In this month’s feature article, ‘Beyond the statistics – this is what our city looks like’, Julie Smith, our Research and Advocacy Coordinator, presents the reality of inequality in our city. She writes, “The city must acknowledge the very difficult socio-economic context in which it and its people exist. An intervention which can ensure that either food prices remain affordable or if more money can be in the pockets of struggling households so that sufficient, quality and diverse food can be secured – 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 municipal services and transport to ensure the longer term socio-economic development and social cohesion within the city – then it must.”
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 socio-economic characteristics for our city. It is this data, along with the political vision of the municipality, which should inform budgetary allocation and the structure of tariffs for municipal services.
Msunduzi Municipality presented an overview of these statistics as part of its presentation into the 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% (expanded by the way moves this to around 55% unemployment). 45.2% of our households are headed by women. The average household income is R108 926 … etc.
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 that actually live in our city. We are not average, resources and wealth is not distributed equally in our population, and so averages cannot be used to determine how budgets should be allocated or tariffs structured for affordability and revenue sustainability. Statistics must be broken down and interrogated if they are to mean anything. This article, by focussing on our city’s three major income bands, may assist us to better see our city in the context of municipal service affordability. We will be able to identify who can pay nothing or a little; who can reasonably be expected to pay at proposed prices; and who can be expected to pay more than the proposed tariff increases. 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 around 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 R1600; this number increases to 71% of our population (439 649) or 44% of all households (71 604).
PACSA monitors the price of a basic basket of food. In September 2012; the basket cost R1354.34. 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; 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 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 last financial year ended June 2012 Msunduzi Municipality only allocated 3.3% or R10 million out of its R304 million grant to fund free basic water, electricity, refuse and sanitation to poor households. Only 6% or 5 839 households (out of 98 680) received the ‘benefit.’
This means that most of 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 6kl water and 50kWh electricity which see no connection to household size, dignity or transformation. Households which 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 members. We therefore have a situation whereby the majority of our population is being pushed outside of the system. Families are forced to use alternative sources of electricity (paraffin, candles, wood) and resort to unsafe or previously undeveloped water sources which put their families’ health, futures and lives in danger. Many families in this group will choose to put their families’ attempts at dignity and transformation above the injustice, inequity and violence of the state. If service infrastructure is in place; they may ‘steal’ water and electricity.
The second income band of households makes up 32% of our households. In this group, 23% earn between R3201 and R12 800 a month and 9% earn R12801 –R25 600 a month. This group, particularly those at the lower level, still earns relatively low incomes; 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 keep 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. This group has no option but to remain within the system. This group has to consume within a normal consumption range if it is to function properly within the system. The problem is that tariffs are not affordable within a normal consumption range. 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 around putting food on the table, paying for transport, school fees, health care or paying for municipal bills and thus keeping out of the fangs of the municipal debt collectors and disconnectors. If Msunduzi Municipality passes its proposed 2013/14 tariffs unchanged; the typical total monthly municipal service bill for this group of households will be R1313.22. Add transport costs to this figure which are very expensive since unchanged apartheid geography still sees workers far from their places of work (around R360 to R680 per month), escalating food prices, a high health care burden (we still have one of the highest incidences of HIV in the country) and significant familial pressures on the wage earner, amongst an amalgam of other necessary expenses for everyday life; and we see that an increasing number of households, particularly at the lower end of this band are in big trouble.
Not everyone in our city is being squeezed. Some households in the city are doing very well. Indeed some might say that their incomes are excessive, with others going further to name such wealth as sin, given our city’s make up and history. The third income band comprises households earning from R25 601 to R204 801 and more a month and make up 8% of all households in our city. In case anyone is still unconvinced that there are structural problems with Msunduzi Municipality municipal service tariffs – this group lays bear the inequalities.
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. Msunduzi municipality categorises rates rebates as ‘free basic services.’ In the last financial year this amounted to R373 million – about R70 million more than the total equitable share. The wealthiest group in Pietermaritzburg via the conversion of rebates to real money in the municipality’s budget and treasury department is responsible for consuming the highest proportion of the 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 which 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 masses of our 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 socio-economic context in which it and its people exist. An intervention which can ensure that either food prices remain affordable or if more money can be in the pockets of struggling households so that sufficient, quality and diverse food can be secured – 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 municipal services and transport to ensure the longer term socio-economic development and social cohesion within the city – then it must.
Big business too has a major role to play. Holding the city hostage by its ability to retrench workers at will and thereby forcing the municipality into offering concessions it is in no position to give whilst unabashedly advocating for even greater subsidies must stop. It cannot be that business continues to receive concessions and subsidies from both the city and its residents without investing in the city – without eschewing labour brokers, or providing secure and permanent employment, increasing the wages of its workers and ensuring that more people are employed. It must recognise that its demands on the local state to reproduce labour power and ensure that the local labour force is housed, fed, fit and disciplined for capital; is being actively eroded by its own parochialism and greed. It is wittingly cannibalising its future employee and demand base. Business must stop screaming and crying like a bunch of rambunctious sugar-filled children at a Justin Bieber concert – it can afford to pay for the municipal services that it requires. If this implicates its senior managers and CEOs (who sit in the top 1.5% of our income pyramid) having to take one less ‘safari’ to Hluhluwe before the rhinos disappear or forgo that family golfing weekend or 5-day vacation at fabulous Sun City – then so be it.
Something has to give; and 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, justice and to allow for services to be developmental and transformative. Should 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 – the local state may struggle to manage what appears to be an emerging social fall-out with rising levels of distrust and indeed a situation whereby citizens may increasingly reject state policies of governance. With a national election next year, this cannot be very clever.
PACSA Research and Advocacy Coordinator
17 May 2013