Local Government: Municipal Systems Amendment Bill [B2-2019]: finalisation; with Minister and Deputy Ministers

Meeting report

The Chairperson said the proposed amendments to the Local Government: Municipal Systems Amendment Bill would be considered clause by clause, and on Tuesday the report on the Bill would be adopted. She asked Mr B Hadebe (ANC) to chair the meeting while she attended to an emergency.

The Acting Chairperson asked the State Law Advisers to take Members through the proposed amendments clause by clause. He said Members had received the document very late and asked the presenters to go through it slowly.

Local Government: Municipal Systems Amendment Bill

Ms Yolande van Aswegen, Principal State Law Adviser, Office of the Chief State Law Adviser, said the issue with clause 1 related to the definition of “political office” and how to expand it in a democratic way. The amendment was to omit “or treasurer of the party” and to insert “treasurer or an elected decision-making position of a political party.” Last night it had been indicated that there was a problem with the use of the word “executive” because it could cause confusion with the definition, which related to the internal structures of the municipality. The reference to “executive” had been removed and instead the definition was expanded by referring to persons who were elected and involved in decision-making positions. This was to include those members of the political party who were not necessarily part of the top five positions but who still took part in the decision-making process of the party. The amendment therefore aimed to expand on the top five positions without referring to them as the executive.

The Acting Chairperson asked if the legal team was satisfied that the clause would withstand any legal scrutiny. Were all the stakeholders with whom they engaged in agreement on the amendment?

Ms Van Aswegen replied in the affirmative. She said everyone was in agreement that this was the way to expand the definition in order to achieve clarity and for the limitation to be justifiable.

The Acting Chairperson asked Members to comment.

Mr C Brink (DA) asked for clarity and confirmation on the amended wording of the clause. Was it “the position of chairperson, deputy chairperson, secretary, deputy secretary, treasurer or an elected decision-making position of a political party in any province, region or other area in which the party operates”?

Ms Van Aswegen replied in the affirmative, except the word “nationally” also appeared after “political party.”

Mr Brink said this amendment satisfied the discussion of having a carefully worded clause that met the purpose of the limitation, and good work had gone into this. He made a proposal that after the word “elected”, “or appointed” should be inserted. Sometimes decision-making positions were co-opted so that they were appointed. Other than this slight proposal, the clause was perfect.

The Acting Chairperson asked Members to support the amended definition.

Mr H Hoosen (DA) moved adoption of the amendment.

Mr B Luthuli (IFP) seconded the mover.

The Acting Chairperson said Members were satisfied that the limitation was indeed reasonable and justifiable in terms of section 36 of the Constitution. He asked for the next clause to be presented. 

Ms Van Aswegen said the clause 2 amendment related to an insertion in section 54A. The proposed amendment from stakeholders had been incorporated. The Western Cape had indicated that section 54A(1) referred to the “acting municipal manager,” yet in section 54A(2) “acting municipal manager” was not expressly included. This created confusion when interpreting the provision because it may be construed that only municipal managers, and not acting municipal managers, were regarded to have the required skills, expertise and competencies. It was proposed, and the Department of Cooperative Governance and Traditional Affairs agreed, that “acting municipal manager” be inserted in section 54A(2). Those skills and competencies would be prescribed by the Minister by way of regulation. There was no need to expand on that in the provision, because it would be dealt with separately in the regulations.

The Acting Chairperson asked if Members supported the proposed amendment.

Mr Brink said he supported it.

Mr I Groenewald (FF+) seconded the mover.

Mr K Ceza (EFF) asked for clarity on the wording of “must at least.”

The Acting Chairperson said it referred to the minimum requirements.

Mr Ceza asked if the wording should be changed to “minimum requirements”.

Ms Van Aswegen replied that “must at least” meant that the Minister would prescribe in the regulations the minimum skills required. If a Member had more than those skills, it was still in order. If the person did not have what was at least stated in the list, then they would not qualify to apply for the position. Persons were required to at least meet the skills listed in the regulations.

The Acting Chairperson said the explanation made sense, and asked if Mr Ceza was happy with it.

Mr Ceza said the explanation was clear, and he was covered by it.

