Section 139 Interventions: status; North West interventions; with Deputy Minister

Meeting report

The Chairperson welcomed Deputy Ministers Obed Bapela and Parks Tau and the Members of the Executive Council.

Deputy Minister Tau, in his opening remarks, observed that section 139 interventions have had sustainable results. However, COGTA has come to the view that it is important going forward to prioritise section 154 as the first level of engagement instead of moving directly to an intervention in local government. Resistance to an intervention by some municipalities is due to the hasty invocation of section 139. Some municipalities have resisted the intervention and have taken the provincial department to court and won. If the necessary steps are taken before the intervention, there would be no unnecessary tension between the two. It is also important to be working closely with the provincial department to provide support to the local government. This would help in ensuring municipalities no longer reach the point where an intervention is required, but that challenges are spotted early and can be supported jointly. Currently a process is underway that will be presented to Parliament in the form of a Bill. This Bill would create mechanisms and a uniform process for the steps taken in the form of support programmes before an intervention is implemented. COGTA would prefer interventions to be used only as a last resort. This Bill would introduce a greater emphasis on support versus interventions and would also assist in ensuring future interventions are much more permanently sustainable than many have been in the past. The Deputy Minister acknowledged and appreciated the Select Committee’s interest it has taken in the oversight of interventions. Future work would benefit greatly from working jointly with the National Council of Provinces.

Mr Dan Mashitisho, COGTA Director General, provided background on the application of section 139 of the Constitution which provides that when a municipality cannot or does not fulfill its duties and obligations, the provincial executive will intervene and take appropriate steps to ensure such obligations are fulfilled. This is done through five methods described in section 139:
▪ Issuing of a Directive: section 139(1)(a)
▪ Assuming responsibility: section 139(1)(b)
▪ Dissolving the Municipal Council: section 139(1)(c)
▪ Taking appropriate steps to ensure budget or revenue-raising measures are approved: section 139(4)
▪ Imposing a recovery plan and possible dissolution of the Municipal Council: section 139(5)

Since 1998, there have been 142 invocations of section 139 by Provincial Executives across all provinces. The majority of the 40 current municipal interventions are in terms of section 139(1)(b), while 13 of these are subject to section 139(5).

Mr Mashitisho discussed the causes of failure in municipalities. There have been serious governance, service delivery, and administration challenges in local government. Municipalities become unstable and fail to provide viable services to their communities, making them no longer financially stable. This is followed by many protests in municipalities demanding better service delivery. Audit disclaimers follow as well as allegations of corruption and nepotism. The main problems include governance failure with frequent political infighting; conflicts between top management and councilors; fraud and misuse of municipal funds and property; a lack of capacity and proper financial systems in administration; revenue collection failure; and lack of political leadership and oversight by municipal councils; Auditor-General disclaimers; non-adoption of the budget; and service delivery quality.

Mr Mashitisho acknowledged the many challenges that arise from interventions. To begin with, a lack of sound political-administration interface when an intervention is implemented means that only part of the municipality accepts the intervention while the other part of local government fights against it. Further, most interventions were implemented via section 139(1)(b), alluding to only a failure in government and not taking into account financial factors and provisions to support the municipality. Some interventions could have been prevented if there was a system in place for early and effective provincial warnings through proper monitoring, oversight, and support. If the Bill the Deputy Minister mentioned was in place already, this may have been different. Added to this, the vagueness in wording of section 139(1) provided problems in defining “executive obligation.” This led to difficulties when local governments interpreted what constitutes an executive obligation and what powers and functions may not be usurped by the intervention process. Again, the wording in section 139, particularly in section (1)(b), provided failings in prescribing the time period in which interventions were allowed to be invoked in a municipality.

Further challenges are that some provinces were failing in submitting regular progress reports so it was impossible for COGTA to be aware of the progress once interventions were revoked. This provided failings in the sustainability and effectiveness of interventions. After the intervention of between six months to a year had been revoked, one would find that after some time, another intervention would be implemented in the same municipality for similar reasons. This showed how ineffective some interventions proved to be.

Mr Mashitisho outlined the key factors that COGTA believes would lead to success. As the Deputy Minister said, this begins with implementing an early warning system to ensure support can be provided to municipalities before intervention is required. The idea is to make the intervention a targeted response to a failure to fulfill obligations, where the most appropriate step is chosen out of the variety offered by section 139. There would need to be clarity amongst all stakeholders on the legal basis, appropriate steps, and procedural requirements of section 139 of the Constitution. Provincial Executives need to have due regard to the intergovernmental checks and balances within and outside section 139. Another key factor for success would be having a timely submission by the Provincial Executive Council of the complete documentation to the Minister, NCOP, and Provincial Legislature. Future interventions would be carried out with an “intergovernmental approach” including the involvement of the district municipality as a key strategy. These interventions would also have a strong focus on participation from the local community.

Mr Mashitisho asked the Select Committee to note the challenges encountered in the application of section 139 of the Constitution and to support the processing of the Intergovernmental Monitoring, Support and Interventions (IMSI) Bill giving effect to section 100 and 139 of the Constitution.

