Purpose of presentation

2. Purpose of presentation • Corrections to MIG Allocations for OR Tambo and Alfred Nzo District Municipalities • Integrated Development Plan (IDP) and funding • Initial conceptualization of the Municipal Infrastructure Grant (MIG) P-component • Ring-fencing of the MIG P-component • Is MIG P-component ring-fencing for municipal sports facilities in the public interest? • Towards a balanced approach • Conclusion

3. The purpose of the presentation is to • (1) request the two Committees’ to effect corrections to MIG allocation in respect of two district municipalities and • (2) to draw the committees attention some critical information relating to the Municipal Infrastructure Grant (MIG) framework as it pertains to the P-Component of the MIG formula. With the exception of these matters the department agrees with the Division of Revenue Bill and issues relating to both the MIG and Municipal Systems Improvement Grant (MSIG) frameworks.

4. The 2012/13 and outer year allocations to Matatiele and Umzimvubu local municipalities were swapped and should be corrected as indicated below. • OR Tambo District Municipality was allocated water and sanitation funds for Mbizana and Ntabankulu local municipalities whereas the funding for these municipalities should be allocated to Alfred Nzo District Municipality and should be corrected as indicated below.

5. Planning at a municipal level is achieved through the adoption of an Integrated Development Plan (IDP) which takes into account the priorities of the municipal constituency in terms of needs. • The funding instruments have to give practical implementation of the IDP. • The Municipal Infrastructure Grant (MIG) is an amalgamation (consolidation) of previously existing separate grants which were administered by different departments prior 2004. • MIG was meant to empower municipalities, consequently, communities to have a bigger say and flexibility on prioritisation of infrastructure which communities themselves regard as pressing needs.

6. It is important that any reforms impacting on funding instruments should protect the rights of communities to express their priorities and for municipalities to fulfil these, otherwise, communities may regard municipalities and councillors as being insensitive to their needs. • Too much stringent conditions on how MIG should be utilised will bind municipalities and prevent them from meeting genuine community needs, consequently, discrediting municipalities and councillors in the eyes of communities if the funding instruments are inflexible, preventing municipalities to respond to the genuine priorities of communities. • It is in the broader public interest that funding from the national fiscus does not unduly constrain and discredit community participation processes as enshrined in local government legislation.

7. The P - component constitutes 15 percent of the total MIG allocation. • Prior the 2011/12 financial year it was aimed at addressing municipal infrastructure such as • sports and recreation facilities, • community halls, • Thusong centres, • taxi ranks, • cemeteries, and related infrastructure that are primarily in poor and disadvantaged areas. • Before 2011/12 the P-component did not provide for any ring-fencing of any of these components, thus affording municipalities more flexibility.

8. For the first time in 2011/12 financial year, the entire MIG P-component was ring-fenced for “municipal sports facilities”. • This phrasing also exclude “Parks and other recreation facilities”. • In terms of the MIG framework in the 2012 Division of Revenue Bill "The P-component of the MIG formula (described in part 5 of Annexure W1 to the Division of Revenue Bill) amounts to 15 per cent of the MIG and must be used for municipal sports facilities only” • The ring-fencing of MIG in the above-way creates ground breaking setting precedent, enabling any sector to call for MIG to be ring-fenced to solely deal with its sectoral interest, which will defeat the rationale for creation of MIG.

9. Whilst the department acknowledges that it is in the public interest that municipal sports facilities should be given due attention, this should not be done to the detriment of the other municipal public facilities which constitute government’s goal of creating conducive human settlements, in particular, in poor and disadvantaged areas. • It is in the public interest that the poor in our society should be afforded human dignity by allowing them to have access to recreation facilities, hold meetings in community halls, and while waiting for public transport, be afforded protection against harsh elements such as the scorching sun and rain, etc.

10. In order to ensure that MIG contains elements of flexibility while addressing the issues pertaining to “sports and recreation facilities”, the department proposes the following amendment to the 2012/13 MIG Framework: “33 per cent of the P-component of the MIG formula must be used for municipal sports and recreation facilities”. • This achieves two objectives. It allows for a reasonable ring-fencing of MIG allocation to address municipal sport and recreation facilities whilst allowing municipalities the freedom to address any other community needs (as expressed in their IDPs) regarding the other infrastructure such as community halls and taxi ranks.

11. The department is deeply humbled for the opportunity afforded it to provide alternative perspectives on this thorny matter. • We hope that the views of the department and those of others will enable Parliament to make a decision which is in the public interest, in particular, with respect to prioritisation of infrastructure development in the poor and disadvantaged areas. • As Parliament is sovereign, we will implement whatever decision that Parliament, on behalf of the people of South Africa, makes. Thanks!