Ms Van Aswegen said the proposed amendment was related to the issue in section 54A(7) because there was no provision in subsection 9 giving the Minister a time period to respond or to take appropriate steps if the Member of the Executive Council (MEC) had not considered the appointment process and outcome. The municipal council had 14 days to inform the MEC of the appointment process and outcome, and thereafter the MEC had 14 days upon receipt of the information to submit it to the Minister. It had been suggested that the municipal council must also inform the Minister, and not only the MEC. The insertion of the new subsection 10 would read as follows: “if the MEC for local government fails to respond to the appointment process and outcome within the timeframes, as contemplated in subsection (7)(b), or the Minister fails to respond as contemplated in subsection (9), the appointment of the senior manager will be deemed to be compliant provided the municipality submitted all relevant documents as prescribed.” This would replace the current subsection 10. Instead of accepting the proposal that the municipal council must also inform the Minister, this new subsection was included to indicate that the particular appointment would be deemed to be compliant if the MEC or Minister did not take appropriate steps. This suggestion came from the Department.

The Acting Chairperson asked Members to comment.

Ms H Mkhaliphi (EFF) said she had no problem with the proposed amendment. The South African Local Government Association (SALGA) had spoken about this amendment specifically. Members had agreed that it was frustrating everyone when MECs did not attend to their duties, and then after a certain time, they came back and wanted the municipality to reverse it.

Mr Brink agreed. He said it was good that the proposed amendment indicated certainty and also provided that the municipality had to submit all relevant documents. This proviso was good because it did not open the gates for all appointment processes to be validated, since the basics still needed to be complied with. He was happy with the proposed amendment.

The Acting Chairperson said he needed clarity on when the Minister became aware of the fact that the MEC had failed to comply. At what point did the Minister become aware? The intention was to ensure that the inevitable was not prolonged unnecessarily, hence the 14-day time period. South Africa had more than 200 municipalities across the country. Could clarity be provided on when the Minister became aware?

Mr Brink said the Bill indicated that the municipal council had 14 days to inform the MEC, and that the MEC had 14 days upon receipt of the information to submit a copy to the Minister.

The Acting Chairperson said he was covered. Did Members support the amendment?

Ms Mkhaliphi said she supports it.

Mr Brink seconded this.

Ms Van Aswegen said the rest of the proposed amendments in clause 2 were just a matter of re-numbering, and were not substantial.

On clause 3, the Western Cape had indicated that section 56(1)(b) required a manager directly accountable to the municipal manager to have the required skills, expertise and competencies, but it did not require an acting manager directly accountable to the municipal manager to have the same required skills, expertise, and competencies. It was being proposed that section 56(1)(b) also refer to the acting manager directly accountable to the municipal manager by inserting “or (ii)” after “(i)”. The effect was that both the manager and acting manager directly accountable to the municipal manager must have the required skills, expertise and competencies as prescribed.

The Acting Chairperson asked Members if they supported the proposed amendment. 

Members answered in the affirmative.

Ms Van Aswegen said the proposed amendment was to omit clause 5, which used to deal with section 56A, because it would be inserted in the principal Act under the part that dealt specifically with staff matters. The Department had indicated that the provision would be inserted to provide for a grace period. SALGA had indicated that the limitation should be extended to all employees of the municipality and not only to municipal managers or managers directly accountable to them. The Department had indicated that it would have to be inserted into the actual principal Act under the part dealing with staff members.

The Acting Chairperson asked if section 56A would remain as it was, and if the proposed amendments made last night would be covered in the principal Act under staff matters.

Ms Van Aswegen replied in the affirmative. Section 71B of the principal Act would be inserted and would still contain the limitation, but it would be extended as proposed by SALGA. It would also contain the transitional provision whereby a grace period was allowed for existing staff members who may be holding political office. They would have a period within which to decide whether they wanted to resign.

Mr Brink asked if clause 5 and the old section 56A would go away. It made complete sense to omit it, because it was replaced at the very end. It was replaced by the SALGA proposal, which would in essence be the new section 71B that stipulated that staff members may not hold political office. It made complete sense if read together with the new clause.

The Acting Chairperson asked if section 56A would be removed.

