Disaster Management Bill: finalisation; Medium Term Budget Policy Statement: report; Commission for Promotion & Protection of Ri

Meeting report

PROVINCIAL AND LOCAL GOVERNMENT PORTFOLIO AND SELECT COMMITTEES: JOINT SITTING
6 November 2001
DISASTER MANAGEMENT BILL: FINALISATION; REPORT ON MEDIUM TERM BUDGET POLICY STATEMENT; COMMISSION FOR THE PROMOTION AND PROTECTION OF THE RIGHTS OF CULTURAL, RELIGIOUS AND LINGUISTIC COMMUNITIES BILL: DELIBERATIONS

Chairperson: Mr Y Carrim

Relevant documents:
Disaster Management Bill [B58-2001]
Proposed amendments to Disaster Management Bill [Stage 4]
Report on Medium Term Budget Policy Statement (See Appendix)
Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities Bill [B62-2001]
Proposed amendments to Commission for the Promotion of the Rights of Cultural, Religious and Linguistic Communities Bill [Stage 2]

SUMMARY
The Committee commenced with final discussions on the Disaster Management Bill. Clause 58 (Disaster Management Volunteers) and Clause 63 (Special Events) were discussed at length. The Committee strongly felt that volunteers should be provided for in the Bill as an alternative that municipalities could have at their disposal in times of disaster. This is in addition to their usual volunteer units. The Committee left the provision on special events up to the Department to decide on what would be an appropriate formulation.

The Medium Term Budget Policy Statement report served as preparation for the Committee on their meeting with the Budget Committee the following day. Due to time constraints the Committee only briefly discussed proposed amendments to the Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities Bill.

MINUTES
Disaster Management Bill
The Chair urged members not to raise new issues on the Bill. New matters would be dealt with in the next session of Parliament in 2002. Mr Carrim guided the Committee through the proposed amendments of the Bill thereby checking on its correctness.

Chapter 7: Disaster Management Volunteers
Clause 58: Disaster Management Volunteers
The chapter and the clause are new and form part of the proposed amendments by the Department.
The Committee unanimously felt that volunteers off the street who help out in times of disaster should be recognised in the Bill. Even though the clause makes mention of a unit of volunteers to be established by municipalities, the Committee felt it necessary to recognise the good samaritan who assists disaster victims as a gesture of goodwill.
Mr G Olifant (ANC) pointed out that in times of disaster it is the everyday person who is first to assist victims, as formal volunteer structures inevitably require some time to mobilise.

Mr L Buys (Department) noted that on many occasions volunteers off the street often hamper rescue efforts by trained personnel. The problem lies in co-ordinating the efforts of informal volunteers.

Mr Olifant stated that surely structures could be set up by municipalities to co-ordinate rescue efforts by communities themselves.

Mr Bouwer asked why the Committee was so insistent that the Bill makes mention of off the street volunteers.

The Chair stated that one reason could be to alert municipalities that they have persons from outside their structures at their disposal. Another reason could be to provide for cohesion in efforts when disasters strike.

Mr Bouwer proposed that a provision could be included, which states that the Act does not prevent participation of outside volunteers.

Mr Smith felt that a positive formulation allowing for participation of outside volunteers would be more preferable.

The Committee agreed.

Mr Bouwer presented a possible option to the Committee and it was accepted.

Clause 63: Special Events
Mr P Bouwer (Department) referred to the new clause and asked the Committee for guidance on what should be provided for in it. He added that the definition of a "special event " per se is not the problem.

Mr P Smith (IFP) agreed that the size of the crowd at a special event is not the problem. The problem lies with controlling the crowd irrespective of its size. The obligation to have contingencies in the event of a disaster is the issue.

The Chair asked the Department to draft the appropriate contingencies that would have to be taken.

The Committee also agreed to additional minor technical changes to the Bill.

Report on Medium Term Budget Policy Statement (MTBPS)
Mr A Lyle (ANC) presented a report on the MTBPS to the Committee. The idea behind the report is to assist the Committee in the manner in which it could influence the budget for the year 2002/2003.

