What it means to open your municipal bill

2011-09-16 00:00

IT all started with a mischievous bolt that emerged seemingly out of nowhere. Prior to that infamous debacle over the errant piece of metal in Koeberg Power Station that coincided with blackouts in the Western Cape at the end of 2005, few South Africans had issues with electricity blackouts and load-shedding.

I suppose that given the lack of planning, investment and maintenance support given to Eskom by the government, the Pandora’s box that unravelled in the ensuing five years was inevitable.

Why does this matter now, in September 2011, amid weakening economic growth and stable (albeit slightly high) inflation?

I recently opened up a municipal bill, and to my horror was reminded that the next round of the 25% per annum electricity hikes had hit home — or rather — hit my fragile pocket.

I work out my budget very tightly — as most South Africans have had to do over the past few years — and the latest bill tested the shelf-life of my rather healthy heart.

The words “administered prices” (the prices of goods and services provided by entities owned by the government) mean very little to most South Africans. However — explained differently as the price of ­electricity, water and other ­government-rendered services — these two words threaten to ruin the average consumer’s financial wellbeing.

The Consumer Price Index (CPI) for administered prices was 11,7% in July 2011, and it has remained well above consumer inflation for more than 18 months. This means that if you spent R5 000 in July 2010 on goods and services provided by entities owned by the government, you probably now spent about R5 600 in July 2011. That represents an extra R7 200 per year on what is probably a very modest budget.

But these price increases run deeper than property rates, electricity and water-tariff ­increases. Standard Bank economists recently warned that education prices set by government agencies for primary and secondary schools are already double that of the overall inflation rate.

These inflationary trends have a real impact on both the fragile economy and the individual consumer’s household budget.

Business confidence is fragile and production or supply-side sectors of the economy such as manufacturing and mining have clearly taken a knock in the wake of waning demand and the recent industrial action.

The demand side of the economy, particularly consumption through retail, has led the way in the current economic recovery. However, the revival is by all accounts an anaemic one. Inflationary pressures in the economy, particularly consumer inflation which hits the pockets of ordinary citizens, threaten to derail this vulnerable recovery. Any such downturn in consumption will have profound consequences for the economy, job creation and job security.

Opening up a municipal bill is something many people dread. The figure you see at the bottom (payable to the municipality) will impact on a host of other spending and consumption-related ­areas of your life. A bigger bill every month could mean less money for that monthly dinner you planned with your partner, or less money for travelling out to visit cherished loved ones. Perhaps you’ll have to scrap that summer holiday you planned.

From electricity bills to university fees and television licences, administered prices infiltrate the very core of our financial lives.

South African households have had to alter their lifestyles drastically in the wake of the deep recession of the recent past. It appears that further lifestyle changes are unfortunately on the cards for many of us.

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