Progress Report on Municipal Public Accounts Committees (MPACs) Presentation to Portfolio Committee on CoGTA 7 August 2012

Outline of Presentation 1 Introduction Reasons for the creation of MPACs Guideline on the establishment of MPACs 2 The MPAC as a response to LG report Institutional context of MPACs Functions of MPACs Other Matters pertaining to MPACs Establishment status and training Establishment statistics breakdown per province Designation of Fulltime MPAC Chairs On-going training Assistance Provided Lessons

REASONS FOR CREATON OF MPACs A 2009 local government assessment study highlighted a number of root causes behind municipal problems. One of these related to poor oversight. This contributes towards restoring the institutional integrity of municipalities. Section 152(1)(a) of the Constitution of the RSA lists as one of the objects of local government, “to provide democratic and accountable government for local communities”.

Guidelines on the Establishment of MPACs A joint DCoG-National Treasury Guideline for the establishment of MPACs was issued on 17 August 2011. The Guideline takes into account the valuable input by SALGA, Association of Public Accounts Committees (APAC), provinces, municipalities and the Local Government MinMEC of 12 August 2011. Acknowledging the existence of the Municipal Finance Management Act (MFMA) Circular 32 (of 15 March 2006), the Guideline provides further guidance on oversight matters and addresses institutional, functional, composition, membership, work programme, meeting arrangements and reporting of MPACs. The Guideline is meant to assist municipalities in establishing MPACs in terms of provisions of the Municipal Structures Act and the MFMA to serve as an oversight committee to exercise oversight over the executive obligations of council.

Institutional Context of MPACs (1/2) The MPACs are established in terms of section 79 (as opposed to section 80) of the Municipal Structures Act as they are meant to assist the Council (not the mayor / executive mayor or mayoral committee / executive committee) to perform its functions or exercise its powers. The MPACs will assist council to hold the executive and municipal entities to account, and to ensure the efficient and effective use of municipal resources.

Institutional Context of MPACs (1/2) The MPAC shall have permanent referral of documents as they become available relating to: In-year reports of the municipality and municipal entities; financial statements of the municipality and municipal entities as part of the committee’s oversight process; audit opinion, other reports and recommendations from the Audit Committee; information relating to compliance in terms of submission of Annual Financial Statements to the Auditor-General and tabling of Annual Report before council; information in respect of any disciplinary action taken in terms of the Municipal Finance Management Act (MFMA) where it relates to an item that is currently serving or has served before the committee; any other audit report from the municipality or its entities; and performance information of the municipality and municipal entities.

MPAC Functions (1/2) The primary functions of MPACs are the following : To consider and evaluate the content of the annual report and to make recommendations to Council when adopting an oversight report on the annual report; In order to assist with the conclusion of matters that may not be finalized, information relating to past recommendations made on the Annual Report, must also be reviewed. This relates to current in-year reports, including the quarterly, mid- year and annual reports;  

MPAC Functions (1/2) The primary functions of MPACs (Continued): To examine the financial statements and audit reports of the municipality and municipal entities, and in doing so, the Committee must consider improvements from previous statements and reports and must evaluate the extent to which the Audit Committee’s and the Auditor General’s recommendations have been implemented.  

Other Matters Pertaining to MPACs In deciding on the Chairperson, the Council may (consider appointing councillors from parties other than the majority party in Council. The Guideline or legislation does not require that chairpersons of MPACs should be from parties other than the ruling party of the relevant municipality. Thus, Councils can appoint as chairperson either a councillor from the ruling party or other parties represented in councils. In terms of the Policy Framework for the Designation of Full-time Councillors (gazetted on 14 December 2011) “The member of the Executive Council of a province responsible for local government may determine that councillors who have been elected or appointed to [certain offices] in a municipal council, may be designated as full- time.”. The appointment is done in concurrency with municipalities. These offices include chairperson of a Committee established in terms of section 79 (of the Municipal Structures Act) in municipalities with 40 or more councillors.

