The
Budgetary Review and Recommendation Report of the Portfolio Committee on Co-operative
Governance and Traditional Affairs, dated 2 November 2011.
The Portfolio Committee on
Co-operative Governance and Traditional Affairs, having considered the performance
of the Departments of Co-operative Governance and Traditional Affairs for the
financial year 2010/11 and the first two quarters of 2011/12, reports as
follows:
1. Introduction
The purpose of the report is to provide a reflection of the
performance of the
Department of Cooperative Governance and Traditional Affairs
against predetermined objectives. Further, the report provides an assessment of
the financial performance of the Department for the first two quarters of the
current financial year. In the final analysis, the report provides for
observations, conclusions and recommendations from the Portfolio Committee on
Cooperative Governance and Traditional Affairs.
1.1 The role of the Committee
Mandate of the Committee, including provisions of Section 5
of the Money Bills Amendment Procedure and Related Matters Act, No 9 of 2009
As a National Assembly Committee, whose powers are enumerated in
Chapter 4, and according to the Rules of the National Assembly, the Committee
is required, in respect of the mandate of the Department of Co-operative
Governance and Traditional Affairs,
According to Section 5 of the Money Bills Amendment Procedure and
Related Matters Act, the National Assembly, through its Committees, must
annually assess the performance of each national Department. The Committee must
submit an annual Budgetary Review and Recommendation Report (BRRR) for each Department
that falls under its oversight responsibilities, for tabling in the National
Assembly. These should be considered by the Standing Committee on Appropriations when it is
considering and reporting to the House on the Medium-Term Budget Policy
Statement (MTBPS). The Portfolio Committee on Co-operative Governance and
Traditional Affairs considered the Budget of the Department of Co-operative
Governance and Traditional Affairs on 31 May 2011. The Committee considered the
Department of Co-operative Governance’s Annual Report 2010/11, as well as the
Annual Reports of the entities reporting to the Department, on 12 & 18 October
2010.
1.2
The Department
Mandate:
The primary mandate of the Department is to:
Vision:
An
integrated, responsive and highly effective governance system working with
communities to achieve sustainable development and improved service delivery.
The
Departments’ mission is to facilitate co-operative governance and support all
spheres of government, the institution of traditional leadership and associated
institutions through:
2. Department’s Strategic Priorities and Measurable
Objectives
2.1 Strategic Plans of the Department
A
summary of the Department’s 5-year strategic plan:
2.2 Measurable Objectives of the Department
The Department’s
core function, given its new expanded mandate, is set out in the five strategic
priorities for the Ministry and Department for the next five years, 2009 -
2014.
Strategic Priority 1: Contribute to building the
Measurable
objectives
·
Facilitate the alignment of
provincial growth and development strategies and integrated development plans
with the medium-term strategic framework and the national plan by reviewing and
implementing the framework for integrated development planning before 31 March
2011;
·
Improve vertical and
horizontal co-ordination and alignment by reviewing the Intergovernmental
Relations Framework Act (2005) and other related legislation, interventions and
oversight support programmes by 31 March 2011;
·
Reform the regulatory and
support mechanism for municipal councils and ward Committees by developing
funding mechanism for municipal councils and ward Committees by 31 March 2011;
·
Develop legislation in
relation to Provincial intervention in Local Government by 31 March 2011;
·
Commence legislative reform on the municipal
systems and structures in consideration and response to lessons learned by 31
March 2011; and
·
Strengthen the capacity of municipalities by
supporting them in the development and implementation of municipal specific
turnaround strategies.
Strategic
Priority 2: Strengthen Accountability and
Clean Government.
Measurable
objectives:
·
Clean cities and clean towns programme conceptualized,
popularized; co-ordinated across municipal areas and implementation supported
by target date;
·
Total number of Municipalities receiving support on
financial management by March 2011;
·
Improved governance by supporting all provincial government Departments and municipalities through development and implementation of anti-corruption policies and programmes by March 2011;
Strategic
Priority 3: Accelerating Service Delivery
and supporting the vulnerable.
Measurable objectives:
·
Strengthen the capacity of
municipalities by supporting them in the development and implementation of
municipal specific turnaround strategies by March 2011; and
·
Total number of Districts supported with the
intergovernmental relations capacity-building programme (total 46 districts) by
March 2011.
Strategic Priority 4: Fostering Development Partnerships, Social Cohesion and community
mobilisation.
