Steep tariff hikes on cards

Nelson Mandela Bay ratepayers will have to dig deeper into their pockets from July if proposed water, electricity and property tariff increases are approved. The municipality has proposed steep hikes of 9.5% for water, sanitation and refuse, 5% for property rates and 6.8% for electricity. The proposals are contained in the draft budget noted by the council on Thursday. The tariff proposals will now go out for public comment before the city formulates the final budget to be adopted at the end of May. The budget, would, however, only come into effect from July 1. On Tuesday, acting chief financial officer Jackson Ngcelwane said the extra charges would be further exacerbated by the VAT increase set to come into effect from April 1. He was presenting the draft budget to a joint mayoral and budget and treasury meeting. “These are the figures that we have worked on in terms of guidelines from national Treasury and Nersa,” he said. While the proposal for property rates increases would be kept at 5% for the 2018-19 financial year, an increase of 7% was projected for the following two financial years. “This will also depend on what we put into the budget in terms of additional expenditure. This is the picture currently,” he said. Water, refuse and electricity would be  affected by the VAT increases. Mayor Athol Trollip said: “The issue around VAT increases is very much going to have a big impact on our tariffs. “The proposed tariffs are too high and they are compounded by the increase of 1% on VAT. “That is something we are not going to be able to sustain.” Trollip urged officials to look at ways to improve operational efficiencies in an attempt to bring the tariffs down. “I have noted in Joburg, how high their increases are due to the impact of general evaluation. What happens in Nelson Mandela Bay doesn’t happen in a vacuum, it happens in all municipalities,” Trollip said. Last year, the municipality received a backlash from angry residents who were not happy with the general valuation of their properties, which pushed the values up exponentially in some cases. Trollip said improving operational efficiencies within the municipality to counter the tariff increases was non-negotiable. “We will continue doing everything in our power to improve operational efficiencies and aligning key performance indicators of mayoral executive members and their executive directors,” he said. Budget and treasury political head Retief Odendaal said they would fine-tune the budget after it went out for the public participation process. “The draft budget sets out the beginning of council’s budgeting process. Officials have come with a budget within certain limits,” he said. The draft budget could still change with further input from Trollip and other councillors. “If there is sufficient budget available, obviously we will give considerations to those requests,” he said. “When you bring tariffs down it comes at a cost, it means there is going to be less income. “It’s a huge task to go and do but we will go through all the general spend items and see where we can cut certain expenditure; it’s a massive process but we have to find a way to do it.” Odendaal said this would also force departments to allocate money to core service delivery aspects. “It’s quite a tedious task but it has to be done.” ANC councillor Rory Riordan threatened that they would not support the draft budget as they had not been given enough time to interrogate it. Riordan said the document had been delivered on Friday evening last week, which had given councillors only one business day to interrogate the document. Nelson Mandela Bay Business Chamber chief executive Nomkhita Mona was concerned about the effects high tariffs would have on future investments in the city. “It should be stressed that higher tariffs can potentially discourage investment and innovation, thus hindering the city’s economic growth , ” she said. “The chamber believes that any proposed tariff increases should be reasonable and targeted below the inflationary levels. Any excessive tariff hikes would affect business negatively. ” Kobus Gerber, of the Nelson Mandela Bay Ratepayers’ Association, said he was mostly concerned about the proposed hike for water. “The hikes for electricity and property rates are not bad, but I would have preferred an increase of around 6% for water. “The consumers are already under a lot of financial pressure, and the frequent tariff increases place more pressure on them, and on [the ability to] create jobs. “I know the metro needs the funds for infrastructure maintenance and [operational costs], but the rising rates are a result of corruption in the metro and the country over the last seven years and now the consumers [have to pay for it].”