Presentation to the Portfolio Committee on Cooperative Governance

and Traditional Affairs

5-6 SEPTEMBER 2012

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.

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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

INTRODUCTION - LEGISLATIVE MANDATE

Act Purpose

Municipal Structures Act (No. 117 of 1998)

The Act provides for the establishment of municipalities in accordance with the requirements relating to categories and types of municipalities.

Municipal Systems Act (No. 32 of 2000)

The Act provides a framework for the provision of services, service delivery agreements and municipal service districts to provide for credit control and debt collection

Municipal Finance Management Act (No. 56 of 2003)

The Act establishes norms and standards for the management of the revenue, expenditure, assets and liabilities, and financial dealings of municipalities and municipal entities.

Gauteng Traditional Leadership and Governance Act (No. 4of 2010)

Provides for the establishment and recognition of traditional communities in the Province

INTRODUCTION - POLICY MANDATE

Policy Purpose

Local Government Turn-around Strategy (LGTAS)

The LGTAS seeks to implement a comprehensive but differentiated programme of action to achieve the objective of enabling municipalities to meet the basic service needs of communities

The Global City Region (GCR) Perspective

The key objective is to reduce unemployment and poverty by promoting economic growth, integrated strategies and joint planning between the different spheres of government.

Funding model for ward committees

Provides for and guides the implementation of support of functionality of ward committees through budgeting for stipend and other resources required for ward committee operations.

Revised National Capacity Building Framework Draft 4

The policy recognises three elements of capacity which impacts on the ability of municipalities to provide services and they are the individual, institutional and environmental capacity

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

GOVERNANCE

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.

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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.

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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.

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Municipal Turnaround StrategyMISA

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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

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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)

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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.

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ROOT CAUSES IDENTIFIESIn 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.

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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.

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PUBLIC PARTICIPATION

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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.

PUBLIC PARTICIPATIONProgress 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,

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

PUBLIC PARTICIPATION –

• CRITERIA FOR FUNDING MODEL– Ward Size:-– Population Size

• Most municipalities have considered funding operations

• Recommended out of pocket expenses is R1000

BREAKDOWN OF FUNDING FOR MUNICIPALITIES IN GAUTENG

MUNICIPALITY COST NO OF WARDS

COJ R350 130

COT R1000 105

COE R100 101

MOGALE R500 34

WESTONARIA R350 16

RANDFONTEIN R350 22

MERAFONG R350 28

LESEDI R100 13

MIDVAAL R250 14

EMFULENI R100 45

NATIONAL GRANT TO WARD COMMITTEES

• DCOG has afforded 4 municipalities grants towards ward committee operations for 2012/13 as follows:

MUNICIPALITY NO OF WARDS AMOUNT PER MONTH @ R500

ANNUAL GRANT

MIDVAAL 14 R70 000 R840 000

LESEDI 13 R65 000 R780 000

RANDFONTEIN 22 R110 000 R1 320 000

WESTONARIA 16 R80 000 R960 000

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.

SECTION 139 IMPLEMENTATION

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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

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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.

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FINANCIAL MANAGEMENT

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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.

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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

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STATE OF MPACSMUNICIPALITY DATE ESTABLISHED NUMBER OF MEMBERS

COT Metro 15/07/2011 and re-established on 27 October 2011

13 Members

COJ Metro 07/2011 18 Members

Ekurhuleni Metro 20/07/2011 11 Members

West Rand DM 29/06/2011 8 Members

Merafong LM 24/08/2011 13 Members

Mogale LM 28/10/2011 13 Members

Westonaria LM 26/08/2011 7 Members

Randfontein LM 20/07/2011 10 Members

Sedibeng DM 10/08/2011 9 Members

Emfuleni LM 06/2011 12 Members

Lesedi LM 28/06/2011 6 Members

Midvaal LM 27/10/2011 7 Members -5 permanent 2 alternates31

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.

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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.