Ms Van Aswegen replied in the affirmative. Section 56A had been inserted by the Amendment Act of 2011, which was now actually invalid. For all practical purposes, it was as if it never existed, and there was no section 56A in the principal Act.

Mr Brink said in order for Members to understand what was happening, it might be useful to deal with clause 5 and the new clause together because they spoke to the same objective. He was happy to support clause 5 but Members should consider it together with the new clause to understand it properly.

The Acting Chairperson said before Members supported the removal of section 56A, the new clause should be considered to understand whether all the recommendations had been captured in it.

Ms Van Aswegen said the numbering in the Bill would be amended due to the new clause. The new clause would be inserted after clause 9, and it would become clause 10. It would be the insertion of section 71B in the principal Act. The principal Act had a specific part that dealt with staff matters, so the new section would be inserted there. The wording of the heading was proposed as: “Staff Members prohibited from holding political office.” Last night the transitional provision had been discussed and a proposal was made for six months, but the proposed amendment stipulated one year. The Committee could decide whether one year was regarded as enough. The one year grace period meant that once this subsection commenced, anybody who had been in the position of staff member who may have been holding political office at that stage would have one year to decide whether to resign from political office or from being a staff member. This proposed amendment had been agreed to by the Department.

Mr Hoosen asked for confirmation that when it referred to staff members, it meant municipal employees.

Ms Van Aswegen replied in the affirmative. In the beginning, SALGA had referred to it as an employee, but in order to be consistent with the terms used in the principal Act, “staff members” was used and referred to the employees of the municipality, including the municipal manager.

The Acting Chairperson asked if it referred to a staff member who had already been employed within the municipality. Where there was a vacancy and an applicant’s curriculum vitae (CV) indicated that such person had held political office, would he or she be prejudiced and not short-listed for an interview? Was it correct, that only when such person became an employee, he would be required to vacate political office so that he was not disadvantaged before he became employed? Was that the understanding? There must not be a situation where CVs were submitted and by virtue of holding political office, applicants were excluded and prejudiced.

Ms Van Aswegen replied in the affirmative. It related to someone who had already been appointed in that position. The grace period applied to someone who had already been appointed as a staff member and must make a decision of whether they wanted to remain a staff member or resign from political office. It did not affect those who applied for the position, because they had not been appointed yet.

Mr Brink said it applied at the start of the contractual relationship. The person went for the interview, was short-listed, ranked and then made an offer of employment. It just meant that when the municipal manager signed the contract, he must make sure he complied with this condition.

The Acting Chairperson asked if Members supported the proposed amendment.

Mr Brink moved to support it.

Ms G Opperman (DA) seconded it.

Ms Van Aswegen said the proposed amendment in clause 6 was brought about by stakeholder engagement. The Western Cape had suggested that it be included. It related to section 57, where the Western Cape indicated that as the section stood, it allowed for the renewal of the contract of employment for municipal managers without following a recruitment and selection process. The Department indicated last night that the recruitment process would always have to be followed. A new paragraph had to be inserted into the Bill. The parts which were being removed were in bold and the parts to be inserted were underlined. The public service regulations had been considered, which allowed for a head of department to sign the employment contract within one month of the date of appointment.

The Acting Chairperson asked Members to comment.

Mr Groenewald noted the wording of subsection 6(a). In terms of the recruitment process, would one year be enough? After the election, the first three months were designated for everything to be put in place, and the delegation of powers must be approved. The recruitment process could start only after this. Would one year be enough time?

Mr Brink said the purpose of the subsection was to align the contract of employment of the municipal manager with the municipal council. It often happened that there was one mayor, one executive and one set of councilors for a five-year period, then there was the opportunity for a new pair of hands for the next five-year period. The one year period was the grace period to give the person the opportunity to serve out his contract. If it was extended, it undermined the idea of linking the term of office of the municipal manager with the term of office of the municipal council.

