Report of the Select Committee on Land and Environmental Affairs on the National Environmental Management: Air Quality Bill [B 62D—2003] (National Council of Provinces—sec 76), dated 20 October 2004:

The Select Committee on Land and Environmental Affairs, having considered the subject of the National Environmental Management: Air Quality Bill [B 62D—2003] (National Council of

Provinces—sec 76), amended by the National Assembly and referred to the Committee, reports that it has agreed to the Bill.

Report of the Select Committee on Land and Environmental Affairs on the National Environmental Management: Protected Areas Amendment Bill [B 2B—2004] (National Assembly —sec 75), dated 20 October 2004:

The Select Committee on Land and Environmental Affairs, having considered the subject of the National Environmental Management: Protected Areas Amendment Bill [B 2B—2004] (National Assembly—sec 75), amended by the National Assembly and referred to the Committee, reports that it has agreed to the Bill.

Report of the Select Committee on Local Government and Administration on Visit to King Sabata Dalindyebo Local Municipality, dated 20 October 2004:

The provincial government of the Eastern Cape intervened in the King Sabata Dalindyebo Local Municipality in terms of Section 139(1)(a) and (b) and Section 139(4)(b) of the Constitution. The provincial government accordingly submitted an application to the NCOP for approval of the intervention in terms of Section 139(1)(a) and (b), in compliance with the requirements of Section 139(2)(b). The provincial government also submitted notification, in terms of Section

139(6)(b), of its intervention in terms of Section 139(4)(b). The Select Committee conducted an oversight visit to the Municipality from 15-17 September 2004, in accordance with its support

function to local government in terms of Section 154 of the Constitution, and to consider the application referred to it. The Select Committee delegation comprised the following delegates:

Hon. S Shiceka, leader of the delegation. (Gauteng)

Hon. B Dlulane. (Eastern Cape)

Hon. P Hollander. (Northern Cape)

Hon. B Mkhaliphi. (Mpumalanga)

Hon. Kgoshi Mokoena. (Limpopo)

Hon. C Ntuli. (Kwazulu-Natal)

The Committee hereby reports on its findings:

KSD Municipality comprises the former transitional local councils of

Umtata and Mqanduli. It is surrounded by a number of small rural

towns and villages whose residents continue paying visits to the

municipal area to acquire services that are not available in their own

ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS NO 89—2004

towns. While this provides the Municipality with a huge economic

boost, it also puts considerable pressure on the infrastructure in the

area. Furthermore, with the provincial government moving to Bisho,

Umtata is no longer the Eastern Cape’s administrative and commercial

hub as it previously was.

The current situation in the KSD Municipality is such that it cannot

fulfill its executive obligations in terms of service delivery and in the

honouring of its financial obligations. This state of affairs has affected

national and provincial programmes and priorities adversely.

It appears that the major contributory factors in this regard include the

following:

the Finance Directorate.

and political interference of Councillors up to the end of the term of

office of the Transitional Council.

a high crime rate.

These factors resulted in an inability by the Municipality to generate

billing on a monthly basis, collect outstanding debts and properly

account for income and expenditure. The Municipality is therefore in

a weak financial state.

KSD failed to adopt its budget by 30 June 2004 as required. In terms

of Section 26(1) of the Municipal Finance Management Act, No 56 of

2003, the Provincial Executive is required to intervene in terms of

Section 139(4)(b) of the Constitution if a municipality has failed to

approve its annual budget by 1 July.

The Provincial Executive invoked the provisions of Section 139(4)(b)

and the intervention became effective on 30 July 2004.

The Select Committee acknowledges the support provided to the

Municipality over an extended period of time.

As far back as 2001/02 the provincial Department noted that KSD was

not performing well in managing its affairs. This was attributed to lack

of capacity and low staff morale emanating from the lack of job

security due to non-appointment of staff either on contract or in

permanent positions.

Utilising Section 154 of the Constitution, the Department assisted the

Municipality in the areas of ICT, administration, human resources and

finance. The Municipality was offered R5 000 000; R750 000 and

R250 000 for the three consecutive financial years, starting in

2001/2002, to address the identified weaknesses. For the same

purposes the Department, through the Management Support

Programme, is allocating a sum of R1 350 000 to KSD during the

current financial year.