North West Local Government and Human Settlements MEC briefing on interventions
Mr Gordon Kegakilwe, North West COGTA Member of the Executive Council (MEC), began by agreeing with Mr Mashitisho’s briefing.

Mr Kegakilwe said that the North West Executive resolved to invoke section 139(b) on six different local municipalities on 2 May 2019. The intention was for the intervention to run for a total of 6 to 12 months. They would also invoke section 139(1)(b) on one district municipality in regard to the infrastructure grant. Providing procedural requirements was also of high importance. The MEC would need to submit a notice of intervention to the cabinet member responsible for local government and to the NCOP within 14 days of implementing the intervention. This report was submitted on 6 May 2019, and the MEC has already received response from cabinet members supporting the interventions. The NCOP Chair also received these notices however has not responded. The MEC will inform the Committee as soon as they hear back from the NCOP Chair. In the Fifth Administration there were many challenges with communication between the MECs and the municipalities. The current administration however has been in contact with every municipality that has interventions except for one where outstanding circumstances interfered. It was his intention to meet with this municipality as soon as possible. In their eyes, interventions are to assist municipalities with particular challenges or executive obligations. Of these six municipalities with interventions, Madibeng and JB Marks both have welcomed the interventions. However, the Mamusa administration has provided challenges as disputes caused half of the administration to be in support and the other half not. The MEC said he is going to communicate with them next week.

Mr Kegakilwe explained how the MEC communicates with the municipalities. Teams are sent. In Madibeng for instance, there is a total of three members in the team. These members consist of an administrator, and two skilled technical / infrastructure qualified team members. These are members who have experience in infrastructure or technology. When teams are being considered, only members who would be useful for that municipality are assigned. Skills for the particular challenges in the municipality would be considered.

Mr Kegakilwe provided detailed information on each municipality.
▪ In Madibeng the service delivery structure has collapsed. This is not the first time Madibeng has had an intervention for similar reasons. This was a concern and so during this intervention special care will be taken to ensure this will be the last intervention Madibeng has for service delivery. The municipality has lost R60 million in the last financial year due to corruption and failure to follow correct expenditure. There is no CFO, municipal manager or technical director because they have all resigned. These positions remain vacant and must be filled. The audit outcomes have been disclaimers for three consecutive years now, and irregular expenditure continues to grow. The budget that was adopted is not fully funded either, and therefore debt is growing and the collection rate is low. These are all executive obligations that the municipality is failing in and therefore this constitutes an intervention.

▪ JB Marks was previously one of the best kept municipalities in the province. Now there are many problems and it is deteriorating. Refuse removal is failing, debt is growing to amounts more than R40-50 million. The contamination of water and poor maintenance of operations are of a growing concern as well. Service delivery systems such as drainage have failed completely. The municipality has agreed to intervention. Since then, the audit outcomes have gone from a disclaimer to qualified but the municipality still requires support because of the increase in the Unemployment Insurance Fund (UIF). The municipality is also implementing an unfunded budget which is being addressed currently by the intervention. The current outstanding creditors have amounted to R66 million.

▪ In Mamusa there are problems of refuse removal, cleaning of township, no dedicated schedule, and a water supply interruption due to lack of maintenance. This lack of maintenance and operation will lead to further service delivery challenges. The removal of the former mayor and the suspension of the municipal manager have raised problems as these positions are vacant. The workers had gone on strike causing more pressure on the municipality. The audit outcome has been a disclaimer for a while now. Whether the Municipal Public Accounts Committee (MPAC) is functional will be investigated. The budget is tabled for 2019/20 but it is structurally imbalanced and not aligned to the Integrated Development Plan (IDP). The municipality has also indicated that it is unable to service its debt and is owing over R57 million to Eskom.

▪ Lekwa-Teemane is another municipality with many challenges. Its service delivery system has collapsed, with no refuse removal and cleaning of the township, and the interruption of water supply due to a lack in maintenance and a failure to pay. The Municipality Infrastructure Grant (MIG) is being poorly expended and affects the development of the municipality. The audit outcome is poor. The MPAC is not functional, and the oversight report backlog keeps this from progressing. The budget is not fully funded, and debtors at the end of February were R657 million of which the majority has been owed for over 90 days. The Eskom accounts are also being challenged because of this financial instability.

▪ Tswaing is another municipality struggling with the cleaning of the township, supply of water, and service delivery. The intervention will also be responsible for aligning the local and district governments to create a better support foundation. There is no fleet whatsoever for service delivery and daily maintenance. Until this can be resolved, there will be little progress in the municipality. Worker salaries were unpaid for 42 days. A team has been sent to specifically address this. The MPAC is not functional. Offices are being closed down due to the lack of payments and salaries. The North West Finance MEC is directly working with this municipality to help deal with compliance issues to open up some money. Financial debtors indicate the debts are outstanding for over 90 days and there are challenges with the Eskom account. At this stage, the support offered has been able to assist with municipality medical aid, but there is still much work to be done.

