House Chair, the Local Government: Municipal Property Rates Amendment Act has been implemented since 2008. Municipalities have now catalogued details of how the Act affects people's lives. These experiences suggest that the Act needs to be changed to make it seamless and minimise legal and policy misinterpretations that have arisen over time.
The object of the Bill is therefore to address the problems that have been experienced in the implementation of the Act since its commencement. The amendments will give clarity and bring uniformity in the way in which property is valued. This will enhance transparency and will assist in holding municipalities accountable. Most importantly, it removes legal ambiguities as well as challenges with interpretation, thereby enabling municipalities to comply with the Act properly.
This compliance with legislation and regulations will contribute to improving municipal audit outcomes, for which we are all striving. As the Act stands it has property categories, but leaves leeway for municipalities to use their own discretion when levying property rates. For instance, you would have a property categorised as "business"; then you would have subcategorisation such as "business 1", "business 2", "business 3", etc.
Clause 6 amends section 8, which deals with a framework for property categorisation, that is whether a property is classified as residential, commercial and business, industrial, agriculture, etc. For rating purposes, it has now been revised to allow for municipalities, if they can show good cause, to apply to the Minister, with motivations, to subcategorise the main property categories. This is reflected in section 8(2). [Interjections.] So, they are not going to go begging to the Minister, hon Steenhuisen.
In addition, transitional arrangements were added to provide for municipalities to implement the provisions of section 8 within seven years of the effective date of this Act, giving municipalities sufficient time to adjust to the new property categorisation framework. Clause 36 inserts a new section 93A which provides for the phasing in of the prohibition on the levying of rates on certain types of public service infrastructure. The rating of certain public service infrastructure such as roads, railways, airport aprons and runways, dams and breakwaters may compromise the economic and developmental objectives of the country. These kinds of infrastructure are enablers of national economic integration and economic growth as they facilitate economic activities across municipal boundaries for the national mobility of goods, services, capital or labour across municipal boundaries.
The possibility that the N1 road, which links the country from Cape Town to Musina, which is our border town in Limpopo with Zimbabwe, can be subjected to different rates by various municipalities through which it passes is absurd. The mere fact that there is no known country in the entire world which subject roads to possibilities of municipal rating says a lot in itself about how irrational this possibility is.
South Africa cannot go against international best practice. Given the focus on infrastructure expansion, particularly in the transport sector, through interventions that are aimed at growing the economy and moving it more efficiently, there is an impetus to not divert funds away, by means of municipal rating, from such much needed infrastructure investments.
It is equally irrational that the national government can build a dam for the purpose of enabling communities within that municipal jurisdiction and other communities located outside that municipal jurisdiction to have access to water and waterborne sanitation only to have a municipality within whose jurisdiction the dam happens to be located subjecting that dam into infrastructural rating.
It also needs to be taken into account that through the national budget process, municipalities are allocated a local government equitable share and various conditional grants, including the Municipal Infrastructure Grant, to enable them to exercise their powers and functions.
It is in the national interest that the government's efforts towards ensuring national economic integration, through infrastructure development of these kinds, is not constrained by the issue of whether future governments would have enough resources from the national budget to settle property rates liabilities. The policy target of the three spheres of government has to be the realisation of a better life for the citizens as opposed to any actions on the part of each sphere of government which may have the unintended effect of either derailing the attainment of this goal or its sustenance.
These kinds of infrastructure are also enablers for local economic development to take place as they contribute to making the municipal jurisdictions in which they are located attractive to both domestic and foreign private sector investments. Alternatively stated, these kinds of infrastructure, by facilitating business decisions to locate business operations in those jurisdictions, contribute in raising these municipalities' rates base in terms of deriving additional revenue in future.
Such investments also connect individual municipalities to the rest of the country through the creation and maintenance of corridors along which goods and services move from one part of the country to another. There is a good case to be made for excluding these kinds of infrastructure from municipal rating.
The prohibition on municipal rating is not extended to the rest of public service infrastructure, such as those in the telecommunication and energy sectors, where there are private sector operators or possibilities for private sector participation in the future, because their exclusion from rating would result in an unfair advantage to the state-owned entities in these sectors.
We now come to the Valuation Appeal Board. The proposed amendment to include a professional associated valuer without restrictions, and with ten years' experience in the valuation of property, as a member of the valuation appeal board, were revised to provide that a professional associated valuer without restrictions, and with ten years' experience in the valuation of property, may be appointed if a professional valuer could not be appointed.
The effect of the above amendment is that preference has to be given to the appointment of a professional valuer. However, taking into account the need for representivity, including gender representivity and the scarceness of the skill, it may not always be possible for a professional valuer to be appointed. It should also be added that practicing as a professional valuer is more lucrative than that of serving on an appeal board; hence the difficulty in always obtaining professional valuers for the appeal board.
Another question which should be raised is why the SA Council for Professional Valuers came up with the once-off concession only in 2013, when it became clear that the government proposal, as contained in the Bill that was published for public comment during 2011, was to remain unchanged in the Bill to be submitted to Parliament. The fact remains that no single profession in South Africa is to be immune to issues of transformation that includes representation in terms of the demographics and gender mix of the country.
Otherwise, we will be perpetuating the status quo for certain professions which should have no place in a transformative society. We are in this current status quo because no significant outcomes are coming out as to how the SA Council for the Property Valuers Profession is transforming this profession. The sooner the council takes tangible steps forward in transforming the valuers' profession, the sooner the proposed amendments would become redundant.
Ideally, preference has to be given to professional valuers, taking into account the country's transformation agenda, which does not exalt any particular profession. The council has to assist in taking the nation forward as the current status quo regarding the valuers' profession is indefensible. The council should not be reactive but rather proactive in transforming this profession. Through this amending Bill, the ANC is implementing the vision which was succinctly expressed by the people of South Africa through the 1992 ANC policy document, Ready to Govern, when they said:
Equity considerations will also be addressed through, for example, redistributive financial mechanisms and allocative systems.
Examples of these forms of redistribution are service charges and rating systems that favour the poor and not the rich; the diversion of military expenditure to housing production; the prioritising of investment in inner city housing; and the upgrading of the townships, informal settlements and rural areas over investments in middle-income housing areas.
Fellow South Africans, the ANC has a good story to tell. The ANC-led government will continue to move this country forward through putting relevant legislation in place and ensuring the implementation thereof. I thank you. [Applause.]