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ANNUAL REPORT 2010/2011 MUNICIPAL DEMARCATION BOARD PRESENTATION TO THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS 18 October 2011. REPRESENTATION TEAM Mr LJ Mahlangu Chairperson: Municipal Demarcation Board Ms N Gwayi
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ANNUAL REPORT 2010/2011MUNICIPAL DEMARCATION BOARDPRESENTATION TO THE PORTFOLIO COMMITTEE ON COOPERATIVE GOVERNANCE AND TRADITIONAL AFFAIRS18 October 2011 REPRESENTATION TEAM Mr LJ Mahlangu Chairperson: Municipal Demarcation Board Ms N Gwayi Deputy Chairperson: Municipal Demarcation Board Mr SM Radebe Chairperson: Audit & Risk Committee Mr RH Monare CEO: Municipal Demarcation Board Ms MI Mathatho Chief Financial Officer Ms MP Leburu Senior Finance Officer
OUTLINE • Last Briefing: 24 May 2011 • Outputs and Developments 2010/11 • Strategic Direction • Progress to date on current strategy • Financial Results 2010/11 • Receipts for the year ending 31 March 2011 • Expenditure for the year ending 31 March 2011 • Report of the Auditor General • Medium term expenditure framework (MTEF 2011 – 2014) • Conclusion Additional Slides: • Research Study on Criteria for Determining Municipal Boundaries and Categorisation of Metropolitan Boundaries • Research Study on Sizes of Municipalities in South Africa
LAST BRIEFING: 24 MAY 2011 • Briefed the Portfolio Committee on: • MDB Performance in 2010/11 (Unaudited at the time); • Strategic Plan 2011/12 – 2014/15; • Proposed Developments going forward; • Financial Results 2010/11 (Unaudited at the time); • Medium Term Expenditure Framework 2011/12 – 2013/14 • We advised the Portfolio Committee that: • The ward delimitation process was successfully completed for the 18 May 2011 local elections, despite having started well after schedule by four months. • The Board was now set to commence with a process of reconfiguring and aligning outer municipal boundaries. • Bids had been called for a service provider to develop a new model on the assessment of the capacity of Municipalities.
LAST BRIEFING: 24 MAY 2011 • The Board adopted to a new way of carrying out its mandate, in a number of core areas of the Board’s work. • Research has been done on key subjects: • Review of the Capacity Assessment Model; • Sizes of Municipalities • Criteria for Demarcation of Municipal Boundaries. • Current system and processes for ward delimitation is time consuming and costly, and needs to be reviewed.
OUTPUTS AND DEVELOPMENTS 2010/11 • During the period under review, a number of key outputs and developments were realised: • Facilitate accountable local government and contribute to free and fair local elections and promote democracy: • During this period focus was on the delimitation of electoral wards within local and metropolitan municipalities, in preparation for the 2011 local government elections; • The process on 15 July 2009 when the National Minister of CoGTA published the formula for the number of councillors, based on the 2009 national common voters roll as divided into municipal segments. • To improve on past ward delimitation processes, especially with respect to consultation with stakeholders: • Time was set aside to allow municipalities to consult widely with communities in their areas; • A very localised process called for by the Board;
OUTPUTS AND DEVELOPMENTS 2010/11 • The primary aim of allowing time for wide consultation, was to facilitate a process whereby the final wards would be a product of community consensus. • Provision was also made for cases where consensus could not be reached in a municipality, during the consultation process; • Provincial Departments of Local Government, as well as SALGA and CDWs, were requested to assist communities in their preparation of submissions to the Board; • The Board also made its own human resources available to all communities for assistance; • Some 50% of municipalities were able to reach consensus with communities and other stakeholders, while others could not reach consensus, or submitted alternative ward configurations which did not comply with legislative provisions;
OUTPUTS AND DEVELOPMENTS 2010/11 • Ward delimitation process was finalised in August 2010, and the final wards were officially handed over to the IEC on 1 September 2011. • Preparations for the next round of municipal boundary redeterminations began soon after the handover. • The Board faced a number of court challenges during the period under review.
