WEDNESDAY, 24 OCTOBER 2001 __

          PROCEEDINGS OF THE NATIONAL COUNCIL OF PROVINCES
                                ____

The Council met at 14:05.

The Chairperson took the Chair and requested members to observe a moment of silence for prayers or meditation.

ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS - see col 000.

                          NOTICES OF MOTION

Ms E C GOUWS: Chairperson, I hereby give notice that I shall move:

That the Council -

(1) notes the increase in the number of cases of child pornography under investigation; (2) further notes that most Internet child pornography sites require credit card details before access is allowed;

(3) welcomes the policy of at least one credit card company not to authorise such transactions; and

(4) calls on -

   (a)  all credit card companies to implement similar policies;


   (b)  Internet service providers to formulate a policy to identify and
       eradicate child pornography websites; and


   (c)  all South Africans to act to eradicate  child  pornography  from
       the Internet.

Mrs A M VERSFELD: Chairperson, I hereby give notice that at the following sitting of the Council I shall move:

That the Council -

(1) notes that the DP wishes to congratulate Agri Wes-Cape for the initiative taken to set up a code of conduct for agriculture in the Western Cape - the first province to have such a code;

(2) also notes that 32 organisations contributed to the development of this code over the past two years, the monitoring and implementation of which will be negotiated with interested and affected parties;

(3) further notes that in the preamble of the code, Agri Wes-Cape understands that our conduct has consequences for the economic growth, natural beauty, social stability and environmental integrity of this province'' andwishes to heal the wounds and injustices of our past’’;

(4) acknowledges that although the significance of this conduct lies within the monitoring and implementation thereof, the DP calls on all the other provincial agricultural unions to follow this example; and

(5) echoes the words of Adv Wallace A Mgoqi, ``history will honour Agri Wes-Cape’’.

Mr L G LEVER: Chairperson, I hereby give notice that at the next sitting of the House I shall move:

That the Council -

(1) expresses its concern at the latest evidence of xenophobia in the Zandspruit informal settlement in Honeydew;

(2) condemns the intolerance of South African residents towards their neighbours of Zimbabwean origin;

(3) regrets the destruction of property and displacement of people; and

(4) calls on all people involved to show restraint and respect for the rights of others.

Rev M CHABAKU: Chairperson, I hereby wish to give notice of the following motion:

That the Council -

(1) notes with regret Israel’s defiance of the United States by rejecting its demands to pull back from its military offensive against the Palestinian authority;

(2) further notes that such action will jeopardise efforts to find peaceful solutions to the Middle East conflict and will increase tensions;

(3) notes in great agony the constant use of excessive and unwarranted force and extrajudicial killings by Israel;

(4) therefore condemns Israel’s invasion over the past week, which has left 22 Palestinians dead, adding to the hundreds that have died; and

(5) mourns the loss of all lives of all backgrounds and resolves that we all stand up for justice for all people so that there can be peace for both Palestinians and Israelis.

                        NEW AFRICA INITIATIVE

                         (Draft Resolution)

Mr P D N MALOYI: Chairperson, I move without notice:

That the Council -

(1) notes the meeting at Abuja for the successful implementation of the New Africa Initiative;

(2) further notes the resolve to end Afro-pessimism and forge a common development plan for the African Renaissance;

(3) commends our President for his initiative in developing the Millennium Africa Plan; and

(4) further congratulates our President for his initiative in achieving support from Britain, America and other countries for the New Africa Initiative.

Motion agreed to in accordance with section 65 of the Constitution.

                        BIOLOGICAL TERRORISM

                         (Draft Resolution)

Mr J L THERON: Chairperson, I move without notice:

That the Council -

(1) recognises the real threat posed by biological terrorism, particularly the use of anthrax;

(2) notes that the latest deaths from anthrax in the United States are of postal workers handling post destined for the US Congress; and

(3) calls on the South African Government to -

     (a)     take all  possible  steps  to  limit  the  risk  to  postal
          workers and government employees handling departmental  postal
          items; and


     (b)     ensure that hoaxers are dealt  with  firmly  to  discourage
          these practices.

Motion agreed to in accordance with section 65 of the Constitution.

                    SEX EXPLOITATION OF CHILDREN

                         (Draft Resolution)

Mr K D S DURR: Chairperson, I move without notice:

That the Council -

(1) notes -

   (a)  with concern,  the  escalation  of  sex  exploitation  in  South
       Africa, including child rape and child abuse;


   (b)  that approximately 180 children per  day  are  estimated  to  be
       abused and about 60 children raped per day;


   (c)  the serious growth  in  the  trafficking  of  children  for  sex
       exploitation, often dressed up as sex tourism; and


   (d)  with concern, that police do not recognise child trafficking  as
       a crime, but only abduction and kidnapping, with  almost  9  000
       cases being reported last year; and

(2) calls upon the Government to take the necessary steps, including introducing legislation, to counter the appalling exploitation and abuse of our children, including child trafficking, child prostitution and child pornography.

Motion agreed to in accordance with section 65 of the Constitution.

       RESUMPTION OF DEBATE ON INTERGOVERNMENTAL FISCAL REVIEW

Mnr J P GELDERBLOM (Wes-Kaap): Voorsitter, ek wil met ‘n ander se kalwers ploeg en hom nie woordeliks aanhaal nie, maar president John F Kennedy se woorde is tog van kardinale belang. ``It was not the economy that built our roads, but the roads that built the American economy.’’

Soos in verskeie ander provinsies het ons ook al jare lank ‘n beleid waarvolgens padprojekte se haalbaarheid en doeltreffendheid aan die hand van sosio-ekonomiese ontledings beoordeel word. Dit wil sê die voordeel vir die provinsie se mense en die land in sy geheel word bepaal. Die jongste analitiese stelsels sluit in sagteware wat deur die Wêreldbank as geskikte maatstaf aanvaar word. Daarná eers word die finansiële haalbaarheid van ons padbouprojekte nagegaan.

Uiteraard is die stelsels wat met besluitneming oor projekprioritisering help, nie die uiteinde van die saak nie. Konsultasie met die plaaslike gemeenskappe is seker die belangrikste faktor wat in ag geneem moet word.

Vir projekte waar sosiologiese aspekte aandag verg, word bykomende maatstawwe soos die armoedsvlakke en werkloosheidsyfers in die gebied in die matriks ingebou om die geskiktheid van sulke projekte te bepaal. (Translation of Afrikaans paragraphs follows.)

[Mr J P GELDERBLOM (Western Cape): Chairperson, I want to plough with another man’s heifer and not quote him verbatim, but President John F Kennedy’s words are nevertheless of cardinal importance. ``It was not the economy that built our roads, but the roads that built the American economy.’’

As in various other provinces, for years we have had a policy in terms of which road projects’ viability and effectiveness are judged according to socioeconomic analyses. This means to say that the advantage for the people of the province and the country as a whole is calculated. The latest analytical systems include software that is accepted by the World Bank as a suitable yardstick. After that the financial viability of our road-building projects is determined.

Of course the systems that assist with decision-making in respect of project prioritisation are not the end of the matter. Consultation with the local communities is certainly the most important factor that must be taken into consideration.

In respect of projects in which sociological aspects need attention, additional yardsticks such as poverty levels and unemployment figures in the area are built into the matrix in order to determine the suitability of such projects.]

However, all the analyses in the world and establishing a list of high- priority projects will get us nowhere if we are unable to channel the right funding firstly to the maintenance of our existing road networks; secondly, to upgrading them and last, but not least, to areas of sociological need. In the Western Cape, our agricultural and tourism sectors are of vital importance to the economy, and the infrastructure to support these, and other industries, is vital.

Rural development is a high priority for the provincial government and this needs infrastructural support. The provincial government also places a high priority on the use of public transport for commuters in the urban areas and for the support of rural development. Without a good road network, road- based public transport cannot operate successfully.

In the effort to maintain what we have, the Western Cape government has placed special emphasis on the containment of overloading of heavy vehicles. A series of contracts is being issued in terms of which our weighbridges will operate for 16 to 24 hours a day. We are hoping that SMME firms will as heavily involved in this venture as they will be in various other projects. Poverty-relief funding for transport, most of it not managed by the provincial government, will also help to provide job opportunities.

As politicians, though, we would be failing in our duty and it would be irresponsible of us to do nothing of consequence about a road network that is tending towards old age and where walking sticks, hearing aids and operations are all coming too late to save faculties that could have been saved with timely interventions.

In die Wes-Kaap is ons diep dankbaar vir die nasionale infrastruktuurfonds en die toekennings daaruit, al is dit gering. Dit is belangrik sodat ons ‘n doeltreffende padnetwerkstelsel kan bewerkstellig.

In die provinsie se beleid soos uiteengesit in die Witskrif oor Vervoer van 1997, word bepaal dat ons ons voertuiglisensies na meer realistiese vlakke verhoog en sodoende die moontlikheid van nuwe programme inbring. Ons het die hoogste tariewe in die land, maar dit is met ‘n spesifieke doel.

In die Wes-Kaap het ons ook ‘n tolpadwet. Chapmanspiek, wat tans vir verkeer gesluit is, is ‘n moontlikheid. Tolgeld sal egter na verwagting slegs help om paaie te herstel, dit sal geensins ‘n inkomstestroom vir die provinsiale regering genereer nie. Dit is net nog ‘n belasting waaronder die mense gebuk gaan.

Ná ‘n nat winter in dele van die Wes-Kaap is die teerpaaie van die provinsie en dié van stadsrade aan die verbrokkel. Ons hoër order gruispaaie het ‘n gemiddelde dikte van 42 millimeter gruis terwyl ons graag ‘n minimum gruislaag van 50 millimeter sou wou hê. Voertuie sit vas in die hoofpaaie wanneer die kors breek.

Met al die bogenoemde bronne in ag geneem, is die totale jaarlikse bedrag wat vir die administrasie en instandhouding van die hoër order paaie beskikbaar is, sowat R350 miljoen. Ons het jaarliks ten minste R800 miljoen nodig om die agteruitgang te stuit, om nie van agterstande uitwis te praat nie.

Die agterstand in instandhouding van provinsiale paaie is tans R1,3 miljard en die 20 000 en meer kilometer van laagste order paaie is dan nog nie eens in berekening gebring nie. Dit het ‘n uiters nadelige invloed op landelike ontwikkeling in die Wes-Kaap. Eise is aan die instroom vir voertuie wat op ons swak paaie beskadig word. (Translation of Afrikaans paragraphs follows.)

[In the Western Cape we are deeply appreciative of the national infrastructure fund and the allocations made from it, even though they are negligible. It is important so that we can build an effective road network system.

The policy of the province, as expounded in the White Paper on Transport of 1997, provides that we should raise our aeroplane licences to more realistic levels and in so doing introduce the possibility of new programmes. We have the highest tariffs in the country, but this is the case for a specific purpose.

In the Western Cape we also have a law in respect of toll roads. Chapman’s Peak, which is at present closed to traffic, is a possibility. Toll fees, however, are only expected to help with road repairs, they would not in the least generate revenue for the province. It is just another tax burden the people will have to bear.

After a wet winter in parts of the Western Cape the tarred roads of the province and those of town councils are disintegrating. Our higher-order gravel roads have an average depth of 42 millimetres of gravel, while we would like then to have a 50-millimetre thick minimum layer of gravel. Vehicles get stuck in the main roads when the crust breaks.

Taking all the aforementioned sources into consideration, the total annual amount available for the administration and maintenance of the higher-order roads is about R350 million. We annually require at least R800 million to arrest deterioration, not to mention eliminating backlogs.

The backlog in the maintenance of provincial roads is R1,3 billion at present and the 20 000 and more kilometres of lowest-order roads have not even been taken into consideration. This has an extremely detrimental effect on rural development in the Western Cape. Claims are streaming in in respect of vehicles that are damaged on our poor roads.]

I repeat that we as responsible politicians must ensure not only that the fiscal policy provides the framework within which our officials can operate to preserve and extend the infrastructure that is so vital to the economy of the country, but also provide the resources. [Applause.]

Mr S M A MALEBO (Free State): Ke a leboha modulasetulo. [Thank you, Chairperson.]

Chairperson, the state of our roads has deteriorated. This deterioration has a very negative impact on the performance of our economy and its growth and on service provision by Government.

A recent assessment puts about 60% of our roads in the ``very poor’’ category. This high percentage is not because of the effects of the democratic Government. There are about four major reasons why our road network has deteriorated so badly: firstly, as a result of neglect over the years. From 1975 to the year 2000 the infrastructure budget experienced serious cuts. The budget cuts meant that roads were not maintained, resealed or rehabilitated, as required, in a cycle of once in every six to seven years. This neglect has resulted in a major backlog regarding our main roads. The 60% or more bad roads in our road network is the result of underbudgeting. This statement is true for both gravel and tarred roads.

Secondly, the lack of resealing and rehabilitation of our major roads is as a result of a lack of funds and of the effort that is required to ensure that we protect our investment regarding our infrastructure.

Today the backlog stands at R2,9 billion, and it requires an allocation of at least R638 million per year, plus an additional R60 million for current maintenance, whilst the replacement value of the paved road network in the province stands at R8,6 billion. For regravelling we need about R77 million for a stretch of 752 km in order to address that backlog. For the current maintenance budget we need about R146 million annually. Quite clearly, at the moment, as a province and as a country, we cannot afford the kinds of allocations that I am speaking of because of the various competing needs of our people.

The biggest enemy of our road infrastructure is overloading on our roads. The damage to our infrastructure caused by a vehicle that carries twice the permissible axle weight is 16 times higher than that caused by a vehicle with the allowable axle weight.

The serious challenge, therefore, is that unless we work on a plan to address the situation of our infrastructure, we will not be able to cope with the economic growth that we are all striving for. Instead, we must expand our existing infrastructure if it is to cope with our annual growth rate of traffic that is estimated at between 4% and 6%.

A road that required resealing in 1998 at R140 000 would, if it was not done then, require at least R740 000 for resealing two years later. If no resealing was done at that stage, that road would have to be rehabilitated totally. The cost would then be R2,2 million. From this we can see that the damage of our roads, or lack of maintenance of our infrastructure, has very negative effects for all of us. But this is felt more in the economy and in the service of Government.

I want to illustrate this by saying that we find the effects of that bad road infrastructure when we look at the rate of accidents, which increases annually as a result of bad road surfaces. It is estimated that about 15% of our total road accidents are as a result of the bad road top surfaces of our roads. We should remember that accidents cost our economy R10 billion annually, in other words 15% of that is what we are paying as a result of bad roads.

The cost of vehicle maintenance increases dramatically, for example the health authorities complain that because of the bad roads their maintenance for ambulances that run on those roads is four times higher than for those ambulances that run on good roads. The general public also complain that their spending on the maintenance of their vehicles increases dramatically when they drive on bad roads. Therefore, it is quite clear that unless we attend to our road infrastructure the cycle of poverty will continue to increase.

It has been proven that every R1 that is spent on our roads has a sixfold multiple effect on society. Put differently, for every R1 that we spend, we can realise about six times that R1 as savings in the economy. Therefore, the best strategic spending for us as Government, and as a country, is in the infrastructure. [Time expired.] [Applause.]

Mr N M RAJU: Chairperson, hon Minister, hon MECs present, hon special delegates and hon colleagues, after the first democratic elections in South Africa, in April 1994, there was great expectancy among all South Africans, especially those, to use an Americanism, who lived across the tracks, in other words the large mass of disadvantaged and deprived South Africans.

