Submissionby The Cape Metro Human Rights ClusteronThe City of Cape Town’sDraft Credit Control, Debt Collectionand Indigent Policy Discussion Document(as approved by EXCO, 16 October 2001)
The public participation process
We are a Cluster of twelve advice offices, eleven of which are in the Cape Metro area. One of our focal areas is housing and related rights. At the moment we have prioritized assisting communities and clients facing the threat of evictions and the cutting off of services such as water and electricity.
In August we ran a two-day training workshop for advice workers on the City of Cape Town’s Interim Debt Management Policy that came into effect on 1 July. We have also begun to train and share information with affected communities on the right to housing and water and the Council’s Debt Management policy. To this extent, we believe we are assisting the Council with its aim of putting in place “a comprehensive communication and education strategy”, as referred to in the draft document.
On Monday 12 November we met with Councillor Gawa Samuels, Chairperson of the Housing Portfolio Committee, as well as Peter Laubscher of the Council’s Housing Department.
Amongst other things, we discussed the public participation process around the latest Interim Debt Management Policy.
As we explained, we have been frantically busy trying to meet the 16 November deadline for submissions on the new draft policy.
The latest Interim Policy was only adopted by EXCO on 16 October 2001. A notice went into the local newspapers on 1 November. This gave us a mere two weeks to prepare a submission, hardly enough time for any civil society organization to respond.
Our offices are spread across the entire City of Cape Town. Just to secure a copy of the latest Policy Document, to circulate it among all advice offices and then to bring advice offices together for a first round of discussion, around a set of draft notes, took us all of ten days. Now we still need to write a first draft, so that a further round of discussion can occur.
In other words, we have had to fall over our feet to meet the Council’s tight deadline. We are sure that other civil society organizations, such as civics and campaign groups, are in an even less favourable position to meet the deadline.
Most organizations are probably not even aware of the fact that there is a new Interim Policy document. We are convinced that a tiny notice in a few English and Afrikaans newspapers, offering a two-week deadline for submissions, on what is quite a technical and legalistic document, falls far short of initiating an effective public participation process.
We therefore request an extension of time so that there can be a genuinely participatory process on a question that is of crucial concern to poor communities in the whole Metro area.
Councillor Samuels and Peter Laubscher assured us that, as far as they were concerned, an extension should not be a problem.
Given that Ramadan commences soon, that the Christmas recess is just around the corner and the fact that most organizations only resume activities in the second week of January, we request an extension of time until the end of February 2002.
This is merely a date that would suit us as a Cluster of advice offices. However, we believe that other organizations and interested parties should be allowed to determine what an adequate period is for themselves.
In the meanwhile, we request that the City of Cape Town takes practical steps to ensure that relevant civic and campaigning organizations receive a copy of the latest Interim Policy document in the next few weeks and are informed promptly about the new deadline for submissions.
Furthermore, we call for a moratorium on all evictions and the cutting off of services at least until affected communities have had their say.
Our guiding principles
As a Cluster of advice offices, our submission is guided by the following principles:
- opposition to all measures that lead to further poverty and an increase in socio-economic inequalities in the Cape Metro area.
- promotion of free or increasingly subsidized public services for poor communities.
- promotion of improved incomes and living standards for the poor communities we serve.
- promotion of the individual and collective realization of key human rights, including:
- the right of access to adequate housing, which includes affordable housing
- the right not to be evicted without a court order and without all the relevant circumstances of affected households being considered
- the rights of children and especially the right to have their best interests be regarded as paramount.
- the right to just administrative action and access to information by households and communities threatened with eviction and the cutting off of basic services.
- promotion of the principles of batho pele in the City of Cape Town’s dealings with the public around debt collection
- promotion of the right of communities to participate in all local government matters.
The policy-making process
We are concerned about how the City of Cape has proceeded with developing and implementing a policy on credit control, debt management and indigency. We believe than in many respects the process has been flawed, including that:
- The Council does not appear to have properly considered the circumstances of communities.
- There have been a number of missing elements in the process.