Measurable objectives:
·
Improve vertical and horizontal co-ordination and
alignment by reviewing the Intergovernmental Relations Framework Act (2005) and other related legislation,
interventions, and oversight support programmes by March 2011;
·
Maximise the communication efforts on all Departmental
programmes and initiatives by conducting communications and marketing
campaigns; and
·
Improve Regional and
International relations by fostering Development partnerships and co-ordinating
donor relations by March 2011.
Strategic Priority 5: To Strengthen the capacity and capability of the Department to
deliver on its mandate
Measurable objectives:
·
Provide a comprehensive legal
services support to the Department and key stakeholders in order to maintain
and improve on Compliance and Due Diligence by 31 March 2011;
·
Improve and manage
the COGTA Strategic Management and Governance processes in order to enhance
organisational capacity and capability in relation to ICT, Human Resource
Management and Development, by 31 March 2011; and
·
Improve the Department’s
implementation capacity and information management systems by introducing
information and business technologies by 31 March 2011.
3. Analysis of Section 32 Expenditure
Reports
The Department is undergoing changes
to suitably address structural and systemic challenges in local government. The
Department had only five programmes in the year just ended and, due to the
reorganisation, there are currently seven programmes, which means that there
are many budget shifts in relation to programmes. The two additional programmes,
albeit the functions are not new, are Provincial and Municipal Government
Systems, on one hand, and Infrastructure and Economic Development, on the
other.
|
Programme |
Budget |
Nominal
|
Real |
Nominal
% change |
Real
% change |
|||
|
R
million |
2010/11 |
2011/12 |
2012/13 |
2013/14 |
2010/11-2011/12 |
2010/11-2011/12 |
||
|
Administration |
197.9 |
212.6 |
216.0 |
222.3 |
3.4 |
- 6.5 |
1.60 |
-3.05 |
|
Policy,
Research and Knowledge Management |
48.2 |
46.0 |
47.6 |
50.2 |
- 2.2 |
- 4.3 |
-4.56 |
-8.94 |
|
Governance
and Intergovernmental Relations |
30 666.4 |
34 213.9 |
37 684.1 |
40 077.5 |
3 547.5 |
1 980.5 |
11.57 |
6.46 |
|
Disaster
Response Management |
293.2 |
821.2 |
558.0 |
594.3 |
528.0 |
490.4 |
180.08 |
167.25 |
|
Provincial
and Municipal Government Systems |
251.2 |
248.3 |
260.5 |
274.7 |
- 2.9 |
- 14.3 |
-1.15 |
-5.68 |
|
Infrastructure
and Economic |
10 217.5 |
12 307.9 |
14 986.2 |
15 804.9 |
2 090.4 |
1 526.7 |
20.46 |
14.94 |
|
Traditional
Affairs |
74.1 |
83.8 |
90.4 |
97.0 |
9.7 |
5.9 |
13.09 |
7.91 |
|
|
|
|
|
|
|
|
|
|
|
TOTAL |
41 748.5 |
47 933.7 |
53 842.8 |
57 120.9 |
6 185.2 |
3 989.8 |
14.82
|
9.56 |
The total allocation of
the Department is R48 billion in the 2011/12 financial year, which represents a
9.56% increase from the R41.7 billion in the year just ended.
There are three programmes that take
up a larger share of the budget. Governance and Intergovernmental Relations,
which has R34.2 billion and which represents a 6.4% real increase from the
previous year. The Disaster Response Management programme also got substantial
increase from R293 million to R821 million in the current year. And finally,
the Infrastructure and Economic Development receives R12.3 billion, which increases
to R15.8 billion by 2013/14. The Municipal Infrastructure Grant allocation
for 2010/11 is R9.5 billion, and increases to R14.7 billion in 2013/14. The targets for 2013/14 are: basic water: R2 million; sanitation: R1.2
million; roads: R1.7 million; community lighting: R768 150.
Over the medium term, expenditure is
expected to increase to R57.1 billion in 2013/14, at an average annual rate of
11%. The substantial increase is due to additional allocations for disaster
relief of R1.8 billion and R1.2 billion for the equitable share over the MTEF
period, the transfer of the infrastructure component of the Siyenza Manje
function from National Treasury, the community works programme and inflation-related
adjustments.
4.
