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New municipal legislation from Treasury to crack down on council members · Drive with John Perlman

• 0:00
  Speaker 1: You're with John Perlman on 702. 702 Drive, when new
• 0:06
  Speaker 1: councils are elected and new municipal and metro governments take shape,
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  Speaker 1: eventually they will be operating under some very, very strictly
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  Speaker 1: revised rules. The finance rules governing the operations of local
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  Speaker 1: government have not really been revised for a couple of
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  Speaker 1: decades now, but that process is very well underway. And
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  Speaker 1: to look at some of the key changes that are
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  Speaker 1: being considered and they Certainly looked like they're important moves
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  Speaker 1: to me. To discuss this, we're joined by Shabia Khan,
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  Speaker 1: who's Accountant General at National Treasury.
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  Speaker 2: Mr.
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  Speaker 1: Khan, welcome and thanks very much for giving us your time.
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  Speaker 1: One of the changes that is being looked at is
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  Speaker 1: changing how financial misconduct in municipalities and metros are actually investigated.
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  Speaker 1: Why is this change so important and what might the
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  Speaker 1: change look like? Good afternoon to you.
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  Speaker 2: Good afternoon, John, and good afternoon to your listeners. Yesterday,
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  Speaker 2: the Minister of Finance, together with the medium-term budget, published
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  Speaker 2: two important bills. One is the PFMA Amendment Bill, and
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  Speaker 2: the second is the Municipal Finance Management Amendment Bill. And
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  Speaker 2: that really sets the architecture for financial management in the
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  Speaker 2: public sector. In local government, what we have seen is
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  Speaker 2: is the persistent noncompliance and breaches that gets reported annually
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  Speaker 2: by the Auditor General's office.
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  Speaker 1: Right.
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  Speaker 2: The current architecture includes a municipal public accounts committee that
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  Speaker 2: is really empowered to investigate whether losses should be recovered.
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  Speaker 2: Within that architecture is also a disciplinary board whose mandate
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  Speaker 2: is to then monitor ensure and enforce consequence management. What
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  Speaker 2: we've seen is that this architecture hasn't effectively executed on
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  Speaker 2: that mandate. So the reforms now include a municipal finance
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  Speaker 2: or a financial misconduct investigation committee. And this is a
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  Speaker 2: common feature in both the PFMA space as well as
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  Speaker 2: the MFMA space. And this usually empowers national treasury as
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  Speaker 2: well as provincial treasuries to investigate these matters a lot
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  Speaker 2: more proactively and long before the Auditor General comes in.
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  Speaker 2: and takes action.
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  Speaker 1: And crucially in that, as I understand it, whereas the
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  Speaker 1: existing structures involve councillors, which at the best of times
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  Speaker 1: is problematic, probably even more problematic in an era of
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  Speaker 1: an increasing number of coalitions, councillors put political considerations first.
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  Speaker 1: presumably dealing with that as a problem would make a
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  Speaker 1: huge difference. One of the other things that is envisaged,
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  Speaker 1: as I understand it, Treasury can step in and appoint
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  Speaker 1: the chief financial officer of a municipality. Now, that sounds
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  Speaker 1: like a good step. I do wonder, though, if that
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  Speaker 1: could be a lonely job with life spent out on
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  Speaker 1: a limb if you don't make sure that they get
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  Speaker 1: the political support to allow them to actually do their work.
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  Speaker 2: Yeah, this was quite an intentional policy decision by the
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  Speaker 2: Minister of Finance. The capacity and capability around financial management
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  Speaker 2: has to be strengthened. And one of the provisions we've
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  Speaker 2: strengthened within the law is that the Minister of Finance's
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  Speaker 2: concurrency is required for the appointment of CFOs. And we're
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  Speaker 2: hoping with that change, Treasury has much more better oversight
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  Speaker 2: over this appointment process to ensure that the correctly qualified
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  Speaker 2: officials are employed to actually manage the public finances in
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  Speaker 2: those municipalities.
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  Speaker 1: Yeah, that many people say is long, long overdue. There
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  Speaker 1: are many other things that are being brought into consideration,
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  Speaker 1: but I just want to touch on this one as
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  Speaker 1: As a last one, Mr. Khan, the finance minister can
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  Speaker 1: hold officials, political office bearers and boards of directors, presumably
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  Speaker 1: that would be entities within a municipality or a metro,
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  Speaker 1: personally liable for unauthorized, irregular, fruitless and wasteful expenditure. Why
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  Speaker 1: is that being put forward and where do you think
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  Speaker 1: that would have an impact?
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  Speaker 2: So, John, you would have seen over the last few
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  Speaker 2: months the Minister of Finance took a decision to withhold
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  Speaker 2: the equitable share for municipalities.
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  Speaker 1: Joe Boog and others.
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  Speaker 2: Yes. So currently the only legal instrument that's available is
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  Speaker 2: the withholding of the equitable share. What we are now
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  Speaker 2: bringing into law is more of a graduated enforcement process
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  Speaker 2: that So we spoke about the Financial Management Investigation Committee.
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  Speaker 2: We're now also instituting measures around holding councillors, mayors, officials,
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  Speaker 2: as well as suppliers liable in their personal capacity for
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  Speaker 2: these non-compliance and persistent breaches. So that's something new, but
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  Speaker 2: it's part of a broader enforcement framework or a graduated
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  Speaker 2: enforcement mechanism before there are severe interventions like the withholding
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  Speaker 2: of the equitable share.
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  Speaker 1: Thank you so much. There's so much more to this,
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  Speaker 1: and you can check it out on a number of platforms.
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  Speaker 1: It's been very, very well reported. We'll have something on
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  Speaker 1: our website a little bit later as well. This interview
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  Speaker 1: with Shabir Khan, Accountant General at National Treasury. These measures
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  Speaker 1: make a lot of sense to me. The question, of course,
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  Speaker 1: is how soon and how effectively? they can be put
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  Speaker 1: in place. But hope that gives you at least a
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  Speaker 1: sense of what is coming down the pipeline as a
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  Speaker 1: new set of councillors take their seats sometime in mid-November,
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  Speaker 1: 29 minutes past five.