- The sequencing of the process has been badly conceived.
- The Council appears to be averse to public participation around the policy and its implementation.
- The Council’s motivation for its overall approach has not been convincing
- Alternatives have not been considered.
Let us examine each of these points.
The circumstances of communities not adequately considered:
Under present political and socio-economic circumstances, the question of arrears is complex and fraught with difficulties.
In the first place, an effective debt management policy needs to be sensitive to the socio-economic conditions facing poor communities. There is evidence of a significant decline in living standards and income levels within working class communities over the past five years or more. To our knowledge, none of the more populous sub-administrations that now make up the Unicity have conducted a survey of household income to base a new uniform arrears collection policy on.
Secondly, adult illiteracy is high and there is widespread ignorance about existing rights, policies and legal procedures.
At present hundreds of thousands of households in debt to the City of Cape Town have little trust in Council administrations ability or inclination to deal with them in a fair and respectful manner.
Indeed, within poor households, there is widespread avoidance of direct contact with the Council. The situation has been made worse by the Council’s ‘get tough’ stance, which has resulted in mounting threat to and the actual eviction of many households, as well as the cutting off of water of thousands of households. Communities have felt terribly wronged by these actions.
It also seems that the Council has proceeded with little consideration of how and when huge arrears have accumulated. There is a strong moral and socio-economic case for scrapping the arrears of poor communities and starting afresh. Yet the Council has proceeded with a determination to collect “all outstanding debt” (para 2.1 in the new policy document).
The Council has also proceeded with harsh punitive action against vulnerable communities, without even including an indigency component in the new interim policy adopted on 1 July 2001. Three and a half months later, after inflicting untold suffering on vulnerable communities by way of evictions and water disconnections, another Interim Policy documented has been adopted. This time it includes an indigent policy.
We note that at the time of the adoption of 1 July policy, an indigency policy was also tabled but not implemented. At the very least, many families who were evicted or had their water cut off might have been protected by an indigency policy.
As an aside, we also note that the indigent policy now in effect hardly differs from the one that was not incorporated into the Interim Policy of the 1 July. In other words, there appear to be no reasonable grounds for its non-inclusion at the time. In the light of the evictions and water cut-offs that have since taken place, it seems the Council proceeded with a combination of neglect and heartlessness.
Other key missing elements:
Besides these neglected considerations, there are a number of other key missing elements in the process, including:
- a well-conceived public participation process
- an effective communication and information strategy
- effective training for personnel expected to administer the new uniform policy.
We suggest that due consideration of the present circumstances of poor communities and inclusion of these missing elements might have averted the debacle that has ensued and the current impasse in the situation.
The Council’s apparent aversion to public participation:
The omissions and flaws in the process go hand in hand with a barely hidden aversion to public participation in the entire process.
We are most concerned about the document’s references to “interference in the process”. We believe that this phrase, which appears twice on page 2, has no place in the document. It suggests that communities and the organizations that represent their interests do not have a right to resist policies they think impact negatively on them. Moreover, communities did not have a say in such a policy before it was adopted.
We wish to remind the Council that the RDP, which was endorse by all political parties, calls for a participatory democracy in which communities proceed unafraid to raise their concerns as widely and forcefully as they can. The Constitution and the Municipal Systems Act encourages community involvement in matters that are the responsibility of local government. We suggest therefore that the City of Cape Town should support and facilitate such community participation rather than raise the bogey of ‘interference’. Inadequate motivation:
The Council argues that it is bound to have a credit control and debt management policy in place in terms of the Municipal Systems Act. This is indeed a requirement of the Act. However, this requirement does not mean imposing a policy in a willy-nilly fashion. It requires a well-conceived process, including proper planning and effective systems.
Councils have a wide measure of discretion in determining and implementing such a policy. The Council should be aware of the fact that there is enough legal precedent for delaying full implementation of such a policy before adequate systems and key elements are in place and other relevant processes have been allowed for. In the case of Logra vs. SPM, the Council was given an opportunity to put policies in place over a reasonable time period.
