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Portfolio Committee on Provincial and Local Government

Municipal Systems Amendment Bill

Report to The National Assembly

2nd September 2003

 

  1. The Local Government: Municipal Systems Amendment Bill deals with consequential amendments flowing from the processing of the Local Government: Municipal Finance Management Bill by the Portfolio Committee on Finance.
  2. The processing of these Bills raises two questions that Parliament needs to address further at some stage:
  3. 3. The need to address the governance aspects of municipal entities comprehensively has resulted in a change in focus on the purposes of municipal entities. The current provisions of the Municipal Systems Act envisage municipal entities, in all its various forms, to be created to provide municipal services. Through separating the provisions dealing with municipal services from those dealing with the governance aspects of municipal entities by placing them in two different chapters, municipal entities can now be established for any function or power performed or exercised by a municipality. The expression "functions and powers" refers to all the functions and powers that a municipality is allowed to perform and exercise in terms of the Constitution and other applicable laws. Such functions and powers would include the provision of municipal services, as well as any aspect thereof, such as the reading of water consumption meters. However, this wider approach to the purposes for which municipal entities may be established, would also allow the establishment of municipal entities for functions of a municipality that do not necessarily relate to municipal services, such as the provision of information technology support to the municipality in general.


    1. The Portfolio Committee believes that there is a need for more information on, and a better understanding of, the number and range of municipal entities that currently exist. The Department of Provincial and Local Government, National Treasury and SALGA (South African Local Government Association) should contribute towards meeting this need.
    2. Initially, significant sections of SALGA had strong reservations about councillors not being allowed to be directors of the boards of municipal entities. Their concerns revolved mainly around the need to exercise effective control over these entities. Following concerted engagement with both the committees on Finance and Provincial and Local Government, SALGA agreed that councillors should not be directors on boards. The Portfolio Committees are aware of SALGA's concerns and have strengthened provisions that ensure that municipal entities are accountable to councils without councillors having to serve as directors. The Portfolio Committee on Provincial and Local Government is aware that these provisions may not be adequate and will, in future, in consultation with the Portfolio Committee on Finance consider a review of these provisions, should it be necessary to do so.
    3. To facilitate reporting by municipalities to the Department of Provincial and Local Government and National Treasury, the Portfolio Committee believes it would be useful if the two departments would provide municipalities with standardized formats in terms of which to report.
    4. In processing clause 8 of the Bill the issue of municipal managers renumeration was once again raised. The Committee draws attention to its "Report on Study Tour of Municipalities", adopted on 15 April 2003, and in particular section 7, part of which noted, "Some of the issues raised by municipalities in regard to the remuneration of municipal managers (and senior managers), are fair and reasonable and need to be addressed. The decision of the Ministry and DPLG Department of Provincial and Local Government) to develop firm guidelines on the remuneration of municipal mangers is to be welcomed. Attention also needs to be given to whether it is constitutionally possible for the minister to issue regulations in this regard. If so, this should be done, and, if necessary, amendments to the legislation should be effected"
    5. The Committee is aware, of course, that the issue is complex. In this regard it notes:
    1. The Committee welcomes the finalisation of the report on municipal managers renumeration commissioned by the Ministry of Provincial and Local Government. It also welcomes the proposal to discuss the findings of the report and appropriate action to be taken after consultation with all the key stakeholders, including the SALGA, the municipal trade unions, National Treasury and the Financial and Fiscal Commission.
    2. The Committee requests DPLG to present the findings of the report to a Portfolio Committee meeting within 8 weeks.
    3. In respect of clause 11(b), the Portfolio Committee believes that if municipalities request assistance from the national or provincial governments in regard to feasibility studies or service delivery agreements, that national or provincial governments should provide this assistance, unless there are exceptional circumstances preventing this.
    4. SALGA believes that sections 86A(1)(b) i and ii, which deal with the Minister's right to regulate or provide guidelines on cross-subsidisation of services and equitable share allocations, should be reviewed. SALGA believes that while they may have been necessary until now, they may no longer be necessary. SALGA feels that this review should be linked to a review of other aspects of the local government legislation. Such a review should be based on the practical experiences of municipalities in effecting the new model of local government. The Portfolio Committee referred to its "Study Tour Report of Municipalities", adopted on 15 April 2003, and other decisions that have communicated the need for a review of aspects of the local government legislation, while ensuring that the fundamental principles and features of the new model are retained. The Portfolio Committee welcomed SALGA's proposals for a review of aspects of the legislation and will take this up further with the Ministry and Department.
    5. The Portfolio Committee found it especially difficult to process this bill in view of time constraints and other considerations. The Portfolio Committee on Finance was required, in terms of the rules of parliament, to confer with the Portfolio Committee on Provincial and Local Government on the Municipal Finance Management Bill. What precisely "confer" means in practice is not altogether clear. The Portfolio Committee on Finance sought as far as possible to organise its meetings on the Municipal Finance Management Bill so that the Portfolio Committee on Provincial and Local Government could also participate in the processing of the bill. However, in view of the length of time it took to process the Municipal Finance Management Bill and the heavy work-loads of our respective committees we were not always able to sit together. We acknowledge our appreciation to the Portfolio Committee on Finance to the extent it was able to co-operate with us.