OUTPUTS AND DEVELOPMENTS 2010/11 • Assessment of Municipal Capacity • Assessment of Municipal Capacity did not take place in 2010/11 (as well as in 2009/10). • The existing model of capacity assessment that had been used since 2001 was still being reviewed. • The Board resolved to devote time and resources to the ward delimitation process. • Ensuring that the Board is supported by an effective and efficient organisational structure • Building and enhancing capacity of the Board’s internal machinery was a major priority during the period under review. • The Board appointed an Organisational Design (OD) specialist to carry out an investigation into the Board’s organisational structure, as well as significant restructuring of the organisation’s establishment.
OUTPUTS AND DEVELOPMENTS 2010/11 • Ensuring that the Board is supported by an effective and efficient organisational structure (Cont.) • The service provider’s brief was to investigate and to write a report with recommendations, on ways of improving the effectiveness of the Municipal Demarcation Board and its members, particularly staff members, by means of systematically planned interventions. • The service provider has since delivered on the brief, and the Board has resolved to bring about far-reaching changes in levels of some positions in the Board’s organisational structure. • Also to significantly restructure of the organisation’s establishment – this in order to have things done differently, in a number of core areas of the Board’s work.
OUTPUTS AND DEVELOPMENTS 2010 • Ensuring Good Governance • Continued to endeavour to ensure that good governance arrangements are in place throughout the organization. • The Audit and Risk Committee was fully operation during the period under review, to oversee and ensure the effectiveness of the systems of controls. • There was also an effective internal audit function in place. The function is outsourced. • At the end of the period under review, the Board was monitoring action by management to attend to issues of concern raised in the IT Governance Audit, including a complete revamp of the Board’s website. • Ensuring Sound Financial Management • During the period under review we were able to maintain: • Effective management of working capital • Preparation of short and long term budgets • Effective internal audits • Consistent cost control.
OUTPUTS AND DEVELOPMENTS 2010 • Improving and Enhancing Stakeholder Relations • As a constitutional institution, it is important for the Board to reinforce the need to engage with all stakeholders in a structured manner, to realise specific organisational goals as well as to meet broader social, environmental and economic challenges. • The need for engaging stakeholders in a structured manner, also reinforced by the fact that stakeholder relations is one of the core functions of all Board, in terms of the corporate governance principles as outlined in the King III report, to which the Municipal Demarcation Board subscribes. • At the end of the period under review, the process to develop a Stakeholder Management and Governance Framework, Stakeholder Engagement Plan, as well as the Stakeholder Communication Strategywas underway.
STRATEGIC DIRECTION The Municipal Demarcation Board has for the current Strategic Plan identified strategic themes to focus and guide the organisation over the next few financial years (2011/2012, 2012/2013, 2013/14 and 2014/15)
PROGRESS TO DATE ON CURRENT STRATEGY • Determination and re-determination of municipal boundaries and categorisation and re-categorisation of municipalities • Circular 1 of 2011 was issued to all municipalities and other key stakeholders, to communicate the programme for the re-determination of municipal boundaries, and to also to provide especially new municipal councillors with some background information on the MDB and its mandate. • Launch and Media announcement • Consultations meetings have been held with the following key stakeholders: • All MECs for local government; • All municipalities in every District Municipality in the country; • MinMEC; • The Chairperson of the NHTL; • National and Provincial structures of SALGA and the IEC; • Political and Civic Structures across the country.
PROGRESS TO DATE ON CURRENT STRATEGY • Determination and re-determination of municipal boundaries and categorisation and re-categorisation of municipalities (Cont) • Meetings with provincial houses of Traditional Leaders are still being arranged in cooperation with the Chairperson of NHTL. • The purpose of the initial consultation meetings with was: • To give MECs and other stakeholders an opportunity to raise demarcations issues with the MDB; • To inform MECs and other stakeholders of demarcations cases that are on record for consideration by the MDB; • Clarify the process and timeframes for changes to municipal boundaries as per Circular 1/2011; • Seek MECs’ and other stakeholders’ support for the process;
PROGRESS TO DATE ON CURRENT STRATEGY • Determination and re-determination of municipal boundaries and categorisation and re-categorisation of municipalities (Cont) • Request MECs and other stakeholders to assist in communicating contents of Circular 1/2011 to provincial stakeholders; • Request MECs and other stakeholders to encourage participation; • Request MECs and other stakeholders to assist in ensuring that municipalities comply with timeframes; • Request MECs that their Departments assist stakeholders wanting to make representations for changes to municipal boundaries.