The consequences of the Council’s flawed approach?
A messy situation
Mounting anger and frustration
More mistrust of the Council and its officials.
Greater homelessness, poverty and social disintegration.
Alternatives not considered
A moratorium on evictions and cutting of services
The scrapping of arrears for poor communities
Heavily differentiated tariffs so that rich areas cross-subsidise poorer communities.
Our conclusions about the process
We would like to avoid further social and economic hardship. Before any further evictions or cuts in services are carried out, we suggest that the Council designs a well reasoned plan for the entire policy-making process. This should include addressing the above concerns and providing for the missing elements we have identified.
Until such a plan is effected, we propose that the Council agrees to a moratorium on all evictions, repossessions and cuts in services,
Money or people?
We are most concerned about the narrow preoccupation with debt collection at what we believe is the expense of vulnerable and poor communities.
One of the objectives of the policy is to “… Collect as much of the debt in the shortest possible time”. The document also states that, “At all times the most financially beneficial arrangement to the Council must be entered into…”
‘Get tough’ is the message in these policy requirements. It is not enough to state that “Human dignity must be upheld at all times” and that the policy “must be implemented with equity, fairness and consistency”. There is sufficient evidence that
It is not a simple matter to uphold dignity “at all times” and collect as much debt in a short a possible time
The message to Council officials should be to collect the debt but with due regard for the extreme social and economic difficulties the face poor communities. These communities and households require social protection and a debt management policy must also be an instrument of this objective. The ‘get tough’ approach can only lead to breaches of human rights, including the right to dignity and the right to just administrative action.
The document states that, “The implementation of this policy shall be based on sound business practices”. However, we believe good governance ought to be about people and their social and economic needs rather than a mere cash relationship.
We are opposed to the Councils approach that all debt should be treated holistically. We are not sure that this approach is legal. When one buys different items on terms at a furniture or appliances store, then the store does not have the right to pursue you for the debt ‘holistically’. In this case we are not sure that the Council is proceeding on the basis of sound business principles. Your fridge cannot be repossessed because you have not paid your lounge suite.
The overall approach of the Council means that those in debt, without little or no financial means, are punished by having to pay out more money before they can have their services restored or the threat of eviction lifted.
The approach will only drive already vulnerable households into deeper debt and crisis. Our communities are delicately poised, there are a range of social problems and we are witnessing serious disintegration in many areas.
The Council’s approach in the policy further threatens poor communities.
Harsh monetary sanctions
The policy document is dotted with harsh sanction and punitive actions purely based on cash considerations. In the current socio-economic context debtors are being set up to fail. Already there is evidence that over 50% of households that signed arrangements in the past few months have already defaulted. This confirms that the policy document contains unrealistic and unreasonable requirements.
We set out below the prescription we are opposed to:
- “If an arrangement is not honoured, the debt collection process/legal action will resume from where it was suspended and not start again at the beginning. Discretion should be allowed. Blanket prescription without due regard for particular circumstances.
- Those who have had their electricity cut off three times will have to pay for the installation of an energy dispenser before their supply is reconnected.
- In the case of an adjudged unauthorized reconnection of a disconnected service, reconnection will be considered as a new application and current installation costs will apply. If current installation costs are more than actual reconnection costs, then this is unfair and unreasonable. No-one should be punished twice on such an arbitrary basis.
- We are also not in favour of indirect debt collection through, for example, the minimum payment of 25% on electricity going to Municipal arrears. We reject all forms of ‘piggy-backing’ as unfair and probably illegal.
- As set our in para 10.1.9, “Housing debtors have to pay all legal costs before any legal action may be stopped.” It seems unnecessary to regard costs awarded to an attorney as part and parcel of the particular municipal debt. A blanket approach is adopted to the amount required to stop the legal process. This too is unfair.
Firstly, because the required amounts are set too high.
Secondly, no provision is made for considering the peculiar circumstances of the affected debtor household.
