Urgent intervention needed as municipalities start pushing through unrealistic budgets

Issued by Retief Odendaal, MPL
Shadow MEC for Finance

Urgent intervention is needed as Eastern Cape municipalities begin pushing unrealistic budgets through their councils, with rates and tariff increases far above inflation. This comes at a time when ratepayers and consumers are under immense financial pressure, due to the extended lockdown measures imposed on them by national government.

If municipalities insist on trying to squeeze blood out of a stone, they are going to face a significant backlash and non-payments will skyrocket!

These ridiculous proposals by local municipalities, make a mockery of the economic recovery proposals that both the national and provincial governments have started to roll out. Instead municipalities are planning to milk cash strapped consumers, seemingly ignorant of just how this ongoing pandemic is decimating our economy.

Although National Treasury has provided further guidance to municipalities and municipal entities regarding the tabling of budgets, specifically noting the impact on ratepayers due to Covid-19, it would appear that many have chosen to ignore this.

SEE: Circular 99

There are some municipalities that are tabling rates increases that are more than double the inflation rate.

Many municipalities have also interpreted the conditional Exemption Notice, as was issued by the Minister of Finance in terms of section 177 (1)(b) of the Municipal Finance Management Act (MFMA), as exempting them from embarking on public participation processes with regards to their draft Integrated Development Plans (IDP), and 2020/21 Medium Term Revenue and Expenditure Framework (MTREF).

This is simply not the case, and municipalities that do not conduct public participation are breaking the law and could have their budgets challenged and set aside.

I have written to the MEC of Finance, Mlungisi Mvoko, to request his urgent intervention in this regard.

The Democratic Alliance has proposed the following suggestions pertaining to tariff increases for local government:

  1. Municipalities must endeavour to keep all proposed Property Rates increases as close as possible to the CPI;
  2. Electricity tariff increases must be on par with what has been approved by NERSA, without adding additional profit margins for municipalities;
  3. Water tariff increase must be on par with the increases in bulk water supply, without adding additional profit margins for municipalities;
  4. All other tariff increases must be curtailed so that it is as close as possible to the CPI.

SEE: Letter

I also call on all ratepayer and civic-minded organisations to monitor their respective municipalities in terms of public participation and ensure that the necessary opportunities for feedback on proposed development plans and budgets are given.

This is certainly not the year where ratepayers and consumers must be forced to fund municipal inefficiencies and wastage.