincial and Local Government and the Select Committee of Local Government and Administration was presented with the annual reports and financial statements of the Department of Provincial and Local Government; the Municipal Demarcation Board; and the Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities.

The Department of Provincial and Local Government detailed the department’s activities in the areas of Financial Performance; Programme Performance; and Project Consolidate. DPLG had had a budget of approximately R15.5 billion, and had spent 99.98% of this budget had been spent. The Department had assisted with decentralization in the Congo; the roll-out of anti-corruption strategies to approximately 30 municipalities; the accreditation of a Municipal Leadership Development Programme; and the acceleration of the roll-out of free, basic electricity and water in South African households. Questions from Members included the Auditor General's report, the Tender Board's involvement in the processes, municipal planning, the information systems audit, and security in the management of accounting and financial systems. There was some discussion as to what exactly had been discussed with the Auditor General. Staff shortages and recruitments were also raised. It was suggested that DPLG should ensure that it engaged with both local and provincial government. The Department's involvement in capacitating traditional leaders was set out.

The Municipal Demarcation Board briefed the Committee on the expenses for the year 2005/2006; outputs and developments; matters relating to municipal boundaries; ward delimitation; the assessment of municipal capacity; the adjustment of district municipality functions to local municipalities; updating the powers and functions of local government; the report to assess pollution legislation; the strengthening of the Board’s interaction with key stakeholders; and the strengthening of the Board’s administrative and financial capacity. It was looking to improve management of its financial assets and liabilities. Questions included the amounts reflected for staff training, "wasteful expenditure" on traffic fines, the effects of changing government from local to municipal, whether the Board was indeed a going concern, and public hearings. Further insight was requested on the Matatiele notice and alignment of other Departments to the Board.

The Commission for the Promotion and Protection of Rights of Cultural Religious and Linguistic Communities briefed the Committee on the mandate, vision and mission of the Commission. The programmes included public education and awareness; research and policy formulation; investigation and conflict resolution; and flagship and events.

An analysis of the audited financial statements was provided. There were disadvantages in the limited number of communities reached, the limited number of programmes initiated by the Commission; and the limited collaborations of the Commission in engaging stakeholders. There was insufficient time for discussion and the Committee would engage the Commission further at another meeting.

MINUTES
Annual Report 2005/6 Briefing by the Department of Provincial and Local Government, 2005/2006
Mr Elroy Africa, Acting Director-General of the Department of Provincial and Local Government (DPLG), presented the annual report on behalf of the department. He detailed the department’s activities in the areas of Financial Performance; Programme Performance; and Project Consolidate.

Particular reference was made to the budget for the year 2005/2006, which, at approximately R15.5 billion, had been the largest ever for the Department.99.98% of this budget had been spent. In regard to the project performance, Mr Africa detailed the activities that had been undertaken for the year 2005/2006. He made particular reference to the role of the department in assisting with decentralization in the Congo; the roll-out of anti-corruption strategies to approximately 30 municipalities; the accreditation of a Municipal Leadership Development Programme; and the acceleration of the roll-out of free, basic electricity and water in South African households.

He further mentioned that 2005/2006 had been a fairly positive year in terms of overall performance, including that of Project Consolidate.

Discussion
The Chairperson requested that the department provide insight into the report issued by the Auditor General in the assessment of the annual report of the department.

Mr M Sigaba, Chief Financial Officer, DPLG, referred to paragraph 5.1 of the Annual Report. He indicated that the Auditor General’s (AG) Report had been specifically referring to under-expenditure on some conditional grants provided by the Department. He elaborated that the Department had had numerous challenges in gathering financial information from the municipalities, as the quality of the information they provided was poor. He further added that the Auditor General had noted under-expenditure particularly in the areas of environmental impact assessments and the construction of infrastructure. Despite the challenges mentioned, Mr Sigaba stated that there had been a forum that was established to co-ordinate sector projects and overcome such challenges.

