MULTISPHERE GOVERNMENT

An important characteristic of the Constitution is that it not only divides

power vertically between the legislative, executive and judicial branches
of government in terms of the separation of powers doctrine. It also
divides power horizontally between the national, provincial and local
spheres of government, thus establishing a quasi-federal system of
government. Section 40(1) of the Constitution provides in this respect
that ‘[i]n the Republic, government is constituted as national, provincial
and local spheres of government which are distinctive, interdependent
and interrelated’. In this chapter we deal with this horizontal division of
power. What must be emphasised from the outset is that the term
‘sphere’ of government has replaced the previous term ‘level’ of
government. An important consequence of this change in terminology is
that all spheres have an equal constitutional status1 as it derives its
authority directly from the Constitution.2 As the Constitutional Court
pointed out in City of Cape Town and Others v Robertson and Others,3
the Constitution has moved away from a hierarchical division of
governmental power. It has ushered in a new vision of government in
which the sphere of local government is interdependent, ‘inviolable and
possesses the constitutional latitude within which to define and express
its unique character’ subject to constraints permissible under our
Constitution.4 This means, the Constitutional Court pointed out further,
that: A municipality under the Constitution is not a mere creature of
statute otherwise moribund save if imbued with power by provincial or
national legislation. A municipality enjoys ‘original’ and constitutionally
entrenched powers, functions, rights and duties that may be qualified or
constrained by law and only to the extent the Constitution permits. Now
the conduct of a municipality is not always invalid only for the reason
that no legislation authorises it. Its power may derive from the
Constitution or from legislation of a competent authority or from its own
laws.5 Presently, each sphere has geographic, functional and institutional
integrity and has powers conferred on it by the Constitution. Moreover,
no sphere may unreasonably interfere in the powers and functions of any
other sphere. Some ambiguity exists, however, with respect to the power
of a sphere to intervene in the affairs of another sphere. Therefore, in
this chapter we identify the exact powers allocated to each sphere of
government, address the relationship between the different spheres of
government and explore the constitutional management of conflicts
between the various spheres of government. It is important to
understand that in a federal or quasi-federal system, the division of
power between different spheres of government may be based either on a
divided model of federalism or an integrated model of federalism.6 In a
divided model of federalism, the subject matters in respect of which
policies and laws may be made are strictly divided between the different
spheres of government. Each sphere, therefore, has its own exclusive
powers and there are very few, if any, concurrent or shared powers. In
this model, the policies and laws made by each sphere will also be
implemented and administered by their own separate civil services and
departments of state. Australia, Canada and the United States are
examples of a divided model of federalism.7 In an integrated model of
federalism, some subject matters are allocated exclusively to one sphere
of government, but most are concurrent or shared. The subject matters in
respect of which policies and laws may be made, therefore, are not
strictly divided among the different spheres of government. In this model,
the framework policies and laws made by the central sphere of
government may be complemented by provincial or local policies and
laws and must be implemented and administered by the provincial or
local spheres of government. Germany and South Africa are examples of
an integrated model of federalism.8 Although we contend that South
Africa could probably best be described as an integrated quasi-federal
state, it is important to note that the Constitution itself studiously avoids
describing the system of governance in South Africa as federal or quasi-
federal.9 When we say that South Africa broadly adheres to an integrated
model of federalism, we are not saying that South Africa is a fully fledged
federal state. Throughout this chapter we will raise questions about the
nature of the relationship between the three spheres of government. We
contend that while the South African system displays several
characteristics of a federal system, it could probably best be described as
a quasi-federal system. In a quasi-federal system, the national
government retains more power and influence over law making and
policy formulation than is usually the case in a completely federal
system. South Africa currently has a national government, nine
provinces, eight metropolitan councils, forty-four districts and a number
of local municipalities. A brief overview of examples of the areas of
competence of each of the spheres of government will assist in
understanding why South Africa’s integrated quasi-federal system
promotes democracy by targeting service delivery in a rational way.
Justice and land are uniquely national areas of competence. Health and
education, in contrast, are shared between the provincial and national
spheres. Provinces implement the ‘developmental functions’ of the state,
such as social development, health and education, among others. All
three spheres of government are responsible for housing and roads, but
the local sphere implements local water and local electricity distribution,
in addition to local roads and other amenities.10 8.1.2Historical
background Prior to the colonial occupation of South Africa by the Dutch
and the British, traditional African government was divided into ‘three
tiers of authority’,11 somewhat analogous to the current three spheres of
government in South Africa. The chief was responsible for the ‘traditional
central government’, the headman was responsible for the ward, while
the family head ‘exercised leadership at the level of the family’.12 Given
that colonisation introduced settler governments, ‘the central
government of the settlers became the primary source’ of power of
African leaders.13 Thereafter, at least attributable in part, to the ‘grand
design’ of the apartheid government the country was systematically
fragmented into so-called ‘self-governing’ and later ‘independent’ entities
(called homelands) based on ethnic, group or tribal affiliations. The
ultimate goal of ‘grand apartheid’, therefore, was that black South
Africans would be stripped of their South African citizenship and be
afforded the citizenship of one of these ‘independent’ entities in which
they would exercise their civil and political rights.14 As such, during the
process of negotiating South Africa’s Interim Constitution, the African
National Congress (ANC) and other liberation organisations exhibited
profound antipathy towards the notion of a federal state because of the
concern that a federal system would result in the resurrection of the
despised homeland system in a different guise. There were also concerns
that a rigid division of powers between the national sphere of
government and the various provincial spheres would inhibit and
frustrate the developmental and egalitarian objectives of the new state
seeking to improve the quality of life for all. During the process of
negotiations, however, the ANC leadership started seeing the benefit and
advantages of strong regional government for the delivery of services and
the political empowerment of the citizens. It seems that exposure to
models of integrated federalism such as the German Constitution assisted
in convincing the liberation organisations that effective regional
government could be combined with strong central leadership and this
was the model that was eventually adopted.15 Some of the political
groups, such as the Inkatha Freedom Party (IFP), favoured a strong
federal arrangement and advocated an asymmetrical arrangement with
maximum devolution of original power to the KwaZulu-Natal (KZN)
region. It was the inability to reach consensus on this and other issues
that caused them to boycott the constitutional drafting process for the
Interim Constitution.16 The IFP eventually participated in the first
democratic election and was the dominant party in the KZN provincial
legislature for about 10 years after the advent of democracy. This
contributed to the ending of the civil strife in the province as the IFP,
despite their limited national support, played an important role in the
provincial legislature. In this sense, the system accommodated diverse
political aspirations. 8.1.3The Constitutional Principles As we saw in
chapter 2, the transition to democracy in South Africa took place in two
stages. An important aspect of this two-stage process was that the final
Constitution had to be consistent with 34 Constitutional Principles agreed
to by the various parties at the multi-party negotiating process and
enshrined in Schedule 4 of the interim Constitution. A significant number
of these principles dealt with the structure of government. They provided
in this respect that: •government shall be structured at national,
provincial and local spheres17 •the powers and functions of the various
spheres had to be defined in the final Constitution and they could not be
substantially less or inferior to those provided for in the Interim
Constitution18 •the functions of the national and provincial levels of
government had to include exclusive and concurrent powers19 •the
allocation of a competence to either the national or provincial spheres
had to be in accordance with listed criteria20 •the national sphere was
precluded from exercising its powers so as to encroach on the
geographical, functional and institutional integrity of the provinces21
•disputes concerning legislative powers allocated by the Constitution
concurrently to the national and provincial spheres had to be resolved by
a court of law.22 A framework dealing with powers, functions and
structures of local government also had to be set out in the
Constitution.23 In addition, every sphere of government had to be
guaranteed an equitable share of revenue collected nationally to ensure
that provinces and local government were able to provide basic services
and execute the functions allocated to them.24 In Ex parte Chairperson of
the Constitutional Assembly: In re Certification of the Constitution of the
Republic of South Africa, 1996, the Constitutional Court held that the
question of whether the powers and functions allocated to the provinces
were substantially less or substantially inferior to those provided for in
the interim Constitution was the most difficult question it had to deal
with.25 After evaluating the allocation of the powers to various spheres
of government and assessing the breadth of the override clause that
allows for national legislation to prevail over provincial legislation in
certain instances, the Court concluded that the diminution in provincial
power was substantial and that this was inconsistent with Constitutional
Principle XVIII.26 This required the drafters to reorder the arrangements,
afford more powers to the provinces and restrict the scope of the override
clause before it met the approval of the Court. In Certification of the
Amended Text of the Constitution of the Republic of South Africa, 1996,
the Constitutional Court found that the revised override clause (section
146) was more stringently drafted and removed any presumption in
favour of national legislation.27 This, together with the adjustment of the
allocation of powers to the provinces, satisfied the Court that the
amended text complied with Constitutional Principle XVIII. We discuss
the exact allocation of powers to the various spheres of government and
the override clauses applying when there is a conflict between the
spheres of government in detail below. 8.1.4The principles of co-
operative government As we noted in the introduction to this chapter,
South Africa adheres to an integrated model of federalism. An important
consequence of this integrated model is that mechanisms must be put in
place to regulate the overlap of power between the various spheres of
government. Although the Constitution contains a number of these
mechanisms, the most important is the principle of co-operative
government. Before we discuss this principle, however, it is important to
set out the basic structure according to which power is divided between
the three spheres of government. This structure may be summed up as
follows: First, the nine provincial governments (and all local
governments) share the power to make laws on a wide range of important
matters with the national government, such as education, the
environment, health, housing and policing. These subject matters are
listed in Parts A and B of Schedule 4 of the Constitution. The national and
provincial governments share power over the subject matters listed in
Part A and the national, provincial and local governments share power
over the subject matters listed in Part B.28 Second, in so far as the
concurrent powers of the national, provincial and local governments are
concerned, the national and provincial governments have equal law-
making powers over the subject matters listed in Part A of Schedule 4,
but limited law-making powers over the subject matters listed in Part B.
While the national and provincial governments are entitled to pass laws
regulating the local government matters set out in Part B, they are not
entitled to pass laws giving themselves the power to administer or
implement those laws. Third, if the laws made by the national and
provincial governments conflict with each other, the national law will
override the provincial law, but only if the national law satisfies the
criteria set out in section 146 of the Constitution.29 If there is a conflict
between a national and provincial law, the legislative provisions do not
become invalid. Instead, section 146 is used to decide whether the
provisions of the provincial Act will prevail or whether the conflicting
provisions of the national Act will prevail.30 The provisions that do not
prevail will remain in limbo and could become operative if the conflicting
provisions in the prevailing Act are scrapped. With respect to by-laws,
section 156(3) of the Constitution states that ‘subject to section 151(4), a
by-law that conflicts with national or provincial legislation is invalid’.
However, in the event that the national or provincial legislation is
inoperative because of a conflict referred to in section 149, then the by-
law is to be regarded as valid for the time that that such legislation is
inoperative. Fourth, apart from their concurrent powers, provincial
governments also have the exclusive power to make laws on the matters
set out in Part A of Schedule 5 of the Constitution and provincial and local
governments have the exclusive power to make laws on the matters set
out in Part B of Schedule 5. These exclusive powers deal with matters of
more regional or local concern such as abattoirs, ambulance services and
liquor licences. Despite the fact that these Schedule 5 powers have been
exclusively reserved for provincial and local government, section 44(2) of
the Constitution provides that the national government may intervene
and pass a law on a Schedule 5 matter if it is necessary to achieve the
objectives set out in paragraphs (a) to (e) of section 44(2) itself.31 Fifth,
the laws that are made by the national government and that fall into the
broad areas of concurrent competence must be implemented and
administered by provincial and local governments. The primary role of
provincial and local governments, therefore, is the implementation and
administration of national laws.32 Last, the national government has the
plenary power to pass laws and administer laws on any other subject
matter not mentioned in either Schedule 4 or 5. This means that the
powers of provinces are explicitly restricted to the subject matters set
out in either Schedule 4 or 5, those matters that have been expressly
assigned to provinces by national legislation and those matters in respect
of which a section of the Constitution envisages the enactment of
provincial legislation.33 Therefore, the powers of the national
government are not restricted and can encompass any matter not
mentioned in Schedule 4 or 5. 8.1.5Co-operative government and the co-
ordination of intergovernmental relations Given the overlap between the
legislative and executive authority of the national, provincial and local
spheres of government, the Constitution makes provision for a system of
intergovernmental co-ordination to manage any potential conflict
between the various spheres exercising concurrent competences. This
forms the heart of the system of co-operative government. The most
important rules governing this system are set out in Chapter 3 of the
Constitution. Chapter 3 of the Constitution entrenches the notion of co-
operative government that recognises the distinctiveness,
interdependence and interrelatedness of the national, provincial and
local spheres of government.34 All spheres of government – national,
provincial and local – are required to observe and adhere to the principles
of co-operative government set out in Chapter 3 of the Constitution.35
Particularly important in this context are the principles set out in section
41. This section provides, inter alia, that ‘[a]ll spheres of government and
all organs of state within each sphere’36 must: •respect the constitutional
status, institutions, powers and functions of government in the other
spheres37 •not assume any power or function except those conferred on
them in terms of the Constitution38 •exercise their powers and perform
their functions in a manner that does not encroach on the geographical,
functional or institutional integrity of government in another sphere39
•co-operate with each other in mutual trust and good faith.40 In addition,
Chapter 3 of the Constitution also provides that an organ of state involved
in an intergovernmental dispute must make every reasonable effort to
settle the dispute by means of mechanisms and procedures provided for
that purpose, and must exhaust all remedies before approaching a court
of law to settle the dispute.41 The intention is to foster respect and co-
ordination, and not competition between the spheres of government.42
There has been some confusion about which bodies are bound by these
provisions. Do they apply only to those organs of state that exercise
legislative and executive power in the national, provincial and local
spheres of government or do they also apply to those organs of state that
are supposed to be independent, such as the Electoral Commission (EC),
the South African Human Rights Commission (SAHRC), the Gender
Commission and so on? After some ambivalence, there is now relative
certainty as to the bodies bound by Chapter 3. In Independent Electoral
Commission v Langeberg Municipality,43 the Constitutional Court held
that the Independent Electoral Commission (IEC) is an organ of state as
defined in section 239 of the Constitution.44 However, it is not part of
government as it is not an organ of state in the national sphere of
government. Chapter 9 entrenches the independence of the institutions
identified in this Chapter and hence these institutions cannot
simultaneously be independent of and yet part of government.45 Thus, a
dispute between a Chapter 9 institution and an organ of state in any of
the three spheres of government cannot be regarded as an
intergovernmental dispute requiring compliance with Chapter 3. The
Court stated that while it is preferable for organs of state not to litigate
against each other readily, there was no obligation on Chapter 9
institutions to follow the prescripts of Chapter 3.46 This suggests that
other independent constitutional institutions such as the National
Prosecuting Authority, the Public Service Commission and the Financial
and Fiscal Commission are similarly not bound by the provisions of
Chapter 3. In Uthukela District Municipality and Others v President of the
Republic of South Africa and Others, the Constitutional Court confirmed
that municipalities are organs of state in the local sphere of government
while the President and Ministers are organs of state in the national
sphere.47 Thus, a dispute involving these spheres would, prior to being
referred to court, have to comply with Chapter 3. For these purposes, the
provincial executive cannot be distinguished from the national executive
and the provincial executive will be regarded as an organ of state in the
provincial sphere. In casu, even though the Constitutional Court agreed
that section 5(1) of the Division of Revenue Act (DORA) was
unconstitutional for excluding district municipalities from the allocation
of nationally raised revenue, the Court insisted that the essence of
Chapter 3 was that disputes between organs of state should be resolved
‘at a political level rather than through adversarial litigation’.48 The
Court held further that it will rarely decide an intergovernmental dispute
‘unless the organs of state involved in the dispute have made every
reasonable effort to resolve it at a political level.’49 Thus, the duty to
avoid legal proceedings places a twofold obligation on all organs of state.
