The DA says a proposal by the ANC for Ekurhuleni to write off more than R20bn that residents owe it in rates and taxes in exchange for supporting EFF finance MMC Nkululeko Dunga’s 2023/24 budget is unfeasible and will encourage further nonpayment.
The municipality, which has a budget of R51.2bn, is effectively run by the ANC and EFF, with positions in executive mayor Sivuyile Ngodwana’s 10-seat mayoral committee equally shared among the two parties. Dunga, who is also the EFF’s Gauteng chair, is scheduled to present the metro’s budget on Thursday.
The ANC and EFF butted heads recently over the alleged theft of rubbish trucks in the metro, which the EFF said could save the metro hundreds of millions of rand if recovered. However, the ANC responded that the EFF and all councillors had voted for a council item in February that recommended 53 of the city’s garbage trucks be written off.
In a media briefing in Germiston two weeks ago, ANC caucus whip and acting regional chair Jongizizwe Dlabathi said the ANC would support the budget if it met 10 conditions.
The conditions include that the budget:
- Be aligned with the state of the city address priorities;
- Tackle the funding of critical energy infrastructure, “including adding three additional transformers to cater for Thembisa, Thokoza and KwaThema [townships]”;
- Bring back “free basic services”; and
- Involve the implementation of a “community mandate of a 75% debt write-off — a one-off relief given the high cost of living”.
DA councillor Fanyana Fana Nkosi, who served as the finance MMC in former mayor Tania Campbell’s administration, told Business Day on Tuesday that the city is owed more than R30bn by residents and businesses. “Of that amount, businesses owe over R2.5bn and the rest is owed by residents,” Nkosi said.
The proposed 75% write-off would be extended to residents only, meaning the metro would effectively have to cancel just more than R20.6bn of the debt. “When we were still in government we encouraged residents to pay instead of saying we are going to write off 75% of their debt,” Nkosi said.
“We told them to approach the municipality and make arrangements to service their debt. If they do that, we said, we will write off 50% of their debt that is a year old. The culture of nonpayment is rife in this country.”
Asked if he would accede to the conditions put forward by the ANC, Dunga said on Tuesday: “The conundrum of running a [coalition] government [means there is] no carte blanche in terms of the political direction. You strike a balance between the views of everyone [in order] to have a consolidated programme of action. [You have] to encompass every view [and] that’s what we have tried to [do with this] ... budget.”
Dunga said the previous DA-led administration directed resources towards capital expenditure programmes, stressing that his budget tried to shift the focus towards underserved communities.
On the 75% debt write-off proposal, Dunga said the metro already has a mechanism where “we write off 50% of your debt, provided people start paying rates and taxes and that they do not default”.
“We are looking at all efforts to meet [the needs of] our citizens as much as we can. We are also looking at the fiscal control guidelines given to us by National Treasury, so I’m not saying it’s not feasible to write off [75%] debt, but the honest truth is that the city is barely surviving regarding its surplus cash flow ... We need to correct that first before looking at any aspect of expenditure,” Dunga said.
Dlabathi could not be reached immediately for comment.
Political analyst Ralph Mathekga said it is quite disingenuous of the ANC to make such a demand to its coalition partner while it is part of the governing coalition.
“Municipalities are struggling to collect rates for many reasons, they are financially stressed and this is a nationwide picture, and to be making such a demand is disingenuous,” Mathekga said, adding it is tantamount to “holding the coalition to ransom”.
“You need to be pragmatic in your approach,” he said, adding the metro could look at how it restructures the debt rather than saying “we are going to write off R20bn”.
Business Day reported recently that municipalities owe Eskom about R57bn and they will soon get respite from repaying the power utility after a decision by the Treasury to have some of the debt written off over three years.
Most of the defaulting municipalities did not generate sufficient funding from their operations to sustain the work they had to perform, leaving them “financially gridlocked”.
Meanwhile, Dada Morero, the ANC caucus leader and finance MMC in the Joburg metro, implored the city’s 6-million residents to pay for municipal services.
“If the municipality doesn’t get the money from ratepayers, we can’t do all the service delivery things that more and more of our communities are calling for,” Morero said, adding that the metro’s coffers are “fast drying up due to the culture of nonpayment”. About 65% of the city’s annual budget — amounting to R77.3bn for 2022/23 — is funded by rates.
Morero is expected to deliver the metro’s budget for 2023/24 in June.
Update: May 23 2023
This story has been updated with new information.
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