Municipal fees becoming too high

Pretoria – In the quarter to end-December South African consumers paid almost 46% more for municipal services than they had in the corresponding period a year earlier.

The biggest increases were in Limpopo (150%), Mpumalanga (145%) and the Eastern Cape (121%), with the pockets of those in the Northern Cape (80%) also being seriously affected.

The smallest increases were in the Western Cape (21%), Gauteng with 29% and KwaZulu-Natal with 31%. In North West revenue from consumers rose 58% and in the Free State 60%.

These figures were disclosed by national Treasury on the basis of reports from the municipalities themselves. Sake24 compared the latest figures with those that the same local authorities had reported the year before.

Total income from consumers in the quarter to end-December was R47.6bn.

Economists.co.za chief economist Mike Schüssler said these increases were based on anything from the fee for borrowing a library book to development contributions from property developers and charges for outdoor advertising.

In a previous test sample Sake24 found that the costs of, for instance, bus services, electrical connections and outdoor advertisements had increased by multiples in various municipalities.

Municipalities were demanding an ever-increasing portion of South Africans’ income, but service delivery was continuously declining, said Schüssler.

But this had a small weighting in the inflation basket and was therefore not properly reflected in the official inflation rate of 3.7%, he said.

Meanwhile municipal debtors had increased to R62.3bn, compared with the R56.3bn reported for the previous year – an increase of 10.6%. Amid problems with its accounting system Johannesburg’s debtors had climbed almost 20%.

Despite the fact that people were unable to pay, municipalities’ income was increasing, said Schüssler.

Newcastle DA Councillor Koos Vorster, who has for years been involved in municipal budgets, said municipalities were busy pricing themselves out of the market. The number still able to pay was shrinking, but it was being increasingly taxed.

He said that in Newcastle 72% of its 500 000 residents, for example, earned less than R3 200 a month.

If one took a look at one of the poorer residential areas, Madadeni, with an average property valuation of R90 000, and where 90% of the residents earned less than R5 000 a month, the average municipal account in the new financial year would be R570 a month, plus about R450 for prepaid electricity.

Can someone earning less than R5 000 a month spend more than R1 000 on municipal services, he asked.

Vorster said the people of Madadeni were not unwilling to pay their municipal accounts, but more than half were in arrears and paid only some of the outstanding amount each month. With the current month’s amounts being added they found themselves unable to extricate themselves from the debt trap.

Meanwhile Newcastle’s outstanding debtors were rising by R9m a month and currently stood at R642m.

About 90% of the council’s income was, according to Vorster, currently coming from 38 000 residents.

He believed a similar situation was true for most of the country’s municipalities.

Vorster suggested that the current R1 900 income ceiling for the indigent should be increased to R3 500, and that the council should use its unspecified government grant to supply free basic services to these residents. This would keep costs down.

Every year the unspecified government grant was earmarked for capital projects, he said.

But a small municipality like Newcastle did not have the ability to spend that, together with other grants for capital projects, and often forfeited the money.

[Source:] http://www.fin24.com/Economy/Soaring-municipal-bills-pound-SA-20110322

[date:] 2011-03-23

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