With apologies to Julie Andrews and ``The Sound of Music’’, not only were the hills alive with the sound of music in celebration of our new-found democracy, but our hills and valleys and mountains became alive with the sound of high expectancy, of delivery and empowerment among the previously downtrodden citizens of our land.

To the credit of the Ministry of Transport, both the hon the Minister present and his erstwhile predecessor, the hon Mac Maharaj, have evinced a keen appreciation of the imperatives of these two buzz words of the new democracy: delivery and empowerment.

For delivery to be realistic, the Department of Transport’s crucial role is obviously to create the enabling conditions for empowerment to ensure that urban and rural access to markets and work opportunities are opened up. The responsibilities of the Ministry include not only the opening up of new access roads to millions of our previously disadvantaged citizens, but, more importantly, to maintain existing infrastructure so that the wheels of the economy keep turning.

Enhanced mobility for our rural communities, through a combination of road infrastructure upgrade and integrated transport service provision, is paramount if all South Africans are expected to play their rightful role in opening up access to the rural markets and employment opportunities, especially in areas such as agriculture, tourism, roads, construction and welfare services.

South Africa has one of the most extensive road networks in Africa, extending over 500 000 km. All three spheres of government play a role in managing the maintenance, rehabilitation and development of this network.

Unfortunately a large portion of our roads are still the old gravel roads and, unfortunately again, these happen to be mostly in the rural areas. This is a problem area, especially in the aftermath of disasters such as floods. Old people and the sick are marooned, unable to visit the clinics or hospitals or collect their pensions or grants. Children are cut off from schools and generally community life becomes frozen.

The Government receives some R26 billion annually in taxes and licence fees, yet the Government spends only R3,9 billion on roads, despite a R23 billion backlog in road maintenance and infrastructure development.

The R26 billion paid by road users every year comes from the levy on petrol, toll fees, licence fees, traffic fines, roadworthy certificates and vehicle registration fees, which approximates to about 12% of Government expenditure. National and provincial governments could be liable for about R3,6 billion in damages for accidents, according to the Southern African Bitumen Association’s researchers, as quoted in last week’s Mail & Guardian, 19 to 25 October, in a report on the roads in South Africa.

A recent High Court ruling found that in terms of the Constitution the authorities are civilly liable for any accident caused by preventable road defects. Government underspending, therefore, could prove costly in the long run. [Time expired.] [Applause.]

Mr P G MASUALLE (Eastern Cape): Chairperson, hon members of the House, the hon the Minister present here, I am particularly honoured and pleased to participate on behalf of the province in this important debate. Up front we would want to commend those who put together the document and, indeed, we want to express our appreciation for the manner in which this was dealt with in the committee.

Road and transport infrastructure is a necessary condition for sustainable development and economic growth. This indeed holds true in very stark proportions in our province. I want to make reference here to the provincial fiscal framework in the consolidated document, which deals with the way forward. This is A.2 in the document, and I quote:

The historical distribution of resources along racial lines resulted in provinces with vastly different economic and demographic profiles. These differences affect the demand for services, the ability to provide services, the skills base of provincial governments and their capacity to generate revenues.

I may add that this dichotomy holds true even within the confines of a province, in this instance our own province. In the domain of critical infrastructure we are experiencing this directly and daily. We do not read about this in newspapers; it is an experience that we live through daily.

The notion that was once depicted very succinctly and accurately by the President of the country is the notion of two nations. We want to make the point here that despite the enormous strides - and I want to repeat, enormous strides - that have been made and recorded since 1994, it is no exaggeration to note that there are still communities in our province that are totally inaccessible by road and this a consequence not of their choice.

Resulting from systematic neglect and impoverishment, we are confronted with huge backlogs that cannot possibly be met in the short to medium term. Recent studies have revealed that 89% of villages in the province need access roads, and in Transkei alone there are more than 6 000 of those villages where this can be found.

We appreciate the opportunity in that we can now collectively take stock and really assess the impact that we have made. Looking at the MTR figures of the recent past, one can see that until this year, the total allocation for roads has been dropping substantially since the 1997-98 financial year. Of course, we are mindful and aware of this in the province, because it has been necessitated by a variety of competing needs in which very bitter choices had to be made.

This resulted in a massive drop in operational expenditure and further exacerbated the backlog situation in the province as it relates to maintenance, upgrading and development of our road network.

Estimates are that we would have needed in the order of R1,2 billion per annum only to keep the existing road infrastructure in good condition, without developing it any further. This, I am afraid I have to say, does not take into account the many villages I have referred to that still need access roads, that is those villages that through systematic neglect were never built roads in the previous regimes.

We have put in place a 10-year plan that is fashioned on a particular funding scenario and, unfortunately, it does appear that there is still a deficit between the identified needs and the actual budgets available. In terms of this approach, we would need, consistently, an amount of on average R2 billion, which would see us able to maintain and indeed develop the network. It is imperative therefore that this trend that is beginning to emerge of consistent and increasing funding is maintained to ensure that lifelong investment in our road infrastructure is secured.

It is our contention that the institutional arrangements that support the provision of this critical function need to be looked at afresh. Existing legislation, with all its good intentions, would appear to unwittingly militate against a well-co-ordinated and focused attack on this historical legacy.

The provision of the infrastructure grant is bringing about hope and is demonstrating that we are beginning to give prominence to this fundamental challenge. We want here to posit that it would indeed be helpful if this kind of grant were to continue, but given the situation, as correctly mapped out in the review document, to which I referred to earlier, particular emphasis must be placed on the backlog component when we look at the provinces as we have been doing.

In conclusion, we again welcome this opportunity and we would wish for more interaction with the National Council of Provinces on matters of this nature. I was a bit taken aback listening to some of the speakers here, because I had referred to us living with these things, not reading about them in newspapers. It is the reality that there are areas which are completely inaccessible, and that is as a result of years and years of neglect. It is quite surprising to expect that within the period of time that we have been in Government we would have removed all those backlogs. [Applause.]

Dr P J C NEL: Chairperson, I would like to thank the National Treasury for this year’s issue of the Intergovernmental Fiscal Review, which mainly focuses on outputs and service delivery by provinces and municipalities. I would also like to thank the hon MEC of the Free State, Mr Malebo, for being here today and for his submission to the select committee.

According to the review, provincial expenditure on road infrastructure increased significantly over the past three years since 1998 in some provinces only, such as KwaZulu-Natal, the Eastern Cape, the Northern Province and Mpumalanga, which received additional allocations to address flood damage. For the rest, spending on roads has been sluggish and the real average annual growth in provincial spending on roads was only 1,1%.

I am, however, sad to say that in the Free State there was no growth. On the contrary, spending on national and provincial roads declined by 22% from R240 million in 1998, to R180 million in 2000. It is estimated that the actual spending in 2001 will only be R165 million, with the result that the road network in the Free State is deteriorating dramatically.

According to the hon MEC, the percentage of poor - as we heard him say today - and very poor tarred and gravel roads has increased since 1991 when only 25% was in poor condition compared to nearly 60% at present.

According to the review, the estimated total backlog in road infrastructure in South Africa is R23 billion. More than R10 billion per annum is required to address the backlog over five years. The estimated backlog in the Free State alone is R3 billion, and more than R600 million is required to address the backlog. One of the main reasons for the build-up of the backlog given by the hon MEC here today is the declining budget for road maintenance. It has decreased drastically from 1975 and reached an all-time low of R147 million in the year 2000.

I want to repeat, the annual need in the Free State to address the backlog is more than R600 million, but the total amount allocated to the province the previous year for road maintenance was only R147 million. No wonder the poor MEC for roads and transport indicated with sadness in his submission that the backlog has now resulted in an old crumbling road network in the Free State that requires far more maintenance than can be provided or afforded. I am afraid that somewhere something is terribly wrong.

I am grateful to learn from the report that as from next year supplementary infrastructure conditional grants will be allocated to provinces. But it can only be a solution if the share of the grant earmarked for provincial roads equals the amount that is needed by provinces to successfully address their backlogs. [Applause.]

Ms B THOMSON: Madam Chair, hon Minister, MECs present and hon members, we thank the Minister of Transport, his senior officials and the MECs present for attending the public hearings. We certainly had insightful and illuminating discussions.

Four issues, amongst others, were brought to our attention. Firstly, we refer to the institutional arrangements for road infrastructure development. During the public hearings we were informed that road development is disaggregated as a national, provincial or local government responsibility.

Current institutional arrangements are inadequate to further develop or build new roads because the capitalisation of national, provincial and rural access minor roads further complicates road upgrading, maintenance and building. However, the recently introduced National Land Transport Transition Act addresses this concern. Section 10 outlines the principles for the establishment of transport authorities for transport areas.

The legislation states that transport authorities may be established for transport areas by written founding agreements between the MEC and a single municipality. The Act further stipulates that transport authorities may be established if their object is to improve transport service delivery in the local sphere of government by grouping transport functions into a single well-managed and focused institutional structure.

The Select Committee on Transport should monitor the progress of the formation of transport authorities and should report back to the NCOP at an appropriate time. In other words, the Select Committee on Transport should assess what progress the Department of Transport has made in establishing new institutional arrangements for road infrastructure development. The real issue is whether our institutional arrangements are appropriate to ensure that money budgeted for roads is aptly spent.

The second issue I wish to raise refers to alternative modes and intermodular forms of transport. The Minister stated that most poor people use minibus taxis for their transport needs. It could therefore be construed that the benefit of bus subsidies does not reach the poor. The department is currently reviewing the issue of subsidies.

We also heard that the department is keen to promote the concept of intermodular forms of transport with special emphasis on commuter rail. This implies the levelling of the field between the road and rail forms of transport. In this light, commuter rail is being restructured and its recapitalisation requirements are being addressed.

A capital expenditure programme was initiated to renew aging rolling stock to enhance safety levels. Metrorail coaches have also been upgraded. Major upgrading was done at Johannesburg’s Park Station and 72 other stations across South Africa.

The MECs also eloquently argued in favour of alternative forms of transport. The recent introduction of the Pedal Power programme for bicycles in their provinces marks the beginning of a new era in the short distance mode of transport. This development is consistent with the Shova Lula national bicycle transport programme.

The MECs expressed concern that it is often not only cars that are not roadworthy, but some roads that may not be vehicleworthy.

The third issue refers to the slowness of cash flow. Several MECs argued that, during post-disaster periods, road reconstruction could not proceed smoothly primarily because of the delay in financial relief from the National Treasury. In fact, financial aid only arrives a year after a disaster has taken place.

In addition, provincial departments of transport were informed of financial relief only on the eve of arrival, thereby making prior expenditure planning an impossible task.

The members of the Select Committee on Transport would be keen to hear the views of the National Treasury. Members of the Select Committee on Transport also heard that roads and infrastructure are Government assets and therefore any policy that favoured the building of new roads and infrastructure at the expense of maintaining existing ones is inappropriate.

This approach will lead to a decay of existing Government assets while new assets are brought on board. This policy design will not produce maximum utilisation of financial resources. The point was also made that road reconstruction, building or upgrading should be based on the needs of the provincial economy.

The maintenance costs of roads produce a higher return throughout the economy. However, we are mindful that the failure to extend roads to neglected areas has equity implications. This may be construed as a catch- 22 situation, but clearly a balancing act is required.

Before I conclude, I would like to refer to the debate which deals with the contribution of maximum loads to the destruction of our roads. We were informed that South Africa has the second highest maximum load permissible in the SADC region. This begs the question, ``What is the maximum load permissible on our roads?’’

I look forward to the views of the Minister on whether excess loads damage our road surface. [Applause.]

The MINISTER OF TRANSPORT: Madam Chair, hon MECs present, special delegates, members of the NCOP, it is a privilege to be here today and to participate in this discussion.

Initially I had fears that this may turn out to be just a complaint session, but I am very pleased that it was not. In fact, the provinces who reported did so in a positive way. They identified their problems and indicated what they are doing and what they are trying to do. It is very clear to me that provinces desire to work in partnership with national Government and, of course, also with local government so as to ensure that we address this problem of infrastructure development and maintenance. All of us consider infrastructure maintenance to be extremely important. I want to give the House the assurance that I myself see their inputs in a very positive light. I welcome the inputs that they have made and the concerns which they have expressed. I have ensured that a senior official of my department is here with me, so that we can note the concerns raised by provinces. As the House knows, the senior official from the Treasury is also here and so, at national Government level, we do regard this issue as being extremely important.

I would just like to make a remark or two about one or two of the issues raised. The first is the question of liability for damages which may be sustained on our roads because of failure to maintain them. It is true that there is the possibility of claims being instituted for bad roads - for example, potholes have caused damage to vehicles and to people. Because of our constitutional arrangement, all three levels of government may find themselves subject to claims of that kind. It is a problem which we must all address together.

At the same time, I think we must be very careful when we speak about liability. There is no absolute liability. Liability has always existed in South African law, and not just because of the Constitution. I think our Constitution confirms what our legal position has always been. In our law, there is liability for acts of omission, ie when one fails to do certain things. That is what we are talking about. However, that liability arises out of prior commission. So if one builds a road and one does not maintain it, potholes develop or dangers are created, and as a result of that, certain things happen which cause damage, then liability arises as well. There is no absolute liability.

And whilst I welcome a report from Sabita and the attention that it has given to the question of possible liability, those claims are often highly exaggerated, although that does not mean that we must not address that issue. We must most certainly do so.

I want to make just a few overall remarks. If we look at ourselves together, then, between six and seven years of democracy, we observe …

The CHAIRPERSON OF THE NCOP: Order! I apologise, Minister. The service staff keep approaching the Table while the Minister is speaking and therefore distract us. If that could not happen, please. Continue, Minister.

The MINISTER: I also apologise for not ignoring it, but it is difficult to ignore at times.

The CHAIRPERSON OF THE NCOP: It is very difficult.

The MINISTER: Thank you very much, Chair.

I think that if we look at ourselves over the past few years, then we will see that in the first six years of democracy we did not pay adequate attention to the question of infrastructure. In as far as transport is concerned - our roads and other transport infrastructure - there were many, many competing demands. For example, a great deal of attention was paid to the building of schools, and health requirements and infrastructure development there.

In fact, a great deal of resources went to infrastructure development in areas other than transport, and, of course, there were other demands which had to be dealt with, other claims. I think the Treasury did very well in trying to steer the country in a way which would address what were the most urgent demands and requirements of the country at that time.

At the same time, I think the alarm bells began to ring when it came to transport infrastructure and it became very clear to us, as time went on, in those first six years, that transport infrastructure had been neglected for far too long. Here I am referring not only to roads, which are very important, but to all transport infrastructure. We talk about roads, railway stations, perways, in relation to railways, our railway lines, our signalling systems and rolling stock in as far as rail transport is concerned. Then there is our taxi infrastructure, sea ports, land border posts and the border posts themselves. As an aside, one can mention that the economic integration of the region requires that all those lengthy delays at our border posts be addressed. We cannot afford those delays if we want to make ourselves and our region competitive.

The one area in which there was spectacular development is our airports. This is because our airports have been successfully managed. The Airports Company Limited has been reasonably profitable and has been able to use money. This has been our focus - to use the profits made at airports on the further development of airports in the country.

There is the very important issue of taxi infrastructure. Taxi infrastructure is highly neglected. At least 60% of our people, speaking nationally, use the minibus-taxi industry, an unsubsidised mode of transport. And yet, if one looks at our taxi infrastructure, it does not signal to or tell our people that we care for them, and that they are equal to others and are first-class citizens. If we look at our taxi infrastructure in many parts of the country - cold, grey, concrete - it is signalling to our people that maybe they are not as important as other people are. I know that it is not so, but that is the perception which it creates.