▪ Ratlou municipality has its MIG expenditure sitting at 52%. There is no machinery to deliver services or to complete regular daily maintenance. The suspension of the municipal manager is also a concern as the administration is lacking an important member. The courts were involved in the suspension of the municipal manager as he was unqualified to be appointed. The MEC is attempting to appeal the court order. Any municipal manager that is declared invalid will also have their decisions declared invalid. This leaves the municipality in a unique situation that requires attention and support. The audit outcome has remained stagnant for the past five years. The municipality unemployment insurance fund (UIF) problem has not been investigated or resolved either. The budget is currently unfunded, and the outstanding debt is R29 million at over 150 days. The MEC intends to directly assist with this as well.

Mr Kegakilwe explained that these are the main municipalities being focused on by the MEC and that have had a section 139 intervention implemented.

Mr Kegakilwe recommended that the Select Committee should consider the report and approve it as the Constitution provides. He welcomed the Committee’s insight and assistance with these interventions.

Discussion
The Chairperson expressed his concern for these municipalities. At the end of the day it is the people who are suffering without water or services. He called for a paradigm shift and expressed how important this matter was.

The Chairperson noted that the presentations had given an understanding of what was happening at municipal level. The presentations had not only touched a nerve, but also the body and the soul, and they had shaken Members, particularly when Members knew that within the next 18 months, local government was going to face elections, and everyone knew that the people were suffering. He invited questions, comments and discussions.

Ms C Visser (DA, North West) stated that having 13 municipalities in one province under administration was more than a red light, it was a disaster. It was a disaster for every single citizen staying in those areas who did not have water, had electricity outages for days, where sewerage was running freely on the ground, and who could not drive through the pot-holed streets, get a driver’s licence or renew vehicle registration and licences. Accounts went way back to 2003. That was not correct. They were in default and nobody did anything about that. Chaos continued.

Ms Visser thanked the presenters for the briefings. She had picked up what the MEC had mentioned and some of the things had to be looked into. People spoke of a lack of capacity. It was a lack of capacity of the councillors selected by political parties. There had to be some measure that those people who stood for election had an understanding of and capacity for local government. One looked at the capacity of the municipal managers and employees who were selected because of political connections and not because they had the best skills to add value to the those municipalities. If one looked at interventions, one saw administrators going into those areas. She had first-hand experience. She had been a councillor in Tswaing Municipality. It was the third time since 2011 that that the municipality had been under a section 139(1)(b) intervention. That municipality had regressed in such a way that she did not know if it would ever be restored, unless there was serious and sincere action from provincial and national COGTA.

Ms Visser stated that there was a lack of support and oversight from provinces. If Tswaing had not submitted its report to the province for ten consecutive years, why had nothing been done? What had happened to accountability at local, provincial and national levels? Where one saw a red light flickering, one had to go in there and see what one could do to improve the situation. She wanted COGTA to investigate. She had approached a local government practitioner when she was a councillor to determine how to improve the situation. The man had done a study, which she had on her personal computer, in which he compared Tswaing with Western Cape municipalities. She did not want to play politics but wanted to bring it to the attention of the meeting that that situation never happened in the Western Cape. When a municipality was in distress, why was there not better support for that municipality to get systems going again and to identify the crisis in a municipality, before North West sat with 16 municipalities under administration and total chaos occurred?

Ms Visser said that one had to look at the administrators, and she was speaking from experience. An administrator would arrive at 10:00 or 11:00 on a Monday morning and by 10am on a Wednesday, he was gone and the municipality was deserted for the week. There was no one there. It was chaos. It was a ghost municipality. No one did anything except take out the last funds that the municipality had. One had to look at municipalities governing in compliance with their mandate and their obligations.

Ms Visser had previously spent 18 months in the Portfolio Committee on Water and Sanitation. The Department of Water and Sanitation had paid R4.5 billion for the War on Leaks programme when everyone knew that the management of leakages was not the mandate of the Department of Water and Sanitation. It was a requirement of the district to look at leakages from the source to the reservoir and the local municipality had to look after leakages from the reservoir to the consumer. If there was a leak, why could it not be contained? Why could the municipalities and districts not do their jobs as they were obligated to do?

Ms Visser asked if one looked at the inputs of administrators and what they had left behind. The last time Tswaing had been under administration, three different administrators had been appointed. None of them had left hand-over reports. What had happened to a hand-over report? What had happened to all the wonderful programmes of COGTA, like ‘Back To Basics’? Those programmes went to municipalities and were tabled in council and then they disappeared and no one checked whether the programme was implemented or how far the municipality was with implementation. It just went on like that. One had to see that accountability took place. Accountability was neglected and not addressed. The Municipal Manager and the Chief Financial Officer should be held accountable.

Ms Visser noted that COGTA was withholding the equitable share of seven of the municipalities. Was COGTA aware of the fact that local people had to start and stop water pumps? Local people had to use their own money to get trucks to remove sewerage, and local people had to get private electricians to get the electricity going. Companies wanted to close down their businesses in a town like Delareyville that had had eight violent protests in the past year and in which shops had been looted and burned down. The businesses could not sustain that. Delareyville was the economic hub of Tswaing, but if businesses closed down, how many people would be without employment?

