Who’s feeling THE PINCH in PMB?

2013-05-23 00:00

AS the Msunduzi Municipality readies itself to pass the 2013/14 budget and tariffs, it is useful to reflect on the latest 2011 Census. This data provides the most recent demographics and socioeconomic characteristics for our city, and, along with the political vision of the municipality, should inform budgetary allocation and the structure of tariffs for municipal services.

The Msunduzi Municipality presented an overview of these statistics as part of its presentation to the Integrated Development Planning (IDP) and budget izimbizo. Our city has a population of 618 536 people and 163 993 households. The average household size is 3,6. Our official unemployment rate is 33% and the average household income is R108 926.

These statistics are interesting, as most statistics are. However, in a context of extreme levels of inequality, they don’t tell us much about the people who actually live here. Statistics must be broken down and interrogated if they are to mean anything.

Poorest of the poor: 60% of households

So, let’s take a closer look at our city and start with the first income band. Out of our population of 618 536 people, 43%, or 265 933 people in our municipality, have no income. The number of households in this group is 26 358, which means that about 10 people live in each of these households — and no one brings in any income. Widening this scope to calculate the total number of people who earn from zero to R1 600, this number increases to 71% of our population (439 649), or 44% of all households (71 604).

The Pietermaritzburg Agency For Community Social Action (Pacsa) monitors the price of a basic basket of food. In September 2012, the basket cost R1 354,34. This means that a significant proportion of households (44%) in our city can barely afford to buy a basic basket of food for their families. Let alone the purchase of any­thing else — no money for transport, health care, education, non-food items (sanitary, hygiene, domestic) and no money to pay for municipal services.

If we add another R1 600 per month to this group, we can then calculate the total number of people who earn from zero to R3 200 per month, and this number increases to 77% of our population (474 656), or 60% of all households (98 680). R3 200 is an important number because this, along with a property value of R100 000, is the threshold to access the Msunduzi Municipality’s indigent concessions (free basic services). National government finances the access to basic services to poor households through a grant called the Equitable Share.

In the past financial year ended June 2012, the Msunduzi Municipality only allocated 3,3%, or R10 million of its R304 million grant, to fund free basic water, electricity, refuse and sanitation to poor households. Only six percent, or 5 839 households (out of 98 680), received the “benefit”.

This means that most of the 60% of our households, which have very little or no money and live in large families, receive no municipal service subsidies. The lucky few that do receive free basic services struggle with the miserly volumes of 6 kl of water and 50 kWh of electricity, which see no connection to household size, dignity or transformation. Households that exceed these free volumes must pay the full tariff for additional volumes. Any payment, however, for water or electricity by any family comprising this group, which makes up more than two-thirds of our population, will severely compromise the health, education and economic prospects of the members.

The working poor: 32% of households

The second income band makes up 32% of our households. In this group, 23% earn between R3 201 and R12 800 a month, and nine percent earn between R12 801 and R25 600 a month. The lower end of this group still earns relatively low incomes, but is excluded from indigent policy concessions, receives no subsidisation and must pay the full tariff costs for its services. This is the city’s working class. It is this group of people that typically keeps the city’s economy and service-apparatus moving. This group is highly regulated and policed. It is targeted by the municipality for service payments and debt collection.

The problem is that bills bear absolutely no relation to ability to pay. Households in this group are really starting to struggle to keep up with the costs of everyday expenses, including the high cost of municipal services. This is the group that is forced to make terrible decisions about putting food on the table, paying for transport, school fees and health care, or paying for municipal bills and thus keeping out of the fangs of the municipal debt collectors and disconnectors. If the Msunduzi Municipality passes its proposed 2013/14 tariffs unchanged, the typical total monthly municipal service bill for this group of households will be R1 313,22. Add transport costs to this figure, which are very expensive because of unchanged apartheid geography (around R360 to R680 per month), escalating food prices, a high health-care burden and significant familial pressures on the wage earner, and we see that an increasing number of households, particularly at the lower end of this band, are in big trouble.

The city’s wealthy: eight percent of households

Some households in the city are doing very well. The third income band comprises households earning from R25 601 to R204 801 and more a month, and makes up eight percent of all households in our city. This group of consumers receives the best deal. It reaps the benefits of fixed charges and receives leniency for high levels of consumption. What this means is that the luxury consumption of this group is subsidised by less wealthy to very poor households. This group also receives the highest rates rebates, since rebates are calculated by multiplying a fixed reduction against the total property value — the higher your property value, the higher your rebate. The Msunduzi Municipality categorises rates rebates as “free basic services”. In the past financial year, this amounted to R373 million, which is about R70 million more than the total equitable share. The important thing we need to recognise in the run-up to the passing of the final municipal tariffs is that a policy decision that knowingly diverts money out of our purses, takes food off our plates and pushes us into debt cannot simply be undone once the mistake has been realised. Nor can it be good public policy or political strategy to deny the people sufficient volumes of basic services, force people to put their dignity and lives in danger and drive thousands of people out of the system. The city must acknowledge the very difficult socioeconomic context in which it and its people exist. An intervention that can ensure more money in the pockets of struggling households will play a significant role, not only in alleviating poverty, but also investing in the future economic development of the city. If the satisfaction of this primary goal means that the state must fully finance or heavily subsidise services and transport to ensure the longer-term socioeconomic development and social cohesion within the city, then it must. Big business, too, has a major role to play. Holding the city hostage with its ability to retrench workers at will must stop. It cannot be that business continues to receive concessions and subsidies from the city and its residents without investing in the city, without eschewing labour brokers, or providing secure employment, increasing the wages of workers and ensuring that more people are employed. Business must stop crying — it can afford to pay for the municipal services that it requires.

Something has to give. The struggling majority of this city has simply given too much and for too long. It is now up to the municipality, business and wealthier citizens to play their part. The 2013/14 tariff policy must be substantially restructured for affordability, equity and justice, and to allow for services to be developmental and transformative. Should the Msunduzi Municipality continue with its roll-out of an ineffective indigent policy, its refusal to change the tariff structure and its continual pandering to business and the wealthy, it may struggle to manage social fall-out. With a national election next year, this would not be very clever.

• Julie Smith is a researcher based at Pacsa

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