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IOLProperty - South African Property For Sale
Monday May 07, 2012

KZN's municipal boundary wars heat up

Fiddling with municipal boundaries is not the solution to getting dysfunctional municipalities to perform and may be a noose around the neck of the larger municipalities that inherit their problems.

And, according to experts, it would drive up the cost of property rates and basic services, without addressing the inherent problems of corruption, inefficiency, crime and the lack of an integrated transport infrastructure that would give those on the municipal edges the mobility to access employment.

Analysts, economists, ratepayers and political parties and even ANC councillors have raised their concerns over the proposal this week that ethekweni municipality cede four wards - 58, 60, 61 and 62 - including areas around the Dube Tradeport, King Shaka International Airport, Verulam, Tongaat and Umhloti to Kwadakuza municipality, to increase its rates base.

Municipal Demarcation Board chairman Landiwe Mahlangu said the proposals would be discussed this week.

The move follows hot on the heels of President Jacob Zuma's suggestion that unviable municipalities be incorporated into successful ones in response to questions in the National Council of Provinces, recently.

The Co-operative Governance and Traditional Affairs Department and National Treasury were assessing municipalities and preparing recommendations.

He said boundaries were not important because SA was a unitary state.

However, economists and analysts have argued that there were indeed winners and losers and sometimes, only losers, in the shifting of boundaries.

University of KwazuluNatal centre for civil society director Patrick Bond said that, in the case of the ethekweni municipality proposal, the North Coast would soon desperately need capital spending on roads, water/sewerage and electricity and shifting the boundaries would not result in huge revenue increases.

"Durban is having huge problems raising funds for servicing the existing base and extending simple municipal services to all its residents.

"The rich who occasionally live in their coastal holiday homes don't consume much water and electricity, so redistribution and cross-subsidies are difficult to achieve. So a redrawing of boundaries will in the short run probably add to Kwadukuza's financial woes," Bond said.

He cited the fiasco with water privatisation there a few years ago, saying its councillors should have learned their lesson.

Economist Mike Schussler said Roodepoort and Midrand had been incorporated into the City of Johannesburg and Alberton, Springs, Kempton Park and Benoni into Ekurhuleni municipality, but now there were suggestions of splitting some of the areas up again.

"It sounds to me that we are desperately looking for solutions and we must start realising as a nation that we will have poor areas and we can't fix all the poor areas. We have too few rich people," Schussler said.

"South Africans are asset rich - close to two thirds own their own homes or partially own their own homes. The problem is that South Africans are income poor and often cannot afford the water and electricity they get."

We should focus on developing sound principals and standards for municipalities and improving our understanding of how local authorities should function, Schussler argued.

"We need to find a way of making public transport cheaper and accessible to where people can get jobs... that is more important than shifting boundaries.

"To think that a poor functioning or a non-functioning municipality is going to improve its functionality because you add it to another municipality is a myth. We need to get the functionality of the economy right," he said.

According to Schussler, the move would drive up property rates; ethekweni municipality ratepayers and political parties agree.

DA councillor Tex Collins said the proposed changes for Durban were "ill conceived" and should be scrapped.

"This municipality has invested substantial funds and effort into the development at King Shaka and Dube, clearly something the Kwadukuza municipality will never be able to match, and, as the main driver of economic activity in Kwazulu-natal, it makes very little sense to jeopardise this," Collins said.

"Durban is already the victim of a seriously diminishing rates base with ratepayers facing ever mounting costs, so to further compound an already parlous situation can only amount to a recipe for disaster. Kwadukuza could never provide the infrastructural and financial support the King Shaka precinct requires," Collins said.

African Christian Democratic Party ethekwini municipality councillor Wayne Thring said the party was opposed to the proposal. He said Durban would lose tourism business to Kwadukuza.

"It would be a sad loss for Durban, which is one of the fast growing cities in SA.

"There will be a knock-on effect with less income coming to the city and, unfortunately, ratepayers will have to pick up the tab. Unlike Joburg and Cape Town, which have a growing rates base, we have a declining rates base and this will further decrease our rates base," Thring said.

eThekwini municipality ANC councillor Fawzia Peer said the move was "definitely not positive" and would result in a R172 million loss in rates.