Ms Visser added that one had to look into the unauthorised, wasteful expenditure and managers should be taken to court if they did not comply. It could not go on because it now ran into billions and billions of rand.

Mr G Michalakis (DA, Free State) noted that in the Fifth Parliament not a single follow-up meeting had been held following any of the interventions that the Committee had been briefed on and approved. He thought that it was something that the Committee needed to look at to ensure that it did its job a lot more effectively. The Committee did a site visit which, apart from the public participation that was important and required, ended up being a meeting in the administrator’s office with the Committee having coffee while he told them that everything was hunky dory. The Committee spent a lot of money staying in a hotel and having coffee with an administrator but it did not really serve a purpose, other than the public participation.

Mr Michalakis suggested that before the interventions were lifted, the administrators should be required to make regular presentations to the Select Committee. If Members did their preparation, which he was sure they would do because the political parties all had representation on those councils, one would not need more than the administrator. The Members would know if the administrator was not telling the truth. The Select Committee should work with the Department to look at such a possibility. Getting the administrators to provide a proper report would allow Committee Members to track the progress of an intervention. Of the 40 interventions in the Fifth Administration, he could not say whether one of them had progressed or what the status was. The Committee approved an intervention and then never heard any more. That was highly ineffective and very worrying for him.

Mr Michalakis asked the Department, out of interest and because he could not mention a single one, if it was aware of and could mention to him a single case where the application of section 139(1)(b) had been successful. And if there was one, what had been done differently to what was being done in other municipalities? In the Free State, not a single intervention had worked, ever, that he knew of. That meant that there was something fundamentally wrong in the way in which the interventions were done. The interventions were necessary, but they were highly ineffective. To make the necessary intervention effective, it had to change. Everyone had to sit around the table and ask what had been done wrong and, if it had been successful in any places, they had to ask what had been done differently.

Regarding the factors that the MECs took into account, Mr Michalakis asked if there was a uniform guideline that provinces used. He was not aware of one. His question was not focussed on the North West but on the Free State. There were approved interventions in places where things were going very wrong. Matjhabeng municipality, the worst run municipality after Maluti A Phofung municipality, was almost unfixable, but no intervention had been considered at any stage. He thought, if he were honest, that the choice not to intervene was political. It was a problem if there was intervention in certain municipalities and not others. Surely, the Department drew a line and said that if a municipality overstepped the line, the province had to intervene for the sake of the people living there? Was there a standard or guideline that the MECs used to make their decision, and if not, would that be considered? He knew that a lot of the time interventions were used as a political tool, which they should not be. An intervention should be a means to ensure that a municipality actually delivered basic services to the people. Those were the most important basic services: water, electricity and sanitation. Would such a guideline be considered?

Ms S Shaik (ANC, Limpopo) asked about support to a municipality before an intervention because National Treasury as well as the provincial Department of Local Government had a programme and a responsibility to support municipalities when they ran into trouble. One would expect that capacity, whether it was financial or an ability to perform, would have been addressed by that support capacity. She thought that cooperative governance should be promoted before section 139 and section 100 interventions. The presentation was unclear what provincial support interventions were offered before a decision was taken for a section 139 intervention in those municipalities.

Ms Shaik welcomed the Deputy Minister’s comments about the Bill that would look at a mechanism for getting to an intervention. Many of her concerns were raised by the two previous speakers. It was not just about getting to an intervention but also about the guidance that happened during an intervention and what happened after an intervention. The Committee needed to look into the fact that both section 139 and section 100 interventions required legislation about procedure, and that there was a legislative gap. Section 100 interventions affected provincial bodies performing oversight.

Ms Shaik referred to the Dr Ruth Segomotsi Mompati District Municipality and the impact of the VBS Mutual Bank collapse, although it was not the only municipality in the country that had invested in VBS. It had had a serious impact on the municipality’s ability to perform. She asked if the Deputy Minister could make a
comment on that. The municipality had lost money and was unable to deliver services. What were the financial implications and what kind of financial support was the province going to give those municipalities? That VBS collapse affected other provinces as well.

Ms M Mmola (ANC, Mpumalanga) said that she had largely been covered by the previous speakers. She referred to the municipality from which the mayor had been deployed to Parliament and whose post was filled by an acting person. How could the municipality operate without the mayor and political head? Further, one could not have a municipality that did not have a technical director because such a person was needed for service delivery. How did a municipality operate with an acting mayor and without a municipal manager?

Ms Z Ncitha (ANC, Eastern Cape) appreciated the presentations. In the MEC’s presentation, he had highlighted the challenges of budget. In the provinces, priority was given to three departments: Health, Education and Social Development. The Local Government Department was at the end of the budget priority list. The MEC had said that the Department had the responsibility to change things around in the 13 municipalities that were in distress. However, if the Department did not have the finances, it would be a problem for the Department to achieve its goals. That problem applied across all provinces.