Funds transferred to KSD during the years mentioned above have not

been fully utilised due to the incapacity of the Municipality. The

impact of the Department’s capacity building programme has not been

immediate. The Department acknowledged the need to exhaust all

avenues before resorting to a Section 139 intervention.

In addition, the Department has a record of numerous reports on

mal-administration by concerned citizens, whistleblowers, fact-

finding reports by the Department, reports of the Auditor General and

reports on meetings between the Department and the Municipality.

These reports and those of the Auditor General, which are disclaimers

from year to year, all pointed to maladministration, malpractices and

alleged corruption within the Municipality, which necessitated

investigations into the affairs of the Municipality.

The Municipality is challenged with considerable debts, which were

in excess of R270 million by the end of July 2004. The Municipality

is battling to service this debt from the revenue it raises by supplying

electricity and water.

The Municipality’s main creditors are Eskom, the Department of

Water Affairs and Forestry, the Public Investment Commission, the

Receiver of Revenue and Workman’s Compensation and other staff

deductions such as the pension and provident fund. The Municipality

has had to hold back these payments in order to meet their monthly

salary obligations.

The Municipality is faced with extensive historical arrears, which

have accumulated to unmanageable levels. The total arrears amount to

R107 260 837,00.

The Municipality itself is owed millions by several debtors. However,

some of the debt goes back several years and the prospects of recovery

appear to be remote.

Failure to collect revenue is one of the main factors contributing to the

failure of the Municipality to render services to its communities as

well in its inability to pay creditors.

The Municipality failed to adopt its budget for the 2004/05 financial

year. In terms of the Municipal Finance Management Act (MFMA),

expenditure incurred when the budget has not been adopted and

approved is illegal. The Department has applied to the Provincial

Executive Council and Provincial Treasury for a temporary budget as

stipulated in Sections 26 (3) and 55 (a) of the MFMA.

The fact that the Municipality is unable to generate its own revenue,

means that it operates on a budget deficit. This has delayed the

application for a temporary budget because the Department has had to

ensure that KSD explains the variance between expenditure incurred

and projected and its available budget (actual expenditure versus

income). KSD operates on a R14 million overdraft monthly, which is

another concern for the Department. The operational plan developed

by the Departmental team addresses this situation practically.

The timeframe for KSD to address the deficit cannot be established

with certainty at this point since it depends, to a large degree, on the

rate of payment for services provided and consumed. According to the

Department’s projections, this will take not less than a year and the

team will review progress after every quarter.

The Municipality also faces significant monthly expenditure having to

cover the costs of the 64 Councillors.

Unnecessary litigation by the Mayoral Committee has further sapped

already strained municipal resources.

Overall, institutional malfunctioning and political infighting has been

manifesting itself in the low morale of personnel and consequent poor

service delivery. Low morale is aggravated by the fact that the staff

placement process has not yet begun.

It appears that there has been a failure to convene regular Council

meetings, which has impeded service delivery.

The political leadership within KSD is poor. Administratively, KSD

also faces serious capacity challenges.

KSD is currently a party to a number of court cases:

delivery of water services to Umtata and surrounding areas. In

September 2003 the District Municipality announced it was taking

over water supply from local municipalities. KSD was the only

local municipality to contest the taking over of this function. (The

District Municipality has seven local municipalities, six of which

were always controlled by the ANC, now including KSD.)

Since 2000 KSD has experienced political instability and a lack of

cooperation between political parties, which has led to the

dysfunctionality of the Council. Council meetings were not held for

some time due to political tensions between United Democratic

Movement (UDM) and ANC Councillors. It was noted that it has not

been easy for the MEC or the Department to intervene promptly

where political parties and infighting is concerned.

On 31 July 2004, the ANC obtained a majority of 56 seats in the

Council. As from 20 August 2004, there has been change of

government within the Municipality.

At present the Council is constituted as follows:

ANC - 36

UDM - 25

PAC - 2

ACDP - 1

There appears to be a non-observance of cooperative government

between the KSD Municipality and the OR Tambo District Municipality.

KSD is dissatisfied that the OR Tambo District Municipality has

assumed the water services provision function. It was alleged that the

District Municipality took over water and sanitation services as well

as personnel without following the necessary procedures. However,

by the time it informed the Department of its dissatisfaction, the

matter was already in court.

