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www.salga.org.za LG Week 31 July - 03 August Sustainable Human Settlements and Infrastructure Session 4: 01 August 2012 Cllr B. Moloi – NEC member & Chairperson of MIS Working Group of SALGA 1 www.salga.org.za Outline • Introduction • Problem Statement • Key Issues – Cross-cutting Infrastructure Issues – Human Settlements – Water Services – Electricity Distribution – Solid Waste Management – Roads and Transport – Environmental Management • Recommendations www.salga.org.za 1. Introduction • LG is the key site of delivery and development and is central to the entire transformative project of the new South Africa. • It is therefore a key mandate of LG (with the support of provincial and national government) to eliminate the disparities and disadvantages that are a consequence of the policies of the past and to ensure, as rapidly as possible, the provision of services to all communities. • Sustainable human settlements and quality infrastructure are key pillars of social and economic development and a key tenet of our developmental approach. • This presentation highlights some of the fundamental infrastructure and human settlements issues facing the LG sector. www.salga.org.za 2. Problem Statement • When municipalities were established and assumed responsibility for various infrastructure services functions, they inherited old infrastructure some of which was long overdue for replacement. This required huge investments in refurbishment of infrastructure. • The policy of the new democratic govt was to prioritize extension of services to the unserved majority rather than refurbishing and replacing infrastructure that benefited a minority. • We effectively postponed investment in infrastructure refurbishment while further loading old infrastructure as more consumers utilized it. • In a sense an infrastructure replacement liability was given to LG without a policy solution as to how this liability was to be financed. • The effects of this absence of a policy solution is now playing itself out in the public domain through spectacular and increasing collapse of infrastructure in many municipal areas. www.salga.org.za 3. Key Issues • The issues are structured into two main sections. The first being issues that of a cross cutting nature in respect of municipal infrastructures services and the second being nuances of sectoral issues in respect of the various municipal infrastructure services sectors, which include but is not limited to: – Human Settlements Development – Water Services (water supply and sanitation services) – Electricity distribution – Solid Waste Management – Roads and transport – Environment, www.salga.org.za 3.1 Cross Cutting Infrastructure Issues • • • • • • CoGTA estimates rehabilitation of infrastructure to be about R20 billion a year of which about R7.5 billion a year is estimated to be backlog infrastructure . Formulating a policy solution to this challenge can no longer be postponed and, given the scale, cannot be left to municipalities alone to solve. A related challenge in respect of the state of infrastructure is lack of data on state of infrastructure especially in sectors such as roads & water services. In some inheriting munis, it is not known where infrastructure such is located, the age and the materials used, while increasing use leads to regular pipe burst and leaks. Need to establish a national GIS based database and national programmes to collect data on the state of infrastructure in priority sectors, eg roads & water. The purpose of such an intervention would be to locate the infrastructure assess its condition, reconstruct the as-is plans, implement a refurbishment or replacement programme while at the same time establishing capacity for ongoing data collection and information management on the state of infrastructure. www.salga.org.za 3.2 Human Settlements Development Municipal accreditation programme • • • Actual handover and implementation of level 2 accreditation functions from provinces to munis still remains a big challenge for LG - since the signing and handover accreditation ceremony on 4th of March 2011, there are various implementation challenges reported by municipalities. – Some provinces are reluctant / unwilling to hand over the full programme management function as envisaged in Municipal Accreditation Framework (MAF). – Provinces are only handing over the management of the current running housing projects instead of the project evaluation and approval functions - provinces insist on retaining the contract management function , which only reinforces the current status quo whereby municipalities remain developers on behalf of provinces. Compliance with implementation of the MAF is required to ensure that munis which have been granted level 1 & 2 accreditation, fully implement functions that have been delegated to them in terms of the MAF. It is suggested that the National Department of Human Settlements should intervene by a policy directive to the affected by provinces. www.salga.org.za 3.2 Human Settlements Development Restructuring of Funding Flows • In terms of DORA, the duties of Provincial Treasuries (PT) are well defined and section 29 (2) (a) subparagraph (i) to (iii) gives effect to that. – It stipulates that PT must gazette all provincial allocation per municipality after approval by the Provincial Legislature or a later date approved by National Treasury. • However, these requirements are generally ignored and to a large extent breached by all the provincial treasuries and their human settlements counterparts, except for the Western Cape Province. Consequently, municipalities are not in a position to plan and budget accordingly for the delivery of sustainable human settlements. • National Treasury should revise the provisions of DORA to include punitive measures for failure to gazette the Integrated Housing and Human Settlements Development Grant allocations to municipalities. www.salga.org.za 3.2 Human Settlements Development Emergency Housing Policy • • • • • Human settlements is a Schedule 4A function in terms of the Constitution (1996), which means that it is a concurrent function shared by nat & prov govt. Reality of housing delivery is that it is an integrated function performed by all 3 spheres of govt which each perform specific roles. The Housing Act (107 of 1997) and National Housing Code (2009) set out the key functions of all the spheres of govt in human settlements development. However, ambiguities in the emergency housing policy ito roles and functions of munis in the delivery of HS have led to misinterpretation of the powers and functions of municipalities by the judiciary. It is clear that these judicial findings are imposing very costly and impeding responsibilities on municipalities because of ambiguities in the policy. The National Housing Code, 2009 in particular Part 3 thereof, as far as it relates to the emergency housing policy should be amended to remove ambiguities wrt the role and functions of munis in human settlements development. www.salga.org.za 3.3 Water Services • Municipal water supply is the fastest growing sector of national water demand, and reflects population growth & rising living standards – effectiveness of mun water services management has critical implications for nat water security. • This has various dimensions, from managing water demand through effective metering and tariffing systems, promoting efficient use and minimizing avoidable losses, and safeguarding the quality of return flows of treated wastewater so that the available water remains fit for use. • Sound asset management is essential to maintain the integrity of extensive water reticulation networks and limit leaks and physical losses, and sound wastewater management is necessary to minimize pollution water sources. • While the current state of water services infrastructure can be attributed to poor decision making at municipal level, in some instances munis are unable to deliver services due to the skewed fiscal transfer systems, availability of both raw and potable bulk infrastructure, deteriorating water quality & inappropriate intervention support or mechanisms. www.salga.org.za 3.3 Water Services Water Losses • The value of the municipal water losses throughout South Africa has been estimated at more than R7 billion annually based on the estimated losses at a basic rate of R5/ kl. • It is proposed that municipalities put aside 1% of the total CAPEX as a revolving fund towards water conservation and demand management. Cost of water service • In the near future it will be a reality that water will come at a high cost. • A total of R410b (71%) of the funds required in the next 10 years to sustain water delivery are in essence required to be funded through LG. • In this regard, it will imperative for municipalities to determine appropriate water pricing in the near future. www.salga.org.za 3.4 Electricity Distribution Investment in Infrastructure • • • During the long period of uncertainty regarding future ownership of distribution assets, has been a significant underinvestment in infrastructure. This added to the inherited maintenance backlogs that accumulated as a result of our prioritization of extension of infrastructure rather than focusing on maintaining infrastructure. EDI Holdings in 08 estimated that backlog was R27billion, growing at R2,5 billion per annum. Distribution Price Regulation • • Major shortcomings with NERSA IBT version e.g. Eskom data was used to develop a national tariff structure & is not relevant to individual munis & does not adequately segment residential customers. Typical results from the application of the NERSA IBT for municipalities are as follows: (1) Loss of domestic revenue: about 25%; (2) Loss as percentage of total revenue: about 10% & (3) Loss as percentage of non-domestic revenue at 25%. www.salga.org.za 3.4 Electricity Distribution Integrated National Electrification Program (INEP) • Access to electricity currently stands at about 83%, with the remaining 17% comprised mainly of rural areas. In these areas Eskom is a licensed distributor. • Non-distributing municipalities do not have electricity departments and completely rely on consultants to design and implement projects. • About a quarter of the remaining 17% without access to electricity is in