Municipal Indigent Policies Framework Presentation

NATIONAL DEPARTMENT OF COOPERATIVE GOVERNANCE FREE BASIC SERVICES POLICY FRAMEWORK, GUIDELINES AND ASSESSMENT TOOL PRESENTER: DR P MAHLOBOGOANE 8 NOVEMBER 2019 1

PURPOSE OF THE PRESENTATION To present the Free Basic Services Policy Framework, Guidelines and Indigent Support Policy Assessment Tool. 2

INTRODUCTION 1. 2. 3. Introduction Key Legislation and Policies Background on the National Framework for Municipal Indigent Policies Purpose of the National Framework for Municipal Indigent Policies National Framework for Municipal Indigent Policies What is an indigent household Methods of targeting households Revenue management issues Guidelines for Implementation of the Indigent Policy Indigent Support Policy Assessment Tool 7. Local Government Equitable Share 4. 5. 5. 6. 3

KEY LEGISLATION & POLICIES Constitution of the Republic of South Africa (Act No. 108 of 1996) Local Government: Municipal Systems Act (Act No. 32 of 2000) Water Services Act (Act No. 108 of 1997). Electricity Regulation Act (Act No. 4 of 2006). National Policy for the Provision of Basic Refuse Removal Services to Indigent Households (October 2010). Free Basic Water Implementation Guideline (August 2002). Free Basic Alternative Energy Policy (Households Energy Support Programme) (April 2007). Free Basic Sanitation Implementation Strategy (April 2009). 4

BACKGROUND ON THE NATIONAL FRAMEWORK FOR MUNICIPAL INDIGENT POLICIES This policy framework provides a basis for the provision of free basic services to the indigent households. Section 74 of the Municipal Systems Act (Act No. 32 of 2000) states that a municipal council must adopt and implement a tariff policy. Section 74(2)(i) indicates that in adopting a tariff policy, the council should at least take into consideration the extent of subsidization of tariffs for poor households. 5

PURPOSE OF THE NATIONAL FRAMEWORK FOR MUNICIPAL INDIGENT POLICIES The purpose of the national framework for municipal indigent policies is to: Ensure that all of the indigents in South Africa have access to an essential package; Align the responsibilities of national and provincial government relating to indigents with those of local government; Provide overall framework within which the free basic services policies and strategies of other departments can be applied; and Provide a basis for ensuring that sufficient funding is available to municipalities to fulfil their responsibilities in providing basic services to indigents. 6

NATIONAL FRAMEWORK FOR MUNICIPAL INDIGENT POLICIES What is an indigent household: An indigent household is defined as a household that due to various factors, in unable to make payment towards basic services, no matter how small the amount. Typical examples are pensioners, the unemployed, and child headed households. 7

NATIONAL FRAMEWORK FOR MUNICIPAL INDIGENT POLICIES Methods of Targeting Households: Service level targeting - where a specific level is given free to the poor Consumption based targeting where those using a low amount of the service are provided with this service free Property value as an indication of the level of household wealth, and hence income threshold Means testing subsidy to those households which are below a household income threshold Geographical (zonal) targeting where a particular area within the municipality is identified as poor and the tariffs for service provided in this area are adjusted accordingly. 8

NATIONAL FRAMEWORK FOR MUNICIPAL INDIGENT POLICIES Revenue management issues: It is not possible to apply a sound indigent policy without a good system for identifying consumer units, billing those who receive above the free basic level and ensuring that payments are made through a sound credit control 9

GUIDELINES FOR IMPLEMENTATION OF THE INDIGENT POLICY The guidelines for implementation of the indigent policy provide municipalities with options for the development of their indigent policies. The guidelines apply specifically to Free Basic Services programme within municipalities i.e. Free Basis Water, Free Basic Sanitation, Free Basic Energy/Electricity and Free Basic Refuse Removal. 10

