Report
of the Select Committee on Finance on the oversight visit to
Background
On 22 and 23 January 2008, the Select Committee on Finance held hearings with
provincial departments on conditional grants capital expenditure for the first
three quarters of the previous financial year. The Committee had concerns on a number
of issues following the hearings and decided to have further meetings with the
following departments:
Department of Housing, Local Government & Traditional Affairs
Department of Land Affairs
Department of Sport Recreation Arts and Culture
Department of Economic Development and Environment Affairs
Provincial Treasury
Land Claims Commission
Delegation
Hon E M Sogoni
Hon M O Robertson
Ms N C Chaso (Committee Secretary)
Ms N Mnyovu (Committee Assistant)
Ms M Herling (Researcher)
The meetings were held in the
The Committee observed the following issues:
Poor planning by both the Department and municipalities. Some of the approved
projects were still not ready for implementation.
Some of the emerging contractors lack capacity and there was a small pool of
established contractors attracted to low cost housing resulting in the need to
re-tender. Established contractors were not attracted to rural development
projects due to logistical issues and the additional cost of transporting
material. Established contractors were supposed to mentor emerging contractors.
The slow start of the rectification programme was a cause for concern. There
was a lot of unfinished work that needed to be redone. There was also the issue
of community housing that had been inherited from
The land restitution process did not prevent development but the department
needed to consult with the Land Claims Commissioner to determine whether or not
the development interfered with the claim. It was reported that problems arose
in cases where the development did not benefit the community as a whole.
Communication with the community prior to the development was critical. Road
shows to municipalities regarding this matter had been conducted but it was
reported that changes in the councils might have led to knowledge gaps.
There was a need to provide land for sustainable human livelihoods.
There was some misalignment of the Municipal Infrastructural Grant (MIG) and
the housing grant. Reasons for this included the discrepancy in percentage
growth in the allocation between housing and MIG, the conditions of the grants
and the identification of priorities by the province and the subsequent
allocation of the grants by the Department of Provincial and Local Government.
The meeting was informed that one could still find cases where houses had been
built without the necessary supporting bulk infrastructure. There was a need
for an integrated approach to development.
The capacity of the provincial Department of Housing remained a challenge and
slow moving projects would be taken back by the Department of Housing.
The department also reported that all contractors were meant to be NHBRC
approved and CIDB compliant but this was taking long owing to lack of capacity
at the NHBRC.
The building of infrastructure was the responsibility
of the Department of Public Works.
The process of registering quantity surveyors took time, especially with
respect to those who were not registered with the Quantity Surveyors Board.
There was a lack of commitment and capacity within institutions which were
expected to assist in service delivery.
There was possible exemption in relation to the procurement of library
materials that would reduce the turnaround time for receiving materials.
There was a concern about the number of operational libraries, their location
and also the question of who was responsible for operating them. The province
had 118 operating libraries and only 36 of those received conditional grants.
The Department reported that the main cause of poor performance were the
capacity within the directorate and supply chain management.
SEDA did not attend the meeting despite being invited.
The municipality showed improvement in relation to revenue collection.
Electricity distribution was confined to the Komga area. The municipality had
licences for areas within its municipality but there were still some problems
with Eskom. There was a need for a smooth handover from Eskom to ensure that
there were no disruptions in service delivery. Eskom received R500 million from
the Department of Minerals and Energy to re-establish networks in Komga.
Refuse removal was also a big challenge and businesses such as holiday resorts
were removing their own solid waste.
The condition of roads affected service delivery. There was a need for capital
equipment to improve and maintain roads.
The Development Bank of
Rural housing development was engaging Thubelisha to assist in feasibility
study and proposals that would be in line with spatial development framework.
Water and sanitation were a big challenge for this municipality. There was a
need for assistance in relation to bulk water and water supply projects. There
was almost no information available to determine expenditure and revenue for
water services. The age of water infrastructure reinforced the problem of water
outages.
Questions were raised about the municipality’s ability to spend money. It was
said that the municipality would get support from DBSA in the form of
engineers, technicians & financial advisors.
The district reported that the local municipalities had no records to verify
their asset registers. The municipality had received a disclaimer for the
2006/7 financial year. There was also no proper planning for the refurbishment
of infrastructure.
The Committee undertook to have further discussions with Eskom regarding
electricity distribution.