Therefore, the issue of transport infrastructure as a whole is very important, and I can say that it is receiving the attention of the national Government, as it does from provincial and local governments. So, the infrastructure development programme of Government is one which we will see unfolding over the next few years. Reference has already been made in this House to the infrastructure grants which have been made, but there are the municipal infrastructure grants which also come into play. Now that our local authorities are in place, they will have a very big role to play. For example, with regard to the issue of taxi infrastructure, to which I have referred, local government has a very important role to play.

In terms of rail transport, we have seen the beginnings of infrastructure improvements. Already, over 70 stations have been improved or upgraded. Over 70 intermodal exchanges have developed in our country. More are going to be built as time goes on. But we will have to do this as a partnership between national, provincial and local government. It would be very easy for national Government to say that most of these things are provincial and local government concerns and have nothing to do with us. But that would be entirely wrong. I accept that we are jointly responsible and that we need to work in partnership.

I can say to this House that our commitment is that we will work in partnership with local and provincial government, address the concerns which have been raised and see what we can do together so that, in the shortest possible period of time, we can address the question of infrastructure development. In this House today, a special reference has been made to road development. It is an issue that has been taken up. We intend going to Cabinet and, of course, we are interacting with the provinces, and we will also be interacting with local government to develop a road development plan for South Africa. We know that we must look at the problem comprehensively, but we must begin to address the problems in an incremental way. If we say that our backlog at this stage is X billion rand, it does not mean that we will be able to make X billion rand available. That will not happen.

What we are looking at is a programme for infrastructure development. In the case of roads, for example, we would like to see a road development plan which looks at our primary and secondary road networks and at national, provincial and local roads, and we would like to explore how we can secure funding. One of the ways through which we have been able to make our national road network look as good as does is by looking at alternative sources of funding and the use of tollroads. Unpopular as that may be, in some instances it has been extremely necessary in our country. There are certain practical problems that we need to resolve in that connection, like public-private partnerships. Getting consortia to participate on the basis of partnership in the build-operate-transfer programmes has been successful in our country and we need to continue to do that.

I would like to say that we very much appreciate that our roads not only perform an economic function, but also perform a social function. In implementing alternative methods of funding and using the mechanism of the toll road system, ie imposing tolls, we take into account the fact that, very often, local inhabitants, through whose areas these roads pass, are hard-pressed and cannot afford to pay these tolls, because they use these roads every day. So, as we develop an approach to the building of our toll roads, we are refining our approach so that local inhabitants do not suffer unduly. For example, in one of the developments, which our Eastern Cape provincial representative can speak much more about that I can because they have looked at it, we are looking at a situation in which those who use the roads for economic purposes bear the costs of that road. Local inhabitants who live in these areas and have to travel to work and come back should not have to pay at all or have to pay very small amounts, or there should be substantial concessions or exemptions granted to them. I think that we are refining our approach to the building of the roads through deciding who should bear the costs of them.

In conclusion, I would like to say that we do recognise that transport infrastructure must receive priority attention, and I am very confident in the way the Treasury has, over the past year, made more funding available for infrastructure development. We will see that continue over the next few years. The challenge before us will be to ensure that we have adequate plans in place so that we are able to implement effectively, so that the money is used efficiently and so that we are able to deliver in the shortest possible period of time. One of the biggest shames will be if the money is made available to us and there are roll-overs at the end of the financial year.

I want to compliment the provinces because that has not happened in the provinces. In a few years, the situation in our provinces has changed. They have managed their finances very well, and I have every confidence in the ability of provinces to deal with the new challenges which now arise. I hope that from a national level we can, in co-operation with provinces, ensure that our new local government structures will also be able to meet the challenges which face them over the next couple of years. [Applause.]

The CHAIRPERSON OF THE NCOP: Order! Thank you, Minister, and again, as with all the other Ministers, I should thank you for joining in this fiscal review set of debates. We now proceed to begin the debate on the housing and local government aspects of the review.

We have on our list Mr Ngwenya as the first speaker. Mr Ngwenya, I am aware that you have just walked in. Unfortunately, you have to stand up and do what you have been deployed to do by your province.

Could the Whips please make sure that the members who are on the speakers’ list are in the House so that we can continue with our business. I am not quite sure why we seem to be rather disorganised. I was informed of special delegates and, therefore, everyone should have known when we would begin.

Mr S NGWENYA (Gauteng): Chairperson, Ministers present, Government representatives, ladies and gentlemen, I apologise for being late.

On behalf of our MEC, Trevor Fowler, I wish to congratulate Minister Manuel on a very incisive and informative document on the Intergovernmental Fiscal Review. I wish to focus on the chapters relating to municipalities. The national picture presented in the document largely applies to municipalities in Gauteng.

The Intergovernmental Fiscal Review’s Chapters 8 through to 11 address the expenditure patterns and consequential challenges in municipalities. Our Constitution and, indeed, the policies of this Government are tailored to address these challenges collectively, in short, as Government acting co- operatively. I wish to address this from the provincial government’s perspective.

The role of the provincial government is defined in the Constitution, in legislation and by the practical realities of the current situation in local government.

Chapter 3 of the Constitution defines the principle of co-operation that binds all spheres of government - national, provincial and local. It more specifically defines the functions of national and provincial governments for co-operation with municipalities in section 154(1) of the Constitution. It states that these institutions:

… by legislative and other measures, must support and strengthen the capacity of municipalities to manage their own affairs, to exercise their powers and to perform their functions.

In section 155(6) the role of provincial government is explicitly defined in relation to this establishment of municipalities. The provincial government must provide the monitoring and support, promote and develop local government capacity.

These imperatives are in plain language and it is clear that the provincial government must do the following: monitor the extent to which municipalities are meeting their obligations, support municipalities to meet their obligations and provide leadership that promotes local government capacity.

There are still millions of our people who live in poverty. Government, particularly municipalities, must contribute to the eradication of poverty if we are to create sustainable communities. Page 131 of the Intergovernmental Fiscal Review refers to the provision of free basic services as Government’s priority and a concrete measure to address the misery of poverty.

In Gauteng, all municipalities have commenced providing free water to residents despite the challenges of administration, ageing infrastructure and other constraints. The reality is that the past few years have demonstrated that arrears in payment for services have significantly increased as a result of poverty and the inability of municipalities to administer targeted subsidy programmes such as the indigent policies.

Consequently, the mandate received from the electorate on 5 December 2000 to provide free water and electricity was timely. Municipalities in Gauteng are of the general view that the provision of free services for the first block of consumption and recovery in greater volumes of consumption is the most effective method of cost recovery. It also has a concomitant effect of penalising overconsumption in a province that imports about 10% of its water. The real challenge is the mechanism by which the rural and poorer districts, such as Metsweding, are going to recover the costs. Indeed, the real challenge to successful implementation is effective revenue collection in systems such as accurate billing and credit control.

The Minister has referred to provision of a free amount of electricity and the challenge of electricity sector restructuring in his review. I wish to bring to Comrade Manuel’s attention that Eskom supplies most poor people in Gauteng. Given the economic profile of Eskom’s residential consumers, we understand that there are huge financial challenges.

However, the delay in the provision of the free basic amount of electricity is placing a huge burden on the municipalities, because many people believe it is the municipalities which are delaying access to this service. Mayors have been the targets of several memoranda and demonstrations as a consequence.

The Gauteng government is convinced that access to healthy and appropriate water and sanitation is essential in an urban environment to prevent the outbreak of disease. We will be investigating the provision of access to appropriate water and sanitation for all over the next three years. Soon we will announce implementation plans for its provision.

A situational analysis of the state of the municipalities in Gauteng has revealed the following strengths and opportunities for transformation to viable and sustainable municipalities. Local municipalities have been through changes before. There is support and commitment from Government. There are new governance structures, and change is inevitable. Dedicated resources are available. However, there are also several weaknesses and threats.

Firstly, interim IDPs and planning are not sufficiently driven by strategic priorities, nor sufficiently linked to the budget. Secondly, insufficient human resource management strategies, in particular change management and stakeholder participation, may result in the loss of experienced personnel. Thirdly, management is not sufficiently results-driven. Fourthly, there are inadequate skills; and, fifthly, there is poor standardisation.

Madam Chair, this is what the MEC from Gauteng wanted to impress upon this august sitting here. However, the document is too long for me to complete. Oh, sorry, it is not Madam Chair anymore. I am sorry, it’s Chairperson now. [Laughter.]

In conclusion, having outlined the process, as embarked upon by Gauteng, we trust that the National Treasury will be receptive to our perspective of beginning a process of creating benchmarks for best practice, with regard to how municipalities can be supported and the extent of the support required. We are confident that our initiative of setting up the municipal institutional support centre and the possible migration to the municipal shared service centre will go a long way to assist in putting municipalities on a sound footing. [Applause.]

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Order! Yes, hon members, you must address the Chair, then you will see all the changes that are taking place. [Laughter.]

Mrs A M VERSFELD: Voorsitter, ten aanvang wil ek die Minister van Finansies gelukwens met die verslag. Die inligting wat daarin vervat is, is werklik interessant en insiggewend. [Chairperson, to begin with I want to congratulate the Minister of Finance on the report. The information contained in it is really interesting and instructive.]

What is worrying is that although the proportion of the formal household dwellings showed a gradual increase of approximately 4%, the informal dwellings have also increased.

Dit bring ‘n mens onder die besef dat behuising altyd ‘n uitdaging vir die regering van die dag sal wees. [This makes one realise that housing will always remain a challenge to the government of the day.]

According to the report on housing, it is mentioned that the Government ``continues to explore innovative alternatives to speed up delivery’’. I would like to suggest more emphasis on alternative building materials, building materials that are cheaper than conventional ones and easier or quicker to build with. It is also noted that the number of houses increased in 1997 to 1998, two years after the initiation of the new housing policy.

The DP would like to warn that the introduction of a transparent housing policy will also slow down delivery. Nevertheless, the DP supports this transparent housing procurement policy. It is also encouraging to see that almost half of the provinces have appointed permanent CFOs, that is, chief financial officers. We would also like to call on all the other five provinces to have their CFOs in permanent positions for the sake of continuity in the newly established CFO forum. This forum can then start with the building of financial management capacity, especially in the smaller municipalities.

Sustainable low-cost housing delivery is indeed a joint effort, not only by the Government and the private sector, but also by different national departments, for example Transport and Agriculture.

Dit is byvoorbeeld baie ontstellend om die toestand van Transnet se huise in Kalbaskraal naby Malmesbury te sien. Ek meen die pryse wat Transnet vir dié huise gevra het, is ‘n skande. [It is, for instance, very disturbing to see the condition of Transnet’s homes at Kalbaskraal near Malmesbury. I feel that the prices Transnet asked for those homes were a disgrace.]

It is also good to see that Government is aiming at better ways of mobilising finance for housing through the National Housing Finance Corporation.

Ek glo die regering moet die behuisingsubsidie aanpas. Dié subsidie staan steeds op dieselfde bedrag as in 1994, naamlik tussen R15 000 en R17 000. In dieselfde tydperk het boumateriaal dramaties gestyg en die waarde van die rand het gedaal. Die eindproduk is dus ‘n minderwaardige struktuur, en ek glo nie dit is wat die regering in gedagte gehad het vir die mense van Suid-Afrika nie. [Applous.] (Translation of Afrikaans paragraph follows.)

[I believe that the Government should adjust the housing subsidy. This subsidy is still standing at the same amount as in 1994, namely between R15 000 and R17 000. Over the same period building materials have risen dramatically and the value of the rand has slumped. The end product is therefore an inferior structure and I do not believe this to be what the Government had in mind for the people of South Africa. [Applause.]]

Mnr C ACKERMANN: Voorsitter, bykans ‘n jaar het verloop sedert die nuwe plaaslike owerhede in werking getree het. In die Wes-Kaap gaan dit in die algemeen baie goed. Ons raadslede werk baie hard en probeer hul probleme oorbrug om rade goed te laat funksioneer.

Waar dit nie goed gaan nie, is waar die ANC regeer, soos in Worcester en Beaufort-Wes. Dáár is dit chaoties. [Tussenwerpsels.] Die President van dié land het die mense van Beaufort-Wes belowe hy sal ná drie maande terug wees. Hy was nog nie in Beaufort-Wes nie en die drie maande het nou uitgeloop. Ek hoop die mense van Beaufort-Wes neem kennis daarvan. Ek bring vandag hulde aan al die hardwerkende raadslede in die Wes-Kaap. [Tussenwerpsels.] (Translation of Afrikaans paragraphs follows.)

[Mr C ACKERMANN: Chairperson, almost a year has passed since the new local authorities came into operation. In the Western Cape we are generally doing very well. Our councillors are working very hard and are trying to resolve their problems in order to enable councils to function effectively.

The situation is less favourable in places where the ANC is in charge, for example in Worcester and Beaufort West. In those areas the situation is chaotic. [Interjections.] The President of this country promised the people of Beaufort West that he would be back after three months. He has not yet been in Beaufort West and three months have now passed. I hope that the people of Beaufort West have taken note of this. I want to pay tribute today to all the hard-working councillors in the Western Cape.]

Democracy and justice walk hand in hand. Therefore, what a pleasure it was when I walked into the Seven Eleven last night to buy the Cape Argus. Let me tell the House that the Cape Argus sides with the ANC, and not with the opposition. [Interjections.] And what was on the front page of the Cape Argus? ``City is world number one for value.’’ The city of Cape Town is the world’s number one for value. [Interjections.] Let us hear what they say, and I hope my colleagues will listen.

Cape Town has been voted the city offering best value for money in the world. [Interjections.] But it is not resting on its laurels, with significant new development poised for the green light from the city council. The city was named the best value-for-money destination at the 2001 Condé Nast Traveller magazine’s annual readers’ awards, and as number 11 among the world of cities. Number 11 among the world of cities! This is the Cape Town Unicity. [Interjections.]

The city did not get only this award. It also got an award for the best-run city in South Africa. [Interjections.] Do hon members know why it got the awards? Because the ANC does not govern the Unicity. [Interjections.] The ANC does not govern the Cape Town Unicity and that is why we get all the prizes. [Interjections.] That is why we got all the prizes! [Interjections.]

The hon Chief Whip is not in the Council at the moment. He said that we do not deliver to the poorest of the poor in this city. What is the real truth? If one reads this report of the fiscal review, and looks at the budget of Johannesburg, the budget of Cape Town, and the budget of old Pretoria, or Tshwane. [Interjections.] That Minister must listen. On housing alone, there is a backlog of 130 000 houses in Pretoria. Do hon members know what that city budgets for housing? Pretoria budgets R46 million. R46 million! What does the Cape Town municipality budget for housing? It budgets R216 million. R216 million! Johannesburg budgets R189 million.

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Order! Hon member, please take your seat.

Ms Q D MAHLANGU: Chairperson, is it parliamentary for a member to say, ``That Minister’’ and do that? It is not. [Interjections.]

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Hon member, will you continue.

Mr C ACKERMANN: That hon Minister must take note of what is in this report.

Let us take the other issue, on health. The ANC cannot take it. They cannot take it when the truth is on the table. [Interjections.] Cape Town is spending R252 million. What is Tshwane spending? Tshwane is spending R90 million. Johannesburg is spending R196 million. These are just a few, basic commodities that are very dear to the poor. [Interjections.]

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana) Order! Hon members, the Minister will not hear and will not be able to respond if you make such a noise.

Mr C ACKERMANN: The Cape Town Unicity is spending more than ANC municipalities on the two basic commodities that the poor want. [Interjections.] The unicity will keep on delivering. It will keep on delivering to the poor. [Time expired.]