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AUDIT OUTCOMES

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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

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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.

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AUDIT OUTCOMES- TREND

Audit Opinion 2008/9 2009/10 2010/11

Disclaimer 1 0 0

Adverse 0 0 0

Qualified 2 4 6

Unqualified 10 10 9

Clean 2 1 0

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BACKGROUND AND CONTEXT

Status Quo of audit Outcomes

FINANCIAL YEAR

MUNICIPALITY 2008/9 2009/10 2010/11

CITY OF JOHANNESBURG CLEAN AUDIT QUALIFIED QUALIFIED

CITY OF TSHWANE QUALIFIED UNQUALIFIED UNQUALIFIED

EKURHULENI UNQUALIFIED UNQUALIFIED UNQUALIFIED

METSWEDING DISTRICT CLEAN AUDIT CLEAN AUDIT UNQUALIFIED

NOKENG TSA TAEMANE QUALIFIED UNQUALIFIED QUALIFIED

KUNGWINI DISCLAIMER QUALIFIED QUALIFIED

SEDIBENG DISTRICT UNQUALIFIED UNQUALIFIED UNQUALIFIED

EMFULENI QUALIFIED QUALIFIED QUALIFIED

MIDVAAL UNQUALIFIED UNQUALIFIED UNQUALIFIED

LESEDI UNQUALIFIED UNQUALIFIED UNQUALIFIED

WEST RAND DISTRICT UNQUALIFIED UNQUALIFIED UNQUALIFIED

MOGALE CITY UNQUALIFIED QUALIFIED QUALIFIED

RANDFONTEIN UNQUALIFIED UNQUALIFIED QULAIFIED

WESTONARIA UNQUALIFIED UNQUALIFIED UNQUALIFIED

MERAFONG UNQUALIFIED UNQUALIFIED UNQUALIFIED

AUDIT OUTCOMES- ANALYSISCity Of Johannesburg

Regressed from the year 2008/09 where a clean audit was received and thereafter a qualification for 2009/10 and 2010/11.

The qualification relates to revenue and accounts receivables. Due to system integration shortcomings, property categories in the billing system differed compared to the system which contains information regarding the classification and zoning of properties, which resulted in a qualification in revenue and accounts receivables.

City Of Tshwane Improved from the year 2008/09 where a qualification was received and thereafter unqualified audit opinions for 2009/10 and 20010/11.

Ekurhuleni Maintained their unqualified status for past 3 years

AUDIT OUTCOMES- ANALYSIS Metsweding District Regressed in the past financial year where it moved from a clean

audit status to unqualified in 2010/11.

Nokeng Tsa Taemane Regressed in the past financial year where it moved from an unqualified audit opinion in the past year to a qualification in 2010/11.

The financial disciplines were not upheld as the key monthly reconciliations of the bank reconciliation were not performed and reviewed, resulting in unreconciled differences between the cash book and the financial statements.

Kungwini Improved from a Disclaimer in 2008/09 to a qualified audit opinion in 2009/10 and 2010/11.

The basis for the qualification was the supplementary valuation roll that was not updated and the accounts receivable sub ledger was not reconciled with the financial statements, resulting in a qualification of revenue and consumer debtors. There was no documentation to support suspense accounts for the liabilities and indigent debtors.

AUDIT OUTCOMES- ANALYSISSedibeng District Maintained their unqualified status for past 3 years.

Emfuleni Local Municipality

Maintained their qualified status for the past 3 years.

The basis for the qualification was the purchase price of infrastructure assets procured in prior periods that could not be confirmed, due to inadequate documentation to support the original cost.

In previous financial years, Emfuleni did not comply with the requirements of GRAP17. In the 2010-11 financial years, Emfuleni was late in engaging consultants to resolve the GRAP17 compliance issues.

