EDITORIAL: Myopic municipalities kill the golden goose

At this point, South Africa’s municipal officials have long since stopped worrying about whether they’re slaughtering the golden goose, and are only debating how to slice it up. 

Last week, the City of Joburg revealed another cheap trick in its bid to suck dry the residents of the crumbling city, while providing as little as possible in the way of services.

The city gushed that the property base has risen 12% in the past five years, to R1.59-trillion — which will allow it to hike rates for the residents based on this number. 

It’s the sort of rudimentary sleight of hand you’d expect from officials with zero sense of what’s happening on the ground, seeking to artificially juice their revenues now that their ability to charge a mark-up on electricity sales has been badly dented by the rolling blackouts.

But it’s the kind of trajectory they need to show to justify the exorbitant R15.3bn which the city paid in salaries last year, alongside, remarkably, the R680m paid in bonuses. Most Joburg residents wouldn’t have got perks remotely close to that.

Estate agents have already described this 12% increase in individual home values as “impossible”, given the city’s regression in terms of services. 

As Pam Golding’s Nelson Ferreira told Business Day: “The City of Joburg started the ball rolling with the overvaluing of properties the last time it revalued the property roll, dismissing most objections.”

The result, he says, is that residents pay “excessive rates every month on inflated values”. 

According to Lightstone, which compiles indices based on sale prices actually achieved, property values in Joburg have grown only 9.73% between July 2017 and July 2022. “Our suspicion is that the remaining difference to get to the 12% might be the result of more stock being available,” it tells the FM. 

But the rent-seekers who now occupy municipal offices may have miscalculated. They can expect a barrage of opposition, including from the Organisation Undoing Tax Abuse (Outa), which last year defeated e-tolls — another unsustainable tax levied on residents.

Outa CEO Wayne Duvenage tells the FM that if politicians were honest with the city’s residents, they’d be admitting they’re not doing their jobs, pointing to the water systems now running dry because officials failed to put in backup power supply. “Stop leaning on residents for your incompetence and failing to manage finances properly,” he says.

Instead, says Duvenage, the city should be cutting rates — or at least committing that no bonuses be paid to officials. 

Whether Outa can find the grounds for a class action lawsuit against the city is another matter. But Duvenage says organisations should be able to challenge “gross irrationality” in rates hikes. “One has to question why rates shouldn’t be regulated,” he says. “Think about residents and affordability, rather than just property values.”

For now, the organisation will campaign to get residents who feel their property values have been misrepresented to use existing channels to object. The city should expect an avalanche of objections.

New mayor Thapelo Amad will need to appreciate that these sorts of underhanded rate hikes will only make the city uncompetitive, especially if he plans to stem the wave of semigration emptying the economic heartland of the country.

Residents of all municipalities should take note: it may be starting in Joburg, but it’s a tactic coming for you too.