City of Cape Town
Submissions on the Constitution Seventeenth Amendment Bill of 2009
1. Introduction
1.1 On 17 June 2009, in Government Gazette No. 32311 of that date, the Department of Justice and Constitutional Development gave notice of its intention to introduce the Constitution Seventeenth Amendment Bill of 2009 ("the Amendment Bill"), in the National Assembly.
1.2 The Amendment Bill was published for public comment, with comments to be submitted within 30 days. For the reasons set out below, the City of Cape Town ("the City") objects to the Amendment Bill. Inter alia for this reason, it requests that it be given an opportunity to amplify these written submissions by way of an oral presentation before the Justice and Constitutional Development Portfolio Committee.
1.3 The memorandum on the objects of the Amendment Bill, which accompanied the publication of the Amendment Bill, makes specific and detailed reference to the Cabinet's approval of the Blueprint for the Reform of the Electricity Distribution Industry (EDI) in South Africa. The memorandum explains that the passing of the Amendment Bill is essential in order to ensure the restructuring of the EDI in South Africa and the establishment of six wall-to-wall regional electricity distributors (RED's) as public entities. The memorandum goes on to state, however, that the Amendment Bill is designed not only to facilitate EDI restructuring, but also to facilitate the regionalisation of other municipal functions, where necessary.
1.4 The City does not intend in these submissions to comment on the merits and demerits of the proposed restructuring of the EDI.The City's opposition to the six RED model is well documented and does not need to be repeated here. The object of these submissions is to set out the City's grounds of opposition to the Amendment Bill.
1.5 In these submissions we do the following:
1.5.1 outline the key provisions of the Amendment Bill;
1.5.2 summarise the current constitutional scheme with reference to the national, provincial and local spheres of government;
1.5.3 set out how the Amendment Bill interferes with the constitutional scheme and why the Amendment Bill negatively affects provinces and municipalities;
1.5.4 outline the possible confusion which will arise regarding the proposed regulation of municipalities' executive authority; and
1.5.5 lastly, examine problems with some of the specific provisions in the Amendment Bill.
2. The proposed new section 156(1A) of the Constitution
2.1 The proposed amendment to the Constitution involves the addition of a new section 156(1A).Section 156 is in Chapter 7 of the Constitution headed "Local Government". Section 156 deals with the powers and functions of municipalities. Subsection (1) provides that municipalities have executive authority and the right to administer the local government matters listed in Part B of Schedule 4 and Part B of Schedule 5 of the Constitution, as well as other matters assigned to local government by national or provincial legislation.
2.2 The proposed new section 156(1A) seeks to limit the executive authority of municipalities. It does so by empowering the government to pass national legislation which further regulates the executive authority of municipalities in respect of the local government matters listed in Part B of Schedule 4 and Part B of Schedule 5.
2.3 There are two threshold requirements which must be met for this legislation to be passed:
2.3.1 it can only be passed "when it is necessary to achieve regional efficiencies and economies of scale in respect of a specific municipal function" [paragraph (a)]; and
2.3.2 the national legislation may only be enacted "if municipal boundaries and executive authority negatively impedes regional efficiencies and economies of scale in respect of a specific municipal function" [paragraph (d)(i)].
2.4 Paragraph (b) of the proposed amendment sets out the aims of the proposed national legislation. Six are listed.
2.5 Paragraph (c) then goes on specify potential constraints on the national legislation by providing that the national legislation must "as far as possible" achieve three specified outcomes. The phrase "as far as possible" means that the outcomes do not necessarily have to be achieved. They therefore do not have the same status as the two thresholds listed in paragraph 2.3 above (which are mandatory).
2.6 Lastly, paragraph (d)(ii) provides for a consultation process with both organised local government (SALGA) and the Financial and Fiscal Commission.
3. The current constitutional scheme
The City's fundamental objection to the Amendment Bill relates principally to the extent to which it interferes with the delicate balance of power as set out in the Constitution.Before highlighting the level of interference and intrusion into this delicate balance, it is necessary to summarise the relevant constitutional provisions:
3.1 The Constitution recognises the relatively autonomous status of local government. This is most aptly reflected in section 151(4) which provides that –
3.2 "The national or a provincial government may not compromise or impede a municipality's ability or right to exercise its powers or perform its functions."
3.3 Local government is defined as a distinct sphere of government with legislative, executive and administrative authority.