AUDIT OUTCOMES- ANALYSISMidvaal Maintained their unqualified status for the past 3

years

Lesedi Maintained their unqualified status for the past 3 years

West Rand District Maintained their unqualified status for the past 3 years

Mogale City Regressed in the past financial year where it moved from an unqualified audit opinion for 2 years to a qualification in 2010/11.

The basis for the qualification was the adjustments that were made to the opening balances on assets to address the prior yearqualification without adequate supporting documentation.

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AUDIT OUTCOMES- ANALYSISRandfontein Regressed in the past financial year where it moved from an

unqualified audit opinion for 2 years to a qualification in 2010/11.

The basis for the qualification was the property, plant and equipment balance that was not supported by an accurate and complete fixed asset register. The municipality was qualified on the accumulated surplus amounts, primarily resulting from prior period adjustments being made to the comparative figures for which no supporting documentation was available.

Westonaria Maintained their unqualified status for the past 3 year

Merafong Maintained their unqualified status for the past 3 years

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

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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.

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INTERNAL CONTROL STRUCTURES

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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.

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ESTABLISHMENT OF FUNCTIONAL INTERNAL AUDIT UNITS

Establishment of Internal Audit units by Gauteng Municipalities:

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Municipality I.A. Unit in place In-house/Outsourced/Co-sourced

City of Johannesburg MM Yes In-house

Ekurhuleni MM Yes In-house

City of Tshwane MM Yes In-house

West Rand DM Yes In-house

Randfontein LM Yes In-house

Westonaria LM No N/A

Merafong City LM Yes In-house

ESTABLISHMENT OF FUNCTIONAL GOVERNANCE

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Municipality I.A. Unit in place In-house/Outsourced/Co-sourced

Mogale City LM Yes In-house

Sedibeng DM Yes In-house

Emfuleni LM Yes In-house

Midvaal LM Yes Outsourced

Lesedi LM Yes Outsourced

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 .

OVERALL ASSESSMENT OF INTERNAL AUDIT UNITS

• Most of the Municipalities have established in-house internal audit units informed by their approved Charters.

• The Midvaal LM and Lesedi LM which have outsourced this function to private audit firms.

• The issue of outsourcing the internal audit function poses a challenge to municipalities with regard to skills transfer and huge costs to municipalities. Some municipalities view outsourcing as a means to enhance the independence of the internal auditors;

• Challenge:-

– The capacity of internal audit staff remains a challenge if the skills transfer clause is not implemented for those with outsourced services.

– For those with internal units delays in filling of vacancies in these units impact negatively on the performance of the internal audit function.

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ESTABLISHMENT OF FUNCTIONAL GOVERNANCE

• The internal auditors of municipalities have appropriate qualifications but not sufficient experience on IT and financial audits,

• Capacity is a challenge in relation to the size of a municipality which leads to the internal audit function being less effective.

• Some internal audit units are not allocated sufficient budget to purchase electronic audit software which would support their work in complying with the required professional standards.

• Senior management do not give support to the internal auditors through the commitment of implementing the recommendations of internal audit unit. Ad hoc assignments by management impact negatively on the execution of the internal audit plans.

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Establishment of Functional Audit Committees

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Establishment of Audit Committees by Gauteng Municipalities:

Municipality Audit Committee established

City of Johannesburg Established

Ekurhuleni MM Established

City of Tshwane MM Established

West Rand DM Established

Randfontein LM Established

Westonaria LM Established

Merafong City LM Established

Establishment of Functional Audit Committees (cont.)

Municipality Audit Committee established

Mogale City LM Established

Sedibeng DM Established

Emfuleni LM Established

Midvaal LM Established

Lesedi LM Established

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OVERALL ASSESSMENT OF AUDIT COMMITTEES• The assessment is based on the Departmental attendance at audit

committee meetings.

• The Auditor-General also attends these audit committee meetings as a means to improve audit opinions and giving guidance in this regard.

• The composition of the established audit committees is in line with the MFMA as the members are not in the employ of the municipality and they are not councilors.

