Local Government Finance in South Africa
| Published date | 01 June 1957 |
| Author | L. P. Green |
| Date | 01 June 1957 |
| DOI | http://doi.org/10.1111/j.1467-9299.1957.tb01190.x |
Local Government Finance in
South
Africa
By
L.
X?.
GREEN
Dr. Green’s analysis of the financial position
of
Local Authorities
in
South
Africa
shows
a striking similarity to the position in the United Kingdom.
OWARDS
the end of 1956, the Union Government set up a committee to
T
enquire into the financial relations between the central government, the
provinces and local authorities in South Africa. The committee is now setting
about its formidable task, and its investigation is none too
soon.
South
Africa
has not escaped the revolution in financial relations between central and local
governments that has swept through most of the more advanced countries
of the world in the last 35 years. This revolution has had two main causes
:
the growing demand for communal services and equipment
of
all kinds
consequent upon the rapid urbanisation of national populations, and the lack
of a corresponding growth in local financial resources because of the
dependence upon the local assessment rate. As estimated below, the gap
between local financial needs and resources in South Africa now stands at
roughly L20 million, and it is growing by over
kl
million
a year.
This gap began to appear during the depression of 1931 and 1932, when
demands made upon
all
levels of government started to multiply. Central
and
provincial revenue resources were able to respond to these demands because
of the fertility of the income tax. At
first
local revenues also responded, not
by way
of
the rate, which proved to be a relatively inelastic source of revenue,
but by way of trading profits. The Second World
War
had a catastrophic
effect
on
trading undertakings, however, and trading profits fell from
25.7 per cent. to 7.4 per cent. of municipal revenues between 1938 and 1948.
They have since remained relatively stationary. Municipal revenues thus
lost their buoyancy and the gap between local financial needs and resources
has rapidly expanded in recent years.
The Growth in
Demand
for
Communal
Services
and
Equipment
The growth in demand for communal services and equipment has had two
main causes: a rapidly increasing urbanisation of the population, and the
setting
of
higher standards of service.
Between 1921 and 1951, the rural white population declined by 99,000
people, while the urban white population increased by 1,224,000 and from
56 per cent. to
78
per cent. of the total white population. The non-white
rural population continued to increase, by 2,185,000, but the non-white
urban population increased by 2,402,000, and the proportion of urban
non-
whites rose from 16 per cent. to 33 per cent. Taking
all
races together, the
urban population rose from 25 per cent. to 42 per cent. of the total population.
On
the basis of the changes taking place between 1946 and 1951, it may be
estimated that about
50
per cent. of the Union’s population now lives in its
urban areas.
This extraordinary shift in population coincided with an economic and
technological revolution that made far-reaching demands upon existing
179
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