Municipal hike to hit consumers

Pretoria - Municipalities' plans to choke another 20% out of punch-drunk consumers this year will further constrain consumer spending.

National Treasury said that municipalities countrywide had budgeted for a 19.4% increase in operating income for the financial year beginning on July 1.

This is, according to North West University economics lecturer André Mellet, considerably more than the inflation rate, which is expected to be about 7% for this year and the next. He reckons consumers will struggle to pay so much more for their municipal services and arrears could further escalate.

Consumer expenditure is the foremost economic driver, he explains, and if it does not get into gear economic growth and job creation will fail to materialise.

Treasury also said that municipalities had budgeted for a 17.6% increase in operating expenditure, providing a 1.8% point buffer between the higher expenditure and income.

Mellet believes this is too narrow.

The planned expenditure was announced in the budgeting process, and expectations created among consumers. He reckons failure to adhere to these promises could spark further protest actions.

Theo Venter, a political analyst at the North West University, says higher electricity tariffs have already distorted municipal budgets. He adds that municipalities' staff expenditure has also got out of hand and is generally consuming much more than 40% of the budget.

"Salaries are eroding the money for service delivery. People don't understand the technical details, and simply see a bunch of "fat cats" up there and a lack of service delivery on the ground."

- Sake24.com

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