- “All costs incurred by Council relating to the collection process shall be deemed to be tariff charges and shall be recovered from the debtor” (4.12).
- All debtors, even those registered as indigent, are compelled to pay an amount against the arrears debt. This is unfair in a number of respects.
Firstly, many households are in dire circumstances, where there is literally no income and families have to survive on handout from neighbours or relatives. To expect even a nominal payment it to promote extra hardship merely for the sake ‘good business practices’. This arbitrary and blanket policy has no place in law.
Secondly, this minimum payment requirement does not allow for the fact that debt might have accrued while the debtor was indeed indigent and should/could have had protection.
Thirdly, to expect indigent people to pay even a nominal amount of say R5 might, in cases where the matter has been handed over to attorneys, means that the debtors might have to spent as much as R25 to travel to the attorney to pay off the R5 debt.
Many other countries have a system of providing a subsidy or benefit to destitute or indigent households that requires no payment on housing.
- First payment of housing debt “must be paid at the time the debt rescheduling arrangement is entered into”. What if there are exceptional circumstance making this impossible?
- We are opposed to the blanket requirement in 11.1.2 that “current charges must be paid in full” and that this requirement “is not negotiable”. Provision under the indigency policy.
Our opposition to privatized functions
One of the ‘principles’ of the policy document states that, “Where alternatives are available Council may provide reduced levels of service to manage the debt growth” (4.8). This seems to raise the spectre of the further privatization of the Councils services and operations.
We are opposed to the privatization of services by the Council. We believe it would lead to higher charges for users and less democratic accountability on the part of the private companies providing the service.
Communities have a bad experience with the Council’s use of private lawyers to do its debt collection and initiate eviction proceedings. We therefore call for the scrapping of the clause that states that, “Debtors may be referred to 3rd party debt collection agencies prior to being subjected to the legal process”. We further request that the Council’s existing arrangements with private attorneys be terminated and that the Council make plans to carry out all debt collection itself. This will at least ensure a measure of democratic accountability that private attorney and other agencies do not permit.
We also note with concern repeated references to citizens as ‘customers’. We are a lot more than customers. We are the beneficiaries of public services. At all times we expect public officials and administrations to be accountable to us. By reducing us to ‘customers’, that sense of democracy, citizenry and public accountability is further undermined.
Measure of last resort
We are pleased with inclusion in the section on rates of a clause stating that, “At any stage while the debt is outstanding, all reasonable steps shall be taken to ensure that the ultimate sanction of a sale-in-execution is avoided or taken only as a last resort.” However, we feel that this clause does not square well with the stated Council objective to “…Collect as much of the debt in the shortest possible time”. This suggests a blanket approach, which is not in keeping with the right to just administrative action.
The meaning of ‘measure of last resort’.
Evictions in the context of a housing backlog of 300 000 and that grows each year.
Evictions add to the total of those effectively homelessness. No options.
We note the Council’s “total commitment to a sale-in-execution should the debtor fail to make use of the alternatives”. Need to understand why debtors “fail to make use of the alternatives”.
Hostility to the Council, aversion to any form of contact, etc.
Furthermore, we propose that the policy document expressly states that all other types of punitive action, such as evictions, water and electricity cut-offs or repossessions, shall also be regarded as measures of “last resort”. This approach could be set out as one of the principles of the policy.
Demand letters
The policy proposes that if a ratepayer does not pay the account by the due date, s/he will receive a Final Demand. We do not believe this is a reasonable approach. In the light of the widespread phenomenon of household debt, coupled with the decline in income levels and overall living standards, we believe that longer period of grace is necessary. We therefore suggest, at the very least, that a letter of Final Demand be preceded by a First Demand letter.
We support the idea that warning letters about possible disconnection of water, electricity or other services should be in the three official languages of the Western Cape. However, the same should apply to all other warning letters or other correspondence related to rates, housing and rent payments.
At the same time, due regard should be paid to the high levels of illiteracy, as well as ignorance about rights, laws, policies and procedures in the Cape Metro area.
