Deputy Speaker, Deputy President, hon members, in the spirit of co- operative governance, the Minister for Co-operative Government and Traditional Affairs, Minister Lechesa Tsenoli, has asked me to speak in this debate. I do so gladly, and I do so in support of the Local Government Municipal Property Rates Amendment Bill. Deputy Speaker, allow me to begin on a blue note, which might not have an immediately obvious connection with this Bill. Fifty years ago, in mid- 1964, Chris McGregor, Janni Jiyane, Mnikelo Moyakhe, Mongezi Feza, Harry Miller, Dudu Pukwana and Louis Moholo, some of the best jazz musicians that our soil has produced, left South Africa. They had performed as the Blue Notes. In exile, they reconstituted themselves as the Brotherhood of Breath. One of the reasons why they left South Africa was the racial segregation and spatial injustice of apartheid that made it impossible for musicians of different race classifications to perform together. McGregor's wife, Maxine, described that South Africa in his biography, entitled Chris McGregor and the Brotherhood of Breath. Because they were not allowed to live in white areas, the black and coloured people were dispossessed of homes that they might have owned for generations and systematically dumped with their few belongings on barren hill sites that were designated as homelands, like KwaNdebele, a 50-mile long shantytown that sprang up almost overnight in the veld, miles from anywhere. The people who lived in those shacks were obliged to spend sometimes as much as eight hours a day on buses that wound around picking up passengers, costing the government more than R1 000 a head, per commuter, each year in subsidies. This was the biggest single expense in the development of a home loan, just to work in Pretoria, a distance of 40 miles, leaving them perhaps with five hours in their homes out of 24 hours a day. This money might have been better employed in building homes. There was no work in KwaNdebele; only a few elites were employed as officials and the rest of the inhabitants were forced to travel daily into South Africa to earn a living. This might have changed in law, but it will take many years and enormous amounts of money to undo the damage that was done during this time in habitation alone. It was when apartheid was building up to this most depressive era that Chris joined the street demonstrations against the closure of the universities to blacks and begun his efforts to put together a mixed race jazz group. This painful history and the challenges that it poses to us today is captured by Mark Orkin in an introduction to Apartheid City in Transition, published in 1991, as we were embarking on negotiations that would lead to our first democratic elections in 1994, the adoption of our Constitution in 1996, and our system of democratic developmental local government in 2000. The apartheid spatial system as it manifested itself within the urban system as a whole was premised on policies aimed at decentralising and deconcentrating employment at the micro level and dividing the city itself into racial residential areas at the micro level. Until 1986, entry into the city itself was regulated by influx control which, as the dividing line between town and countryside, was secured by repressive, racially based legislation. This division was complemented by economic constraints that blocked access for the poor to spaces that were too costly for the migrating populations. Underpinning this racial and class-based exclusion was the regional integration of labour markets that undercut constitutional and racial boundaries. The result has been a massive waste of resources, and the net spatially based redistribution of wealth from the poor to the rich as a result of a divided tax base; constraints on small business development; limits on agglomeration in the inner cities; the subsidisation of transport; and, to counteract the cost of subsidies, deconcentration, decentralisation and the huge misuse and non-use of land. Out of this has emerged the need for a city that maximises the use of its resources and ensures access to its services for the poor. Although legislatively this rationalisation is a necessary condition for building the compact city, the built environment is spatially fixed. How the compact city can be built in a way that simultaneously utilises the deconcentrated urban infrastructure that already exists will emerge as the main challenge. Speaker, these are the challenges that the ANC government inherited from apartheid in 1994. Despite this legacy, in two decades we have achieved an unparalleled success in delivering basic services to the majority of South Africa's people. Democratic developmental local government has been at the forefront of this good story, and the assertion that local government is an unmitigated disaster area is a demonstrable falsehood. However, we must debate this Bill in the context of the significant challenges that remain in realising the vision of democratic and developmental government outlined in our Constitution, and its role in the ongoing struggle for spatial justice implicit in that vision. The Local Government Municipal Property Rates Act is central to the financial sustainability of South Africa's metropolitan and local municipalities and their ability to play a role in achieving this vision. It gives effect to the mandate that municipalities have to raise their own revenue by levying property tax or rates against property in the municipal area. Property rates make up a large portion of the