Mr Groenewald said he agreed with Mr Brink, but he was worried about the practical implications. As soon as the new council was being elected, there must be a new process of appointing a new manager. For example, if there was an election in 2016, then by the end of 2017 one had to appoint someone. Similarly, if the elections were in 2021, then by 2022 a new person must be appointed. For practical reasons, there were only a few months to put everything in place, such as the delegation of powers and all the administrative issues. If a contract had been signed for five years, there would be a compliance issue with most of the municipalities. One year would not be enough. The recruitment process had to happen before the contract ended so that the municipality was not without a municipal manager. Would that one year period be enough for all municipalities to comply so that the contract did not lapse and an acting municipal manager had to be appointed until the recruitment process had been done? It would be only a four-year contract, and municipalities would sit with a compliance issue. He agreed with the one year period, but was worried that in reality it would not be possible for municipalities to comply.

The Acting Chairperson asked for a response from the legal team.

Ms Van Aswegen replied that it was an existing provision in the principal Act. She was not sure what the policy reason behind the one year period was, and how it would affect municipalities. She asked the Department to respond instead.

The Acting Chairperson said from his experience, the one year period was enough because the turnaround time to constitute a council and decide on the form was only three months. The turnaround time for filling a vacancy was also three months, so if there were any technical glitches within the process, there was a six-month period within which to play around.

Mr Tebogo Motlashuping, Acting Deputy Director General, Department of Cooperative Governance and Traditional Affairs (COGTA), said the original wording of the clause was for a period of two years, but the Department had agreed to a period of one year. Councils were not supposed to wait for the end of the contract of a municipal manager. The election was supposed to start at the process when the contract came to an end. One year was adequate in the sense that within a period of three to six months, the council would have at least done the recruitment process. The Department was trying to do away with councils waiting for the end of the contract. It did not want to bind the new council to a period longer than 12 months.

The Acting Chairperson asked if Members supported the amendment. He said at least the time period was certain. In the past it used to be two years, and this was not working for municipalities.  It was ample time for councils.

Another Member seconded this.

Ms Van Aswegen said the Limpopo province had indicated that the Bill must specifically state that employment contracts for managers directly accountable to a municipal manager must be on a permanent basis. There must be no confusion over whether it was a permanent appointment. The proposed amendment was that paragraph (f) would become paragraph (g), which dealt with the deletion of subsection 7. The insertion of a new subsection 7A in the principal Act provided specifically that the employment contract of managers directly accountable to municipal managers must be on a permanent basis. This was done in line with the proposal by the Limpopo province.

The Acting Chairperson asked Members whether they supported the amendment.

Mr Groenewald said he supported it.

The Chairperson asked what the rationale was behind making the managers permanent. Under the previous Act, the same principle applied to municipal managers, as it applied to managers directly accountable to them, but now the former were given a different line of employment.

Ms Van Aswegen asked if the Department could respond.

The Acting Chairperson said the justification given was that it would provide stability within the municipality if the managers directly accountable to the municipal managers were premised on a full-time basis. Did the stability extend only as far as those managers, and not to the municipal manager?

Mr Motlashuping replied that in the public service, directors general (DGs) were based on fixed term contracts. The new council in a municipality would have a strategic approach in relation to what they wanted to achieve. That was why there was a link between the term of office of a municipal manager and the political office of a municipality. There should be a strategic link between the administrative face and the political face.

On the managers directly accountable to municipal managers, institutional memory and stability required these managers to be given permanent positions. This was to allow for continuity in the municipality. Furthermore, part of the professionalisation of municipalities was to retain their institutional memory. The only difference between a manager and a municipal manager was the strategic position of the latter, which was in line with the political strategy of the council.

The Chairperson said it raised an issue of retrospectivity. When the Act kicked off, the term would end and then there would be new applications to have the contract on a permanent basis. When the Act kicked off, did the contract automatically change from contract-based to permanent-based?

Mr Motlashuping replied that the law did not act retrospectively. The senior managers directly accountable to the municipal manager, who was appointed on contract, would not be appointed in terms of the new law. As soon as their contract came to an end, they could not raise a legal claim to have their employment on a permanent basis. Those positions would be vacant and under the new dispensation the law would be applicable, but those in the system now could not make claims in terms of the new dispensation. Once the contract came to an end, the positions would be vacant. When this was made into law, they would apply under this new dispensation.