Analysis of the Department’s Annual Report and Financial Statements
There are numerous
performance indicators that reflect substantive progress; however there are few
areas where failures are evident. In the following section more focused
attention is paid to detailed programme performance.
DETAILED PROGRAMME PERFORMANCE ANALYSIS
4.1
PROGRAMME 2: POLICY AND
RESEARCH AND KNOWLEDGE MANAGEMENT
The performance of this
programme on numerous indicators is uneven with many objectives partially
achieved or not achieved at all. With respect to achievements, the monitoring
and evaluation as well as IT Systems frameworks have been developed.
This programme has a
variance of R7 million, most of which is derived from the Policy, Methods and
Research Sub-programme.
.
4.2
PROGRAMME 3A: GOVERNANCE
AND INTERGOVERNMENTAL RELATIONS
Most of the work
regarding developing discussion documents or legislation has been achieved;
however, many of targets regarding fiscal relations are still outstanding,
because some aspects are the responsibility of National Treasury. These include improving the quality of
financial statements and supply chain management regulations.
Of critical importance is
the area of anti-corruption. The work of the Anti-corruption Inspectorate
requires training of local officials and elected representatives, but this was
put on hold to allow PALAMA to review the accredited course on anti-corruption
and ethical conduct.
4.3
PROGRAMME 3B:
INFRASTRUCTURE AND ECONOMIC DEVELOPMENT
This programme is
critically important in ensuring sustainable local economic development through
implementation of LED strategies in municipalities, as well as intensifying the
establishment of and support for co-operatives. This programme is also
responsible for the implementation of Community Works Programme (CWP). However,
substantive work on LED and co-operatives remains a challenge. Ward-based co-operatives
have not been realised, due to a lack of financial and human resources.
Regeneration of corridor towns in KZN, EC, LM and
An important part of the
mandate of this programme is the establishment of the Special Purpose Vehicle (SPV)
or Infrastructure Development Agency, which will intensify the infrastructure
roll-out programme to build new infrastructure, and rehabilitate and maintain
existing infrastructure. The completion of the establishment and
operationalisation of the SPV has not yet been done, and it is unclear when
this will be concluded. The SPV is critical to the intensification of the
provision of universal access to basic services such as water, sanitation and
electricity. The bulk infrastructure will contribute to the effective,
efficient and economic provision of Free Basic Services in municipalities, in
accordance with credible Indigent Registers.
Presently, there is
steady progress towards the achievement of objectives of provision of universal
access to basic services such as water (1.6 million households), sanitation
(936 379 households), roads (1 113 636) and electricity (554 977) as at
December 2010. These achievements are
critically important for the attainment of the Millennium Development Goals
(MDGs) by 2014. However, there is lack of monitoring and accurate reporting
with regards to progress in provision of Free Basic Services to indigent
households.
4.4 PROGRAMME 3C : PROVINCIAL AND MUNICIPAL
GOVERNMENT SUPPORT
This
programme deals with municipal performance monitoring and support in order to
improve the service delivery capability. There is greater emphasis on
legislative review and regulatory framework to enhance municipal performance.
However, in the period under review, whilst some regulations have been
concluded, others have not been completed, due to capacity constraints viz.
councillor remuneration regulations and amendments of the Municipal Structures
Act. An assessment report of all legislation that underpins service delivery
has been finalized. Further, a progress report on the implementation of the
Local Government Turn-Around Strategy has been developed. Provinces and
municipalities have been assisted with implementation of the Municipal
Performance Regulations. Municipal support towards improvement of the performance
management system has been conducted through training and workshops.
Performance
monitoring, by implication, requires the compilation of a report to discern
patterns; however the Department has failed to undertake this task, due to
capacity constraints.
In terms of
capacity building in municipalities, the Department has failed to develop a
recruitment and retention strategy. Further, the Department has failed to
develop the institutional framework for the Public School for Local Government,
as well as developing a framework for professionalization of Local Government.
4.5
PROGRAMME
4: NATIONAL DISASTER MANAGEMENT CENTRE
With respect
to Disaster Management, the Department has achieved the pre-determined
objective or indicator of building 30 disaster management centres. However, the
capacity for disaster risk reduction is inadequate, and models for indicative
risk profile are incomplete in the period under review. Further, reaction to foreseen natural
disaster viz. the recent floods that affected Eastern Cape, Free State,
Gauteng, KZN and Northern Cape early in 2011 indicate that the inadequacy
of response and recovery measures. This
was evident in the affected municipalities during the oversight by the
Portfolio Committee.
