THE CATHOLIC PARLIAMENTARY LIAISON OFFICE AND HANNS SEIDEL FOUNDATION ROUNDTABLE

1. THE CATHOLIC PARLIAMENTARY LIAISON OFFICE AND HANNS SEIDEL FOUNDATION ROUNDTABLE 20th May 2016 Why Do We Need Provincial Government? Mr Themba Fosi DDG – Department of Cooperative Governance

2. CONTEXT • System of cooperative governance is a product of negotiations; • Balance of forces at the time- the need to secure peace, stability and to consolidate the fledgling democracy; • Eradication of the inequalities created by apartheid and reconstruction and development of the country; • Design model that allows democracy at all levels, popular participatory democracy and fair distribution of powers and functions across levels of government; • Inclusion of Provincial government contributed to the constitutional settlement in South Africa; and • Balance between securing national unity and regional political • participation. (check on majority power)

3. CO-OPERATIVE GOVERNANCE - 1996 • Three levels of government, each with elected governments, with sufficient responsibilities and functions, entitled to a fair allocation of income in accordance with the powers entrusted to it; • The powers of all three spheres of government guaranteed constitutionally, with provinces having certain exclusive, as well as, concurrent powers (Sections 74 – 76; Schedules 4A and 5A) • Different levels of government, constituted according to section 40 as distinctive, interdependent and interrelated manifestations of governmental authority. • Section 41(2) stipulates that an Act of Parliament must establish or provide for structures and institutions to promote and facilitate inter-governmental relations and provide appropriate mechanisms and procedures to facilitate settlement of inter-governmental disputes.

4. The mandate of provincial government • Provincial government derives its functional mandates from the Constitution, national sector policy and legislation, and provincial legislation and policy; • The first mandate is to provide representative, participatory and accountable government in a province; • Provincial government must provide democratic representation to provincial electorates and responsible and accountable government within the territory of a province; • Consistent with this mandate, each provincial government has the power to pass provincial laws and make policy for its area of jurisdiction, and is accountable to its electorate for its conduct and performance.

5. The mandate of provincial government - cont • The second mandate is to provide public services to its resident population and promote province-wide development; • Provincial governments are responsible for implementing nationally determined policies in education, health, social development, agriculture, roads and human settlements. • Provincial governments promote sustainable regional development by investing in economic infrastructure, supporting enterprise development, and planning the long-term development of their regions. • Provinces receive a larger share of nationally raised revenue than local government;

6. The role of provinces in the transition to democracy The Policy Review on Provincial and Local Government undertaken by the then Department of Provincial and Local Government during 2007-2009, provided the opportunity for people to make submissions on the role of provinces. From this process two opposing views were articulated: • The first kind comprised political viewpoints about how the provincial system has contributed to establish democracy in our country. The submissions that argued for retaining the provincial system of government emphasized the contribution that the inclusion of provincial government made to the constitutional settlement in South Africa. • An allied point of view was that provincial government offers another platform for political participation and democratic representation, and this consideration must trump other considerations, such as, for example, the costs of a provincial system.

7. The role of provinces in the transition to democracy The opposing view (those who did not support retaining the provincial system) argued that provinces represented: • The last vestiges of apartheid and should be abolished; • The costs and efficiencies of the system was the correct point of departure in light of the huge challenges facing the country; or that • There were too many levels of decision-making, which undermined national government’s role in achieving national redress.

8. Proposals on provinces 2012 - cont • The following important proposals were put on the table during the ANC’s 2012 Conference for discussion: • That we have fewer provinces which are functional, effective, economically sustainable, integrate communities on non-racial basis and do away with ethnic boundaries; • That the role of provincial legislatures be refocused, and mechanism to strengthen legislatures be developed; • That the powers and functions of the provincial sphere of government be strengthened to ensure more functionality, economic viability and racial/ethnic integration; • A consideration of municipal representation in legislatures to strengthen participatory democracy and representation; and • That the roles and responsibilities of provinces be legislated so as to remove any uncertainty and disputes

9. The effectiveness of provincial government • Why Do We Need Provincial Government? • Its effectiveness in the current form; • Appropriate role of provincial government in service delivery and development relative to the other two spheres; • Which functions should be performed at this sphere, as opposed to another; • Provinces raise little of their own revenue and depend on national transfers to fund their activities; • Generally provincial expenditure has achieved redistribution, but outcomes, performance and capacity are uneven across provinces. • Provinces that inherited former homelands generally have the weakest capacity, highest unemployment and poverty, lowest per capita expenditure, and poorest service delivery record.