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana) Order! Hon members, this is not a bar! [Interjections.] Order! [Interjections.]

Mr C B HERANDIEN (Western Cape): Chairperson, on perusal of the report highlighting the issue of housing, I concur whole-heartedly with the contents of the report. There does, however, appear to be a difference of opinion in two of the tables, namely 6.3 and 6.5, but I do not believe them to be material at this stage to improved housing delivery, and therefore, no debate or discussion will be of profit.

I do, however, wish to table a few of the concerns the Western Cape has with regard to expeditious and efficient housing delivery. With regard to the new procurement measures, this province supports entirely the concept of a transparent housing procurement policy. I do, however, wish to warn that the introduction thereof will, by the very nature of its implementation, bring about an initial slowing down of delivery. The Department of Finance must take clear cognisance thereof.

In respect to local government and the responsibility for services, I must emphasise that since its inception the housing fraternity has been carrying the costs for the provision of trading services to our housing projects. This has, obviously, come at a cost to the size of buildings built for the beneficiaries. It is common knowledge that local authorities benefit from the revenue generated by trading services, despite not investing a single cent themselves. Surely this must be reviewed to allow our homeless people to enjoy the full benefit of their subsidy, and not just a portion thereof, as is the case at present.

The advent of IDPs could not have come soon enough. As part of the housing family, we have not produced integrated realistic housing environments. We have merely perpetuated the planning paradigm prior to 1994, where the poor were settled the furthest away from the social fabric of a town with very little, if any, social facilities. Proper implementation of the IDPs will, I dare say, ensure that we no longer repeat the type of developments we have now.

In talking about integrated development, I must also make a plea to all other national line-function departments associated with delivery to the poor, such as water and electricity, to work closely with the provincial departments of housing, so as to ensure a holistic approach to human settlement development.

I would like to offer my compliments to the Department of Housing for introducing this programme. Our housing landscape is littered with dysfunctional settlements. My plea to the Department of Housing is that this programme should be a permanent housing programme within our suite of housing programmes, and should receive an increased allocation over the MTEF period. It has always been the contention of this province that the figures, and not the criteria, should be used for the allocation of housing funds, and that that will be based on the true numbers.

The 1996 census figures form the backbone of the allocation criteria, and it is common knowledge that they have been found wanting. To ensure that provinces get what they are actually entitled to, it is strongly urged that this dimension of the allocation criteria be urgently reviewed. Many local authorities are now beginning to challenge the notion that they can be enjoined in the housing delivery loop, as they feel it is not a municipal responsibility. Specific reference is made to the Constitution, which apportions legislative competency in housing matters to national and provincial governments’ housing delivery, but it must not be delayed around issues of competency and unfounded mandates as alluded to by the various municipalities.

An urgent plea is made to the Department of Housing to make a public announcement in this regard, setting out in detail reasons why local authorities can be compelled to take the responsibility for housing delivery in their areas of jurisdiction. This is very closely aligned to the prescription of the new procurement measurements which apportion responsibility to municipalities to act as developers.

A great concern for housing delivery in the Western Cape is the lack of all- round capacity amongst some of the smaller municipalities to deliver or see to the project management of housing projects.

I strongly urge that both the provinces and the Department of Housing should join hands in developing and implementing capacity-building courses within municipalities, so as to ensure efficient housing delivery. Despite the advent of newly elected local government structures, the experience is that there is still a great degree of gatekeeping in the delivery process, resulting in a delay in housing delivery. Threats of violence are common occurrences. In some instances, elected ward councillors have been assassinated because of their desire to see development. It is imperative that the housing fraternity not allow themselves to be held to ransom by the lawless few, and that the agents of law and order provide the necessary support as and when necessary.

As a province, the issue of farmworkers’ housing is presenting a huge challenge, as the number of farmworkers that are being evicted from farms increases. In seeking a solution to this vexing problem, the province has developed a farmworkers’ settlement policy, which provides scope for on- farm, off-farm and agrivillage formations as solutions. I can almost state, with certainty, that this issue is prevalent throughout other provinces bar one, and requires the full attention of Government at all levels.

In conclusion, I would like to state that the provinces should accept full responsibility for the housing of the homeless as enforced by the Constitution and should join the national Government in seeking solutions to all the problems and challenges confronting us. [Applause.]

Mr T RALANE: Chairperson, Minister, MECs, special delegates and members, we are honoured to participate in this debate on the housing chapter of the IGFR. Having participated in the public hearings that took place recently, we were struck by the enormity of the challenges facing the housing department. The IGFR reflects the fact that housing remains one of the key postapartheid challenges, challenges relating not only to backlogs, but also to the spatial environment and the quality of community life. Alongside national and local government, provinces play a role, particularly in providing housing. Since 1994, the Government has contributed to over 1,2 million low-cost houses, providing shelter to over five million people. This reduced the housing backlog significantly and translates into providing shelter to an estimated one out of every eight persons.

These new housing projects could be the conduit to deracialising societies. The housing sector faces notable institutional challenges of delivery and accountability, and these include the consolidated municipal infrastructure programme and social economic infrastructure that contribute to the development of sustainable human settlements. Underspending over the last three years has improved largely as a result of improved capacity in the provinces. However, the highest underspending during 2000-01 was recorded in the Northern Province as a result of floods.

In October 1999 a household survey shows certain patterns regarding access to housing, water and electricity. These patterns partially reflect the impact of housing delivery on the overall quality of life. The portion of households living in formal dwellings showed a gradual increase from 65,8% in 1995 to 69% in 1999. On the other hand, the number of households living in informal dwellings has also increased, as the pressure for shelter is experienced across all types of housing. The 2001 review informs us that no new homes were constructed during the current financial year in the North West province. However, the MEC informed the meeting that 8 379 homes were built in the year under review.

Variation in the pace of delivery is also evident in the roll-overs in housing subsidy funds. Where the provincial housing department had roll- overs exceeding R2,2 billion, or 71% of its allocated housing subsidy funds in 1995-96, it has estimated roll-overs of R590 million, or 15%, in 2000-

1. It is clear from this that certain obstacles to sustainable delivery have been identified, and government continues to explore ways to speed up delivery, and to contribute to the development of sustainable human settlement.

Financial management in the sector has improved. Further steps are being taken to improve and streamline the funding arrangements for housing programmes. These include converting the housing into a conditional grant, resulting in all funds received by provincial housing departments being deposited into the appropriate provincial revenue fund, thus improving accountability over such funds. It must also comply with national norms and standards.

One of the most problematic obstacles to delivery is the delay in the land transfer process, which is necessitated by legal aspects of land transfer. The recent local government elections impacted badly on the delivery of houses, and municipalities delay in approving new housing programmes as a result of the nonpayment of property rates. This projects a negative picture, namely that government does not care about the poor.

Secondly, with regard to programmes approved and subsidies allocated, it has been established that there is a lack of communication from the provinces to the people, such that people are not informed of their allocations, and they take part in land invasions, whereas their houses are ready for occupation.

Natural phenomena such as floods and tornadoes resulted in the underutilisation of conditional grants. Although the duration of natural disasters was short, the periods in delays were logically beyond the incidence of the disasters themselves. Some of the most critical obstacles are the double allocation of houses and lack of co-ordination across the spheres of government and amongst all sectors. Fraud and corruption should be addressed in the allocation of the houses.

The following recommendations have been made: An in-principle policy decision has been taken that 0,5% to 0,7% of provincial budgets has to deal with emergencies such as disasters. All participants should be captured in a database, which links the provinces, to avoid this double allocation. Both the national and provincial governments should work together to solve such problems as housing delivery as it is a priority of both national and provincial departments.

The department has shifted from its policy of quantity to quality, as reflected in the fact that speeding up delivery compromises the quality of houses. MECs have to facilitate the problems related to bureaucracy, such as delays in approving new housing programmes as a result of property rates. The Minister has also recommended that women in housing should be promoted and not marginalised.

Due to an increase in shelter demand, the upgrading of informal settlements should be prioritised so as to bring water and sanitation. It has been agreed that provinces should indicate problems they experience so that the Minister can be aware of them, such as in the case of the Minister for Agriculture and Land Affairs, who is helping with the issue of the the R281 certificates to speed up the process.

There should be a standard payment system in place to minimise fraud. Guidelines with regard to the special needs of certain categories of historically disadvantaged people, such as women and the disabled, in the allocation of houses should be a priority. Local government should comply with national norms and standards in housing, and not raise standards, which has caused the collapse of projects.

Local governments should avoid paying a lot of money to consultants. The devolution of responsibilities should be accompanied by reciprocal funding.

Mr Ackermann echoed and expressed the frustrations and anger of the confusion in the leaderless Cape Town. The Minister should not respond to his infantile outburst. [Laughter.] [Applause.]

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Before I go on, hon members, can I make it clear that I will not condone or countenance any deliberate transgressions of the rules of this House. Mrs Vilakazi, you know you are wrong in what you are doing. Are you ready to apologise? Mrs J N VILAKAZI: Chairperson, yes, I do apologise.

The MINISTER OF HOUSING: Chairperson, I am not sure of the format. Have we come to the end of the input from the provinces?

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Probably as far as housing is concerned.

The MINISTER: Chairperson, I think we have come to a stage as Government, at national, provincial and local spheres, where there is an urgent need for us to focus on issues and come up with appropriate solutions to those problems.

We have been trying to observe the response of the public, or the consumer, in relation to payment for rates and services, and from the feedback, as recorded by the different municipalities, it does look as if we do have successes in certain areas, and failures in other areas. However, I think we need to look at the issue at two levels. At one level we have unemployment and poverty in the country. At the second level it is an observation of poor communities that they have been able to play a role in terms of participating in improving the quality of their lives.

So, when we deal with this problem, we need to take into consideration that there are genuine factors and issues, but also that in certain situations there is plain recalcitrance by those who are supposed to respond to rate payments.

There has been an input from the lady of the DP - unfortunately she has left for the airport - in relation to alternative building material. I think those members who have been involved in doing a survey by virtue of being in areas, and looking at the delivery in those areas, will be aware of the fact that there is a preferred pattern by the consumer. Our consumer, up to now, prefers to have shelter that is provided through brick and mortar.

It is very difficult for us to force them to be consumers of material other than brick and mortar. However, in the industry one does have a variety of building material coming forward through technology, but our people are not yet ready to consume that, partly because of experience, but in certain situations because of culture.

Our people are averse to living in shelters made out of wood. They say they are afraid of fires, and if one looks back at our immediate history, fire has played a very difficult and painful role in terms of transformation and change in relation to the communities that were effected by fires, and they continue to affect us in the informal settlements.

The issue of adjusting the housing subsidy is a matter which is currently under discussion with Treasury. We will make an announcement when necessary. It is an issue that we are aware of.

I need to correct an hon member and remind this member that when we started in 1994, the housing subsidy was R15 000. In 1997-1998 it went up to R16 000. There is an agreement that it is time to review this amount. We will come back to the House when we are ready. Regarding the increase of the subsidy, when we look at that issue we also have to consider the fact that it is our policy to go back to our housing paper. Our policy has always invited the consumer, the communities, to play a role in accessing housing. This was built into the policy because we were cognisant of the fact that Government on its own, with its own fiscal ability, may not be able to provide the amount of money that people would expect.

If one looks at the waiting list of about 7,5 million people and the amount of money that we would like to utilise in providing the infrastructure that relates to housing, one becomes well aware of the fact that it runs into billions of rands. One has to bear that in mind.

I want to say to the hon Mr Ackermann that I really do not want to get into the politics of his emotional outburst. [Interjections.] I understand why he has to be so excited and express whatever he wants to express in the manner that he does. Our condolences are with him. [Laughter.] [Applause.] In the case of Mr Herandien, I think it has been one of the most sober and amicable presentations from the Western Cape. Hon members are aware of the fights that we have. [Applause.] I think we have to commend him for his sobriety because all of us, especially those that are housing practitioners, are aware of the fact that this is a very difficult terrain. One has to look at the issues and be balanced and rational in the way one deals with them.

MECs addressed the issue in a conciliatory manner. What we still need to see is that members realise that our records are official. They are backed by the census. These records reflect the backlog as follows: The province with the highest backlog is Gauteng. It is not the Minister of Housing saying so because she is from Gauteng, not at all. It is the census. The census says the majority of informal settlements are in Gauteng, followed by KwaZulu-Natal and then the Western Cape.

That in itself helps us to plan how we utilise our resources and how we spread the resources to those who need our support. We need to understand this fact so that we do not politicise it. It is a factual reality.

The same goes for the procurement policy that has gone through Minmec. We have to realise that in the first term of office it was necessary for us to approach delivery in the manner we did. Now we are in the second phase of delivery. There are certain considerations that have to be tabled.

We now have to ensure that our delivery patterns redress some of the issues we were unable to address in our first term of office. One is that we delivered in those areas where land was available, that is former township areas. They were serviced and had infrastructure, and we could deliver there.

The most difficult thing for Government to do was to deliver on those plots of land. If we did not, it would have meant that we would lose all the money that had been invested. However, by doing that, we did not say that we want to perpetuate the old apartheid patterns. We have done that with the more than 198 000 serviced plots we inherited.

Now we have the opportunity to look at our policy framework and identify which way to go, and have done that. Under the leadership of the President of this country, we now have to deliver in those areas where in future there will be economic activity.

That is why we deliver projects such as the one at Coega. It is one of our best projects. People in the rural area participated in housing acquisition in a manner never experienced before. The local government is also involved.

Secondly, we say let us go out and identify land in the inner city that we can purchase. Our records say there might be very little land available, according to the statistics of Land Affairs. What remains of the 1,2 million hectares of land that belongs to the state? Some 669 000 hectares have already been allocated. The remaining pieces of land have to be divided for settlement, agricultural, commercial and industrial purposes. This Government has to think very seriously about where we want to focus.

Thirdly, we have to work and make sure that we do achieve the deracialisation of society by bringing people closer to the inner cities. We have to rework our programmes in a manner that promotes medium density.

I can proudly say that we have taken a decision after extensive discussions with Treasury. Henceforth we would like to move slightly on the emphasis on medium density. We would like to absorb the middle-income group awaiting housing. At the same time we want to include the merging of the different income groups and classes to create a revenue base. This will enable us to pull people closer to the amenities in the inner cities, which is something we have to work on. [Time expired.] [Applause.]

Mr B J MKHALIPHI: Chairperson, hon Minister and hon members, local government is probably the key role-player in the delivery of services and development processes in South Africa today.

The transformation process and the establishment of financially viable and sustainable municipalities are crucial if one wants to see local government fulfil its developmental role. In this regard, major steps have been taken.

I want to name a few, namely providing a clear and motivating framework through the White Paper on Local Government; the redemarcation process, which resulted in more fiscally viable, although fewer, municipalities, which will also address the need for sound financial management, and, lastly, the provision of a new legal framework for local government through the Local Government: Municipal Structures Act and the Local Government: Municipal Systems Act.

The Intergovernmental Fiscal Review of this year highlights the fiscal realities that need to be considered to secure the sustainability of these objectives. In line with our Constitution, many national and provincial departments are considering which of their functions are best performed in the local sphere, a major challenge as this department devolves its functions and powers downwards to the local sphere. The outcry is for more corresponding resources in terms of finance and personnel. Functions under review include housing delivery, primary health care and the district health system, water and municipal services and municipal policing.

Regarding water and sanitation services, an outcry has been heard in the public hearings that, most of the time, the municipalities to which these services are devolved always lack the capacity to maintain and to operate these services to such an extent that they eventually disintegrate. Already, personnel calls have become the foremost cost driver for municipalities in recent years. This affects the scope to expand delivery as budgets come under extreme pressure. Therefore it is paramount that municipalities manage personnel expenditure properly.