Meetings were subsequently held between the two Municipalities,

with their respective Executive Mayors, and the Department, led by

the MEC. These meetings were convened in an effort to foster

cooperation between the two Municipalities and to persuade KSD to

settle the dispute out of court. These efforts failed.

KSD has been held this water function for years and believes that it

has the capacity to continue doing so. The discontinuation of this

function has also meant a loss of revenue for KSD.

It has been argued that the change confuses consumers, who now have

to change from paying water at KSD, while still paying there for

electricity, refuse removal etc. The fact that is no longer a common

payment has resulted in irregular payments or in some cases no

payment by consumers at all.

Various instances have been cited as examples of where the OR

Tambo District has been uncooperative with KSD:

Provincial Government, until threatened with legal action.

withheld.

This is a targeted intervention where the MEC has authorised the

Head of the Department to fulfill the said role without appointing an

external person.

In referring to a ‘‘targeted intervention’’ the Department is focusing on

two functional areas, namely, Finance and Corporate services (HR

and Administration).

The MEC has already had a public meeting where he addressed

communities, the Council, labour and municipal employees on the

reasons, terms of reference and expectations of the intervention.

A team has been set up, comprising the Department, KSD and OR

Tambo District Municipality, with officials performing finance,

administration and human resources functions. Three working groups

for the above functional areas were established. They report to a

Steering Committee (comprising management from the three institutions)

on a fortnightly basis.

The three working groups have submitted a consolidated report to the

Steering Committee providing a situational analysis highlighting the

following:

The priority areas for addressing the situation were identified. This

culminated in an operational plan that was developed with, and

adopted by, the Steering Committee.

The team has started implementing some operations, which include

the following:

Provincial Executive Council.

management issues (political and administrative).

Based on the progress reports submitted to the NCOPby the MEC, the

NCOP will continue to monitor the impact of the turnaround strategy

instituted by the provincial department. It is recommended that the

intervention be executed for a period of three months; whereafter the

extent of the progress made should be reviewed. The intervention

should end when the Municipality is able to effectively deliver

services to its constituency at acceptable levels. In this regard, a

consultative process should be followed before the ending of the

intervention.

The recommendations of the Committee are based on the following

observations:

of Reference for the intervention. However, these are still being

awaited.

impacted negatively on severe lack of infrastructure and service

delivery in that area. The drafting of a growth and development

strategy, identifying revenue raising measures for KSD and

surrounding areas, must be initiated by the province.

provincial government must assist in training and capacitating

Councillors on the current legislative framework.

needs to be critically assessed.

consultants.

consumed.

The Committee resolves to recommend to the House as follows:

In terms of Section 139(6)(b), the MEC is required to submit a written

notice on the intervention to the NCOP. The Committee, having

received the notice and having considered the inputs from the

administration of the Municipality and the relevant stakeholders,

resolves to recommend to the NCOPto support the intervention by the

Eastern Cape provincial government, in terms of Section 139(4), until

a temporary budget is finalised.

Furthermore, that the provincial government thereafter continues the

intervention in terms of Section 139(1)(a) and (b). The Committee

strongly recommends that an Administrator or an administrative team

be appointed in the KSD, which may or may not include the

Municipal Manager and/or the Chief Financial Officer of KSD.

Further, that, in order to enable the NCOP to exercise its oversight

over the intervention regularly, the MEC must submit a report to the

NCOP every month after receipt of this report. These reports should

focus on the terms of reference for the intervention and areas of

concern raised in this report. The Ministry of Local Government

should also play a role in monitoring the progress of the intervention.

The Committee recommends further:

1. That a discussion be convened between the Department, the

MEC, the Provincial Standing Committee and SALGA on the

state of municipalities in the province in early November 2004 to

formulate a proactive approach to providing support.

2. That a programme for the capacitation of Councillors and

officials of KSD be developed as a matter of priority.

3. That the present Council be encouraged to reconsider legal cases

against individuals in all cases being paid for by the Municipality,

in view of its financial status.

4. That ward committees be strengthened as a matter of urgency.

5. That the Mayor and the Speaker regularly brief ward committees

on progress being made with the intervention process.

6. That, following the next local government elections, serious

consideration should be given to the introduction of an Executive

Mayoral system at KSD.

Report to be considered.