In terms of
the actual budget allocation and expenditure, the programme has a variance of
R6.7 million.
5. FINANCIAL GOVERNANCE AND
MANAGEMENT
On governance matters, the
Audit Committee concludes that the internal audit controls were ineffective in
the year under review. Further, the Audit Committee stated that this
ineffective internal control was worsened by non-functioning of the Internal
Audit Unit and Risk Management. The
Auditor-General’s report states that, in terms of governance, the Accounting
Officer did not ensure that the Internal Audit Unit was adequately resourced
and functioned in terms of risk identification and corrective action.
The Department is facing
significant uncertainties as it is a defendant in various lawsuits; and, due to
the fact that these matters have not been resolved, an amount of R4.4 million has
been set aside as contingent liability in the financial statements. There is
also an irregular expenditure to the amount of R419 million as stated in note
27.2 of the financial statements. Of this amount, R271 million was a
contravention of the supply chain management according to the PFMA and Treasury
Regulations.
An amount of R336 000, paid
as interest in legal fees, is recorded as wasteful and fruitless expenditure.
This is so because, had the Department paid legal fees on time, there would be
no interest incurred
In terms of procurement and
contract management, the Auditor-General reveals that Goods and Services with a
value of between R10 000 and R500 000 were procured without inviting at least
three written price quotations from suppliers in violation of the PFMA.
In total, under-expenditure
amounts to R76 million. The Department had an under-expenditure of R55 million,
mainly in the Community Works Programme, which could not finalise all its
intended projects in the year under review. The balance was due to transfers
made to
There is an amount of R51.9
million of aid assistance that was unutilized in the year under review, which
is more than the R32.4 million of unused aid funds in the previous year.
6.
Consideration of Other Sources of Information
A number of sources can be used to
analyse the strategic and operational plans of Departments. These include:
·
The State-of-the-Nation
address;
The State of the Nation Address
covered a wide range of areas, most of which are embedded in local government,
including building of small, micro and medium enterprises (SMMEs), local
tourism, infrastructure and agriculture, to mention a few. The general thrust
of the speech was on the imperative of job creation which remains an
intractable challenge, due to a myriad of structural challenges the country
faces. Local government plays an integral role in all these areas, as a locale
of service delivery. Therefore the integration and co-ordination of government
systems and implementation strategies in all spheres become ever more
important.
The speech, with respect to local
government, remains focused on the service delivery challenges of municipalities,
but, more importantly, on the structural and systemic challenges that were
highlighted in the State of Local Government Report adopted in 2009. The
President was still firm on priorities of local government highlighted in his
address in February 2010. These areas remain critical strategic areas to ensure
a well-functioning system of local government, in line with the five priorities
of government. These strategic priority areas are as follows:
·
Job creation and SMME development;
·
Continued implementation of the Local Government Turn-Around
Strategy (LGTAS) to ensure correct management; administrative and technical
skills, and customer care;
·
Provision of basic services, such as housing, water,
sanitation, electricity, waste management and roads;
·
Informal settlements upgrade;
·
Eradication of corruption and fraud in procurement and
tender processes; and
·
Disaster management.
The President noted with concern
that, in some cases, the people’s experience of local government has not been a
pleasant one. Further, the President expressed concern that the frustrations in
some areas resulted in protests, which indicated the problems that existed in
the local sphere of government. It must be stressed that the country was
engulfed in flames for the most part of 2009, due to ‘service delivery’
protests. However, in certain areas, there has been a resurgence of these
challenges in 2011.
IMPACT ON CO-OPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS
The maturity of the system of local
government a decade after the inception of democratic municipal governance is a
critical imperative for the country to achieve its commitment to citizens for
better services, as well as defeating poverty in the medium term. The country’s
growth, development and stability depends on a functional local government
system that works to deliver services to the people, builds and maintains
infrastructure, creates employment opportunities through Local Economic
Development, enhances clean governance and fights corruption to ensure value
for money for citizens. Local government, in fact, is the centre of gravity
where all government service delivery functions ultimately find focus – thus
the integration and co-ordination of all programmes becomes cardinal.