Ms Molatelo Montwedi, Chief Director, Municipal Infrastructure, DPLG, added that the primary difficulty faced by the Department with regard to financial management had been planning. She explained that there had been issues of time lags between budget approval and budget expenditure for municipalities. As such, she expressed the Department’s approach to encourage municipalities to reflect the three-month time lag in their reports that were submitted in January.

Mr M Dlabantu, Former Chief Financial Officer of DPLG, who attended to assist the Committee with answers to questions covering his term in office, added that there had been an institution that was set up prior to the establishment of the DPLG in the year 2001. He mentioned that the amounts that had been issued by this State Tender Board were somewhat irregular. As a result, there were discussions centred on amending the Public Finance Management Act to ensure that the authorisation of budgets was regulated.

The Chair then questioned the reasons for the lengthy process to implement these discussions. He further enquired as to whether or not the Tender Board had submitted a response.

Mr Dlabanutu responded that there had been insufficient evidence. Although there had been legislation to dissolve the Board, it was not passed. In addition to this, it was not within the authority of the National Treasury to deal with the matter. Therefore there would be a number of details around the issue that remained to be finalised.

Mr P Smith (IFP) then questioned the reasons why DPLG had emphasised expenditure rather than leave such a duty to the municipalities.

Mr Dlabantu stated that it did so in order to encourage openness and transparency to allow for a fair opinion as determined by the Auditor General.

Mr S Shiceka (ANC) inquired into the approval processes adopted by DPLG. He noted that the challenge had been that such processes were too lengthy. He further emphasised that the NCOP would be ensuring that the DPLG provided an annual report containing municipal performance results. Mr Shiceka stressed that the issue at hand was in fact the under-expenditure on the conditional grants.

Ms Montwedi responded that although the issue surrounding conditional grants was true, it was in fact being discussed out of its context. The main problem, she clarified, was that of municipal planning. She stated that municipalities required approximately 18 months to plan effectively. She added that resolving this problem was part of the mandate of the Municipal Infrastructure Programme that had been initiated approximately two years ago. This programme had improved over the years and would assist in improving the spending of the municipalities. She stated that the authorisation of projects within municipalities was another area that required attention.

In terms of the processes of approval Ms Montwedi detailed an investigation that had been conducted by the DPLG to address this issue. It was found through this investigation that in fact, municipalities failed to complete the required registration form. Furthermore, this had proved to be a risk towards the provision of free basic services as maintenance backlogs could not be addressed. Over and above this particular irregularity within the processes of approval, Ms. Montwedi added that no other flaws had been found in the current system and that suggestions into the matter were welcome.

Mr M Likotsi (PAC) then suggested that DPLG should ensure that Integrated Development Programmes were assessed before the approval process took place. He further inquired as to whether or not capacity was available to communicate with individuals at ground level.

Ms Montwedi responded that municipalities were in fact benefiting through the districts to which they had been transferred.

Mr Smith then also questioned the purpose of funds indicated on page 173 of the annual report.

In terms of DPLG's interaction with the office of the Auditor General, Mr Sigaba stated that the AG had requested information from DPLG that could have been accessed directly. Consequently, this delayed proceedings, as the information requested was not provided timeously.

The Chairperson responded that as DPLG had improved in the area of compliance, it should focus on improving its performance. Furthermore, he added that the office of the Auditor General should have accessed the gazetted information independently as this would have made the process more efficient.

Mr Sigaba provided information relating to the information systems audit. He mentioned that the challenge for the department had been in the changing of the passwords of individuals who had left employment at the department. He added that through an external consultation process, a report had been commissioned into resolving information technology management controls.

Mr Dlabantu added that another problem area had been that of the disaster recovery of data. He stated that data was being stored. However, there remained the issue of access to management accounting systems. Procedures had been resolved particularly with regard to the authorisation of reports by management in this area.

The Chairperson delved further into the matter of security in the management of accounting and financial systems. He inquired as to when the disaster recovery system had been established. He then questioned the reason that this system had not been in place prior to the reporting of the Auditor General.

Mr Dlabantu responded that no correspondence had been received from the office of the Auditor General with regard to the financial statements that were reflected in the period in question. He stated, rather, that the opinion of the system, as stated by the Auditor General, was based on the previous report of the department.