budgets if metropolitan local municipalites. The ability of municipalities to levy rates and value property efficiently and fairly is essential for good governance and service delivery at local level. Rates income is essential for municipalities to contribute to the social and economic development of the communities they serve. National Treasury's budget review points out that 73% of local government revenue is raised through tariffs and property rates. Since the implementation of the Act in 2005, municipalities across the country have conducted general property valuations and developed rates policies. The legislation has been tested in practice and areas requiring refinement have been identified. The 2014 amendments are part of the ongoing process of refining policy and legislation to meet the dynamic needs of South Africa's municipalities. The amendments to the Act aim to strengthen this important law, clarify its aspects and provide greater support and monitoring through provinces and national government for those municipalities that require it. The amending Bill and the recently promulgated regulations on the appointment and conditions of employment of senior managers promote good governance and the professionalisation of local government in line with the vision set out in our National Development Plan, NDP. As this term of office draws to a close, these and other policy developments underscore the national government's ongoing efforts to support and strengthen local government. As President Zuma pointed out in this year's state of the nation address, national and provincial government must play a greater role in supporting local government. The 2014 amendments do not represent fundamental changes to the law, but clarify some aspects of the legislation, strengthen governance and streamline aspects of application. And, most importantly, the Bill will improve levels of trust in the property rating system by strengthening national and provincial oversight, by simplifying complex aspects of the Act and by providing for property categorisation that is simple to understand, transparent, and easier to regulate. The proposed amendments also seek to ensure that municipal rating is not undertaken in isolation to national interests in so far as the economic and developmental objectives of the country are concerned. Deputy Speaker, we would like to thank the portfolio committee for the rigorous manner in which they have discharged the legislative mandate, and also thank the organised local government, various sectors and individuals who have made valuable proposals. Together they have effected important improvements to the Bill, and we are confident that the Local Government Municipal Property Rates Amendment Act will make an important contribution to strengthening our system of democratic developmental local government, together moving South Africa forward. Thank you. [Applause.]
Deputy Speaker, Deputy President, hon members, firstly I would like to address the House on issues raised before the reading of the Second Order of the day. The Portfolio Committee on Co-operative Governance and Traditional Affairs submitted the report on 28 February and again submitted a detailed report with corrections which appeared in the Announcements, Tablings and Committee Reports on 04 March. That is why we were allowed to schedule this debate for today. The Local Government: Municipal Property Rates Amendment Bill, No 19 of 2004, is hereby amended so as to provide for amendments and the insertion of certain definitions. Section 229 of the Constitution allows municipalities to impose rates on properties in their areas, subject to regulations in terms of national legislation, and the Constitution enjoins local government to be developmental in nature. In addressing the service delivery priorities of our country and promoting the economic and financial viability of municipalities, it is necessary to provide local government with access to a sufficient and buoyant source of revenue in order to fulfill its developmental mandate. The income derived from property rates is a critical source of revenue, especially in areas that have been neglected in the past due to racially discriminatory laws. It is essential, therefore, that municipalities exercise their power to impose rates without a statutory framework that not only enhances certainty, uniformity and simplicity, but also takes into account the historical imbalances and rates burden on the poor. Property rates assist municipalities to fund services that benefit the whole community as opposed to benefiting individual households. These services include installing and maintaining streets, roads, sidewalks, lighting, stormwater drainage, recreational facilities, cemeteries, etc. Municipalities have a long history of rating properties in terms of the old provincial ordinances of the Cape, Natal, Orange Free State and the former Transvaal provinces, especially in the formerly white urban areas. This is not a new system at all. The Local Government Municipal Property Rates Act replaces the old system of property valuations and ratings based on old provincial ordinances, meaning that property owners are liable for the payment of their rates. Deputy Speaker, if I may ask, what are municipal property rates? Municipal property rates is a cent amount in a rand, levied on the market value of an immovable property - that is, the land and building rights of a way, casements and servitudes. How are these calculated by municipalities? Property rates are calculated by multiplying