In recent weeks we have heard the news of how Johannesburg and Tshwane have been taking action against high profile customers who have not paid their municipal accounts. This has included the Sandton City shopping centre and the Silver Lakes residential complex.
It is quite remarkable that the municipalities and the debtors have allowed themselves to land in these situations. These very visible examples sadly illustrate the extent of the decay in many municipalities. Municipalities function in an environment where at least 95% of budgeted revenue needs to be collected to fund budgeted expenditure to leave a surplus of less than 0,1%. There is therefore virtually no room for slippage. Failing municipalities are unable to deliver reliable services and to collect the revenue due to them. It is therefore no wonder that George and the Western Cape is experiencing an influx of semi-grants in search of greater stability.
As we prepare for Council to approve the Adjustment Budget for the period to June 2022 and the multi-year budget for 2022/23 and beyond, the top management team and the councillors closely involved in the budgetary process have become increasingly aware of the areas where increasing levels of expenditure will be required in the near future.
Over the past decade George has been showing levels of growth ahead of the average annual growth rates for the Garden Route region to the extent where earlier on George constituted 35% of the regional economy, this proportion has now grown to 40%. This growth has placed pressure on the existing infrastructure. It has also been evident that the economic growth has outstripped the growth in revenue of the municipality. This has contributed to the pressures of allocating expenditure.
In the forthcoming budget, attention will be given to the interwoven challenges resulting from the migration influx, refurbishment of ageing infrastructure, adding water and wastewater treatment capacity, catering for economic growth and intensifying efforts to reduce reliance on Eskom’s electricity supply. An intensive review is underway to ensure that all revenue is being collected. In addition, tariff structures are being reviewed.
Numerous municipalities have restructured their tariffs to include a basic availability component to help fund fixed charges in addition to charges linked to actual unit usage. It may well be necessary for George to also adopt this methodology. In the case of electricity, a study has been done to examine ways to reduce peak hour usage by shifting power usage over more hours. This is the “time of usage” concept. Innovative ways are being explored to establish if consumers adopting this approach can be offered more attractive pricing options.
Progress on these efforts will be communicated in due course.