Outa flags rates increases, staff costs in R50.8bn eThekwini draft budget

Outa CEO Wayne Duvenhage. Picture: Moneyweb

Outa CEO Wayne Duvenhage. Picture: Moneyweb

A full council is expected to adopt the draft budget of R50.8 billion next week.

The civil action group Organisation Undoing Tax Abuse (Outa) said on Friday it believed eThekwini Municipality’s multi-year rates increases in the current draft budget were unsustainable.

The organisation also flagged the city’s high staff costs and “massive” under-spending on maintenance as problematic.

Outa’s KwaZulu-Natal office made its submission to the metro on Friday amid calls for comment on the city’s 2019/20 draft budget.

A full council is expected to adopt the draft budget of R50.8 billion next week.

Outa KZN’s eThekwini branch manager, Jonathan Erasmus, called on the city to “review its flawed public participation process, curb the unsustainable multi-year rate increases, reduce staff costs and ramp-up spending on maintenance”.

Among Outa’s key findings was that the city is set to spend 29.2% of its generated revenue on staff costs, well above National Treasury guidelines of 20%.

Outa also found that the city had over the last 10 years consistently underspent on repairs and maintenance to the tune of R10.2-billion, with the trend expected to continue.

“The budget, as it stands, is extremely costly to residents who continually face the reality of decaying infrastructure resulting in power and water cuts which generally contribute to a poorer quality of life,” said Erasmus.

Over the next three financial years, property rates are set to increase by 6.9% annually. Sanitation services are set to increase by 9.9%, refuse by 9.9% and water for residential and business by 15% and 15.5% respectively.

The rates increase was well above the Consumer Price Index (CPI) forecasts over the same period, which hovered at about 5%, said Erasmus.

“Raising revenue by excessively taxing an already over-stretched consumer is simply not a sustainable financial model,” he said.

Outa also called on the city to “review its public participation strategy” after finding several weaknesses in its current strategy. This included not making the draft budget available at public libraries and not providing an easily accessible alternative for residents to comment online.

The organisation also said there were financial misstatements in the budget’s executive summary, with the predicted costs for water and electricity services being the same figures presented in the 2018/19 budget.

Outa accused city officials of a “serious lack of care in compiling the report” by “merely copying and pasting sections from previous years without reviewing the contents”.

The executive summary was often the only section of the draft budget most residents would be able to easily understand, said the organisation.

– African News Agency (ANA)

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