Ms Ncitha’s second issue was about the clustering of municipalities. She had noted in a previous meeting that in demarcating municipalities, the country ended up with some municipalities that were very poor. For example, the new Dr Beyers Naudé Local Municipality in the Eastern Cape was a cluster of merged municipalities that did not have a revenue base and yet that municipality was expected to deliver services. How could the municipality do that when the people were entirely dependent on grants which could not fund the municipality? She flagged that for a debate by the NCOP.

Ms Ncitha raised the issue of section 139 versus section 154. It linked to what she had already mentioned: The Committee expected the Department to provide support which meant that the Department would have to second officials to municipalities. However, if there were 12 municipalities that needed assistance, how could the Department cope with that? The Committee did not want the Department to jump to section 139. Luckily, the Deputy Minister had already addressed the route that the Department was going to take. The Department would have to take the Deputy Minister’s approach on board very quickly because there were a number of municipalities around the country that were in need of a system to support municipalities.

Ms Ncitha did not know how a municipality could have six audit disclaimers. What was the role of the municipality and of the Department? If a municipality had a disclaimer in two successive years, it was obvious that the municipality had a problem and needed immediate intervention. Why were municipalities allowed to get to such a situation without consequences? Local government was an autonomous sphere of government and sometimes provincial departments experienced limitations in being able to act. Government had to create a situation where each department had teeth to bite. The Auditor-General had been empowered but the Departments had to do something to help municipalities before the matter reached the Auditor-General.

Mr S Mfayela (IFP, North West) told the Deputy Minister that he had a problem with municipalities that had political infighting amongst top management and the councillors. He wondered if the Deputy Minister had ever visited places such as Ekurhuleni which had serious problems with potholes. These councillors merely slept. Had he ever been to Emfuleni where the whole place was a mess? He commented in his mother tongue. He asked himself if the situation was because of the executive mayors.

When Mr Mfayela looked at Department officials who appeared before the Committee in Parliament, they were very serious and it seemed as if they were working. Could the Committee not visit those people without warning? The municipalities were not working but he thanked the Deputy Minister and his team for addressing the Committee on interventions.

Mr E Mthethwa (ANC, KZN) thanked the MEC Gordon Kegakilwe for having the guts to come up with the report he had presented. To do justice to the matter, the NCOP Committee needed a day to go through the report. He agreed with the suggestion that the administrator be required to brief the Committee, point by point, on the status of the municipality under administration.

Ms Mmola asked what had been meant by the MEC remark that “municipalities deployed people who did not qualify”. The previous year, Zweli Mkhize had said that municipalities had to employ people who were competent so what was the MEC saying when he said that people were not qualified?

Mr A Gxoyiya (ANC, Northern Cape) asked the MEC if he could recommend three steps that the NCOP could take to assist him. He would also appreciate copies of the Auditor-General’s management reports issued to those municipalities.

In his considered response, the Chairperson said that he was not going to dwell on the negative implications but rather ask about the process itself. As Committee Chairperson, almost every week, he received information from the NCOP Chairperson on such interventions. He implored the Committee to guide the NCOP about what role the NCOP could play in dealing with the situation.

The Chairperson asked, rhetorically, why a provincial executive would invoke a section 139  intervention on a municipality – under what circumstances? The law was clear. section 139 of the Constitution stated that the provincial executive would intervene when a municipality could not or did not fulfill its constitutional obligations. The obligations of a municipality were clearly stated in section 152 of the Constitution such as to ensure the provision of services to communities in a sustainable manner; to promote a safe and healthy environment; and all that a municipality was expected to do.

The Chairperson noted that the Deputy Minister had highlighted that the legislative instrument, section 139, had to be used as a last resort. That meant that there were certain legislative measures that the Executive Authority had to apply and section 154 was very clear about that. It specifically said that the provincial and national governments support and strengthen the capacity of municipalities to manage their own affairs and they should monitor municipalities. He asked what kind of support, strengthening and monitoring the provincial government offered municipalities throughout the process. Was it adequate? Was it enough? Was it sufficient? As Ms Ncitha had suggested, the Committee should look at what kind of support was given to municipalities. Was it adequate? Was it sufficient? Was section 139 the only instrument to be applied by the province when it came to helping municipalities?

The Chairperson’s next rhetorical question was what happened after a province had invoked section 139? The province had to report to the Minister who, within 28 days, would approve or not approve the intervention. In addition, the provincial executive had to submit a written notice of the intervention to the National Council of Provinces, where the Select Committee would deal with the matter. section 139 gave the NCOP 180 days to finalise a process in which to agree or not agree with the intervention. His question to the Deputy Minister was: did everyone in that chain or loop comply? And if anyone did not comply, what were the ramifications? How would such an eventuality be dealt with? That was very important.

The Chairperson said that as interventions were a centre piece of this Committee, it would be important to do what Members were proposing. Firstly, to get a model of where section 139 had been invoked and there was a success story, which could be applied elsewhere. It should provide lessons learnt. Other municipalities facing similar constraints would have to apply similar measures to resolve the challenges. The Committee would have to address the 180 days given to the NCOP to approve or not approve the measure. Part of that would be to visit an affected municipality and, using the assessment instruments available, assess that municipality and the support given by the provincial government and make a recommendation to the NCOP on whether to agree or not agree with the intervention.