They have to make every reasonable effort to settle the dispute through
the mechanisms provided and to exhaust all other remedies before they
approach the courts.50 The Court will decline to hear the matter if there
is a failure to comply with this obligation. In effect, the matter will be
referred back to the parties to comply with their obligations in terms of
Chapter 3. With the specific aim of preventing conflicts between the
national, provincial and local spheres of government, especially in so far
as their concurrent powers are concerned, the Constitution provides for
the establishment of co-ordinating bodies. Some of these bodies are
responsible for co-ordinating the legislative activities of the three spheres
of government and others for co-ordinating the executive activities of
government. The responsibility for co-ordinating the legislative activities
of the different spheres of government has been vested in the National
Council of Provinces (NCOP). This is – as we explained in chapter 4 –
because each province, as well as organised local government, is
represented in the NCOP. Given that we have already discussed the NCOP
elsewhere, we will not dwell on the manner in which it co-ordinates the
legislative activities of the three spheres of government here. Instead, we
will focus on those bodies that have been established by the
Intergovernmental Relations Framework Act (IGRFA)51 to co-ordinate the
executive activities of the different spheres of government. The IGRFA
was passed to establish structures to promote and facilitate
intergovernmental relations and to provide mechanisms to settle
intergovernmental disputes. The understanding is that ‘if there are
forums within which organs of state may share their experiences and
problems, then the potential for disputes among them may be
minimised’.52 The provisions of the IGRFA do not apply to conflicts
between the national and provincial legislatures.53 These conflicts have
to be resolved in accordance with section 146 of the Constitution. As a
consequence of the Langeberg case, all Chapter 9 institutions and other
independent institutions fall outside the scope of the Act. Finally, as the
courts are independent, they too are not bound by the provisions of the
IGRFA. The purpose of the IGRFA is to provide a framework for the
various spheres of government and organs of state within those spheres
to facilitate co-ordination in the implementation of policy and
legislation.54 These include the provision of coherent government, the
effective provision of services, the monitoring of implementation of
policy and the realisation of national priorities.55 To help achieve this
purpose, the IGRFA creates a number of co-ordinating forums. Among the
most important of these are the President’s Co-ordinating Council,56
National Intergovernmental Forums,57 the Premiers’ Intergovernmental
Forum58 and District Intergovernmental Forums.59 An interesting
perspective is raised by Steytler who draws a distinction between co-
operative intergovernmental relations and coercive intergovernmental
relations.60 He argues that while the Constitution envisages a system of
co-operative intergovernmental relations, statutes such as the IGRFA lean
more in the direction of a system of coercive intergovernmental relations
dominated by the national sphere of government. This leads him to the
conclusion that South Africa currently operates as an integrated federal
state that utilises a coercive form of intergovernmental relations. In other
words, while the national sphere is obliged to co-operate with the other
spheres, it also dominates them. The intended role of the principle of
subsidiarity It is imperative that the status of local government is not
eroded by national and provincial legislation. This is especially so
because of the important role played by local government in achieving
the developmental objectives of the Constitution. Therefore, the higher
spheres of government must assist and support the local sphere in the
execution of its functions. However, the higher spheres may not intervene
in the local sphere unless it is unable to deliver services or perform its
functions. Therefore, the principle of subsidiarity means that powers
must be conferred on the lowest sphere of government first and
foremost,61 because that sphere is closest to the people it serves and thus
it knows best what the needs and interests of the people are. (Note that
the principle of subsidiarity discussed here differs from the principle of
subsidiarity that applies in equality cases discussed in chapter 12.) If this
is how the Constitution intended intergovernmental relations to work, it
raises a pertinent question about the long-term prospects for South
Africa. How do we reconcile the exercise of power by local government
(assisted by provincial and national government) with the expression
that the state has turned against the people by not delivering adequate
services; the people have turned against the state by protesting violently
in response; and the people have turned against each other?62 In some
instances, organs of state have to act in conjunction with other organs of
state to carry out their statutory and constitutional responsibilities or to
provide effective service delivery. The IGRFA requires that in these
instances, implementation protocols must be agreed on by the various
participating organs of state.63 Among various objectives, the
implementation protocols must: •identify the roles and responsibilities of
each organ of state in implementing policy and carrying out its statutory
functions •provide for aims and objectives of the project •determine
indicators to measure the attainment of the objectives •provide for
monitoring and evaluation mechanisms64 •provide for dispute-resolving
procedures •determine the duration of the protocol.65 One of the most
important objectives of the IGRFA is to set in place mechanisms to deal
with intergovernmental disputes. An intergovernmental dispute is
defined as a dispute between different spheres of government or between
organs of state from different spheres concerning matters arising from
statutory powers or functions assigned to them or from an agreement
between the parties regarding the implementation of their statutory
powers. In addition, the issue must be justiciable in a court of law.66
This definition is wide and covers disputes that arise as a consequence of
the various parties exercising their statutory power. This would include
disputes about which party is responsible for paying for the services
provided and which party should provide particular services. In addition,
disputes may arise as a consequence of an agreement entered into by the
parties in furtherance of a joint mandate. It does not, however, include
disputes concerning interventions in terms of sections 100 and 139 of the
Constitution.67 Any intervention in terms of these sections must satisfy
the procedural and substantive constraints built into these sections. The
IGRFA imposes a direct duty to avoid intergovernmental disputes.68 This
duty involves taking reasonable steps both to avoid intergovernmental
disputes and to settle intergovernmental disputes that arise without
resorting to judicial proceedings. A related benefit of intergovernmental
relations is its potential to develop substantive principles of public
administration. This means that the purpose of section 195 of the
Constitution will be realised. Section 195 declares that the principles
governing the public administration are, inter alia, an efficient, economic
and effective use of resources; and development-oriented and
accountable conduct. Time-consuming and resource-draining litigation
between organs of state will defeat the very objectives to which the
public administration aspires, thus friendly relations are an imperative
among and between the three spheres of government. The IGRFA
prescribes various steps which must be followed as a prerequisite before
taking legal proceedings (which must be instituted only as a last resort).
As a first step, the parties must try to settle the dispute through direct
negotiations or through an intermediary. If this is unsuccessful, then one
of the parties may declare a formal intergovernmental dispute by
notifying the other party of this in writing.69 After a formal
intergovernmental dispute has been declared, the parties are obliged to
convene a meeting to determine the precise issues that are in dispute, the
material issues that are not in dispute and any mechanisms and
procedures, other than judicial proceedings, that are in place and which
can resolve the dispute. The parties are also required to agree on
appropriate mechanisms to settle the dispute and to designate a person to
act as a facilitator.70 If the meeting is not convened and if the dispute
involves a national organ of state, the Minister responsible for provincial
and local government must convene the meeting.71 Similar
responsibilities rest on the MEC for local government in respect of
disputes involving provincial organs of state and local government or
municipal organs of state. The IGRFA assigns specific responsibilities to
the facilitator.72 The main mandate is to settle the dispute in any manner
necessary and to provide progress reports to the relevant parties. The
attempts to settle and the contents of the progress reports are deemed to
be privileged documents and may not be used in judicial proceedings.
Importantly, no organ of state may institute proceedings to settle an
intergovernmental dispute unless it has been declared a formal
intergovernmental dispute and efforts made to settle the dispute have
proved to be unsuccessful. 8.2The division of legislative and executive
power between the national and provincial spheres of governments
8.2.1Introduction The division of legislative and executive authority
between the three spheres of government is one of the key features of the
system of multisphere government adopted in the Constitution. In this
part of the chapter, we discuss the division of legislative and executive
authority between the national and provincial spheres of government.
Although there is a large overlap between the matters over which each
sphere has legislative and executive authority, provincial executives may
have slightly different powers than provincial legislatures as additional
administrative powers may be delegated to provincial executives by the
national legislature.73 This would empower provincial executives to
exercise administrative powers in terms of such legislation even though
the provincial legislatures may not be empowered to legislate on that
matter. Nevertheless, to a large degree, provincial executives have
authority over the same subject matter as provincial legislatures. Unless
indicated otherwise, we will deal with these matters as if they overlap.
Before discussing this further, however, it will be helpful to discuss
briefly the objectives and structure of provincial government. 8.2.2The
objectives and structure of provincial government South Africa is divided
into nine provinces, namely the Eastern Cape, Free State, Gauteng,
KwaZulu-Natal, Limpopo, Mpumalanga, Northern Cape, North West and
Western Cape.74 The Constitution regulates the governance of the
provinces in Chapter 6 and sets out the structure, powers and functions
of the provincial legislatures75 as well as the provincial executive
authorities.76 Judging from the structure and powers bestowed by the
Constitution on the nine provinces, provinces are required to fulfil at
least three important interrelated but distinct functions: •First, provinces
provide a close link between voters and their government to ensure that
the government addresses the particular concerns and unique challenges
and needs of discrete geographical areas. •Second, provinces are required
to implement national policies and plans relating to important service
delivery areas such as housing, health care, policing and education.
•Third, provinces must oversee the smooth running of the local sphere of
government within the boundaries of the province. Is provincial
government good for democracy? The decision by the drafters of the
South African Constitution to create three separate spheres of
government has come under sustained criticism. Some have argued that
the provincial sphere of government should be scrapped or at the very
least that the number of provinces should be reduced. Thus, the
governing African National Congress (ANC) resolved at its conference in
2007 that the number of provinces should be reduced from 9 to 6 and at
its 2017 conference it adopted a resolution that the ‘reconfiguration’ of
provinces should be investigated by a presidential commission.77 The
argument is that the provincial sphere of government is unnecessary, that
it is inefficient or that it forms part of the gravy train and that scrapping
or reducing the number of provinces would make it a lot easier to govern
well. Steven Friedman challenges this view, arguing instead that the
provincial sphere of government enhances democracy. He argues that
some provinces have at times done better at serving citizens than central
government. Substantiating this argument is his analysis of the crisis that
occurred in the North West province where voters used their power to
hold accountable those elected to power – using ‘their votes to signal that
they don’t want a government that does not serve them’ and roundly
rejecting the premier and his allies. This proves that if the ANC ignores
the will of the people in a particular province, voters may resort to
removing the ANC provincial government at the next election irrespective
of their views of the national government. It simply gives voters more
choice in expressing their preferences. Furthermore, provincial
governments supervise and oversee the functioning of local government.
Given widespread dysfunctionality in parts of local government over
recent years, the provincial sphere is necessary to ensure proper service
delivery. 78 To a large extent the structures and functions of the nine
provinces mirror one another. Each province is entitled to pass a
provincial constitution79 and the Western Cape has done so. However,
such a constitution cannot bestow substantially more powers on a
province or deviate from the basic structure of governance of the
province as set out in the national Constitution.80 The constitution-
making power is not a power to constitute a province with powers,
functions or attributes in conflict with the overall constitutional
framework established by the national Constitution. The provinces
remain creatures of the national Constitution and cannot, through their
provincial constitution-making power, alter their character or their
relationship with the other levels of government.81 When discussing the
structure and functioning of provinces, we shall therefore focus on the
provisions of the 1996 Constitution only. The legislative authority of each
province is vested in its provincial legislature. The provincial legislature
has the legislative power to pass a provincial constitution and to pass
legislation for its province with regard to any matter: •within a functional
area listed in Schedule 482 •within a functional area listed in Schedule
583 •outside those functional areas and that is ‘expressly assigned’ to the
province by national legislation84 •for which a provision of the
Constitution ‘envisages’ the enactment of provincial legislation.85 A
provincial legislature may also assign any of its legislative powers to a
municipal council in that province.86 In addition, the legislature of a
province may change the name of that province by adopting a resolution
with a supporting vote of at least two-thirds of its members, requesting
Parliament to change the name of that province.87 Apart from the
legislative powers set out above, the Constitution also provides that
provincial legislation with regard to any matter that is reasonably
necessary for, or incidental to, the effective exercise of a power
concerning any matter listed in Schedule 4, is for all purposes legislation
with regard to a matter listed in Schedule 4.88 The members of provincial
legislatures are elected in accordance with the same electoral system that
applies to the election of members of the National Assembly (NA). The
size of each of the legislatures is determined in terms of a formula
prescribed by national legislation relating to the population size of that
province, but cannot be smaller than 30 and no larger than 80
members.89 The Western Cape legislature’s size is determined by the
Western Cape Constitution.90 The requirements for membership of
provincial legislatures, as well as the loss of membership, are identical to
those prescribed for the NA.91 Provincial legislatures are also elected for
a term of five years and can be dissolved before the expiry of that term
for exactly the same reasons as those that apply to the NA.92 As we may
recall, a province’s permanent delegates to the NCOP are not members of
the provincial legislature. However, such permanent delegates to the
NCOP may attend and may speak in their provincial legislature and its
committees, but may not vote. The legislature may require a permanent
delegate to attend the legislature or its committees.93 The rules
regarding the functioning of provincial legislatures also mirror those
prescribed for the NA. The executive authority of a province is vested in
the Premier of that province, who exercises it together with the other
members of the executive council. The Premier’s role mirrors that of the
President at national level. Obviously, though, Premiers do not enjoy the
head of state powers bestowed on the President by section 84 of the
Constitution. However, Premiers do appear to exercise powers as head of
the province. These powers, set out in section 127(2) of the Constitution,
are not exercised together with the other members of the executive. The
powers include the responsibility of assenting to and signing bills;
referring a bill back to the provincial legislature for reconsideration of the
bill’s constitutionality; referring a bill to the Constitutional Court for a
decision on the bill’s constitutionality; summoning the provincial
legislature to an extraordinary session to conduct special business;
appointing commissions of enquiry; and calling a referendum in the
province in accordance with national legislation. The Premier exercises
executive authority, together with the other members of the Executive
Council, by: •implementing provincial legislation in the province
•implementing all national legislation in the functional areas listed in
Schedule 4 or 5 except where the Constitution or an Act of Parliament
provides otherwise •administering in the province national legislation
outside the functional areas listed in Schedules 4 and 5, the
administration of which has been assigned to the provincial executive in
terms of an Act of Parliament •developing and implementing provincial
policy •co-ordinating the functions of the provincial administration and
its departments •preparing and initiating provincial legislation
•performing any other function assigned to the provincial executive in
terms of the Constitution or an Act of Parliament.94 A province has
executive authority in terms of those functional areas listed in Schedules
4 and 5 of the Constitution, but ‘only to the extent that the province has
the administrative capacity to assume effective responsibility’.95 The
Constitution enjoins the national government to assist provinces to
develop the administrative capacity required for the effective exercise of
their powers and performance of their functions through legislative and
other measures.96 Any dispute concerning the administrative capacity of
a province in regard to any function must be referred to the NCOP for
resolution within 30 days of the date of the referral to the Executive
Council.97 A member of the Executive Council of a province may assign
any power or function that is to be exercised or performed in terms of an
Act of Parliament or a provincial Act to a municipal council. An
assignment must be in terms of an agreement between the relevant
Executive Council member and the municipal council. It must be
consistent with the Act in terms of which the relevant power or function
is exercised or performed, and it takes effect on proclamation by the
Premier.98 Premiers are elected by the provincial legislature.99 Premiers
can also be removed in two ways: •First, Premiers can be impeached in
terms of section 130(3) of the Constitution for a serious violation of the
Constitution or the law, serious misconduct or inability to perform the
functions of office. •Second, in terms of section 141 of the Constitution, a
provincial legislature may remove a Premier for purely political reasons
by instituting a motion of no confidence in the Premier. The division and
demarcation of legislative competences between the national and
provincial spheres Unlike Parliament, which has plenary legislative
powers, the provincial legislatures have limited legislative powers. The
limited nature of the provincial legislatures’ legislative powers was
highlighted by the Constitutional Court in its judgment in Premier:
Limpopo Province v Speaker of the Limpopo Provincial Legislature and
Others.100 The facts of this case were as follows. In 2009, the Limpopo
Provincial Legislature passed the Financial Management of the Limpopo
Provincial Legislature Bill, 2009. The purpose of this Bill was to regulate
the financial management of the Limpopo Provincial Legislature itself.
After the Limpopo Provincial Legislature had passed this Bill, it was
referred to the Premier of Limpopo for his assent and signature. The
Premier, however, had reservations about the constitutional validity of
the Bill and refused to assent to it. Acting in terms of section 121 of the
Constitution, the Premier referred the Bill back to the Provincial
Legislature and, after the Provincial Legislature had failed to address his
concerns, to the Constitutional Court for a decision on its constitutional
validity.101 The Premier’s reservations were based on the fact that the
financial management of a provincial legislature is not listed as a
functional area in either Schedule 4 or Schedule 5 of the Constitution.
This meant he argued that the Bill fell outside the Provincial Legislature’s
legislative competence. The Provincial Legislature accepted that financial
management of a provincial legislature is not listed as a functional area
in either Schedule 4 or Schedule 5. It argued, however, that the Bill did
fall into its legislative competence because the power to pass legislation
regulating the financial management of a provincial legislature has been
‘expressly assigned’ to the provinces by the Financial Management of
Parliament Act.102 In addition, the Provincial Legislature argued further,
the power to pass legislation regulating the financial management of a
provincial legislature was ‘envisaged’ by sections 195, 215 and 216 the
Constitution.103 Section 195 deals with the basic values and principles
governing public administration. Section 215 deals with the national,
provincial and municipal budgets and section 216 indicates the nature of
treasury controls that must be implemented. A majority of the
Constitutional Court rejected both these arguments and came to the
conclusion that the Bill did not fall into the legislative competence of the
Limpopo Provincial Legislature. It was, therefore, unconstitutional and
invalid. In arriving at this conclusion, the Constitutional Court pointed
out that the defining feature of our constitutional scheme for the
allocation of legislative powers between Parliament and the provinces is
that the legislative powers of the provinces are enumerated and clearly
defined, while those of Parliament are not.104 The plenary power that
resides in Parliament, therefore, is contrasted with the limited powers
that have been given to provincial legislatures.105 An important
consequence of this feature is that a provincial legislature may pass
legislation only on: •those matters set out in Schedule 4 •those matters
set out in Schedule 5 •those that have been ‘expressly assigned’ to the
provinces by national legislation •those in respect of which a provision of
the Constitution ‘envisages’ the enactment of provincial legislation.106
The general scheme of the Constitution, the Constitutional Court pointed
out further, was aimed at ensuring that the legislative authority of the
provinces is clearly identified.107 In addition to the competences directly
articulated in Schedules 4 and 5, the Constitution specifically requires
that additional competences are ‘expressly assigned’ by national
legislation to the provinces or are ‘envisaged’ by a provision of the
Constitution.108 After setting out these principles, the Constitutional
Court turned to consider whether the Financial Management of
Parliament Act has expressly assigned the financial management of a
provincial legislature to the provinces. In this respect, the Constitutional
Court noted that the word ‘expressly’ must be interpreted as part of the
objective to ensure that provincial competences are clearly identified.
