Back in May, I worked for a now-defunct Taxpayers’ Union organisation for two weeks. I wrote several articles for them which were never published. I feel they are still relevant today, and hope you find them interesting.
While housing prices and rental costs are rapidly contracting, in the highest unemployment figures on record, South African municipalities are seeking a larger slice of our diminishing rate-paying population. This year, increases in municipal rates are being raised to keep up with spiralling costs of electricity and private security, to make up for systemic failures in national infrastructure.
And yet there is little that the taxpayer gets in return. Less than 20 of our 257 municipalities received a clean audit, as billions of taxpayer Rands are frittered away on graft and waste. Service delivery continues to plummet. The biggest share of these increases goes to electricity, largely to pay for the R10-billion installation of new renewables, whose energy density does not yet reach that of traditional energy sources like coal or nuclear, the maintenance on which is notoriously late and sub-par.
The quality of South Africa’s municipal service delivery is in a downward spiral, with strong negative impacts on the agricultural industry. According to the Financial and Fiscal Commission, this is because municipalities are prioritising high wages for staff over the delivery of services.Because of this deterioration, Clover has had to shut its factory in Lichtenburg, which employs over 380 people in a town which can scarcely afford to lose the source of employment. This is due to unreliable supply of both water and electricity.
The greatest point of change is the increase on property taxes, burdening homeowners and small businesses with costs that are difficult to bear as the economy still suffers strain from the effects of arbitrary and ineffective lockdown policies. TPN Credit Bureau representatives have pointed out that the pressure on homeowners, who are spending an increasing proportion of their income on housing, is harming economic recovery.
Credit defaults are on the increase across South Africa as these rates increases coincide with the economic situation. Consumer debt has reached an eye-watering R1.9-trillion, with 20.4-billion in defaults alone over the first quarter of 2021. Even those who are relatively wealthy (average starting home loan of more than R1.2 million and take on vehicle loans of more than R450,000) are starting to take strain, as their credit defaults among taxpayers hit R4-billion in the last quarter of 2020, with outstanding loans of over R600-billion.
While the Economic Reform and Restructuring Plan (ERRP) implemented last year aims to improve the state of planning across all three spheres of government (national, provincial, municipal), the changes are yet to be seen by ordinary people, who are still struggling to eke out a living amid the chaos. By adding 60 000 labour-ntensive jobs to the civil service as part of its broader plan, the ERRP does not appear to be combating the kinds of disproportionate expenditure experts have diagnosed as one of the key reasons for municipal failure, but instead appear to be doubling down with expensive make-work projects which, judging by past government track-record, are unlikely to be delivered timeously, on budget or of any reasonable quality.
It pledges an additional 300 000 educational-sector workers, though considering that South Africa already spends among the most of any country in the world on education as a proportion of GDP, and receives some of the worst education in the world, it is hard to see how this will contribute to improving circumstances without significant reforms. While expansions to infrastructure are also on the cards, without visible commitments to replacing decaying water treatment services or a change in the sorts of contractors used to build the long-overdue power stations needed to provide adequate electricity, it appears unlikely that things will change.
Overall, the government’s approaches to existing problems do not appear to address the structural issues which are driving the deterioration of service delivery. Nor is the burden on the civil service being alleviated through layoffs or procurement of more efficient private contractors through open and transparent tender processes. Instead, the government has committed to throwing more money at the problem without reforming existing laws and practices, and allowing the taxpayer to foot the bill for structural incompetence and corruption.
Without adequate change soon, more municipalities will have to be seized by ratepayers, as has happened in Harrismith, Koster and Swartruggens. Judges declare that these victories can only be short-term, but with the current state of municipal management, not just in ANC-run areas, but in the rest of the country too, it may be become an ever-more common solution to the destruction of ordinary citizens’ livelihoods.