Many Durban residents cracking under immense financial pressure because of salary reductions and job losses since the start of Covid face “consumer carnage” as a slew of increases came into effect on Thursday.
Late yesterday, eThekwini Municipality spokesperson Mandla Nsele confirmed the city would extend its Covid Debt Relief Plan.
“The municipality has taken into careful consideration the continued financial constraints experienced by many customers, residential and business, and has decided to extend its Covid-19 debt relief plan to the end of December 2021. This will give our residents enough time to approach the city and make payment arrangements,” said Nsele.
Stringent lockdown level 4 was implemented this week, again shutting down a number of businesses, particularly in the hospitality, tourism and entertainment sectors.
With more jobs likely to be shed, icy winter temperatures setting in and a vicious third wave rampaging through Gauteng with increased infections forecast across provinces, hefty increases in electricity and water, rates, petrol and food will have to be included in household budgets.
This month will also see the new “water and sanitation infrastructure levy” at R1.50/kl water and R1.50/kl sewerage disposal. This was announced on June 23 and is to upgrade infrastructure affecting water supply and treatment of sewage effluent, according to the municipality, and will be on top of the tariff increases coming into effect this month:
- Electricity: 14.9%
- Water and Sanitation: 8.5%
- Refuse: 4.9%
- Property rates: 4.9%
Transport costs are also expected to rise significantly as motorists and commuters brace for an increase next week. The Automobile Association (AA) has forecast an increase of an estimated 23 cents per litre for petrol, 38 cents per litre for diesel and paraffin, 32 cents. International petroleum prices continued to climb in June because of an improved global economy boosting the demand for oil, while the rand has weakened from about R13.75 to R14.30 against the dollar.
The average cost of the household food basket has increased by 7.1% over the last 10 months, according to the Pietermaritzburg Economic, Justice & Dignity Group (PMBEDJ), while inflation over the same period was much lower (3-5%).
Debt Rescue CEO Neil Roets described the situation for consumers as “carnage on the streets”.
“This is an extraordinary set of increases for consumers to bear. We know that millions are buckling under financial pressure, thanks in large part to the increased impact of the coronavirus, specifically the surge in Gauteng on the back of the Delta variant, leading to a revised lockdown level.
“Many in the restaurant, hospitality and alcohol industries ‒ as well as their extensive supply chains ‒ have either been placed on short time, had their incomes cut or even lost jobs as a result. While there is talk of a renewed form of TERS, it is, to say the least, carnage on the streets,” said Roets.
Releasing the Household Affordability Index statement this week, PMBEDJ programme co-ordinator Mervyn Abrahams called for the Covid Special Relief Grant to be brought back, as well as topping up of pension and child grants.
He said June figures indicated that on a salary of R3643.92 for the average worker, 52.3% (R1907.50) of income was spent on electricity and transport.
“We expect this figure (52.3%) to increase massively this month (July). The greatest portion of wages go on these two items, and food is bought with what is left over once the bills are paid.
“With the petrol price and electricity increases, there will be far less available to buy food,” said Abrahams, adding that the crisis around child nutrition continued to deepen.
“It is likely the long queues of hungry people we saw in the first and second waves requiring food support will again come to pass because the state has taken away all income support, wages have not gone up, food prices have gone up, jobs continue to be lost, and unemployment levels remain untenably high,” he said.
And amid the auditor-general’s various reports on dysfunctional municipalities on the verge of collapse, municipal sector wage negotiations for this year’s increase remain in deadlock and are expected to continue.
Yesterday, the Organisation for Undoing Tax Abuse (Outa) said the decline of municipalities across the country would not stop until municipal officials and political office bearers were held accountable.
Outa public governance executive Julius Kleynhans said successive audit reports pointed to a lack of consequence management, poor leadership and a lack of accountability.
“It has become the norm that officials and political office bearers are, at best, suspended or removed from office, and in many cases, deployed to other government positions.
“Until individuals or leadership collectives are held accountable by way of legal prosecution and even imprisonment, nothing will change, and matters will just get worse,” said Kleynhans.
This week, the Financial and Fiscal Commission tabled its report on the Division of Revenue 2022/23 which said the research found that “the pandemic is causing significant dislocations in virtually all municipal revenue streams, which gives rise to liquidity crises of huge proportions.
Capital expenditure was found to be at a higher risk of deferment compared to operational expenditure. While revenue collection rates have fallen far below the norm, there are some glimpses of revenue rebounding in the metro and intermediate city municipal categories. This quick rebounding for some categories of municipalities suggests some financial resilience.
“On the other hand, Covid-19 has generally condemned municipalities deeper into debt. The increase in consumer debt has rendered many municipalities unable to service their own debt, especially to utilities such as Eskom and the water boards,” stated the report.
On the question of food security in the context of the Covid-19 pandemic, the commission found that the nationwide lockdown caused massive job losses, which had led to concerns about household food security.
The Independent on Saturday