the market value of the immovable property, which is land plus building, by a cent amount of a rand determined by the municipal council, taking into consideration public comments. For example, if the market value of an immovable property is R50 000, and the cent amount in a rand is 15c, then the amount due for the property rates is R50 000 multiplied by 15c, which equals R750 per year. This means that every month a property owner will pay R62,50, and this R62,50 is calculated by dividing R750 by 12 months. I am giving an example of the calculation of rates. This Bill before the House seeks to address challenges that have emerged since the implementation of the Act. The provisions in the Bill seek to bring changes in terms of making the Bill simpler to implement and to strengthen certain regulatory, monitoring and reporting provisions. There were a number of different interpretation issues that arose. This Bill also aims to exclude certain properties from rating in the national interest and enable municipalities to be transparent and warrant fair rating, which is a good story to tell, especially for the poor, the indigent, the elderly, and disabled people. The proposed provision to exclude aspects of the market value of the property owned by the recipients of older persons' grants and disability grants is removed because the ANC- led government is moving towards universal access to older persons' grants for all pensioners, regardless of income, as outlined in the Minister of Finance's 2013-14 Budget Speech. This means that the means test for older persons' grants is to be phased out by 2016. In practice, in one way or another, municipalities either exempt or grant significant rebates to property owners who are poor, guided by their property rates policies and indigent policies. Before I provide some feedback on the amendments, I would like to thank and express my appreciation for the stakeholders who participated in making changes and proposals to the Bill during the public hearings. The process was characterised by vibrant interactions through submissions. Also, I would like to thank the members of the portfolio committee, representatives of all parties, the department and the state law advisers for their immense contribution to the changes made to the Bill. The differentiation in respect of the period of availability of valuation rolls for metropolitan and local municipalities was introduced. These provisions recognise the vibrancy in the property market in metropolitan areas which necessitate shorter valuation cycles for metropolitan municipalities. There are numerous challenges faced by a number of smaller municipalities that warrant longer valuation cycles. In order to recoup the costs of valuation rolls, whilst the status quo is retained in respect of metropolitan municipalities, local municipalities' valuation roll validity is extended by one additional year. Nothing stops any municipality that deems itself fit to shorten the validity of its valuation roll from doing so, as the Act sets up the maximum period of the validity of valuation rolls whilst allowing municipalities the flexibility to settle for shorter periods if they desire to do so, as long as this does not amount to a drop in standards. Clause 6 of the Bill deals with the framework for property categorisation, that is whether a property is classified as residential, commercial, business, industrial or agricultural, for rating purposes. It has been revised to allow for municipalities, if they can show good cause, to apply to the Minister and give motivations for the subcategorisations they want. This compromise was reached to address concerns that section 8 may be overly prescriptive. Concerns were raised by municipalities and by some committee members during the public hearings. A new clause was added to section 8, which will now become section 8(4), and reads as follows: a) Where a municipality can, on good cause, show that there is a need to subcategorise the property categories listed in subsection (2), a municipality must apply to the Minister in writing for authorisation to create one or more of such subcategories. b) Such application must - i) be accompanied by a motivation for such subcategorisation; (ii) demonstrate that such subcategorisation is not in contravention of section 19; and (iii) reach the Minister at least 15 months before the start of the municipal financial year in which the municipality envisages levying a rate on such subcategorised property. In light of the amendments that were effected to clarify matters relating to public worship and official residences related thereto, it was agreed in the portfolio committee that section 17(1) be amended to make it clear that only one office bearer's official residence registered in the name of the relevant religious community is excluded from municipal rating. It means that section 17(1) will now read as follows: i) On a property registered in the name of and used primarily as a place of public worship by a religious community, including the official residence registered in the name of that community which is occupied by the office bearer of that community who officiates at services at that place of worship. There is another proposed amendment that I won't go into now, because I am watching my time, and that is the Valuation Appeal Board, which I think hon Steenhuisen will go into. It is a clause that we did not see eye to eye on during the deliberations. The Valuation Appeal Board is a professional associated valuer without restrictions and with 10 