3.4 Both the national government and the various provincial governments have limited powers to intervene in the affairs of municipalities.These powers of intervention are reflected in the following provisions of the Constitution:
3.4.1 section 44(1)(a)(ii) confers on Parliament the power "to pass legislation with regard to any matter…. within a functional area listed in Schedule 4". This is a very wide power, not limited in the same way that provincial powers are;
3.4.2 however, with regard to Schedule 5 matters, Parliament has more limited powers. Parliament may only pass legislation with regard to a Schedule 5 matter in five specified situations set out in section 44(2) of the Constitution. This distinction between Parliament's powers with regard to Schedule 4 matters and Schedule 5 matters is significant;
3.4.3 provinces, on the other hand, have more limited powers. The introduction to both Part B of Schedule 4 and Part B of Schedule 5 specifies that provinces have legislative responsibility in relation to local government matters to the extent set out in section 155(6)(a) and (7) of the Constitution;
3.4.4 section 155(6)(a) confers a discrete power on provinces with regard to local government. It empowers provinces, by legislative or other measures, to "provide for the monitoring and support of local government" in the relevant province. This is not a responsibility conferred on national government;
3.4.5 in terms of section 155(7), both national government and the provincial government are given "the legislative and executive authority to see to the effective performance by municipalities of their functions in respect of matters listed in Schedules 4 and 5, by regulating the exercise by municipalities of their executive authority referred to in section 156(1)". This is generally referred to as the supervisory responsibility of both national government and the provincial governments;
3.4.6 the strongest intervention power conferred in respect of municipalities is set out in section 139 of the Constitution which allows the relevant provincial executive to intervene in the affairs of a municipality "when a municipality cannot or does not fulfill an executive obligation in terms of the Constitution or legislation". This intervention power is a drastic one and is conferred specifically on provincial governments.The power of national government to intervene in these circumstances is, in terms of section 139(7), extremely limited: it may do so only when a provincial executive either cannot or does not intervene;
3.4.7 the powers of supervision and potential intervention must counterbalance those provisions of the Constitution which impose a positive obligation on both national government and provincial governments to respect and to build up local government autonomy. For example, section 41(1)(e) of the Constitution requires all spheres of government to "respect the constitutional status, institutions, powers and functions of government in the other spheres". This is buttressed by section 154(1), which requires national government and provincial governments, by legislative and other measures, to "support and strengthen the capacity of municipalities to manage their own affairs, to exercise their powers and to perform their functions"; and
3.4.8 lastly, section 229 of the Constitution confers on national government certain powers and responsibilities with regard to municipalities' fiscal powers and functions.
3.5 As will be seen from the above, the Constitution very carefully balances the powers conferred on the three spheres of government. In relation to local government, this balancing act is reflected in the following comment of the Constitutional Court when certifying the new text (NT) of the Constitution:
"What the NT seeks hereby to realise is a structure for LG that, on the one hand, reveals a concern for the autonomy and integrity of LG and prescribes a hands-off relationship between LG and other levels of government and, on the other, acknowledges the requirement that higher levels of government monitor LG functioning and intervene where such functioning is insufficient or defective in a manner that compromises this autonomy.This is the necessary hands-on component of the relationship."[ <#_ftn1> 1]
3.6 The City's overriding objection to the proposed constitutional amendment is that it allows national government to overplay the hands-on relationship without due deference to the hands-off relationship.
4. The Amendment Bill's interference with the overriding constitutional scheme
4.1 The introduction to the proposed new section 156(1A) gives Parliament the power to pass national legislation to "further regulate the executive authority of municipalities in respect of local government matters listed in Part B of Schedule 4 and Part B of Schedule 5" in certain specified situations. This goes well beyond the supervisory responsibility of national government set out in paragraph 3.3.5 above and the very limited intervention power of national government as set out in paragraph 3.3.6 above.It rides roughshod over the relatively autonomous status of local government (paragraph 3.1 above) and the role of provinces to intervene in certain situations (paragraph 3.3.6 above). It also, quite bizarrely, conflates Part B of Schedule 4 and Part B of Schedule 5, notwithstanding the fact that national government has very limited legislative powers and no general legislative power in relation to Schedule 5 matters (see paragraph 3.3.2 above).
4.2 As set out in section 155(6)(a) of the Constitution, it is provinces which have the obligation to monitor and support local government. More importantly, as set out in section 139, the power to intervene in the affairs of municipalities is conferred specifically on provinces. Section 139 entitles provinces to issue directives to municipal councils, to assume responsibility for the relevant obligations in that municipality and even to dissolve the relevant municipal council and appoint an administrator in its place. These are drastic powers which are quite properly conferred on provinces. As stated in paragraph 3.3.6 above, national government may only intervene where the relevant province cannot or does not do so. These provisions of the Constitution, read together, impose a hierarchal relationship on the three spheres of government, with provinces being principally responsible for the local sphere. The proposed amendment, however, allows national government to ignore the provinces and regulate the executive authority of municipalities. This seriously undermines the integrity of the Constitution.
