Tuesday, 13 November 2012

The St Francis Bay Fire Crisis: Its Causes and Cures

The following article is copied, with permission, from chrislbecker.com, a blog dedicated to Liberty, Private Property, & Voluntary Exchange

By now most news readers will know that some 75 homes burnt to the ground in a raging fire in St Francis Bay over the weekend. As sad as this story is (this writer has spent at least 15 pleasant Christmas holidays in St Francis Bay), this is a crisis that has been waiting to happen, that  residents of St Francis Bay were aware of.
On August 16, 2010 the St. Francis Bay resident’s association (SFBRA) sent a Notice of Disputeto the Kouga Municipality (KM).
The Notice of Dispute starts off with:
Several disputes were lodged, but on page 8 under the heading “ISSUES RELEVANT TO THE NOTICE OF DISPUTE”, is a subheading “3.8. Fire Protection.” It reads (emphasis as found in original):
(a) The Fire Hazard in St. Francis is life threatening and of grave concern to residents, yet in spite of the fact that SFB have thatch on the majority of homes, the SFB Fire Fighting Unit was withdrawn from the town. This has already led to the fact that 2 years ago a home was burned to the ground, as the Fire Engine was not able to reach it on time. See Appendix 32 third row. On the 3rd of August this year, a home was saved from fire by locals who ripped out burning thatch from its roof. The fire engine eventually arrived. Major fires have threatened homes and lives over the last two years (See Appendix 32).
(b) There is an urgent need for maintenance of fire fighting equipment.
(c) Public Open Spaces need to be cleared of Bush and the KM needs to monitor property owners with regards to keeping their plots free of alien vegetation. Currently it only happens sporadically and follow up is inadequate.
The seeds of this crisis were sown because local government was responsible for fire fighting in SFB. Because local government has monopolised the provision of fire fighting services, it has tended to reduce the quality of the product that it provides, while still charging the same amount. This can be compared with Eskom, the government monopoly that advertises for its clients to use less of its product, while hiking prices.
Instead of employing a private fire fighting company to clear public spaces of bush, and to be ready to respond to fire emergencies, the SFBRA attempted to force government to provide services by withholding taxes. This strategy failed. The government fire fighters could not be dispatched from Humansdorp in time, and this gave the fire just enough time to get out of control.
The lesson of this fire is that private citizens must do more than merely withhold taxes to try and pressure government into providing services. In fact, communities should not want government to provide any services at all. Communities should take it a step further and withhold taxes while taking back the responsibility of managing these services as well. This means communities should employ private fire fighting units to take the necessary preventative steps, such as clearing public spaces, and also responding to emergencies.
There is a place for the insurance industry in this process as well. It would have cost the insurance industry a fraction of what it will cost them now to rebuild these homes if they had maintained a private fire fighting unit in St Francis Bay since its disbandment several years ago.
Do the math: A capital outlay of two fire engines costing about R150,000 each, plus a fire station costing R1,000,000 or less. Total capital outlay R1.3 million. Ongoing costs of four stand-by fire fighters at salaries of about R250,000 each per year, R1 million per year.
Estimating a cost of damages of 75 homes with an average rebuild cost of R3 million plus household contents of R1 million, and the cost to rebuild this section of St Francis Bay to insurers will be about R300 million (very rough estimate).
With a capital outlay of less than R2 million and an ongoing annual cost of R1 million, SFBRA and their insurers could have had a private fire fighting and prevention unit operating for nearly 300 years.
Of course, the costs could have been split between the residents and also insurance firms and paid for on an ongoing basis. The fire fighting unit could also be tasked with doing more: think crime prevention, sea rescue, to mention two other responsibilities it could take on. Furthermore, there would not only need to be one such private fire fighting units, but two or even three could compete to provide these services, which incentivises better quality service at the lowest possible cost.
I want to end with the following: the South African government cannot be blamed for their failures. As the greatest economist who ever lived taught in his book “Socialism”, government has no way to tell whether it is doing a good job or not, as there is no profit and loss signals to communicate success or failure to them. Therefore governments are doomed to fail at delivering services. “Market failures” are therefore inevitable wherever government is involved. It is time the people of South Africa learnt this lesson, and started taking back the full responsibility for running their communities.
h/t David Joffe for the SFBRA Notice of Dispute.

Wednesday, 7 November 2012

Teetotaling after midnight

The Kouga Municipality has amongst other mishaps landed itself in a situation where it is in default of the provincial liquor trading laws by not having a valid trading hours by-law. It is a requirement that trading hours be set by the municipality and although this power seems to be historically misunderstood by municipalities resulting quite often in protracted litigation and animosity between legitimate business owners and municipal authorities. In Kouga’s case the municipality introduced proposed liquor trading laws several years ago and ultimately managed to bungle up the public participation process to the extent that the 2006 by-law was legally assailable and when certain publicans were brought to prosecution under the by-laws the High Court was asked by them to set aside the by-law for want of legality – which happened much to the municipalities embarrassment. For whatever bizarre and ill advised reasons the municipality appealed. In November 2011 the Supreme Court of Appeal dismissed with costs the municipality’s appeal although it modified the High Court Order to specifically protect the license holders against being prosecuted (Kouga Municipality v Bellingan and Others (121/11) [2011] ZASCA 222)*.
This litigation came at a great cost to Kouga residents as ultimately the officials and politicians involved in creating the mess were never held accountable. The costs in litigation ultimately were born by Kouga ratepayers and the publicans themselves (as full costs are never recovered).

