Madam Deputy Speaker, given the very technical and rather inane type of Bill we have today, I do not blame the hon Deputy Minister for trying to jazz it up a bit. It was intresting to have that meandering out and it did have some sense of foreboding when you talked about "blue notes". I thought it was another part of your attack on the DA that was coming, but certainly it was a welcome interlude from the technical nature of this Bill.
Section 41 of the Constitution of the Republic of South Africa provides, and I quote:
All spheres of government ... must -
(e) respect the constitutional status, institutions, powers and functions of government in the other spheres;
(f) not assume any power or function except those conferred on them in terms of the Constitution; (g) exercise their powers and perform their functions ...
This is the important part -
... in a manner that does not encroach on the geographical, functional or institutional integrity of government in another sphere.
The DA believes that local government has the right to exercise its powers and functions as prescribed by the Constitution of the Republic of South Africa, particularly in terms of sections 151 and 154. The amendments to this Bill are largely technical in nature and are certainly very welcome additions that have resulted from the experience of implementation of the Act over the past couple of years.
However, there are several amendments which the DA found problematic. The first one is the amendment of section 8. The DA believes that, as the Local Government Turnaround Strategy recognised, one size does not fit all, and that it is not suitable and it differentiates the approach as required. We believe that this amendment will dictate to municipalities through a very prescriptive manner the categories of property that they must have the in their rates policy as well as the subcategories. This amendment essentially removes the flexibility of municipalities to determine their own rating category and subcategories. This is a far too prescriptive exercise of national powers. Each municipality is different and each municipality needs to adapt to its local conditions and its local community. This was confirmed by the City of Tshwane v Blom, which recognised the fact that municipalities have the right to determine their own categories of property.
The current Act prior to the amendment was the correct way to go. It created a guideline and a framework for municipalities, but allowed them the flexibility to be able to do that. What the current amendment is trying to do is to make sure that if municipalities want to have subcategories, they have to go cap in hand to the Minister and motivate when, in fact, this is their right in terms of the local government legislation and the Constitution.
The correct locus for determining property rate categories is the Property Rates Policy, which is required by the Local Government: Municipal Property Rates Act. This provides for a section with a great deal of public participation and accountability, and it has councillors, who are the directly elected representatives of local communities, who on an annual basis review this policy, determine the categories and then apply them within the municipality. If there are problems, it is the local government councillors who are responsible for oversight and are held accountable for the types of categories and subcategories that the municipalities wish to apply.
The second amendment which the DA is concerned about is section 17, and this is probably the largest concern that we have. This revolves around the new category of public service infrastructure. Essentially the government is going to be moving to a system where they will be trying to exempt themselves from having to pay rates on public service infrastructure. There is no doubt that this amendment is a precursor to a ratio which is going to apply further down the line. This will lead to a loss of income in municipalities.
Every single municipality that appeared before the committee in the public hearings raised concerns around this issue. They said that if you are going to take this public service infrastructure out of the rating categories, you are going to move towards exempting it. What is going to happen? There is going to be a hole in the budget. That can only be met in one of two ways: an increase in rates and a shift in incidents to other categories of ratepayer, namely residential and business, or they are going to have to pull back on service delivery.
Thankfully the committee was able to prevail and the department came forth with a compromise position where this will be phased in over five years. The bottom line is, however long you take to phase it in, it is still going to lead to the loss of income in these municipalities, which is going to be passed directly on to ratepayers and you are going to have residential and business ratepayers essentially having to foot the bill for government trying to exempt itself from having to pay rates on those properties.
The other amendment which we had a concern about was the amendment to section 32 which extend the life of valuation rolls. Whilst this is certainly understandable for district municipalities, and there was sympathy for the argument put forward by the department, there is a lack of capacity in many of the smaller municipalities. This compilation of valuation rolls becomes a very onerous task and a very expensive task for these municipalities. But I cannot see fit to extend this to metropolitan municipalities.
Raising rates is one of the key functions of local government in order to finance itself. A municipality particularly a metropolitan municipality - that cannot regularly update its valuation roll should be getting the intervention of the department to determine exactly what is going wrong there. Instead, we have a blanket extension, where municipalities can keep - and in the case of a metropolitan municipality could effectively keep - a valuation roll in place for up to six years.
The whole reason of the Act was to move to market value, where the willing- seller, willing-buyer would pay for the property. The fluctuations in the property market over a six-year period are massive. You could well end up with a situation where residents are paying rates on a property that was purchased during a boom in property, but where there has now been a bust and market value has deteriorated or degenerated or decreased and the property owners are still paying pegged rates at the higher market value. If you are going to use market value, you must use market value; you cannot end up with a situation where people are stacked in a false situation when paying rates on property. And of course the adverse could also occur.
The other clause that the hon Chairperson mentioned was the issue around the professional associated valuers sitting on appeals boards. We believe that this is undesirable, because you have professional valuers who compile the valuation rolls, while you then have professional associated valuers, mostly junior categories, sitting in appeals on decisions taken by them. The example will be like the junior advocate sitting in on an appeal of a High Court judge.
My concern here is that it could well lead to a weakening of appeals boards across the country. This could have a negative effect in one of two ways. Firstly, you could have a situation where professional associated valuers, junior valuers, are sitting in on decisions and are not capable of actually processing them as they are reviewing decisions of people who are much more experienced and have much more professional qualifications. This could well lead to problems. Secondly, many big corporations and companies may come in to challenge the rates, bringing in top advocates, bringing in experienced professionals to challenge the rates. Whether the junior valuer is going to be able to stand up and defend the municipal valuer's decision in this regard is open to debate.
The Valuers Association created a dispensation last year which allows junior professional associated valuers to apply and to be accredited as professional valuers to try to get more professional valuers onto the market for municipalities to take care of. I believe that this is going to lead to a dumbing down of the appeals board. This is important, because these appeals boards are very often a resident's - ratepayer's - last recourse in terms of appealing against valuation. The only step after that is the High Court and with the cost of the legal process in our country, it is simply unaffordable for most residents.
We welcome the new reporting mechanisms that are contained in the Bill, and we hope that something concrete will happen with regard to those reports. We have, as has the NDP, recognised that the government's response has been for more regulations for local government, while many of the existing regulations are not implemented. We hope that the regulations and reports that are now required are actually going to be dealt with, processed and actioned in those municipalities that have not been compliant. Thank you. [Applause.]