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.]