Presentation to the Portfolio Committee on Cooperative Governance and Traditional Affairs

1. Presentation to the Portfolio Committee on Cooperative Governance and Traditional Affairs 5-6 September 2012

2. Overview of Content • Introduction • Governance • Role and Responsibilities • MTAS • Public Participation • Section 139 Implementation • Financial Management • MPAC • Audit Outcomes • Internal Structures • Government Debt owed to Municipalities • Supply Chain Management • Service delivery: • Status Qou report • IDP credibility and achievement • Bulk infrastructure • Elimination of Backlogs • Corruption.

3. Introduction • Core Functions of the Department include the following:- • Support and Strengthen the capacity of municipalities to manage their own affairs; exercise their powers and perform their functions; • Draft Provincial Legislation that affects the status, institutions, powers or functions of Local Government; • Monitor, support and promote the development of local government and see to the effective performance by municipalities of their functions as per Schedule 4 and 5

4. Introduction - Legislative mandate

5. Introduction - Policy mandate

6. Introduction-Outcome and Outputs (9) • Responsive, accountable, effective and efficient local government system:- • Differentiated approach to municipal financing, planning and support • Improving access to basic services • Implementation of the Community Work Programme (Responsibility of DED) • Actions supportive of the human settlement outcomes • Deepen democracy through a refined ward committee model • Administrative and financial capability • Improved coordination of interventions impacting on Local Government

7. Governance

8. Intergovernmental Relations (IGR) • IGR framework was adopted in 2010 and looks into:- • providing the general principles of IGR in the province, • regulating IGR forums established in the province, • provides for guidelines to govern internal IGR procedures and • Provides a framework for the settlement of IGR disputes. • Key IGR Structures:- • The Premier’s Coordinating Forum was reconfigured, • MEC/MMC Fora were established in sector Departments and; • IGR Practitioner’s Forum was established.

9. Intergovernmental Relations (IGR) • CHALLENGES FACED BY MUNICIPALITIES:- • Capacity constraints in terms of resources, staff and expertise at the local level; • Inadequately defined roles and positioning of Intergovernmental Relations Units; • Non or irregularly attendance of intergovernmental meetings and the lack of appropriate resolution tracking mechanisms and to monitor and evaluate implementation thereof; and • Uncoordinated activities between the provincial departments and municipalities, between sector departments operating in the same municipality, and as well as amongst the neighbouring municipalities themselves.

10. Intergovernmental Relations (IGR) • SUPPORT TO MUNICIPALITIES:- • Hands on support to municipalities in terms of reviewing their IGR policies. • Host IGR practitioners seminars to share experiences and learn from each other. • Quarterly MECMMC meetings held focusing on: • Human Settlements and Infrastructure Development • Finance • Integrated development planning and LED • Capacity development of municipal IGR practitioners • Development of IGR Implementation Plan and Monitoring Framework.

11. Municipal Turnaround StrategyMISA

12. Municipal Turnaround Strategy - MISA • The Province’s focus on 5 priorities:- • Acceleration of Service Delivery • Enhancing Good Governance • Promoting sound financial management • Fighting corruption • Facilitating sustainable infrastructure development

13. Municipalities receiving Targeted Support • Local Municipalities in the West Rand District: • Westonaria • Randfontein • Mogale • Merafong • Local Municipalities in the Sedibeng District: • Lesedi • Emfuleni (Diagnostic Analysis still outstanding)

14. Diagnostic Process • The process consist of a two day engagement with municipalities utilising the MISA tool/MTAS. • After this engagement a draft support plan is drafted. • A one day feedback session is held to discuss the support plan and get buy in from municipalities. • An assessment/verification of the intervention was completed • MISA then finalise a costed support plan. • For the non-MISA projects the department then prioritise and supports.

15. Root Causes Identifies In the main these are following root causes: • Capacity constraints – inability to attract and retain staff and afford competitive salaries; • Critical posts being vacant; • Political interference in:- • the appointment of staff, • procurement and; • other operational matters; • Political differences amongst councillors; • Limited ability to source alternative funding for infrastructure investment projects.

