Will solar incentives cripple local governments?

The Salga warning over how solar incentives could drive municipalities deeper into debt highlights just the tip of the iceberg

● The warning this week by the South African Local Government Association (Salga) that the National Treasury’s solar power tax incentive could effectively bankrupt municipalities deserves a serious hearing. I write this while staring at the eight rooftop solar panels recently installed by my neighbour. It is a growing trend in my neighbourhood, where residents, frustrated by load-shedding, cable theft and vandalism, are opting to move off-grid. With no end in sight to rolling blackouts, it is understandable.

This is not the first time Salga has raised a red flag over the state of local government finances. Municipal finances took a serious knock at the start of the pandemic. In the first three months of the lockdown, metros were reporting billions in revenue losses. Gauteng municipalities reported losing more than R5bn in revenue. The closure of businesses and consequent job losses was largely to blame and whatever the Treasury provided as a cushion proved woefully inadequate.

As the recently released local government revenue and expenditure report shows, municipalities are neck-deep in debt. Municipalities are indebted to the tune of R86bn with well over half of this debt owed to Eskom and the water boards. In turn, municipalities are owed billions by businesses and households. The totals for the eight metros are R115bn for households, R30bn for businesses and more than R7bn for government departments and entities. And as the auditor-general notes, more than half of what is owed to municipalities will never make its way to municipal coffers.

The Treasury punts the same solution every year. If only municipalities implemented credit controls, punished those who don’t pay, charged realistic (meaning higher) tariffs and diversified their revenue sources, we would not be here. This message about revenue collection is usually accompanied by a stern reminder that the municipal crisis is worsened by the reality of the “wrong hands at the till ”— politicians and administrators who misuse public funds.

“What do you expect us to do?” is the usual retort from a middle class that is fed up with paying for services that are not rendered or delivered erratically.

One can sympathise with this response. Opting out of public provisioning is attractive. We associate public services with poor standards, questionable quality and, in many instances, unjustifiable risk and humiliation. Relying on public transport comes with the perpetual risk of being late for work, sitting or standing in an overcrowded train carriage or even buying a ticket for a service you might never use. A trip to a public hospital conjures images of long

At a local level, this credibility crisis has birthed different ways of opting out

queues in filthy, bloodstained casualty wards.

At a local level, this credibility crisis has birthed different ways of opting out. There are at least three noticeable responses — each with its own implications for the future.

The first response is at individual level — a “to each their own” response where those who can afford to are turning to solutions such as solar panels or hiring private grass-cutting services to make public walkways safe for joggers and cyclists.

The second can be called a community-driven “doit-yourself” response. In the run-up to the 2021 municipal elections, communities across the country bypassed local government and pooled their skills and cents to build roads and schools and rehabilitate crumbling infrastructure. This response carries immense symbolic power.

At a more institutional level lies the third response, in which business associations are setting up parallel agencies — such as AfriForum’s Pioneer — to take over such services as sewage management, garbage collection and electricity delivery. Discovery’s new fleet of fire trucks, launched in the vacuum of fire services in Johannesburg, is another example.

These responses provide short-term relief from collapsing public services. But they have the longterm effect of disinvesting interest from public solutions and deepening the inequalities that already exist between middle-class and poor South Africans.

It is clear that local government cannot continue to function in its current form. But troubling questions arise. What are the implications of ceding power to unaccountable private institutions like AfriForum’s Pioneer or Discovery? What does the collapse of local government — a site of social reproduction — mean for public goods such as parks, roads, water and sanitation, libraries and street lights? By opting out of public services, are we not signing up for a citizenship that can only be accessed through money?

In their 2012 book Alternatives to Privatisation, David McDonald and Greg Ruiters identify four strategies in response to privatisation of public services — defending the status quo; revising or changing what’s not working; reclaiming public services that were lost in previous rounds of privatisation; and, perhaps more promising, imagining new ways of running public services. This framework is useful for thinking about local government in South Africa.

What we need is a combination of strategies: defending what is left of public services, changing what is not working and reclaiming what was lost to outsourcing, underinvestment and corruption. At the same time we must explore radical alternatives rooted in popular mobilisation and organising.

The call to scrap a funding model that has plunged local government into a black hole deserves our support. So too do the voices opposing outsourcing and budget cuts. If we do not want to live in a country where what are supposed to be public functions are parcelled out between individuals and unaccountable private entities, and where the size of one’s wallet determines access to citizenship entitlements, then we have little choice but to contest this turn against public provisioning.