This meant, the Court noted further, that the national legislation
assigning the additional powers must leave no doubt of its intent and
must clearly stipulate the nature and scope of the powers assigned. The
reason why the national legislation assigning the additional powers must
leave no doubt of its intent, the Constitutional Court went on to note, is
because it will provide reasonable certainty as to the areas of competence
of the provincial legislatures.109 Clarity as to the nature and extent of
the power assigned will advance co-operative government which has, as
one of its guiding principles, that no sphere will assume any power or
function except those conferred in terms of the Constitution. This clarity,
the Constitutional Court also held, would prevent disputes and inform
the public as to which sphere has competence over the particular
matter.110 The Court suggested that the preamble and the objectives of
the enabling legislation should make the intent clear and unequivocal.111
The Court concluded that if the assignment is merely implied as opposed
to express, it will fail to comply with the requirements of the Constitution
regarding the assignment of legislative authority.112 Having found that
the Financial Management of Parliament Act did not expressly assign the
financial management of a provincial legislature to the provinces, the
Constitutional Court turned to consider whether the power to pass
legislation regulating the financial management of a provincial
legislature was ‘envisaged’ by sections 195, 215 and 216 of the
Constitution.113 In keeping with the theme of maximum clarity in
respect of the allocation of legislative powers to the various spheres, the
Constitutional Court also adopted a restrictive approach to this
argument. It held that only those provisions of the Constitution which in
clear, unequivocal and express terms sanctioned the enactment of
provincial legislation fell under this section.114 The Constitutional Court
stated that the power had to be expressly assigned and not merely
implied. To do otherwise would, in the view of the Court, undermine the
principle of certainty and adversely affect the constitutional scheme.115
The Court identified section 155(5) of the Constitution as an example of
such express assignment. This section provides that provincial legislation
must determine the different types of municipalities to be established in
the province.116 On the facts, the Constitutional Court concluded that
the sections of the Constitution relied on by the provincial legislature did
not in clear and unmistakeable terms envisage the enactment by the
provincial legislature of this law.117 In their dissenting judgments, the
minority of the Constitutional Court disagreed with the manner in which
the majority interpreted the word ‘envisages’. The word ‘envisages’, the
minority reasoned, must mean something different from the phrase
‘expressly assigned’.118 If they meant the same thing, the drafters of the
Constitution would not have used different words. The word ‘envisages’,
the minority reasoned further, means something less than ‘expressly
assigned’, but not much less.119 ‘It must appear that the relevant
provisions of the Constitution read in context lead to no conclusion but
that the Constitution contemplates the exercise of the power by the
provincial legislature and that the Constitution could mean nothing
else’.120 After setting out these principles, the minority turned to apply
them to the facts and found that the power to pass legislation regulating
the financial management of a provincial legislature was ‘envisaged’ by
sections 195, 215 and 216 of the Constitution.121 The case represents an
attempt to have reasonable certainty in respect of the division and
demarcation of legislative competences between the national and
provincial spheres. The constitutional scheme vests the residual
legislative powers in the national sphere and makes specified allocations
to the provincial legislatures. The Court did not permit the boundaries to
be blurred and insisted that the provinces can only legislate in respect of
functional areas falling within Schedules 4 and 5, or if national laws
clearly assign further function to the provinces, or if the Constitution
expressly assigns power to the provinces to legislate on specified
matters.122 Do you agree with the reasoning of the majority or minority
in this case and should a premier have the power to refer such a matter to
the Constitutional Court to test the constitutionality of legislation passed
by the provincial legislature? 8.2.3Determining legislative competence:
the pith and substance test As we have already seen, the legislative
powers bestowed on Parliament overlap to some degree with the
legislative powers bestowed on provincial legislatures. One of the more
difficult questions of South African constitutional law is the exact
relationship between the legislative powers of Parliament and the
legislative powers of the provincial legislatures. There are two distinct
issues at play here: •First, when dealing with concurrent competences
listed in Schedule 4, both Parliament and the provincial legislatures are
empowered to pass legislation on the same topics. Given this fact, it is
inevitable that conflicts will sometimes arise between the provisions of
national and provincial legislation dealing with the same subject matter.
These conflicts are regulated by section 146 of the Constitution, which
provides that the provisions of the provincial legislation will prevail
unless one or more of the requirements listed in section 146 itself is met,
in which case the national legislation will prevail.123 •Second, usually
only provincial legislatures can pass legislation dealing with one or more
of the exclusive competences listed in Schedule 5. However, in
exceptional cases set out in section 44(2) of the Constitution, Parliament
may intervene and pass legislation listed in Schedule 5. We shall deal
with this below. It is important to note that the division of legislative
authority between the national, provincial and local spheres of
government imposes important federalist limits on the power of each
sphere of government to legislate. At the heart of these limits lies the
principle that each sphere may not adopt legislation that falls outside its
legislative authority. Legislation passed by a legislature in a particular
sphere, therefore, may be challenged on the ground that it does not fall
within the legislature’s authority. Whenever a person challenges
legislation on the ground that it does not fall within a legislature’s
authority, a court will have to determine whether the legislature in
question was competent to pass the legislation. There are two distinct
questions that arise whenever there is uncertainty whether the
legislature of one sphere of government is competent to pass legislation
on a specific topic: •First, there is a need to decide whether the impugned
legislation deals with a topic listed in Schedule 4 or Schedule 5. Our
courts have developed a special test for this, which we will discuss below.
•Second, once we have determined whether the legislation falls within
Schedule 4 or 5, we must ask whether the relevant legislature was
authorised to pass the legislation as a matter of course or in terms of
section 44(2) of the Constitution. The Constitutional Court uses the ‘pith
and substance’ test to determine whether a Bill deals with subject matter
contained in schedule 4 or 5 of the Constitution. The ‘pith and substance’
test requires ‘the determination of the subject-matter or the substance of
the legislation, its essence, or true purpose and effect, that is, what the
[legislation] is about’124 What complicates matters is that a Bill could
have more than one ‘pith and substance’ – in other words its true purpose
could be to achieve more than one goal. In such a case the pith and
substance of the bill relates to each one of the true purposes of the Bill.
However, a Bill may also contain other provisions dealing with matters
not related to the true purpose of the Bill. Such provisions would be
incidental and in terms of the pith and substance test for legislative
competence, such provisions which fall outside the pith and substance of
the legislation are seen as merely incidental and has no effect on
determining the pith and substance of the Bill.125 The pith and substance
test was first applied by the Constitutional Court in Ex Parte President of
the Republic of South Africa: In re Constitutionality of the Liquor Bill.126
This case provides a good illustration of the fact that one Bill could have
more than one pith and substance, thus more than one true purpose. In
this case, Parliament passed the Liquor Bill which sought to regulate the
liquor industry comprehensively. The Bill divided the economic activity
of the liquor industry into three categories: manufacture, distribution and
retail sales. The Bill treated manufacture and distribution as national
issues and retail sales as provincial issues to be dealt with by provincial
liquor authorities. However, even in respect of retail sales, the Bill
prescribed detailed mechanisms as to how the provincial legislatures
should establish their retail licensing systems. The President referred the
Bill to the Constitutional Court in terms of section 84(2)(c) of the
Constitution, to consider the constitutionality of the Bill. The concern
was that the Bill exhaustively regulated issues concerning manufacture
and distribution and provided for the national sphere to control the
issuing of liquor licences despite the fact that liquor licencing was an
exclusive provincial competence in terms of Schedule 5 of the
Constitution. Parliament contended that the Bill primarily dealt with
trade, economic and social welfare issues, which are concurrent
competences in terms of Schedule 4. The Western Cape provincial
government argued that the Bill dealt with liquor licences, which is an
exclusive provincial competence in terms of Schedule 5. The
Constitutional Court emphasised that under the post-apartheid
Constitution, governmental power is not located in the national sphere
alone.127 Legislative authority is vested in Parliament for the national
sphere, in the provincial legislature for the provincial sphere and in
municipal councils for the local sphere.128 Any interpretation must
recognise and promote the philosophy of co-operative government at
various levels.129 However, given the breadth of the competencies listed
in the various Schedules, their parameters of operation will, of necessity,
overlap.130 The Constitutional Court pointed out that the Constitution
allows for provincial exclusivity in respect of matters falling within
Schedule 5, subject to an intervention by the national sphere that is
justified in terms of section 44(2) of the Constitution. This, argued the
Court, meant that the functional competencies in Schedule 4 should be
interpreted as being distinct from, and excluding, Schedule 5
competencies.131 The Court found that the primary purpose of Schedule
4 is to enable the national government to regulate various issues inter-
provincially (between all the provinces).132 Conversely, the provinces,
whose jurisdiction is confined to their geographical territory, are
accorded exclusive powers in respect of matters that may be regulated
intra-provincially (exclusively within the province).133 The main
substance and character of the legislation (its ‘pith and substance’)
determines the field of competence in which it falls. A single piece of
legislation may have various parts and more than one substantive
character.134 According to this reasoning, the Court concluded that the
pith and substance of the bill dealt with the manufacturing, distribution
and sale of liquor. The manufacture and distribution segments of the
legislation affect inter-provincial as opposed to intra-provincial
competencies135 which means that the competence of liquor licensing in
Schedule 5 was not intended to encompass the manufacturing and
distribution of liquor.136 In any event, the Court was prepared to
conclude that even if the provincial competence in respect of liquor
licenses extends to production and distribution, the national spheres
‘interest in maintaining economic unity authorises it to intervene in these
areas under section 44(2) [of the Constitution]’.137 However, the Court
adopted a much stricter approach to the national regulation in respect of
retail sales. A relatively uniform approach to liquor licensing in the
country may be desirable but this did not amount to a necessity that
justified an intrusion into the exclusive provincial competence. Thus, the
Court deemed those aspects of the law that regulated the manufacture
and distribution of liquor constitutional and the segment of the national
law regulating the retail industry unconstitutional.138 The substantial
measure test versus the pith and substance test for Bills. It is important
to recall what we stated in Chapter 4, namely that there is a distinction
between the test to determine whether a Bill should be tagged and then
passed as a section 75 Bill not affecting provinces or a section 76 Bill
affecting provinces, and the test to determine whether a Bill deals with a
concurrent competence in terms of Schedule 4 or an exclusive provincial
competence in terms of Schedule 5. There is an important difference
between the substantial measure test used to decide how to tag a Bill and
the pith and substance test used to determine whether the subject matter
of a Bill falls within Schedule 4 or Schedule 5. In terms of the pith and
substance test, those provisions of a Bill that fall outside its substance
are treated as incidental. In contrast, the tagging test is distinct from the
question of legislative competence. It focuses on all the provisions of the
Bill to determine the extent to which they substantially affect functional
areas listed in Schedule 4 and not on whether any of its provisions are
incidental to its substance. The more it affects the interests, concerns
and capacities of the provinces, the more say the provinces should have
on its content.139 In Tongoane and Others v National Minister for
Agriculture and Land Affairs and Others the Constitutional Court
summarised this difference as follows: There is an important difference
between the “pith and substance” test and the “substantial measure”
test. Under the former, provisions of the legislation that fall outside of its
substance are treated as incidental. By contrast, the tagging test is
distinct from the question of legislative competence. It focuses on all the
provisions of the Bill in order to determine the extent to which they
substantially affect functional areas listed in Schedule 4 and not on
whether any of its provisions are incidental to its substance. The test for
tagging must be informed by its purpose. Tagging is not concerned with
determining the sphere of government that has the competence to
legislate on a matter. Nor is the process concerned with preventing
interference in the legislative competence of another sphere of
government. The process is concerned with the question of how the Bill
should be considered by the provinces and in the NCOP, and how a Bill
must be considered by the provincial legislatures depends on whether it
affects the provinces. The more it affects the interests, concerns and
capacities of the provinces, the more say the provinces should have on its
content. 140 Importantly, the Court endeavoured to remain faithful to the
structure of the Constitution. Had the Court interpreted the competence
of ‘trade’ very broadly, this would have provided an opportunity for the
national legislature to intervene in a variety of matters that fall under
Schedule 5 such as liquor licensing, control of undertakings that sell
liquor, licensing and control of undertakings that sell food to the public,
markets and street trading. By demarcating the boundary by reference to
intra- and interprovincial activities, the Court ensured that national
intervention in respect of Schedule 5 matters that apply intra-
provincially must comply with section 44(2) of the Constitution. A broad
interpretation of the competences listed in Schedule 4 would have
ultimately negated the exclusive competence of the provinces to legislate
in respect of matters listed in Schedule 5.141 Given that subject matter or
the substance of legislation determines the field of competence in which
it falls, it is important to be able to identify the subject matter or the
substance of a law. The Constitutional Court discussed the manner in
which this may be done in Abahlali baseMjondolo Movement SA and
Another v Premier of the Province of KwaZulu-Natal and Others.142 In
this case, the applicants, an association representing residents of
informal settlements, applied for an order declaring the Elimination and
Prevention of the Re-emergence of Slums Act,143 which had been passed
by the KZN Provincial Legislature, to be unconstitutional and invalid.
They based their application on a number of grounds, one of which was
that the KZN Provincial Legislature lacked the competence to pass this
law. The KZN Provincial Legislature lacked the competence to pass the
Act, the applicants argued, because it did not deal with housing. Housing
is a functional area of concurrent national and provincial competences
listed in Schedule 4. They argued that the Act dealt with land tenure and
access to land which, in terms of section 25 of the Constitution, is a
functional area of exclusive national competence.144 The key question
the Constitutional Court had to determine, therefore, was whether the
subject matter or substance of the Act was housing, in which case it
would fall into the legislative competence of the KZN Provincial
Legislature, or whether it was land tenure and access to land, in which
case it would not fall into the legislative competence of the KZN
Provincial Legislature. When it comes to determining the subject matter
or substance of a law, the Constitutional Court held that two important
principles must be taken into account: •First, the substance of the law
does not depend on its form, but rather on the true purpose, effect and
essence of what the law is about. •Second, no national or provincial
legislative competence is watertight and it is therefore important to
determine the main substance of the legislation in order to ascertain
whether the provincial legislature has legislative competence.145 After
setting out these principles, the Constitutional Court applied them to the
facts. In this respect, the Court held that in determining the substance of
the Act it had to be considered as a whole.146 The preamble of the Act
identified the purpose of the legislation as being to eliminate and prevent
the re-emergence of slums in a manner that protects and promotes the
housing construction programmes of provincial and local
governments.147 The Court found that the overall strategy of the Act was
to eliminate slums and to make provision for the progressive realisation
of adequate housing by improving service delivery and by generally
improving the conditions under which people are housed. It was not
simply about eviction with no regard for the consequences of rendering
people homeless.148 The Court concluded that the Act was primarily
about improving the housing conditions of those living in slums in
KZN.149 It was therefore about housing and fell within the legislative
competence of the province.150 However, the majority of the Court found
that section 16 of the Elimination and Prevention of the Re-emergence of
Slums Act obliged owners to institute eviction proceedings when directed
to do so by the MEC even if to do so would not be in accordance with the
Prevention of Illegal Eviction From and Unlawful Occupation of Land Act
(PIE Act).151 The majority found this to be inconsistent with section 25 of
the Constitution which seeks to provide greater security of tenure to
communities whose tenure is legally insecure as a result of past racially
discriminatory laws.152 Thus, a full and complete appraisal of the law is
required to determine the substance of the legislation. This, in turn,
assists with assessing whether the law deals with a matter that falls
under Schedule 4 or 5 or within the exclusive competence of Parliament.
Once this determination has been made, then clarity can be obtained as
to which legislative body has competence over the matter. 8.2.4The
resolution of conflicts between the national and provincial spheres
8.2.4.1Conflicts related to concurrent competences set out in Schedule 4
As stated earlier, both Parliament and the provincial legislatures possess
power to legislate concurrently over the functional areas contained in
Schedule 4. Affording concurrent legislative responsibilities over the
same functional areas to different legislatures can lead to conflicting laws
being enacted over the same subject matter. For instance, education is a
concurrent function and thus both the national and provincial
legislatures have jurisdiction to pass laws in respect of this competence.
