Are SA’s councillors dumb and dumber?

While the ideas of some politicians and their financial advisers might be noble, they also strike me as being downright stupid. Here’s the concept: you are owed a lot of money, so you reduce the amount you’re owed to make it easier for your debtors to pay you.

At the same time, you urgently need every cent you can lay your hands on to maintain systems and equipment, provide certain essential services and develop your area.

What am I talking about?

The municipalities, local authorities and metropolitan councils of South Africa. Just six of them are owed almost R30-billion and if you add the debts of the smaller councils to this, the figure is probably double that.

One by one, the councils are providing interest waivers or are simply writing-off debts because people apparently cannot pay. Yet these same councils admit that they don’t have the money to provide essential services, can’t develop land for housing, can’t keep the water purification works running smoothly and can’t maintain the roads, stormwater drains or electricity supplies.

Why? Because they don’t have the money to do so.

Let me give you some examples.

For years now, the Tshwane council has been offering an interest waiver to its residents as an inducement to make them pay-off their arrears. Ekurhuleni has joined this cycle and it, too, is offering residents a period of six months’ interest free. Both councils (and there are many, many more) are giving away money they don’t have.

Then, the Ekurhuleni municipality is now giving its loyal customers – those who actually pay their bills – a 0,5% rebate as long as the debt is less than 30 days old.

Empowerdex says that the total amount currently owed to councils is R56,1-billion – and only 5% of that debt is owed by government and the balance is from ordinary ratepayers and consumers.

It says that most of the debts are for water (28%), property rates (21%) and electricity (23%). Unsurprisingly about 23% of the debt is not allocated to any source.

Empowerdex’s analyst, Paul Berkowitz, says that billing problems and a high turnover of municipal staff may be to blame for the poor performance when it comes to collecting debts. In fact about 79% of the R56-billion owed has been outstanding for 90 days or more and there is probably only a slim chance that this money will be paid.

The R56-billion owed is arrears on money that should have been collected by the councils but because of their own inefficiencies and inabilities, it hasn’t been.

So this week the eThekwini council confirmed that it will write off R98-million in unpaid rents owed to it by residents in nine of the hostels in the city.

Earlier this year, the Emfuleni council decided to write-off more than R580-million in unpaid debts. Yet this is the same council that can’t maintain its water purification works because it doesn’t have enough money to do so and pumps raw sewage into the Vaal River instead.

This year, that same council wrote off all interest and penalties incurred by schools, churches, non-profitable organisations and body corporates. To make matters worse, it then reduced the principal debts of churches, non-profitable organisations and body corporates by 50% and those of schools and private individuals by 30%.

So it wrote off the arrears and then reduced the current debts too.

Everywhere you look in South Africa you will find cash-strapped municipalities that blame the lack of service delivery on a shortage of funds. And much of that shortage is due, quite simply, to inefficiency and an inability to collect money that is owed and payable.

Inject R56-billion into the South African municipalities and the constant cry of “we have no money” would partly be dampened. Now, these same councils are choosing to just write off the amounts they are owed.

What bothers me even more than this is the use of incentives to make people pay. That process sets a serious precedent for the future because, as time goes by, all residents of the city will want to benefit from having their debts reduced and so will deliberately withhold money to do so.

It’s a bit like the current policy regarding traffic fines. If you get a fine of R500 (or whatever the amount is) and you pay it within 30 days you’ll get a 50% discount.

What a completely daft notion. You break the law, get fined and get a discount for doing so. I reckon the process should be the other way around. You get a fine and if you don’t pay it in 30 days, it doubles or triples.

Just as if your rates and taxes are in arrears or you haven’t paid your water and lights account, then the amount you owe should attract special interest, punitive penalties and a special late payment levy.

The amounts should be increased for non-payment, not reduced.

What our councils are doing is reducing the amount of money they earn (by providing rebates and writing off debts) so that they can provide even fewer services because they have even less money to work with.

There seems to be no logic to this argument at all.

My attitude is if you don’t pay for the water and electricity you use, your services should be suspended. If you don’t pay your rates on time you should be sued in a special rates court so that each case can be settled quickly. If you still refuse to pay, your assets should be attached and sold to discharge of the debt.

That’s the way efficient, law-abiding countries operate.

So maybe you can explain the current thinking in our councils: First of all make excuses for the people who can’t pay; then give them an incentive to pay by reducing their bills; then collect even less money, so you reduce the amount you can spend on providing fundamental municipal services for those who do pay.

I simply cannot understand the logic.

Can you?

*Hartdegen writes a regular column for Property24.com. The content of his columns constitutes his personal opinion and doesn’t pretend to be facts or advice. Contact him at paddy@neomail.co.za.

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