10. Education, health and social development: latest trends from Provincial Budget and Expenditure Review 2015 • Increased investment over years has contributed towards improvement in the state of education. This investment has helped meet the goal of universal access to and improved quality of education. • Definite progress is being seen in the health sector. Mortality rates for adults and children have peaked and are declining. Provincial health departments now employ more than 300 000 personnel, of whom about 64% are health practitioners. There are signs of inefficiency, with rising unit costs, high administration budgets and relatively limited growth in hospital outputs. Personnel management and control has improved significantly. Under-expenditure on health infrastructure remains a concern given the state of some of the country’s health facilities. • Provincial social development departments play an essential role in addressing the human development needs of society’s most vulnerable members. The budgets of provincial social development departments have grown considerably.

11. Provincial workforce and national transfers: latest trends from Provincial Budget and Expenditure Review 2015 • Provinces employ 55.7% of the total government workforce (including all spheres of government and public institutions); • Education and Health make up 87% of the total provincial government workforce. This indicate that even if provinces are removed, this function will need to continue and shifting it to local or national government would not automatically result in a cost saving; • National transfers to provinces account for 97% of provincial revenue in 2014/15. These transfers have grown strongly over the past several years, and will continue to grow in real terms over the MTEF period. However, the level of expenditure has not been matched by commensurate improvements in health, education, social services and public infrastructure; • Slow economic growth has put pressure on provincial government’s revenue and reduced the fiscal space for increased expenditure.

12. Equitable Division of Revenue raised Nationally among the three spheres of government • Sections 214 and 227 of the Constitution require that an equitable share of nationally raised revenue be allocated to provincial government to enable it to provide basic services and perform its allocated function; • Provinces have limited revenue-raising capacity and the resources required to deliver provincial functions do not lend themselves to self-funding or cost recovery; • Due to their limited revenue-raising potential and their responsibility to implement government priorities, provinces receive a larger share of nationally raised revenue than local government; • .

13. Determination of each province's Equitable Share of the provincial sphere's share of revenue raised nationally (as a direct charge against the National Revenue Fund)

14. Linkages between provinces and other spheres • There are strong linkages between what happens in a municipality and what happens in a province, as well as within provincial departments. • For example, supporting the rural economy through agriculture is hampered if logistics infrastructure such as provincial roads is in poor condition. • Provinces need to be acutely aware of the social trends in their spatial context, especially the impact of urbanisation on the demand for social services and on the municipalities within the province.

15. Elimination or reduction of provinces • Provinces have expressed support for a clearer definition of the nature, role and functions of provincial government; • On the question of the number of provinces, some proposals have been submitted to government for determining the number on criteria such as economic sustainability, administrative feasibility and the ability to contribute towards national identity and cohesion; • It was also suggested that optimal performance and efficiency should determine whether there are too many entities at provincial and local level and whether their boundaries are correct; • In deciding how to establish new provincial structures, a provincial demarcation process similar to the municipal demarcation process is proposed; • It seems there is more support for an incremental approach to provincial government than a radical approach such as abolition. Such an incremental approach would include the drafting of a policy framework on provincial government and possible investigation of criteria for the future look of provinces;

16. The way forward: clearly defining the role and functions of provinces Policy should be to clarify, refine and regularize role and functions of provincial government and to build capacity & effectiveness of provincial institutions: • Define the role and functions of ‘developmental provincial government’ in national legislation • Provide a framework for establishing provincial departmental portfolios • Define concurrency in the context of provincial service delivery, planning and development • Set indicators for provincial government performance and norms and standards for provincial service delivery and organizational structures, and provide for provincial reporting responsibilities to national government • Define national government’s responsibility to support provinces • Introduce a national capacity-building programme for provinces • Provide for a statutory demarcation process • Regulate provinces support, monitoring and intervention roles in respect of local government.

17. The way forward: improving the system of cooperative governance • The reality that the system of cooperative governance is not working effectively, necessitates that greater co-ordination and cohesion between and across the three spheres of government is induced. • The system of cooperative governance has to become tighter, powers and functions have to be examined and there has to be service delivery acceleration. • Concern about efficacy and improving services to the people necessitates that the complexity and uncertainty about powers and functions must be addressed. • Powers and functions must be better distributed across the spheres of government. • The cooperative governance system that is at the heart of our Constitution is not going to be dismantled. What is needed is a change in the form of the cooperative governance system. There are features of the system that have to change to take into account changing conditions and needs;

18. Conclusion • The Provincial System is a product of negotiated transition and post-94 transformation, it is now a constitutional reality and we have 22 years experience of delivering services to build on. • Reform should concentrate on improving effectiveness, responsiveness and accountability of the governance system. • It is not just about coordination between the spheres of government, but also within the spheres. • The future of provinces should not be seen in a vacuum, but is part of a reform process that target the whole system of government. • The ultimate goal is the realization of a true developmental state.

19. THANK YOU!