The Chairperson noted that the MEC’s presentation had been very helpful as it gave a sense of why, ultimately, the province resorted to section 139. He was sure that the same situation would pertain to all other municipalities and that would give the Committee a way of assessing a particular municipality and whether section 139 was warranted or not. He asked if sections 139 and 154 were the only instruments available.

The Chairperson stated that the MEC had shown that the problems infesting municipalities included corruption, fraud, and maladministration. Did he use section 106 of the Municipal Systems Act to attempt to investigate the situation before he resorted to section 139? That was another way in which a province could assist a municipality. In his view, the Department used section 139(1)(b) but no other measures. section 139(1)(a)(iv) spoke about the budget, so why was that not used? section 139(1)(a)(v) spoke to the development of a financial recovery plan. In cases where municipalities could not collect debt or provide services, provinces could use that instrument to intervene. Why did provinces always resort to section 139(1)(b)? The section contained a basket of instruments to deal with the situation at hand.

The Chairperson noted that the Deputy Minister had spoken about early warning signs. He asked if, up until section 139 was invoked, there were no signs that the municipality was having problems. Did municipalities just get to that point? For him, section 47 of the Municipal Systems Act stated that the province had to continually monitor municipalities and it had to generate a report about municipalities in the province. At that point, a province was able to collect information about municipalities and would be able to detect which municipalities were not doing well and the provinces should immediately intervene. That linked to the whole of local government according to section 48 of the Municipal Systems Act where the Minister had to compile an annual report on the state of municipalities in the country. One could then detect immediately that a particular municipality was weak and lacked a particular capacity and one could determine which interventions needed to be brought on board. The Committee needed to look at the whole basket and suggest what needed to be done to attend to the challenges.

The Chairperson was happy that the Committee was working very closely with the Department. Members needed to play a role and their contributions would help to ensure that the problems were dealt with. He invited the MEC and the Deputy Minister to comment on the matters raised. Thereafter, they would chart the way forward.

Response by North West COGTA MEC
MEC Gordon Kegakilwe agreed that having 13 out of 22 municipalities under administration was a crisis. It was a challenge. The province could not hide its head in the sand like an ostrich. It had to take up the challenge, as should national, of the local government sphere. It spoke to capacity, not only of officials but also to the political capacity that had been put there by all the political parties. It was about the commitment of those people and was an issue that political parties had to address.

The MEC noted that one issue was how to apply capacitation strategies for officials in the municipalities. In the North West, not more than about three municipal managers had remained from the last five-year term. 17 or 18 had left and had been replaced by new municipal managers. None of those new managers had been a municipal manager in the previous term. Not more than five CFOs would be retained from the previous term. That was the situation throughout the country, not only in one province. How one dealt with the retention of skills from one five-year term of local government to the next was a challenge that had to be addressed. Each Council came with its own people. Towards the end of an administration’s term, the situation started to improve as people started to gain capacity but, come the end of term, they all left and the province started afresh with new municipal officials. The Auditor-General had also noted the same trend. It was a matter that had to be addressed by the law and by practitioners.

The North West MEC stated that mechanisms had been put in place to strengthen the monitoring of municipalities so that when one arrived at a decision to invoke the section, the province had reports, including section 71 reports that were assessed. He admitted that the provincial department had limited skills but it was trying to put measures in place. He believed that administrators could assist, but what was good was that the Committee had discussed closer monitoring, even of the administrators. The province required monthly reports from the administrators which were tabled before council. The purpose of an administrator was not to take over but to go in and capacitate the people there so that when the administrator left, the municipality could continue. He accepted the suggestion that the NCOP Select Committee would interact with the administrators and he would freely allow that to happen.

The MEC stated that the lack of UIF payments lay with the municipal council. Many municipalities said that the Municipal Public Accounts Committee (MPAC) was not functional, but he would ask: who was MPAC? It was a committee of councillors chaired by a councillor. The council could not say it was not functional. It was like the National Assembly saying that the Standing Committee on Public Accounts (SCOPA) was not functional. That situation had to be addressed

The MEC replied that VBS had affected four municipalities in the North West province. Dr Ruth Segomotsi Mompati District Municipality had suspended the municipal manager and was taking time to deal with the disciplinary processes after a forensic report had been submitted. However, the mayor differed with the suspension and even though the person had been suspended, the mayor had brought that person back, outside of a council resolution. That was the type of behaviour that the province had to deal with at local government level. It spoke to politicians. That was why matters were getting worse in that municipality. Mahikeng was under intervention after it had lost R80 million in the VBS saga. The municipal manager from Moretele Local Municipality was on suspension and the Madibeng LM municipal manager had resigned.

The MEC was concerned that what was not being addressed was whether politicians had been involved in the matter. What were they doing about it? Everyone pleads party politics and avoids addressing the matter, but it had to be addressed. The question was how R150 million had passed by a mayor without the mayor knowing that R150 million had been invested for six months? What had happened to the section 71 reports? Why was the mayor not receiving them? Who had appointed the municipal manager? It was the council. Those were the issues.

