PRO-POOR REVENUE MANAGEMENT STRATEGIES. PRESENTER: KRISH KUMAR ethekwini MUNICIPALITY

Transcription

1 PRO-POOR REVENUE MANAGEMENT STRATEGIES PRESENTER: KRISH KUMAR ethekwini MUNICIPALITY

2 CONTENT Legislation Ethekwini approach Ethekwini solution Advantages & Disadvantages An alternate approach Conclusion Poverty is everyone s problem. It cuts across any line you can name: age, race, social, geographic or religious. Whether you are black or white; rich, middle class or poor, we are ALL touched by poverty Governor Kathleen Blanco

3 LEGISLATION Constitution S227 (1)(a) EQS for basic services Department Water Affairs Free Basic Water Strategy 2002 Performance Regulations Reg.10 Register of households earning less than R1100 per month (US$130) In a country well governed, poverty is something to be ashamed of. In a country badly governed, wealth is something to be shamed of - Confucius

4 OBJECTIVES Free services to poor households Definition poor household There is no clear definition for poverty Water use R1100/household Income (US$130) Reg 10 use R1100/household Income (US$130) NT uses R1720 (A national poverty line for SA discussion document 2007) (US$200) Think about it: Every educated person is not rich, but almost every educated person has a job and a way out of poverty. So education is a fundamental solution to poverty Governor Kathleen Blanco

5 ETHEKWINI APPROACH Considerations Establish who can afford to pay/ or not to pay based on property values Also include vulnerable groups: pensioners; childheaded households; medically boarded individuals But apply a universal approach to all who qualify Cost implications to set-up an administration to control register Assistance from state agencies: Labour and Home Affairs

6 ETHEKWINI APPROACH Fraud & corruption is due to universally applying to all that qualify Certainty for the budget - number of renewals per year per indigent household Verification process reduced Vastness of the City Equitable Share from National Treasury used to fund life-line tariffs

7 OUTCOME OF CONSIDERATIONS Cost to process application approximately R155/application (US$18) Estimated Indigents approx households amounting to a cost of US$ Targeting best way of granting relief. Use property value to achieve Gives certainty on the budget

8 SOLUTION Targeted Approach Look at the value of property Different for Rates and Water All properties falling in the net is regarded as indigent Electricity Based on consumption

9 Rates & refuse INDIGENT RELIEF Prop valuation <= R no rates and refuse (US$21 500) Water & Sewer Prop Valuation <= R first 9kl free (US$29 400) Electricity First 50 kwh free if using <= 150 kwh/month Pensioners First R of property value not taxed

10 ETHEKWINI UNIVERSAL APPROACH ADVANTAGES Cost Effective Curb fraud corruption Gives budget certainty Easy to identify DISADVANTAGES Not all in net are indigent No verification on household income Does not comply with Reg. 10 If you go out into the real world, you cannot miss seeing that the poor are poor not because they are untrained or illiterate but because they cannot retain the returns of their labor. They have no control over capital, and it is the ability to control capital that gives people the power to rise out of poverty. - Munhammad Yunus, Banker to the Poor: Micro-lending and the battle against world poverty

11 ALTERNATE APPROACH: INDIGENT REGISTER - DIFFICULTIES Defining beneficiaries in terms of households, account holders currently varying national norms Defining what constitutes a household. How should municipalities deal with properties that have a main structure as well as other living structures on same property? Dwellings with more than one household? Defining who is indigent there are varying criteria, such as income thresholds, child-headed houses, no access to services, etc. Administration depends on applications from potential beneficiaries verification of info an issue.

12 ALTERNATE APPROACH: INDIGENT REGISTER - COSTS Monitoring and evaluation costs of refining, establishing, aligning, monitoring, data management, and evaluation Analysis of financial framework identification of barriers to implementation Communication campaign costs Cost of infrastructure upgrading or development to deliver the benefit Cost of ensuring accessibility indigents must be able to access the service they require may need additional application points, especially in rural areas Annual cost of verification Fraud and corruption

13 CONCLUSION The choice is yours However, recommend the Ethekwini approach Indigent register too expensive, cumbersome and risk of fraud It should never be that the anger of the poor should be the finger of accusation pointed at all of us because we failed to respond to the cries of the people for food, for shelter, for the dignity of the individual Nelson Mandela

14 THANK YOU