Deputy Chairperson, hon members, the NCOP delegated the Select Committee on Local Government and Administration to conduct a fact- finding visit to the Xhariep District Municipality in the Free State province on 11 October 2008. Again the main objective of the visit was to interact with internal and external stakeholders in the provincial executive council through the office of the MEC for Local Government and Housing in terms of section 139(1)(b) of the Constitution.
The committee had interactive meetings with stakeholders, including the administrator, the executive mayor, the chief whip, the acting municipal manager, organised labour, the Free State Youth Commission, the SA Council of Churches and the SA Local Government Association, Salga.
In briefing the committee, the administrator indicated that on 28 May 2008 the Free State provincial executive council decided to intervene in the Xhariep District Municipality. The rationale for the intervention was its lack of capacity to perform powers and functions; inadequate budget to perform as a district municipality; and possible unauthorised, irregular, fruitless and wasteful expenditure, including fraud, corruption and nepotism.
The administrator further informed the committee that since its establishment the district encountered acute financial constraints due to the limited levy base, and for the past three years the district has passed budgets with deficits. The provincial department of local government has provided the district with technical support to achieve the development of the budget, budget-related policies, internal control, annual financial statements and financial management since the suspension of the chief financial manager.
In order to deal with the above-mentioned challenges the administrator indicated that a turnaround strategy has been developed to provide system support and strengthening of internal control; to support the establishment of internal audit function; and to ensure development and implementation of performance agreements that could hold section 57 managers accountable for their performance.
The Free State Youth Commission welcomed and supported the intervention. The representatives of the union Samwu indicated that organised labour supported the intervention as issued by the MEC of Local Government and Housing.
Having visited Xhariep District Municipality, the Select Committee on Local Government and Administration recommends that: approval is granted for the intervention issued by the Free State MEC for Local Government and Housing; the provincial Department of Local Government and Housing facilitate the appointment of a forensic investigation into the alleged financial irregularities and mismanagement in the municipality; the provincial Department of Local Government and Housing ensures the fast-tracking of the appointment of section 57 managers; the municipality ensures the implementation of good labour practices between the municipal management and organised labour and the functioning of the labour forum in the municipality; the municipality also facilitates the signing of performance management contracts and assessments of section 57 managers and the implementation of a code of good conduct to ensure a working relationship amongst councillors and officials; the MEC's office monitors the progress of the municipality through scrutinising periodic reports and forwards a copy to the NCOP and the intervention be reviewed after a period of six months, which is until 30 April 2009.
This report is to be considered by this House. Thank you. [Applause.]