Prepare for local elections Delimit wards Re-determine municipal boundaries 2016 2015 2015 2014 2013 2013 2012 2011 Consultation and legal process June 2011 to Oct 2013 Consultation and legal process Nov 2013 - June 2015 IEC process July 2015 - April 2016 Broad process and timeframes within current legal framework:2011 - 2016
Key periods for public participation MDB provides information Meetings per district area Deadline for new requests Further visits Section 26 Sub- missions Public meetings Section 21 objections Aug/Sept 2011 15 Dec 2011 Jan-Mar 2012 Apr-May 2012 Sept-Oct 2012 Aug 12-Jan13 Municipalities consult affected communities, and encourage participation More information: MDB Circular 1/2011: www.demarcation.org.za
PROGRESS TO DATE ON CURRENT STRATEGY • Determination and re-determination of municipal boundaries and categorisation and re-categorisation of municipalities (Cont) • A framework has been developed, based on the research study on criteria for demarcation of municipal boundaries. • The framework provides information and guidelines that will empower stakeholders to submit requests to the Municipal Demarcation Board for the re-determination of municipal boundaries. • The framework puts together in one concise document, key relevant information and guidelines, for stakeholders to motivate a boundary change request.
PROGRESS TO DATE ON CURRENT STRATEGY • Assessment of the capacity of metropolitan, district and local municipalities • A service provider was appointed for the implementation of the revised capacity assessment model, building on the history of capacity assessment data obtained in previous years. • The review of the capacity assessment model has elicited a number of weaknesses pertaining to the old model. • Two-tier local government is neither effective nor efficient • Lack of clarity on powers and functions • MEC adjustments have exacerbated the problem • Adjustments may undermine service delivery • Framework for adjustments is insufficient • Narrow conceptualisation of capacity
PROGRESS TO DATE ON CURRENT STRATEGY • Capacity assessments not useful for boundary adjustments • Need to understand environmental & institutional capacity • Capacity assessment model inadequate • Heavy reliance on subjective indicators of capacity • The review has subsequently come up with some recommendations: • Advocacy recommendations • Single-tier local government • Legislation to assign powers and functions • Capacity Assessment Model recommendations • Suspend recommendations on adjustments • Position Capacity Assessment as a strategic resource
PROGRESS TO DATE ON CURRENT STRATEGY • Revised model • Financial data is critical • Include measures of performance • Identify norms and standards for benchmarking • Include information on scarce skills • Introduce qualitative assessment of Powers & Functions • Quantitative process has limitations and should be used as a trigger for a qualitative review of powers and functions within a particular district triggered by one of the following: • One or more municipalities performing a function less than adequately • One or more municipalities performing a function with less than minimum capacity • Request by MEC for qualitative review • Programmatic qualitative investigations of all districts over a five year period i.e. 10 districts qualitatively evaluated a year.
PROGRESS TO DATE ON CURRENT STRATEGY • Methodology • Improve integration with other data collection processes • National Treasury, StatsSa, National Sector Departments • Web-based collection methodology with support • Simplify and shorten questionnaire • Include metros • Outputs • One strategic and analytical report supported by • Automated municipal reports • District report • Provincially aggregated district report • Accessible, interactive database with reporting • This year will pilot this methodology. Nine districts (roughly 20% of all municipalities)
PROGRESS TO DATE ON CURRENT STRATEGY • Ensuring that the Board is supported by effective and efficient organisational processes, systems and practices • The following reports on the organisation design were submitted by the service provider and approved by the Board: • The Blueprint Report with findings and recommendations, on the restructuring of the organisation’s establishment, as well as improvements. • The Board has also adopted a particular option in the report as the best organisation design to enable the MDB to meet its mandate more effectively. • The Implementation Report, which provides the MDB with an implementation road map. • Job evaluation, which is the process of determining the worth of one job in relation to that of other jobs in an organisation so that a fair and equitable wage and salary system can be established.