4.3 If the proposed amendment is approved, it will introduce serious ambiguities into the Constitution. The drafters of the proposed amendment have set out to address this by commencing the proposed new section 156(1A) with the words "Notwithstanding any other provision of the Constitution …". In effect they are stating: "ignore the inconsistencies which will result and disregard the ambiguities, because the new section 156(1A) trumps all other provisions of the Constitution". This is constitutional drafting at its worst. Its effect is to insulate an Act of Parliament from proper constitutional review. By doing this, it undermines the founding values as set out in section 1 of the Constitution – specifically the value of the supremacy of the Constitution. Because the proposed amendment constitutes an implied amendment to section 1, the Amendment Bill will need the support of 75% of the members of the National Assembly, not two thirds, as suggested in the memorandum accompanying the Bill.
4.4 It also appears that the consequences of the proposed amendment on other sections of the Constitution have not been taken into consideration. For example, section 146 of the Constitution deals very delicately with conflicts which may arise between national legislation and provincial legislation falling within a functional area listed in Schedule 4. There is no need for section 146 to deal with conflicts which may arise with regard to legislation falling within a functional area listed in Schedule 5 since, as stated in paragraph 3.3.2 above, provinces have primary legislative responsibility with regard to Schedule 5 matters. The Amendment Bill, however, seeks to confer significant powers on national government with regard to Schedule 5 matters. This will necessitate a re-examination of section 146.This has not been done.
4.5 The City of Cape Town is therefore of the view that the Amendment Bill fundamentally undermines the integrity of the Constitution as a whole, negatively affects the provinces by disregarding their primary role in regard to the supervision of local government and negatively affects municipalities by undermining their relative autonomy. For these reasons the Amendment Bill should be rejected.
5. The meaning of "further regulate the executive authority"
5.1 An earlier draft of the Amendment Bill, which was apparently approved by Cabinet, provided for national legislation to "limit" the executive authority of municipalities. The draft which has now been published for comment instead allows national legislation to "further regulate" the executive authority of municipalities.It is totally unclear what the phrase "further regulate" means within the context of the Amendment Bill.Take, by way of example, the function of electricity reticulation listed in Part B of Schedule 4.Does the phrase "further regulate" entitle national government, through the envisaged national legislation, to limit this power of local government?If so, does it allow national government to go further and confer executive authority in relation to this function on itself?It is not at all clear where the final executive authority will lie. The move from "limit to "further regulate" has not cured the obvious problem. Had the national government intended to deprive municipalities of their functional responsibility in relation to electricity reticulation, it could simply have deleted electricity reticulation from Schedule 4B.
5.2 National legislation passed in terms of section 156(1A) will undoubtedly be open to challenge. If the legislation seeks to confer powers on national government, for example with regard to the electricity reticulation function, local government will undoubtedly be able to contend that this conferring of power goes well beyond what is envisaged by the phrase "further regulate".This legislative uncertainty is not at all conducive to good governance.
5.3 Besides being unclear as to what is meant by "further regulate", the Amendment Bill is also totally unclear as to what is meant by "executive authority". As stated in paragraph 3.2 above, municipalities have legislative, executive and administrative responsibility with regard to Schedule 4B and 5B matters, and any other matters assigned to them.The Amendment Bill allows Parliament to pass legislation regulating municipalities' executive authority.No mention is made of their legislative or administrative responsibility.Conceivably, a municipality could pass a by-law with regard to a matter regulated by legislation passed in terms of the Amendment Bill.This would create a potential conflict between the national legislation and the by-law.It is not at all certain that the national legislation will trump the by-law.Section 156(3) of the Constitution provides that a by-law that conflicts with national legislation or provincial legislation is invalid, but "subject to section 151(4)".Section 151(4) is quoted in paragraph 3.1 above. It protects municipalities from being compromised or impeded in their ability or right to exercise their powers or perform their functions. If the national legislation is deemed to fail the section 151(4) test, the by-law could trump the national legislation. This will be hugely damaging for co-operative governance.
5.4 An interesting contrast to the phrase "further regulate the executive authority" is found in section 155(7) of the Constitution.This gives national government and provincial governments the authority "to see to the effective performance by municipalities of their functions".This latter phrase is fully comprehensible and finds expression in the suite of legislation (including the Municipal Systems Act[ <#_ftn2> 2] and the Municipal Finance Management Act[ <#_ftn3> 3]) passed by national government over the past decade.It is very different from the phrase found in the Amendment Bill, which is so vague that its meaning is unclear. It will almost inevitably result in legal challenges to the legislation passed in terms of section 156(1A).
6. More specific problems with the Amendment Bill
We have outlined above the City's general and overriding objections to the Amendment Bill.For the reasons set out above alone, the City respectfully submits that the Amendment Bill should be withdrawn in its entirety.There are, however, a number of more specific provisions which also require attention:
6.1 Paragraph (b) sets out the goals of the national legislation to be promulgated in terms of section 156(1A). Six goals are listed. It is not clear whether it is intended that all six goals must be fulfilled before the legislation can be passed, or whether it is sufficient for one or more of the six to be fulfilled.
