BUDGET REVIEW: MUNICIPAL DEMARCATION BOARD PORTFOLIO COMMITTEE ON PROVINCIAL AND LOCAL GOVERNMENT

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BUDGET REVIEW MUNICIPAL DEMARCATION
BOARDPORTFOLIO COMMITTEE ON PROVINCIAL AND
LOCAL GOVERNMENT

• 15 April 2005

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REPRESENTATION AND DOCUMENTS

• From the Board
• Dr V Mlokoti Chairperson Municipal Demarcation
  Board
• Mr R M Somanje Chief Financial Officer.
• Mr R H Monare Manager Municipal Demarcation
  Board
• (Chief Executive
  Accounting Officer)
• Documents Tabled
• Annual Report 2004 2005
• Strategic Plan 2005 - 2008

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OVERVIEW

• The Board.
• Concerns and Queries raised in 2004.
• Receipts for the Year 2004/05.
• Allocation of MTEF Funding 2004/05.
• Expenditure 2004/05.
• Outputs and Developments 2004/05.
• Ward Delimitation
• Municipal Capacity Assessments
• Analysis of the Municipal Roads and Public
  Transport Functions
• Categorisation Study
• Information on Consultants 2004/05.
• Strategic Direction Medium Term Strategy
  2005/06 2008/09.
• Approved Budget 2005/06.
• Draft Budgets 2006/07 2008/09.
• Conclusion.

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THE BOARD

• 9 Members since 1 February 2004
• Chairperson the only full time member of the
  Board
• Manager (CEO and Accounting Officer) in charge of
  the Boards Administrative Arm
• 4 Operational Clusters
• 27 Staff Positions in the Establishment
• 4 Vacant
• 2 Frozen
• 85,7 Black
• 38 Female
• 4,7 Disabled.

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CONCERNS AND QUERIES RAISED IN 2004

• Memo dated 19 October 2004 sent to the
  Chairperson of the Portfolio Committee,
  explaining all concerns that were raised on 11
  October 2004
• The concerns and reservations raised included
• The Boards expenditure being possibly excessive,
  and rising from year to year at too high a rate,
  with respect to
• Professional Fees
• Office Expenses
• Staff Remuneration
• Board Members Remuneration
• Travel and Accomodation
• Consultants employed by the Board possibly taking
  too substantial a portion of the Boards funding,
  whether the money being spent on consultants is
  justified, and that the money could be more
  appropriately spent on young emerging black
  graduates

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CONCERNS AND QUERIES RAISED IN 2004

• Salaries being paid to Staff possibly being
  totally inappropriate, and thus the request for
  the salaries to be broken down for the Portfolio
  Committee, to determine if the salaries are
  appropriate.
• The possibility that the Board may be spending
  its money on things that are irrelevant in as far
  as its core mandate is concerned, and thus the
  financial difficulties it faced
• A former Member of the Board leaving the Board to
  set up a consultancy and get work from the Board,
  thus indicating that it is more lucrative to work
  for the Board as a consultant, than to stay as a
  Board Member
• Steps taken by the Manager MDB to rectify issues
  raised under emphasis of matter in the 2003/04
  year.

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CONCERNS AND QUERIES RAISED IN 2004

• As requested by this Committee, our memo provided
  in detail
• A breakdown of all expenses incurred on
  professional fees and on Office Expenses
• A clear indication that expenditure on
  professional fees was fully justified, and that
  it was incurred in direct pursuance of the
  Boards core mandate, and the fact that taking
  away the expenditure on professional fees would
  have seriously compromised the Boards work
• An explanation of the fact that the vast majority
  of the consultants that have been employed at the
  Board are emerging Black graduates and
  professionals, who actually gain a major boost in
  their careers as a result of working for the
  Board
• The fact that no board member has ever left the
  Board to set up a consultancy, so as to get work
  from the Board.