Municipalities also have conditions of service and salary bands that are quite different from those of national and provincial departments. Within these and other spheres, there is one Public Service, where all employees have the same system of benefits such as pensions and salary bands. Consolidating the Public Service would, therefore, require service benefit equalisation, as we are seeing now in the new amalgamated municipalities.

Further work such as the financial impact of medical aid benefits which are also unequal and the number of employees in this sphere on municipal budgets is also required before consideration can be given to an integrated Public Service. At the municipal level, the councils are also challenged to include the Integrated Sustainable Rural Development Strategy and the Urban Renewal Strategy to dovetail with the recent IDPs that have been compiled.

The metropolitan municipalities have distinct and major revenue-generating capacities and are only marginally dependent on transfers from national Government. Many rural and smaller urban municipalities, however, have a much weaker fiscal capacity and depend considerably on transfers from the national Government. The hon member Masemola would be able to tell us about municipalities such as Thembisile in the Mpumalanga area.

Government’s commitment to assist in the provision of free basic services requires the implementation of focused and targeted fiscal and integrated programmes at all spheres of government. This does not, however, alleviate the need for improved financial management by municipalities to spend within their budgets and to collect revenue that is due to them, and to also expand, enhance and maintain their revenue bases.

Capital expenditure has been declining as a percentage of total spending, as actual capital spending is less than budgeted. Being of a discretional nature, capital expenditure is the first victim when budgets are under pressure and crosscutting measures are to be put in place. Municipalities need capital projects such as water and waste water treatment plants and distribution networks, solid waste disposal facilities, streets, clinics, and community facilities, etc.

The operation and maintenance of these facilities remains a major challenge. Therefore it has become necessary to fast-track legislation and processes to reform and to ensure that regulatory budgetary financial management and systems jointly create a conducive climate for decentralisation and sound financial management. This will further require that functions between category B and C municipalities and associated revenue streams between the two spheres of government are clearly spelt out.

The enactment of new legislation governing local government financial management, including a municipal borrowing framework, in the mooted municipal financial management Bill is linked to the enhancing and consolidation of intergovernmental transfers and provision of guidance to municipalities to ensure not only that the system does not benefit only the rich consumers, but that the cost of services remains affordable to all and that those who can pay for these services actually do so.

In addition, the redemarcation processes have also created the existence of cross-border municipalities and associated complications. I heard someone calling them the fourth sphere of government. Examples of such municipalities are Carletonville and Stilfontein in Gauteng and North West as well as Bushbuckridge and Phalaborwa in Mpumalanga and the Northern Province. The boundaries of these municipalities extend over the provinces, as mentioned. The challenge, for example, is that it is not clear to which housing board the respective municipalities have access in terms of finding financial resources for housing loans. [Time expired.] [Applause.]

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Order! Hon members, allow me to take this opportunity to recognise the presence of the first lady, Ms Mbeki, in the gallery. I welcome her to the NCOP. [Applause.] Mr J I MABENA (Mpumalanga): Chairperson, my name is J I Mabena. It appears on the speakers’ list as J S Mabona, who happens to be my uncle, who is the MEC for public works. I would like to thank the Chairperson for the opportunity to participate in this debate on what the Director-General of the National Treasury correctly refers to as a barometer of provincial and local government fiscal trends.

The IGFR can also be described as a very important radar that can guide us towards the destination of improved quality of Government expenditure, and the meeting of our major challenge of delivering quality services at affordable prices and to more South Africans. The fact that this year’s edition not only updates all sectors covered in previous reviews, but also deals with housing and provincial roads, is an achievement that must be celebrated by all of us.

The convergence that has developed through, inter alia, joint Minmecs must be enhanced as improved co-ordination remains one of the prerequisites for our success in maximising quality service delivery.

The inclusion of nonfinancial information comes at an opportune time with the implementation of the PFMA, which shifts the focus from how much one spent to whether there is value for money in terms of outputs and outcomes which have been agreed upon upfront. The information will, therefore, facilitate the assessment of outputs and outcomes.

We know that the review also highlights the important role of the provincial sphere of government in the implementation of major social services, most of which have limited or no cost recovery measures. We must build on the information contained in this edition and, of course, find solutions to blockages such as the lack of a common methodology for comparisons and readily available information.

It is a fact that infrequent local government elections are of themselves inadequate mechanisms to ensure local democracy. Tangible delivery of basic services at affordable prices and constant refreshing of electoral mandates by communities, are fundamental to both social and economic development and a successful developmental local government.

The public-private partnership funding options for infrastructure development must be strengthened. We must use all the means at our disposal to make the public-private partnership projects that are already in place, like the the Nelspruit water project, a success. This will require that we deal with all known blockages and also strengthen the capacity of the municipalities to monitor implementation and adherence to predetermined service performance criteria by the contractors.

We must, of course, also ensure that the implementation of these PPPs does meet our empowerment policy interests. We must also, in this important area of work, as the review does on provincial trends, learn from the mistakes we may have made in implementing some of these PPP projects. There is a need to monitor and ensure that municipalities concentrate on their comparative and competitive strengths. I would like to submit to this House that there is no area without at least one indigenous exploitable resource, as even deserts and steppes can cast a spell that can become a resource for tourism. I think that our colleagues from the Northern Cape can attest to this.

The strengthening of the capacity of local government to raise its own revenue and to formulate comprehensive integrated development plans remains an important challenge. One agrees with the assertion that there is a need to align the elements of the transformation of this sphere, so the call in the IGFR for the alignment of developmental management and service delivery, institutional reform and capacity-building, the demarcation of boundaries, physical reform and the creation of a vibrant borrowing environment must be supported.

Regarding housing delivery, the backlog of R2,2 million as outlined in the IGFR is huge and requires us to do something about the bureaucratic problems that impact negatively on the pace of delivery. Our experience, as a province, shows that housing delivery is an 18-month cycle, with the first nine months necessary for the resolution of land-related matters. This requires forward planning of up to a year before delivery can take place. We must, through co-operation and comanagement of infrastructure in programmes like the CMIP, deal with problems around property rates payment demands prior to the issuing of clearance certificates, which also affects tenure upgrade programmes.

With regard to the Jobs Summit housing projects, we would really welcome the finalisation of issues relating to the funds by the national Housing and Finance departments. It is, indeed, encouraging to realise that the review also highlights, honestly, some of the major mistakes we made immediately after 1994 and some of the hard and eye-opening lessons that we must learn from those mistakes, most of which were as a result of lack of capacity.

The lack of capacity to spend in Government departments and the need for the creation of a new interface between those who have needs and those who manage the money, as the hon the Minister, T Manuel, once argued, must be dealt with as a priority. The combination of this important tool, in the form of the IGFR and adequate and focused capacity-building programmes, will ensure that we deal squarely with the capacity conundrum - the DBSA that Mr Jay Naidoo talks about when arguing that we face not a crisis of capital, but rather a capacity one.

In conclusion, we believe that there is cause for us as a nation to celebrate the major improvements contained in this year’s review. [Applause.]

Mr S L TSENOLI (Free State): Chairperson, hon Minister and Deputy Minister, and hon members, the Intergovernmental Fiscal Review is a critical one that is meant to reflect the relationships in the resource allocation between the three spheres of government. It is, therefore, a useful barometer to measure the impact of the resources that we collectively collect. But it is also a critical instrument in building our co-operative relationships.

The Constitution provides that this relationship should be interdependent and interrelated, albeit distinct. In examining our resource allocations to date, we want to be able to see that relationship reflected in the financial flows. In other words, it is not, in and of itself, operating outside of those relationships as anticipated in the Constitution.

We want to add our word of congratulation to the Treasury for a continually improving fiscal review, not only in quantity but also in the quality of the information contained therein, specifically progressing from no mention of local government to a cursory reference to several chapters now, which is a huge and a very important part of the review. This reference to local government in the manner and the degree to which it is mentioned here is significant.

The Canadian Federation of Municipalities head, Jacques Jobin, once said, in his capacity as secretary of the International Union of Local Authorities, that local government is destined to be the institution for improving the quality of lives in all communities. He also said that although there are those who dismiss it on the grounds of what they call corruption and inefficiency, rightly or wrongly, they miss the bigger picture of the evolving significance of local government and, therefore, the need for national, provincial and global structures of governance to give active support to municipalities. It is for that reason that we are particularly well pleased with the amount of work that has been done around local government and with the undertaking to improve that work.

The fiscal review itself is also significant in its open and transparent reference to some of the weaknesses that are still there, including those of the potential hazard of unfunded mandate, the inadequacy of information to date about local government transformation, and also the capacity problem that continues to bedevil us. Often we do not raise these issues sharply enough and we often underestimate the legacy of apartheid policies, especially in relation not only to broad development and infrastructure but also to the people factors such as the availability of skills and insufficient numbers at a variety of levels in order to make the biggest impact in the institutions that we have created.

The collaboration of municipalities and provincial government in the evolution of this review is a very important one. The manner in which that happens is particularly critical. Again, I would like to refer to Jobin when he said about this matter that the difference between looking at - let me talk about a rose because I am from a city of roses - the beauty of a rose on a picture, and actually holding it in one’s hand, smelling its pleasant fragrance and feeling the vulnerability of its petals, is huge. This is why the participatory evolution of this fiscal review involving local and provincial governments is a crucial one for us. [Interjections.] The role of local government in the development programmes generally, especially in poverty alleviation, is acknowledged by the UNDP as one of the key agendas for building governance in that the integrated development plan which our country has adopted as a way through which local government must now inform its budget is important progress. It is also crucial to remind ourselves that it will only be in March 2002 that the first final IDPs, which have been comprehensively formulated, will be adopted. What we have now are actually interim integrated development plans.

The key around this is that the current practice of provincial and national departments is not appropriate to the vision that we have already designed. We require some way in which, through reporting requirements, some incentives and penalties, we can encourage both provincial and national departments to participate in the formulation of IDPs and to do so timeously, but also involve appropriate senior officials in various departments.

The impact on housing is an important one. Local government is going to make the biggest difference in housing delivery, especially because we are now talking about integrated development plans, and housing forms a crucial part of the integrated housing delivery plans of these IDPs. The sustainability of such plans will lie, in very important ways, in the degree to which provincial and national departments participate in these programmes.

The Integrated Sustainable Rural Development Strategy is already throwing out very important lessons for some of us in terms of the audits of projects in this area, of who is doing what in this area. Thereafter, the replication of that information throughout the provinces is, in fact, what is going to have to characterise the nature of development in every municipality in our province. The requirement for those projects to be packaged so that they have bigger impacts is one of the biggest lessons that we are learning through the Integrated Sustainable Rural Development Strategy.

With regard to the fiscal review and the nonfinancial information it now promises to improve, which I hope will include a gendered perspective on these issues, we would like, at both provincial and local government level, to draw on the lessons which we thought the Department of Finance had created in terms of some institutional capacity to handle and provide disaggregated gender-related information. Such information will be critical, and will help us to make a better assessment of what impact every rand that is allocated is actually making in the most critical area of our lives.

I raise this issue because the majority of the population in my province consists of females and youth. If we look at the levels of poverty of the province, it actually says that if we are talking about poor people we are talking about women. If we talking about unemployed people, we talking about women. If we talking about the people on whom HIV/Aids has impacted heavily, we are talking about women.

It is for this reason that we think the gendered perspective, as part of this evolving fiscal review, shows the relationship between our resource allocations and the impact on poverty, and if it is in that manner especially it will be very useful.

The DEPUTY CHAIRPERSON OF THE NCOP (Mr M L Mushwana): Thank you, hon member, your time has expired. [Applause.]

Order! The new speakers’ list that I now have allows me to call upon the hon MEC of finance for the Eastern Cape - he was not on my previous list - Mr E Godongwana to address this House.

Mr E GODONGWANA (Eastern Cape): Chairperson, national Ministers present here, colleagues from other provinces, hon members of this House, I am tempted to respond to the hon Ackermann here.

Mr C ACKERMANN: Do not be tempted.

Mr E GODONGWANA (Eastern Cape): No, I am. I am responding to him and the unfortunate language the DA accuses us of using, that of invoking the race card. [Interjections.] The unfortunate part of dealing with the history of this country is that one cannot avoid the concept of race. One cannot! This is because the very fundamentals of apartheid were based on race. Therefore, we cannot avoid making reference to history and race. [Interjections.]

Mr C ACKERMANN: Why are all the people from the Eastern Cape coming to live here? [Interjections.]

Mr E GODONGWANA (Eastern Cape): I am coming to that point. The reason is that they have systematically developed over decades ways of undermining certain parts of this country and making them deserts. Afghanistan, which is being bombed by the Americans, is nothing compared to some of the places in the Eastern Cape. The Nats deliberately did that, which is where the hon member comes from. [Interjections.]

He deliberately skewed the resources of this country. Let me just give an example. This House at the moment is going to debate the Industrial Development Amendment Bill. It is one of the Bills which begins to give powers to the IDC to be able to deal with tourism infrastructure. But, in this province, even before that mandate was given to the IDC, the IDC was already allowed to do that - spending R65 million building a nice thing that goes on the mountain, a tourist destination - this was part of the hon member’s history.

We are dealing with the racial resources that were deliberately skewed by his people. And then he comes here and makes himself out to have better administrators. [Interjections.] Having said that, I come to the matters under review here.

With regard to this Intergovernmental Fiscal Review, part of the 1999 review makes reference to some of the provinces that began the 1998 financial year with outstanding debts. The Eastern Cape was one of those provinces.

We take pride in saying that we are also, in this financial year, counted amongst those who have improved financial management, but accepting that this was at a cost. We had to do a number of things, for instance in containing personnel costs, we had to reduce personnel from 139 000 to 126

1. That was huge. Also, we reduced capital expenditure, which is reflected here in the document, as we did, to some extent in some of the complementary inputs that are required for some of our social services.

It has been a painful process but it has paid off. It has paid dividends. Today we can proudly say that we are now able to focus on service delivery of social services and to prioritise spending on social and economic infrastructure.

We do not deny that there are important challenges that are still confronting us. Chief amongst those is the issue of backlogs. For instance, we inherited about 42 000 km, which are proclaimed roads, under the provincial government. When we took over only 4 000 km were paved or surfaced. At the moment we have almost managed to pave about 7 000 km. We intend to continue doing that and improving our service delivery.

A key issue in any poor community is HIV/Aids. Again, our focus there is on two pillars: dealing with prevention and dealing with home-based care. Of particular importance in the lessons we have learned is that we tended to put more resources into health, only to find that the home-based care was more pertinent to welfare.

Those are some of the issues we are grappling with. I must confess that from our side the focus has not been on what is called treatment. We leave that to national Government. Our assumption at the moment is that - and we stand to be corrected - there is no medicine that does that. The reason for the fact that there is too much debate and focus on treatment, and not on prevention, eludes me. Unless one is a marketing salesman of the pharmaceutical companies, I would not know why one would focus on that as a major issue.

The third issue, of course, is the child support grant. This is going to be a major challenge for us if one looks at the projected figures by the national Department of Social Development. Despite the fact that we are number three in terms of population in the country, in terms of the take- up, at the peak we would be number one at 780 000, with KZN being 600 000. Clearly that poses a challenge for us. It is an issue which we think is an important point.

Again, the fourth element is skilled personnel. If one reads both the Ncholo report and the Presidential Review Commission report, the well-known Maphai report, then clearly the issue that is confronting provinces is the issue of skilled personnel. In some of these provinces we have a mismatch. We have personnel that are called additional to the establishment, but who cannot occupy the critical posts.