Local government interests are
fundamental to the objective of a developmental state, and therefore priorities
in this sector are generally cross-cutting and consistency in articulating
these priorities is evident. A glaring example of the significance of the
multifacetedness of the mandate of local government is the task of provision of
basic services such as water, electricity, sanitation, infrastructure and
housing. These functions involve a plethora of Departments such as Human
Settlements, Water Affairs, Energy, Transport and Public Works. To further
demonstrate the point, the municipal Integrated Development Plan (IDP), which
is a developmental planning framework for local government, incorporates
transport, health and water services plans in order to respond comprehensively
to the needs of the people.
There are numerous salient issues
which have been highlighted in the past to ensure better and efficacious
allocation of resources, and the elimination of duplication and disparities in
remuneration. These matters concern the policy review of the provincial sphere,
as well as the two-tier system of local government. In the 2010 State of the
Nation Address the President alluded to the formation of a single Public
Service, which would ensure that the financial years used by municipalities are
brought in line with the two other spheres of government.
The following section provides a
detailed account of the afore-mentioned priorities that emerge from the State
of the Nation with regards to local government.
Job Creation
The overarching theme of the Address
was on creating employment for the millions of unemployed people in
The President, based on the
understanding that job creation is everyone’s business, stated that “all
government Departments will align their programmes with the job creation
imperative. The provincial and local government spheres have also been
requested to do the same.” Government Departments must develop their targets
and specifically the Department of Co-operative Governance and Traditional
Affairs needs to prioritise this imperative. The Department of Co-operative
Governance manages the Community Works programme, which ought to employ many
community workers. Municipalities must also, as matter of course, implement
radical programmes to increase local employment.
The government continues to provide financial and non-financial support
to small, medium and micro enterprises, small-scale agriculture, as well as co-operatives.
The President noted that the campaign to pay SMMEs on time, within 30 days, is
proceeding well. It is also important to note that the President emphasised the
role and contribution of tourism to the economic growth of the country and this
has a bearing on municipalities as well.
Continued
Implementation of the Local Government Turn-Around Strategy (LGTAS)
Cabinet
approved the Local Government Turn-Around Strategy in December 2009 to improve
local government performance and service delivery through the application of
correct management and administration, and development of technical skills. The
adoption of the LGTAS followed a process of assessment of municipalities which
found that local government was in a state of distress and was confronted by a
litany of problems ranging from governance, financial matters, and lack of
skills to service delivery problems. The
assessments were conducted between April and August 2009 and were actually
designed to ascertain the root causes of the current state of distress in many
of the country’s municipalities, in order to inform a National Turn-Around
Strategy for Local Government. Between the years 2004 and 2008, there were 106 ‘service
delivery protests’ throughout
The cornerstones of the LGTAS
revolve around several key pillars:
·
Tightening the municipal supply chain management mechanisms.
·
Establishing a single window of co-ordination to curb
overregulation of municipalities, as identified in the Inaugural IGR report.
·
Implementing Special Purpose Vehicles for infrastructure
development, particularly in struggling municipalities.
·
Refining the model of ward Committees to give effect to
participatory democracy in communities.
·
Establishing a single election at all three levels of
government in order to save resources and build unity in line with the Single
Public Service, as well as the financial terms of municipalities.
Importantly, the LGTAS is not a
‘one-size-fits-all’ mechanism but provides an overarching guide by means of
which municipalities are going to be assisted to develop a tailor-made
Municipal Turn-Around Strategy to effectively discharge their responsibility in
conditions of political stability, administrative efficiency and financial
viability. There is emerging consensus that the co-ordination of government
programmes is extremely important, as municipalities play a pivotal role in
implementation. The planning instrument of municipalities, known as the
Integrated Development Plan (IDP), is a critical tool which must be in accord
with local priorities and integrate government developmental plans. The IDP must incorporate a Water Services
Plan, a Health Services Plan, Transport Development Plans and other spatial
development considerations which demonstrate the multi-sectoral nature of local
government functions.