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CONCERNS AND QUERIES RAISED IN 2004

• Confirmation of the fact that in view of the
  Boards mandate and projects, scaling down on
  consultants just for the sake of reducing
  numbers, would mean employing additional staff at
  the Board, and this would have a nett effect of
  increasing costs rather than reducing them
• A clear demonstration that the annual escalations
  on office expenses and staff salaries were
  perfectly normal, and that there was nothing
  excessive about the escalations
• An explanation of how staff salaries at the Board
  are made up
• An explanation of the fact that Board Members
  remuneration are simply what has been determined
  by the Minister for them, as well as
  reimbursements of their out-of-pocket expenses
  while in the course of their duties as Board
  members. There is therefore nothing excessive
  about their remuneration

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CONCERNS AND QUERIES RAISED IN 2004

• With respect to travel and accomodation, an
  explanation of the fact that
• Board Members cannot be expected to be largely
  office-bound if they are going to be effective
• Board Members, who are all part time except the
  Chairperson, must travel to attend Board
  meetings
• The Board is well known for its frugality in its
  modes of travel, and their accomodation around
  the country.
• An explanation of the effective steps taken by
  the Manager to rectify issues raised under
  emphasis of matter in 2003/04 Annual Report.

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RECEIPTS FOR THE YEAR 2004/05
Original MTEF Allocation 16,023,000
Additional MTEF Allocations during the Year First Additional Allocation Second Additional Allocation 1,000,000 5,500,000
Total MTEF for the Year 22,523,000
Add Other Funding (Donor Funding) 3,490,765
Other Income (Interest Sales) 164,981
TOTAL INCOME AT OUR DISPOSAL 26,178,746

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ALLOCATION OF MTEF FUNDING
Per Cluster/Division Allocation 2004/05 Proportion of MTEF
Administration HR 3,862,708 17,15
Finance Procurement Control 2,018,675 8,96
GIS IT Support 5,209,300 23,13
Research Implementation 7,790,864 34,59
Manager Board 3,641,453 16,17
TOTAL 22,523,000 100
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ALLOCATION OF MTEF FUNDING
Per Standard Item Allocation 2004/05 Proportion of MTEF
Personnel Remuneration 5,171,216 22,96
Personnel Training 102,055 0.45
Compensation of Board Members 1,638,600 7,28
Administration Expenses 2,956,465 13,13
Professional Fees Core Business Support Operations 7,607,450 207,330 33,78 0,92
Travel Accomodation 2,772,127 12,30
Capital Expenditure 524,723 2,33
Other Expenditure Items 1,543,034 6,85
TOTAL 22,523,000 100
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EXPENDITURE 2004/05

• Total expenditure, excluding donor funding and
  expenditure on publication of ward boundaries,
  amounted to R26,622,928.
• Balance of R395,370 at 31 March 2005, fully
  committed.
• Expenditure on publication of ward boundaries
  envisaged to total R3,9 million, and will be paid
  from the 2005/06 budget.
• Decision taken in consultation with National
  Treasury and Auditor-General
• To avoid over-expenditure in the 2004/05 year
• In view of the additional R9,1 million allocated
  to the Board in the latter part of 2004/05 to
  assist with ward delimitation, and thus added to
  the 2005/06 MTEF allocation.
• See Annexure A of the Annual Report.

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OUTPUTS AND DEVELOPMENTS 2004/05

• Outputs during the year in the following areas of
  work
• Ward Delimitation
• Municipal Capacity Assessments
• Analysis of the Municipal Roads and Public
  Transport Functions
• Study of current metropolitan municipalities and
  implication for future categorisation of
  additional Category A municipalities
• Actvity on Municipal Boundary Re-determinations
  minimal, as priority was given to ward
  delimitation.

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WARD DELIMITATION

• Ward delimitation was done in terms of Local
  Government Municipal Structures Act, 1998
• Wards were being delimited for local and
  metropolitan municipalities (Municipalities with
  less that 7 councillors do not have wards)
• 3754 wards in 2000 elections, 3878 wards for
  2005/6 elections
• The number wards, and ward boundaries changed as
  a result of
• - an increase in the number of councillors
• - migration of voters
• - Additional voters registered in wards
• - requirement that each ward in the
  municipality
• must have approximately the same number of
  registered
• voters (15 deviation allowed).