PROGRESS TO DATE ON CURRENT STRATEGY • Salary benchmarking, which is a process where an organisation tests its own pay practices against that of other outside organisations. • A new Remuneration Policy. • Migration Policy, to regulate the movement of employees from one post or position in the current Organization Structure to another in the new Organization Design. • New structure envisaged to be operational at the beginning of the 2012/13 financial year.
PROGRESS TO DATE ON CURRENT STRATEGY • Ensuring good governance • Draft unaudited annual report for the year ended 31 March 2011 considered by the Audit and Risk Committee. Duly submitted to the Auditor-General on 31 May 2011. • The Auditor-General has given an unqualified audit opinion, but with emphasis of matter. • Improving and enhancing stakeholder relations • Service providers were appointed for a three month contract for support on media relations and media engagement. • Other service providers were appointed to prepare a stakeholder and communication strategy for the Board. • The stakeholder management function has been adequately provided for in the organisational design blueprint report that was approved by the Board. • The boundary redetermination process was kick-started with an extensive programme of initial consultations with key stakeholders across the country.
FINANCIAL RESULTS 2010/11 • SUMMARY OF FINANCIAL RESULTS • RECEIPTS FOR THE YEAR • FINANCIAL PERFORMANCE FOR THE YEAR ENDED MARCH 2011 • BREAKDOWN OF EXPENDITURE
SUMMARY OF FINANCIAL RESULTS • Total income for the period R37.9 million • Expenditure during the period R36.0 million • Resulting in a surplus of R1,9 million • Expenditure Variance of R1,6 million • Projections – Board has spend within budget • Current ratio = 6:1 • Accumulated Surplus of R16,9 million • Commitments of R11,0 million
REPORT OF THE AUDITOR GENERAL • Unqualified report with emphasis of matter • Irregular Expenditure of R726,012 • Contravention of PPPFA • HDI Points scoring was not documented
MEDIUM TERM EXPENDITURE FRAMEWORK (MTEF 2011-2014) • 2011 MTEF amounts to R121.4 million • Allocation for 2011/12 increased by R1.3 million • Representing a 3% increase • In 2012/13 and 2013/14 grants increased by 5% in respective years.
RESEARCH STUDY ON CRITERIA FOR DETERMINING MUNICIPAL BOUNDARIES AND CATEGORISATION OF METROPOLITAN BOUNDARIES • The brief for the research study on demarcation criteria was to: • Expand on and precisely define the criteria implied, for an area to be regarded as a Category A (metropolitan) area, as outlined in Section 2 of the Local Government: Municipal Structures Act, 1998, including developing quantifiable indicators, benchmarks and thresholds for each criterion; • Expand on and precisely define the criteria implied for municipal boundary demarcation and, more specifically, the objectives of demarcation and factors to be taken into account by the Board when it determines a municipal boundary, as outlined in Sections 24 and 25 of the Local Government: Municipal Demarcation Act, 1998. • The study was to develop quantifiable indicators, benchmarks and thresholds for each or clusters of factors/criterions as outlined in section 25 Local Government: Municipal Demarcation Act, 1998.; • Institutionalisation and precise application of the section 2 criteria as well as the sections 24 and 25 demarcation objectives and factors.