"The council has spent a lot of money servicing some of the northern areas, which is our key growth area. We will seek compensation for assets as both assets and liabilities need to be transferred. It is highly unlikely that Kwadukuza would afford this as well as the cost of further bulk infrastructure expenditure," Peer said.

Zuma's suggestion that unviable municipalities be absorbed into those that were viable drew a mixed reaction.

Lennox Mabaso, spokesman for KZN MEC of Co-operative Governance and Traditional Affairs Nomsa Dube, said she had commissioned a study to assess the viability of the province's 61 municipalities that would recommend innovative ways to improve them.

Bigger municipalities received larger grants, but it was the smaller historically underdeveloped municipalities that needed more funds for economic growth.

A lack of existing infrastructure increased the cost of services for smaller municipalities making it far more expensive to connect residents to electricity and water than for a larger municipality that had infrastructure.

Asked whether ratepayers would be overburdened by having to support smaller municipalities Mabaso said many rural people had already fled to cities like Durban because of a perceived lack of services.

Daspokesman for Co-operative Governance and Traditional Affairs John Steenhuisen said there were "better remedies" for municipalities which had failed because of maladministration or corruption other than inclusion with other councils. However, there was an argument to incorporate rural municipalities into larger ones.

"Some municipalities are simply unviable. They have no rates base and are reliant on grant funding from national and provincial government and, due to their location, they are unable to attract qualified and experienced personnel who take up more lucrative contracts with the metros and district municipalities," Steenhuisen said.

"However, it would be absolutely essential that there is sufficient assistance provided by the national and provincial government to make sure that the incorporations did not compromise the sustainability of other municipalities.

"It would make no sense to incorporate if you then end up with an even bigger failed municipality," Steenhuisen said.

"When the Durban unicity was created and the smaller local authorities were scrapped, we were promised massive cost savings as a result. This did not happen - and in fact costs escalated.

"There would be the inevitable court challenges as there would definitely be political consequences. There would be jobs shed as the incorporated council will only need one municipal manager, one CFO (chief financial officer), mayor, speaker and set of councillors," Steenhuisen said.

However, Efficient Group economist Dawie Roodt said decision-making powers should ideally be decentralised to the lowest level to make municipalities as small as possible. This would give communities the chance to decide on their own affairs.

"But, unfortunately, in South Africa you can't have good managers at all those levels and we need to put them into the bigger entities. Bigger municipalities can usually be run much cheaper because of economies of scale," Roodt said.

However, bigger municipalities meant less competition between towns.

IFP spokesman for Co-operative Governance and Traditional Affairs Inkosi Bonga Mdletshe agreed that there was "too much centralisation" of government.

"Municipalities that don't have a rates base should have an equitable share and the government needs to engage people on this matter - and there should not be a talk-down approach but a bottom-up approach," Mdletshe said.

Combined ratepayers Association chairwoman Lilian Develing said there were nine megacities in the world and their common problems were crime and a lack of transport.

"This is something we fear - already the demarcation process is in place with a view to amalgamating the municipalities. The unicities do not work. They are cumbersome.

"With all the corruption and lack of skills, taking in brokendown municipalities will put a huge burden on the already overtaxed ratepayers," she said. "There are many examples of towns paying out more in salaries than they have in income and then all they do is put up the rates."

However, ethekwini municipal manager Sibusiso Sithole, said ailing municipalities should be helped.

"There are municipalities which, by virtue of where they are located and in terms of their rates base, are unlikely to be financially viable on their own. However even boundaries won't resolve the problems, it's the professionalisation of local government that should take place," he said.

Sithole said local governments needed to work across boundaries to provide skills to sister municipalities.

"There are instances where we are working together. For example, we are working with Umsunduzi municipality to help with their electricity crisis," said Sithole.

But, according to Bond, Zuma has shirked the central issue. Pravin Gordhan's Treasury has been far too stingy in giving poor towns - with vast hinterlands created by former head of the Municipal Demarcation Board Michael Sutcliffe - the resources needed to provide services.

"We are now the world's most unequal large country, and we have about the highest rate of protest. Both problems could be solved with redistribution. But that doesn't seem to be the Treasury's agenda, because, like all the world's finance ministries, it mainly serves the society's rich."

The Independant on Saturday

 
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