Representation by the Economic Development & Planning Directorate SALGA Presentation to the Standing Committee on Appropriations: Local Government and EPWP 18 May 2009 Representation by the Economic Development & Planning Directorate

The purpose of this presentation to the SCOA is to: Inform the Standing Committee on Appropriations (SCOA) regarding the performance of Municipal EPWP Performance over the 2009/10 financial year Outline the role SALGA has played and continues to play in supporting EPWP Highlight challenges experienced by Local Government Make proposals that will support improved EPWP reporting and performance

SALGA engagement with EPWP Phase II SALGA has engaged with the Department of Public Works (DPW) and the EPWP Unit since December 2008 on EPWP Phase 2 SALGA is aware that the EPWP implications and expectations for municipalities is to create the 1 448 409 work opportunities at the local level by 2013/14 SALGA is centred on making EPWP more accessible and inclusive to a wider audience of municipalities, ensuring that as many municipalities as possible participate and creating a differentiated approach particularly focusing on the challenges facing poorer and more rural municipalities SALGA’s EPWP oversight, concerns and recommendations have been raised through its internal mandating structures, ie. Provincial and National Working Groups, EMT and NEC These matters have been raised directly with the Department and NCOP Select Committees during the budget process

Original impact of proposed EPWP II enhancements Initially, for provinces and municipalities to be eligible for the EPWP Phase II Wage incentive, they needed to have: Met minimum participation targets for women, youth and people with disabilities. Met the minimum threshold of the employment creation targets using their conditional infrastructure grants. Reported on their contribution to the EPWP to the Department of Public Works. The impact of application of these original Phase II criteria was that only 44 municipalities would qualify as eligible to access the incentive in the first year 2009/10 (15%). A further 26 municipalities who although reported on their EPWP efforts were been deemed to be non-eligible.

SALGA input into the revised EPWP Phase II enhancements (1/3) Differentiation between Urban and Rural areas The EPWP wage incentive was amended to have a rural bias, i.e. a different application between urban areas, rural areas and ISRDP nodes. EPWP Employment Creation Targets Were amended to provide a stronger incentive for employment creation in the rural areas. The threshold for participation of all rural municipalities was reduced to 0 (zero), meaning that all rural municipalities that contributed to the EPWP became eligible for the EPWP wage incentive. Urban areas will still have to meet a minimum threshold based on 7 (previously 3) Full Time Equivalents (FTE’s) per million rand of MIG expenditure before they can become eligible. Urban areas: The members of the South African Cities Network consisting of the six metros, Buffalo City, Mangaung and Msunduzi. Rural areas: all areas that fall outside these nine cities. ISRDP nodes: These nodes, identified as priority areas will be given special focus Integrated Sustainable Rural Development Programme (ISRDP)

SALGA input into the Revised EPWP Phase II Enhancements (2/3) Revised EPWP Wage Incentive Rural municipalities can now claim for the incentive for every FTE they create, not only for the FTE’s created above the minimum threshold. Urban municipalities will receive a smaller share of the incentive as the will only receive the incentive for FTE’s created above their increased threshold The impact on the revised EPWP fiscal incentive model, making it more rurally biased, is summarised as follows: The implications of this would impact a rural district like Vhembe, that was previously ineligible will now be able to access at least R 2.3 million from the incentive provided that EPWP employment is created and reported. On the other hand for a metro like eThekwini, could start claiming the incentive once the employment created exceeded 1513 FTE. Now they can only start claiming once they have exceeded 2521 FTE. This results in a reduction of R5.8 million of their allocation. Original proposal included only 44 municipalities or which 6 cities and 8 ISRDP nodes When revised for 2008/09 this listed included 68 municipalities, of which 5 cities and 10 ISRDP nodes.

