15 March 2005

COSATU PARLIAMENTARY OFFICE

Tel: 021 461 3835

COSATU welcomes the opportunity to comment on the Intergovernmental Relations Framework Bill [B3-2005], hereafter referred to as the Bill.

Government has identified the period 2002 to 2005 as the second phase of local government, a period focusing on "consolidating and extending the gains of the first phase", where the first phase (2000 to 2002) consisted of democratizing, demarcating and amalgamating municipalities and establishing the 284 municipalities in the local government sphere.

The current phase is strongly shaped and influenced by Project Consolidate (initiated in 2004), aiming to provide, amongst other, hands-on support to targeted municipalities for a period of 2 years to "address the specific challenges that these municipalities face and propel all municipalities towards the final phase of sustainability."

Since 1994, COSATU has engaged robustly with the transformation of the State at all three spheres of governance and has been broadly supportive of the initiatives to transform local government. This was especially during phase 1 of the transformation process.

The government, through the Department of Provincial and Local Government (DPLG) has indeed accomplished much in terms of outputs, infrastructure development, establishment of new institutions and legislation, and assistance to municipalities to transform the local government landscape. Billions of rands were invested in providing especially historically marginalized communities with services and infrastructure that was denied them during the apartheid era.

COSATU has however, with increasing concern, expressed its outrage and dismay at the outcomes of some aspects of transformation, in particular with privatization, commercialization and corporatisation of certain public entities that was associated with this period and which impacted negatively on the local government sphere in particular. Many of the strategies, such as the rollout of public private partnerships, were influenced by the hegemony of the National Treasury. Previous research done by DPLG on the kinds of partnerships that could take place between communities and government were overshadowed and largely suppressed. It continues to be overshadowed by the dominance of public-private partnerships, which we find problematic.

In addition to the high unemployment rate, the huge income inequalities and extent of poverty in South Africa, the former resulted in, amongst other, the isolation and exclusion of communities from access to free basic services. It is obvious that basic services, such as water and electricity are vital for social, health and environmental reasons.

As part of its 8^th Congress Resolutions, COSATU has called for the rollout of free basic services, minimum service levels for electricity to which each resident should be entitled; and the support for the Masakhane campaign in terms of its original principle that those who can afford must pay for services.

Furthermore, we called for the rejection of means testing as a way of determining who should get access to free and cheaper services, a national water and electricity tariff policy that should provide an initial amount that should be free for everyone and be given unconditionally, linked to a progressive rising block tariff. In this way, no one would be disconnected from water.

In the above regard, we called for an appropriate billing system that takes into account equity and development considerations. We also called for the outlawing of pre-payment meters since it had a detrimental impact on the poor and jobs of municipal workers, since it generally charged more than users of standard meters, and led to job losses of meter readers and workers in the billing section of municipalities.

Given the fact that the democratization of local governance is complete, and that most municipalities have developed their own identity, challenges, strengths and unique character, opportunities now abound for the sharing of case studies of good practice, learning from each other through exchange of information and experiences. It is within this context that the Bill is tabled.

The object of the Act, which includes coherent governance, effective provision of services; monitoring implementation of policy and legislation; and the realization of national priorities, within concept of co-operative government, is to be welcomed. It is critical for the various spheres of government to engage in debate at both a horizontal and vertical level.

The various intergovernmental structures in existence, or to be set up, in particular the national, provincial and local governmental for a would, in theory, facilitate the broader objectives of developmental governance, if applied in a manner that takes into consideration the objectives of the RDP, the spirit of the Freedom Charter, and pegs its goals to the objectives of the Growth and Development Summit Agreements and Millennium Development Goals, of halving unemployment and poverty by 2014 respectively. It would also require the rollout of additional resources and a concerted effort to work together towards the attainment of these goals.

COSATU is therefore broadly supportive of the Bill, but would proposed that several further policy aspects and mechanisms be introduced, viz:

• The overarching need to introduce public participation in policy formulation at this level; as well as a public assessment of performance and strategic plans; using not only economic data, but integrating these with socio-economic indicators;
• Addressing the shortcomings of organised local government
• Ensuring that the alignment of national, provincial GDS Agreements and IDP’s take sufficient cognizance of the unique needs of a province or municipality;
• Promoting partnerships other than public-private partnerships
• Promoting projects at an intergovernmental level that are labour-intensive and job-saving, rather than job-shedding, and
• The urgent need to develop a framework to collect credible municipal data

The establishment of democratic municipalities dates back to the White Paper on Local Government in the late 1990’s. There were many institutions, both local, regional and international that influenced and advised government on the formulation of its policies and programmes.

