Municipality reduces tariff increases
This municipality subscribes to the pro-poor policies in tangible ways, says eThekwini mayor
ETHEKWINI Municipality has given some relief to residents who were upset at the increases the city proposed for rates and utilities.
Rates have now been increased by 4.9% rather than the proposed 6.9%. As of July, electricity goes up by 6.2% (the initial proposal was 6.9%), water by 9.5% (9.9%) and sewage by 6.4% (9.9%).
These hikes were voted and accepted by council last Friday.
The following parties voted in favour of the increases: the ANC, IFP, APC, ID and Al Jama-ah.
The DA, EFF, MF, Mosa and DLC voted against the budget on the basis that the increases were not affordable.
Belinda Scott, the deputy mayor, addressed the criticism that was levelled at the proposed hikes.
Scott, who is a member of the ANC, said her party was committed to service delivery. She said that despite the current economic crisis that had been exacerbated by the Covid-19 pandemic, the city had tabled a realistic, fully-funded, balanced and credible budget.
She accused the DA of politicking when the budget was made public. She said it was due to the ANC’s direct intervention that the city had managed to ensure that the increases were the lowest in the past six years.
“There are two sides to the challenges of revenue collection. The city is finding some consumers, who are gainfully employed, using the Covid crisis not to pay their service-related bills, versus the genuine destitute who are in dire need of assistance. As per the national government directive, the council has to resume the credit control and debt collection process as of July 1.”
Scott added that the city gave assurances that those who could not afford to pay would be able to enter into an arrangement with the municipality.
IFP member and eThekwini council member Mdu Nkosi said although they had initially opposed the draft budget, they voted in favour after mayor Mxolisi Kaunda and his team reduced the increases.
“In the previous year, we voted against the budget because the figures were way too high. I think water was over 15%. We understand poor people will suffer, but we commend the mayor and his team. They tried by all means to cut the budget and push the tariffs down.
“Last year, the city’s operating budget was R50 million. This year, it’s R32 million. This budget is a well-considered one, and we did not see the need to vote against the budget. Just because we’re an opposition party, it doesn’t mean we should oppose everything.”
Nkosi said the IFP would, however, ask the city to be more transparent with how money was spent.
“Money was given by national (government) to deal with Covid-19. Most of the money went towards homeless shelters and rehabilitation centres. It’s high time the city screens those who claim to be homeless because not everyone is homeless. They should also check if those homeless people are wanted for criminal activities.”
THIS is an extract from a speech delivered by the mayor of eThekwini, councillor Mxolisi Kaunda, on the 2020/21 budget which has now been adopted.
The current state of the economy is impacting significantly on the finances of the city.
The Covid-19 outbreak, low growth rate, high unemployment, and load shedding are impacting on the ability of consumers to pay their municipal accounts.
The city is working hard to stimulate growth as well as retain and grow existing businesses.
We also remain committed to ensuring stability in the provision of services to our residents and businesses.
The municipality has consistently achieved an unqualified audit opinion and despite the current state of the economy and the threat of a downgrade to the sovereign rating, the city managed to maintain its investment-grade credit rating of A1+ in the short-term and AA+ in the long-term with a stable outlook.
The long-term rating means that the municipality has a very high credit quality, protection factors are very strong, and is able to afford external borrowings to fund its capital expenditure if the need arises.
The short-term rating means that the municipality has the highest certainty of timely payment, short-term liquidity, including internal operating factors. Access to alternative sources of funding is high and risk factors are extremely low.
The 2018/2019 annual financial statements were timeously produced and complied with the relevant accounting standards. The 2019/2020 budget was also timeously approved and National Treasury assessed the budget to be credible, relevant and sustainable.
The National Treasury also found that the budget is strategy-led and supports economic development which will contribute to longterm financial sustainability.
However, we are concerned about the cost of bulk tariff increases above inflation from Eskom and Umgeni Water Board. Representations have been made to Nersa (National Energy Regulator of South Africa) and Umgeni Water Board.
We all know that high tariff increase impacts negatively on the city’s rates and tariffs and the affordability by customers.
We are currently dealing with the process of a bond issuance for the first time in the history of the city. This is anticipated to benefit the city by ensuring that there is another funding mechanism available to tap into when required.
This is only possible because the municipality is highly-rated by financial institutions nationally and internationally.
Notwithstanding this, there are still concerns. Accordingly, the main message for this year’s budget is austerity. We must ensure the effectiveness of our spend and that our ratepayers are getting value for money.
In addition, we want to ensure value for money in our procurement. In this regard we are benchmarking prices and every bid committee report must address the issue of value for money.
There is also going to be a key focus on cost-cutting and ensuring full compliance with the National Treasury circulars and our own Cost Containment Policy. We are committed to cutting back wherever possible without impacting on service delivery. We fully appreciate that rates and tariff increases must be affordable.
We are committed to assisting our poor residents who cannot afford to pay for municipal services. At the same time, we plead with those who can afford to pay to honour their obligations by paying for the services rendered on time.
As a caring government, we are working hard to ensure that even during this tough economic climate our residents are not severely strained. We have tried to put in place measures to ensure that our tariff increases are realistic and affordable. The electricity tariffs over the last few years have ranged from 6.9% to 13.07%.
Recognising the state of our economy and the hardship felt by our residents and businesses and following representations that have been made during the budget consultation process, the proposed tariff increase is 6.22%.
This is a true reflection that this ANC-led municipality is responsive, caring and understands the needs of its people.
Over the last three years, the water tariff increase for domestic and business consumers has averaged above 15%.
As a caring ANC-led government we have again listened to the hardships and representations made by business and our poor consumers, and so we propose a tariff increase of 9.5%.
Initially, in the tabled budget, the proposed tariff for water was 9.9%.
Refuse removal tariff increases have also averaged 9.9% over the last 3 years. Being a responsive government, we have resolved to limit the increase to 6.4%.
Property rates have averaged 6.9% over the last six years. We have decided that this tariff increase should be limited to 4.9%. This is an unprecedented reduction which reinforces our full commitment to alleviate the plight of the poor.
Let me reiterate that we shall tell no lies and claim easy victories. Every single tariff has been decreased in real terms. Contrary to the narrative that was fanned by the prophets of doom, this municipality subscribes to the pro-poor policies in tangible and meaningful ways.
Whilst we are dependent on bulk purchase tariffs from Eskom and Umgeni Water Board, this is the first time in the history of this municipality that tariffs have come down in real terms.
No one can say that this ANC-led government is not caring and does not listen to its citizens.