6.2 The goal listed in paragraph (b)(i) refers to the national legislation providing for the "transfer of assets". This suggests that the national legislation will empower national government to unilaterally deprive a specific municipality of its assets and to transfer those assets to some other entity (for example regional electricity distributors in the case of EDI restructuring). That will amount to an unwarranted expropriation of the municipality's assets.
6.3 Paragraph (b)(ii) and (iii) refers to the national legislation facilitating "appropriate planning and expenditure in respect of infrastructure and maintenance" and "equitable tariffs, user charges, fees and service levels". This will in a very major way interfere with a municipality's control over its revenue and its expenditure. It could result in municipalities being reduced to powerless bodies and in effect functioning as the executive arm of national government. It should perhaps be asked: is this the intention?
6.4 Paragraph (b)(vi) provides that the national legislation must be aimed at preventing "unreasonable actions by a municipality which is (sic) prejudicial to the interest of another municipality or the country as a whole". Who will determine whether the actions of the municipality are unreasonable? Who will decide whether one municipality's actions are prejudicial to the interests of another municipality or the country as a whole?
6.5 As stated in paragraphs 2.3 and 2.5 above, the Amendment Bill contains two mandatory thresholds and three desired but ultimately discretionary outcomes. The three discretionary outcomes are set out in paragraph (c). The national legislation must "as far as possible" achieve these outcomes. The national legislation must, as far as possible,
(i) facilitate appropriate municipal participation in decision-making,
(ii) maintain municipal accountability to its community, and
(iii) maintain fiscal and institutional sustainability through protecting municipal revenue other than revenue derived from the equitable share allocations referred to in section 214 of the Constitution.
On the face of it, these threshold requirements appear to fulfill a laudable purpose, but the national legislation will almost certainly make it impossible to achieve them. In fact, to the contrary, the national legislation will potentially emasculate municipalities and make it difficult if not impossible for them to fulfill their constitutional mandate, as set out in sections 152 and 153 of the Constitution. As set out in paragraph (b) of the Amendment Bill, the national legislation can interfere with the revenue of the municipality and its expenditure. It is impossible to conceive how this will happen without interfering with a municipality's decision-making, its accountability to its community and its fiscal and institutional sustainability. If, for example, municipalities are deprived of any authority in relation to the electricity reticulation function, they will be denied a major income stream. This will fundamentally affect the ability of the municipalities to meet their budgetary obligations and deliver municipal services.
6.6 The reference to "as far as possible" in paragraph (c) of the Amendment Bill is frankly disingenuous. It is a signal to Parliament that, as long as it can show that it has made an effort to facilitate the achievement of the ideals set out in paragraph (c), the national legislation will pass the constitutional test. This makes a nonsense of the supposed requirements set out in paragraph (c).
6.7 In terms of paragraph (d)(i) of the Amendment Bill, national legislation may only be enacted if municipal boundaries and executive authority negatively impede regional efficiencies and economies of scale in respect of a specific municipal function. This is the second threshold requirement. The question must be asked: why is it necessary to introduce national legislation for cross-boundary co-operation to be achieved? Local government legislation already facilitates cross-boundary co-operation, including the establishment of appropriate "institutional arrangements" (in the language of the Amendment Bill) to achieve such co-operation. Examples are –
6.7.1 the mandatory co-operation between district and local municipalities as provided for in section 88 of the Municipal Structures Act;[ <#_ftn4> 4]
6.7.2 the establishment of private companies in which the shares are held by one or more municipalities as provided for in section 86C(2)(b) of the Municipal Systems Act; and
6.7.3 the establishment of multi-jurisdictional service utilities as provided for in sections 87 and 88 of the Municipal Systems Act.
6.8 Little effort has been made by national government and provincial governments to facilitate the co-operation between municipalities on any of the bases listed above. Many of the aims of the proposed constitutional amendment could be achieved if national government and provincial governments were proactively to utilise their monitoring and support powers, and even their supervisory powers, to facilitate greater co-operation between municipalities. That co-operation would then be achieved on a voluntary basis, not as a consequence of a "big stick" approach from national government.
7. Conclusion
For all the reasons set out above, which will be amplified when the City makes its oral submissions, the City respectfully requests that the Amendment Bill be withdrawn.
Dated at Cape Town on this the 14th day of July 2009.
Alderman D Plato
Mayor of Cape Town
[1] <#_ftnref1>In re Certification of the Constitution of the RSA, 1996 1996 (4) SA 744 at 882 C – D.
[2] <#_ftnref2>Local Government: Municipal Systems Act, No. 32 of 2000.
[3] <#_ftnref3>Local Government: Municipal Finance Management Act, No. 56 of 2003.
[4] <#_ftnref4>Local Government: Municipal Structures Act, No. 117 of 1998.
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