• The challenge comes when members resign from the audit committees as it takes a lengthy process to advertise and appoint new members to serve on the committees.

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GAUTENG GOVERNMENT DEBT MANAGEMENT

PROJECT

BACKGROUND

• The report is focusing on the five GPG Departments that owe the municipalities the most amounts:-

– Departments of Local Government and Housing,

– Health and Social Development,

– Education;

– Infrastructure Development and;

– The Department of Transport.

APPROACH

• A provincial debt management committee has been established. Its aim is to facilitate and ensure that:-– Provincial departments pay municipalities for services, rates

and taxes on time, and thereby, Reduce Government debt to municipalities.

• One on one meetings are held quarterly between provincial departments and municipalities on the following objectives:-– Identify and validate properties owned by Province.– Ensure that debtor information on government accounts was

cleaned and then corrected on the municipal finance systems

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APPROACH• Meetings are held between provincial departments and

municipalities are held monthly with the following objectives:-

• Track payments made and forthcoming payments by Departments

• Create a business process that will effectively deal with Government debt from both provincial and local government perspective.

• Initiate discussion on the structuring of Government tariffs and rates,

• Structuring payments cycles for Property Rates

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DEPARTMENT OF EDUCATION (GDE)

ANALYSIS OF TABLE

• GDE has made significant and constant payments to municipalities

• This has shown the municipalities the commitment they have in settling the municipal debt.

• The department has developed a strategy to address the challenges it has been experiencing regarding the section 21 school’s lack of payment of services.

ANALYSIS OF TABLE

• The key part of the strategy is that the budget for services will no longer be given to those section 21 schools that have not been paying for services, instead payment of services will be centralised at the GDE head office.

• For those section 21 schools that are paying, the GDE require proof of payment from the schools by a certain date of the month to ensure timeous payments.

CHALLENGES PER DEPARTMENT: EDUCATION

• Meter readings at schools are a big challenge as in some cases departments are billed on estimates which are higher than the actual reading or municipalities cannot locate the meters in the school yard hence they bill on estimation.

• This leads to a dispute of the billed amount. This results in the schools withholding the payments while the matter is being resolved.

• Attempts to resolve this are underway via the one on one engagements between the Department and the municipalities.

CHALLENGES PER DEPARTMENT: EDUCATION

• It is also noted that schools with exorbitant outstanding amounts are due to decaying water infrastructure and abuse of the water and electricity by communities in those schools that are not properly secured

CHALLENGES PER DEPARTMENT: EDUCATION

• The other challenge that was noted during the working session with the Department of Education is that some of the schools have been paying for rates and taxes due to the fact that the municipalities are not splitting the accounts.

• This however is being dealt with through one on way

engagements with these municipalities.

DEPARTMENT OF ROADS AND TRANSPORT

DEPARTMENT OF INFRASTRUCTURE(DID)

ANALYSIS OF TABLE: DID• DID is trying to bring all the account up-to-date in most

municipalities, however that is dependent on the municipalities delivering correct information as agreed in the debt management committees.

• In addition, payments are also subject to property verification processes. This is a challenge for municipalities as the DID asset register is incomplete and this results in the verification process taking too long.

• The issue will be dealt with urgently by the senior management of DLGH and DID.

DEPARTMENT OF HOUSING AND LOCAL GOVERNMENT (GDLGH)

CHALLENGES PER DEPARTMENT: DLGH

• There is serious weakness in the system regarding the transfer of housing projects and land to beneficiaries.

• There is no standard approach to handle the transfer process in particular between the Housing Department and municipalities.

• Ownership of property has been a contentious issue that has constantly surfaced as an impediment in the payment of outstanding debt

• Municipalities continue to bill the department for service consumption by residents until change of ownership to occupants is effected

DEPARTMENT OF HEALTH (GDH )

ANALYSIS OF TABLE

• The department of Health is still experiencing financial crisis, hence such low payment rates in the table.