Discretion
“as a final tool by which decisions can be made in accordance with policy” (5.1)
.
Discretion to ensure “some form of payment is forthcoming out of negotiations with the debtor”. What about discretion that treats the socio-economic plight of households sympathetically. Unforeseen circumstances, etc.
Discretion in relation to credit control, the size of the deposit conclusions about “municipal payment history”, the “minimum deposit”.
Give examples of the “exceptional circumstances” when users can have service reconnected without paying full amount of arrears and unauthorised consumption”.
Home visits
“Home visits will be undertaken by officials following the issue of the Statutory Notice to the debtor. The visiting official will make every effort to encourage the defaulting debtor to pay their current account and enter into an arrangement for arrears” (10.1.8).
This is the final contact by the Council with the debtor household before the matter is handed over to the attorney and eviction proceedings occur. How binding is such visit? There should be a guarantee that no eviction proceedings will be set in motion before such a visit occurs.
The right to a court hearing
In more than one place in the policy document (10.1.7 and 10.2.1.6), the Council fails to inform debtors of their right to have a court hearing in which a magistrate will have an opportunity to
consider all the relevant circumstances. Instead, it assumes that default judgment is automatic.
This is an example of deliberate misinformation rather than an aspect of the promised comprehensive communication and education strategy.
Many debtors do not know their rights. They feel intimidated by a court summons and are disinclined to appear in court. As a result, they land up losing their property or housing as a result of default judgment against them.
The debtor’s right to not be evicted without a court order, after all relevant circumstances have been duly considered, is thereby breached. The policy document should clearly communicate this right to debtors.
Breaches of the right to just administrative action
Procedural hoops, unreasonable to expect proof that one’s financial circumstances have not changed every three months. It is difficult enough for someone who has been unemployed for many years to prove this fact but to have to do so every three months is unreasonable.
Specify time period allowed before disconnection of service after due date on the Final Warning letter has passed (8.5).
Other unconstitutional or unlawful clauses
Leaving of notices about water disconnection. In breach of the Water Service Act?
Circumstances under which “effective disconnection” will occur. Criminal offence. Burden of proof. Arbitrary action. Presumption of innocence until proven guilty by a court of law.
Obstacles to having service reconnected. Charging current installation costs before reconnection. What are the real costs compared to the “current installation costs”?
The legality of ‘piggy-backing’?
Affordable housing
The stated general principle that debt rescheduling includes payment of the current account, together with “an acceptable/affordable amount towards the arrears each month”.
The distinction between ‘acceptable’ and ‘affordable’.
The indigent policy
Without motivation, the policy pegs the qualifying amount for a household to be registered as indigent at R800 per month. This baseline figure is at least five years old. Not only has inflation significantly raised the cost of living but household income in the working class townships of the Cape Metro area have seriously declined in the same period, as a result of mass retrenchments and the cutting of the State Maintenance Grant which affected 60 000 families in the Western Cape alone. We therefore reject the R800 figure.
Furthermore, the figure is regardless of the size of the household. Many households have seven or more mouths to feed.
We also propose that other circumstances be factored into the indigency policy, including: disability, illness, HIV/AIDS, old age, number of children.
The City of Cape Town needs to initiate research aimed at accurately reflecting the socio-economic position of households in the Cape Metro area. Only such nuanced information can provide a basis for an indigent policy that offers genuine protection for poor communities.
We also reject the notion that indigent benefits could be cancelled purely on the basis that indigent debtors own items that are “deemed to be” a luxury. This grants unreasonable discretion to housing officers. Will the Council draw up a list of items generally regarded as a ‘luxury’. What about a household that receives a gift from a relative, e.g. a fridge or a television set?
The implication is that the test of indigency is not merely income but also possession of particular unspecified goods. This additional test is unfair and open to abuse by Council officers.
Checklist
Compare to July 1 document.
Compare to previous sub-structure policies.
Where to peg indigency level. MLL. HSL
Just administration, spell out the implications of the policy.
Identify potential litigation issues and ask for legal opinions.
Stumble It!