16. Projects to address the challenges • Capacity building towards functionality of ward committees. • Audit status of by-laws and develop a guidelines. • Facilitate the filling of vacant critical posts. • Training and deployment of expertise in critical ares • Introduction of a zonal water loss programme. • Development of an infrastructure Master Plan for the region. • Review cash and debt management strategies. • Monitor functionality of council including caucus. • Draft business plan for funding infrastructure.

17. Public Participation

18. Public Participation-Key Performance areas • Provide support and monitor the functionality of ward committees (Quarterly Reports). • No of meetings held and percentage attendance • No of meetings organised by ward committee and percentage of ward community attendance. • Submission and tabling of ward reports to Council. • Number of door to door campaigns and/or interaction with street committees. • Number of complaints handled and resolved. • Strengthen the ward committees through support programmes and activities (including training in key areas of planning, budgeting, oversight and communication) • Promote public participation in decision making at municipal levels (e.g. IDP) • Evaluate public participation processes and systems on a regular basis and provide support to address issues that come up.

19. Public Participation Progress to date:- • Public Participation Framework has been developed and shared with Municipalities. • Workshops were conducted with the targeted municipalities.Municipalities were engaged to draft policy framework on Public Participation Framework • Developed a Framework for the election of Ward Committees. Most ward committees have been elected using the guidelines. • All ward committees have been established except for 4 2 in Lesedi and 2 in the City of Jo’Burg. The challenge has been primarily political. • Ward committee funding Model is in place although it is implemented differentially. • Plans are underway to continue to build and strengthen the ward committees through monitoring and support programmes and activities,

20. Public Participation – National Ward Committee Framework • Purpose • Determine criteria for calculation of out of pocket expenses • Provide mechanisms, systems and procedures for ward committee funding and functionality • Puts obligation on municipalities to budget out of their own revenue for ward committee activities • Provides guidance to municipalities for targeted ward budgeting • Promotes ward councillors to work together with ward committees • Explores fiscal and grant mechanisms to support under-resourced municipalities

21. Public Participation – • CRITERIA FOR FUNDING MODEL • Ward Size:- • Population Size • Most municipalities have considered funding operations • Recommended out of pocket expenses is R1000

22. Breakdown of Funding for Municipalities in Gauteng

23. National Grant to Ward Committees • DCOG has afforded 4 municipalities grants towards ward committee operations for 2012/13 as follows:

24. Challenges – Funding Model • Limited resources within municipalities to pay the recommended full amount of R1000 per month. • No resources within Province to augment in monetary terms municipal budgets.

25. Section 139 Implementation

26. Implementation of Section 139 in Gauteng • In 2009, the Gauteng Executive Council resolved to implement the provision of section 139 (5) (a) of the Constitution • A recovery plan was prepared and approved on the 9th February 2010 • Implementation of the plan was managed by the Mayor and Acting Municipal Manager with support from GDF, DLG&H and DBSA’s Siyenza Manje officials • 8 months after implementation of the Municipal Financial Recovery Plan the province assessed the management of financial commitments and the overall cash flow and it was evident that it was insufficient and unsustainable • By October 2010, the council was dissolved and an Administrator was appointed until the Local Government Elections in May 2011

27. Implementation of Section 139 in Gauteng • LESSONS LEARNT:- • Systemic problems within the municipality administration like lack of capacity and leadership impacted on its demise. • Intervention should have taken place earlier. • The municipality was not viable nor sustainable and support measures such as the Recovery Plan were not adequate to resolve the systemic challenges. • The rates boycott of the ratepayers associations exacerbated the problem • The intervention should have been provided with comprehensive resources. Adequate budget and full time support team should have been provided as part of the support plan. The team should have included expertise like HR and Labour Relations, Finance and Revenue Specialists, Engineers, Internal Auditor, Legal Advisor. • The recovery plan should also include focused attention on the political leadership and related challenges.

28. Financial Management

29. MPACS • A separation of powers oversight model has been introduced in Gauteng local government. The Oversight Model mirrors parliament’s portfolio committees. • It was piloted City of Jo’burg (COJ) - • It has now been rolled out in the City of Tshwane and the Ekurhuleni Metropolitan Municipality. • Municipal Public Accounts Committees (MPACs), which are similar to parliament’s Standing Committee on Public Accounts (SCOPA) have been established across all municipalities in Gauteng since the Local Government Elections 2011. • Their primary responsibility is to ensure that reports of the Auditor General (AG) are given the serious attention that they require by municipal councils.