During the period 1999-2003, there were several dynamic and participatory engagement at a local level, that helped citizens understand how budgets work, what the new legislation meant and how they can engage with municipalities and contribute to the identification of its priorities, as it was to be captured in a municipality’s IDP and reflected in its future budgets. There were varying degrees of public participation within each municipality, each with its own strengths and weaknesses.

Regardless of the efficacy of community participation at this time, the legal requirement for participation of the public in policy formulation at a municipal level set an important precedent at this level. It is important to sustain these initiatives, become less reliant on international and local consultants who do not appreciate the importance of public participation, especially when the same work can be done and facilitated by CBO’s, NGO’s with proven track records, and revive public participation where it has waned and were there was an exclusion of regular and sustained public participation.

The establishment of national, provincial and local fora, and the regular reporting to the President’s Co-Ordinating Council provides a unique opportunity to take this process of public participation even further.

COSATU suggests that a form of structured engagement with these forums be established and developed. For example, a biannual imbizo or lekgotla at a provincial level, with elected representatives from communities, which include ward committee representatives or recognized local government bodies and community structures, representative of the diverse communities and needs of wards and municipalities, give inputs towards the objects of the Bill, in particular around the provision of services; feedback regarding the efficacy of implementation of policy and legislation, and the realization of national priorities.

The controversial experiences around public-private partnerships, such as those of Dolphin Coast, and the privatization of water in Mpumalanga, bears testimony to the need to hear perspectives and voices from the ground directly. These should not only be organised local government, councilors, officials from municipalities or MEC’s, but ordinary citizens who are keenly aware of the dynamics and developments in their area and who have engaged the municipality at an organization or community level.

COSATU remains concerned about the poor performance at outputs of SALGA, the organised local government body.

As an example supporting the need for broader public participation, is the recent attempts of SALGA to force municipalities to surrender their independence around pension funds and dramatically cut the benefits these funds pay. It is a demonstration of how problematic the representivity and interests of local government will be represented at the forums envisaged in the Bill.

Only a third of the funds responded to an ultimatum by the South African Local Government Association (SALGA) that they record their acceptance, in principle, of unilaterally setting conditions for their amalgamation by the end of February. None of the pension funds had given unconditional approval to the associations’ proposals.

Unless these provisions are addressed pro-actively and quickly, these problems would remain and continue to bedevil good intergovernmental relations.

As we deliberate on this Bill, the NCOP is conducting visits to several provinces. Provinces have completed their GDS consultation processes and have had a varying degree of public participation and inputs from stakeholders.

It is imperative to emphasis that priorities and needs are unique to a region or municipality. Whilst the provinces and municipalities must reflect the national GDS priorities, it should not develop to a situation where "one size fits all is advocated." Clearly, some provinces for example, are more rural in nature. Therefore special emphasis needs to be placed on agriculture in a more rural province. Failure to align from the bottom-up, could result in national dominance that would be detrimental to the specific needs of a province or municipality.

As a result of the restructuring of local government, several mergers of municipalities, reallocation of functions and powers, and funding of various services have undergone a lot of changes.

COSATU proposes that a review of these changes be documented carefully to assess the efficacy of these restructuring initiatives. Therefore the study being undertaken at a national level to determine which functions and powers can be reassigned from national to provincial and local spheres of government, should inform the nature and extent of devolution of these functions and powers.

It is imperative for provincial and local government to demand the cost implications of restructuring initiatives. It should at least be matched with the concomitant funding. Unfunded mandates will place further pressures on the provincial and local fiscus, forcing them to impose further or higher provincial and possibly even local taxes. The recent proposal to introduce provincial fuel levies is a case in point.

COSATU is of the view that too little thinking went into the implications of the above provincial tax proposal. Clearly, it will place unfair pressure on the poor, since the kinds of taxes proposed will cut directly into disposable income, in this case increased transport costs, especially within the persist apartheid architecture of townships located far from the central business district. Therefore, the recalculation of the division of revenue is critical before these allocations of new functions and powers occur.

Finally, the recent debate on the Division of Revenue Bill on 25 February 2005 with the Select - , Portfolio Committees for Finance and Joint Budget Committee revealed an alarming shortcoming in credible municipal and some provincial data. This serious shortcoming was acknowledged by the National Treasury and requires urgent attention.

It is critical to have this data if economic data is to be linked to social and developmental data. It is only with credible data from both economic and social and developmental data, that the critical linkages between economic growth, reduction of income inequalities, the realization of Constitutional socio-economic rights and positive outcomes can be ensured.

COSATU, with the above concerns in mind, supports the Bill, but would strongly advocate for mechanisms to be established to address these issues raised.