• However, there is an intervention by the MEC for Health, the premier and National Treasury.

• The Mogale City and Lesedi municipality have credits on DoH accounts for the clinics and are awaiting authorization from the department to off-set the credits against hospitals with arrear accounts.

DEPARTMENT SUMMARY OF THE TOTAL OUTSTANDING DEBT AS AT

JUNE 2012

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CHALLENGES: GENERIC

• The cash flow is a challenge for some departments who don’t budget enough money for payments of municipal services and yet they process payments.

• Payments are delayed at times due to the fact that the departments must verify the accounts once they receive the claim before they can make payments.

WAY FORWARD

• Working sessions to be held to aid in verifying and resolving unclear matters between municipalities and departments with regards to issues of ownership and asset verification.

• That Gauteng Municipalities are encouraged to bill DID on property rates on a quarterly basis in sync with the timing of the grant, so as to avoid incorrect cash flow projection from the municipal side.

• A firm and clear directive be given in a form of a circular, on the ownership of housing projects upon completion, therefore enable municipalities to bill beneficiaries directly and not the Departments of Housing.

WAY FORWARD• All the school districts should do their own meter

reading on monthly basis and it will be compared to the municipalities reading and the billing will be based on that.

• That the committee investigates the possibility of implementing remote meter reading infrastructure in the Departments.

• Considers ring-fencing allocations for services for the Department of Health at the level of the Gauteng Treasury.

WAY FORWARD

• There should be a concerted effort towards resolving water leakages in schools and continuously maintaining such infrastructure.

• The provincial debt management committee to engage officials responsible for the Provincial water demand management project to plot a way forward in implementing the project.

SUPPLY CHAIN MANAGEMENT

SUPPLY CHAIN MANAGEMENT (SCM) - METROS

• Supply chain management findings relating to irregular expenditure not condoned in terms of section 170 of the MFMA by national treasury. In this regard, the metros faired as follows:– COJ-R432 million – COT-R119 Million of which R94 million related to contracts entered

into the prior periods – EMM-R14 Million

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SUPPLY CHAIN MANAGEMENT (SCM) - METROS

Plan to address the issues:-• Tracking mechanisms will be implemented such that when contracts are

entered into, plans for the closure of the project are in place.

• Interactions with National treasury will be initiated to review the applicability and constitutionally of the legislation relating to suppliers in the service of the state.

• Ensure that internal controls are in place to make certain that there is compliance with legislation relating to procurement matters.

• The city of Johannesburg deviation policy should be reviewed to ensure it meets the AG requirement. AGSA uses the requirement set in Regulation 36 and reasons provided are assessed against this SCM regulation.

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SUPPLY CHAIN MANAGEMENT (SCM) - METROS

SCM findings on awards made to persons in the service of the state 9 SMC Regulation 44)• COJ-Municipality (13-R6.6 Million) and other state institution (27=R45

Million) excluding municipal entities;

• COT-Municipality (41=R20 Million) and other state institution (127=R24, 46 Million);

• EMM-Municipal (4=R0, 5 Million) and other state institutions 28=R149.9 million)

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SUPPLY CHAIN MANAGEMENT (SCM) - METROS

Plan to address the issues:-

• Internal controls need to be improved to identify suppliers who are employed by the municipalities and the municipal entities.

• SALGA is in the process of consolidating a database of employees of the state in Gauteng for easy access to municipalities.

• It is a challenge for local government to identify employees in the service of the Public Service. Engagements are underway to discuss and resolve the matter with National treasury and the Accountant General, especially in relation to the constitutionality of the legislation

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SUPPLY CHAIN MANAGEMENT (SCM) - METROS

Unauthorized expenditure in excess of the limits amount (provided for in the

votes R50 million)

• COJ –R43 Million for bulk purchase and grants and subsidies paid R13 Million

• COJ-R 53 Million mainly relating to overspending on guarding services by JMPD

Plan to address the issue-• There is a need to engage and review the limits in line with the size of

metropolitan municipalities and their respective budget.