30. State of MPACS • An evaluation of MPACs in Gauteng in 2010 highlighted challenges upon which the following recommendations were formulated: • A need for a standard approach on the appointment of members, • Continuous training for members was required, constant monitoring of MPACs, • Granting chairpersons fulltime councillor status, and • To develop a legislative authority for MPACs. • By 31st October 2011, all MPACs were established in Gauteng in line with Circular 56 dated June 2011

31. State of MPACS

32. MPACS- Challenges • Following are their key challenges: • Committee members are lacking the required skills and expertise on financial and non-financial oversight and scrutiny. • Performance and status of the MPACs is negatively affected by the lack of resources (i.e. human and financial). • The lack of a committee researcher is a clear impediment to the majority of MPACs in the province as they can bridge the skills gap of members. • Generally there is lack of powers to enforce decisions of the MPACs.

33. MPACS- Provincial Support • SALGA Councillor Induction Programme (June 2011) strengthened on the role of MPACs • Workshops held on the role and function of MPACs • APAC, DLGH, Provincial Treasury held 2 day session in May 2012 on the role, mandate and functions of MPACs • Certificate Programme developed with Regenesys - 50 MPAC members being trained • Full-time Section 79 Chairpersons – Concurrence assigned at 70% of the upper limit. Of the 9 municipalities qualifying in terms of their size, 5 applied and received concurrence from the MEC.

34. Audit Outcomes

35. Audit Outcomes • Of the 15 audited municipalities:- • 9 Unqualified:- COT, Ekurhuleni, Metsweding, Westrand, Sedibeng, Midvaal, Lesedi, Westonaria and Merafong • 6 were qualified:- Mogale City, Emfuleni, COJ, Nokeng, Randfontein and Kungwini • 0 disclaimers or adverse

36. Audit Outcomes- Progress • 8 Municipalities have maintained their unqualified status over the last two financial years • 4 Municipalities have maintained their qualified status over the last two financial years. • 3 municipalities have regressed over the last two financial years. However one Metsweding is from a clean audit to an unqualified. • This is of great concern to the Province and plans are in place to address the challenge.

37. Audit Outcomes- Trend

38. BACKGROUND AND CONTEXT

39. Audit Outcomes- Analysis

40. Audit Outcomes- Analysis

41. Audit Outcomes- Analysis

42. Audit Outcomes- Analysis

43. Audit Outcomes- Analysis

44. Targeted Hands on Support • OPCA targeted hands on support to Randfontein, Westonaria, Mogale City, City of Tshwane and Emfuleni municipalities • Primary focus areas of the targeted hands on support are:- • Internal Controls • Asset Management • Oversight Function • Revenue Management • Capacity Building – Scarce and Critical Skills • Performance Informatio; • Annual Financial Statements • Integration of the Financial system data- City of Tshwane

45. OPCA Provincial Coordinating Committee (OPCC) • The OPCACC was established to:- • monitor the implementation of OPCA within Municipalities as well as the provincial departments within the province. • All Municipalities the progress made in addressing AG issues as well as progress towards achieving clean audits. • All stakeholders also present the progress made in supporting municipalities to achieve clean audits. • Streamline the support from various stakeholders to municipalities.

46. Internal Control Structures

47. Internal Control Structures • Municipalities are statutorily required by section 165 and 166 of the Municipal Finance Management Act (MFMA) to establish strong governance structures to advise the municipality on matters relating to:- • internal controls, internal audit, accounting and financial reporting, • risk management, • performance management, • governance, • compliance with the MFMA and any other applicable legislation.

48. Establishment of Functional Internal Audit Units Establishment of Internal Audit units by Gauteng Municipalities:

49. Establishment of Functional governance

50. Shared Services Internal Audit and audit committee • A study concluded that it is feasible and cost effective to establish a shared services model in the Westrand. • The outcomes of the study were then presented to the municipal managers and mayors within the West Rand Region. • The findings were also presented to the regional transformation committee, which is made up of mayors, MMCs finance, and municipal managers of all the municipalities in the Westrand. • The transformation committee approved that the shared services be established. • The individual municipalities need to take council resolutions to implement .