Local government, by design, plays a
fundamental role in the co-ordination of government services, as a sphere that
is tasked with Integrated Development Planning encompassing a wide range of
sectors. Experience indicates that the upper spheres of government do not take
the IDP process seriously, and they show this either by not attending related
meetings or by sending junior officials who cannot make commitments. The IGR
forums that are a statutory obligation, do not regularly meet in order to
ensure that concrete plans and budgets in line with predetermined objectives of
the IDP are implemented, monitored and evaluated. There is a tendency by upper
spheres of ‘dumping’ projects or fiscal dumping in municipalities without
proper co-ordination, which in turn require services from municipalities
without having budgeted for such service provision. For instance, national Departments
do not indicate their intentions during the IDP process and, halfway through
the year, come to municipalities and indicate that they wish to build housing
units which require services which the municipality has not budgeted for. This is not ideal; but, notwithstanding, it
is not desirable for the municipality to reject projects from national or
provincial government which are in the interests of community service delivery.
In terms of the Constitution, the
upper spheres of government also have a responsibility to supervise, assist and
intervene in struggling municipalities where evidence suggests that this
component has been weak. Some of the municipalities that are engulfed in chaos
currently, such as Thaba Chweu, are Project Consolidate municipalities, and the
Provincial administration has already implemented interventions in terms of
Section 139 of the Constitution. But post-intervention measures have proved
insufficient, because service delivery problems persist.
Provision of Basic Services
The year 2014, which is the target
year for achieving the MDGs by halving poverty, is fast approaching, and the
unrelenting government commitment to the provision of basic services must be
intensified. Key MDG areas relevant to this sector include electricity
reticulation, water sanitation services and waste removal, which are functions
of Local Government in line with Schedule 4 Part B of the Constitution, of
1996. In order to realise the constitutionally guaranteed imperatives in 2000,
Government announced its policy intent to provide free basic services to poor
households. In this regard, water, sanitation and energy were identified as
basic services to be supported by Government's programmes in respect of poor
households.
In the State of the Nation Address
the President maintained the historic commitment of Government to improve the
quality of life and dignity of ordinary people by ensuring adequate access to
basic services. In this regard, the President stated that the infrastructure
development programme enables government to expand access to basic services and
to improve the quality of life. In this context, the projects for provision of
water, electricity and housing are imperative. The function of provision of
sanitation has been transferred to the Department of Human Settlements, as it
is more appropriate there.
According to the recent statistics
from the Department of Co-operative Governance progress on national access to
basic services is as follows:
Water: 93%
Sanitation: 70%
Electricity: 82%
Refuse: 69%
These figures reflect provision of
basic services according to RDP standards and not necessarily Free Basic
Services statistics. Further, these figures do not seem to be verifiable, as
has been the case previously. It is also critical to stress that these figures
do not reflect the state of MDG delivery in informal settlements.
Upgrading Informal Settlements
The challenges of in-migration are
resulting in expansion and/or proliferation of informal settlements in the
urban fringes of many metropolitan areas. These informal settlements conform to
the apartheid spatial logic of segregation on the basis of race, distance and
time with regards to employment opportunities. The historical rural/urban
divide has compelled many economically active rural dwellers to seek employment
in the cities, usually locating themselves in the urban periphery, in areas
which are deprived of services. The informal settlements and townships follow
the distorted racially-based apartheid spatial framework, as they are located
on the urban fringe and residents live in conditions that are often not fit for
human settlement. Upgrading informal settlements is informed by the desire to
break away from the apartheid culture of neglect in order to restore the dignity
of the people.
In the 2011 State of the Nation
Address the President asserts that “the construction industry is a known driver
for work opportunities”. There are 1.2 million households living in the
country’s 2 700 informal settlements. He further made a categorical commitment
that, by the year 2014, 400 000, the 1.2 million households in informal
settlements should have security of tenure and access to basic services. The 2010 ANC
NEC lekgotla also noted with concern the issue of urban sprawl and, without
providing details, made an undertaking to seek to discourage this situation.
Processes of urbanisation and migration have pointed to the need to give
greater attention to the acquisition of suitable land for the appropriate
transformation of informal settlements and the need for better co-operation
between national, provincial and local government. Steps must be taken to
discourage the emergence of new informal settlements.
Eradication of Corruption and Fraud in Procurement and
Tender Processes
The main issue that seems to be
crippling service delivery, particularly in local government, is corruption,
fraud and tender irregularities. To curb this scourge, the government is committed
to implement Local Government Anti-Corruption Strategy. This Strategy has been
rolled out to all municipalities. A particular focus must be on reviewing the
Municipal Finance Management Act and the relevant regulations. Decisive and
bold action must be taken against anyone found to be looting state and public
resources. To give impetus to the fight against corruption and nepotism, the
ANC NEC lekgotla has asserted that procurement and supply chain management
processes must be strengthened to eradicate the scourge. As a result of this
commitment, the Department of Co-operative Governance has tabled amendments to
the Local Government: Municipal Systems Amendment Bill (B22 – 2010) which will
prohibit re-employment in the local government service of municipal employees
found guilty of fraud and corruption.