Provisions of a law passed by Parliament on education may conflict with
provisions of a law passed by a provincial legislature on the same subject
matter. It is thus imperative for the Constitution to anticipate such
conflicts and to include provisions that seek to resolve conflicts between
laws dealing with the same subject matter and which are passed by the
different legislatures. Section 146 of the Constitution provides a
framework in terms of which these conflicts are to be resolved. It has
been suggested that conflicts between central and provincial laws are
dealt with by reference to the following enquiries:153 •Does the central
legislature have the legislative competence to pass its law? •Does the
provincial legislature have the legislative competence to pass its law? •If
both legislatures have the legal competence to pass the laws, then the
issue would be whether the different laws can be reconciled. •If there is
an irreconcilable conflict, then the central law will prevail if the
provisions of section 146 of the Constitution are satisfied. •If the
provisions of section 146 of the Constitution are not met, then the
provincial law will prevail. Thus, the first question is whether the
legislative body possesses the constitutional power to legislate over the
matter. If the response is that the provincial legislature, as in the case of
the Premier: Limpopo, or Parliament, as in Executive Council of the
Western Cape Legislature and Others v President of the Republic of South
Africa and Others,154 does not possess the authority to legislate, then
that is the end of the enquiry. The legislative body lacking the power
cannot constitutionally legislate and there is no need to determine
whether national law should prevail over provincial law or vice versa. It
is only if both national and provincial legislatures have the power to
legislate and do so that attempts must be made to reconcile the laws. If
the laws cannot be reconciled, section 146 of the Constitution must then
be applied to determine which law should prevail. If any one of the
criteria listed in section 146 is met, the national law will prevail.155 The
provisions of section 146 can only be resorted to in respect of conflicting
laws dealing with a functional area listed in Schedule 4.156 Criteria
permitting the national override are divided into two categories. If one of
the criteria listed either in section 146(2) or 146(3) is satisfied, then the
conflicting provincial law is rendered inoperative for the period of the
conflict.157 If, for some reason, the conflicting national law is repealed,
the provincial law that had been rendered inoperative as a result of the
application of section 146 will again be operative. All the criteria listed in
section 146(2) are subject to the additional requirement that the national
legislation must apply uniformly to the country as a whole. Thus, a
national law that targets a particular province will not prevail in terms of
section 146(2). The Constitutional Court reaffirmed these principles in
Federation of Governing Bodies for South African Schools (FEDSAS) v
Member of the Executive Council for Education, Gauteng and Another.158
Education is a Schedule 4 competence over which both the national and
provincial legislatures have concurrent legislative competence. The Court
confirmed that provincial law, without more, is not rendered inoperative
by the existence of a conflicting national law. In terms of section 146(2),
central law will prevail if any one of the following three conditions is
established: (a)The national legislation deals with a matter that cannot
be regulated effectively by legislation enacted by the respective provinces
individually.159 (b)The national legislation deals with a matter that, to
be dealt with effectively, requires uniformity across the nation, and
national legislation provides that uniformity by establishing norms and
standards, frameworks or national policies.160 (c)The national
legislation is necessary for the maintenance of national security; the
maintenance of economic unity; the protection of the common market in
respect of the mobility of goods, services, capital and labour; the
promotion of economic activities across provincial boundaries; the
promotion of equal opportunities or equal access to government services;
or the protection of the environment.161 In Mashavha v President of the
Republic of South Africa and Others,162 the Constitutional Court had to
consider the constitutionality of the President assigning to the provinces
the administration of the Social Assistance Act163 in its entirety. In terms
of the interim Constitution, the President could only assign the
administration of the Act to the provinces if the provisions of section
126(3) of the interim Constitution164 were not applicable. The Court
found that the assignment was invalid as the administration dealt with a
matter that could not be regulated effectively by separate provincial
legislation. For the administration of social welfare grants to be
administered fairly and equitably, it needed to be regulated or co-
ordinated by uniform norms or standards that applied throughout the
Republic.165 To achieve equity and effectiveness, it was necessary to set
minimum standards across the nation.166 The primary objection of the
Court was that if Gauteng, the richest province in the country, paid a
higher old-age pension than Limpopo, then the dignity of people in
Limpopo would be offended as different classes of citizenship would be
created.167 Thus, to prevent inequality and unfairness in the provision of
social assistance to people in need, uniform norms and standards had to
be applicable throughout the country.168 In terms of section 146(3) of the
Constitution, national law will prevail over provincial law if it is aimed at
preventing unreasonable action by a province that is prejudicial to the
economic, health or security interests of another province or the country
as a whole, or impedes the implementation of national economic policy.
When is section 146 invoked? It is important to note that conflicts only
arise and section 146 will only be invoked when one or more of the
specific legal provisions in a provincial Act cannot be obeyed at the same
time as one or more of the provisions in a national Act. It is also
important to remember that as both the national and provincial spheres
have legislative competence over these matters, the provisions that
conflict do not become invalid. All that happens is that section 146 is
used to decide whether the provisions of the provincial or national Act
will prevail. The provisions of the Act that does not prevail are simply
suspended. If the conflicting provisions of the Act that prevails are
scrapped, the provisions of the conflicting Act will be ‘resurrected’, so to
speak, and will again become operational. For example, if both the
national Parliament and the Western Cape Provincial Parliament pass
legislation dealing with the regulation of the use of blue-light brigades by
politicians, both will have the legislative power to pass such legislation
as Schedule 4 states that road traffic regulation is a concurrent
competence. If there is a direct clash between the provisions of the
Western Cape law and the provisions of the national law, say the national
law allows Ministers and Deputy Ministers to use blue-light convoys
while the Western Cape law allows only Ministers to do so, then a court
may have to decide whether the national legislation prevails in terms of
section 146 of the Constitution. If the court finds that section 146 is
indeed applicable and that the provisions of the national law prevail, the
prohibition contained in the provincial law would become inoperable
until such time as the national law is amended or scrapped. If the court
finds that section 146 is not applicable, then the prohibition contained in
the provincial law against the use of blue-light convoys by Deputy
Ministers will prevail, but only in the Western Cape. 8.2.4.2Conflicts
related to exclusive provincial competences in Schedule 5 Section 44(2) of
the Constitution states that even though provincial legislatures have the
exclusive powers to pass legislation on one of the functional areas listed
in Schedule 5 of the Constitution, the national Parliament may
nevertheless intervene in areas listed in Schedule 5, but only when it is
necessary: •to maintain national security •to maintain economic unity
•to maintain essential national standards •to establish minimum
standards required for the rendering of services •to prevent unreasonable
action taken by a province which is prejudicial to the interests of another
province or to the country as a whole. If Parliament does intervene and
validly passes legislation on one of the functional areas listed in Schedule
5, a conflict may arise between national legislation and provincial
legislation with respect to the matters listed in Schedule 5. A conflict
between national legislation and provincial legislation with respect to
these matters must be resolved in terms of section 147(2) of the
Constitution. This section provides that national legislation referred to in
section 44(2) of the Constitution prevails over provincial legislation that
falls with the functional areas listed in Schedule 5. 8.2.5National
intervention in provincial administration Each sphere of government has
important constitutional and statutory responsibilities to discharge. If a
sphere of government becomes incapable of performing its functions, it
will become necessary for another sphere of government to intervene and
carry out the functions of the dysfunctional sphere. A failure to do so may
mean that important aspects of service delivery may suffer and residents
will be prejudiced. However government at the various spheres are
democratically elected and are assigned direct constitutional powers to
function effectively. It is imperative that any provision allowing for one
sphere to intervene and assume the executive obligations of another
sphere contains both process and substantive constraints so as to ensure
that the power is not abused for irrelevant and irrational purposes. Thus,
the national executive controlled by Party A should not be permitted to
assume the executive functions of a province controlled by Party B for
purely political reasons. Section 100 of the Constitution allows for
national intervention in provincial administration. Section 100 permits
the national executive to intervene and take appropriate remedial
measures if the province cannot or does not fulfil an executive obligation.
The intervention must be aimed at ensuring fulfilment of the executive
obligations.169 The most intrusive intervention would be the assumption
of responsibility for the relevant obligation. Less intrusive interventions
may include the deployment, by consent, of skilled personnel or other
support to assist the province to meet its constitutional and statutory
obligations. If the national government is to intervene, it must issue a
directive to the province describing the extent of the failure to fulfil its
obligation and stating the steps required to fulfil its obligations.170 The
substantive constraint is that it may only assume responsibility for the
relevant obligation to the extent necessary to maintain essential national
standards or meet established minimum standards for the rendering of
the service; to maintain economic unity; to maintain national security or
to prevent the province from taking unreasonable action that is
prejudicial to the interests of another province or to the country as a
whole. If an intervention is challenged then the national executive would
have to prove that the intervention is necessary to achieve one of the
objectives stated above. In addition to these substantive constraints,
there are a number of procedural constraints that have to be met. A
written notice must be submitted to the NCOP indicating that the
intervention has occurred, within 14 days of the intervention.171 The
intervention must end within 180 days if the NCOP disapproves of the
intervention or has not expressly approved of the intervention.172 One of
the important responsibilities of the NCOP is to represent the provinces
and to ensure that provincial interests are taken into account in the
national sphere of government.173 For the intervention to continue
beyond 180 days, the NCOP must expressly approve it. This would
require the national executive to satisfy the NCOP that the intervention is
necessary to achieve the objectives set out in section 100 of the
Constitution. Furthermore, there is an obligation on the NCOP to review
the intervention regularly and make recommendations to the national
executive. This would ensure that the assumption of functions of a sphere
of government does not continue more than is absolutely necessary to
ensure the objectives of the section are being met. It may also order the
intensity of the intervention to be periodically reduced as the capacity of
the province to deliver increases. Finally the section allows for national
legislation to be enacted to regulate this process. 8.3The division of
legislative and executive power between the national and provincial and
local spheres of government 8.3.1Introduction As we have already seen,
an important aspect of the Constitution is that it distributes legislative
and executive authority between the national, provincial and local
spheres of government. In the previous part of this chapter, we discussed
the division of legislative and executive authority between the national
sphere of government, on the one hand, and the provincial spheres of
government, on the other. In this part of the chapter, we discuss the
division of legislative and executive authority between the national and
provincial spheres of government, on the one hand, and the local sphere
of government, on the other. Before doing so, however, it will be helpful
to discuss briefly the objectives and structure of local government.
8.3.2The objectives of local government The objectives of local
government are set out in section 152(1) of the Constitution. This section
provides that the objectives of local government are: •to provide
democratic and accountable local government for local communities •to
ensure the provision of services to communities in a sustainable manner
•to promote social and economic development •to promote a safe and
healthy environment •to encourage the involvement of communities and
community organisations in the matters of local government. In addition,
section 153 of the Constitution also provides that a municipality must:
•structure and manage its administration and budgeting and planning
processes to give priority to the basic needs of the community •structure
and manage its administration and budgeting and planning processes to
promote the social and economic development of the community
•participate in national and provincial development programmes. Despite
the fact that these sections impose a wide range of obligations on local
government, the Constitutional Court held in Joseph and Others v City of
Johannesburg and Others that one of the most important objectives of
local government is to meet the basic needs of all of the inhabitants of
South Africa.174 For this reason, ‘the establishment of wall-to-wall
municipalities in the Republic is mandatory’.175 To achieve this
objective, the Constitutional Court held further that sections 152 and 153
of the Constitution, read together with the Local Government: Municipal
Systems Act,176 impose an obligation on every municipality in the
territory to provide basic municipal services to their inhabitants, such as
water and electricity, irrespective of whether or not they entered in a
contract for the supply of these services with the municipality.177 Street
renaming and decolonisation These issues were considered in the
fractured judgment of the Constitutional Court in City of Tshwane v
Afriforum.178 In 2007 the Tshwane Metropolitan Municipal Council took
a policy decision to replace the names of streets and heritage sites in the
city of Pretoria and surrounding areas. Implicitly relying on the
philosophy that informs the Constitution’s aspirations of achieving
national unity, reconciliation and healing the divisions of the past,179 the
Council resolved to change 25 of the more than 100 old street names.180
The purpose was to recognise and honour the heritage and history of
indigenous heroes and heroines in their own motherland.181
Subsequently, the name Tshwane replaced Pretoria for the same reasons.
It is conceivable that this resolution was also in furtherance of some of
the provisions of sections 152 and 153 of the Constitution, discussed
above. Pertinent to the Council’s (albeit unstated) intentions are the
sentiments expressed by Welsh just as apartheid was drawing to an end:
‘without addressing diversity in a way that will ensure that all live
together “in reasonable harmony and peace”, South Africa will
“haemorrhage by continuing violence”.’182 Upon being informed of
Council’s resolution, Afriforum contended that Tshwane had not followed
the correct process prior to implementing the new changes and sought to
interdict the Council from proceeding to implement the resolution. In
addition, they argued that their cultural rights were being infringed by
these changes. In terms of an out of court agreement, the Council
committed to delaying the replacement of street names by six months,
during which time Afriforum would be given an opportunity to seek
judicial review of the Council resolution. However, Afriforum never did
launch its review application.183 Seven months later, preceded by some
consultative meetings held in areas located in 10 of the 76 wards of
Tshwane, as well as after having, in its view, solicited a diversity of views
including those of Afriforum, Council resolved to commence with the
implementation of the replacement of the old and offensive street
names.184 On an urgent basis, Afriforum applied for – and succeeded in
obtaining from the High Court – an interdict against the Council.185 The
Council sought leave to appeal, which the Supreme Court of Appeal (SCA)
granted. However, the SCA dismissed the appeal, compelling the
Council’s application to the Constitutional Court.186 In declaring that the
interdict should never have been granted in the first place,187 the
majority of the Constitutional Court placed the case within context. The
wounds of colonialism, racism and apartheid run deep in South
Africa.188 Black people have been subject to centuries of deprivation of ‘a
sense of place and a sense of belonging’189 on account of colonialism.
Even worse, colonialism was the ‘systematic negation of the other person
and a furious determination to deny the other person all attributes of
humanity’.190 Likewise, the minority was of the view that the
Constitution recognises a right or interest based on ‘a sense of belonging
to the place where one lives, rooted in its particular history, and to be
involved in decisions affecting that sense of place and belonging.’191 In
the words of Ndlovu-Gatsheni, ‘denying others humanity is the highest
form of barbarism’.192 So too, the historical injustices occasioned by
apartheid were profoundly pernicious.193 The Court recognised that the
Council was inspired to give realistic expression to the notion of Ubuntu,
‘that one only becomes complete when others are appreciated,
accommodated and respected’.194 The majority were of the view that
even on an appeal against the granting of interim relief, the applicants
bore the onus of demonstrating that it had met the requirements for the
granting of interim relief. The Court held that the old restrictive common
law rules pertaining to the appealability of interim order were now
replaced by the more flexible standard of whether it was ‘in the interests
of justice’ to grant leave to appeal. The majority accepted in Afriforum’s
favour, without expressly deciding this issue, that they had established
prima facie rights. A further requirement for an interdict is that the
applicant must demonstrate a reasonable apprehension of irreparable
and imminent harm occurring should the order not be granted. The other
requirements are that the balance of convenience is in the applicant’s
favour and that there are no other alternative adequate remedies. It was
contended by Afriforum that the removal, even temporarily, of the street
names, would cause emotional hurt and adversely affect their sense of
belonging and association. The majority held that Afriforum would not
suffer irreparable harm as a result of the temporary removal of the
names pending the review application. Afriforum had not demonstrated
that they would suffer irreparable harm and whatever temporary harm
that they would suffer could be remedied by the reinstatement of the
names if the review application is successful. The Court also found that
Afriforum had not demonstrated that the balance of convenience
favoured them. It found that Tshwane belongs not only to Afrikaners but
to all people, united in diversity. Any harm that Afriforum and its
supporters felt was neutralised by the sense of belonging that the vast
majority would experience by the name changes. The majority therefore
held that Afriforum had failed to establish the requirements for an
interdict and allowed the appeal. The minority were of the view that the
common law rules regarding allowing appeals against interim orders
should be applied and that the appeal should have been dismissed.
