Presentation to IMFO Audit & Risk Indaba THE LORD CHARLES HOTEL, SOMERSET WEST. CAPE TOWN 08-10 APRIL 2013

1. Presentation to IMFO Audit & Risk IndabaTHE LORD CHARLES HOTEL, SOMERSET WEST. CAPE TOWN08-10 APRIL 2013 Clr Subesh Pillay SALGA NEC | FINANCE WORKING GROUP CHAIRPERSON @subeshpillay subeshpi@tshwane.gov.za

2. Presentation Outline • Why do we need competency regulations in the context of the National Development Plan • Legal Challenges and Unintended Consequences of Competency Levels in its current form • SALGA Proposals to remedy the situation • Status Quo and Way Forward

3. Why? Minimum Competency: SALGA PERSPECTIVE The reasoning behind the Regulations is sound. It is critical for managers in municipalities to be able to comply with the requirements of the Municipal Finance Management Act, especially municipal finance officials. The professionalization of local governmentand competence of its officials is an absolute imperative However, in drafting the Regulations, a number of practical implications may not have been taken into account. Refers to the ability Public Service, including at Local State level

4. BACKGROUND The National Treasury introduced Municipal Regulations on Minimum Competency Levels in Government Gazette 29967 of 2007. The key provision is as follows: The competency levels are prescribed in Regulations 3,5,6,8,9, and 11 and refer to the Accounting Officer, the CFO, managers reporting directly to the accounting officer, financial officials, middle managers and officials involved in the supply chain process. “Financial official” is defined and includes the municipal manager, CFO and managers that report directly to the municipal manager. 18. (1) No municipality or municipal entity may, with effect 1 January 2013, employ a person as a financial official or supply chain management official if that person does not meet the competency levels prescribed for the relevant position in terms of these Regulations.

5. LEGAL STANDING OF THE REGULATIONS • On a plain reading of the text, the sub-regulation means that no municipality may, after 1 January 2013, have in their employ (i.e among their current staff) persons who do not have the minimum competency requirements as set out in the Regulations. This has the unintended consequence of invalidating (retrospectively) the employment contracts of those persons employed before 1 January 2013 (but who do not have the requisite minimum competencies). • The implementation of retrospective or retroactive legislation contravenes the rule of law and, therefore, the Constitution. There is an established rule of law against retrospective application of legislation. • In Transnet Ltd v Ngcezula 1995 (3) SA 538 (A), the Court held thus that “unless contrary appears either expressly or by necessary implication, it is a presumption of our law that the legislature intends to regulate future matters only.”

6. IMPLICATIONS OF THE REGSfor Managers who have not acquired competencies by 1.01.2013 • The deadline ignores the recurring contractual regime applicable to senior management in local government, in that new appointments have been made subsequent to the local elections in May 2011 due to most of the previous five year contracts having come to an end around the time of the elections. • The same problem will occur in 2016/17 and whenever new appointments are to be made, including the prioritised filling of vacancies.

7. Unintended Consequences • Sub Reg 18(1) effectively excludes any person from outside the LG sphere from applying for Finance & Management posts after 1 Jan 2013 (if they don’t have the minimum standards) this will; • Reduce the already strained pool of skills available to the sector • Will lead to management crisis since decisions of Seniors Managers (Including MM’s / CFO’s) may be questionable and will lead to legal and or audit queries / qualifications • Negate efforts towards enabling vertical deployment of Capacity from other spheres to Local Government

8. CIRCULAR 60/2012 • Circular 60 of 2012 purported to propose an approach to “managing the requirements of the above regulations towards the remaining eight-month deadline.” and further provides that “whilst the provisions of these regulations will apply consistently across all municipalities and municipal entities from the effective date of enforcement, National Treasury will consider, ‘Special Merit Cases’, delaying enforcement of certain provisions for a period up to eighteen months from 1 January 2013.” • Unfortunately, a Circular has no legal status and cannot amend legislation (primary or secondary) and is accordingly of no assistance in addressing its (potentially fatal) anomalies come 1 January 2013.

9. SALGA RecommendationsTo Minister of CoGTA / November 2012 • The regulations be amended to provide that upon appointment, the relevant municipal official must obtain the requisite financial qualifications within eighteen (18) months of his or her appointment, with the necessary punitive measure for non compliance after the expiry of this period. • Experience and/or prior learning be expressly recognized in the Regulations and it must make provision for the waiver of certain or all of the competency requirements on account of a manager or official’s experience and or qualifications. • Alternatively, that the regulations be withdrawn and re-worked so as to give effect to the objectives of the Local Government Turnaround Strategy, having due regard to the concerns raised, and to ensure synergy between these regulations and the competency framework of the draft regulations proposed by DCOG

10. STATUS QUO & WAY FORWARD • No amendments have been made and the regulations are applicable notwithstanding the issues highlighted. • Municipalities must have at the very least applied for exception in terms of circular 60 for “special merit cases” – notwithstanding the challenges raised with regard to the standing of this Circular. • SALGA will continue to advance its agenda of professionalising the local government sector through inter-alia the development of a comprehensive competency framework for senior management in local government

11. MAX WEBBER on Bureaucracy and Public Administration