The Chairperson expressed concern that it was a serious matter that the Auditor General had not notified the department regarding the contents of the audit opinion.

Mr Sigaba added that there had also been the issue of sharing servers between the three buildings in which DPLG was located. He explained that the information technology department had been investigating the options that could be available for the purpose of backing up information.

Mr Shiceka then stated that the Auditor General would not issue a report unless all parties affected by it are notified. He then asked the DPLG to clarify whether or not it was suggesting that it had not been informed by the Auditor General of the opinion that would be entered into the report. Mr Shiceka also questioned what the role of the security officer had been in the matters of security that had already been mentioned.

Mr Dlabantu clarified that the in fact, the opinion of the Auditor General had been based on the Department’s report earlier on during the year and that the DPLG had been notified of this opinion. He stated, however, that as there had been numerous developments that had occurred since the earlier report was issued, the position of DPLG with regard to matters of security was therefore different and improved in certain areas. He emphasised once again that the Auditor General had informed DPLG of this opinion that was issued earlier on during the year.

The Chairperson also expressed concern that the matter of disaster recovery had been detected by the Auditor General rather than the department. He inquired whether the post of Chief Information Officer of the department had been filled.

Ms Keitumetse Mketi, Deputy Director General, DPLG, stated that the post had recently been advertised.

The Chairperson referred to the strategic objective of governance and accountability, as detailed in the annual report. He noted that there was much attention being given to local government and not much to provincial government in this regard. He requested DPLG to explain this position as it was clear that provincial government had been struggling with its financial performance.

Mr Derek Powell, Deputy Director General, DPLG, stated in response that much work had been conducted in provincial growth and development strategies. He added that the process of the Integrated Development Programmes facilitated the review of provincial performance. Furthermore, capacity assessments had been conducted on provincial government and the DPLG would be assisting in this particular area. He also mentioned that there had been much investigation conducted into the capacity of the offices of premiers. DPLG was certainly engaging with provincial government. Mr Powell added, however, that it could certainly do more as there were always areas in which improvements could be made.

Mr Africa added that the programmes that had been established would be encouraging much engagement with provincial government. He noted that the challenge may lie in that the work done with provincial government was dispersed across the DPLG. The interactions of the department with provincial government could certainly be more coherent. In terms of the work already achieved, a preliminary assessment had been conducted with regard to provincial government. The results showed that there was a discrepancy between the understandings of provincial government of its mandate, resources, organization and so on. Mr Africa compared the Northern Cape and Gauteng in order to illustrate the differences existing amongst provinces. He concluded by mentioning that the department would be completing a comprehensive assessment of provincial government in this regard.

Mr S Mashudulu (ANC) noted that the DPLG continued to report on the same areas every year and questioned the reasons as to why more townships such as Everton were not reported.

Ms Bernadette Leon, Chief Director, Urban Renewal Programme, DPLG, responded that a pilot programme had been launched to address this issue. Through the process of urban renewal, toolkits were being shared with the townships as currently, the department could only engage with eight townships.

The Chairperson then suggested that DPLG should ensure that it engaged with both local and provincial government. He then requested that the DPLG delegation should explain the difficulties that had been experienced in the employment of staff, with particular reference to the vacancy rate exceeding twenty percent.

Ms Mketi replied that there were efforts within the department to fast track recruitment. However, there had been numerous challenges in retaining staff who had been made more lucrative offers elsewhere.

Following this, the matter of remuneration was raised. Mr Smith mentioned that he had been of the opinion that the issue had been to redress remuneration in poorer municipalities. Mr Shiceka added that small municipalities had been complaining that they had been losing benefits and he requested the department to express its view on this position.

Ms Mketi stated that it had been a challenge to attract the right skills for the right positions. Furthermore, the package approach adopted by DPLG had been such that the cost implications were made clear to the employer. He added that a Ministerial notice had been published in July expressing what the packages of councillors include.

Mr M Likotsi (PAC) then inquired into the matter of the "dead wood" that had been detected by the Auditor General and asked what would be done about this situation.