RESEARCH STUDY ON CRITERIA FOR DETERMINING MUNICIPAL BOUNDARIES AND CATEGORISATION OF METROPOLITAN BOUNDARIES • The study was to develop quantifiable indicators, benchmarks and thresholds for each of the cluster factors/criteria as outlined in section 25 Local Government: Municipal Demarcation Act, 1998, including recommendations/advice on data requirements, skills sets and other resource requirements; • Recommendations as to which provisions in Section 2 of the Structures Act, 1998, and Sections 24 & 25 of the Demarcation Act, 1998, would be reviewed. • The methodology for the study involved: • International Survey of municipal boundary reform • Development of Data Base of Demarcation Indicators • Conducted desktop analysis of relevant South African documentation • Conducted Interviews with relevant experts
RESEARCH STUDY ON CRITERIA FOR DETERMINING MUNICIPAL BOUNDARIES AND CATEGORISATION OF METROPOLITAN BOUNDARIES • The study developed a database of indicators, by: • Collating data from Census, Community Census, MDB and IEC. • Used the MIIF Classification as an illustrative tool: • A-Metros • B1-Secondary Cities • B2 -Large Towns • B3 -Small Towns • B4 –Rural Areas • C1 -Districts who are Not Water Service Providers • C2 -Districts who are Water Service Providers
RESEARCH STUDY ON CRITERIA FOR DETERMINING MUNICIPAL BOUNDARIES AND CATEGORISATION OF METROPOLITAN BOUNDARIES • The study has developed indicators for each of the criteria in section 24 and 25 of the Demarcation Act. • Also suggests a useful organisation of the criteria used for the demarcation of municipal boundaries, into a collection of categories and/or subcategories. • This may enable greater flexibility were the emphasis with regard to a particular case may be geared toward a particular set of criteria. However, there are a number of caveats: • Many of the criteria/indicators are interdependent (i.e., one criterion may influence the another criterion and vice versa); • Given the interdependence of many of the criteria, it is difficult to assert a hierarchy to the criteria (i.e., that some criteria are more important than others or that some are a perquisite for other application of other criteria);
RESEARCH STUDY ON CRITERIA FOR DETERMINING MUNICIPAL BOUNDARIES AND CATEGORISATION OF METROPOLITAN BOUNDARIES • Criteria should be given varying weight and importance depending on the unique circumstances of an area. • The following are suggested as criteria for small municipalities: • the need for cohesive, integrated and compact areas • Political boundaries, including areas of traditional rural communities, ward committees and local communities • Boundaries that enable the delivery of main municipal services, particularly irrigation, water works, electricity and sewerage • The ability to generate a certain amount of revenue locally • topographical, environmental and physical characteristics of the area including watersheds • boundaries sensitive to economic conditions of each small municipality
RESEARCH STUDY ON CRITERIA FOR DETERMINING MUNICIPAL BOUNDARIES AND CATEGORISATION OF METROPOLITAN BOUNDARIES • The following are suggested as criteria for District Municipalities: • within the framework of national redistribution there is a need to share and distribute financial and administrative resources; • existing land use and transport planning. • the promotion of integrated social and economic development planning • the need for co-ordinated local, provincial and national programmes and services.
RESEARCH STUDY ON CRITERIA FOR DETERMINING MUNICIPAL BOUNDARIES AND CATEGORISATION OF METROPOLITAN BOUNDARIES • Four main categories of municipal demarcation criteria are put forward in the study: • Planning and Development Criteria: Many boundary adjustments particularly in the form of municipal amalgamations are premised on the need to provide better planning and economic development over an extended area. This includes the socio-economic interdependence of a given city-region. Section 25 (A, H, and J) Criteria and Indicators • Municipal Functioning Criteria: These include the collection of indicators that measure the delivery of municipal services and the administration of areas of municipal responsibility. Section 25 (D, G and I) Criteria and Indicators • Municipal Financial Criteria: These include the impact of demarcation on a municipality’s revenue and expenditures. Section ( 25 D, K) Criteria and Indicators • Municipal Governance Criteria: Referring to indicators that measure the decision making ability of a municipal government as well as questions of good governance over the city-region. Section (25 B, E, F, and L) Criteria and Indicators
RESEARCH STUDY ON CRITERIA FOR DETERMINING MUNICIPAL BOUNDARIES AND CATEGORISATION OF METROPOLITAN BOUNDARIES • Public participation, in particular, is raised as being an important component of boundary reform. International overview has pointed out that South Africa excels at good boundary criteria but lags behind other nations on the processes of reform. • It is suggested that the Board should be more transparent in releasing the substantial deliberations of its decisions. It should provide local government stakeholders with a written account of how it has applied the Section 24 and 25 criteria. • The option to hold public meetings is highlighted. Another way to improve public participation is by making meetings compulsory for all boundary investigations. The study suggests that the Board should always hold public meetings before it makes boundary decisions.