Recommendation
There should be an ongoing forum where planning issues are discussed to ensure
that stumbling blocks that have a huge impact on housing are identified and
removed early. Each stakeholder should play its role effectively. All line
managers in the forum must attend the meetings.
The Committee resolved that it would convene a meeting with Department of Water
Affairs and Forestry to establish why the Great Kei Municipality has received
only R1 million out of the R3,2 million provided by the Development Bank of
Southern Africa.
Report of the Select
Committee on Finance on the oversight visit to identified provincial
departments and the Sol Plaatjie Municipality, Northern Cape, dated 13 May
Introduction
The oversight visit took place on Friday, 28 March 2008. A meeting was held
with the
Hon TS Ralane (Chairperson of the Committee)
Hon EM Sogoni (
Hon GM Goeieman (
Hon BJ Mkhaliphi (
Staff composition was as follows:
Ms TP Xaso (Committee Secretary)
Ms NC Chaso (Committee Secretary)
Ms N Mnyovu (Committee Assistant)
Terms of reference
At a meeting held between the Committee and the Provincial Department of Local
Government and Housing at Parliament, the Province indicated that it had been
promised R100 million by National Treasury. The Department had indicated that
it was in need of that funding and the Committee had undertaken to assist in
attaining the money. The Committee’s objective in meeting with the Department
of Local Government and Housing during this visit was to establish whether it
had been able to absorb this additional funding and whether there were any
risks of under-spending as a result of that additional funding.
The Committee had also been informed about challenges that related to building
materials which had been bought three to four years ago by the Department of
Local Government and Housing, but remained unused. Given that this matter
impacted negatively on housing delivery in the Province, the Committee
undertook to meet with the department concerned and the affected
The Provincial Department of Health had reported to the Committee that the
Provincial Treasury had taken over the Health Department. The Committee had
undertaken to follow the matter up in a meeting with both departments. This was
one of the reasons for the meeting in
The Departments of Agriculture and Roads, Transport and Public works were
invited to report on their third quarter expenditure of Conditional Grants and
Capital Expenditure as well as personnel and non-personnel spending.
National and provincial departments as well as other stakeholders that were
invited to the meeting were as follows:
Department of Provincial and Local Government
National Treasury
Provincial Department of Roads, Transport and Public Works
Provincial Department of Health
Provincial Department of Agriculture
Provincial Treasury
The Homeless Federation
Provincial National Home Builders Registration C
The Provincial Department of Health was one of the
main reasons for the Committee’s visit to the
Both the provincial Treasury and the provincial Health departments reported
that relations between the two had improved. The Committee, however, was not
convinced that this was so. On two occasions the Northern Cape Department of
Health had reported that they were not able to function as a result of the
Provincial Treasury. The reports presented that relations were good were
perceived to be making mockery of the Committee’s visit to the province. Poor
relations between the two departments had led to hospitals not having
medication. Furthermore, the Committee was concerned that the Health Department
had not prepared a proper report to form a basis for the discussion, nor had it
taken serious the matter on hand.
The Committee further informed the Department of Health that the Public Works
Department reported that Health had not signed a Service Level Agreement.
Moreover, the Committee still needed to enquire from the Treasuries what had
brought about the need for the department to be under administrations.
Provincial Treasury reported that the decision to put Health under
administration was made by the Provincial Executive Committee (EXCO). According
to the Provincial Treasury, it was the media that reported about a hostile take
over and this was said to be the reason for the misunderstanding between the
two departments. It further disputed the statement of a hostile takeover.
There was a concern with relating to inconsistency on the part of the
Provincial Treasury given that Public Works in the province had been and was
still in a worse condition than the Health Department. The appointment of the Chartered Accountant
was also a concern and questions were raised as to what the role of the CFO was
in such an event.
Local Government and Housing
The department reported that the additional allocation
of R100 million had been received and that the money had already been
transferred to district municipalities for housing delivery. To this end no
risks were anticipated. Those were the Pixley Kaseme, Kgalagadi, Francis Baard
and Siyanda district municipalities. The department further reported that
monitoring and evaluation plans were already in place to ensure that the money
was used appropriately.
