How Midvaal delivers more to the poor than ANC-run councils

by The Editor

FEATURE: Every municipality is required by national legislation to implement an indigent policy. If someone registers as indigent, they receive from their local government a package of rebates for basic services such as water and electricity. With regard to income, the set minimum is R2 280 – earn less than that amount and you can qualify as indigent. But municipalities can set the threshold higher. Midvaal boasts the highest threshold in Gauteng. And the reason it is able to do that is because it runs the most efficient administration in the province too: proof that good governance is the key to effective poverty relief programmes.

How Midvaal delivers more to the poor than ANC-run councils

By: Gareth van Onselen

5 April 2012

As a poverty-relief measure and in accordance with national legislation, every municipality is required to adopt an indigent policy, which allows those people registered as indigent to qualify for a package of rebates from their local government.

The rebates in question concern those basic services – water, electricity, refuse removal, etc – that are provided to citizens by local authorities. In order to qualify all a citizen needs to do is register with the municipality. Once registered they automatically are awarded a series of financial relief measures for each service.

The exact nature of each relief package varies from municipality to municipality but only in so far as the amount and extent of the relief is concerned, although there are set minimums. Each municipality must provide relief from the kinds of basic services identified above and each must offer at least the set minimum (a municipality cannot ignore the requirement).

In order to determine a fair benchmark with regards to what sort of income level would qualify someone as indigent, the Department of Co-operative Governance has used the figure of R2 280 (or double a state pensioner grant) as a recommended set minimum. Put another way, if a person earned less than this amount, they should be able to qualify as indigent.

But, municipalities are allowed to be flexible. While R2 280 is the recommended set minimum some use a higher figure – in which case, more people can qualify (technically, the threshold is not legally binding, so some have set a lower amount).

In Gauteng, the DA-run Midvaal boasts the highest threshold out of all local authorities in the province: R3 200. The new threshold was recently adopted by the Midvaal council, on 23 March. Here is a full breakdown of the threshold as set by every local authority in Gauteng.

Midvaal: R3 200.00
• Randfontein: R2 500.00
• Westonaria: R2 280.00
• Mogale City: R2 280.00
• Emfuleni: R2 280.00
• Lesedi: R2 280.00
• Merafong City: R2 280.00

The reason municipalities are allowed some flexibility is because their ability to generate the financial resources necessary to set a threshold will have an impact on how high that threshold is. If a municipality is, for example, unable to collect its rates or has a large unnecessary debt it is forced to pay off, it won’t be able to cross-subsidise poverty relief measures such as the indigent policy to the same extent that a municipality that does effectively collect rates and has no significant debt.

So, the lower the threshold, the more likely it is that the municipality in question simply cannot afford to set the qualification level any higher.

In turn, the more efficient a municipality is at collecting rates and managing debt, the higher the threshold it will be able to set and the greater the number of impoverished people able to qualify for a rebate.

And this is the key point: very often the DA is criticised for focusing too much on running, clean efficient administrations as opposed to helping the poor and destitute. On face value that is not true, DA governments at local and provincial level have comprehensive anti-poverty programmes. But, and this is the thing, running clean efficient governments – that collect rates, that manage finances properly, that minimise unnecessary debt – are in effect administering anti-poverty measures. Because the better managed an administration is, the more efficient it is at collecting those rates monies it has budgeted for, the more effective and extensive its poverty relief programmes can be.

Midvaal makes the point perfectly.

Not only has it achieved nine straight financially unqualified audit reports from the Auditor-General, but the fact that it is the only municipality in Gauteng with a revenue collection rate of 100% means it is able to set its indigent threshold higher and, therefore, provide basic services to a greater number people without the means to provide properly for themselves – more than any of the ANC-run councils in the province. Most recently the Municipal Financial Sustainability Index, released by Ratings Afrika, ranked Midvaal the best municipality for financial stability in the province.

The same principles (and, in the majority of cases, outcomes) apply to every other DA-run municipality, all the way through to the City of Cape Town.

And, this works in the other direction too. Many of the ANC-run municipalities on that list are simply so poorly run, they cannot match Midvaal’s threshold, even if they wanted to. Emfuleni, for example, has in the last ten years received a total of five disclaimed opinions, four qualified opinions, one adverse opinion and not once a financially unqualified report from the Auditor-General. At the same time, more than R2 billion is owed to Emfuleni by the public and businesses in the area.

In a 2010 speech Emfuleni Mayor Mshudulu explained the consequences of poor debt collection for the municipality: “The municipal debt is mounting and this has affected the ability of the municipality to effectively discharge its mandate of delivering services to its residents.” The final affect of which he put as follows: “The failure to pay will ultimately lead to the total collapse of our municipality.”

An inability to properly run a municipality, to collect rates in line with its budget projections leads to a downward spiral of debt that, once past a certain point, is almost impossible for an administration to arrest.

And that is not just an assault on good governance – but an assault on the poor, who are most effected by the consequences of this kind of mismanagement as they are the most sensitive to it. Indeed, one could quite justifiably argue that to run a municipality badly is a direct attack on the poor.

So, the next time you hear the ANC in the Western Cape whine about how the DA-government government in the province or the City of Cape Town are too concerned with clean audit reports and not the poor – think again. The one is directly related to the other and the more seriously you take the one, the more seriously you take the other.

By that measure, the ANC – supposedly the party of the poor – has a lot of answer for. And Midvaal, supposedly the very antithesis of pro-poor governance (at least if the ANC is to be believed) stands alone as the local authority most committed to helping the greatest number of poor people gain access to basic services in Gauteng.

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