Only Joburg shows some improvement {writer: Piet Coetzer}

With the exception of the City of Joburg, the outstanding debt levels of all South Africa’s metropolitan municipalities seem to have taken a turn for the worst.

The position of more than 70 municipalities is further complicated by the withholding of payments by ratepayers in protest over lack of adequate service delivery, with no resolution of the situation in sight.

After there were signs of improvement a year ago in the outstanding payments by consumers to municipalities, outstanding debt levels are moving inextricably in the wrong direction. At the end of March, metropolitan municipalities were owed nearly R31 billion – and all municipalities R57bn – by ratepayers, including provincial and national government bodies and businesses.

These figures, released by the Treasury, compare unfavourably with the previous figures released last August.

As at the end of June last year – the end of the municipal financial year – the country’s municipalities were owed R50bn. Metropolitan municipalities were owed R29.4bn of this at that point, which was a R2.8-billion increase for the same period the previous year.

The City of Joburg, at the end of March, was still owed the most by consumers: R8.3bn, although this is down from R10.7bn in March last year – indicating that it is improving its collection.

All the other metros are in a worse position compared with a year ago.

Ekurhuleni, Gauteng’s largest metro, remains in the second-worst position with R7.5bn currently owed, compared with R6.7bn last year.

eThekwini is owed R4.8bn, up from R4.26bn; while Cape Town is in fourth place with R4.86bn owed, up from R4.2bn. Tshwane is owed R3.5bn, up from R3.1bn, while Nelson Mandela Bay is owed R1.3bn – up from R1.2bn.

Local Government Research Centre director Clive Keegan said in June that this was putting pressure on municipalities to deliver, particularly basic services, to the poor.

Business was included among the villains, but the bulk of non-payers of rates and services fees were households in the lower income areas, he said.

Keegan added that the proposal by Co-operative Governance and Traditional Affairs Minister Sicelo Shiceka, that ratepayers with household incomes below the personal income tax threshold should not pay municipal rates, would put further pressure on embattled municipalities.

The largest outstanding unpaid bill is R16bn for water owed to 280 municipalities, or 28.5% of the R57bn in debt. Property rates make up R14.2bn, or 25% of the unpaid bills, while a significant R7.6bn is owed to municipalities for electricity – or 13.5% of the outstanding amount.

Of the R31bn owed to metro municipalities – including Nelson Mandela Bay, Ekurhuleni, Joburg, Tshwane, eThekwini and Cape Town – households owe R17.3bn, or 56%; government departments R1.3bn, or 4.4%; and businesses R4.5bn, or nearly 15%. Other unspecified customers owe metros R7.3bn.

“The problem is that the municipalities are not enforcing vigorous revenue-collection strategies. They are simply allowing too many people to get away with not paying rates and service accounts,” Keegan said.

Finance Minister Pravin Gordhan reported that national consumer debts amounted to R56.8bn at the end of March. These figures were unaudited, but R290 million had been written off.

Rates boycott

The department of Co-operative Governance and the National Taxpayers Union (NTU), in the interim, reached a standoff in June over when the withholding of municipal rates by its mainly white members would end.

Jaap Kelder, the national leader of the umbrella body – which is co-ordinating the public protest in about 70 municipalities around the country – was emphatic that the NTU was not engaged in boycott actions. “It is not a boycott. In contrast to the boycotters who can’t show a cent for it... we are happy to pay.”

He added that a fund had been set up, containing about R15m – into which rates withholders were paying their rates and service fees. This money would be paid toward services once it was proved that services were being carried out and rates were not being wasted by municipalities.

However, in certain municipalities, there had been a complete breakdown in services to the community, said Kelder.

Minister Shiceka’s legal officer André Gaum confirmed that talks had been held with the NTU, but agreement had yet to be reached on when the boycott would end.

The NTU’s withholding of rates represents a small fraction of the R56bn owed to the country’s 284 municipalities.

Kelder said that the union agreed it would start paying rates in three months, but the Department of Co-operative Governance was insisting on a six-week payment kick-in.

It had been agreed, however, that pilot projects should be set up in four towns where the government, ratepayers and community organisations could work with municipal officials to identify and end poor service delivery. The towns are Louis Trichardt in Limpopo, Barberton in Mpumalanga, Bethlehem in the Free State, and Sannieshof in the North West.

However, until an agreement is reached on the withholding of rates, the projects will not commence.