Mr Africa responded that DPLG was investigating alternatives to improve financial systems at both provincial and local government. In order to address this matter, the department would be engaging with organizations such as The South African Institute of Chartered Accountants (SAICA) and the Development Bank (DBSA). In terms of the matter of "dead wood", Mr Africa stated that the employment of individuals in local government was not the responsibility of the DPLG. However, through Project Consolidate, the department would be permitted to intervene.

Mr Likotsi further inquired as to whether DPLG had been encouraging the participation of traditional leaders in the area of development.

Prof W Sobahle, Chief Director: Traditional Leadership and Institutions, DPLG, explained that the provinces had to reconstitute traditional councils. He added that the department had been involved in capacitating traditional leaders to serve in the area of development and that this process of reconstitution would facilitate the preparation of traditional leaders to play their role in development.

The Chairperson stated that issues such as remuneration, would be taken up at a later stage.

Briefing on Annual Report 2005/6 of the Municipal Demarcation Board
Mr R Hillary Monare, Manager: Municipal Demarcation Board, began his presentation by providing a summary of the previous briefing made to the committee. He highlighted that the Auditor General’s report of the Municipal Demarcation Board had been unqualified, but had raised some matters of irregularity.

Key areas presented upon included the expenses for the year 2005/2006; outputs and developments; matters relating to municipal boundaries; ward delimitation; the assessment of municipal capacity; the adjustment of district municipality functions to local municipalities; updating the powers and functions of local government; the report to assess pollution legislation; the strengthening of the Board’s interaction with key stakeholders; and the strengthening of the Board’s administrative and financial capacity.

Mr Monare mentioned that the Board was looking to improve the management of its financial assets and liabilities. Furthermore, he provided information with regard to the medium term strategy of the Board (2006/2007 to 2009/2010). With regard to this strategic plan, he emphasised that the 2009/2010 budget had yet to be finalized.

Discussion
The Chairperson complimented the Board on its unqualified audit report. Furthermore, he commended the fact that the presentation provided a summary of the previous briefing offered by the Board to the committee.

Dr Vuyo Mlokoti, Chairperson, Municipal Demarcation Board, replied that the summary served the purpose of being reflective and thus easing the discussion into shape.

Mr G Krumbock (DA) questioned whether the amount reflected for staff training in the annual report included amounts for management consulting.

Mr Smith expressed concern that the Board had transferred the issue of a budget deficit to parliament, with specific reference to the information provided in the briefing on the annual report.

Dr Mlokoti acknowledged that the systems of the Board should be improved to ensure that overspending did not occur.

Mr Smith further referred to the presentation and requested the Board to elaborate on the matter of "wasteful expenditure".

Dr Mlokoti replied that the "wasteful expenditure" had been for traffic fines incurred. As the amount of R5000 was not significant, he added, it had not been pursued otherwise.

Mr Smith then sought clarity into the credit amount of R1.3 million as reported in the funds received by the Board.

Mr Richard Somanje, Chief Financial Officer, Municipal Demarcation Board, explained that the amount reflected had been received late from the DPLG and as such, had to be included as a credit figure in the financial report of the Board.

Mr Smith further inquired as to the effects of changing government from local to municipal, as reflected in the briefing. He questioned the destabilising effects of such changes on the performance of municipalities.

Dr Mlokoti responded that it was more suitable to keep municipalities at district level to ensure that municipalities performed their functions. He added that this approach affected the issues of planning and capacity and as such, the Board had submitted a request to the DPLG to investigate these matters.

The Chairperson expressed unease at the notion that the Board was a going concern when in fact, it had been overspending.

Mr Somanje responded by stating that the matter of the Board as a going concern was being investigated.

Mr Shiceka then proposed that the issue of under-capacity should be given particular attention. He advised that the Board present the areas that were being compromised as a result of under-capacity in order for the committees in the joint sitting to collectively pursue these issues.

The Chairperson questioned how it was possible for the Board to regard itself as a going concern when it was constantly under -funded. He then suggested that the board should forfeit some of its objectives or responsibilities in order to illustrate its lack of capacity.