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STRUCTURES AND CONSULTATION FOR WARD DELIMITATION

• Board takes final decisions
• MDB Boundary Committee IEC represented
• Local Elections Technical Committee IEC
  represented
• Delimitation Committees IEC represented
• Consultation with municipalities and the public
  in different phases.

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DELIMITATION DONE IN PHASES
Phases Time Frame Process
Phase 1 20 Feb 2004 Finalise outer boundaries of municipalities for the division of the voters roll into municipal segments MDB/IEC
Phase 1 20 Feb 2004 Divide the national common voters roll into municipal segments - IEC
Phase 1 22 April 2004 Publish formula for the number of councillors - Minister.
  May-Oct 2004 Publish number of councillors - MECs. (Major delays. Target date was 12 May 2004)
Phase 2 June - Dec 2004 Public consultation process including public hearings - MDB
Phase 3 Jan Apr 2005 Gazette wards for objections, finalise ward boundaries and hand over to IEC for electoral process - MDB
Phase 4 Apr Dec 2005 Electoral process - IEC
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HOW DID WE DRAW THE BOUNDARIES?

• GIS Based
• In consultation with IEC
• Used different data sets
• Applied the criteria in Schedule 1 of Structures
  Act
• Public submission considered by relevant
  delimitation committee
• Various map sets released

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EXAMPLES OF RULES APPLIED IN DRAWING WARD
BOUNDARIES

• Ward boundaries should be contiguous.
• Retain existing ward boundaries as far as
  possible.
• Ensure that when communities, reading from the
  ward map, will be able to identify ward
  boundaries on the ground. Use roads, fences,
  rivers etc.
• Do not split obvious groupings of
  villages/suburbs, traditional areas etc.

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EXAMPLES OF RULES APPLIED IN DRAWING WARD
BOUNDARIES (Cont)

• Keep the number of voters as close to the norm as
  possible to ensure that certain voting stations
  does not get overburdened by having too much
  voters to accommodate in the required time frame
• Take physical characteristics into account
• adequate road networks should exist
• no physical barriers such as a freeway, river,
  servitudes, fences etc. that could hinder
  accessibility to voting stations
• Avoid people having to cross steep valleys,
  mountains, rivers, canals etc
• Use Voting District boundaries, as building
  blocks.

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PHASE 3 TO PHASE 4

• Map Set 3 was approved by the Board on 25
  February 2005
• The Set was gazetted for objections on 02 04
  March 2005
• Closing date for objections was on 31 March 2005
• Delimitation Committees examined and considered
  the objections on 08 and 09 April 2005, and put
  together Map Set 4
• Board sat on 14 April 2004 to determine, vary or
  withdraw the ward boundaries of Map Set 4
• Formal handover of the final ward boundaries to
  the IEC will be on 20 May 2005.

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WARDS OPEN QUESTIONS

• Should VDs again be used as building blocks in
  future local elections?
• Is the existing legal framework enhancing
  transformation and stabilisation of
  municipalities? (Spatial re-configuration every 5
  years)
• Should the number of councillors/wards not be
  fixed in line with Parliament and Provincial
  legislatures? (at least strict criteria to change
  number of councillors/wards only in exceptional
  circumstances)
• How can democracy and development be balanced?
  (using wards for planning)
• Do we need a review of the criteria for ward
  delimitation? (a number game, disregarding
  planning and service delivery needs, some
  criteria should be applied to electoral process
  etc)
• Should the review of ward boundaries not be a
  continuous process to satisfy local needs for
  service delivery and development? (perhaps a
  similar process as for outer boundaries)
• How can changes to municipal boundaries be
  synchronised with changes to ward boundaries? (
  now a stop and go process, wards only every five
  years)
• Changes to the system would required timeous
  changes to the legal framework!

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MUNICIPAL CAPACITY ASSESSMENTS

• For the 2004 capacity assessments, timeframes,
  the process was commenced earlier to ensure that
  the results can be available to municipalities
  for their IDP process.
• Recommendations on the adjustment of powers and
  functions between local and district
  municipalities were made to the MECs for Local
  Government in December 2004.