Secondly, they disagreed with the finding implicit in the judgment of the
majority that reliance on cultural practices founded in history rooted in
oppression is not protected by the Constitution. The minority held that
one of the issues to be considered when deciding whether it was in the
interests of justice to grant leave to appeal was whether it would lead to
piece-meal adjudication. Granting the appeal against the interim order
resulted in more than three years of litigation without the substantive
issue being considered. It would have been best for the application for
leave to appeal against the interim order to be refused and the main
review application considered instead. The interim order, according to
the minority, was not final in effect and therefore not appealable. The
minority stressed that the decision as to whether or not to grant leave to
appeal cannot depend either on the names of the streets that were being
changed or the names with which they were going to be replaced. As the
interim orders were not final in effect, it was not in the interests of
justice to grant leave to appeal. The minority went on to add that the
right to enjoy ones culture is not tainted by the nexus between that
culture and historical injustices. The minority held that not being allowed
an opportunity to make representation in instances where cultural rights
and a sense of belonging were being infringed, even temporarily, could
result in irreparable harm. The minority held that the applicants have a
right to insist that the municipal adhere to the rule of law. In this case the
applicants were not saying that the Council cannot change the street
names, rather it was arguing that it must do it properly and until it does
so its members are entitled to the cultural bonds that they derive from
the existing street names. Highlighting the deference that the separation
of powers doctrine requires of it,195 the Court unequivocally stated that
the Council is vested with the constitutional and statutory power and
duty to run the affairs of the City by taking policy decisions. The Court
further held that since the nature of public participation is flexible, but
does not permit ‘co-governance or equal sharing of executive and
budgetary responsibilities’ by a civil society organisation such as
Afriforum, the Council had satisfied the requirement of ensuring that
public participation took place.196 The majority emphasised the
centrality of Ubuntu in determining the nature and extent of public
participation prior to a decision being taken and the application of the
doctrine of separation of powers. The Court declared that it is entirely
within the executive branch of government’s remit to determine how it
shall fulfil its functions. In particular, courts must refrain from making
orders that ‘have the effect of altogether derailing policy-laden and
polycentric decisions of the other arms of the State’.197 8.3.3The
structure of local government Section 155 of the Constitution
distinguishes between three different categories of municipalities namely
category A municipalities, category B municipalities and category C
municipalities: 1.A category A municipality has exclusive municipal
executive and legislative authority in its area and is referred to as a
metropolitan municipality in section 1 of the Local Government:
Municipal Structures Act.198 2.A category B municipality shares its
municipal executive and legislative authority in its area with a category
C municipality and is referred to as a local municipality in section 1 of
the Municipal Structures Act. 3.A category C municipality has municipal
executive and legislative authority in an area which includes more than
one municipality and is referred to as a district municipality in section 1
of the Municipal Structures Act. Apart from distinguishing between
category A (metropolitan), category B (local) and category C (district)
municipalities, section 155 of the Constitution also provides that national
legislation must establish the criteria for determining when an area
should have a single category A municipality or when it should have
municipalities of both category B and category C. The national legislation
referred to in this section is the Municipal Structures Act. Section 2 of
this Act provides that metropolitan municipalities must be established in
metropolitan areas, and section 3 provides that local and district
municipalities must be established in all other areas. A metropolitan area
is defined in section 1 of the Municipal Structures Act as any area which
reasonably can be regarded as a conurbation featuring areas of high
population density, intense movement of people, goods and services,
extensive development, multiple business districts and a number of
industrial areas. In addition, the social and economic linkages between
the constituent units should be strong.199 The power to determine
whether an area satisfies criteria and should therefore be classified as a
metropolitan area with a metropolitan municipality is vested in an
independent body known as the Municipal Demarcation Board. The
Municipal Demarcation Board is responsible for determining and re-
determining the boundaries of municipalities. Its powers and functions as
well as the procedure it must follow when it exercises it powers and
carries out its functions are set out in the Local Government: Municipal
Demarcation Act.200 Why must an independent authority carry out the
task of determining municipal boundaries? Section 155(3)(b) of the
Constitution declares that national legislation must establish criteria and
procedures for the determination of municipal boundaries by an
independent authority. The independent authority referred to in this
section is the Municipal Demarcation Board. The Constitutional Court
highlighted the reasons why an independent authority must carry out the
task of determining municipal boundaries in its judgment in Matatiele
Municipality and Others v President of the Republic of South Africa and
Others.201 In 2005, Parliament passed the Constitution Twelfth
Amendment Act and the Cross-Boundary Municipalities Laws Repeal and
Related Matters Act.202 In terms of these laws, the boundary between
KwaZulu-Natal and the Eastern Cape was altered so that the area in
which the Matatiele Municipality was located was transferred from
KwaZulu-Natal to the Eastern Cape and new municipal boundaries were
created. The applicants then applied for an order declaring the
Constitution Twelfth Amendment Act to be unconstitutional and invalid
on the grounds that it violated section 155(3)(b) of the Constitution. They
argued that the new boundaries of the Matatiele Municipality had been
determined by Parliament and not by an independent authority, namely
the Municipal Demarcation Board. The Constitutional Court rejected this
argument and refused to grant the order. In arriving at this decision,
however, it set out some of the reasons why section 155(3)(b) of the
Constitution provides that the Municipal Demarcation Board must be an
independent body. In this respect, the Constitutional Court pointed out
that the ‘purpose of section 155(3)(b) is “to guard against political
interference in the process of creating new municipalities”’,203 This is
because, the Constitutional Court pointed out further, if municipalities
were established along political lines or if there was political interference
in the establishment of new municipalities, our system of multiparty
democratic government would be undermined.204 A deliberate decision,
the Constitutional Court went on to conclude, was therefore made to
confer the power to establish municipal areas on an independent
authority.205 The different types of municipalities that may be
established within each category of municipality are also set out in the
Municipal Structures Act. The Act begins in this respect by distinguishing
between three ‘executive systems’ of municipal government and two
‘participatory system[s]’.206 The three executive systems are the
collective executive system, the mayoral executive system and the
plenary executive system: •A collective executive system is one in which
the executive authority of the municipality is exercised by an executive
committee. In this system, the leadership of the municipality is
collectively vested in the executive committee. •A mayoral executive
system is one in which the executive authority of the municipality is
exercised by an executive mayor assisted by a mayoral committee. In
this system, the leadership of the municipality is vested in an executive
mayor. •A plenary executive committee is one in which executive
authority is exercised by the municipal council itself. In this system, the
leadership of the municipality is vested in the municipal council. The two
participatory systems are the subcouncil participatory system and the
ward participatory system: •A subcouncil participatory system is one
which allows for delegated powers to be exercised by subcouncils
established for parts of the municipality. •A ward participatory system is
one which allows for matters of local concern to wards to be dealt with
by committees established for wards. After distinguishing between these
different systems of municipal government, the Municipal Structures Act
goes on to provide that: •a metropolitan council must have either a
collective or mayoral executive system and may combine its executive
system with a subcouncil participatory system or a ward participatory
system or both207 •a local council may have a collective, mayoral or
plenary executive system and may combine its executive system with a
ward participatory system but not with a subcouncil participatory
system208 •a district council may have a collective, mayoral or plenary
executive system but may not combine its executive system with a
subcouncil or ward participatory system.209 The articulation of the type
of municipality is important to determine three issues: •first, the
institutional relationship between the municipality’s executive and
legislative functions •second, whether a metropolitan or local
municipality is permitted to establish ward committees •third, whether a
metropolitan municipality is permitted to establish subcouncils that
exercise delegated powers for parts of the municipality. Finally, it is
important to note that section 155 of the Constitution also provides that
national legislation must make provision for an appropriate division of
powers and functions between local and district municipalities. A
division of powers and functions between a local and a district
municipality, however, does not have to be symmetrical, but must
constantly ensure that the need to provide municipal services in an
equitable and sustainable manner is being upheld.210 The national
legislation referred to in this section is the Local Government: Municipal
Structures Act.211 8.3.4Municipal powers As we have already seen,
municipalities are no longer simply creatures of statute. Instead, they
derive at least some of their executive and legislative powers directly
from the Constitution itself.212 The executive and legislative powers of a
municipality are set out in section 156 of the Constitution. This section
provides that a municipality has executive authority in respect of and has
the right to administer the local government matters listed in Part B of
Schedule 4 and Part B of Schedule 5;213 and any other matter assigned to
it by national or provincial legislation.214 In addition, section 156 of the
Constitution also provides that a municipality may make and administer
by-laws for the effective administration of the matters that it has the
right to administer.215 A careful examination of this section shows that it
distinguishes between two types of powers, namely: those powers that
are derived directly from the Constitution and that may be referred to as
original powers and those powers that are assigned to municipalities in
terms of national or provincial legislation and that may be referred to as
assigned powers. Apart from those powers that are derived directly from
the Constitution or that are assigned to it in terms of national or
provincial legislation, section 156(5) of the Constitution also provides
that a municipality has the right to exercise any power concerning a
matter reasonably necessary for, or incidental to, the effective
performance of its functions.216 Democracy – one of the cornerstones of
the South African Constitution – is vital to the effective performance by
municipalities of their functions. What is specifically required is a system
within each municipality where officials are appointed on merit, where
the rule of law is adhered to, and where democratic accountability is
evident. A further attribute that the officials responsible for creating and
implementing the by-laws must possess is cultural competence.
Developing cultural competence entails: •learning about other cultures
•becoming aware and knowledgeable of cultural differences and their
effect and impact on public service delivery outcomes •engaging and
integrating cultural awareness, cultural knowledge, and cultural
sensitivity into public service delivery practices.217 Cultural
competence, therefore, operates at both the individual and institutional
level.218 This approach is undoubtedly consistent with the
developmental duties of municipalities. The White Paper on Local
Government219 defines developmental government as ‘local government
committed to working with citizens and groups within the community to
find sustainable ways to meet their social, economic and material needs
and improve the quality of their lives’.220 8.3.4.1Original municipal
powers Section 156(1)(a) of the Constitution provides that a municipality
has executive and legislative authority in respect of the local government
matters listed in Part B of Schedule 4 and in Part B of Schedule 5. In
addition, section 156(5) of the Constitution also provides that a
municipality has the right to exercise any power concerning a matter
reasonably necessary for or incidental to the effective performance of its
Schedule 4 Part B and Schedule 5 Part B functions. Given that these
powers can only be altered or withdrawn if the Constitution itself is
amended, they form the most significant source of municipal powers and
are a fundamental feature of local government’s institutional
integrity.221 Chapter 7 of the Constitution which deals with local
government allocates specific powers to the provinces and local
government. When Parliament passed the Municipal Structures Act in
1998, it sought to regulate local government expansively and to deal with
the specific matters that had been allocated to the competence of the
provincial legislatures in Chapter 7. Given this fact, it is not surprising
that some of the provisions of the Municipal Structures Act were
challenged by the provincial governments of KwaZulu-Natal and the
Western Cape in Executive Council, Western Cape v Minister of Provincial
Affairs.222 Although Parliament acknowledged that Chapter 7 allocates
power to provinces and to municipalities, it contended that this does not
deprive Parliament of the right to legislate over these matters. It argued
further that in terms of section 44(1)(a)(ii) of the Constitution, Parliament
has legislative competence in all fields except those falling within
Schedule 5. Thus in terms of this argument, the powers conferred on the
provinces and on local government by Chapter 7 should be deemed
concurrent powers as they do not fall within functional areas listed in
schedule 5 of the Constitution. Relying largely on section 44(4), which
provides that when exercising its legislative authority, Parliament is
bound only by the Constitution, and must act in accordance with, and
within the limits of, the Constitution, the Constitutional Court rejected
this argument. The Court held that Chapter 7 allocates specific powers to
the different spheres and that this operates as a constitutional constraint
on the exercise of the legislative power of Parliament. These constraints
further regulated the manner in which Parliament was meant to exercise
its legislative powers. It thus concluded that the contention that
Parliament had concurrent powers over these matters is inconsistent
with the language of Chapter 7, which clearly assigned them to the
provincial legislatures. Consequently, the provisions of the Act were
invalid to the extent that Parliament had legislated contrary to the
constraints contained in Chapter 7 of the Constitution.223 Using the
bottom-up method to determine the scope and ambit of the matters set
out in Schedule 4 and Schedule 5 In both the Liquor Bill case and in City
of Johannesburg Metropolitan Municipality v Gauteng Development
Tribunal and Others,224 the Constitutional Court held that the scope and
ambit of the matters set out in Schedule 4 and Schedule 5 of the
Constitution must be interpreted in light of the model of government
adopted by the Constitution and the manner in which the Constitution
allocates power to the different spheres of government. Besides these
principles, the Constitutional Court also held in Gauteng Development
Tribunal that where two or more matters appear to overlap with each
other, they should be interpreted in a bottom-up manner.225 A bottom-up
method of interpretation is one in which the more specific matter is
defined first and all residual areas are left for the much broader
matter.226 In the Gauteng Development Tribunal case, for example, one
of the key questions the Constitutional Court had to answer was whether
the power to approve applications for the rezoning of land and the
establishment of townships fell into the broad matter of urban and rural
development, which is listed in Schedule 4A, or into the specific matter of
municipal planning, which is listed in Schedule 4B. In accordance with
the bottom-up method of interpretation, the Constitutional Court began
its analysis, not with an examination of the scope and ambit of the broad
matter of urban and rural development, but rather with an examination
of the scope and ambit of the specific matter of municipal planning. In so
far as the scope and ambit of municipal planning was concerned, the
Constitutional Court began by noting that although the term is not
defined in the Constitution, it has a particular and well known meaning,
which includes the zoning of land and the establishment of townships.227
In addition, the Constitutional Court noted further, there is nothing in the
Constitution which indicates that the term ‘municipal planning’ should
be given a meaning which is different from its common meaning.228 The
power to approve applications for the rezoning of land and the
establishment of townships did, therefore, fall into the area of municipal
planning listed in Schedule 4B.229 After coming to this conclusion, the
Constitutional Court turned to consider whether the same powers also
fell into the broad matter of urban and rural development. The Court
held that they did not. In arriving at this conclusion, the Constitutional
Court began by noting that the term ‘urban and rural development’230
could not be interpreted in a way that included the power to approve
applications for the rezoning of land and the establishment of townships.
This is because, the Constitutional Court noted further, such an
interpretation would infringe the principles of co-operative government
which provide that each sphere of government must respect the functions
of the other spheres and must not assume any functions or powers not
conferred on them by the Constitution or encroach on the functional
integrity of the other spheres.231 An important consequence of this
approach, the Court went on to note, was that the term ‘urban and rural
development’ should be interpreted narrowly so that each sphere of
government could exercise its powers without interference by another
sphere of government.232 Having found that the term ‘urban and rural
development’ was not broad enough to include the powers that form a
part of municipal planning, the Constitutional Court then concluded that
it was not necessary to go any further and define exactly what the scope
of the functional area of urban and rural development was.233 The
Constitution confers the authority on municipalities to pass laws in
respect of the matters listed in Part B of Schedule 4 and Part B of
Schedule 5. However, it is important to note that the authority to pass
laws on the matters listed in Schedule 4B and Schedule 5B has also been
conferred on the national234 and provincial governments.235 The
authority conferred on the national and provincial governments to pass
laws on the matters listed in Schedule 4B, however, is limited by section
155(6)(a) and 155(7) of the Constitution.236 The authority conferred on
the provincial governments to pass laws on the matters listed in Schedule
5B is limited by section 155(6)(a) and 155(7) of the Constitution.237
Section 155(6)(a) of the Constitution provides in this respect that: [e]ach
provincial government … by legislative and other measures, must provide
for the monitoring and support of local government in the province. And
section 155(7) of the Constitution provides that: [t]he national
government, subject to section 44, and the provincial governments have
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). The first case in a line
of cases dealing with the need for the spheres of government to ‘respect
the constitutional status, institutions, powers and functions of
government in the other spheres’ and ‘not assume any power or function
except those conferred on them in terms of the Constitution’,238 is City of
Johannesburg Metropolitan Municipality v Gauteng Development
Tribunal and Others.239 Of specific importance to all of these cases is the
fact that Part B of Schedule 4 includes ‘municipal planning’. In the
Gauteng Development Tribunal case, the Constitutional Court held that
an important consequence of section 155(7) of the Constitution is that
neither the national nor the provincial spheres of government can, by
legislation, give themselves the power to exercise executive municipal
powers or the right to administer municipal affairs.240 This is because,
the Constitutional Court held further, the mandate of these two spheres is
ordinarily limited to regulating the exercise of executive municipal
powers and the administration of municipal affairs by municipalities.241
In other words, while the national and provincial spheres of government
are entitled to pass laws regulating the local government matters set out
in Schedule 4B and Schedule 5B, they are not entitled to pass laws giving
themselves the power to administer or implement those laws. The
municipalities themselves must exercise the power to administer or
implement those laws. In Minister of Local Government, Western Cape v
Lagoonbay Lifestyle Estate (Pty) Ltd and Others,242 the Constitutional
Court confirmed the ‘vision of robust municipal powers’ when it held:
This Court’s jurisprudence quite clearly establishes that: (a)barring
exceptional circumstances, national and provincial spheres are not
entitled to usurp the functions of local government; (b)the constitutional
vision of autonomous spheres of government must be preserved; (c)while
the Constitution confers planning responsibilities on each of the spheres
of government, those are different planning responsibilities, based on
‘what is appropriate to each sphere’; (d)‘“planning” in the context of
municipal affairs is a term which has assumed a particular, well-
established meaning which includes the zoning of land and the
establishment of townships’; and (e)the provincial competence for ‘urban
and rural development’ is not wide enough to include powers that form
part of ‘municipal planning’.243 Subsequently, in Minister of Local
Government, Environmental Affairs and Development Planning, Western
Cape v The Habitat Council and Others; Minister of Local Government,
Environmental Affairs and Development Planning, Western Cape v City of
Cape Town and Others244 the Constitutional Court was required to
decide whether ‘direct provincial intervention in particular municipal
land-use decisions is compatible with the Constitution’s allocation of
functions between local and provincial government’.245 In its decision,
the Court reiterated that ‘[m]unicipalities face citizens insistent on
delivery of governmental services, since they are the frontiers of service
delivery’.246 Accordingly, the Court held that municipalities are best
suited to make decisions regarding zoning and subdivision of land
because these are ‘localised decisions … based on information that is
readily accessible to municipalities’.247 The Court therefore determined
that it is unconstitutional and invalid for the MEC at provincial level to
decide appeals against municipalities’ planning decisions and to replace
them with its own. A case sharing similar facts to the case immediately
above is that of Tronox KZN Sands (Pty) Ltd v KwaZulu-Natal Planning
and Development Appeal Tribunal and Others.248 The Constitutional
Court emphasised that the distribution of power among the municipal,
provincial and national spheres of government constitutes the heart of
the South African constitutional dispensation.249 In asserting that
‘provincial interference in municipalities’ exclusive and constitutionally-
enshrined domain’250 is antithetical to the principles of co-operative
government, the Court confirmed the order of the High Court declaring
section 45 of the KwaZulu-Natal Planning and Development Act 6 of 2008
constitutionally invalid. Section 45 had provided that: A person who
applied for the development of land situated outside the area of a scheme
or who has lodged written comments in response to an invitation for
public comment on a proposal to develop the land, who is aggrieved by
the decision of the municipality … may appeal against the municipality’s
decision to the Appeal Tribunal. The Court was obliged to declare the
section invalid because not only was the Appeal Tribunal situated within
the provincial sphere of government, but the MEC was responsible for
appointing the members of the Appeal Tribunal, thus this Tribunal was
not independent.251 Likewise, the case of Shoprite Checkers (Pty)
Limited v Premier, Gauteng Province and Others252 unambiguously
provides that a municipality is vested with the exclusive executive
authority to consider and approve applications for the relaxation of
height limitations of all buildings situated within its municipal area.253
8.3.4.2Assigned municipal powers Sections 44(1)(a)(iii) and 104(1)(c) of
the Constitution provide that both the national and provincial
governments may increase the legislative powers of specific
municipalities or municipalities in general by assigning any of their
legislative powers to a specific municipality or to municipalities in
general. Apart from sections 44(1)(a)(iii) and 104(1)(c), sections 99 and
126 of the Constitution provide that a national or provincial Minister may
increase the executive powers of a specific municipality by assigning
their executive powers to the municipal council of that municipality. The
assignment must, however, be consistent with the Act in terms of which
the relevant power is exercised or performed.254 Finally, it is also
important to note that section 156(4) of the Constitution provides that the
national and provincial governments must assign the administration of a
matter listed in Part A of Schedule 4 or Part A of Schedule 5 to a
municipal council if certain conditions are met. These conditions are as
follows: •First, the matter necessarily relates to local government.
