Open Letter to the Mossel Bay Municipal Manager

Dear Mr Puren

I write on behalf of Moss Rates.

We formally reject the proposed 2026 Mossel Bay Integrated Development Plan (IDP) budget, particularly the proposed rate and fixed charge increases, which allegedly compound to an untenable 77% increase over four years. This response is informed by the broader economic context outlined in the article “South Africa Faces a Death Spiral” (Daily Investor, 2023) – https://dailyinvestor.com/finance/102303/south-africa-faces-a-death-spiral/?source=newsletter – which highlights the risks of unsustainable fiscal policies and excessive reliance on taxation amidst economic challenges. Below, we outline our concerns and recommendations.

Key Concerns

1. Unsustainable Rate Increases The proposed rate increases far exceed the inflation rate of 4.5%, placing an unfair burden on compliant ratepayers, many of whom are retirees with pension incomes growing at less than 4% annually. Combined with South Africa’s high tax environment (45% standard tax rate, 15% VAT, and additional levies), these alleged increases exacerbate financial strain on residents already grappling with declining real incomes.
2. Economic and Social Context Drawing from the referenced article, South Africa’s fiscal challenges, including a growing budget deficit (R63.3 billion in August 2023, up from R42.7 billion in 2022) and rising debt servicing costs (projected at R397.1 billion by 2025/26), reflect a national trend of expenditure outpacing revenue. Mossel Bay’s proposed budget allegedly mirrors this reckless spending pattern, relying heavily on ratepayers to finance ambitious projects without addressing systemic issues. Key drivers of poverty, such as poor education quality, lack of family planning, substance abuse, weak work ethic, crime, and the absence of secure property titles, remain unaddressed, perpetuating dependency on taxation rather than fostering sustainable solutions.
3. Reckless and Wasteful Expenditure We highlight only four instances of alleged mismanagement:

• R4 million on allegedly unused armoured vehicles: These assets reportedly serve no practical purpose and represent alleged wasteful spending.
• R800,000 on a rubber duck for JOC: This purchase is allegedly redundant given the capabilities of the SAPS Water Wing, commercial and private boaters, and the National Sea Rescue Institute (NSRI), which could be better supported.
• R147 million in bad debts allegedly written off over four years: This reflects alleged poor financial oversight and debt recovery mechanisms.
• Costly litigation: The municipality’s pursuit of allegedly unwinnable legal cases has reportedly wasted millions; prudent litigation and fairly settling disputes could save significant funds.

4. Excessive Charges and Profit-Driven Services Refuse removal charges are allegedly at least 100% above cost, transforming a cost centre into a potentially profit-making enterprise. Annual escalations without transparent cost justification are unacceptable. We demand a comprehensive review of all municipal cost codes, staffing levels, and operational efficiencies to eliminate alleged profiteering and align charges with actual costs.
5. Disproportionate Salary Increases Municipal salaries and employment costs have risen by 7–8%, significantly above the 4.5% inflation rate, while ratepayers face a proposed 13% rate increase. This alleged disparity is unfair and unsustainable, particularly when most ratepayers’ incomes are not keeping pace with inflation.
6. Misaligned Priorities While the 2030 Sustainable Development Goals are commendable, the municipality allegedly lacks the capacity to manage illegal migration and squatter ingress effectively. Financing these initiatives through excessive taxation of a small group of compliant ratepayers is neither equitable nor sustainable. The municipality must focus on addressing root causes of poverty and dependency, such as secure property title provision, rather than perpetuating a cycle of alleged over-taxation.
7. Inappropriate Rate Comparisons Mossel Bay attempts to justify its proposed rate hikes by comparing our relatively low rate structure to other municipalities with higher rates, identifying this disparity as an opportunity to significantly increase our rates and fixed charges. We firmly reject these comparisons as misleading and inappropriate. Mossel Bay’s unique demographic and economic context—characterised by significant growth in newly registered properties and proclaimed land, which provides a new revenue stream, and the fact that approximately 30% of paying ratepayers own holiday homes and do not reside here permanently—renders such comparisons invalid. Using these disparities to justify alleged excessive rate hikes lacks transparency and fairness.

Recommendations

• Implement Austerity Measures: Curtail borrowings and non-essential spending, including halting purchases of allegedly unnecessary assets.
• Align Rate Increases with Inflation: Cap rate increases at the inflation rate (4.5%) to ensure affordability for ratepayers.
• Comprehensive Review and Cost-Cutting Measures: Conduct an immediate, thorough, and independent audit of all municipal operations to identify and eliminate alleged inefficiencies and waste. This must include, but not be limited to: reviewing all cost codes, evaluating staffing levels for overstaffing or redundancies, assessing assets held for surplus or underutilisation, conducting a building and office requirement and ownership audit to optimise space and reduce overheads, scrutinising all contracts for value and renegotiation opportunities, and exploring consolidation of operations to streamline processes. The goal of this review must be to achieve significant cost reductions, ensuring that every expenditure is justified and contributes directly to essential services, with transparent reporting on cuts implemented.
• Prioritise Efficient Debt Management: Address the alleged R147 million in bad debts through improved recovery processes and avoid costly litigation by settling disputes early when appropriate.
• Support Sustainable Development: Shift focus from tax-funded initiatives to empowering residents through measures which enable wealth creation and reduce dependency on state resources.
• Manage Ward Capital Projects: Align ward project budgets with available finances, avoiding unrealistic “wish lists” that drive alleged excessive rate increases.
• Cease Inappropriate Comparisons: Discontinue the use of irrelevant municipal rate comparisons to justify rate hikes, and instead develop a budget that reflects Mossel Bay’s unique economic and demographic realities, leveraging new revenue streams from property growth.

Conclusion

The proposed 2026 IDP budget, with its alleged excessive rate increases and reliance on over-taxation, is unsustainable and unjust. Mossel Bay must adopt a prudent, inflation-linked budget that reflects economic realities and prioritises efficiency, transparency, and fairness. We urge the municipality to review all processes, cut alleged wasteful expenditure, and address systemic issues contributing to poverty and dependency. Failure to act risks pushing ratepayers and the municipality into a financial death spiral, as warned in the broader South African context.

We await your response and a revised budget proposal that addresses these concerns.

Regards,

Peter Brauteseth

Moss Rates