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SUPPLY CHAIN MANAGEMENT (SCM) - METROS

Fruitless and wasteful expenditure with regard to interest on:-• overdue account;• penalties from South Africa Revenue Services;• expenditure for resources not utilized and traffic fines.

Plan to address the issues• Training of the compliance officers and their staff to ensure proper

understanding of the applicable laws and regulations;

• Explore the development of a compliance check list which will be used to ensure that laws and regulations are compiled with before transgression occur.

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SUPPLY CHAIN MANAGEMENT (SCM) - LOCALS

• SCM findings on awards made to persons in the service of the state (SCM regulation 44):– Sedibeng District Municipality (SDM) (1=R836 942) and other state institution

( 23=R527 497)– Emfuleni Local Municipality (1=R94 000) and other state institutions ( 15=R4

750 553)

• Unauthorized expenditure, overspending on total budget or main division within budget:– Merafong City-R 13 million for bulk purchase and grants and subsidies paid.– Mogale City- R11,8 million relating to overspending of the total operational

expenditure budget– Randfontein-R53 million mainly relating to overspending on operational

expenditure

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SUPPLY CHAIN MANAGEMENT (SCM) - LOCALS

• Other Supply Chain Management (SCM) findings identified for all municipalities were as follows:– Reasons for deviation that do not meet the requirements

of SCM regulation 36,– Advertisement for tenders less than minimum period– No competitive bidding process for other awards– Three quotations not obtained– Tender process not followed for awards that are required

by the legislation– Inadequate contract management resulting in deviations

to SCM as contracts are not managed properly towards the end of their terms.

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SUPPLY CHAIN MANAGEMENT (SCM)

• Tender processes not followed for awards that are required by the legislation;

• Inadequate contract management resulting in deviations to SCM as contracts are not managed properly towards the end of their terms.

• Limited capacity and skill within SCM units in municipalities.

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DEPARTMENTAL SUPPORT – SUPPLY CHAIN

• Provide hands on support to targeted municipalities to address issues raised.

• Monitor compliance and the implementation of municipals plans through the OPCACC and Municipal Audit Steering Committees.

• Monitor and support initiatives on OPCA hearings at municipal level with the aim of taking disciplinary action where managers do not comply or follow through on their respective action plans.

• Facilitate and strengthen critical capacity (skills, policies and systems) through hands on support to targeted municipalities.

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ACCELERATING ACCESS TO BASIC SERVICE THROUGH BULK INFRASTRUCTURE

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BACKGROUND

•Municipalities are responsible to provide basic services- Constitution, MFA Act No. 56 of 2003, Chapter 1.

• A service that is necessary to ensure an acceptable and reasonable quality of life and which if not provided, would endanger public health, safety and the environment.

•There is a need to address bulk & distribution infrastructure backlog to enable delivery of basic services.

•Shortage of Skilled and Experienced Civil Engineers, Town Planners, Electrical Engineers, Artisans, Surveyors remains a challenge etc.

•Capacity building programme- Civil Engineering, Planning and Built Environment Skills including Artisans need to be rolled-out.

SCOPE OF WORK/PROGRAMMES• Work carried out in these Municipalities:

o Sedibeng District Municipality, Midvaal Local Municipality, Lesedi Local Municipality and Emfuleni

o West Rand District, Randfontein Local Municipality, Merafong Local Municipality, Mogale Local Municipality

o The three Metros (CoT, CoJ and Ekurhuleni)

• Nature of support– Senior Retired experts Civil, Planners, Electrical Engineers & Artisans paired with young

graduates.