The Committee expressed a concern that, as far as it was aware, the only
municipality that had been targeted for accreditation as a housing developer
was the
The department responded that there were projects, according to their business
plan, that had been waiting for funding. This was the basis on which the
additional allocation had been requested. It added that the districts were
still in the process of accreditation and that the funds were transferred to
municipalities that had made claims. According to the department the transfers
were done two weeks prior to the meeting with the Committee. The
The Committee expressed a concern at the contradiction in the versions given by
the department and the
The Committee raised the matter regarding material that had been bought for the
delivery of houses. A group of housing beneficiaries called the Homeless
Federation had been present in a visit three years ago during a provincial week
wherein decisions were taken with respect to the delivery of houses. Certain
promises were made at the time to a parliamentary delegation but nothing had
come of them.
The Committee was informed that the project had stopped pending an
investigation that was underway with regards to materials that had been bought.
It was reported that the Premier had instituted the investigation into the
matter. The municipality reported that this was one of the projects that had
been stifled by the department who went into agreements with contractors,
bypassing the municipality and issuing subsidies.
It was not clear how exactly the department had come up with a list of
beneficiaries given that the municipality had been excluded from all
processes. It was noted that, under
normal circumstances, the indigent list should be with the municipality. To
this end the department responded that it had held several meetings with the
municipality and other support organisations.
The Sol Plaatjie municipality disputed this. It further reported that
the current beneficiaries were not eligible to benefit from the project.
Recommendations of the Committee
The Committee recommends
as follows:
Projects should be in line with the Integrated Development Plans (IDP) and in
consultation with the
The Northern Cape Premier should be asked for the report on the investigation
she had instituted.
The Mayor of Sol Plaatjie and the Department of Local Government and Housing
should assist by expediting availability of the report on the investigation to
avoid further delays which were leading to escalated costs.
Roads and Public Works
The Committee noted with concern that there seemed to be a communication
problem within the department. A question was posed on the status of a project
that related to one mental hospital in the Province. A further question related
to the provision of transport to other departments and whether this
responsibility lay with the transport department or not. Furthermore the
Committee enquired whether the department had any Service Level Agreements with
suppliers. Spending as at 31 December
was as 57% or over R2 million and now the expense was projected to be
100%. Capacity was another area of
concern raised by the Committee.
In responding to these questions the department reported that in consultation
with the Provincial Treasury, it had employed people, in terms of the IDP
programme, who assist by looking into capacity issues and identifying the role
of the department. With regards to the fleet management, it was reported that
this service had been outsourced. At the time of the meeting the tendering
process was underway.
The Committee was informed that Service Level Agreements (SLA) had been agreed
to and the department was in the process of effecting
them with the various departments it dealt with. It further reported that the
Health department had not signed the
The department acknowledged that its expenditure was at 57% by end December and
maintained that at the time of the meeting it was at 100%. To justify this leap
the department cited that from 14 December to 14 January contractor closed and
that invoices were forwarded to the department in January and payments only
started to take place then. They added that the maintenance of access roads was
also a factor resulting in what appeared to be a March spike.
The department reported that they had approached treasury for money to build
the SK road however treasury could not provide the funds. To this end the
Committee felt that this was an indication that there had been no prior
planning for the project, hence Treasury had no money for it.
A concern was raised with the Provincial Treasury in respect to its allocations
towards roads infrastructure which amounted to a mere R199 million coming from
the equitable share while the biggest allocation of R257 million came from
conditional grants. The Committee noted that the bulk of that R199 million was
probably spent on salaries.
Recommendations of the Committee
The Committee recommends as follows:
A list of all municipalities to which money had been transferred and where
access roads had been constructed should be submitted to the Committee;
Furthermore there should be an indication of how these linked to the Municipal
Infrastructure Grant and the Integrated Development Plans and
This information should be forwarded to the Committee within three weeks after
the consideration of the report by the Council..
Department of Agriculture
The department had overspent on CASP and Land Care and it argued that this was
not as a result of poor planning on its part. It
added that bulk of its spending took place from January
because there had been outstanding completion certificates that were required
before money could be paid out.
Furthermore it reported that the allocations of the conditional grants
were based on each project determining how much money it required.
The Committee enquired on how the overspending would be funded and whether
there were any programmes that had been compromised to fund the land care programme.
The department responded that funding would come from the equitable share and a
food security fund. Some of the money came from the hydroponics project in
Moreletswa which was under-spending. To this end it was pointed out that the
department was compromising issues of food security. The place where the
hydroponics structure had been put up had no drainage and alternative location
needed to be found. The location had been in an industrial area where there
were no community members. It was noted that the project had not been
compromised but merely relocated. There were interactions with the Droogfontein
beneficiaries with the view to moving the project to their location.