MPACs Establishment Statistics (1/2) In terms of 2011/12 DCoG’s Annual Performance Plan (APP) 10% of MPAC’s should be established by 31 March 2012. To fast-track MPAC establishment, the DCoG advised then Acting Minister of Cogta to request (through the 2011 SALGA national conference) for municipalities to establish MPACs by 30 November 2011. MPACs which existed before the recent local government elections dissolved with the dissolution of Councils. As of 31 March 2012, the number of MPACs were 223 from the current 278 municipalities. This represents 80% for the 2011/12 national financial year. As of 2nd August 2012, this increased to 83% (232 municipalities).

MPACs Establishment Statistics (2/2) Province Municipalities with MPACs Total munics Free State - - 24 Western Cape 9 ( 30%) 30 Northern Cape 31 (97%) 32 North West 23 (100%) 23 Limpopo 30 (100%) Eastern Cape 45 (100%) 45 Gauteng 12 (100%) 12 KZN 61 (100%) 61 Mpumalanga 21 (100%) 21 Grand Total 232 ( 83%) 278 Less FS Munics 232 (91%) 254 Note: Information as of 20th July 2012 and supplied by provinces.

Designation of Fulltime MPACs Chairs (1/2) Province Authori sed Names of Authorised Municipalities Application under consideration Free State n/a Western Cape 1 City of Cape Towwn Northern Cape Francis Baard DM North West 10 Rustenberg, Madibeng, Moses Kotane, Greater Taung, Ditsobotla, Tlokwe, Matlosana, Mafikeng, Moretele & Ramotshere Moiloa. Limpopo

Designation of Fulltime MPACs Chairs (2/2) Province Author ised Names of Authorised Municipalities Application under consideration Eastern Cape 1 OR Tambo Alfred Nzo, Amathole, Nyandeni & Mahlathi. Gauteng 4 Joburg, Tshwane, West Rand & Merafong Randfontein. KZN eThekwini Msunduzi, KwaDukuza & Umzimkhulu. Mpumalanga n/a Grand Total 17 9 Note: Information as of 20th July 2012(for rest) and 1 August 2012 for WC and supplied by provinces.

MPACs Training – To contribute towards MPACs Functionality As MPACs were established provinces were conducting orientation/ induction sessions. 6 Provinces conducted training workshops to all MPAC councillors at district-level from April to July 2012 to complement the induction sessions. The training sessions were a joint collaboration by the APAC, provincial Treasuries, provincial Cogtas, provincial Auditor-General Offices, with guidance by National Treasury & DCoG where required. The 7 provinces are : Eastern Cape, Gauteng, Limpopo, Mpumalanga, North West, Northern Cape and Western Cape. KZN is intending to roll out its training from August 2012.

Assistance Provided where there are Challenges The department works closely with provinces who primarily interact with municipalities and collaborate with provinces where there are issues of challenges. These collaboration includes guiding the province or a municipality (in those instances where the municipality directly approaches the department). It is through these engagement with the provinces that the Northern Cape which initially had problems was able to make serious inroad towards establishing MPACs. The department is still to interact closely with the Western Cape with respect to municipalities with outstanding MPACs.

Lessons Learned (1/2) Various lessons have been learned through the MPAC establishment phase, and these include: Municipalities and provinces are varied in relation to governance indicators and these dynamics have to be acknowledged (some are far ahead whilst others are lagging behind, those lagging behind have to be brought up to the level of the fast pacers without derailing the movement of fast pacers).

Lessons Learned (2/2) Various lessons have been learned through the MPAC establishment phase, and these include: In implementing the Guidelines, one complication that arose in respect of smaller municipalities is that if you exclude from MPAC membership the Mayor or Speaker or Chief Whip, you end up having only 2 or 3 councillors who can serve in MPACs. Any future review or amendments of guidelines has to take into account the manner in which municipalities are demarcated in terms of sufficiency of councillors to serve on Council committees.

Conclusion It should be mentioned that the establishment of functional MPACs has always been to contribute in part to the broader financial governance and other indicators at municipal level. The effectiveness of the MPACs together with other Council committees will be seen firstly by the quality of the AFS and the increased number of municipalities with improved audit outcomes. (This will be an outcome of the future). Improving the functionality of MPACs require the support of all partners in areas where they are better positioned to add value. Thanks