•Second, the matter would most effectively be administered locally.
•Third, the municipality has the capacity to administer the matter.
•Fourth, the municipal council agrees to the assignment. A key difference
between section 156(4) of the Constitution and sections 99 and 126 is that
while section 156(4) is mandatory, sections 99 and 126 are discretionary.
Section 156(4) thus reinforces the principle of subsidiarity, which requires
that the exercise of public power takes place at a level as close as
possible to the citizenry. The assignment of legislative and executive
powers It is not entirely clear how section 156(4) of the Constitution
relates to the assignment of legislative powers in terms of sections
44(1)(a)(iii) and 104(1)(c) and the assignment of executive powers in
terms of sections 99 and 126. On the one hand, it may be argued that
section 156(4) of the Constitution is an additional basis for the
assignment of both legislative and executive powers to a municipality.
This is because it refers to the national and provincial ‘governments’ and
not simply the national and provincial legislatures. On the other hand, it
may be argued that section 156(4) of the Constitution simply sets out the
circumstances under which the assignment of executive powers in terms
of sections 99 and 126 becomes compulsory. This is because it refers to
the assignment of the ‘administration’ of the matters listed in Schedules
4A and 5A in terms of an ‘agreement’ to a ‘specific municipality’. Steytler
and De Visser argue that the terms ‘administration’, ‘agreement’ and
‘specific municipality’ in section 156(4) of the Constitution all point
towards assignments that have their basis in sections 99 and 126 of the
Constitution. This means, they argue further, that section 156(4) is not an
additional basis for assignment, but rather a principle that sets out the
circumstances under which an assignment of executive powers in terms
of section 99 or 126 becomes compulsory.255 An assigning agent may set
the parameters for the exercise of the assigned authority in the legislative
act of assignment. The assignment is intended to be a complete transfer
of the function and it entails the final decision-making power in
individual matters. Accordingly, the assignment must conform to the
requirements of section 151(4) of the Constitution. The assignment of
powers and functions to municipalities by legislation or by an executive
act or by agreement is regulated by the Local Government: Municipal
Systems Act. 8.3.4.3Incidental municipal powers Section 156(5) of the
Constitution provides that a municipality has the right to exercise any
power concerning a matter that is reasonably necessary for or incidental
to the effective performance of its functions. This power is sometimes
referred to as the incidental power. The incidental power refers to those
powers that strictly speaking fall outside the matters over which a
municipality has legislative and executive authority, but are so closely
connected to the effective performance of its functions that they are
considered to be a part of the matters over which a municipality has
authority. While they are not intended to create new functional areas of
legislative and executive authority, the incidental powers do broaden a
municipality’s existing functional areas of legislative and executive
authority. Determining the subject matter of a law The matters over
which a municipality has legislative and executive authority may be
divided into three categories: •first, those set out in Schedules 4B and 5B
of the Constitution; •second, those that have been assigned to a
municipality by the national or provincial government; and •third, those
that are reasonably necessary for or incidental to the effective
performance of its functions. As the judgment in Le Sueur and Another v
eThekwini Municipality and Others256 illustrates, a municipality may
base its power to pass legislation on a particular subject matter on any
one or all three of these categories. The facts of this case were as follows.
In 2010, the eThekwini Municipal Council adopted a resolution amending
its town planning scheme to introduce the Durban Metropolitan Open
Space System (D-MOSS). This system is aimed at protecting areas that
have a high biodiversity value in Durban by creating a system of open
spaces that will link them together. To achieve this goal, the system
provides that land which falls within a D-MOSS area may not be
developed without first obtaining an environmental authorisation. Even
then, it may only be developed subject to strict controls aimed at
protecting the ecological goods and services the land provides. After the
Municipal Council had adopted this resolution, the applicant, who owned
land located in the eThekwini Municipality, applied for an order declaring
the resolution to be unconstitutional and invalid. He based his
application, among others, on the grounds that the subject matter of the
resolution was the environment, that this matter is listed in Schedule 4A
as a functional area of national and provincial legislative competence
and, consequently, that the resolution fell outside the legislative
authority of the Municipal Council. The High Court rejected this
argument. In arriving at this decision, the Court noted that the functional
area of municipal planning which is set out in Schedule 4B must be
interpreted in the light of section 24 of the Constitution.257 This section
provides that ‘[e]veryone has the right to an environment that is not
harmful to their health or wellbeing’. In addition, section 152(1)(d) of the
Constitution provides that one of the objectives of local government is to
‘promote a safe and healthy environment’. These sections clearly indicate
that the functional area of municipal planning includes responsibility
over environmental affairs.258 The Court noted further that it is clear
that legislative and executive authority over environmental matters as a
part of municipal planning has been assigned to municipalities by
national and provincial legislation.259 Section 23(1)(c) of the Municipal
Systems Act, which deals with integrated development planning at a
municipal level, for example, recognises that there is an obligation on
municipalities together with other organs of state to contribute to the
progressive realisation of the fundamental rights contained in section 24
of the Constitution.260 Apart from the grounds set out above, the Court
also appears to have accepted that the environment may be classified as
a matter that is reasonably necessary for or incidental to the effective
performance of a municipality’s municipal planning function. This is
because municipalities have traditionally been involved in regulating
environmental matters at the local level and it is inconceivable that the
drafters of the Constitution intended to exclude municipalities from
legislating in this area.261 While the decision appears to be correct, it
highlights the fact that it may not always be easy to determine whether
the subject matter of a law falls into one of the functional areas set out in
Schedules 4B and 5B, or into the incidental powers set out in section
156(5) of the Constitution. 8.3.5Conflicting national, provincial and
municipal laws Given that Parliament, the provincial legislatures and the
municipal councils all have the power to pass laws in respect of the
matters listed in Schedules 4B and 5B, it is inevitable that these laws will
on occasion conflict with one another. Conflicts between national and
provincial laws and municipal laws are resolved in terms of section
156(3) of the Constitution. This section provides simply that, subject to
section 151(4), a by-law that conflicts with national or provincial
legislation is invalid. An important consequence of this provision is that a
municipality must exercise its legislative and executive authority within
the parameters set by national or provincial legislation. In the absence of
any national or provincial law regulating a local government matter,
however, a municipality is free to determine the content of its legislative
and executive decisions. 8.3.6Supervision of local government Although
the Constitution confers legislative and executive powers on local
government, it also recognises that local government is the weakest of
the three spheres of government and often lacks the capacity to exercise
these powers. The Constitution, therefore, also provides that the manner
in which local government exercises its legislative and executive powers
must be supervised by the national and provincial spheres of
governments. These supervisory powers may be divided into four
different categories: 1.the power to monitor local government 2.the power
to support local government 3.the power to regulate local government
4.the power to intervene in local government.262 The power to monitor
local government is set out in section 155(6) of the Constitution. This
section provides that each provincial government must, by legislative or
other measures provide for the monitoring and support of local
government in the province. Provincial governments must also promote
the development of local government capacity to enable municipalities to
perform their functions and to manage their own affairs. In the First
Certification judgment, the Constitutional Court held that this power
grants the provincial governments the authority to ‘observe’ or ‘keep
under review’ the manner in which a municipality manages its affairs. It
does not, however, confer on provincial government the authority to
control the affairs of a municipality. It is accordingly the least intrusive
of all the supervisory powers.263 The power to support local government
is set out in section 154(1) of the Constitution. This section provides that
the national and provincial governments, by legislative and other
measures, must support and strengthen the capacity of municipalities to
manage their own affairs, to exercise their powers and to perform their
functions.264 In the First Certification judgment, the Constitutional
Court held that this power grants both the national and provincial
governments the authority to strengthen a municipality’s ability to
manage its affairs. It may also be used by national and provincial
governments to prevent a decline or degeneration in a municipality’s
existing structures, powers and functions.265 It is, therefore, more
intrusive than the power to monitor local government, but not as
intrusive as the power to regulate or intervene.266 The power to regulate
local government is set out in section 155(7) of the Constitution. This
section provides that both the national and provincial governments have
the legislative and executive authority to see to the effective performance
by municipalities of their functions in respect of the matters listed in
Schedules 4 and 5 by regulating the exercise by municipalities of their
executive authority. In the First Certification judgment, the
Constitutional Court held that this power grants the national and
provincial governments the authority to ‘control’ the manner in which a
municipality manages its affairs.267 It does not, however, confer on the
national and provincial governments the authority to exercise municipal
powers or perform municipal functions.268 It simply authorises the
national and provincial governments to establish a framework within
which a municipality must perform.269 It is a ‘hands-off’ and not a
‘hands-on’ power. Section 139(1) of the Constitution provides that when a
municipality cannot or does not fulfil an executive obligation in terms of
the Constitution or legislation, the relevant provincial executive may
intervene by taking any appropriate steps to ensure the fulfilment of that
obligation. The appropriate steps that the provincial executive may take
include measures such as issuing a directive, assuming responsibility and
dissolving a municipal council.270 The power to intervene in terms of
section 139(1) of the Constitution is commonly referred to as a regular
intervention. In the First Certification judgment, the Constitutional Court
explained that the power to intervene gives the provincial government
the authority to intrude on the functional terrain of local government.271
In other words, it does confer on provincial government the authority to
exercise municipal powers and perform municipal functions. It is a
‘hands-on’ power. It is, accordingly, the most intrusive power.272 Given
its intrusive nature, the circumstances under which a provincial
government can exercise this power are not only restricted, but are also
subject to various procedural requirements. The first important
safeguard is that the assumption of responsibility by the provincial or
national government must only ‘be in respect of the particular obligation
that the municipality was failing to perform’.273 Secondly, the
assumption of responsibility should be necessary to maintain essential
national standards or to meet the established minimum standards for the
rendering of services.274 Thirdly, any assumption of responsibility must
be necessary to prevent the municipal council from taking action
prejudicial to the interests of another municipality or to the province.275
Finally, the intervention must be necessary for purposes of maintaining
economic unity.276 Prior written notice to the municipality of the
intention to intervene is necessary to give effect to the fostering of
friendly relations on the basis of mutual trust and good faith. As an
absolute last resort, and only if exceptional circumstances exist, the
dissolution of the municipal council may occur. This is in terms of the
2003 amendment to the 1996 Constitution.277 Apart from regular
interventions, section 139 of the Constitution also provides for budgetary
interventions and financial crises interventions. Section 139(4) of the
Constitution governs budgetary interventions. This section provides that
if a municipality cannot or does not fulfil an obligation in terms of the
Constitution or legislation to approve a budget or any revenue-raising
measures necessary to give effect to the budget, the national or relevant
provincial executive must intervene by taking any appropriate steps to
ensure that the budget or those revenue-raising measures are approved.
The appropriate steps which the national or provincial executive may
take include measures such as the mandatory dissolution of the
municipal council and the adoption of a temporary budget or revenue-
raising measures.278 The relevant provincial executive is required to
intervene if the municipality, in breach of its constitutional or legislative
obligations, fails to approve a budget or any revenue-raising measures
necessary in order to give effect to the budget.279 This intervention must
be aimed at ensuring that the budget or revenue-raising measures are
approved. The powers of intervention include dissolving the Municipal
Council, appointing a temporary administrator until a new council has
been elected and approving a temporary budget in order to provide for
the continuing functioning of the municipality. In terms of the Municipal
Finance Management Act, the adoption of a budget is deemed pivotal to
the functioning of a municipality as a municipality may only incur
expenditure if it is in accordance with the approved budget.280 The
Constitutional Court in the Fedsure case281 held that the approval of the
budget or resolutions determining rates and taxes are regarded as
legislative acts. As the original draft of section 139 only permitted
interventions in respect of executive actions, the Provincial Executive
was not permitted to intervene where the municipality was failing to
discharge important legislative obligations. The amendment now permits
an intervention where there is a failure to approve a budget. Section
139(4) does not have the myriad of process constraints found in section
139(3). The obligation is simply to submit a written notice of the
intervention to the Minister, to the provincial legislature and to the NCOP
within seven days. Section 139(4) permits an intervention only when the
municipality fails to approve a budget or a revenue-raising measure. This
would generally be objectively verifiable and unless addressed
expeditiously could have serious consequences. Thus the basis for
intervention under section 139(4) and (5) are much narrower than section
139(1). The Provincial Executive in these circumstances needs to act
expeditiously and decisively and bring an end to a serious dereliction of
responsibility. The SCA in Premier, Western Cape and Others v Overberg
Municipality282 provided the following guidelines on how section 139(4)
should be interpreted:283 •If the municipality fails to approve a budget or
any revenue-raising measures necessary in order to give effect to the
budget in breach of its constitutional or legislative obligations, the
provincial executive is obliged to intervene and act. •The Provincial
Executive is obliged to take some steps, however there is no obligation
that it must dissolve the Council as a first step. •The Provincial Executive
may decide on the intervention that is required, but the steps taken must
be appropriate and suitable. •The steps taken by the Provincial Executive
must ensure that the annual budget is approved. •The Provincial
Executive must consider less drastic means before resorting to the
dissolution of the Council. •If the circumstances are such that less drastic
measures cannot be adopted or if these measures failed to yield results
then the Provincial Executive may proceed with the dissolution. On the
facts of the case, the Provincial Executive did not consider less drastic
means other than to dissolve the Council in order to get the budget
approved. The Court held the principle of legality requires the holder of
public power not to misconstrue that power. The Court concluded that by
misconstruing its power under section 139(4), the Provincial Executive
offended the principle of legality. In addition, the Court held that by
dissolving the Council without considering less drastic options, the
Provincial Executive acted contrary to section 41(1) of the Constitution
which requires all spheres of government to respect the constitutional
powers of other spheres and not to assume any power or function except
those conferred upon them. In the circumstances, the Court set aside the
decision of the Provincial Executive to disband the Council. Section
139(5) of the Constitution governs financial crises interventions. This
section provides that if a municipality, as a result of a crisis in its
financial affairs, is in serious or persistent material breach of its
obligations to provide basic services or to meet its financial
commitments, or admits that it is unable to meet its obligations or
financial commitments, the national or relevant provincial executive
must impose a financial recovery plan, dissolve the municipal council, or
assume responsibility for the implementation of a recovery plan.