The
The Committee encouraged the two to finalise the matter and noted that the
performance of the department would be closely monitored by the Committee. It
was found to be an interesting coincidence that all invoices had come through
at the same time. The Committee also pointed
out that vandals would always be there hence the need to partner with
communities and municipalities.
A question was posed to the Provincial Treasury as to how much would be
allocated towards agriculture in the coming year for infrastructure, given that
some of its projects were in crops and live stock. Provincial Treasury
indicated that the department had been given R8.8 million for the 2008/9
financial year based on their business plan and on the basis of page 108 of the
Division of Revenue Act.
Conclusion
Mr Goeieman and the department were tasked to visit some of the projects
outlined by the department. It was indicated that in some cases, Mr Goeieman
would need to conduct unannounced visits to ascertain whether the projects
reported on did exist. His task would be to assess the impact of these projects
on the communities within which they existed and the sustainability thereof.
Report of the Select Committee on
Finance on the oversight visit to Limpopo,
22 February 2008, dated 23 May 2008
Introduction
The Select Committee on Finance conducted an oversight visit to the
province of Limpopo on Friday, 22 February 2008. The delegation was follows:
Hon T S Ralane (Chairperson of the Committee)
Hon D Botha (ANC MP)
Support staff:
Ms T Xaso (Committee Secretary)
Mr M Tau (Researcher)
Ms N Tshoma (Committee Assistant)
2) Background
From Tuesday, 22 January 2008 the Select Committee commenced with hearings
wherein Provincial departments accounted for their expenditure of the 1st,
2nd and 3rd Quarter Conditional Grants, Capital
Expenditure and Personnel & Non-personnel. It was evident from these
hearings that the Committee needed to undertake a visit to the
Roads and transport
Local Government and Housing
Agriculture
Health
Sports, Arts and Culture
Water Affairs and Forestry
Provincial Treasury
The following National Departments and entities were invited to accompany the
Committee on this visit:
Department of Housing
Department of Sports and Recreation, Arts and Culture
Department of Provincial and Local Government (DPLG)
Development Bank of
Department of Water Affairs and Forestry (DWAF)
3) Terms
of reference
The Committee wanted to follow up on a report by the Department of
Agriculture that they were constructing roads in farm areas. Roads and
Transport in the province had been invited so that they could respond to this
matter;
The Department of Health had expressed concerns that it was under-funded;
The Committee also needed to interact further with the Department of
Sports, Arts and Culture to discuss their under-spending in respect of the
grant for libraries;
4) Findings
Having discussed at length matters of concern with departments which were
in attendance, the Committee made the following observations:
Provincial Departments of Agriculture
and Roads and Transport
The Committee
concluded that there was
Generally no collaboration amongst departments in the province;
no collaboration between the two departments;
a lack of cooperation on the part of Roads Agency Limpopo (RAL) with regard to
business plans and reporting back;
evident non-participation by departments in IDP’s;
high salaries paid by Road Agency Limpopo (RAL) when compared to Roads and
Transport;
staff component at RAL was 40 versus the department’s staff component of about
2000 despite the fact that RAL received 70% of the infrastructure budget. These
issues had been raised by the Committee with the MEC for Roads and Transport,
requesting the MEC to resolve issues of parity between the officials of the
department and those of RAL; accountability and;
gaps were identified in terms of district roads in areas that had no powers to
build road (e.g. Greater Skhukune).
The following were the recommendations of the Committee:
The Departments of Roads and Transport,
Agriculture and the Provincial Department of Local Government and Housing were
requested to convene an urgent meeting to look at the issue of infrastructure
in the province, inclusive of district roads, in respect of areas relating to
agriculture. Out of that meeting they should draft a proposal to the FFC,
Provincial Treasury and the National Departments of Roads and Agriculture
requesting more funding. IDP’s were to be an integral part of that
proposal;
Mr Tooley, was tasked to coordinate this meeting and report back to the
Committee within three weeks.