Mr Brink said the Chairperson made a good point. Members needed to consider whether to include something in the Bill to state that existing fixed term contracts would not be affected by the sub-section. This could be done to make it absolutely clear that there was no expectation of current fixed term contract holders having such contracts made permanent. It might sound ridiculous to the officialdom, but it might not be so ridiculous to municipal officials.

The Chairperson said the current managers were appointed under certain circumstances and conditions. Those conditions still stood, and the contract was a fixed term one. As soon as it ended, the new provision kicked in. During their contract, they could not add what was not applicable to them.
Members needed to understand the intention behind the amendment. Were there any financial implications for the municipality if the five managers were made permanent? Did it impact on the total cost of employees and the management structure, taking into account pension funds? Members would have liked to be provided with a cost analysis benefit. It would create a huge financial burden on municipalities, because now the managers must be given all of the benefits that come with a permanent position. What would it cost the municipality? Were permanent employees more expensive than contract employees? She assumed the rationale behind having employees on a fixed term contract basis was because it was cheaper. Could Members be given clarity on this? Given the total number of municipalities and the issue of salaries, there had been an effort to cut the salary bill of public servants. Were they not adding more to the salary budgets of municipalities?

Mr Brink said Members needed assurance from the legal team that section 7A was unassailable in that it applied only to positions once existing fixed term contracts had expired, and that it did not change such contracts. If this assurance was provided, he would be happy because it eliminated the risk. He was not sure whether permanent employees necessarily cost more than fixed term contract employees, because there were different bands upon which officials were appointed. It was based on different considerations. It was for the municipality to structure how it advertised those posts within the bands. The benefit of a fixed term contract was that it was easier to get rid of employees, but he doubted that in terms of expenditure they were more expensive.

Mr Groenewald said the difference between fixed term contracts and permanent contracts was that the former stipulated a starting and ending date. The duration of the contract was clearly specified. Was that not by exclusion already a fixed term contract, and not a permanent one?

Mr Motlashuping replied that senior managers were not part and parcel of the bargaining council. They had an all-inclusive salary package that included pension and medical aid. In the event they became permanent employees, they would not form part of the collective bargaining council. There were no financial implications added to this. The Minister was empowered to determine the salaries of senior managers and would make sure that there were no added financial implications for municipalities. The Department was in the process of looking into the pension fund regime of senior managers. He agreed with Mr Brink that it did not make any difference in terms of financial implications whether an employee was appointed on a permanent or fixed term basis. The issue was to look at the modalities to ensure municipalities were not unnecessarily burdened.

Ms Van Aswegen said the insertion of sub-clause 2, read together with subsection 7A, indicated that the current fixed term contracts would end on the date stipulated in the contract. That specific person now had to apply again for the position. Subsection 7A came into effect only on the day the Act commenced. It would then affect permanent contracts, and would not affect existing employees who had fixed term contracts. If the Committee wanted to include a clause that made it clearer, this was possible.

Adv Frank Jenkins, Senior Parliamentary Legal Advisor, said there was no difference between the two in respect of the financial implications. The amendment would affect only the new contracts, but it was also possible to include a specific clause in the Bill indicating this. Sub-clause 2 may not appear as clear, because it referred to the principal Act. He agreed with Ms Van Aswegen that a clause could be inserted.

The Acting Chairperson asked Members if they were happy with the response, and whether the amendment was supported.

Mr Brink said he supported it.

Mr Luthuli said he had a problem with the word “permanent.” It meant something other than what was stipulated in the Bill itself. If the municipal manager was on a contract, but the managers were in permanent positions, it would create tension at a later stage. When the election took place and new councillors took over, what would be the position of the managers if the councillors did not like them?

The Chairperson said there were normally nine managers directly accountable to the municipal manager. If one checked the salary difference, there was a huge gap. What happened in the public service was not what happened in the municipalities. There was a different regime of salaries. How was this going to be reconciled? There must be one public service, and municipalities must be regulated to be in line with it. There was currently a huge difference in earnings between a municipal manager and a department manager. How were they going to manage these arrangements? It meant that managers accountable to the municipal manager must fall in the next band. Members needed to be convinced on the costs part of the Bill before it could be made into law. Were they not creating a singular structure in the municipality?