NATIONAL FRAMEWORK FOR MUNICIPAL INDIGENT POLICIES Challenges: High number of indigents not receiving services as the policy does not cater for individuals but households Some municipalities are highly dependent on the equitable share for the provision of services (need to improve revenue collection) What should municipalities do about dwellings with more than one household? 11

INDIGENT SUPPORT POLICY ASSESSMENT TOOL 1. Cover Page (Title Page) The policy has a cover page (title page). 2. Abbreviation All the abbreviations used in the policy are written in full. 3. Legal Frameworks and Policies Legal or other mandatory frameworks within which the policy is written, are stipulated in the policy. 4. Policy Background The policy clearly indicates what it seeks to achieve or address, e.g. poverty, unemployment and inequality. The policy has a municipal profile which informs the targeting approaches the municipality is using. 12

INDIGENT SUPPORT POLICY ASSESSMENT TOOL 5. Policy Principles The policy indicates the sound moral, ethical and administrative bases of this policy. 6. Policy Objectives The policy indicates what the policy objectives are. 7. Scope of Application The policy indicates to whom it is applicable to. 8. Targeting Approach The policy indicates targeting approaches used to identify indigents. 13

INDIGENT SUPPORT POLICY ASSESSMENT TOOL 9. Qualifying Criteria The policy lists the qualifying criteria for being approved in the indigent register. 10. Application Process The policy clearly demonstrates the process of application for indigents as well as the required documentation (e.g. proof of identification; a bank statement or a sworn affidavit stating no bank account; a bond statement or sworn affidavit stating that you do not have a bond account, etc.). The process should cover the following: e.g. a. Registration; b. Deregistration / Exit Strategy; c. Complaints Management. 11. Penalties and Disqualification for False Information The policy clearly indicates how the municipality will deal with applicants who provide false documents. 12. Excess Usage of Allocation The policy indicates what happens if the level of consumption of the indigent household exceeds the consumption level approved by the municipality. 14

INDIGENT SUPPORT POLICY ASSESSMENT TOOL 13. Termination of Indigent Support / Exit Mechanisms The policy indicates the municipal exit mechanism that is also linked economical and poverty alleviation initiatives in the municipal area. 14. Monitoring and Evaluation The policy indicates how monitoring and evaluation is done and the responsible person. 15. Verification of the Indigent Register The policy indicates how the municipality verify the indigent in the indigent register. 16. Validity Period The policy indicates validity period of assistance. 17. Communication The policy indicates how policy awareness is conducted within municipal boundaries and other vulnerable groups, e.g. Woman, Child headed households, old aged people. 15

INDIGENT SUPPORT POLICY ASSESSMENT TOOL 18. Contact of the Office Responsible for the Indigent Policy At the end of the page the policy should have the contact details of the office responsible for indigent policy for our external stakeholders. 19. Approval by Council The policy indicates the date it was approved by council. This can either be a signature in the policy or an annexure. 1 = Poor: Need to redraft the policy 2 = Good: Policy requires improvements in certain areas 3 = Very Good: Policy covering all important policy aspects 16

LOCAL GOVERNMENT EQUITABLE SHARE In terms of section 227 of the Constitution, the local government is entitled to an equitable share of nationally raised revenue to enable it to provide basic services and perform its allocated functions The local government equitable share is an unconditional transfer that supplements the revenue that municipalities can raise themselves (including revenue raised through property rates and service charges) The equitable share provides funding for municipalities to deliver free basic services to poor households and subsidises the cost of administration and other core services for those municipalities that have the least potential to cover these costs from m their own revenues Although the calculation of each municipality's allocation is intended to ensure they are funded to enable them to provide basic services, the municipal council is accountable for ensuring that this reflected in the municipal budget. 17

LOCAL GOVERNMENT EQUITABLE SHARE The national department responsible for local government must transfer a municipality s equitable share to the primary bank account of the municipality in three transfers on 8 July 2019, 2 December 2019 and 16 March 2020 calculated as follows: First transfer = 5/12 x total allocation, Second transfer = 4/12 x total allocation, and Third transfer = 3/12 x total allocation. 18

Thank You Thank You 19