8.4Financial affairs 8.4.1Introduction Apart from dividing legislative and
executive power between the national, provincial and local spheres of
government, the Constitution also divides fiscal powers – the power to
collect and spend public funds – between the three spheres of
government. Chapter 13 of the Constitution sets out the constitutional
provisions regulating fiscal powers. Chapter 13 is sometimes referred to
as the financial constitution. Apart from regulating the power to collect
and spend public funds, Chapter 13 of the Constitution also establishes
two important regulatory bodies, namely the central bank and the Fiscal
and Financial Commission (FFC). The power of the purse Murray and
Simeon argue that: [I]n multilevel systems of government, fiscal
federalism, or the division of revenues and expenditures among central
and provincial governments, may say as much, if not more, about how
power and influence are distributed than the constitutional text.
Constitutional competencies are meaningless without an accompanying
fiscal competence (not to mention other dimensions of competence such
as administrative capacity). Financial sticks and carrots in a centralized
financial system give the centre power to influence provincial actions
and priorities well beyond the formal allocation of authority.284 After
reading Chapter 13 of the Constitution and after assessing the financial
powers of each sphere of government, it is easier to determine which
sphere of government has been provided with more decisive powers.
From such a study, it becomes apparent that the provincial sphere of
government is less powerful than the other spheres. 8.4.2The division of
fiscal powers The division of fiscal powers between different spheres of
government gives rise to a number of difficult questions. Among these are
the following: •First, whether the power to raise revenue should be
distributed between the different spheres of government or centralised in
the national sphere. In a competitive or divided system of federalism, for
example in Canada, the power to impose taxes is usually distributed
between the different spheres of government. In a co-operative or
integrated system of federalism, such as South Africa, the power to
impose taxes is usually centralised in the national sphere of
government.285 •Second, if the power to impose taxes is centralised in
the national sphere of government, the next question that arises is how
the revenue that has been raised by the national sphere of government
should be distributed, not only between the different spheres of
government, but also within each sphere. In so far as this question is
concerned, there are a number of different approaches that may be
adopted. The transfer of funds could, for example, take the form of
conditional grants, on the one hand, or unconditional grants, on the
other.286 •Finally, there is also the question of how the decision to divide
national revenue between the different spheres of government and within
each sphere of government should be made and by whom. Should it be
made by the national sphere of government alone or should the other
spheres have a say? What about third parties? Should they be given a role
to play?287 8.4.3The collection of revenue As Kriel and Monadjem point
out, the power to collect revenue is vested primarily in the national
sphere of government.288 This is because Chapter 13 of the Constitution
restricts the power of the provincial and local spheres of government to
impose taxes. In so far as the provincial sphere of government is
concerned, section 228(1) of the Constitution provides that a provincial
legislature may impose: •taxes, levies and duties other than income tax,
value-added tax, general sales tax, rates on property or customs duties
•flat-rate surcharges on any tax, levy or duty, other than corporate
income tax, value-added tax, rates on property or customs duty. An
important consequence of these provisions is that the main sources of
revenue such as income tax, value-added tax, general sales tax, and rates
and customs duties have been expressly removed from the jurisdiction of
the provinces. The reason for the decision to restrict the power of the
provincial legislatures to impose taxes Although the power to impose
taxes promotes the principles of accountability and transparency in
government, the drafters of the Constitution decided to restrict the power
of the provincial legislatures to impose taxes. This is partly because the
drafters of the Constitution believed that the economic disparities that
already exist between the provinces would have been exacerbated if
significant taxing powers were given in the provinces. Apart from the
provisions set out above, section 228(2) of the Constitution also provides
that a provincial legislature’s power to impose taxes, levies, duties and
surcharges may not be exercised in a way that materially and
unreasonably prejudices national economic policies, economic activities
across provincial boundaries, or the mobility of goods, services, capital or
labour. In addition, a provincial legislature’s power to impose taxes must
be regulated by an Act of Parliament which may be passed only after any
recommendations made by the FFC have been considered.289 The Act of
Parliament referred to in this section is the Provincial Tax Regulation
Process Act.290 The Provincial Tax Regulation Process Act restricts a
provincial legislature’s power to introduce a new provincial tax. This is
because it essentially provides that if a province wishes to introduce a
new provincial tax, it must first submit a proposal to the Minister of
Finance who, after consulting the Budget Council, must introduce a Bill
into the NA to regulate the new provincial tax. Given the restrictions
imposed by this Act, it is not surprising that no new provincial taxes have
ever been introduced. In so far as municipalities are concerned, section
229(1) of the Constitution provides that a municipality may impose:
•rates on property and surcharges on fees for services provided by or on
behalf of the municipality •if authorised by national legislation, other
taxes, levies and duties appropriate to local government or to the
category of local government into which the municipality falls. Like the
provincial legislatures, however, municipalities may not impose income
tax, value-added tax, general sales tax or customs duty. Apart from the
provisions set out above, section 229(2) of the Constitution also provides
that a municipality’s power to impose rates on property, surcharges on
fees or other taxes, levies or duties may not be exercised in a way that
materially and unreasonably prejudices national economic policies,
economic activities across provincial boundaries, or the mobility of
goods, services, capital or labour. In addition, a municipality’s power to
impose rates on property, surcharges on fees or other taxes, levies or
duties may be regulated by national legislation which may be passed only
after organised local government and the FFC have been consulted and
any recommendations made by the FFC have been considered.291 The
national legislation referred to in this section is the Local Government:
Municipal Property Rates Act292 and the Municipal Fiscal Powers and
Functions Act.293 The Municipal Property Rates Act regulates the
municipalities’ power to levy property rates and the Municipal Fiscal
Powers and Functions Act regulates their power to levy surcharges on
fees. Determining when property is state property Section 3(3)(a) of the
Rating of State Property Act (Rating Act)294 provides that a municipality
may not impose rates on state property that is held by the state in trust
for the inhabitants of an area that falls into the jurisdiction of a
municipality. In Ingonyama Trust v eThekwini Municipality,295 the SCA
had to decide whether land owned by the Ingonyama Trust fell into
section 3 of the Rating Act and was therefore exempt from paying
property rates to the eThekwini Municipality. The Ingonyama Trust was
established in terms of the KwaZulu-Natal Ingonyama Trust Act.296 It
owns all the land that was previously owned by the government of
KwaZulu and is administered by a board made up of the Ingonyama and
eight other members appointed by the Minister of Land Affairs. The key
issue that the SCA had to decide was whether the land owned by the
Ingonyama Trust could be classified as state property. The Court held
that it could and, consequently, that the Trust was exempt from paying
rates in terms of section 3 of the Rating Act.297 In arriving at this
decision, the SCA noted that the land owned by the Ingonyama Trust
could be defined as state property because the Trust itself could be said
to be a part of the state.298 The SCA gave the following reasons why the
Trust could be said to be a part of the state: •First, eight of the nine
trustees were appointed by the Minister of Land Affairs who also had the
power to make regulations governing the affairs of the Trust.299
•Second, the cost of administering the Trust had to be paid by the
Department of Land Affairs.300 •Third, the financial statements of the
Trust had to be audited by the Auditor-General. •Fourth, an annual
report on the activities of the Trust had to be submitted to the Minister of
Land Affairs by the accounting authority of the Trust.301 •Last, the land
owned by the Trust was defined as state land by Parliament in a number
of other statutes, for example the National Veld and Forest Fire Act,302
the National Forests Act303 and the South African Schools Act.304
8.4.4The distribution of revenue Although the Constitution restricts the
power of the provincial and local spheres of government to impose taxes
and thus to raise revenue, it compensates them for this loss by granting
them a right to an equitable share of revenue collected nationally. Section
214(1) of the Constitution provides in this respect that an Act of
Parliament must provide for: •the equitable division of revenue raised
nationally among the national, provincial and local spheres of
government •the determination of each province’s equitable share of the
provincial share of that revenue •any other allocations to provinces, local
government or municipalities from the national government’s share of
that revenue, and any conditions on which those allocations may be
made.305 The Act referred to in section 214(1) of the Constitution is the
annual DORA (the budget). Section 214(2) of the Constitution provides
that the DORA may be passed only after the provincial governments,
organised local government and the Financial and Fiscal Commission
(FFC) have been consulted and any recommendations made by the FFC
have been considered. In addition, section 214(2) of the Constitution also
provides that the DORA is required to take into account: (a)the national
interest; (b)any provision that must be made in respect of the national
debt and other national obligations; (c)the needs and interests of the
national government, determined by objective criteria; (d)the need to
ensure that the provinces and municipalities are able to provide basic
services and perform the functions allocated to them; (e)the fiscal
capacity and efficiency of the provinces and the municipalities;
(f )developmental and other needs of provinces, local government and
municipalities; (g)economic disparities within and among the provinces;
(h)obligations of the provinces in terms of national and provincial
legislation; (i)the desirability of stable and predictable allocations of
revenue shares; and ( j)the need for flexibility in responding to
emergencies or other temporary needs, and other factors based on similar
objective criteria. While regard must be had for the need of the provinces
to be able to provide basic services and carry out their developmental
objectives, the criteria set out in section 214(2) place a heavy emphasis
on the importance of national objectives and priorities. The listing
appears to suggest that the other criteria will be evaluated through the
prism of national objectives. The process preceding the adoption of the
DORA is set out in the Intergovernmental Fiscal Relations Act.306 At least
10 months before the start of each financial year, the FFC must submit
recommendations for an equitable division of revenue raised nationally
between the three spheres of government as well as each province’s share
of the provincial share of national revenue to the Minister of Finance,
Parliament and the provincial legislatures.307 After receiving the FFC’s
recommendations, the Minister of Finance must consult with the FFC
itself, the provinces, either in the Budget Council or in some other way,
and organised local government, either in the Budget Forum or in some
other way.308 The Budget Council and the Budget Forum are statutory
bodies established by the Intergovernmental Fiscal Relations Act to
facilitate intergovernmental consultation with respect to fiscal
matters.309 Once these consultations have taken place, the Minister of
Finance must introduce the annual Division of Revenue Bill in the NA at
the same time that the annual budget is introduced. The equitable share
allocated to each sphere of government as well as each province’s share
of the provincial share of national revenue must be set out in this Bill.310
The DORA begins by dividing the revenue raised nationally between the
three spheres of government. It then goes on to divide the provincial
share of revenue raised nationally between the provinces and finally it
divides the municipal share of revenue raised nationally between the
municipalities. The amounts allocated to each province and each
municipality are based on different formulae. These formulae are made
up of a number of different components.311 Finally, it is important to
note that although the equitable share of national revenue is supposed to
be an unconditional grant, there are some restraints on the manner in
which the provinces may spend this money. Section 227 of the
Constitution, for example, states that ‘each province is entitled to an
equitable share … to enable it to provide basic services and perform the
functions allocated to it’. Provinces, therefore, must use the equitable
share to provide basic services and perform the functions allocated to
them. 8.4.5The budgetary process Section 215(1) of the Constitution
provides that the national, provincial and municipal budgetary processes
must promote transparency, accountability and the effective financial
management of the economy, debt and the public sector. In addition,
section 215(2) of the Constitution provides that national legislation must
prescribe the form of national, provincial and municipal budgets; when
national and provincial budgets must be tabled; and that budgets in each
sphere of government must show the sources of revenue and the way in
which proposed expenditure will comply with national legislation.
Budgets in each sphere of government must also contain: •estimates of
revenue and expenditure, differentiating between capital and current
expenditure •proposals for financing any anticipated deficit for the
period to which they apply •an indication of intentions regarding
borrowing and other forms of public liability that will increase public
debt during the ensuing year.312 As the Constitutional Court pointed out
in the Premier: Limpopo Province case,313 the Public Finance
Management Act (PFMA)314 deals with public finance. To help achieve
the objects of section 215 of the Constitution, section 27(1) of the PFMA
provides that the Minister of Finance must table the annual budget for
the financial year before the start of that financial year. In addition, the
MEC for Finance in each province must table an annual provincial budget
within two weeks of the Minister’s budget speech unless an extension has
been granted by the Minister of Finance.315 Section 27(3) provides that,
among other factors, the annual budget must contain: •estimates of all
revenue expected to be raised during the financial year •estimates for the
current expenditure for that financial year •estimates of interest and
debt servicing charges •any repayments on loans •estimates of capital
expenditure for that financial year and projected financial implications of
that expenditure for future financial years •estimates of all direct charges
against the relevant revenue fund and standing appropriations for that
financial year •proposals for financing any anticipated deficit in that
financial year. Apart from helping to achieve the objects of section 215 of
the Constitution, the PFMA is also aimed at fulfilling the obligations
imposed on Parliament by section 216 of the Constitution. Section 216
provides that national legislation must establish a national treasury and
prescribes measures to ensure both transparency and expenditure control
in each sphere of government by introducing generally recognised
accounting practices, uniform expenditure classifications and uniform
treasury norms and standards. Although section 216 of the Constitution
imposes an obligation on Parliament to establish a national treasury and
not provincial treasuries, the PFMA makes provision not only for a
national treasury, but also for a provincial treasury in each province. The
Minister of Finance heads the National Treasury which comprises those
departments that are responsible for financial and fiscal matters.316 The
main functions of the National Treasury are to: •promote the national
government’s fiscal policy framework •co-ordinate macroeconomic
policies •co-ordinate intergovernmental financial and fiscal relations
•manage the budget preparation process •exercise control over the
implementation of the annual budget •facilitate the implementation of
the annual DORA •monitor the implementation of the provincial budget
•promote and enforce transparency and effective management in respect
of revenue, expenditure, assets and liabilities of departments, public
entities and constitutional institutions.317 In terms of section 11 of the
PFMA, the National Treasury is also in charge of the National Revenue
Fund. The National Revenue Fund is established in terms of section 213
of the Constitution. This section provides that all money received by the
national government, except money excluded by an Act of Parliament,
must be paid into the fund. In addition, it also provides that money may
be withdrawn from the National Revenue Fund only in terms of an
appropriation by an Act of Parliament or a direct charge against the
National Revenue Fund when it is provided for in the Constitution or an
Act of Parliament. A province’s equitable share of national revenue is a
direct charge against the National Revenue Fund. The provincial treasury
for each province is headed by the MEC for Finance in the province and
the provincial department responsible for financial matters in each
province.318 The main functions of each provincial treasury are to:
•prepare a provincial budget •exercise control over the implementation of
the provincial budget •promote the transparent and effective
management in respect of revenue, expenditure, assets and liabilities of
the provincial departments and provincial public entities •ensure that its
fiscal policies do not materially and unreasonably prejudice national
economic policies.319 In terms of section 21 of the PFMA, each provincial
treasury is in charge of the Provincial Revenue Fund for its province.
Provincial Revenue Funds are established in terms of section 226 of the
Constitution. This section provides that all money received by a
provincial government, except money excluded by an Act of Parliament,
must be paid into the Provincial Revenue Fund. In addition, it also
provides that money may be withdrawn from a Provincial Revenue Fund
only in terms of an appropriation by a provincial Act or a direct charge
against the Provincial Revenue Fund when it is provided for in the
Constitution or a provincial Act. Revenue allocated to local government
in terms of section 214 of the Constitution is a direct charge against a
Provincial Revenue Fund. 8.4.6The central bank Section 223 of the
Constitution provides that the Reserve Bank is the central bank of the
Republic and that it must be regulated in terms of an Act of Parliament.
The Act referred to in this section is the South African Reserve Bank
Act.320 In terms of section 224(1) of the Constitution, the ‘primary object
of the South African Reserve Bank is to protect the value of the currency
in the interest of balanced and sustainable economic growth …’. In
addition, section 224(2) also provides that the bank is obliged to function
independently and without fear, favour or prejudice, but must consult
regularly with the Minister of Finance. The Reserve Bank plays a key role
in the management of the money and banking system. The Reserve Bank
describes this role as follows: •The formulation and implementation of
monetary policy: Monetary policy refers to the measures taken to
influence the quantity of money and the rate of interest in the country.