Department of Sports and
Recreation, Arts and Culture
The Committee observed that there was:
disagreement between the Provincial Department and the Provincial Treasury in
terms of figures on expenditure; National Department was, however, in agreement
with the Provincial Department;
under-spending with respect to libraries and was of great concern;
a concern that transferred figures did not necessarily translate to
expenditure;
Whilst pointing out that reports at Treasury emanated from submissions by
accounting officers, the Committee recommended the following:
Provincial Treasury and the Provincial Department of Sports, Arts and Culture
meet to resolve differences in reported figures;
Report back to the Committee within two weeks after consideration of the report
by Council;
The Committee committed itself to monitor this closely;
It was proposed that national projects should be done in consultation with the
Provincial Treasury in order to provide a synergy and avoid disjuncture in
reporting.
The Committee advised the Provincial Department to draft a report outlining how
the adjustment budget of R16m was to be spent
National Department of Housing
The Provincial Department of Local Government failed to make input at the
Committee’s proceedings due to their late arrival, after the meeting adjourned.
The Committee observed that provinces were still not capacitating
municipalities to become housing developers. Provincial Treasury informed the
Committee of challenges they experienced when meeting with the Provincial
Department of Local Government and Housing, thereby requesting the intervention
of the Committee.
The Committee reiterated to the meeting that housing was a provincial
competence and that the provincial department had the responsibility to
capacitate municipalities and avoid dumping money on them. It was noted that a
major challenge was that of planning.
In the absence of the Provincial Department of Housing the Committee permitted
the National Department to leave stating that discussions on housing would be
taken further at hearings on the Division of Revenue Bill which were scheduled
to follow shortly.
Development Bank of
The Committee was still waiting for a report from the DBSA and DPLG on what
was being done to assist municipalities in need of assistance. The observation
of the Committee was that assistance given to municipalities was in the context
of Siyenza Manje, which did not speak to other programmes, which were also
under the DBSA. The Committee resolved
that this would be taken
Provincial Department of Health
While the department
acknowledged that some of its challenges related amongst other things to issues
of high procurement costs and abuse of the departments vehicles, it stressed
that its biggest problem was the fact that it was extremely under funded. The
department also expressed its difficulty in adhering to the PFMA given its
circumstances within the province. At a recent hearing before the Select
Committee on Finance the province had raised a concern at a baseline allocation
of 24.1%. Furthermore the Committee was also informed that due to the gross
under funding, the department would carry over into the new financial year
debts of the last two months of the previous year. Some of the reasons given by
the provincial department for over expenditure included costs for the
transporting of bio-hazardous waste; importing of vaccines; warehousing of
medicines and distribution thereof; personnel and other expenses, which include
Occupation Specific Dispensation (OSD’s). The Committee resolved to verify the
matter of OSD’s with the National Department of Health.
Having heard the report of the Department, the Committee made the following
observations with respect to the Department of Health in
For the Provincial Growth and Development Strategy of any province to work, it
requires healthy people to partake in it;
Expenditure for OSD’s was very high;
There was a need to align provincial priorities with national priorities
The baseline had risen to 25.9%.
Recommendations
The Committee recommends that:
the MEC’s for Treasury and for Health meet and discuss funds available through
OSD’s.
HOD’s of these two departments also meet to discuss matters at an official
level;
the National Department of Health conduct an audit to determine the rate at which
professionals are leaving the province and come up with strategies for staff
retention;
Portfolio Committees in the provincial legislatures should be part of
interactions with provincial departments.
Report to be considered
5. Report of the Select Committee on Finance on the oversight visit to
identified municipalities in
Introduction
The oversight visit took place from 18 to 19 March 2008. Meetings were held at
the
Hon TS Ralane (Chairperson of the Committee)
Hon EM Sogoni
Hon GM Goeieman
Hon DJ Botha
Hon ANT Mchunu
Hon ZS Kolweni
Hon BJ Mkhaliphi
Staff composition was as follows:
Ms TP Xaso (Committee Secretary)
Ms NC Chaso (Committee Secretary)
Ms N Mnyovu (Committee Assistant)
Terms of reference
The visit formed part of the Committee’s ongoing interaction with
municipalities to monitor collaboration and coordination pertaining to the
provision of municipal services and support given to municipalities by
provincial and national departments. The following municipalities had been
identified for the visit:
Emalahleni
Steve
Gert
Albert
Msukaligwa
Bushbuckridge Municipality
Nkomazi
National departments and other stakeholders that accompanied the Committee on
this visit were as follows:
Department of Provincial and Local Government
Department of Minerals and Energy
Department of Water Affairs and Forestry
National Treasury
Eskom
The aim of the Committee was to engage with the above mentioned municipalities,
along with national and provincial departments, on the following areas:
Municipalities’ budgets;
Municipalities’ compliance with the Municipal Finance Management Act;
The spending and performance of the municipalities with regard to conditional
grants;
The municipalities’ relations and collaboration with various national and
provincial departments and entities;
Capacity constraints of the municipalities, if any;
The extent of service delivery; and
Determining whether municipalities’ Integrated Development Plans were aligned
to the Provincial Growth and Development Strategy.