This is a result of the Bantustan system, which is the product of these fellows - or these hon members, rather. Sorry for that. [Laughter.] [Interjections.]

An HON MEMBER: It was those comrades you appointed.

Mr E GODONGWANA (Eastern Cape): Not us! With regard to the Bantustan system, Kaizer Matanzima, who was working with those hon members, employed tractor drivers. We still have the tractor drivers, but not the tractors. That is how the system was implemented. [Interjections.]

We are still grappling with those questions. There is a focus on improving skills in our province in terms of educators, pharmacists and doctors. These are some of the people we want to focus on.

In previous reviews we made the point that intergovernmental fiscal relations in South Africa was a dynamic and changing process and, therefore, needed to be harnessed in a more amicable way. In this regard, it is important, therefore, to highlight the challenges of the local government transformation agenda. There is a growing trend internationally which suggests that the devolution of functions to local government becomes a critical area, and the rationale for this is that efficiency could be achieved at that level. In our case, having successfully transformed 843 to 284 municipalities, that challenge has become acute and our challenge, therefore, is to make sure that we can transform these local governments to be efficient and effective.

At the same time, I also agree with the hon Mkhaliphi that we should move swiftly to transfer powers and functions to those levels to the extent that they can best perform at that level. Again, we should not use that as an excuse. I am mindful of the fact that people will say we do not have the capacity, and that we cannot transform the functions. My view is that we need to transform the functions, and, concomitant with that, begin to assist the municipalities with capacity. I also agree with the hon Ralane that that, of necessity, should follow the principle we have established in this intergovernmental framework so that as we move the functions, the funds must follow. I would like just to conclude by echoing the sentiments of my colleague who was here yesterday, MEC Kondlo. UmaDlamini highlighted some of the important issues, and I think it is quite important to restate that. One of these issues is that, in order to make sure that this intergovernmental process has integrity and functions properly, we need to do a couple of things. One of the challenges that we are facing as provincial government is the following. She made reference to table 1.1 …

The CHAIRPERSON OF THE NCOP: Order! I am afraid that your time has expired, hon member. [Applause.] I know that Mr Godongwana did not expect that from me, but I was instructed by the previous holder of this Chair. [Laughter.]

Mr M J KUSCUS (North West): Chairperson, Ministers present here today, my colleagues, MECs from the various provinces and all members of the House, following the poetic and passionate and somehow romantic exposition of the MEC from the Free State local government and the input made by my colleague from the Eastern Cape to bring a rural perspective to the debate, my task has been made relatively easy this afternoon.

This afternoon we are busy debating in this House the Intergovernmental Fiscal Review, a document that bears testimony to the collective successes of Government in the area of fiscal management over the last financial year. But, as we enter this process of measuring or gauging our successes and the gaps in the delivery of services to our people, it will perhaps be of assistance to us if we heed the words of a wise president of the USA, Franklin D Roosevelt, who once stated:

The future lies with those wise political leaders who realise that the great public is interested more in good government than in politics.

Presented to this House, we have the Intergovernmental Fiscal Review, which is an attempt to enhance good government in this country, because it accentuates the whole constitutional principle of transparency and enhances Government’s level of accountability to the populace, and also articulates Government’s motives and intentions much more clearly to the wider public out there.

What distinguishes South Africa from its counterparts in the developing world is our decisiveness in dealing with fiscal matters in this country. Yes, after the aftermath of 11 September, we clearly see how many countries had to run helter-skelter to beef up their economies, and bring about macroeconomic stability. But in our country, through very prudent fiscal management, we are weathering a very difficult time much more confidently.

Our Government has always engaged itself in those activities that will result in economic growth to improve the lives of the majority of South Africans, by both raising their living standards and enhancing their economic power.

For the North West province, we would just like to highlight two issues reflected in the Intergovernmental Fiscal Review. The one issue is the cross cutting matter around human resource development. On average, 57,3% of provincial budgets goes into personnel expenditure. In the North West, close to 59% of our budget goes into personnel expenditure. What comes out very clearly in this review is that we are dealing here with a very distorted skills mix, and given the deep rural nature of some of our provinces, and the manner in which this co-exists with low levels of infrastructure, it fundamentally impacts on our ability to deliver services.

Therefore, we need to very seriously look at the whole rationalisation and restructuring of the Public Service because, in a rural province such as the North West, as the fiscal review reflects here, there is a critical shortage of professionals such as doctors, nurses, social workers and even certain categories of educators in maths, science and so on. Just to give an example, in relation to specialists, there are only 1,5 specialists per 100 000 of the population, as compared to a province such as Gauteng, where there are 30,9, and the Western Cape, with 38,5. There are only 12,5 doctors to 100 000 of the population, compared to Gauteng where there are 36 doctors per 100 000 and the Western Cape’s 37,2.

Given the human development index of the North West, where we have a high illiteracy rate of 44%, and infant mortality rates of 43 per 1000 live births, Government must critically look at an incentive package so that we deal with these inequalities in our skills base. There is no way we will be able to attract professionals into our deeply rural areas without us having incentives to get them to go there. If we do not do that, we will perpetuate some of these things which we have inherited from the past.

In terms of local government and these newly established structures, we still continue to witness a relatively smooth transition into this new system. A fundamental component linked to the success of this new municipal system is the ability of municipalities to generate new and alternative sources of income and revenue. We welcome the introduction of the integrated development plans, because they will ensure sustainable development of the communities on the ground.

Our observation, however, is that the interim IDPs, though noble in intent, do not always link up to fiscal realities and a lot of work still needs to be done to quantify these IDPs into realistic fiscal projections. These IDPs have been identified as a vehicle which is going to serve as a catalyst to local economic development, and we would like to see a vigorous assault on the skills base of these local governments, because if the local governments are not properly capacitated with good financial skills, the whole notion of accelerated local development will be a wasted idea.

We would like to see these more as challenges than as obstacles to development. To overcome some of these problems and challenges that this new set of structures is facing as a result of the amalgamation process, we see that it becomes essential that we synergise the financial years of all spheres of government. One cannot have a situation where local government still budgets from 1 July till 30 June, while the rest of the spheres have another cycle.

In terms of the Intergovernmental Fiscal Review we will then have a more realistic comparison of Government’s delivery processes in totality across all spheres of government, and we can then compare, more accurately, what has been going on in a specific period of time in our fiscal year.

We, from the North West province, would this afternoon also like to acknowledge the invaluable role played by the Minister of Finance and his team, commonly known as ``Team Finance’’. [Time expired.]

The CHAIRPERSON OF THE NCOP: Minister Manuel, there was no intention on my part to stop the member just at that point.

The MINISTER OF FINANCE: I will check next time. [Laughter.]

Mr L D MARKOVITZ (Western Cape): Chairperson, it is always a pleasure to be at the NCOP, and I thank you for the invitation to be here. I did not come here prepared to speak politics, but I want to react to the opportunity given to me by my colleague from the Eastern Cape. I want to ask my colleague of the Eastern Cape: Is it going to take seven years, seventeen years or seventy years to deal with the question of excuses based on history? [Interjections.]

I would have rather expected my colleague of the Eastern Cape to perhaps address the NCOP on why they have not spent some R250 million allocated to them for the building of classrooms. [Interjections.] I might say that I am not 400 years old, but having said that, it is a pleasure to be here.

The Treasury is to be congratulated - I will deal with my congratulations at the beginning so I cannot be cut off at the end - on the production of a very comprehensive and useful overview of the financial condition and service-delivery performance of the three spheres of government. It is a most welcome step forward in Government’s commitment to open and transparent fiscal management, and contributes considerably to a greater understanding of the complex financial and institutional relationships that bind national, provincial and local government.

I believe, however, that this exercise in accountability would be greatly enhanced were the review to be accompanied by a briefer summary document, which would enable citizens to measure the performance of their elected representatives in a more accessible and readable manner. As it stands now this document is simply too detailed and indigestible for public consumption. A simple guide to intergovernmental relations would be a valuable tool in the hands of ordinary people who are not well-versed in the complexities of fiscal transfers and equitable shares, but desire a better understanding of how government works.

Let me turn to two sections of the review which have long been of particular interest and concern to me: taxation powers and borrowing powers.

While I accept that the collection of revenues from existing provincial sources could, in many instances, be greatly improved upon, I remain convinced that those provinces which have demonstrated effective management of both their income and expenditure should be entitled to explore further revenue sources with greater elasticity and creativity.

An HON MEMBER: You always want power.

Mr L D MARKOVITZ: Funny you should say that. There is also a pressing need to accelerate the process of identifying appropriate provincial tax options and including them on the allowed list. This matter has been under consideration for several years, and it is unsatisfactory that efficient and well-managed provinces should be further penalised while the Treasury grapples with the possible problems which will be posed by provinces which are less able to efficiently manage budgeting and cash management processes.

Secondly, I welcome the review’s encouraging comments regarding the urgent need for a legal and regulatory framework to govern provincial borrowing. Again, however, this appears to be a case where concerns about underperforming provinces are handicapping the needs of those provinces, such as the Western Cape and Gauteng, which are able to support an increase in debt servicing costs and to meet the necessary budget reporting obligations.

An HON MEMBER: Do you know Khayelitsha?

Mr L D MARKOVITZ: I have most probably been there more often than you have.

Annexure A4 offers an interesting and insightful look at the future development of our intergovernmental systems. It is suggested that we can either move towards a highly centralised system, with provincial activity tightly constrained by national laws and regulations, or towards one in which provinces could be granted greater discretion over both expenditures and revenue sources as their capacity develops.

There can be no doubt in my mind as to the direction we should be taking. If interpreted with a view to maximum decentralisation of powers, functions and financial rights, the Constitution contains substantial opportunities for enabling legislation instruments, which will give to the provinces greater powers of both taxation and borrowing, and a substantial reduction in conditional grants in favour of equitable share. Following this path would be entirely in keeping with contemporary global trends, whereby the devolution of governance to the lowest possible subnational levels is seen not only as a powerful guarantor of financial and political accountability, but as an important step towards restoring public confidence in the processes that govern them.

The provinces have been given wide-ranging responsibilities, whether as agents of national Government, whether supporting and strengthening the capacity of local government, or whether executing their own functions such as the building and maintenance of roads, providing health services and supplying educational facilities. The extent to which we succeed in the discharging of these obligations would depend on the resources and revenue- enhancing opportunities which that sphere of government is allowed.

The review before us makes it clear that more prudent financial management, better budgeting and improved planning have resulted in a substantial turnaround of provincial finances. Likewise, this change in provincial fortunes has laid down a solid foundation for accelerated service delivery and improved quality of services.

That is precisely the positive environment which the Minister and his department should regard as an opportunity to empower provincial governments, such as the Western Cape, to assign to them greater autonomy over their financial affairs, and to grant them the means to get on with the business of social upliftment, community development and infrastructural expansion.

Of course, this must be a two-way commitment. The Minister is perfectly correct in his insistence that greater taxation and borrowing powers to the provinces must be accompanied by improved provincial standards of financial housekeeping, information systems and budgetary responsibility. The Intergovernmental Fiscal Review demonstrates that these conditions are, at least, being met, and that most provinces are entering a new period of stability and maturity.

The turnabout and our manifest commitment to financial prudence must now be rewarded. I accept the inevitability of incremental movement towards enhanced provincial powers, but ways must now be found to speed up these processes of departmental investigation and legislative initiative with which we have been toying for far too long. The provinces are not the stepchildren or mere administrative agents of the national Government. Rather, they constitute a legislative and executive sphere of government in their own right, charged with a host of mandates and developmental obligations.

Respect our constitutional rights, honour our legitimate expectations and strengthen our ability to bring a better life to all the people we represent and serve. For our part we shall continue to govern wisely and well, but only if we are furnished with the tools and the financial means to do so.

Cllr D MASEMOLA (Salga): Chairperson, hon Ministers and Deputy Minister, members of the executive councils, members of this House and special delegates, I would like to begin by thanking, firstly, the Department of Finance for having been able to produce this Intergovernmental Fiscal Review report, and then the NCOP, and the select committee in particular, for the hard work they have done to put forward these issues that are being debated today.

It is the first Intergovernmental Fiscal Review debate after the immense changes to the system of local government and the December 2000 elections. Indeed, as so well indicated in the report, local government is faced with a number of challenges which alone cannot be addressed without the assistance of other spheres of government. As the sphere of government closest to the people, it is tasked with the major challenge of delivering basic services. This role needs to be perfected, and we want to see ourselves performing it to our utmost best.

It has been indicated, though, that one municipality in the country, specifically Thembisile, went for some days without water, and that is attributed to the fact that there are constraints in the horizontal co- operation systems within our municipalities. That problem has really indicated a need for a strengthened multijurisdictional service provider in areas where our local authorities do not have the necessary capacity to provide services. That is a problem which exists in a number of municipalities throughout the country.

On 9 February 2001, the President said:

The new structure of local government in urban and rural areas will be the focal institution of government to ensure the co-ordinated implementation of our programmes …

The final phase of local government transition has therefore substantially changed the institutional character of municipalities through the redemarcation of municipal boundaries and the new structural forms introduced by the Local Government: Municipal Structures Act. In this context, and also in ensuring the finance management systems of local government, it becomes very important that these systems enhance good governance, effective and efficient management and cost-efficiency in the way in which municipalities run their finances.

The local government transition and transformation have increased the fiscal and financial pressures faced by municipal government in general. The December 2000 elections have introduced a range of challenges faced by municipalities. Some of these are mentioned in the report. They are, however, worth mentioning. One would say the following: the costs of establishing these new municipal structures and systems as a result of the demarcation and new legislation; the provision of free basic services; the responsibilities to address the poverty and developmental challenges faced by local communities; addressing the legacy of apartheid; increasing participation and accountability in local governance; and the reduction of budgets, where some municipalities at the moment are forced to retrench their employees. These challenges faced by municipalities are enormous and therefore our presentation is seen in the spirit of fostering co-operative governance with an attempt to provide as much in the way of resources as possible for us to address the problems referred to.

The integrated development planning processes or plans are the most powerful participative and consultative instruments to formulate development priorities at local level, to strengthen the link between community needs and spending priorities. It is therefore critical that the national and provincial spending priorities should be located within these plans, with a view to maximising the allocation of resources and addressing the needs identified by the local communities.

In the same context, the actualisation of the Integrated Sustainable Rural Development Strategy and Urban Renewal Programme as a strategic intervention mechanism to make available as much in the way of resources as possible should be accommodated in the appropriation of resources to maximise attention to these identified areas.

This review takes into account the enormous fiscal burden that the financing of free basic services has on local government. We therefore see a need for a source of funding to be identified to assist these municipalities to address the possibilities of budgeting overheads. We think that it would be very important that, in as much as these services are being provided, at the same time, an alternative fund be made available to assist these municipalities.

Secondly, a national study with regard to the subsidisation of the poor, over and above the concept of free basic services for all, should be undertaken within all municipalities to determine the extent thereof, and find a way of addressing the social needs and problems that the rural communities are facing throughout the country.

Local government cannot ignore its key responsibility of social and economic development. While a significant amount of these costs are funded through local taxes, a vast number of municipalities do not have an adequate tax base to address all these challenges. Therefore, again, an alternative source of revenue should be identified to finance the gaps in social and economic development that are faced by municipalities.

We acknowledge the work done by Treasury and support the rationalisation of conditional grants to local government and the proposed three-year allocation of grants to municipalities. We also acknowledge and support the National Treasury on the Medium-Term Expenditure Framework in order to effect proper planning of municipal services because this will enable our municipalities to allocate their resources and plans in line with the available resources that would be availed to them from national Government.