• Support provided in these key disciplines: o Water and Sanitationo Roads and Storm watero Town & Transport planningo Project Managemento Amenitieso Housing & Energy

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BASIC SERVICE DELIVERY AND BULK INFRASTRUCTURE

• PMU Support –

– Municipal Infrastructure Grant Spending

– Planning for Capital works, Operations and Maintenance

– Backlog Studies in order to develop Recovery Plans

– Facilitation Of Access to Grant Funding

– Medium and Long-Term Infrastructure Asset Planning

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BASIC SERVICE DELIVERY AND BULK INFRASTRUCTURE

Achievements

• A total value of R4.2 billion over the 7year period;• R380 Mil in the 2011/2012 financial year on infrastructure including

bulk services. • Almost 1,800 projects were managed in the different phases over

seven years and 31 projects completed for the Financial 2011/2012;• 142- Households were connected to water & sanitation (2010-

2011/12);• 313- Households benefitting from new or upgraded bulk sanitation

(2010-2011/12)• 240- Households benefitting from new or upgraded bulk water

supply (2010-2011/12)

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BASIC SERVICE DELIVERY AND BULK INFRASTRUCTURE

Individual Municipal Expenditure /Achievements

Expenditure on various MIG Components

Expenditure up to June 2012

B-Component 272,673

P-Public Transport 10,794

P-Emergency Services 9,557

P-Community Services 77,102

P-Other Institutions 0P-Services to Businesses 0

E-Component 0

PMU's 10,195

TOTALS 380,321

BASIC SERVICE DELIVERY AND BULK INFRASTRUCTURE

Individual Municipal Expenditure /Achievements B- Component Expenditure-

As can be seen below; Roads (39%) and Sanitation (35%) are high in capital expenditure. These are followed by Water (22%), Storm water (3%) and Street/Community Lighting (1%).

Actual Expenditure for B-Component Up to June 12

Water 59,826

Sanitation 95,242

Roads 105,168

Stormwater 8,818Street / Community Lighting 3,620Solid Waste Removal 0

TOTALS 380,321

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Municipal Infrastructure Grant June 2012

Payment Schedule

Transfers from

National

Spent by munucipality

Deviation Transfers from

National

Percentage transfers

Percentage spent

Percentage spent

- - - - - Emfuleni 126 985 126 985 126 621 - 364 100.00% 99.71% 99.71%Midvaal 22 845 22 845 22 845 - - 100.00% 100.00% 100.00%Lesedi 23 139 23 139 22 288 - 851 100.00% 96.32% 96.32%Sedibeng District Municipality - - - - - Total: Sedibeng Municipalities 172 969 172 969 171 754 - 1 215 100.00% 99.30% 99.30%

- - - - - Mogale City 80 957 80 957 80 953 - 4 100.00% 100.00% 100.00%Randfontein 30 284 30 284 11 712 - 18 572 100.00% 38.67% 38.67%Westonaria 54 184 54 184 54 184 0 - 100.00% 100.00% 100.00%Merafong City 61 137 61 137 61 137 0 - 100.00% 100.00% 100.00%West Rand District Municipality - - - - - Total: West Rand Municipalities 226 563 226 562 207 986 1 18 576 100.00% 91.80% 91.80%

- - - - - Unallocated - - - - - Total: Gauteng Municipalities 399 532 399 531 379 740 1 19 791 100.00% 95.05% 95.05%

MUNICIPAL INFRASTRUCTURE GRANT- 2011/2012

BASIC SERVICE DELIVERY AND BULK INFRASTRUCTUREChallenges/Impeding Factors • Main challenge remains the spending of the approved allocated capital budgets -

Randfonteing

• Lack of Pre-planning- Forward planning required at least a year before implementation.

• Limited or no funding for Operations and Maintenance of infrastructure.

• Appointment of in-experienced Consultants/Contractors.

• Procurement & Payment Process prolonged unnecessarily.

• Lack of Project Management Skills and Clerical Support Staff Internally.

• Lack of Support and cooperation from other Departments within Municipality.

• Lack of coordinated planning and budgeting for key projects on across the spheres of government.