RESEARCH STUDY ON CRITERIA FOR DETERMINING MUNICIPAL BOUNDARIES AND CATEGORISATION OF METROPOLITAN BOUNDARIES • The study also suggests a need for provision to be made in legislation, for annexation or technical redeterminations/corrections. • Annexation/technical redetermination often involves the incorporation of a small piece of territory such as a farm. The Municipal Demarcation Act is conspicuously silent on how to deal with this issue of annexation. • The suggestion is that this process must be dealt with in legislation along the following lines: • Accommodation of growth by all municipalities must be accomplished without encumbering the initiating municipality and the responding municipality’s ability to achieve rational growth directions, cost effective utilisation of resources and fiscal accountability; • An annexation must be supported by growth projections, availability of lands within current boundaries, consideration of reasonable development densities, accommodation of a variety of land uses and reasonable growth options within each municipality (initiating and responding municipality);
RESEARCH STUDY ON CRITERIA FOR DETERMINING MUNICIPAL BOUNDARIES AND CATEGORISATION OF METROPOLITAN BOUNDARIES • An annexation must achieve a logical extension of growth patterns, transportation and infrastructure servicing for the affected municipalities; • Each annexation must illustrate a cost effective, efficient and coordinated approach to the administration of services; • Annexations must demonstrate sensitivity and respect for key environmental and natural features; • Coordination and cost effective use of resources will be demonstrated when annexations are aligned with and supported by integrated development planning, economic development plans, transportation and utility servicing plans and other related infrastructure plans; • Annexation proposals must fully consider the financial impact on the initiating and responding municipality; • Inter-agency consultation, coordination and cooperation is demonstrated when annexations proposals fully consider the impacts on other institutions providing services to the area;
RESEARCH STUDY ON CRITERIA FOR DETERMINING MUNICIPAL BOUNDARIES AND CATEGORISATION OF METROPOLITAN BOUNDARIES • Annexation proposals that develop reasonable solutions to impacts on property owners and citizens with certainty and specific time horizons will be given careful consideration and weight; • Annexation proposals must be based on effective public consultation both prior to and during any annexation hearing or proceedings. • Finally, the study identifies implications for the Board’s skills sets. • There are two main approaches in this regard. • Firstly, the Board could use consultants to support them on boundary investigations. This is largely the existing approach of the MDB and also is the approach used by most of the international Demarcation Boards sampled in this report. • The advantage of this approach is that enables the Board to draw on specialised expertise and independent insight when investigating boundaries. It is also a more cost-effective way of utilising resources given that consultants are only used when needed. • The disadvantage is that the Board does not develop a critical mass of internal capacity.
RESEARCH STUDY ON CRITERIA FOR DETERMINING MUNICIPAL BOUNDARIES AND CATEGORISATION OF METROPOLITAN BOUNDARIES • The second approach entails the Board developing its own internal expertise. If the MDB supports this approach it should employ empirical Social Scientists to help disaggregate census data and other relevant data bases (presuming that it does not have such people in its employ). • The advantage of this approach is that enables the Board to develop its own in-house capacity. • The disadvantage is that it will have highly paid professionals in its employ who may be underutilised in quiet periods. • The MDB’s preference is for the second approach.
RESEARCH STUDY ON SIZES OF MUNICIPALITIES IN SOUTH AFRICA • The brief for the research study on demarcation criteria was to explore: • Challenges faced by the new local government system in South Africa towards realising the vision of developmental local government, particularly those challenges that come with large, inclusive municipalities; • The relationship between municipal size and the efficiency of the delivery of municipal services. Is there an optimal size or range of sizes for a municipality in the South African context, from the standpoint of efficiency and to minimise duplication of resources and efforts? • The methodology for the study involved: • International Survey of Literature on Local Government Size • Development of Data Base of Demarcation Indicators • Conducted desktop analysis of relevant South African documentation • Conducted Interviews with relevant experts