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Capacity Assessments Projects for 2004/2005
Activity Expected Output Timeframe
Drafting of Provincial Local Government Capacity Reports A report per province which examines The provincial changes in overall local government capacity between 2002 -2004. An indication of the provincial trends and variations in the performance of powers and functions January/early February 2005
Drafting of National Local Government Capacity Report A national report Indicating the national shifts in municipal capacity, provincial comparison, national trends. Assessment of the municipal boundaries in relation to the capacity February/early March 2005
Update of the Viability Report The viability report would be updated based on the data received in the August 2004 capacity assessment. February/early March 2005
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ANALYSIS OF THE MUNICIPAL ROADS AND PUBLIC
TRANSPORT FUNCTIONS

• A national Report clarifying uncertainties around
  these functions.
• Second Draft sent out to Board members for
  comments.
• Second Draft to be tabled at the meeting of the
  Powers and Functions Committee on 9 May 2005, to
  seek comments from provinces.

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CATEGORISATION STUDY

• A comparative report on the performance of
  existing metros, international trends, and future
  scenarios
• Second Draft due end April 2005.

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Information on Consultants 2004/05
Project Number of Consultants Used 2004/05 Profile of Consultants Used 2004/05
Ward Delimitation Process 14 12 Black Males 2 Black Females
Municipal Capacity Assessments 46 27 Black Males 13 Black Females 2 White Females 4 White Males
Study of the metropolitan Municipalities 01 1 Black Male
Analysis of Municipal Roads and Public Transport Functions 01 1 Black Male
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STRATEGIC DIRECTION MEDIUM TERM STRATEGY
2005/06 2008/09

• Strategic Plan identifies a number of Key Board
  Objectives that the Board will pursue over the
  current MTEF period
• Key Board Objectives aimed at directly ensuring
  that the Board fulfils its mandate
• The Key Objectives firmly based on the mission
  and mandate of the Board
• Other strategic objectives pertaining to
  organisational and resources management, will
  also be pursued.
• The Key Strategic Objectives, with Indicators and
  Timeframes, are outlined in pp. 6 10 of the
  Strategic Plan.
• Allocation of resources in terms of requirements
  per key board objective.

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STRATEGIC DIRECTION MEDIUM TERM STRATEGY
2005/06 2008/09

• Organisational and resource management strategies
  include
• Capital Investment Strategy
• Management Strategy for Financial Assets and
  Liabilities
• Strategy on the use of consultants
• Human Resources Strategy
• Information technology Resource Strategy

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APPROVED BUDGET 2005/06

• Total Receipts of R23,9 million, with additional
  R9,1 million allocated in the last part of the
  last financial year
• Some R3,9 million will go to gazettes for wards
  (2004/05)
• Approved budget in Annexure A of the Strategic
  Plan, and Annexure B of the Annual report.
• Indications are that the allocation for 2005/06
  will be adequate for our work in this financial
  year.

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DRAFT BUDGETS 2006/07 2008/09

• Draft Budgets indicate shortfalls of
• R5,1 million for the year 2006/07.
• R5,8 million for the year 2007/08.
• Reasons for the shortfalls are
• The MTEF allocation of R17,177,000 for 2006/07 is
  a drop of 28 from the 2005/06 allocation
• The MTEF allocation of R18,014 for 2007/08 is a
  drop of 25 from the 2005/06 allocation
• Both cuts are too severe, and will compromise the
  Boards operations
• Our proposal is that the 2005/06 be dropped by 7
  for 2006/07, and by about 0.4 for 2007/08
• Our proposal takes into account the need to
  maintain our operations at the same level we
  are not expanding and to take into account
  annual inflation

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Conclusion

• The concerns and reservations raised by the
  Portfolio Committee in the last year were
  attended to with urgency
• A larger proportion of the Boards receipts for
  2004/05 has been spent on the core business of
  the Board, with support services taking up a
  visibly smaller proportion
• We have deferred expenditure on the publication
  of wards to the current financial year, to avoid
  over-expenditure on the 2004/05 allocation
• The Board has had a successful year in terms of
  outputs
• We have a strategic plan in place to guide our
  operations going forward
• Indications are that the MTEF allocations for the
  current year 2005/06 will be adequate to cover
  our operations for the year
• Our estimates indicate shortfalls for the years
  2006/07 and 2007/08

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Thank you