The municipality reported that it had
been appointed as a housing developer and that progress had been made in
delivering houses. Only 920 people were
registered on the indigent list in the 2006/7 financial year and this was a
concern for the Committee which felt that the number should have been bigger
than 920.
It was reported that the municipality had
a Mayor’s Discretionary Fund amounting to R5m.
Sewerage and refuse removal were reported
to be free for all indigent people. One of the major challenges faced by the
municipality was the deaths of the indigent people as funerals were not
affordable. The municipality further reported that it had come up with a
strategy to deal with this. In addition, some managers had adopted needy
families.
Other challenges reported by the municipality were:
Transportation for learners who had to travel distances of over 80km to get to
school;
Provincial departments that owed money to the municipality (Education, Health
and Local Government and Housing), some for over three years. To this end the
municipality reported that a service provider had been appointed to deal with
the collection of monies owed;
A promise not met by the DPLG of R65 million relating to a pilot project of
which the municipality was a part;
Government departments that refused to participate in Integrated Development
Plans (IDP’s); and
Sewerage spillages were reported as a problem.
The Department of Provincial and Local Government (DPLG) reported that it was
pleased with the expenditure patterns of the municipality and encouraged the
municipality’s commitments to progress. It further reported that within the
current MTEF, allocations to poor municipalities in terms of the Municipal
Infrastructure Grant (MIG) had been reviewed. Whereas the applicable formula would
have allocated about R3m to Emakhazeni, reviewed allocations saw this
municipality, and others similar to it, receiving a minimum of R5 million.
DPLG confirmed that Emakhazeni was part of a pilot
project on developing an Infrastructure Management Plan. This pilot involved
the development of a 10 to 20 year plan for the municipality. It was reported
that banks had been included in the pilot to look at the municipality and its
capacity to raise revenue. The report from the pilot would be used to come up
with a plan for the whole country.
Furthermore, the DPLG disputed the claim by Emakhazeni that an amount of
R65m had been promised to the municipality.
The Provincial Treasury reported that, while the municipality was compliant
with the Municipal Finance Management Act (MFMA), it still relied heavily on
grants and subsidies and was not able to raise its own revenue. The Provincial Treasury
informed the Committee that it had written letters to municipalities in the
province raising a concern about departments who owed municipalities huge
amounts of money. In the letters it had requested municipalities to indicate
the exact amounts owed and the duration of the debts. It reported that, to date,
no responses had been received from the municipalities.
Observations of the
Committee
The Committee made the following observations relating to the
According to the Municipal Finance Management Act (MFMA), municipalities were only
allowed to invest money that was not immediately needed. It was the view of the
Committee that the Mayor’s Discretionary Fund was not in line with the law; and
The DBSA needed to be brought on board with the pilot project by the DPLG.
Having heard the presentation of the municipality, the following observations
were made by stakeholders present, and the Committee:
The DPLG complained that this was the most frustrating municipality to deal
with in terms of cooperation. Some of the most obvious challenges faced by the
municipality related to procurement and the appointment of staff. Furthermore,
the DPLG reported that it had been receiving reports signed by the Chief
Financial Officer (CFO) and Municipal Manager on the municipality’s expenditure
and was surprised to hear that money had in fact not been spent.
National Treasury pointed out that the presentation by the municipality did not
give specifics e.g. how
many houses had been electrified. It added that, post 2010, municipalities
would be getting more money and needed to gear themselves for that. National
Treasury observed that municipalities neither had ability to spend nor did they
have the ability to collect from debtors. It was reported that, for over three
years, National Treasury had been trying to get the municipality to hire
interns. It was also reported that the municipality was not using the Finance
Management Grant (FMG) which was at 0% expenditure.
