Crisis of confidence

CARIN VISSER, of the Sannieshof ratepayers' association, which falls under the Tswaing municipality in North West Province, has used some of the money accumulated in its private rates and taxes account to restore water to the town after local ratepayers refused to pay for services not rendered. Documents show the association has also fixed tractors and begun using them to keep the town's gardens and cemetery cut and clean. It's stopped raw, untreated sewerage flowing directly into the Harts River and replaced and restored machinery required to print vehicle licences.

Says Visser: "You'll not believe the kind of situation we face. We were getting no services at all. Before the ratepayers started using the money to provide services, the town - which includes 8 000 poor blacks who live in a township - hadn't one drop of water. People in the township walked two kilometres to the nearest tap - only to find there was no pressure. In actual fact, the township is built on an old golf course. There are three boreholes on it. All that needs to happen for everyone to have water close at hand is for those to be connected."

Visser has years' worth of filed correspondence to the local council, the provincial government and the premier himself in which she documented grievances and warnings, including the fact that the municipality's electricity transformers haven't been serviced since 1998.

Shortly after declaring a dispute with the municipality, Sannieshof's ratepayers met the provincial government over what was perceived to be a water shortage. Provincial officials promised to investigate pumping water to the area from the Katze Dam but asked residents of the towns in the area - Sannieshof, Agisanang, Pelhindaba - to wait six months (with no running water) for a definite answer.

Says Visser: "In the meantime, business and ratepayers found it wasn't that there was a shortage of water. The reason for being without water was due to neglecting to maintain pumps and pipes. We resolved the water shortage ourselves by fixing the pump and cables of borehole 4, costing R12 300." Visser adds council officials now regularly ask for help.

"Recently the town's water pumps broke down and required two fan belts that cost R98. The council said it didn't have the money. So we paid for the belts, and water was restored in time for the weekend. Over the 16 months that ratepayers have been using their own rates and taxes to maintain equipment and provide those services, we have spent R162 000. The council gets millions a year (in fact, R400m) and is in overdraft to the tune of R102m. Nobody is accountable for a specific job," she says.

While Government adopts a reconciliatory tone, Provincial & Local Government Minister Sicelo Shiceka concedes discontent over services is warranted, especially when it comes to businesses that can't stay open without the basics, such as running water.

Ratepayers refuse to be placated by promises to deal with the situation, saying they want to see real improvements before they'll hand over rates and taxes being stashed in private accounts and, in some cases, being used to render services and repair critical infrastructure.

"There's no doubt this (rates revolt) is spreading quickly. It's extraordinarily embarrassing for Government," says Local Government Research Centre director Clive Keegan.

Finance Minister Trevor Manuel has been instructed to dispatch Treasury mandarins to guide provincial governments and negotiate with ratepayers' associations in the hope SA's rates base will be restored before the situation blows up.

So far 30 ratepayers' associations countrywide are withholding their rates and taxes. A further 40 have declared disputes with their municipalities in preparation for the next move - withholding payments. According to the National Taxpayers' Union (NTU), which has been advising ratepayer bodies on the current action, says around 200 more ratepayers' associations are expected to follow suit soon.

The NTU's Jaap Kelder is resolute. It's not for a lack of trying that ratepayers have arrived at this point. "This isn't something that started last week. Ratepayers' associations have got paper trails going back years documenting efforts to communicate with local councils, provincial ministers and premiers trying to alert them of services issues and trying to resolve them. Municipalities have ignored ratepayers - who are now showing their disgust.

The question is: Is withholding rates legal? Government says it isn't. However, eight days after receiving Finweek's questions about the legalities of the situation, Government hadn't responded. The State is understood to be taking legal advice.

The NTU has taken legal opinion and is confident that holding rates in a separate account when services that people are supposed to pay for aren't rendered is well within legal limits provided for in the Municipal Finance Management Act, the Municipal Systems Act of 2000, the Constitution as well as a High Court precedent that ruled against the Bloemhof municipality.

Members of the recently formed East Coast Ratepayers' and Residents' Forum in the Eastern Cape agree with Visser, saying they've been unsuccessfully discussing services delivery problems with the Great Kei Local Municipality for more than five years.

"The municipality refuses to communicate with us so we don't know what happens to the money we pay. We've decided to use the money to maintain our areas ourselves," says chairman Lappies Labuschagne.

Danie Eichstadt, who chairs the Dihlabeng ratepayers' association in the Free State - which is holding almost R400 000 in rates and taxes in a private account (growing at a rate of R50 000/month - says: "For five years we've tried to get things going. The municipality has ignored us. We declared a dispute with the municipality in August 2007. It has ignored us until now. Now that the provincial and national Government is getting involved we've been asked to a meeting (on 27 March). But we won't pay over money based on words."

Dihlabeng's budget is just proud of R400m/year and, according to the auditor-general's disclaimer opinion, is technically insolvent. It's unable to comply with seven basic requirements required to continue as a going concern and render proper services to the community. Those include proper management of creditors, debtors, dependence on Government grants, bank overdraft, current asset/liability ratio, operating deficit, funds and reserves.

While an Ipsos Markinor survey confirmed only 44% of South Africans place any trust in their local municipality, it's clear it's going to take more than a few meetings with ratepayers and councillors to turn this situation around.

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