By Deon van Zyl, Chairperson of the Western Cape Property Development Forum.
Local governments across SA have published Draft Budgets that are now subject to the typical box-ticking public participation process.
Closer to home, the City of Cape Town has published the Draft City of Hope Budget for comment (to which the WCPDF has also submitted its comment).
On the one hand, the City’s dedication to play catch-up on bulk services provision across all communities should be celebrated and, as the property development industry, we do celebrate this. The increased apex investment follows decades of under investment, bringing Cape Town to the brink of the same infrastructure crisis playing out in other metros across the country. Hopefully, this can now be averted.
To fund the increased expenditure on infrastructure, some creative thinking has led to the introduction of a wealth tax: service availability charges linked to the value of the property and not the scale of the service being provided.
‘Those that can, will pay more’ seems to be the standard government response across all spheres, not least at local authority level, as seen in the recent attempted VAT increase at national government level.
Had the Cape Town strategy of infrastructure capacity catch-up been complimented by an organisational cost-efficiency strategy (think of a more appropriate version of the current red tape reduction happening in the USA), the average ratepayer might have been appeased to some extent. But, on the administration side, it remains business as usual. Staff related costs are increasing by 7.5% – more staff are being appointed, and policy optimisation and regulation reduction remain a pipe dream.
Worldwide, we see taxpayers questioning value for money in their engagements with the government in a low-growth environment. Locally, in the Western Cape at least, we are for the first time seeing smaller municipalities challenging larger municipalities on value-for-money offerings. Consumers (including business owners) are starting to respond by migrating to municipalities offering better services at more affordable prices. Likewise, as the market responds, so will the property development industry in seeking new opportunities.
It will be fascinating to reflect, in years to come, whether local government has responded effectively to ratepayers’ needs and affordability constraints. And it will be interesting to see whether the upcoming location government elections will reflect ratepayers’ current frustrations on the proposed rates and taxes increases.
Rumour is that enormous rate payer pressure is already causing some tinkering with the numbers in City Hall, which may lead to a second Draft Budget.