While the role of central and provincial government in financing new infrastructure is acknowledged, the maintenance thereof in future years will create a major additional burden for local government, and will further constrain the limited resources mentioned above.

Accordingly, we need to consider how to ensure the sustainability and further maintenance of those facilities with the limited resources which municipalities, at the moment, would be able to provide to maintain that infrastructure.

The equitable shares to the district municipalities are quite central, precisely given the lack of capacity of some of these district municipalities and the fact that some of them are still new and that, as such, there is no way in which they can fund their own programmes. We think that, through this process, some means should be developed to further allocate these resources through the equitable share such that these district municipalities are also able to implement their own plans and programmes.

In conclusion, regarding what has been anticipated by the White Paper on the creation of strong district governments throughout the country, we think that that policy commitment should be carried forward. For us to be able to realise that, we need to finalise the whole process on the devolution of powers and functions to these respective institutions. That, probably, should be coupled with enough resources for these structures to start exercising their own given mandate.

Therefore, if that can be achieved, we hope that the two major strategic intervention policy programmes, the ISRDS and the Urban Renewal Programme, will indeed be realised and impact quite positively on the improvement of the lives of our own people, particularly in those rural areas.

In conclusion, we therefore would like to thank this House for having been able to interact with this document and we believe that, probably, as we continue with the implementation, the communities will be better off and their lives improved. [Applause.]

Mr R M NYAKANE: Chairperson, municipalities are constitutionally charged with the responsibility of providing essential services to their residents. This obligation is directly linked to the availability of adequate resources. At present most municipalities experience cash flow difficulties, partly due to the emerged culture of nonpayment for services, a situation which might develop into a state of anarchy.

Most poor municipalities, particularly the rural, can hardly generate funds to enable themselves to execute their constitutional obligations. Projects such as the provision of strategic infrastructure that will promote economic development and the upgrading and continuous maintenance of municipal infrastructure require not only skills and capacity. Heavy financial capital will rather have to be injected into municipalities in order to realise these objectives.

Poor and rural municipalities exist in abject poverty. The high rate of unemployment coupled with the scourge of HIV/Aids which targets the poverty- stricken sector of our society will continuously exacerbate the economic status of our rural municipalities.

Being a bona fide resident of one of these poor rural municipalities, I wish to commend the national Government for having budgeted for intergovernmental transfers, which will be the major source of revenue for the municipalities. However, how long will these municipalities depend on hand-outs? This is nothing but a maintenance grant similar to that given to the poor children under the age of seven. Municipalities therefore have to utilise the funds sparingly and with a high degree of accountability. The fact that transfers are the main source of rural municipal revenue poses great challenges to the poor municipalities. The administrative staff and the councillors will have to demonstrate a high degree of accountability, cost-effective and efficient administrative practices and rigorous prioritisation processes.

Lastly, the public-private partnerships funding has shown interest in those larger and financially viable municipalities like Nelspruit, Richards Bay and Dolphin Coast. This private-sector participation seems to be showing progress.

In 1998 there was a question from one of the members of Parliament who wanted to find out whether these partnerships would be extended to the disadvantaged sectors of our communities. The hon the Minister then answered that it would. Does this response still hold today? [Applause.]

Ms C S BOTHA: Chairperson, the latest IGFR report is a very useful document. It is lucid and logical and contains a wealth of information. I would like to suggest, contrary to the hon Markovitz’s proposal, that it even be expanded to a second volume with detailed information on local government included, but split according to individual metros and local and district municipalities.

However, despite all its merits - a rose by any other name - political representatives cannot use the IGFR as a substitute for independent evaluation through their personal observations. The reality on the ground can easily be befuddled by statistical aggregates and selective examples, as well as the perspective conveyed in nonfinancial comment.

The report pertinently acknowledges the challenge presented to local government to evaluate and manage the impact of fiscal choices. Of the 284 newly demarcated local authorities it was found that few had budgets linked to their strategy priorities. Clearly, it is no good committing municipalities to improved services, while expenditure is directed, not towards delivery, but increasingly towards salaries and operating costs. This is confirmed by the fact that 78% of municipal costs are operational and only 22% are for capital projects. Salaries continue to make up the largest share of this expenditure, 31%, and continue to rise faster than inflation and budget growth.

The new demarcation which necessitates the equalisation of salaries, no doubt at the highest level, will also add to this cost in the same way as council remuneration is likely to rise towards the maximum upper limits provided. Whilst the number of councillors has decreased by 30%, council remuneration has already increased by 55% since pre-1999.

Additionally, the report highlights the failure of councils to collect budgeted revenue and to refrain from incurring irresponsible expenditure. I have recently seen the appointment of administrative and political staff to new councils in the Free State with back-dated gravy-train salaries, regardless of the fact that these choices pushed the municipal budget into the red.

At the same time steps have not been taken to increase debt collection. On the contrary, this has been postponed. On the other hand, municipalities are also at the receiving end of political choices over which they have little say, the best example currently being the 1999 election promise to deliver free basic services to all.

The compilers of the review have tried to rationalise this compromising promise through some creative phrasing using the following wording: ``The policy commitment has sometimes been understood as free basic services for all.’’ I say: bunkum! Politicians had no such reserves when they were wooing the electorate and I hope this kind of political fine-tuning will in future be avoided.

While the report reflects a Treasury approach which places financial disciplines squarely at the heart of responsible delivery, we need much more. We need the speedy implementation of financial and budget reforms and politically responsible choices. [Applause.]

Ms Q D MAHLANGU: Chairperson, I am not going to waste members’ time, because many of the issues I wanted to cover have been covered very extensively.

May I once again request this Chamber to approve the report as tabled in the ATC yesterday. It is not a perfect set of documents, but I think we have tried our best to capture the discussions in the public hearings.

The 2001 IGFR has provided us with a good set of information which must be used to measure Government’s performance. Sectors covered in the review consumed a lot of resources from the fiscus because they are labour- intensive. In tables 7.1 and 7.2 in the review it is clearly stated that personnel continues to consume a lot of resources despite the decrease in personnel expenditure. This trend is expected to stabilise over the MTEF period.

I will skip other issues.

The review also states that provinces are no longer having problems with their overdrafts. Instead they have budget surpluses which are being used to finance capital programmes and further increase spending on social services.

In our view the surplus may reflect the lack of spending by departments and provinces or may be because departments overestimated their budget at the time. We would like to have more information on the issue.

We hope that moving towards the full implementation of the PFMA, we will address some of these problems. The move from cash accounting to accrual accounting may address these issues.

We know there are national norms and standards for the provision of basic services. Provinces and local spheres of government, in some instances, do not follow these norms and standards. For example, in some areas where Government provides R16 000 to build a house, local government may provide R23 000. There is no matching grant in between to get to that standard.

If provinces or local governments have higher norms, they should be in a position to match those grants to provide services to the people who need them, like the hostels in Gauteng which were renovated and turned into family units.

During the public hearings it became clear that, in some instances, communities are not consulted in the construction of infrastructure. Hence some of them have become white elephants without people utilising them. We think that communities should play a critical role because they may prefer one route to another. We also think that communities are concerned and their cultures must be taken into account.

In some provinces, there are communities that do not believe that they must have one house with everything in it. They want to have houses which are divided into a toilet, kitchen and bedroom separately built. All these issues must be taken into consideration when one builds infrastructure for communities.

In this democratic Government, we must try to pursue the integrated developmental approach, through both the rural integrated strategy and the Urban Renewal Strategy. This will help in the sense that when these houses are built, clean and safe water, electricity, sanitation and sewerage systems, schools, transport, roads and clinics will be provided. All these will contribute positively towards the development of our community, unlike what apartheid did. This will help to instil dignity and pride in our communities.

Revenue generation continues to be a problem and a legacy to both provinces and municipalities. Although provinces do not have a huge fiscal capacity, the very little that they collect will make a huge difference. In considering the Provincial Tax Regulation Bill, the capacity of provinces to collect revenue becomes very relevant. Municipalities must increase their capacities to collect and those who have low fiscal capacity should be helped by either of the two spheres of government in line with the developmental agenda as espoused in new municipalities.

For more than 40 years the previous government, that is the apartheid government, continued to create a mess and dislodge people. People were divided on the line of race, ethnicity, religion and so forth. Today when one looks at Sandton and Alexandra, then one can see the clear mess that apartheid created. To redress the imbalances that exist in Alexandra alone will take more than 40 years.

I wish to thank the Ministry and all communities who participated. We hope that in future the document will be released in time so as to allow members ample time to engage and formulate the report. This would be very appropriate. [Applause.]

The DEPUTY MINISTER FOR PROVINCIAL AND LOCAL GOVERNMENT: Chairperson, Minister Manuel and hon members, I am speaking for the first time in this House and I feel a bit nervous. I am used to being heckled. [Laughter.]

Mr L D MARKOVITZ (Western Cape): Oh, I can do that! [Laughter.]

The DEPUTY MINISTER: I want to thank the House for giving me the opportunity to address it this afternoon. I had the opportunity of addressing the select committee the other day, and there I was nervous too.

May I just remind this House that in February this year, our President, in his address to the nation, declared that our country and indeed the people of South Africa were moving step by step further away from our painful past. Our President highlighted the fact that we wanted to move our economy onto a higher economic growth path, increasing our competitiveness and efficiency, raising employment levels and reducing poverty and persistent inequalities.

At the heart of creating a stable economy and good governance lie intergovernmental relations and co-operative governance, which is entrenched in our Constitution and aims at ensuring that the national, provincial and local spheres of government work together in achieving our objective, which is a better life for all.

The Intergovernmental Fiscal Review, which provides us with a budget and spending information in all sectors managed by provinces and municipalities, should be able to assist us in assessing any progress we are making in achieving these goals we have set for ourselves.

This review follows the decision by national Government to place the local government sphere at the core of our mandate to improve the lives of our people, the disadvantaged and rural poor in particular. However, our movement towards creating a better life for our people comes with huge responsibilities in terms of ensuring that local authorities have the capacity to deliver services to each and every household in their areas. Our President also emphasised that the new structure of local government, in urban and rural areas, would be the focal institution to ensure the co- ordinated implementation of Government’s programmes. To this end, the Government has adopted the Integrated Sustainable Rural Development Programme and the Urban Renewal Programme. Cabinet, in its wisdom, has also delegated the task of co-ordinating the implementation of these programmes across all three spheres of government to the Ministry and the Department of Provincial and Local Government.

This Ministry and the Department of Provincial and Local Government have, therefore, taken on this challenge. The Ministry and the department are conscious of the fact that the immediate task is the development of the capacity of local government. This is critical for the success of these programmes.

The very nature of these programmes - integrated, sustainable - require all departments, national and provincial, and indeed the municipalities, to reprioritise their budgets in order to accelerate the provision of better services at a local level.

The challenge facing us is that of strengthening our local authorities in order for them to succeed in their efforts to better the lives of our people. Already the Treasury has allocated R65 million - I wish it were dollars - to boost the institutional … [Interjections.] [Laughter.] … and structural capacity of all the district councils responsible for the 13 nodal areas which were identified for the first phase of the Integrated Sustainable Rural Development Programme.

We must accept that the principles of good governance, effective and efficient management and cost-efficiency are also critical for the success of local government. We cannot just consider the recommendations of the fiscal review without taking into account the fact that we have just recently transformed our system of local government.

The Local Government: Municipal Structures Act of 1998 introduced operational changes, and, parallel to that, the financial systems of local government will be reformed when we introduce the Bill on municipal finance management, budget reforms and the generally accepted municipal accounting practice policy framework. This will mean a very sharp learning curve for some of our municipalities.

The fiscal review points out that only a few of the 284 newly demarcated local authorities have linked their budgets to their strategic priorities in terms of improving the services they provide to our people. However, I am privileged to report to the House today that we have now received the integrated development plans from all of the 284 municipalities. Following discussions with our provincial and local government counterparts, we have set February 2002 as our first deadline to measure our key performance areas through physical and visual output. As the Minister for Provincial and Local Government would put it, we want to see visible outputs. Next week we will also be launching performance indicators and support packs for local government. The IDPs will primarily shift the focus of municipalities towards better- integrated and sustainable delivery, nationally co-ordinated by the Department of Provincial and Local Government. Our new system of local government, with the guidance of IDPs, will definitely contribute towards a shift in budgetary priorities as the fiscal review suggests.

No longer will we see most of our budgets being spent on the actual administration of local authorities. We will witness a fundamental shift towards spending on development projects in communities, to assist in developing local economies that will ultimately contribute towards the strengthening of our national economy. Through these IDPs, local authorities will also be able to clearly define moneys collected through actual service delivery.

Also of particular importance is the extension and rehabilitation of municipal infrastructure. Not only will this extend municipal service delivery, but it will also have positive spin-offs for economic activity. However, municipalities with high levels of underservicing also lack capacity to address their infrastructure challenges rapidly.

Two weeks ago, our Minister of Finance, Minister Trevor Manuel, addressed this House. He indicated that the advances made in transforming local government were substantial and added that the fiscal conditions to support developmental municipalities were taking shape.

It is our belief that consolidated local municipalities will, in future, manage their budgets more efficiently. Our Constitution defines this sphere of government as developmental in nature. This means that local government is an important agent for delivery of services, but it is also crucial to the social and economic upliftment of our people.

Through the IDPs, local government, in conjunction with national and provincial governments, public and civil society organisations and the private sector will take on increasing responsibilities for service delivery. IDPs set out the vision, needs, priorities, goals and strategies of a local municipality, to develop the community it serves. It provides a framework in consultation with communities for determining its budgetary priorities.

Through our new system of local government, it is essential that our people become actively involved in deciding how they are governed. While encouraging municipalities to develop a culture of consultation, our new system also encourages local people to actively participate in the process of deciding how they are governed.

From the start, we have said that in view of the introduction of our new system of local government, we also had to review the finances allocated to this sphere of government. This includes the equitable share of the national revenue, the proposed new Local Government: Property Rates Bill, district council levies, intergovernmental grants, the restructuring of the electricity industry, private and public partnerships and local economic development.

Finally, we must look at the transformation of our system of local government as an investment in the economic and social structure of the type of society we wish to establish. Through active participation in local government structures, communities will shape their own destinies.

The democracy we are considering consolidating imposes certain responsibilities on our people. It demands of them to contribute towards the stabilisation of the economy of their communities, through assisting the police in the fight against crime, through maintaining the quality of local facilities and through contributing towards municipal services.

For local government to be effective, we have to ask all South Africans to play their part and to pay for services provided by our municipalities, as this will contribute towards stable and effective local government. We have set ourselves a number of challenges, but these are all driven by one objective, that of creating a better life for all our people. The people in turn have mandated us the task of facilitating this. This is a huge and complex task that will take time to achieve, but we cannot fail them. [Applause.]

The MINISTER OF FINANCE: Chairperson and members, firstly, I would like to express my appreciation. The task that we set for ourselves with regard to attempting to initiate discussions on the IGFR in the way that we have handled it here was, certainly, a complex one. But I think that other than the conclusion and a few little glitches that the hon Mahlangu referred to in the report, as printed in the ATC, it is a task that has been exceedingly well accomplished. I want to express appreciation and say why I think so.

It is a complex task because it involves, firstly, the select committees here, sister committees in provincial legislatures, representatives of provincial and national government, and, last but not least, the active participation of Salga.

This kind of oversight function has not, to the best of my recollection, been undertaken yet. So - I think it is for that that the NCOP should be commended.