Provincial Treasury also raised a concern that the report presented to the
Committee was glaringly different from the one that had been presented by the
municipality to the Provincial Treasury.
The Committee made the following observations with respect to the municipality:
The number of positions was 1330 of which 741 were vacant while the salary bill
was already at 40%. This meant that if the vacancies were to be filled the
salary bill would be bloated. To this end, the Committee requested the
municipality, Provincial Treasury, National Treasury, DPLG and Local Government
to look at the following matters:
Determine whether the given 1330 posts
was the real figure;
The credibility of the budget that was presented to the Committee;
The sustainability of the budget were the post to be filled;
Address the issue of under-collection;
Look into the alignment of priorities to the budget; and
Determine whether there was a discretionary fund or not.
The Committee was concerned about the attitude of the Auditor General given
that in the context of what was presented to the Committee, there had been no
forensic investigation of the municipality. The Committee noted that it
considered interacting with the National Auditor-General on this matter with
the objective to assist and ensure service delivery.
It was reported that the provincial Health Department
owed the municipality an amount of R9 million.
DPLG reported that it was pleased with the expenditure of the municipality
which was at 76%. They added that they were aware of challenges faced by the municipality.
National Treasury pointed out that the presented budget did not include the
capital budget which was a concern.
Provincial Treasury reported that it had challenges with the municipality and
assisted wherever they were needed.
Eskom reported that it had projects totalling 1400 connections and another 943
connections were scheduled to be done by the end of March.
The Department of Water Affairs and Forestry (DWAF) reported that it had a very
good working relationship with the municipality.
Observations of
the Committee
The Committee pointed out that the MIG had been under-spent.
Furthermore, the Committee was concerned that the municipality had appointed a
deputy CFO (a new post) while there was funding for a
properly qualified CFO.
The water subsidy was also under-spending. To this end DWAF was requested to
assist in dealing with capacity. It was noted that, in a rural municipality
such as this one, every cent needed to be used and used well. The Department of
Local Government and Housing was requested to be part of the discussions on
capacity building.
It was reported that the total number of libraries
within the municipal area was eight. Eventually the municipality planned to
have ten libraries with two in rural villages.
The municipality further reported that their operational budgets were
ballooning as a result of high levels of legislation governing operations. All
new legislation came with staff requirements which reduced the capital budget
that had been aimed at service delivery.
It was further reported that the district had instructed that MIG funds
be ring-fenced to deal with issues of water.
The Committee heard that the municipality needed an amount of R18 million to
assist in the provision of toilets in the place of biological toilets that were
currently in place.
The Committee was informed that the Provincial Education department also owed
this municipality about R900 000. Furthermore it was said that funding was
given to schools on the basis of how old the schools were, as such schools in
towns received bigger allocations than those in RDP areas.
The Provincial Health Department also owed the municipality R5.5 million. The
Department was reported to be taking over the provision of primary health care.
The municipality reported that it was resisting this move by the Health
department since it felt that it could provide this service.
The Committee was also informed that 74% of the municipal budget was from its
own revenue in which case it sometimes had to take loans. In areas where
revenue was generated, refuse removal took place twice a week and in others
once a week.
Provision for the indigent:
10 kl of water, 50kwh, free sanitation, free refuse removal, 100% rebate on
property tax. The municipality reported that 82.3% of its equitable share went
towards the free basic services for indigent.
Furthermore the municipality reported that it was facilitating housing delivery
even though it had not been given the subsidies for this. The actual erection
of the houses was said to be done by the province. In addition the municipality
believed that housing delivery could be accelerated if the municipality could
be accredited.
All municipal programmes were reported to be fully aligned to the Provincial
Growth and Development Strategies (PGDS).
The DPLG reported that it was pleased with the expenditure of the municipality.
National Treasury commended the municipality for being able to raise its own
revenue. It noted, however, that the question of unfunded mandates needed to be
addressed.
Provincial Treasury reported that the municipality complied with the MFMA and
that it had an in-house financial system that worked well. It also pointed out,
that the municipality’s capital expenditure was an area of concern since the
municipality was not spending according to a set benchmark. To this end the Provincial Treasury reported
that it had sent out a template wherein municipalities could fill in their capital
projects.
