L Msengana-Ndlela: Local Government Laws Amendment Bill

21 August 2007

The Chairperson of the Portfolio Committee on Provincial and Local
Government, Mr Lechesa Tsenoli
Members of the Committee
Ladies and gentlemen

We welcome the opportunity to present the Local Government Laws Amendment
Bill to you today. This occasion follows our previous interactions with the
Committee when we presented the Strategic and Budget overview of our department
on 6 to 7 March 2007. These discussions culminated in the budget debate that
was led by our Minister, Mr FS Mufamadi and our Deputy Minister, Ms N Hangana
on 6 June 2007.

Capacity-building and policy developments

You will also remember that in these presentations, we outlined the
strategic path and focus that we intend to maintain as we facilitate improved
levels of service delivery and development in our country. It is clear that the
nature of institutionalised under-development and exclusion before 1994
requires of us to double our efforts in ensuring that the state has the
capacity to pursue its developmental role together with all sectors of our
society. This is why in 2004, we launched the Project Consolidate initiative
which had two distinct elements. I would like to quote the manner in which
these elements were presented in the Project Consolidate booklet (page 16) as
published in 2004:

* a targeted hands-on support and engagement programme on building the
capacity of municipalities to perform their mandate
* a complementary process of systematic refinement of policy, fiscal and
institutional matters that will enable the consolidation of the local
government system in the long-term.

Today we would like to address the committee on this second element, which
deals with policy matters.

But before we do so, I would also like to briefly refer to the first element
that deals with capacity building in municipalities. This morning an important
statement was made today by the Ilima Trust of the Old Mutual Group, one of
many institutions that have responded to the call to partner with government in
improving the capacity of municipalities to perform their mandate. This group
is led by Mr Paul Hanratty of Old Mutual, Mr Tom Boardman of Nedbank, Mr Bruce
Campbell of Mutual and Federal and Ms Gloria Serobe of Wiphold. The practical
commitment of this Group and the Ilima Trust to partner with government was
re-iterated by Mr Jerry van Niekerk this morning to the public and through the
South African Broadcasting Corporation. He was reflecting on progress that is
being made as some of retiring senior executives and managers are being
deployed to municipalities through Project Consolidate. Other related
initiatives by the same group are reflected in a joint statement published on
the 20 July 2007.

It is within this context of practice and experience that we are able to
identify remaining challenges in our system of governance. It is also through
our interactions with communities in varied ways, including the Presidential
Izimbizo programme that we are able to pose policy questions and choices that
all South Africans must consider in order to strengthen our system of
governance in the medium to longer term. On 31 July our Ministry and Department
spoke at length about these questions and processes regarding the future of
provincial government. The Bill that we are presenting today is about urgent
measures and amendments to existing local government legislation, as part of
the longer term policy focus.

The content of the Local Government Laws Amendment Bill

The key areas for repeal or amendment to legislation that the Bill seeks to
address are the:

* Old Order Legislation (prior to 1994)
* Municipal Demarcation Act (1998) and the Municipal Structures Act
(1998)
* Municipal Systems Act (2000)
* Municipal Property Rating Act (2004).

Repeal of old order legislation

This Bill also contains a schedule of redundant legislation pertaining to
local government that must be repealed. These pieces of legislation are not in
line with the principles of inclusion and developmental local government, such
as the Jan Kempdorp Act (1964) and the Promotion of Local Government Affairs
Act (1983). For example, the Jan Kempdorp Act dealt with the administration of
this town between the former Transvaal and the Cape, before the establishment
of wall-to-wall municipalities.

Improving planning and budgeting for purposes of service delivery

The amendments to the Municipal Demarcation Act (1998) and the Municipal
Structures Act (1998) seek to address current problems regarding the fiscal
alignment with (a) boundary determinations, (b) authorisations to perform
certain functions and (c) adjustments of powers and functions between
municipalities. Such determinations, authorisations and adjustments by
provincial MECs for local government must take effect on the commencement date
of the municipal financial year following the date of publication of the
notice. This would ensure that there is improved fiscal alignment and
sufficient time for planning in this regard.