urban areas and mainly informal settlements. These are largely areas where 177 municipalities are licensed distributors. • We need 1) planning alignment between various electrification projects funding agencies; 2) provide technical support to under‐capacitated municipalities; 3) do away with the rqmnt for 80% occupancy of housing developments before electrification commence and 4) Amend the policy to provide full cost of connections in areas provided by both Eskom and munis. www.salga.org.za 3.5 Solid Waste Management • SA’s new approach to waste management is emphasising waste minimisation, reduction, re-use and recycling. • The efficacy and sustainability of delivery of solid waste services by municipalities is constrained by severe fiscal challenges. • The municipal solid waste sector is in general facing a serious fiscal situation, with operating deficits ballooning to the point at which the sustainability of service delivery will be threatened. • The structure of capital financing for waste services is not optimal, with reliance on grant financing, subsidy leakage to non-poor consumers, and user charge revenues that are too low. • In this context, the need to expand delivery solid waste services sector requires greater efficiency of fiscal mechanisms and a clear strategy to improve operating efficiencies, secure financial sustainability of waste services delivery, and boost municipal revenues. www.salga.org.za 3.6 Roads and Transport • Transport plays an important dual role in the economy, both as a direct provider of services and as a catalyst for economic integration, redistribution & development - critical to achieving economic growth & social dev targets. • Our road network is a major asset that gives the country a significant comparative advantage - however, deteriorating rapidly as a result of a number of factors, which include a protracted period of under-funding. • A challenge that continues to persist however is the integration and coordination of the provision of roads at the municipal level. • With the exception of tolled roads, the roads infrastructure is generally funded from tax - there is a limit to which a mun can tax ratepayers leading to situations where there is no financial provision for investment and maintenance of the rural roads infrastructure. • A sustainable funding model for roads infrastructure at a municipal level is required, especially in rural areas. www.salga.org.za 3.6 Roads and Transport Prioritization of efficient rail freight and public transport • • Sustained increase in vehicle travel demand puts pressure on existing road and parking capacity, leading to further expansion of vehicle infrastructure. In this regard, the focus should be on: – Investing in efficient public transport; and – Moving freight onto rail instead of roads. Mun Public Transport, Roads infrastructure management capacity & Tolls • • • A positive dev is public transport systems such as BRT being implemented in cities and planned integrated public transport networks. However, with the exception of the cities, there is very ltd public transport management capacity in many municipalities. Charging the users of infrastructure for use of infrastructure is an acceptable way of revenue collection. – but is concerning how this principle has been applied in case of Gauteng Freeway Improvement Project and its implications for future Open Road Tolling in and around metropolitan spaces. www.salga.org.za 3.7 Environmental Management • • • • The performance of environmental management functions, though not legislated in the Constitution, is assigned to municipalities through Schedule 4 and 5 of the Constitution. Problems arise, however, in the execution of these functions due to fundamentally weaknesses in the fiscal system in re allocations to munis to perform these functions; weak IGR support and often confusion on roles and responsibilities within the tiers of LG. In addition, capacity constraints (insufficient technical expertise) at local level; growing basket of services & shrinking fiscal mechanisms to perform them. The following critical challenges need to be addressed: – (1)The nature and range of environmental functions performed by municipalities; – (2) organisational capacity of munis to perform environm. functions and – (3) fiscal frameworks that support mun performance of environ. functions. www.salga.org.za 4. Recommendations • While this discussion document only highlights some of the key issues for debate, the focus must be on ensuring that local government has the necessary framework which is conducive to, and support for, delivering sustainable human settlements and infrastructure. • LG has been given a very broad and challenging set of responsibilities, the execution of which requires a coherent and co-ordinated set of support initiatives from the other two spheres of govt. The South African Local Government Association, invites delegates to: • Debate the issues and proposals for discussion; and • Assist in the formulation of recommendations which will address the challenges and facilitate a conducive framework for the sustainability of our infrastructure and liveable human settlements.