The MEC agreed there was a need to look at the Department budget. It was an issue that was being hammered. There was a need for provinces to look at the budget provided to the Department of Local Government. One reason why interventions did not work was because the province sent an administrator but did not provide the administrator with a budget and there was no money in the municipalities. There was no budget from the province to deal with sanitation problems, for example. The province paid salaries for the administrator and the team but there was no budget to provide service delivery. Those were some of the challenges that legislators had to consider when coming up with a new Act. Even when national intervened in a province, there was no budget. The same budget of the province that was in distress was the only budget available to the administrator of a province.

The MEC assured the Committee that unannounced visits were welcomed. In response to the question of what the NCOP should do to help, he suggested that it had to deal with the law. The Constitutional Court had ruled on the regulations on sections 56 and 57 dealing with the employment of municipal managers and senior managers. Once those regulations were put aside, what powers would MECs have? The Council could appoint someone with Grade 12 as the technical manager. Provinces were not armed to throw out such an appointment following the Constitutional Court decision on the regulations. So capacity in terms of the law was required. The emphasis on the budget had to be addressed. The enforcement of decisions was a challenge. There were situations where the Minister would write that certain officials should not have been appointed according to the regulations. The MEC would concur, but council would just sit and not implement the instructions. The province was not armed to go to court unless it turned to the Constitution. That problem affected all municipalities. He could quote the Western Cape scenario, the Tshwane situation or even Johannesburg. Some issues were common.

He welcomed the comments and inputs of the Committee and he would go back to the province and fight for the implementation of those points. If one did not change the situation soon, citizens would not vote for any parties in the local government elections in 2021. They would sit at home during local government elections. That was what everyone had to fight for.

Response by Deputy Minister Parks Tau
The Deputy Minister welcomed the comments and questions. The Chairperson had framed his comments as a submission. How should one approach the basket of powers and functions of provincial and national government? Certain things had to be done in the normal course of work. It was not as if one woke up one day and there was a problem so one implemented section 154. It should be in the normal course of duty that one supported local government, in particular, where there were limitations. It should be in the normal course of one’s responsibility that one monitored what transpired in local government and that one received reports on a regular basis, reviewed them and was able to respond appropriately to ensure local government performed its function. It was a question of how one built institutional capacity at national and provincial level to execute those responsibilities, and that was going to be an important part of how one should approach the work that had to be done by those present at this meeting.

The Deputy Minister said that the Ministry had identified and categorised the challenges that confronted them at local level. The MEC’s motivations for intervention had indicated some of them. There were three broad categories. In certain municipalities, governance, management and administration issues impacted on the ability of the local government to execute its authority and meet its constitutional obligations. The second category was systemic issues that had to do with the allocation of powers and functions. Certain district municipalities and water services did not have sufficient revenue to function, and so on. The third category was the viability of municipalities as a result of economic and spatial issues.

The Deputy Minister explained that government had designed a wall-to-wall system of local government so there was the reality that many municipalities did not have a revenue base from the onset and were reliant on transfers from government. There were instances where decisions about mergers had impacted on the viability of local government such as when two local authorities that were themselves not viable, had been merged. Putting two uneconomic and unviable municipalities together did not make one viable municipality. Certain mergers had been introduced where a viable municipality took over an unviable municipality but it had been drawn down by the unviable municipality.

Those were the three broad categories being confronted. That was how the municipalities should be categorised because that helped COGTA to address problems based on the nature of the problem. No amount of introducing section 139 would make an unviable municipality viable. One had to re-think the fiscal framework of how local government was financed so that it could undertake its executive obligations. Such an approach required an engagement with the entire system, including Parliament and the Executive considering how government could ensure long-term viability of local government. It was an important collective task that would have to be undertaken in a thematic way in response to the nature of the problems.

The Deputy Minister agreed that the problem created by the VBS investments had impacted local governments. Thus even if the municipality could have been viable, because its money was locked in the VBS liquidation and sequestration process, that municipality was not going to be viable. COGTA had to start engaging with the question of what it was going to do. Intervening would not solve the problem because millions of rand were locked in a process that had not been resolved. The municipalities would, as a consequence, struggle to meet their obligations. The question of what was going to be done had to be answered collectively. COGTA was engaging all stakeholders, partly because COGTA was imposing a responsibility on provinces and MECs to resolve problems that they might not be able to resolve. COGTA was intervening because this was a real problem: third party payments had not been made and services were not being provided.

The reality was that there was a hole and until the hole was plugged, the problem could not be resolved. What did one need to do to plug the hole? It required a collective response. The Deputy Minister stated that he was not providing an immediate answer to his questions as it was a matter that required the input of all of government.

The Deputy Minister addressed the question of whether there was currently a uniform system for intervention and whether a uniform system should be developed. COGTA intended to bring an instrument to Parliament for consideration and the intention behind the Bill was that there should be a uniform way in which local governments themselves identified whether they were unable to execute their executive authority because the starting point was with self. Those elected authorities should be asking the question: am I executing my executive obligations, and, if not, what do I do to execute my executive obligations? Such an approach imposed the responsibility on self in the first instance and the local authority could indicate what it had done and what interventions it had made before it requested assistance. The second part of the process was for both national and provincial government to provide support in the normal course of its work – so it was necessary, through regular monitoring and early warning systems, to identify which local governments had challenges and what those challenges were. Monitoring was an obligation so that it could be shown that the necessary steps had been taken, should intervention become necessary. It would place an obligation on government which would have a duty to undertake certain steps at a particular point.