As of November 2011 therefore liquor establishments in Kouga cannot be prosecuted for trading outside of the hours prescribed by the municipality in the invalid by-law. The municipality must pass a new by-law and has taken more than a year to get to the point of having public meetings to get Kouga in compliance with the provincial statute. The fact that the municipality was unable to achieve compliance in almost a year is yet another indictment against the competence and diligence of various people.
Therefore when I saw a notice concerning the setting of the trading hours I wasn’t particularly concerned, I had assumed (wrongly it turns out) that what would occur is that the status quo trading hours would be put into the necessary format and that the expensive lesson from the courts would have been learnt. Naivety knows no bounds and despite knowing how dangerous Kouga’s approach is to the Rule of Law I frequently find myself affording the benefit of the doubt to the municipality. On it emerging that liquor licence holders were specifically being invited and handed copies of the draft document my personal interest (having witnessed the folly in Makana in 2007) my personal attention was captured and I decided it best to attend the meeting as part of my responsibilities to the municipality.

As a rule I am of the view that the Association needs to apply an approach that our first concern with municipal decision making is legality and democracy, particularly when the decisions are of a divisive or political nature. I believe that the JBRA must have four requirements be met in everything the municipality does (a four way test as it were):
  1. The municipal action or by-law must in and of itself be procedurally lawful (in particular it must be intra vires and have been authorized in accordance with the relevant statutes)
  2. The municipal action or by-law must serve a rational purpose
  3. The municipal action or by-law must have been preceded by proper and appropriate public consultation
  4. The municipal action or by-law must pass section 36 (of the Constitution) muster if it limits constitutional rights
Whilst our Constitutional jurisprudence has developed such that the tests presented may be merged under a general rubric of “legal and fair” there are practical and theoretical reasons to avoid conflating issues. If a municipal action or by-law violates any of the four tests the JBRA simply cannot support the decision as it would not be in the interests of residents. In addition to these tests municipal action also needs to be in the interests of residents generally and a few principles of decision making ensure that this occurs:
  1. Any course of action which places the municipality at great risk of litigation (and the dangers arise from litigation) should be subject to heightened scrutiny.
  2. The person who wishes to change the status quo has the responsibility to demonstrate that the change is beneficial.
  3. Every decision must have sustainable results. The municipality cannot spend money it does not have in the hope that magically the money will arrive, nor can it allow construction without infrastructure or act as a costly buffer against the inevitable.

At the presentation of the by-law the municipality absolutely avoided answering the question “what is wrong with the status quo” the closest thing to an argument is that there is a requirement to have a by-law but that merely advances the argument to formalize the status quo into a by-law it does not explain the municipalities proposals, some of which are highly irrational. By way of example the by-law has later trading hours in purely residentially zoned areas than in mixed use areas. The by-laws will allow for champagne breakfasts but not the service of beer (umqombothi or "classic") with a meal before 11:00 in the morning.

The proposed by-law fails in so many respects to be good at law or practice that regardless of what liquor trading hours a person would like to see the Draft Liquor Trading and Hours Bylaw is likely to be a disaster in the making. At the public meeting the Director responsible for the process undertook to receive written representations of the draft for a period of two weeks (which ends next week Thursday) and that interested parties would be able to motivate to present to Council who actually make the decision at the December meeting. Hopefully the publicans, liquor store owners and guesthouses will amongst themselves make good submissions and take up the opportunity to present to Council to avoid the municipality again making a decision without the necessary information. As the JBRA we will need to decide whether we actually have a sufficient interest to present a case orally – and what that case would be. My view is that our primary duty is discharged by fighting for public consultation and a transparent process and that we can confine ourselves to written submissions, however we certainly do have the competence to present (sadly the JBRA may actually be more competent than the municipality).

So now there is the opportunity for residents to formulate and express their views on liquor trading hours. The options should range from almost unlimited trading hours with businesses determining their own trading hours individually – what makes this option attractive for Jeffrey’s Bay town is that it could be a tourist statement – through to very restrictive conditions based on what residents want with middle options such as properly designating areas where trading hours are short and areas where trading hours are long. Many residents and residential areas may wish for early hours primarily in the hope of noise reductions or other reasons** however what is worrying is that the municipality has attempted to claim that it has thousands of complaints yet I have not received a single complaint about liquor trading hours being what they are. It is possible though that with so many other problems in Kouga liquour trading hours will only become a question when asked, which is what is happening now.

As such at this juncture because of the bad foot on which the municipality is proceeding the JBRA as a matter of principle cannot support an illegitimate process which will harm jobs and damage businesses, what we can hope for is that the Council recognizes what its actual responsibility is. A discussion about what residents want - what areas should have what trading hours - is a difficult one to hold but if it isn't held then politicians will make the decisions without proper information.

* Technically only the Applicants (the three licence holders who approached the High Court), however any prosecution for trading outside of hours in Kouga would fail because of the declaratory order.
** Municipalities often seriously misconstrue what their powers on liquor trading under the Act are and mistakenly assume the relevant section of provincial legislation to be a power to determine all manner of things such as the hours during which a licensed premises may operate (the Makana municipality attempted to dictate the closing hours of pubs and restaurants in Grahamstown using the liquor trading hours provision, after High Court litigation they like Kouga were forced back to the drawing board on liquor trading hours), and if the municipality is not held to check – if we let moralist sentiments against alcohol trading, or not-in-my-back-yard early closing hours approaches dominate – a costly and futile exercise could easily occur. Uncertainty in the industry places many jobs and risk and invariably if liquor stores are required to shorten their hours their staff will simply be underemployed and effectively be paying a tax in the form of lost wages, similarly if business owners need to defend their businesses through legal channels they will incur costs and so will the municipality. The truth is that experience shows that shorter and more restrictive trading hours often result in more noise and noise nuisance is best addressed in other by-laws.