With reference to the SALGA Circulars 52 and 55 issued on the 13th of November 2009 and 7 December 2009 respectively, we confirm that the Independent Commission for the Remuneration of Public Office Bearers (“the Commission”) on 12 November 2009 recommended that the upper limit of the annual remuneration of members of local government institutions be increased by 8% for the financial year commencing 1 July 2009. However, the President of the Republic by Government Gazette on 23 November 2009 approved the annual remuneration of Public Office Bearers to be 7%.

In order that the remuneration of councillors is still benchmarked against public office bearers in the provincial sphere of government we are pleased to advise that the Minister of Cooperative Governance and Traditional Affairs has now promulgated the notice to give effect to the aforementioned.

The Minister signed the determination and this was promulgated on 21 December 2009 in the Government Gazette No.32833.

1.         Key features of the Notice

Certain key features of the notice are the following:

(a)     An across the board percentile increase in salaries, allowances and benefits of 7% per annum effected retrospectively from the 1st of July 2009 and the prior determination (i.e. 8 December 2008) is repealed with effect from the 1st of July 2009; and

(b)     Remunerating part-time Plenary Type Mayors similar to part-time Mayors/Executive Mayors effected retrospectively from the 1st of July 2009.

2.         Implementation

2.1        Municipal managers in particular should note that they may not implement the upper limits before their councils have considered a report on the upper limits and have resolved on the levels of remuneration which will apply in that municipality. This consideration must occur with regard to the financial year (in this instance 2009/10) within which the payments will have to be made, and the affordability thereof for municipalities. This implies that the budget for the year in question must reflect the liability to pay the level of remuneration determined by the council and this must in turn be cash funded.

Further, before implementation, it is necessary for a council to consult with the MEC responsible for Local Government in its province, motivating the affordability and demonstrating that the liability has been budgeted for. Failure to follow the above steps will result in an adverse opinion being expressed by the Auditor General.

2.2        In instances where a council has not made the necessary budgetary provisions to support increased remuneration, it will nevertheless be necessary for it to consider the determination and resolve specifically not to increase the remuneration payable. This is necessary because the former Government Notice of the 8th of December 2008 was repealed with effect from the 1s^t of July 2009. Accordingly, payment of remuneration to councillors after the 1st of July 2009 is now only lawful in terms of the determination published on the 8th of December 2009 and councils must consider it accordingly.

2.3        It will be necessary for councils to apply the formula contained in paragraphs 2, 3 and 4 of the gazette, in order to determine which grade of municipality they are. It should be noted that this formula applies to local, district and metropolitan municipalities. As was the case with the 8th December 2008 Notice, the formula is based on total population within the municipal area (defined as the latest available official statistics for population as determined by the Statistician General in terms of the Statistics Act). The other component is “total municipal income” which is fully defined in the definition section. In summary this effectively means own income and exclude transfers and / or grants from the national fiscus, with the exception of those provided in replacement of RSC levies, which are included in municipal income.

2.4        The upper limits of the annual total remuneration package of various categories of fulltime councillors are contained in paragraph 5 of the gazette. It should be noted that the amount contained under “total remuneration” in the table in paragraph 5 is the maximum which may be received by a councillor and includes all allowances, save for amounts claimed in terms of paragraph 6 (a)(ii), 6 (c) and cell phone allowances provided in terms of paragraph 10, which are additional to the total remuneration.

2.5        The upper limits for part time councillors are set out in paragraph 8 of the determination.

As it relates to local government, the Commission in its 2009/10 recommendations gazetted on 12 November 2009 recommended that the “total remuneration for councillors includes the following elements:-

1.       A basic salary component equal to 60% of the total package, which constitutes the pensionable salary;

2.       An amount of R120 000 per annum determined as the amount to which section 8(1)(d) of the Income Tax Act, 1962, applies. The amount is included in the basic salary component;

3.       A flexible portion of the remaining amount of the total remuneration”.

Kindly take note that the aforementioned recommendations by the Commission have not been included in the attached Notice. This as well as other challenges consistently highlighted by SALGA in our comments on the draft Notice are subject to a process of consultation with the Department of Cooperative Governance and Traditional Affairs.

Any questions regarding the implementation of the upper limits should be directed to Provincial Executive Officers of SALGA at provincial offices or to Lance Joel (ljoel@salga.org.za) at SALGA National (012 369 8077 / 0829083335).

The detailed Circular together with the 21 December 2009 Upper Limits Notice and the SALGA Comments is available under the Newsroom link above.