Clearly, the task is about exercising policy choice. In order to do so, it is imperative that we recognise that policy manoeuvrability is limited by circumstances. Part of that circumstance is the history of a particular part of the country. Unless we deal with that, we will be like trees without roots, because the circumstances that face underdeveloped parts of the country are very different from those that face provinces such as the Western Cape and Gauteng.

I dare say that many of us would have buckled under the load imposed on somebody like MEC Godongwana when he came into office and we slapped him with section 101(a) of the Constitution and asked him to turn the situation around from the most dire circumstances. Many would have buckled at that kind of challenge, but I think it is in dealing with that that we begin to understand what policy manoeuvrability is. I think that those issues are well reflected in the changes that do come through in the various tables that are published and they were, I am sure, reflected on in the discussions here.

One of the two key questions that we asked at the start of this discussion was: Does co-operative governance work? It is a complex arrangement. One should look at some of the areas that create more stress in provincial budgets like welfare payments, both to the aged and the disabled, and the child support grants, and all of the decisions taken at national level. We then say to provinces they have to finance these out of their equitable share. Dealing with the issue, as a chapter in the IGFR attempts to - and I am sure the discussion in the workshops here attempted that - brings us closer to answering the question: Does co-operative governance work?

The second question that the hon Botha posed - not the Botha who is the Deputy Minister, but the other Botha in the House - is an interesting one because, as we move forward, we need not engage with the quantum of the spend, but its quality. What happens to the money? How does it get to people? What does it do to improve the capabilities of people in the fight against poverty? That is the exceedingly important challenge, and I will come back to it in a moment.

We could not conceivably have turned these two weeks of discussion only into a request for more money. It is inappropriate that we should try to do those kinds of things in these discussions. Everybody would take a bit of chance - tata machance, tata mamillions - but the process of budgeting is quite a different one. [Laughter.] In fact, we had hoped that what we have as a starting point, namely the fiscal framework with its divisions, would be taken as a starting point. That fiscal framework is made up of or arrived at through four interconnected issues.

The first is something that we as the National Treasury placed before Cabinet, and that is the macroeconomic framework, which will indicate how much we have available, in other words how much money we have to raise as taxes and how much we have to borrow.

The second is the vertical division. Whilst this matter has been discussed and will be discussed in the Budget Council and the Budget Forum, where Salga is present with us, at the end of the day it is a political choice that is exercised by Cabinet in an attempt to give expression to our interpretation of constitutional functions and responsibilities.

The third, in the respective provinces, is the horizontal division and that is largely influenced by the FFC. I know that some have been saying that all that they need to do is to count a few more people in their provinces and they will get more money. It is a lot more complex than that because the formula of the FFC has demographics as only one component. Services, backlogs, historic disadvantage - all of those things are factored into the equation. They are there, and it is a matter of public record. Certainly, the Select Committee on Finance here in the NCOP has discussed the FFC’s recommendations.

I would like to invite all of the members whose interest in fiscal matters has been raised in the course of these discussions to go back and familiarise themselves with how those formulas are arrived at.

The fourth set of issues relates to local government, and this is the area that is facing the most change, because the change from 843 - I get these numbers wrong all the time - to 242 is not merely going to be a simple division sum. I think we understand very clearly that with the demarcation, there were also very substantial changes in fiscal capacity. The way in which we approach these issues as we go forward is going to mean that we must, over the next two years maybe, give ourselves the space to deal with this, to be informed by the changes and to ensure that the fiscal responsibility vests as we make the commitment to ensure that local authorities are properly resourced to be able to deliver free basic services and maintain those resources.

Turning to some of the issues that were raised in the discussion: The first of those was the references to HIV and Aids. I am quite appreciative of the extent of the discussion that took place, not only in the health and welfare meeting but also in plenary here. It is important to recognise, as the Intergovernmental Fiscal Review advises us, that over R4 billion is spent by the three spheres of government on HIV and Aids and related illnesses. That is not the heart and soul of this report as some of the press seem to suggest, but it certainly does debunk this notion that nobody cares.

The second issue that was raised, and something that is under discussion at the moment, is the health conditional grants. Certainly the grants for the provision of tertiary services have been located in some provinces. Part of the learning from this exercise here in the NCOP, going forward as well, will allow us to negotiate changes to the health conditional grants, because we now understand that some provinces have been excluded from the tertiary grants, but it is actually crazy to think that tertiary services are not provided in those provinces. Those issues are currently being negotiated between ourselves and the Ministry and Department of Health to ensure a more even spread. On the timing of changes, I think we need to maximise the sensitivities all round.

I was a bit struck by the very strong call for increases in the child support grants, because the increases were called for in two directions - the first to raise the age to 18 and the second to increase the size of the grants. None of us here, I think, is that callous that we would not agree with the spirit. But I think, at the same time that we all must put our heads together and ask what is affordable in a poor country like South Africa. When we balance all of our priorities we clearly come out with a different set of issues. But that is the stuff that budgets are made of, that work is ongoing, and Parliament will be advised of the decisions taken in the passage of time.

In respect of something else that was raised here on the Division of Revenue Act, namely local government and its ability to implement water schemes, there were some very strong words raised as well. I do not take the view that the fault is either inherently in co-operative governance or in the Division of Revenue Act, because we do indeed need to have certain safeguards to ensure that money transferred and intended for infrastructure is spent on it.

I think this is about learning together, trying to effect these changes going forward, and revisiting the safeguards that are in the legislation. I think it may be an error to ignore them entirely in the future. The key challenges, from the reports, are in the nonfinancial areas, where the hardest decisions, clearly, are going to lie. Here, I think something that was not raised is for all of us to be alive to the difference between social expenses, which we can transfer, and social processes, which are quite different.

Democracy is going to be strengthened in this country, because social processes have strengthened. Social processes involve communities at their most elementary levels. In this regard, I think that local government and wards within local government are going to be profoundly more important than the discussions we have in the National Assembly or in the National Council of Provinces.

It is through ensuring that the processes happen that people can receive issues differently, and in terms of this debate MEC Godongwana often refers to relating to income availability in rural areas. This is also about the capabilities of communities and poor people to be able to change their own lives. It is about doing all of those things. Here, in the discussion, I think a number of speakers, fortunately, since yesterday made the point that money is not the only solution. It is about managing the resource, about allowing the resource to take root in the community and about engendering appropriate responses from the communities. I think that those points raised by colleagues in the House yesterday and earlier today need to be commended, because they speak of the kind of maturity of our responsibility to drive and effect the changes.

I had never hoped that this Intergovernmental Fiscal Review would become a kind of league table of who is good and who is bad, because circumstances have been quite different. I almost said to the hon Markovitz that although he may have good tax-raising ability, the province is exceedingly well endowed. Many rich people live here. Many industries are located here. Part of our responsibility in Government and in Parliament at a national level is to deal with issues of inequality, and the absence of opportunity is part of inequality.

That is the challenge that we have to work through on a continual basis. I do not know, tongue in cheek, as the hon MEC just lost the mayor. What else will he lose if we give it to him next? [Laughter.] [Interjections.] These are issues we have to deal with, because they describe this great joy that we have of building a democracy that is deep, not for ourselves because it must touch the lives of our people in a very tangible kind of way.

In expressing appreciation, let me conclude by saying this first. Though it is the third time we have had an Intergovernmental Fiscal Review, it is the first time that the discussion has been this intense. It is the first time that we have been able to take away with us a report out of this process. It adds a perspective, and I want to thank colleagues for that perspective, because that perspective is informed by a set of realities that will always be different from those of the Treasury, but enrich what we do. We say thank you very much for that.

The second point to make, in conclusion, is that our budgeting is cyclical. We can indicate that around the end of October next year, within a day or five, there will be an Intergovernmental Fiscal Review. The issues that we take on board now will influence the way in which that is done because this is an ongoing process. As I said to my colleagues in Cabinet, though we had to give a bit of an extension this year because of certain changes: ``Please know that on 30 June next year I expect a letter from you with your budget submissions for the budget in 2003.’’ It is a cyclical process and we all need to engage in it in that kind of way.

Clearly there are changes that are going to be a bit more gradual than others, but we need to mark those changes and go along with them as we proceed. We need to watch very clearly the policy choices. We need to create more policy room as we spend. This means that we must watch the efficacy of spending. That is the quality assurance that I think all spheres of government must put into this discussion as we go forward.

I hoped that this exercise would empower the participants in the process. What we sometimes find is that a few people will say, ``I will talk about these economic issues,’’ while other people think that that is not for them. But part of what we have tried to do here is to involve everybody in talking about budgets, because it is certainly a key part of our political responsibility. Ensuring that there are resources available and how we spend them is a key part of our political responsibility. I hope that we were able to do that. I hope that all of the members of the NCOP feel a lot more empowered.

I know that some of the crafting is still in this jargon that economists speak, but I hope that we were able to break that down. I express that hope very fervently because I think that this process will work if it can be taken a step forward.

That step forward is, hopefully, that within provincial legislatures and within local governments these same discussions can happen because, as we begin to hold those discussions, we empower public representatives, which is the objective of the exercise. As public representatives, are empowered they will understand that there is no magic, that a lot of the debate around macroeconomics is in fact something on the side. The key we must be looking at is how money is spent to make a difference in the lives of people.

Once we are sure of that it is then easier to talk about the general availability of the resource - can we tax more, can we spend more - because there are parts of what we see now that do suggest, from time to time, that we do not have capacity to spend a lot more.

However, that is taking the exercise forward, and it is in that regard that I invite you, as Chairperson of the NCOP and the distinguished members of this Council, to take the process forward. But thank you very much for enriching the Budget process as we proceed. [Applause.]

The CHAIRPERSON OF THE NCOP: Ke batla go leboga Tona Manuel. Ke bone gore baemedi botlhe ba ba nang le seabe mo tirong e, ba e dira sentle. E simolotswe ke Tona Manuel. Re rata go mo leboga. [I would like to thank the hon Minister Manuel. I realise that the people who are involved in this task are doing very well. I was initiated by the hon Minister Manuel, and for that we would like to thank him very much.]

Minister, we thank you for the initiative, which you introduced, allowing the NCOP to interact seriously with the Intergovernmental Fiscal Review. Many persons have been involved in putting the process together, particularly Mr Surty, but I think it was excellent that you actually encouraged the select committee to ensure that we give the detailed analysis. I am sure that the NCOP will take on the challenge posed by this initiative. Thank you very much.

Debate concluded

The Council adjourned at 17:35. ____

            ANNOUNCEMENTS, TABLINGS AND COMMITTEE REPORTS

ANNOUNCEMENTS:

National Assembly and National Council of Provinces:

1. The Speaker and the Chairperson:

 Copies of the memoranda on the objects  of  the  following  Bills  (the
 Bills  were  presented  to  the  National  Assembly  by  the  Portfolio
 Committee on Finance on 3 October 2001) can now be  obtained  from  the
 Clerk of the Papers or the Committee Section of Parliament:


 (i)    Financial Intelligence Centre  Bill  [B  1B  -  2001]  (National
     Assembly - sec 75);


 (ii)   Pension Funds Second Amendment Bill [B  41B  -  2001]  (National
     Assembly - sec 75).


 The  memoranda  are  also  available   on   Parliament's   website   at
 ``http://www.parliament.gov.za/bills/2001/memo1.htm''               and
 ``http://www.parliament.gov.za/bills/2001/memo2.htm'', respectively. National Council of Provinces:

1. The Chairperson:

 The following papers were tabled and are now  referred  to  the  Select
 Committee on Education and Recreation:


 (1)    Report and Financial Statements of the Foundation for Education,
     Science and Technology for 2000-2001, including the Report  of  the
     Auditor-General on the Financial Statements for 2000-2001.


 (2)    Report of the Africa Institute of South Africa for 1999-2001 and
     Financial Statements for 2000-2001.

TABLINGS:

National Assembly and National Council of Provinces:

Papers:

1. The Speaker and the Chairperson:

 (1)    Report of the Auditor-General on the Financial Statements of the
     Universal Service Agency and the Universal Service Fund  for  1999-
     2000 [RP 137-2001].


 (2)    Report of the Auditor-General on the Financial Statements of the
     Disaster Relief Fund for 2000-2001 [RP 133-2001].


 (3)    Report of the Auditor-General on the Financial Statements of the
     National Supplies Procurement Fund for 2000-2001 [RP 144-2001].


 (4)    Report of the Auditor-General on the Financial Statements of the
     National Electricity Regulator Fund for 1997-98, 1998-99 and  1999-
     2000 [RP 152-2001].

1. The Minister of Education:

 (1)    Report of the Certification Council for Technikon Education  for
     the period 1 April 2001 to 31 August 2001 [RP 175-2001].


 (2)    Government Notice Number 415 published in the Government Gazette
     No 22281 dated 18  May  2001,  National  Policy  regarding  Further
     Education and Training Programme: Approval of  adjustments  to  the
     Economic Higher and Standard Grade Core Syllabi for Grade 12,  made
     in terms of the National Education Policy Act, 1996 (Act No  27  of
     1996).


 (3)    Government Notice Number 416 published in the Government Gazette
     No 22281 dated 18  May  2001,  Approval  of  an  amendment  to  the
     aggregate for  Senior  Certificate  candidates  offering  technical
     college instructional offerings as part of their  programmes,  made
     in terms of the National Education Policy Act, 1996 (Act No  27  of
     1996).


 (4)    Government Notice Number 417 published in the Government Gazette
     No 22281 dated 18  May  2001,  National  Policy  regarding  Further
     Education and Training Programme: Approval of the drafting and  the
     documentation of National Education Policy  regarding  the  Gauteng
     Youth College Programme, made in terms of  the  National  Education
     Policy Act, 1996 (Act No 27 of 1996).


 (5)    Government Notice No 472 published in the Government Gazette  No
     22334 dated 29 May 2001, Call for nomination to fill a  vacancy  in
     the  South  African  Qualifications   Authority   caused   by   the
     resignation of the member representing the  Adult  Basic  Education
     and Training Sector, made in terms of section 4(3)(l) of the  South
     African Qualifications Authority Act, 1995 (Act No 58 of 1995).


 (6)    Government Notice No 485 published in the Government Gazette  No
     22345 dated 1 June 2001, Call for nomination to fill a  vacancy  in
     the  South  African  Qualifications   Authority   caused   by   the
     resignation  of  the  member  from   the   National   Organisations
     Representing Colleges other than teachers and  technical  colleges,
     made  in  terms  of  section   4(3)(l)   of   the   South   African
     Qualifications Authority Act, 1995 (Act No 58 of 1995).


 (7)    Government Notice No 541 published in the Government Gazette  No
     22374 dated 13 June 2001, Appointment of a replacement to serve  as
     a member of the South African  Qualifications  Authority,  made  in
     terms  of  section  4(4)  of  the  South   African   Qualifications
     Authority Act, 1995 (Act No 58 of 1995).


 (8)    Government Notice No 650 published in the Government Gazette  No
     22471 dated 12 July 2001, A focused study  of  the  development  of
     the National Qualifications Framework with the aim of  streamlining
     its  implementation,  made  in   terms   of   the   South   African
     Qualifications Authority Act, 1995 (Act No 58 of 1995).


 (9)    Government Notice No 703 published in the Government Gazette  No
     22524 dated 27 July 2001, National Policy regarding  Special  Needs
     Education: Approval of  Education  White  Paper  6,  Special  Needs
     Education: Building an inclusive  education  and  training  system,
     made in terms of section 3(4)(l)  and  (o)  of  National  Education
     Policy Act, 1996 (Act No 27 of 1996).

1. The Minister of Communications:

 Report and Financial Statements of Telkom Limited for 2000-2001.