With respect to the accreditation of the
municipality, the Committee agreed that it would set up a meeting with the
National Department of Housing, Provincial Treasury and Provincial Housing to
address the matter.
The National Treasury pointed out that the report that had been presented by
the municipality to it was not the same as the one presented to the Committee.
It was reported that when the municipality adopted its budget there had been a
deficit of R22 million. It had debtors of over R86 million. The adjustment
budget that was being presented at the meeting was not credible. It further
reported that the municipality was overspending by over R1 million in January
2008 on its Capital budget. Furthermore, National Treasury enquired on what the
director in the Municipal Manager’s office did.
The National Treasury also noted that in the operations budget, there was an
allocated amount for “other” and this had the second highest amount of money.
It enquired as to what this “other” included. It also pointed out the glaring
difference in the capacity requirements of this municipality and that of
Msukaligwa, adding that this municipality seemed to be doing well without the
huge numbers of staff needed in Msukaligwa. The Provincial Treasury concurred with
National Treasury that the presentation differed from what had been presented
to the Provincial Treasury. It added that support was given by Provincial
Treasury to assist the municipality.
The Committee made the following
observations:
The municipality had received a qualified report from the Auditor General. The
findings of the AG with respect to the municipality included among others:
Incorrect accounting framework;
Non availability of a fixed asset register;
Overstatement by R499 788 due to calculation error;
Capital Development fund overstated by R4m due to calculation error; and
Non availability of source documents.
The Committee noted the report by this municipality but requested that, given
that the Mayor and the Municipal Manager were not present, they would be
invited to be part of the meeting on 5 May in
The presented report did not relate the challenges
faced by the municipality, but reported on behalf of other municipalities. This
made it difficult for the Committee to interact with the presentation.
The municipality reported that it had been under the impression that it needed
to report on the entire district. To this end it was agreed that the
municipality should also prepare itself for the meeting scheduled to take place
in
In the absence of the Executive Mayor and the Municipal Manager,
the Committee noted the report by this municipality but
requested that they be part of the meeting on 5 May in
4) Conclusion
Given the above findings, the Committee made the following conclusions:
Issues of capacity were a common challenge among municipalities;
Departments were not honouring their commitments to municipalities in terms of
debt;
There were departments who were reluctant to participate in IDP’s;
Municipalities had discretionary funds that were not in line with the MFMA;
Some municipalities had very high salary bills;
Recommendations
Emakhazeni
Municipality
The Committee recommends as follows:
Departments owing money to this and other
municipalities should promptly meet their commitments or risk being in
violation of the law;
The Department of Education should meet with the municipality and address the
question of scholar transportation;
The matter of the municipality being housing developers would be taken up by
the Committee with the department of housing;
The Department of Water Affairs and Forestry (DWAF) should develop a programme
of action to assist with the problems of sewerage spillages in Emakhazeni and
report to the Committee;
The municipality should continue to put in place ways of raising its own
revenue; Furthermore it should limit personnel spending to be no more than 30%
of its budget;
The MEC for Finance and the Mayor of Emakhazeni should address the issue of
outstanding debts as a matter of urgency in terms of the MFMA.
Msukaligwa
The Committee recommends that the municipality prepare
a report on the true state of affairs for a meeting that would be held in
Nkomazi
The
Committee recommends as follows:
The Provincial Treasury meet with the municipality and
discuss possible ways of ensuring capacity building for the municipality.
The DWAF assist in dealing with capacity issues ensuring that the municipality
was able to spend its water subsidy.
The Department of Local Government and Housing should be part of the
discussions on capacity building.
The Mayor should inform the Provincial Treasury whenever there was money owed
to it by the departments.
Steve Tshwete
The Committee recommends as follows:
The municipality should consider making use of its investment to address the
issue of biological toilets. All municipalities should invest money that was
not immediately needed, in line with the MFMA.
Albert Luthuli
The Committee recommends as follows:
Given the report of the Auditor General on the municipality, National Treasury
should meet with this municipality, DWAF, DPLG, Provincial Department of Local
Government and Housing and Provincial Treasury, to deal with all matters raised
in the report so as to get the municipality on track. Some of the focal areas
specified for that meeting were:
Alignment of budgets and
Salary bill
The DWAF and the municipality needs to resolve the following matters that had
been raised by the municipality as challenges; the upgrade and refurbishment of
water and sewer treatment works and the huge backlogs in sanitation.