This assists is ensuring stability of prices and seeks to promote
employment and economic growth. The Reserve Bank sets the interest
rates at which other banks can borrow money and this ultimately
determines the interest that consumers pay in respect of their debts such
as mortgage bonds. •The provision of liquidity to banks: When banks face
a liquidity problem as a result of a temporary shortage of cash, the
Reserve Bank provides liquidity to these banks on a conditional and
temporary basis. The main purpose of this assistance is to prevent banks
going into bankruptcy and people losing their savings and deposits that
they invested in the banks. •Bank notes and coins: The Reserve Bank has
the exclusive authority to issue and destroy bank notes and coins in the
country. •Banker of other banks: The Reserve Bank is the custodian of
the cash reserves that banks are legally required to hold.321 The Reserve
Bank thus plays a vital role in the formulation and implementation of
economic policies. Its decisions have a direct impact on the lives of
people. Importantly, the policy decisions of the Reserve Bank and the
government in power may not always coincide and it is for this reason
that the independence of the Bank is entrenched. The Reserve Bank is
meant to act is the best interests of the economy of the country and to be
shielded from having to act in accordance with the popular will. The
importance of the Reserve Bank to the economy of the country was
recognised by the full bench of the High Court in Absa Bank Limited and
Others v Public Protector.322 The Court held that one of the functions of
the Reserve Bank was to act as a lender of last resort and prevent
instability in the banking sector. Powers of this nature are exercised
internationally by central banks. Importantly, the Court noted that these
powers and functions are exercised by experts with specific skill and
competence in financial matters. The Court went on to hold that other
organs of state such as the Public Protector should not lightly interfere
with the exercise of these discretionary powers. 8.4.7Procurement
8.4.7.1Introduction Section 217 of the Constitution makes it imperative
for an organ of state in the national, provincial or local sphere to contract
for goods and services in a manner that is fair, equitable, transparent,
competitive and cost-effective. However, organs of state are not
prevented from implementing a procurement policy providing for
categories of preferences in the allocation of contracts and the protection
or advancement of persons or categories of persons previously
disadvantaged by unfair discrimination.323 The section goes on to
require national legislation to be enacted to prescribe a framework to
implement the policy of preference to previously disadvantaged persons.
The Preferential Procurement Policy Framework Act (PPPFA)324 is the
empowering legislation that seeks to achieve this objective. In
Millennium Waste Management (Pty) Ltd v Chairperson of the Tender
Board: Limpopo Province and Others,325 the SCA required tenders to be
evaluated in a manner that advances the five constitutional values
identified in section 217 of the Constitution. In this case, the appellant
had submitted its tender which met all the specifications of the
advertisement. However, the appellant had inadvertently omitted to sign
the declaration of interest, but had inserted the name of the relevant
person and had filled in the relevant information. A tender committee on
behalf of the Limpopo Department of Health and Social Development
disqualified the applicant and finally awarded the tender to a consortium
called TTP. A particularly concerning aspect was that TTP’s bid for the
removal, treatment and disposal of hospital waste was R3 600 000 per
month which was significantly more than appellant’s tender which would
have cost the Department R400 000 per month. The Tender Board argued
that the signing of the declaration of interest was peremptory and as the
appellant had not signed it, the Tender Board was obliged to disqualify
the appellant. The SCA held that the decision to award the tender was
administrative action and had to comply with the provisions of the
Promotion of Administrative Justice Act (PAJA),326 with section 217 of
the Constitution and with the PPPFA.327 Interpreting the regulations in
terms of which the Tender Board was acting, the SCA held that the Tender
Board had the power to condone non-compliance with procedural defects
in the application.328 However, the SCA went on to hold that ‘our law
permits condonation of non-compliance with peremptory requirements in
cases where condonation is not incompatible with public interest and if
such condonation is granted by the body in whose benefit the provision
was enacted’.329 The SCA stated further that the condonation of the
failure to sign would have been in the public interest as it would have
facilitated competitiveness.330 A condonation in this instance would
have served the broader constitutional values of fairness, competiveness
and cost-effectiveness.331 Importantly, the SCA held that whether the
appellant’s tender constituted an acceptable tender in terms of the PPPFA
must be construed in the context of a system that is fair, equitable,
transparent, competitive and cost-effective.332 In other words, the
constitutional values must be the prism through which the enabling
legislation must be interpreted. The SCA held the term ‘tender’ must be
given a relatively narrow meaning and cannot mean that the tender must
comply with conditions which are immaterial, unreasonable or
unconstitutional.333 The SCA concluded that by insisting on
disqualifying the appellant for an innocent omission, the Tender Board
had acted unreasonably.334 The SCA set aside the decision of the Tender
Board and ordered the Tender Board to reconsider and adjudicate on the
bids submitted by the appellant and TTP afresh. The Court thus assessed
the entire tender process against the five values identified in the
Constitution and not just the final evaluation process of the shortlisted
candidates. When is condonation permissible? Assume that the price
differential was not as stark and assume that tenderer B had submitted
their tender a day after the date stipulated in the advertisement.
Tenderer B tendered to remove hospital waste for R400 000 per month
and the successful tenderer (Tenderer A) quoted R1 million per month. In
all other respects, the tenders are similar. Does the Millennium Waste
Management case allow a tender board to entertain the late submission
of the tender by tenderer B? Alternatively, could such an option not be
used to overlook all sorts of non-compliance and in the final analysis be
contrary to the values in the Constitution? In Minister of Social
Development and Others v Phoenix Cash & Carry Pmb CC,335 the SCA
once again reiterated that the five principles of fairness, equitable
treatment, transparency, competitiveness and cost-effectiveness must
inform all aspects of the tender process. In a frank judgment, the SCA
directly questioned the legitimacy of the process that led to the
appellants being denied the tender and in a damning indictment indicated
that from its experience drawn from matters before the Court, the values
of section 217 are honoured more in their breach than in their
observance.336 The facts of this case were as follows. Bids were invited
to supply food hampers to indigent families in KwaZulu-Natal and in the
Eastern Cape. The price of the bid submitted by Phoenix was
approximately 40% less than that submitted by the successful tenderer.
In response to a request for reasons, the department indicated that it had
evaluated the bids and that Phoenix was unsuccessful. Subsequently, the
department attempted to supplement their reasons by stating that
Phoenix had not complied with certain prerequisites. The SCA found that
the department in excluding the bid by Phoenix had elevated form above
substance.337 Had it properly appraised the documents submitted, it
would have concluded that the material issues dealing with financial
viability had been dealt with even though no audited statements were
submitted.338 Accordingly, the SCA held that the process was
fundamentally flawed and set aside the decision. In an effort to prevent
such a fundamentally flawed process from being repeated, the Court laid
down the following principles: •It is against the principle of fairness for
the tender process to be evaluated on the basis of uncertain criteria
which could have the effect of meritorious applicants being excluded. •A
process that emphasises form over substance could have the effect of
facilitating corrupt practices by providing an excuse not to consider
meritorious tenders and by excluding them on technicalities. This is often
inimical to fairness, competitiveness and cost-effectiveness. •The tender
board can prescribe formalities, provided the requirements are made
clear and the consequences of non-compliance spelt out.339 •The SCA
cautioned against unreasonably elevating matters of subsidiary
importance to a level of primary importance and then deeming non-
compliance to be fatal to the bid.340 Section 217 of the Constitution must
be read with section 5 of the PAJA which requires a functionary to
provide adequate reasons for administrative decisions which materially
and adversely affect rights if requested. Once reasons are provided, the
decision can be appraised against the constitutional criteria in section
217. In the Phoenix Cash & Carry case, the reasons supplied were
woefully inadequate and the supplementary reasons confirmed that, at
best, an unreasonable and irrational decision had been made. The tenor
of the judgment appears to suggest that the irrationality bordered on
improper conduct. What is apparent from these decisions is that while
price may not be the decisive factor, massive disparities in pricing will
weigh with the court when determining whether a public body has
discharged its ultimate mandate of acting in the public good. It would be
advisable therefore that if the successful tenderer’s contract price is
much more expensive than the unsuccessful tenderer, that the reasons
provided deal with the disparity in price and justify the decision to award
the tender despite the price difference. The issue of whether
inconsequential irregularities can be disregarded was considered by the
Constitutional Court in Allpay Consolidated Investment Holding (Pty) Ltd
and Others v Chief Executive Officer of the South African Social Security
Agency and Others341 in which Allpay, the unsuccessful bidders,
challenged the legality of awarding the tender to Cash Paymaster
Services. The SCA held that ‘a fair process does not demand perfection
and that not every flaw is fatal’. 342 It went on to state that ‘[i]t would be
gravely prejudicial to the public interest if the law was to invalidate
public contracts for inconsequential irregularities’. Thus, it appeared that
the SCA was suggesting that irregularities that were inconsequential to
the final decision or outcome could be ignored. The Constitutional Court
disagreed, and held that the suggestion ‘that “inconsequential
irregularities” are of no moment conflates the test for irregularities and
their import’.343 The Constitutional Court took the view that process
requirements cannot be conflated with the merits, and went on to hold:
To the extent that the judgment of the Supreme Court of Appeal may be
interpreted as suggesting that the public interest in procurement matters
requires greater caution in finding that grounds for judicial review exist
in a given matter, that misapprehension must be dispelled. So too the
notion that even if proven irregularities exist, the inevitability of a
certain outcome is a factor that should be considered in determining the
validity of administrative action. 344 The Constitutional Court held that
complying with process formalities serves three purposes: (a)It ensures
fairness to the participants in the bid process. (b)It enhances the
likelihood of efficiency and optimality in the outcome. (c)It serves as a
guardian against a process skewed by corrupt influences. This approach
accords with the imperative in section 217 of the Constitution that organs
of state, when contracting for goods or services, must do so in a fair,
equitable, transparent, competitive, and cost-effective manner. However,
it is apparent from the Constitutional Court judgment in AllPay that the
irregularity and non-compliance must be material. The court suggested
that the proper approach involves a two-pronged analysis: •Firstly, it
must be determined whether an irregularity or non-compliance has
occurred. •Secondly, if so, such irregularity or non-compliance must be
legally evaluated to ascertain whether such irregularity or non-
compliance would amount to a ground of review under PAJA. Dealing
with disparities in price When a tender is awarded to a body that did not
submit the lowest tender, the state is paying more for a service or
product. Assume that Cleaners Incorporated, a group of female cleaners
who have been cleaning the officers of the KZN Provincial Administration
for the last five years, form a consortium and bid for a new provincial
government cleaning contract against their previous employers,
Sparkling Clean CC. Most members of Cleaners Incorporated are African
female and many of them are sole breadwinners. Their bid is R10 000
more a month to clean the buildings than the corresponding offer by
Sparkling Clean, which is a national company. Should the government
procurement policy be used to bridge the economic disparity in our
society or should government attempt to obtain the maximum value for
its rands given the demands on a limited budget? 8.4.7.2The Preferential
Procurement Policy Framework Act 5 of 2000 While section 217(1) of the
Constitution imposes an obligation to act in terms of a system that
accords with the five principles, section 217(2) permits public bodies to
implement a preferential procurement policy. The PPPFA requires organs
of state to determine a preferential procurement policy and to implement
it.345 Section 2 of the PPPFA draws a distinction between contracts above
the prescribed amount346 and contracts below the prescribed amount. In
respect of contracts above the prescribed amount, a maximum of 10
points may be allocated for the specific goals identified in the PPPFA
while in respect of contracts below the prescribed amount a maximum of
20 points may be allocated for the specific goals. The specific goals relate
to contracting with people who were historically disadvantaged by unfair
discrimination on the basis of race, gender, sex or disability or for the
purposes of implementing the Reconstruction and Development
Programme. The points allocated must be out of 100. The process
envisaged by the PPPFA is that: •persons are invited to tender in respect
of a formal tender proposal •all applications are assessed in terms of
evaluation criteria specifically identified in the tender proposal •the
various bids are ranked in terms of each evaluation criteria.347
Previously the body scoring the highest points was allocated the tender.
Thus, the PPPFA and the regulations of 2011 adopted a fairly rigid system
to ensure that price is allocated the overwhelming segment of the points,
but that equity issues are not ignored. However, in terms of the 2017
regulations to the PPPFA348 (which repealed the 2011 regulations), far
more flexibility is conferred on organs of state. Examples of this
flexibility include the fact that as a result of the case of South African
National Road Agency Ltd v The Toll Collect Consortium and Another,349
as read with Regulation 9(2), it is now compulsory for organs of state to
specify ‘objective criteria’ upfront in the tender advertisement. These
objective criteria encompass such aspects as the intention to use
procurement to promote local industrial development, the imperative of
achieving socio-economic transformation and the empowerment of small
business enterprises, rural and township enterprises, as well as co-
operatives. Furthermore, Regulation 9 authorises an organ of states to
insert a condition into the tender advertisement to the effect that the
successful bidder is required to subcontract a minimum of 30% of the
value of its bid to designated groups as stipulated in Regulation 4. A third
example is that Regulation 6(9) and 7(9) provide that ‘If the price offered
by a tender scoring the highest point is not market-related, the organ of
state may not award the contract to that tender’. Therefore, the organ of
state is now empowered to negotiate a market-related price with the
bidder that has scored the highest points. If these negotiations fail, the
organ of state may negotiate with the second highest scoring bidder or
even the third highest scoring bidder. A tender may only be cancelled if
no agreement is able to be reached. SUMMARY The Constitution does not
only divide power vertically, but also horizontally between the national,
provincial and local spheres of government. This horizontal division of
power establishes a quasi-federal system of government. Power is divided
largely according to an integrated model of federalism in which the
subject matters in respect of which policies and laws may be made are
not strictly divided between the different levels or spheres of government
but are shared between them. To ensure that this system works
optimally, the Constitution also establishes the principle of co-operative
government, requiring the various spheres of government to work
together regardless of the political party in power nationally, provincially
or at local government level. The National Council of Provinces (NCOP),
the second House of the national legislature, plays an important role in
co-ordinating the legislative activities of the three spheres of government.
The structures of government for the nine provinces largely mirror that of
the national sphere. A Premier elected by the provincial legislature heads
the provincial executive and can also be removed by the provincial
legislature. A province has executive authority in terms of those
functional areas listed in Schedules 4 (concurrent powers shared with the
national executive) and 5 (exclusive powers) of the Constitution.
Provincial legislatures operate largely in the same manner and according
to the same principles as the national legislature. However, provincial
legislatures only have one House and not two although their interests are
represented in the NCOP at national level. When both the national
legislature and the provincial legislature pass legislation on one of the
areas listed in Schedule 4, the provincial legislation shall prevail except if
one of the criteria set out in section 146 of the Constitution is present in
which case the national legislation shall prevail. It will only be
permissible in exceptional circumstances for the national legislature to
pass legislation relating to one of the areas exclusively reserved for
provinces in Schedule 5 if this is authorised by section 44(2) of the
Constitution. When determining whether the subject matter of a Bill falls
within Schedule 4 or Schedule 5, we must apply the pith and substance
test. This test must be distinguished from the substantial measure test
used to decide how to tag a national Bill to decide on the procedure to be
used to pass it. In the constitutional dispensation, local government
fulfils an important role. Municipalities thus enjoy original and
constitutionally entrenched powers, functions, rights and duties that may
be qualified or constrained by law and only to the extent to which these
are set out in section 152(1) of the Constitution. Section 155 of the
Constitution distinguishes between three different categories of
municipalities, namely: •category A municipalities with exclusive
municipal executive and legislative authority in their area and which are
referred to as metropolitan municipalities •category B municipalities
which share their municipal executive and legislative authority in their
area with a category C municipality and which are referred to as local
municipalities •category C municipalities with municipal executive and
legislative authority in an area which includes more than one
municipality and which are referred to as district municipalities. The
Constitution determines that a municipality has executive authority in
respect of and has the right to administer the local government matters
listed in Part B of Schedule 4 and Part B of Schedule 5 and any other
matter assigned to it by national or provincial legislation. In addition,
municipalities may make and administer by-laws for the effective
administration of the matters which they have the right to administer.
Conflicts between national and provincial laws and municipal laws are
resolved in terms of section 156(3) of the Constitution. This section
provides simply that, subject to section 151(4), a by-law that conflicts
with national or provincial legislation is invalid. An important
consequence of this provision is that a municipality must exercise its
legislative and executive authority within the parameters set by national
or provincial legislation. In the absence of any national or provincial law
regulating a local government matter, however, a municipality is free to
determine the content of its legislative and executive decisions. The
financial arrangements in the Constitution tilt power decisively in favour
of the national sphere of government as the power to collect revenue is
vested primarily in the national sphere of government. This is because
Chapter 13 of the Constitution restricts the power of the provincial and
local spheres of government to impose taxes. Although the Constitution
restricts the power of the provincial and local spheres of government to
impose taxes and thus to raise revenue, it compensates them for this loss
by granting them a right to an equitable share of revenue collected
nationally. Section 215(1) of the Constitution provides that the national,
provincial and municipal budgetary processes must promote
transparency, accountability and the effective financial management of
the economy, debt and the public sector. Section 217 of the Constitution
also makes it imperative for an organ of state in the national, provincial
or local sphere to contract for goods and services in a manner that is fair,
equitable, transparent, competitive and cost-effective.

MLA 9th Edition (Modern Language Assoc.)

Pierre de Vos, et al. South African Constitutional Law in Context Second
Edition. Oxford University Press Southern Africa, 2021.

APA 7th Edition (American Psychological Assoc.)

Pierre de Vos, Warren Freedman, Zsa-Zsa Boggenpoel, Lisa Draga,
Christopher Gevers, Kathy Govender, Patricia Lenaghan, Sindiso Mnisi
Weeks, Catherine S. Namakula, & Nomthandazo Ntlama. (2021). South
African Constitutional Law in Context Second Edition: Vol. Second
edition. Oxford University Press Southern Africa.