The Deputy Minister said that while intervention came as a last resort, that was the ideal. In reality, in certain instances, one could not always follow that mechanical approach. One might have to go in with an intervention because the situation was dire. So, whilst the philosophy was self-diagnosis, support, monitoring and then intervention, the reality in certain instances might require intervention upfront. The draft Bill would go out for public comment before it came to Parliament. COGTA believed that it would create sustainability and clarity about how those processes were to be undertaken.

The Deputy Minister addressed an observation made by the Department and raised by Members. When one looked at the budgets of the provincial departments, not all of them were uniformly capacitated in terms of resources and human resources so an obligation was placed on an MEC to do work when, in fact, the reality was that the MEC might be surviving on a shoestring budget. So how did COGTA work with Treasuries across the board? How did COGTA indicate to Treasuries the need to build a stable local government? The department in the provinces needed to have the resources and skills to do regular monitoring. That was something that required attention.

On training and capacity building, the Deputy Minister stated that COGTA was engaged in a discussion with the National School of Government to create local government-specific modules to build capacity in local government. The School of Government provided broad government capacity but COGTA was engaged in a process to develop specific modules that would build the capacity of administrators at a local level, including political office bearers. That would enable the creation of a skills base in the system and enable the continual training and retraining of people as laws and paradigms changed.

The Deputy Minister responded to questions about the sustainability of the interventions. He shared the concerns of the Committee Members. Many of the interventions underway were actually repeat interventions. In essence, they were not getting out on the other side with a local authority that had the requisite authority and capacity as well as the systems for long-term sustainability. The law was very prescriptive about what could be done. Whilst COGTA supported the interventions that the MEC had asked the NCOP to consider, it did believe that there had to be a rethink about the way in which interventions were done. If one went in with an intervention, could one come out with an intervention that was sustainable? He believed that that was necessary or there would be a need for repeat interventions that did not resolve the problems. As he had said, in certain instances a municipality would not be viable regardless of the interventions.

When reports were published, he noted that it was repeatedly stated that the local governments were not viable, but people forgot that government had passed a law and had overseen the process of creating local authorities that were not viable. And then people woke up one day and said that the local governments were not viable. They had not been viable from the point of design so there was no point in sending some genius of an administrator to go and solve the problem. When local governments had not been viable from the onset, what was required was a rethink of fiscal support mechanisms.

Lastly, the Deputy Minister commented on the NCOP role. He believed that the NCOP was a critical part of the process of helping local government to be viable, by overseeing the work that COGTA did on a national and provincial level. Secondly, the NCOP had a responsibility to ensure that, where there was an intervention, COGTA had followed the required process as stipulated in law. In certain instances, the NCOP had an obligation to indicate to the Executive that the way it was dealing with the problem would not solve the problem. The Ministry saw the NCOP as a critical part of how local government challenges would be resolved and it wanted to work with the NCOP. He noted the comments of the NCOP Chairperson but also noted that the Select Committee would lead the House in how it was going to deal with these matters going forward. Working with the Committee, the Ministry and COGTA could go back to Parliament and government and show that they had categorised the problems and knew what the solutions were. They would have to explain that in certain instances the solutions were beyond local government itself and in certain instances the solutions had to be created by government, and those particular items would have to be indicated.

He summed up saying that together the role players were at the beginning of a process where they could collectively agree on the creation of a viable system of local government where intervention would be an exception and not the norm. That work would have to be done jointly and collectively.

Closing remarks
The Chairperson stated that it had been a useful session which had touched the heart of what the NCOP was expected to do. Listening to the presentations on how the national government was addressing the matter and how the provincial government was addressing it in the North West had given him confidence that the country had the necessary institutional capacity and memory to navigate the complex process. Local government was one of the most complex projects of transformation. As the Deputy Minister had stated, if one solved the problems of local government, one solved half of the problems that were affecting the country. It would go a long way to deal with the matter if everyone, in unison or in partnership, did what was expected of one.

He said that the Committee would look at its programme for the next term of Parliament and, as Members had proposed, identify areas of importance, undertake study visits, go to where it was burning, engage with municipalities and other stakeholders to understand the magnitude of the problem. That would enable the Committee to be part of the solution. The Committee would also be part of the legislative process and would properly interrogate the Bill to ensure that it would help local government going forward.

Lastly, in order to expedite the Bill, the Chairperson proposed that the Deputy Minister considered holding a conference or workshop with all stakeholders to facilitate a conversation with the Department about the interventions and what each one could do to help the situation. That would stabilise the situation and stimulate discussions.

He thanked the Deputy Minister and the MEC as well as their teams for their attendance and for sharing such useful information. He thanked Members for their participation in the discussions.

The meeting was adjourned