It is important to recognise that
the fight against corruption has intensified, and there are several cases that
have been prosecuted, ranging from the embezzlement of municipal funds, to
tender irregularities and lack of compliance to supply chain management policy.
There is a case in King Sabatha Dalindyebo which is currently in court in
Mthatha in which six officials have allegedly defrauded the
Disaster Management
The threats of climate change to
It must be noted that there were
warnings issued in October last year, but it appears that these calls were not
heeded by the relevant authorities. Consequently, there was damage to
infrastructure and loss of human life. There are still some worrying
projections which need thorough mitigation strategies to protect human life and
property.
The government, as announced by the
President, has set aside R800 million for immediate relief to assist
communities. Further, the government is earmarking funding for post-disaster
recovery and reconstruction. Municipal property, such as bridges, has been
swept away by the floods. School buildings and people’s houses have also been
severely affected. This funding will be welcome relief for the communities.
·
Reports of
the Auditor-General of
The Department received a
qualified audit opinion from the Auditor-General for 20010/11 financial year.
The basis for the
qualified opinion was as follows:
The Department did not
have an adequate system for identifying and recognising all irregular
expenditure and there were no satisfactory alternative procedures that could be
performed to obtain reasonable assurance that all irregular expenditure had
been properly recorded. Consequently, the Auditor-General was unable to obtain
sufficient appropriate audit evidence as to the completeness of irregular
expenditure of R419 586 000 as stated in the financial statements.
There were emphases of
matters on:
Report on other
legal and regulatory requirements
·
Entities
reporting to the Department of Cooperative Governance and Department of
Traditional Affairs
South African Local Government Association (SALGA)
The South African Local Government
Association (SALGA) has a mandate to represent, support, advise on and profile
organised local government interests. This mandate is reinforced by the
resolutions their 2007 National Conference, which adopted critical resolutions
to effectively put local government at the core of service delivery processes
in an efficient and effective local government system. The Conference
resolutions evolved, through a series of phases, into a 5-year strategic
agenda, which is based on the following critical pillars;
·
Strategic
profiling
·
Support
and advice
·
Representation
SALGA received an
unqualified audit report. The report also determined that it had achieved 86%
of its key performance indicators for 2010/11. SALGA has conducted a
Disaster Risk Management Assessment and developed a Guide on Disaster Risk
Management for Local Government. Budgetary constraints were a major issue faced
by SALGA and it was as a result of this that SALGA was operating at only 68% of
capacity. Only R43 million of the R96 million required was provided for.
Commission for the Promotion and Protection of the Rights of Cultural,
Religious and Linguistic Communities (CRL Commission)
As its name suggests the CRL Commission has a
fundamental responsibility to promote the right of communities in order to
develop their historically diminished progressive heritage.
The Cultural, Religious
and Linguistic Commission (CRL Commission) presented its 2010/11 Annual Report.
Twenty-nine cases had been referred to the Commission during that year, twenty-two
of which had been investigated/mediated and resolved, and seven of which were
outstanding.
The Commission received
an unqualified Audit Report with Emphasis of Matters for: irregular
expenditure; fruitless and wasteful expenditure; going concern under-funding;
non-compliance with legal requirements; lack of predetermined objectives and
lack of internal controls.
Municipal Demarcation Board (MDB)
The Committee had an interaction with the Municipal Demarcation Board
(the Board). The mandate of the Board in terms of the principal Act is to
conduct:
The Board
made a presentation of its audit outcomes, as well performance issues. in terms
of audit information, the Board has received an unqualified audit opinion with
matters of emphasis. This was in relation to irregular expenditure of R726 012, which was in
contravention of the Preferential Procurement Policy Framework Act. The
Board recorded a total income of R37.9 million, with an expenditure of R36
million, resulting in an expense variance of R1.6 million
7.