Enhancing the performance management system

With regard to the performance management system, the amendments in the
Municipal Systems Act seek to specify the term of office of Municipal Managers
(at least five years), to enforce the declaration of interests by senior
municipal officials, and the removal of the ambiguity regarding the Minister's
authority to issue regulations under section 72.

Another problem area identified with the Municipal Systems Act deals with
the duty of provinces to conduct investigations on cases or instances of
non-performance and maladministration of municipalities. A new subsection has,
therefore, been inserted to empower the Minister to advise the MEC to conduct
an investigation and to provide the Minister and the Minister of Finance with a
report detailing the outcome thereof.

Dealing decisively with potential incidents of corruption in procurement
processes

The old schedules of the Municipal Systems Act are outdated and lenient in
addressing potential corruption in procurement processes. In this regard,
amendments to Schedules 1 and 2 are aimed at aligning the Municipal Systems Act
to the Municipal Finance Management Act (2003) and its Regulations. This should
lead to a prohibition of awarding a contract by a municipal council to a person
who is in the service of the state or is an advisor contracted to the
municipality.

Ensuring that municipal officials who become candidates in an election
resign from official duties

The current legislation is ambiguous with regard to the participation of
municipal officials in elections for the National Assembly, Provincial
Legislatures and Municipal Councils. The amendment therefore provides for a
staff member who, on becoming a candidate for election to the National Assembly
or any Provincial Legislature, to resign not later than the date on which he or
she is issued with a certificate in terms of the Electoral Act. Staff members
nominated as a permanent delegates to the National Council of Provinces (NCOP)
must also resign not later than the date on which he/she is nominated as a
permanent delegate to the NCOP, whilst those who become a candidate for
election to a Municipal Council, must resign not later than the date on which
he or she is issued with a certificate in terms of the Municipal Electoral
Act.

Relief to ratepayers and consumers

In terms of current legislation, one of the problem areas identified is that
municipalities require advance payments before issuing rates clearance
certificates. This requirement places a heavy financial burden on consumers. To
lessen this financial burden, it is proposed that the period for the issue of a
rates clearance certificate be reduced from 120 days to 60 days. Furthermore,
in the Mkontwana judgement (Mkontwana versus Nelson Mandela Metropolitan
Municipality and Another, CCT 57/03), the Constitutional Court ruled on the
need for municipalities to provide owners of properties with copies of
electricity and water accounts sent to tenants. The relevant section of the Act
is amended accordingly.

With regard to the alignment of rates policies to municipal budgets, there
are two substantive stages that are being clarified. First, the development of
a rates policy is identified as an important but separate to the second phase
of implementation. Second, the phase of drawing a budget and tabling it for
public comments must be followed and include monetary quantification, as
determined by the valuation roll. The amendment to the Property Rates Act
proposes this clarity in order to enable municipalities to deal with these
complementary, but separate, phases in greater detail.

There is also a need to remove the burden of undertaking evaluation,
especially where there is no intention to levy rates. The proposed amendment
allows for municipalities not to be compelled to value public service
infrastructure where there is no intention to levy rates. As this Act is being
implemented, our monitoring and evaluation team was mandated to address matters
that are related to differential rating. This kind of rating applies to
different property categories such as agriculture, commerce and industry. We
are now in a better position to clarify definitions and technical legal
interpretations with regard to such categories.

In view of the financial implications of property rates on ratepayers and
the public at large, we strongly also propose that the Minister of Finance and
the Minister of Provincial and Local Government should have the legislative
mandate to curb rates revenues. This national approach, we hope will provide
welcome relief and protection of ratepayers, who otherwise would be negatively
affected by inappropriate rating procedures at individual municipal level.

In conclusion, these amendments to key pieces of legislation will seek to
improve enforcement measures that are directed at service delivery and
development. I would like to thank the Chairperson of the Portfolio Committee
for inviting us to present the Local Government Laws Amendment Bill and we look
forward to fruitful deliberations.

I thank you.

Issued by: Department of Provincial Government and Local Government
21 August 2007
Source: Department of Provincial Government and Local Government (http://www.dplg.gov.za/)