Municipalities’ delivery affected by debt levels

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Failure to collect revenue has led to a large-scale problem for municipalities, preventing them from functioning at optimum levels, according to a report by the SA Institute of Race Relations (SAIRR).

In 2010, municipalities were collectively owed R62 billion but by June 2013 that figure had risen to R87 billion, according to the Local Government in 80 indicators After 20 Years of Democrac by the SAIRR’s Georgina Alexander.

Aggregate municipal consumer debts was at R93.3 billion from December 31.

Metropolitan municipalities were owed R52 billion as at 31 December, 2013. Johannesburg is owed the largest amount at R17.6 billion, followed by Ekurhuleni (Germiston) metro at R10 billion, Cape Town at R6.3 billion and Tshwane (Pretoria) at R6 billion.

Persistently high debtor levels show that efforts to collect billed revenues are poor. This could be due to factors such as lack of political backing, insufficient staff, or unwillingness to carry out electricity and other service cut-offs to force payment.

The majority of municipalities have collection rates (collection of service charges or tariffs and property rates) below 80%.

“This is the amount outstanding for water, electricity, sanitation, refuse removal and rates. It is roughly equivalent to a third of budgeted current municipal revenue and also roughly equivalent to the total amount budgeted for transfers to local government from national taxes.

“Reasons for failure of households to pay debt include financial stress. An offcial report said last year that rapid urbanisation and economic stagnation meant that a growing number of households could not pay for increasingly expensive municipal services.

“However, there is also a view that there should be no charges for all the numerous things the ANC has promised to provide as part of its ‘better life for all’, to use one of its election slogans,” according to Alexander.

Enforcement also plays a big role in the situation. This includes people whose water or electricity is disconnected because of failure to pay, but simply reconnect it illegally – sometimes with lethal consequences, she said.

In the past two years, 78 local authorities between them owed R1.3 billion in arrears to 12 water boards.

Some municipalities also bite off more than they can chew.

“Johannesburg, for example, is busy with huge plans for bicycle routes, solar energy, and the like, along with the extension of a hugely expensive and highly disruptive rapid transport system.

“The more mundane work of servicing buses, fixing potholes and repairing collapsed storm-water drains is largely neglected. Very large numbers of traffic lights can be out of order for days if not weeks or even months on end.”

City of Johannesburg skyline. Picture Thinkstock

City of Johannesburg skyline. Picture Thinkstock

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