Fears for job losses due to higher municipal rates
2005-04-07
THE Drakenstein Municipality’s has no control over ratepayers’ debts, while service levels are dropping and rates hikes could cripple local business.
That is the contention of the local business sector, led by Max van der Wath (chairperson of the Wellington Business Chamber/Sakekamer), who also severely criticised the increase of 10,07% in councillors’ remuneration.
In their submission on the Drakenstein Integrated Development Plan and budget, van der Wath called on Council to review the proposed rates increases of 7,5% to be implemented on 1 July.
“Our textile and food processing industries are under severe pressure and should economic conditions not change in the near future, further heavy job losses are expected.
“Agriculture is in recession due to the drought.
“Drakenstein’s proposed increase in rates will translate in even more jobs being sacrificed in order for businesses to survive.
“Above inflation annual increases in rates make business less competitive nationally and internationally.
“It does not contribute to Local Economic Development - in fact it reduces our chances significantly of growing the local economy.
“This will translate into higher unemployment and the resulting socio-economic problems.”
Van der Wath also said that the Drakenstein Municipality’s essential services “are in a state of near-collapse due to a policy of not filling vacancies, while councillors have given themselves the maximum salary increase of 10,07%.
“In the draft budget, the Municipality provides for a reduction of 4,78% in its salaries and wages, translating into a saving of R7,9 million.
“No mention is however made of how this commendable saving is to be achieved, such as realistic wages, planned reduction of posts and increased productivity.
“It is our contention that this saving may simply be the result of a policy of not filling vacancies.
“The obvious danger of following such a simplistic route is the near-collapse of essential services as reported by the Cleansing Department which has a 30% vacancy rate (of the 296 total posts, 99 are currently not filled).
double inflation given the state of affairs at the Council and local economic conditions, must be severely criticised.”
Van der Wath also expressed the concern of the business sector over the unabated rise in debt of the Drakenstein Municipality (currently more than R125 million), with insufficient measures to manage the situation.
“Council had to increase Provision for Bad Debts by 53,44%, an additional R8 million, to total R23 million.
“To put this figure in perspective, the total increase of operating income equates R29 million as represented by a rate increase of 7,5%.
“Thus, we are making no progress: those who pay subsidise those that don’t pay and we are reaching critical mass where any reasonable annual increase in rates of those who pay, won’t be enough to subsidise those that don’t pay.
“Capital charges are budgeted to increase by a further 8.8% (R5,3 million), totalling R66 million (13.01%) of the total budget. This is the amount spent on servicing debt in the form of interest payments.
“Should one consider the decline in interest rates it means that substantial new debt has been incurred to keep the Municipality afloat, while there has been a reduction in collection costs of 0,31%. If we lose the debt battle our municipal system could collapse.”
“Local government cannot create sustainable jobs because it needs a growing economy, a broadening of the tax base and a vibrant competitive private sector to create jobs.
“The Municipality wants to rationalise the tourism function in order to achieve a cost-saving to council.
“This is one of our major industries and one can hardly imagine the rationale of rationalising the promotion thereof.
“Instead one would rather like to see an expansion of the function and a broadening of the existing public private partnership already in place to fund the expansion strategy.”
Van der Wath proposed urgent bilateral discussions between council and the business sector be held before the 2005/2006 IDP is finalised.
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