Conclusions
|
Observation |
Recommendation |
Time frame |
|
In the Committee’s BRRR recommendations of 2010,
reference was made to the review of the funding model on equitable share. The
Committee observed that on Strategic
priority 1, the deadline for the
developing of a funding mechanism for municipal councils by 31 March 2011, has
been missed |
The Department, SALGA, and National Treasury should
relook the funding formula to take into account equitable share for
smaller/rural municipality. The Department must revisit this objective and
fast track the implementation thereof. |
May 2012 |
|
Strategic priority 2: Support on financial
management to Municipalities – the Department, as the driver of the Clean
Audit programme, is not exemplary |
The Department should focus on obtaining a clean
audit for the next financial year, so as to lead Municipalities by example
towards achieving clean audits. |
31 March 2012 |
|
The Committee
observed that some progress has been made on the implementation of the LGTAS
however the impact on sevice delivery around strategy is not evident on local
level |
The Department must further capacitate
municipalities to implement Municipal Turn-Around Strategies to improve
service delivery. |
On going basis |
|
The Committee observed that the Department had
established an Anti-Corruption inspectorate respond to the President’s call
on fighting corruption. The Committee notes the Special Investigation Unit
(SIU) investigations in various provinces. |
The Anti-Corruption Inspectorate should report on
findings and progress made on a quarterly basis. The Committee further recommends that all reports of
investigation on fraud and corruption conducted in municipalities should be
forwarded to the Committee by the Inspectorate. |
On going basis |
|
The Committee observed that of the 119 programme
projects of the Department targeted and budgeted for the financial year, only 56 were achieved, 21 were
partially achieved and 38 were not achieved at all. |
The Committee recommends that the Department submit
the list of incomplete or partly achieved projects, and the responsible
officials, by the end of November 2011. The Committee further recommends that
the Department provides them with an expenditure plan for projects for
2011/12 and submits monthly reports on the implementation thereof. |
End of November 2011. |
|
On the programme of Financial Governance and
Management the Committee observed the following: ·
Irregular expenditure, ·
Fruitless and wasteful expenditure ·
that the Department does not have proper
internal control measures, ·
non-compliance
with supply chain management policies, ·
Non-compliance with legislation, ·
Non-compliance with Treasury regulations |
The Department should establish a fully functional audit Committee; Staff should be capacitated on supply chain
management policies The Department should implement stricter internal
control measures and have measures in place for staff members that do not
comply Disciplinary action should be taken against
officials that do not comply with supply chain management policies |
With immediate effect. |
|
The Committee acknowledges the progress made with
regard to disaster management rehabilitation and notes that limited
funding and resources delay progress. |
The Committee recommends that the Department supply
them with a plan of action on how this rehabilitation will materialize |
End of November 2011 |
|
The Committee noted that the issue of Municipal
Public Accounts Committees (MPACs) was emphasized at the SALGA conference |
The Committee recommends that all municipalities should
establish the MPAC which should be chaired
by either a member of the opposition or any councilor, except mayoral Committee
members. |
Before end of the financial year |
|
Since the last BRRR recommendation that the Department
brief the Committee on a monthly basis on progress with regard to LGTAS, the Committee
noted that this did not materialize. |
The Committee recommends that the Department report
on progress on a quarterly basis |
On a quarterly basis |
|
It was noted that the legislation is in place to
deal with the issue of the hiring
practice of potential employees at municipalities |
SALGA and the Department of Cooperative Governance
should organize workshops for all municipalities to educate and familiarize
them with the amendments to the Local Government: Municipal Systems Act 2011.
|
End of November 2011 |
|
The Committee notes that a inter-departmental task
team was set up to look at the recovery of municipal debt prior to 2008 |
The Committee recommends that this task team should
report on progress on a quarterly basis |
On a quarterly basis |
|
With regard to CWP, the Committee observed that
there is no proper co-ordination, The Committee notes that the 2010 BRRR recommendations
have not been implemented. |
The Committee recommends that an expenditure plan be
submitted to the Committee and further recommends that quarterly progress
reports incl provincial reports be submitted to it. |
On a quarterly basis |
|
The Committee is aware that the President and the
Minister signed and agreement on Outcome 9. |
The Minister should brief the Committee on a
quarterly basis on progress on Outcome 9, |
On a quarterly basis |
|
The Committee recommended, in the 2010 BRRR, that
Eskom and Nersa should engage SALGA on
improving tariffs systems. |
The tariff structure should be regulated before 1
July so as to be aligned with Municipal budgets. |
Before July 2012 |
Report
to be considered.