SALGA input into the Revised EPWP Phase II Enhancements (3/3) Extension on Reporting Deadline An original extension to the April 2009 reporting deadline until June 2009 (the Municipal financial year allowed municipalities who reported on their EPWP activities from March 2009 to June 2009 to qualify for a nominal incentive amount in the 2010/11 financial year. This provided an window of opportunity for municipalities who had yet to participate, to report and qualify and to increase the number of municipalities benefiting from the EPWP going forward. DPW then subsequently extended the reporting deadlines further until the 15th October annually

Municipal Performance in the 2009/10 Financial Year EPWP Performance in 2009/10 Municipal Performance in the 2009/10 Financial Year From a SALGA perspective performance of Local Government should be assessed in terms of: Number of municipalities reporting Number of Municipalities Eligible/Qualify for the Fiscal incentive Number of municipal FTE’s % DORA draw down by municipalities Noting performance against municipal financial year vs national financial year

Municipal Performance in the 2009/10 Financial Year EPWP Performance in 2009/10 Municipal Performance in the 2009/10 Financial Year Number of Municipalities Reporting (qualify for incentive) Province 2007/08 2008/09 2009/10 % Change (from 07/08) Municipalities still not reporting Eastern Cape 12 23 92% 22 Free State 4 7 11 175% 14 Gauteng 5 8 10 100% KwaZulu Natal 9 33% 49 Limpopo 16 20 Mpumalanga 19 111% 2 Northern Cape 60% 17 North West 15 114% Western Cape 0% Total 68 105 125 84% 158

Municipal Performance in the 2009/10 Financial Year EPWP Performance in 2009/10 Municipal Performance in the 2009/10 Financial Year Number of Municipal FTE’s (based on the EPWP 4th Quarter Report 1April 2009 / 31 March 2010: Infrastructure Sector) Number of projects: 1391 FTE’s: 40,793 Work Opportunities: 127, 222 Still 1321187 work opportunities required at the local level by 2013/14 Ave Wage: R83.81

Municipal Performance in the 2009/10 Financial Year EPWP Performance in 2009/10 Municipal Performance in the 2009/10 Financial Year DORA Draw Down by Municipalities Province Percentage of incentive paid Eastern Cape 21% Free State 15% Gauteng 190% KwaZulu Natal 84% Limpopo 63% Mpumalanga 12% Northern Cape 25% North West 80% Western Cape 17% Average 69% % DORA Draw Down by municipalities (National financial year: 1 April - 31 March) No. of Municipalities 0% 10 >0%-25% 22 25%-50% 9 50%-75% 6 75%-100% 4 100% - 250% 16 > 250% 2 Total 68

SALGA activities in the 2009/10 Financial Year EPWP Performance in 2009/10 SALGA activities in the 2009/10 Financial Year Besides advocating changes to EPWP Phase II (especially in terms of the DORA), SALGA’s aim was to increase number of municipalities reporting on EPWP (to ensure more municipalities qualify for the wage incentive). The target was for SALGA to host/facilitate municipal EPWP workshops in all provinces and submit a monitoring report of issues to the SALGA National Office: Besides KZN, all workshops were hosted in all Provinces (with DPW representation) EPWP Phase has been discussed at all National Economic Development and Planning Working Groups since March 2010 and the 3rd Quarter report was presented at the 10 December 2009 NEC of SALGA

SALGA activities in the 2009/10 Financial Year EPWP Performance in 2009/10 SALGA activities in the 2009/10 Financial Year SALGA has attempted (unsuccessfully) to form a formal partnership (memorandum of understanding) with DPW around EPWP SALGA believes that with the necessary political and technical support, capacity and institutional arrangements, a joint EPWP Unit and SALGA partnership would provide both the much needed fundamental political and technical support to municipalities

SALGA activities in the 2011/11 Financial Year EPWP Performance in 2010/11 SALGA activities in the 2011/11 Financial Year The extension to the EPWP reporting deadline for Municipalities applies until 15 October and allows municipalities who report on EPWP activities from March 2010 to June 2010 to at least qualify for a nominal incentive amount in the 2011/12 financial year. This provides a window of opportunity for SALGA to support municipalities who had not participated to report and qualify and to increase the number of municipalities benefiting from the EPWP. As proposed in the Directorate Business Plan, it is expected from the SALGA Provincial Offices to assist at least 3 non participating municipalities per province to begin reporting on EPWP. The National Office is committed to pursue a greater working relationship with the DWP in order to: Clarify the reporting requirements and reporting process for local government to ensure effective Monitoring and Oversight Providing consolidated support to municipalities regarding EPWP.