The Committee was referred to ‘the Issues to Pursue’ section of the report. Mr Lyle outlined issues that he felt the Committee had to pursue with the Budget Committee.
The Department should explain the reason why there had been rollovers to the value of R 81,009 million from the previous year. Municipalities had apparently been allocated R 578 million for transitional purposes. The concern was whether the figure was sufficient.

For a detailed look at the issues outlined by Mr Lyle please refer to the attached document.

Discussion:
Mr Lyle invited comments from the Committee on the MTBPS.

Mr P Smith (IFP) pointed out that provinces and local government had not spent
R10bn that had been allocated to capital projects. To what extent had efforts been made to capacitate provincial and local government to spend the funds?
He also asked how the budget is to address the limited fiscal capacity of municipalities.

Rev A Goosen (ANC) noted that if Department did not spend R 81 million that had been allocated how do they expect to get increases for the next budget.

Mr Lyle agreed that if you are unable to spend money that you have been allocated in the past how can you expect to be given increases in the future.

The Chairperson, Mr Carrim stated that government is moving from macro-economic stability to micro-economic reforms. The fact that the budget deficit and interest rates have dropped allows for focus on infrastructural investment and capital expenditure.
The Chair noted that South Africa has one of the best models of what local government should be. The problem however lies in the funding of local government. Local government cannot be capacitated without proper funding.

Ms C Lobe (ANC) asked how the provision of basic services to impoverished communities is linked to the huge debts that are still outstanding from the very same communities. She also stated that the issue of how amalgamated municipalities need to cope with the increased burden of the poorer towns that fall under their jurisdiction should be addressed.

Mr B Kompela (ANC, Free State) emphasised that nodal points are critical to poverty alleviation. He asked to what extent are nodal points working and what could be done to solve problems associated with them.

Mr Lyle assured members that their comments would form part of the inputs to be made to the Budget Committee.

Commission for the Promotion and Protection of the Rights of Cultural, Religious and Linguistic Communities Bill
Mr Carrim guided the Committee through the proposed amendments of the Bill thereby checking on its correctness. He asked members to once again only to raise issues that are of concern to them. Due to time constraints the Committee was only able to progress up until Clause 5.

New Clause 5: Powers and Functions of Commission
The Chair asked why the clause had been phrased in the active voice. He asked the Department to rephrase it.

The Department agreed.

The meeting was adjourned.

Appendix
Medium Term Budget Policy Statement (MTBPS) Prepared by Lyle (ANC MP)

Overview

· Economic growth will be slower than projected in the February budget: (3.5 %). The MTBPS projects growth from 2.4% this year to 3.5% a year over the MTEF - this is 1.1% decrease However, economic performance is expected to improve steadily in the period ahead.

· Government will be able to respond to the downturn in the economy with an appropriate mix of tax relief{ accelerated infrastructure spending and support for social services, and municipal infrastructure development together with an easing in monetary policy.

The MTBPS outlines this response and proposes a medium term framework for the 2002 budget

Policy Priorities for the 2002 budget:

· Addressing poverty and vulnerability which are the core principles of RDP, remains the central challenge in setting budget priorities and spending plans.

· The personal income tax structure will again be adjusted. to provide relief to lower and middle income tax payers with a view to narrowing the gap between the maximum personal rate and the rate of tax of companies.

· The expenditure increases for the 2002 budget will be on health services, municipal infrastructure, housing and improved policing.

· Budgetary provision for the electrification programme will also be stepped up - R600 million was voted in 2000/01 and this will increase to R950 million in the year 2002 budget.

· R605 million I proposed on the labour vote to provide for shortfalls on UIF and the R300 million for the post office is reintroduced this year

· The proposed budget framework provides for strong growth in transfers to municipalities, recognising their critical role in extending basic services to under-served households and communities.

· Growth in spending picked up from 6.65 (99/200) to 8 9% in 2000/01. Underspending in 2000/01 was lower than in 1999 / 00 and this is attributed to the structural changes to conditional grants and improved capacity in government (p32).

N.B. The robust tax collection and the decrease in the debt deficit ( (5,7% this year from 6,3% in 1998) has evidently contributed to increased allocations in social services.

Provincial and Local Government Finance:

Significant developments in provincial and local government include:

· A change in the provincial equitable share formula to take account of the increased spending commitments in social security grant.

