Gordhan's appointment to affect property market

Bill Rawson, Chairman of Rawson Properties, believes the former finance minister is just the right man to turn back the tide in local government and restore good governance, and this in turn will have a ripple effect on the property market, he predicts.

According to a treasury report as of December 2013, municipalities face consumer debts of R93.3-billion at the end of the second quarter of the 2014 municipal fiscal year, which ends in June. Gordhan, then finance minister, warned in March that the economic slowdown and substantial increase in tariffs as a result of higher prices of fuel, water, electricity and materials were "continuing to reduce the affordability and therefore the ability of consumers to pay for these services".

Year-on-year increases

Aggregate municipal consumer debts were at that point R2.8-billion more than the R90.5-billion reported at 30 September last year, the end of the first quarter of fiscal year 2014.

Treasury also reported that metropolitan municipalities achieved 47.3% or R85.5-billion of billed and other revenue of the total adopted revenue budget of R180.8-billion. This is slightly less than the 48.3% performance reported in the second quarter of the previous year.

Rawson believes it was important for a strong man, like Gordhan, to make his presence felt in the municipal level of government. He believes that Gordhan's skill in getting the tax money in while head of SARS will place him in good stead to tackle the debt burden, the revenue collection problems and to iron out administrative irregularities and mismanagement.

Increased rates on property and hiked taxes in general were partly a consequence of mismanagement, Rawson argued. These increased rates at municipal level were having "an enormous effect" on the property market. If the increased levies on sectional title properties, for example, were not absorbed by the owners, they had to be mopped up by the tenants. "This applies to residential, industrial and commercial property and adds to inflation ultimately."

"So the good minister needs to see that all the codes of conduct and discipline and good governance are adhered to by suitably qualified [municipal] personnel so that all the excessive costs are reduced and service delivery is increased. Gordhan has a superb record of delivery... and this must be why our president has given him this challenge," said Rawson.