Dr Mlokoti responded that the Board had made a decision to focus on the delivery of basic objectives. Due to staff shortages and lack of funding, the Board could not in fact conduct activities such as public hearings to the extent that was required. He disclosed that these concerns had been raised with the DPLG and various stakeholders. He believed that it did indeed remain a going concern, despite being unable to perform its functions as desired.

Ms L Mashiane (ANC) articulated that she was perturbed at the response from the board that the "wasteful expenses" discussed earlier were regarded as insignificant. She expressed concern that the staff of the Board could continue to be irresponsible and that this had not been dealt with in a firm manner.

Dr Mlokoti substantiated the approach of the Board towards this matter by that the traffic fines were incurred during car rentals. The car rental company had notified the Board of the fines at a late stage. As a result, the Board was unable to respond efficiently as the matter could not be pursued with all employees concerned. Therefore, the decision was taken to write-off the expense as "wasteful".

The Chairperson then raised the matter of public hearings. He asked the members of the committees present to outline the requirements that should be fulfilled in this area to improve performance.

Mr Smith suggested that the Board should indicate the shortfalls it had experienced and that the Committees present then pursue the matter in the relevant structures.

Mr Shiceka then requested the Board to provide more insight into the matter of the Matatiele notice.

Dr Mlokoti explained that in this matter, the Board had issued a letter to municipalities declaring its intention. This letter detailed the plans of the Board and requested that municipalities respond by a set date. As no responses had been received by the deadline, the Board extended the closing date. Dr Mlokoti explained that the Board had published notices with regard to the plans for Matatiele and Khutsong. Furthermore, the Board had communicated with the Minister of Justice to request input regarding the alteration of provincial boundaries. With respect to the role of premiers, however, Dr Mlokoti stated that the matter had been referred to the DPLG. In terms of its activities, the Board would continue to create awareness. Furthermore, the Board would be proposing that boundary changes should be made on one date to prevent adverse effects on communities.

Mr Shiceka asked whether there were any other departments that were not aligned to the programme proposed by the Board.

Dr Mlokoti explained that currently, the justice and police departments were required to be in alignment with the programme in order to make the boundary changes effective.

Mr Monare added that with regard to the justice boundaries, a particular process would be required to facilitate the changing of boundaries.

Mr Mashudulu expressed the concern that there had been an outcry during the delimitation of boundaries. He suggested that the Board should seek to limit such an effect. Furthermore, he added that the Board should be sure to conduct an assessment of resource capacity in its planning. He further inquired as to the methods used by the Board to motivate staff training and development and thus effectively deal with poaching.

In terms of the matter of delimitations, Dr Mlokoti articulated that the matter was continuously undergoing careful planning. More specifically, he mentioned the role of the next elections in effecting boundary changes.

Dr Mlokoti further stated that the Board had conducted an initial assessment of resource capacity in December that remained to be concluded. He added that the results of this assessment would also show the effects of Project Consolidate.

Briefing on the 2005/6 Annual Report of the Commission for the Promotion and Protection of Rights of Cultural Religious and Linguistic Communities (CRL Rights Commission)
The representative of the CRL Rights Commission briefed the Committees with an introduction outlining the mandate, vision and mission of the Commission. Following this, the programmes of the Commission were described as including public education and awareness; research and policy formulation; investigation and conflict resolution; and flagship and events.

An analysis of the audited financial statements was further provided. Some of the budget implications that were emphasised included: the disadvantages of reaching a limited number of communities; the limited number or programmes initiated by the Commission; and the limited collaborations of the Commission in engaging stakeholders. In addition to this, the Commission set out its key priorities for the year 2006/2007. These included public hearings regarding initiation and circumcision as well as numerous celebrations relating to Ten Years of Democracy in South Africa.

Discussion
The Chairperson concluded the meeting by stating that there was insufficient time for full questions but that the CRL Rights Commission should be invited to attend a further meeting to discuss their efforts further and for full engagement.

The meeting was adjourned.