· A continuation of strong growth in infrastructure grants

· Changes in the local government grant system to take account of the new municipal boundaries and fiscal capacities of new municipalities.

Funding of provincial government

Equitable Share

· the largest in the provincial allocations will rise from R105,3 billion in 2001/02, to R1331,1 billion in 004/05,an average annual growth rate of 8.1 %.

· Divided horizontally between provinces using the FFC (1996) recommendations = to allocate resources on the basis of relative need between provinces, taking into account the demographic and economic profiles of the provinces (Table 6.1, p77, MTBPS).

Conditional grants

Funding of local government:

The MTBPS outlines challenges for the local government (p82 MTPBS).

· Challenges of the transformation phase

· Provision of basic services to all residents - free services to the poorest.

· The amalgamation process which will result in municipalities having to contain personnel expenditure which has risen rapidly to an average in the order of 31% in the last few years

· The pressure of equalising salaries across amalgamated municipalities.

· Some municipalities have limited effective tax capacity at present.

Allocations to local government are projected to grow faster than the other two

spheres in recognition of the above challenges.

The Equitable Share

· the formula now takes into account free basic services

· is projected to increase by an average of 13.9% a year over 2001/02 rising to 5.7 billion by 2004/05.

· For 2001 budget it was R3, 560 billion and has been adjusted to 3,888 billion

- this is an increase of R328 million, 9.2% (table 6.3, MTBPS, p85).

· Changes to the equitable share will be effected through addressing the weak fiscal capacity of categories B and C municipalities – ie by adjusting the institutional component ("I" grant) of the formula as per FFC's proposals.

It is difficult to establish whether the allocations to the equitable share and conditional grants are reasonably adequate unless:

- Municipal IDPs with monetary values are used as a benchmark. IDPs could also have some limitations in that they could be too ambitious and unrealistic and not present a true picture of a municipality, or

- A through study of the basic needs of municipalities is conducted.

Transition grants:

· We note the significant increase in the adjusted figure for: 2002 from 250 million to R578 million. There is a decrease to R200 million in the year 2002/03 and nothing has been allocated for the year 2003/04 and 2004/05.

· The sudden drop in allocation for the year 2002/03 and the fact that there is no allocation reflected for the last two years of the MTEF cycle poses a real concern especially that it has been a general view of the Committee that he implementation of the new system of local government is projected to continue for at least not less than ten years. The implementation of the Municipal Structures and Systems Acts as well as the forthcoming legislation will be part of this process.

FFC proposals:

· FFC submitted 22 recommendations for the Division of Revenue 2002 - 2003 published in June 2001.Nine of such recommendations relate to provincial government and 13 to local government.

· Although government still needs to explore the practical implications of FFC's proposals, it has reservations about the implicit suggestions that the constitutional mandates provisions relating to basic services into a formula for dividing resources among the three spheres. Instead, government prefers to leave this to political judgement informed by the rigorous technical analyses and to provisions of legislation approved by parliament.

· In the case of local government, a task team comprising the key national government departments, the FFC and SALGA will be established to take the FFC’s recommendations forward.

Issues to pursue:

· Department to explain the R81, 009 million roll-overs

· If one divides the adjusted figure of R578 million for the transition grant by 284 municipalities there will be an average allocation of R2 million per municipality

- Is this sufficient?

- Why a drop in the allocation for the year 2002/03 and no allocation at all for the for 2003/04 & 2004/05

· National government is phasing in a consolidated, formula driven and decentralised infrastructure grant to municipalities, as evidenced in the Division of Revenue Act 2001 This process will not be implemented until the division of fiscal powers and functions between category B and C municipalities have been finalised. (Can the Department inform the Committee about progress in this regard)

· The Institutional Support (the "I") grant has been adjusted to give relief to municipalities that have little or no revenue raising capacity and this is for the short-term. Are there any measures in place to address the lack of fiscal capacity in the long-term, especially that municipalities will soon be expected to implement the new property rates system?

· With reference to the Portfolio Committee Budget Review report (ATC 30 May 2001), the Committee volunteered to contribute to the implementation of the ISRDS and UWS programmes. What are the challenges in he implementation of especially the 13 nodal points that were identified by the President.