years' experience in property valuation. The committee revised the section slightly to provide for the appointment of a professional associated valuer without restrictions and with 10 years' experience in property valuation where a professional valuer could not be found or appointed. The revised clause amending section 56(1)(b) now reads as follows: An appeal board consists of not fewer than two and not more than four other members with sufficient knowledge of or experience in the valuation of property, of which at least one- i) must be a professional valuer registered in terms of the Property Valuers Profession Act, 47 of 2000; or ii) may be a professional associate valuer, without restrictions and with at least 10 years' experience, registered in terms of the Property Valuers Profession Act, 47 of 2000, if a professional valuer cannot be appointed. The effect of the amendment is that there has to be a preference for the appointment of a professional valuer, taking into account the scarcity of professional valuers and the need for representivity, including that of gender. It also needs to be asked why the SA Council for the Property Valuers Profession came up with a once-off concession only in 2013, when it is clear that the government proposal, as contained in the Bill, which was published for comment in 2011, was to remain unchanged until it was brought before the portfolio committee. The fact remains that no single profession in South Africa is immune to issues of transformation that include representation in terms of demographics and gender. We face the status quo because there have been no significant outcomes from the way in which the SA Council for the Property Valuers Profession is transforming the profession. The sooner the council takes tangible steps forward in transforming the valuers' profession, the better. On behalf of the portfolio committee, I table the Local Government: Municipal Property Rates Amendment Bill to be passed by the House. The ANC supports the Bill. I thank you. [Applause.]
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.]
Hon Speaker, hon members, the Local Government: Municipal Property Rates Amendment Bill, which I will hereafter refer to as the Rates Bill, is expected to regulate the power of a municipality to impose rates on property and tie up all the loose ends started on 2 July 2005, when just four municipalities began valuing and rating properties in terms of the 2004 Act, which was amended through the Local Government Laws Amendment Act of 2008. It is essential that local government exercises its power to impose rates within a statutory framework that not only enhances certainty, uniformity and simplicity across the nation, but also takes into account historical imbalances and the rates burden of the poor. The Constitution of the Republic of South Africa confers on Parliament the power to regulate the exercise by municipalities of their fiscal powers. What, however, remains unfinished business in the Act is the fact that, amongst others, clause 6, which substitutes section 8 of the Act, limits the basis for the categorisation of properties to use and permitted use only. This clause also provides for a municipality, on good cause shown, to apply to the Minister to subcategorise property categories. Hon Minister, it is no secret that informal settlements are going to be a part of the national property framework for a long time to come. With the pace of housing development we have seen with this government up to now, it means that there is a lot of land unused, unaccounted for and that remaining untaxed in terms of the rates system as envisaged by this Bill. The Congress of the People would like to know how this Bill will eventually deal with this phenomena and further empower municipalities to bring in the very large parts of the towns and the cities with informal settlements where services are needed most - and are provided for one way or the other - but continue to remain out of the categorisation process or the rates matrix, as would be expected and, at the same time, as envisaged by clause 6. Clause 13 speaks to the exclusion from rates of mining rights or mining permits, excluding infrastructure above the surface in respect of mining property. A number of mining houses use high volumes of water and electricity, such that the variations as intended in the Bill would need serious scrutiny going forward. The same clause also recognises land belonging to beneficiaries and heirs, their dependants and/or spouses, and includes a 10-year temporary exclusion from the payment of rates before the exemption lapses. Cope would like to raise the issue of body corporates as separate entities that present a certain exclusivity, which is highlighted in clause 16 and clause 21 in respect of sectional title schemes and share blocks. These bodies have been a law unto themselves for a long time, and in certain instances have remained unaccountable to any regulatory body, including the Estate Agency Affairs Board, where one would have hoped there would be a certain degree of monitoring or accountability. This Bill requires them to give municipal valuers access to their documents, property and information required for the purpose of valuing the property. Finally, Cope finds the Bill favourable in that it is commendable. Provincial departments responsible for local government should ideally have commensurate establishments if they are to fulfil their constitutional monitoring and support roles in terms of the Act, whether amended or not. I thank you. [Applause.]
