A presentation on the Local Government Laws Amendment Bill by Ms Lindiwe Msengana-Ndlela, the Director-General of the Department of Provincial and Local Government, National Parliament, Cape Town

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