Challenges from a Local Government perspective: Challenges I Challenges from a Local Government perspective: Inconsistent levels of support: Sometimes conflicting between national EPWP co-ordinators and provincial DPW offices Limited levels of engagement between EPWP Technical support and local government (“not accessible”) A more predominate focus on performing (reporting) rather than non-performing (non-reporting) municipalities Limited access to peer-to-peer learning networks for municipalities or platforms to sharing of good practice Experiences on the EPWP Management Information System Access, training and support Mixed Local Government experiences of EPWP MIS system “Black Box” with limited access SALGA has met with the EPWP Unit at DPW to clarify the current municipal EPWP reporting figures and to request for specific standard reports are supplied to SALGA as to assist in the Monitoring and Communication of EPWP performance within SALGA and with Municipalities.

Challenges from a Local Government perspective: Challenges II Challenges from a Local Government perspective: Reporting Standards on Local Government EPWP performance: The different financial year ends and therefore the different reporting quarters; The different sectors (infrastructure, environmental and social) are sometimes combined and sometimes separated when reported; It is unclear if the training, youth, women and people with disability figures are being captured? Limited Councillor awareness/ownership of EPWP programme despite general political committment There is a need for greater role clarification between LED officials and owners of infrastructure programmes within municipalities in being responsible for EPWP Capacity challenges at municipal level to identify EPWP projects Dependence on 3rd parties/contractors to capture and report monthly SALGA has met with the EPWP Unit at DPW to clarify the current municipal EPWP reporting figures and to request for specific standard reports are supplied to SALGA as to assist in the Monitoring and Communication of EPWP performance within SALGA and with Municipalities.

Challenges from a Local Government perspective: Challenges III Challenges from a Local Government perspective: Delay in reporting, qualifying and able to draw down grant (see below) Municipalities that report by the end of the National Financial year receive the full allocation, before the 15th October a Nominal allocation; after the 15th October only qualify for the next cycle. Confusion between national and municipal financial year

Comment on EPWP Phase II 2010/11 Recommendations / Suggestions I Comment on EPWP Phase II 2010/11 In terms of the DORA, SALGA commends and supports: Municipalities must at the very least report to participate in EPWP The extension to the reporting date for Local Government to 15 October annually The increase in the nominal incentive amount to R800 400. Municipalities who report between 1 April 2009 and 15 October will receive the nominal incentives The continuation of the zero threshold for Rural Municipalities A Rural incentive increased to R60/day (from R50)

Comments on EPWP Phase II 2010/11 Recommendations / Suggestions II Comments on EPWP Phase II 2010/11 A much more extensive MIS training programme is necessary to enable provinces to capture data themselves. The system needs to be simplified and made more transparent Even SALGA currently does not have access to the system SALGA has had to request that the DPW provide specific standard reports from a Local Government financial year and reporting perspective to assist in the Monitoring and Communication of EPWP performance within SALGA and LG Greater technical support and accessibility provided to municipalities by the EPWP Infrastructure unit More direct face to face interactions and support (especially on those non-reporting municipalities)

Comments on EPWP Phase II 2010/11 Recommendations / Suggestions III Comments on EPWP Phase II 2010/11 SALGA could support a EPWP Knowledge Platform that would inter-alia: Good practice guidelines Institutional arrangements Development of a generic Municipal EPWP Policy for Local Government Fast-tracking the fiscal incentives: For 158 municipalities who report for the first time - gain immediate access to a smaller nominal fiscal incentive in the next financial year Reporting before 31 March – Full incentive Reporting after 31 March – Nominal incentive

Comments on EPWP Phase II 2010/11 Recommendations / Suggestions IV Comments on EPWP Phase II 2010/11 For the 125 reporting municipalities, the ability to borrow against the incentive to leverage additional resources (private sector/3rd party) Using the wage incentives to expand on EPWP beyond just infrastructure: Cleaning of public spaces, including rivers, parks and roads, drains etc Collection and recycling of household waste Creation and maintaining of communal food gardens Community safety Cutting of grass, trimming of trees and vegetation Sports and fitness programme