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eThekwini's Budget Unsustainable
The eThekwini Metropolitan
Council adopted the draft Medium-Term Revenue and Expenditure Framework for
2019/20 to 2021/22 without any changes. According to the municipality, all of
the questions and submissions about the draft budget – many of them pertaining
to the steep and unsustainable tariff increases - had been considered, however
no changes were made to the budget which raises a concern.
The budget was tabled at a full council sitting on Wednesday 29 May.
Rates will be raised by 6,9% (on assessment rates), electricity (13,07%), water (15% for households and 15,5% for businesses), refuse removal (9,9%) and sanitation (9.9%). It is important to note that all these increases are higher than the consumer price index (CPI), and that value added tax (VAT) is raised on all of these items, excluding assessment rates.
The only decrease noted is the Eskom tariff (from 14.4% to 13.07%). This is due to a decision by the National Energy Regulator (NERSA), but Mayor Zandile Gumede noted that this decrease could be reviewed when NERSA completes another review.
OUTA eThekwini spokesman Jonathan Erasmus said middle-income households that do not qualify for any rebates would effectively pay 13% more in the 2019/20 financial year, with a year-on-year increase of 11.5% in 2020/21 and a projected 8.6% increase in 2021/22.
The compound effect of the increases means these same households will pay 35.6% more in May 2022 for the same services rendered in May 2019. Erasmus also warned that the City’s rate increase projections are usually conservative in estimation. According to a StatsSA publication on 22 May 2019, the annual consumer price inflation was 4,4% in April 2019, down from 4,5% in March 2019. The IMF World Economic Database April 2019, also shows that the CPI average for 2019, 2020, 2021 and 2022 is expected to rise at 4.9%, 5.4%, 5.5% and 5.5% respectively.
“The rising cost for services provided by the City is way out of step with the generally accepted increase expected for salaries and wages, often pegged to CPI. The reality is many employees aren’t receiving increases due to the depressed nature of the South African economy. The multi-year rate increase projections are simply unsustainable and must be contained to ensure economic development and sustainability,” said Erasmus.