OpinionPREMIUM

ROB ROSE: ‘Extortionate’ rate hikes push SA to the brink

Cities like Joburg are buying bulk services, then slapping on vast ‘mark-ups’, to pay for soaring salaries and unjustified bonuses for municipal staff

Picture: 123RF/JENNIFESOPHIE
Picture: 123RF/JENNIFESOPHIE

On a large noticeboard in Joburg’s suburb of Linden, the Trinity Methodist Church tells passers-by what it’s praying for at this particular moment. Right now, the noticeboard reads: "We’re praying for an acceptable level of city management."

Not mercurial or inspiring — just "acceptable". Even the heavens can’t be asked to wrestle anything more out of the grisly 30-vehicle crash that is the City of Joburg.

Still, as everyone who has been exposed to what the ANC euphemistically terms "governance" will tell you, Joburg is hardly alone. Myriad reports over the past month — from the North West to KwaZulu-Natal and the Free State — illustrate how the country’s largest cities are crumbling, while many smaller towns have been entirely left for dead by the venal officials notionally in charge.

At this point, it’s debatable whether the ANC can lay its hands on enough plasters to keep the façades from disintegrating entirely until after the local government election on October 27. As finance minister Tito Mboweni revealed, 163 of SA’s 278 municipalities — more than half — are in "financial distress", 40 are battling to deliver basic services and 102 had adopted budgets for this year they can’t fund.

Everyone has noticed. The Economist, for one, reported how many ratepayers associations are withholding taxes in protest: "The starkest effects of corruption and ‘cadre deployment’, where cronies are given jobs on the basis of loyalty rather than merit, are found in local government."

But with the election looming, you’d think the ANC would want to at least try to smear lipstick on its largest metros, like the City of Joburg — the commercial heart of SA, responsible for 16% of the country’s GDP and a supposed "world-class African city". Instead, it seems to have given up.

As Gareth van Onselen wrote so evocatively in March, Joburg appears to be terminal: there are so many potholes that the roads are becoming illusions; the trees are in the ICU; the pavements have been abandoned by municipal officials; the streetlights don’t work; and when it rains, broken drains overflow to ensure the roads become rivers.

The bubbling fury over the collapse of services in towns and cities could find an outlet in the October 27 local government election

"Joburgers can sense it," he wrote. "And they are piling in. Anything metal is stolen. Manhole covers, house numbers, cables, road signs, railings. It’s every person for themselves, and the city last."

But what makes this so especially galling is that the city is unashamedly hiking electricity rates by 14.6% and water by 6.8% from July. Is it any wonder that, as the rent extracted from its citizens soars in inverse proportion to the quality of the "services", rumblings of a tax revolt are growing?

In fact, were citizens aware of just how thoroughly they are being pickpocketed by the city’s administration, they might be even more averse to the rate hikes.

Economist Mike Schüssler has calculated that the City of Joburg is making an immense profit off you, its resident.

As he tells the FM, Joburg is a city which makes one of the highest profit margins — based on what it pays for its bulk water and power, compared to the price at which it on-sells those utilities to residents.

The city’s 2019/2020 financial report, for example, showed it had an effective "operating mark-up" of 72%. For water, power and sanitation, which it buys in bulk, it adds a mark-up of 101%, before sending its bill to you, the consumer. In the first six months of this financial year, the city paid R10bn in "bulk purchases" of power, water and sanitation, for which it billed you R15.9bn.

Well, you might say, the city has to get money somewhere so that it can operate. But not only does it get a grant from the central government, it also collected R12.5bn in "property taxes" from residents last year. More likely, it’s hiking rates to pay for its world-class mismanagement.

Not only did it pay R2.3bn for "nontechnical" electricity losses (like stolen or damaged meters and billing errors) last year, it splurged R73.8m in "fruitless and wasteful expenditure" and wrote off R1.43bn in "unauthorised expenditure".

The city also has to hike tariffs to afford its salary bill, which is growing faster than private sector salaries. Last year, the city paid R14.8bn in "employee costs" — 17.6% more than the previous year. And, hold your breath, the city even opted to pay its hapless staff R660m in bonuses.

Who knows why, since the city has even abdicated its role in fixing potholes to Discovery Insure and Dialdirect.

The problem is, all our municipalities are packed tight with inert officials like Joburg mayor Geoff Makhubo.

The on-the-ground reporting in recent weeks in the Boikhutso township in Lichtenburg detailed how "the stench of sewage running down the streets greets visitors", as tons of black refuse bags, uncollected for months, line the streets.

In Pietermaritzburg, pictures of mountains of uncollected trash lining potholed streets tell the story. In eThekwini, 52% of the water is lost due to leaking or burst pipes — for which the residents pay, in ever-rising water bills. And in the Free State, the auditor-general reported that some officials "were unable to provide the most basic of financial information without the help of a consultant".

In other words, these "officials", whose salaries you pay, don’t know what they don’t know. It may sound dramatic, but the evidence suggests SA’s smaller towns have gone feral — and the politicians who notionally run these places are, at this point, looting directly from the citizenry when they levy taxes for their nonexistent service delivery.

The anger — particularly at unaffordable rate hikes levied to pay inflated salaries for undeserving municipal officials — is palpable. Mercifully, there is an outlet valve for this bubbling fury in the form of the October 27 election.

Which is just as well, since, at this point, the government has vanishingly slim moral authority to argue against the threat of an outright tax revolt — an inevitable consequence of its delinquency.

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