BASIC SERVICE DELIVERY AND BULK INFRASTRUCTURE – WAY

FORWARD• Provincial Advocacy required in the implementation of basic services

programmes in Municipality, to achieve it the following four pillars are necessary:o Experienced professional engineers, technologists and technicians is

management.o Policy, systems and operating procedures in place and understoodo Sound knowledge of the condition of infrastructure delivering

essential services.o Sound revenue systems which will provide, above all, sufficient money

to ensure that 1 to 3 above are in place.

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BASIC SERVICE DELIVERY AND BULK INFRASTRUCTURE – WAY

FORWARD• Advocate for appointments to fill critical vacant posts with suitably qualified

persons.

• Facilitate and support effective recruitment, retention and succession planning in Gauteng municipalities to drive the staffing turnaround needed.

• Re-configure planning and budgeting model to support municipalities to achieve maximum possible impact.

• Find alternative funding mechanisms to complement existing funds especially for upgrades, operation and maintenance.

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INTEGRATED DEVELOPMENT PLANNING

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INTEGRATED DEVELOPMENT PLANNING –CRITERIA FOR

ASSESSMENT• The Departments oversight and support with regards to IDPs

is in terms of:-– Legislative compliance: this considers the extent to which the IDP complies

with provisions of the Municipal Systems Act.

– Credibility: The DCoG IDP credibility framework serves as an essential point of

departure in determining the credibility.

– In addition to this attention is given to factors such as the quality and reliability of data used in compiling the IDP.

– Other factors considered include the extent to which the various strategies proposed in the IDP are responsive to the challenges identified in the status

quo.

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INTEGRATED DEVELOPMENT PLANNING CRITERIA FOR

ASSESSMENT• The Departments oversight and support with regards to IDPs is in the

areas:-

– Alignment: In the bid to making IDP a plan of all government, attention is given to extent to which the IDP is aligned to the plans and strategies of the provincial and national government.

– In light of the outcome-based planning approach, much focus will be dedicated towards assessing the extent to which IDPs are linked to and give effect to government’s outcomes over the electoral term.

• IDPs have been approved and the Department is working with Municipalities in ensuring that IDPs reflect alignment of budgets across all spheres of government.

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INTEGRATED DEVELOPMENT PLANNING - ASSESSMENT

Municipality 2011 Ratings 2012 Ratings

City of Johannesburg Metro High High

City of Tshwane Metro High High

Ekurhuleni Metro High High

Sedibeng DM High High

Lesedi LM Medium High (Improved)

Emfuleni LM Medium Medium

Mid-vaal LM Medium High (Improved)

Westrand DM High High

Westonaria LM Medium Medium

Randfontein LM Medium Medium

Mogale City LM Medium High (improved)

Merafong LM Medium Medium

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IDP- DEPARTMENTAL SUPPORT

• Strengthening the credibility and implementability of IDPs through– Development ward-based planning framework– Conduct IDP Education (For Officials and Councilors)– Support improvements with the use of statistical data

(collaborating with Stats SA)– Collaboration with the M&E Programme to monitor the

implementation of IDPs.– Conduct an evaluation study to establish the socio-

economic impact of IDPs.

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IDP- DEPARTMENTAL SUPPORT

• Facilitate inter-governmental alignment – Facilitate the alignment of IDPs with Government

outcomes through ongoing engagements (via the Provincial IDP Steering Committee)

– Establish partnerships with the Gauteng Planning Commission to ensure that IDPs are linked to the evolving planning system of the province (mainly through 2055)

– Supporting inter-municipal planning initiatives – MEC comments on IDPs in terms of Section 26 of MSA to

highlight key areas of alignment.

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MUNICIPAL INTEGRATED DEVELOPMENT PLANS (IDPS)

• Ensure Compliance with Legislative requirements by – Monitor the development, review and

implementation of IDPs and provision of hands-on support

– Conducting annual analysis of IDPs to asses this

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