Mr Hadebe said it must be considered whether there would be any resistance to change, since the senior managers were permanent when the new structure came into effect, with new strategic objectives. Had this been taken into account? What about the unintended consequences of having managers resisting change? Mr Luthuli’s concern must also be responded to.

The Chairperson asked if this would withstand constitutionality. Would there not be a challenge from municipal managers wanting to become permanent, because the law was changing?

Mr Luthuli said if a new municipal manager came in and worked alongside existing people who had been there for a long time, would it not create more problems? This was his concern. 

Mr Motlashuping replied that every five years there were local government elections. This had created serious challenges in respect of institutional memory and how the municipality could strategically maintain good administration. The municipalities had indicated to the Department that there had been a lot of capacity building to make sure they were run professionally. When the 2011 Act was being considered, the issue was to make sure senior managers were made permanent. Having the senior managers on a permanent basis helped to ensure there was a seamless transition from one political era to the next. This was because even when councillors were out of office, at least on an administrative level there was knowledge maintained in the system. This contributed to the professionalisation of local government administration. The new municipal manager might have a problem working with other managers who had been in the system all along, but the proposal was meant to aid the seamless transition.

The salary gap would be addressed by the Minister, who was empowered to determine the salaries of senior managers. The Department was currently working on a review of the salaries of senior managers. There should not be a continuation of a salary gap between managers and municipal managers. The Department was in discussion with the Department of Public Service and Administration regarding the movement of staff between the three spheres of government. When the Minister determined the salary of senior managers, he would also be cognisant of other work that was being done to create a single public service, in order to reconcile the salaries of managers in municipalities and those in the public service. It must be ensured that there was no disparity between salaries. The Department had seen that senior managers who were accountable to the municipal manager on fixed term contracts made it impossible to have a smooth transition at a political level. Councillors who came to the fore did not have the necessary knowledge of how the municipality operated. The Department proposed they be on a permanent basis so that they knew what was happening on the political and administrative fronts. 

The Chairperson said there was currently a Constitutional Court judgment on this. She asked for Members to be provided with the regulatory impact assessment of the Bill.

Mr Hadebe said Members should defer this particular clause, and give the legal team an opportunity to brief Members again next Tuesday. If Members had other concerns, they should be forwarded to the legal team so that there was consolidated research on all the issues raised.

The Chairperson said the regulatory impact assessment must be provided to Members. The constitutionality issue of municipal managers wanting to become permanent because of the change in the law must also be dealt with. The only reasoning that Members had heard was because of stability.

The Acting Chairperson asked the legal team to look into these matters.

Mr Luthuli said the permanent person would overpower the new municipal manager. He would be told that he did not know anything because he had not been there for a while. The permanent managers would say that the municipal manager could not tell them anything. This would open up a can of worms.

Mr Hadebe said when the new accounting officer came in with new strategic directions, there was going to be resistance to change. Others would resist the change because they were used to certain ways of doing things. He asked if Members could defer this section, and deal with it on Tuesday.

The Chairperson agreed with the suggestion. The legal team must be allowed to work on the issues raised and share it with Members next week. Members could not look at a Bill without looking at the regulatory impact assessment. This would be covered next week. There must not be more ambiguity created, but rather there had to be clarity. Everyone was committed to the professionalisation of the Bill, and stakeholder inputs were also important.

Mr Luthuli said he did not know whether it was improper for Members to say they were not going to reject the Bill and raise issues they were unhappy with, rather than making a noise in the House.

The Chairperson said the reason the meeting was being postponed was because at the end of the day, Members must find each other. The concerns raised would be dealt with next Tuesday. Consensus was reached in various ways, and that was what the Committee was doing going forward. All concerns were going to be addressed, and next week Members would go through the Bill clause by clause again. Members must agree and if they did not, there would be a vote.

Mr Brink asked whether on Tuesday next week they were going to go clause by clause, together with some kind of impact assessment, in order to approve the clause on the permanent appointment of senior managers.

The Chairperson replied in the affirmative. Members had to reach consensus on this matter.

Mr Brink asked if the meeting next week would also speak to the legal implications as well as the potential financial implications.

The Chairperson replied in the affirmative.

The meeting was adjourned.