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:

NOTICE OF DISPUTE

A. DECLARATION OF A DISPUTE (“DISPUTE”) BETWEEN THE ST. FRANCIS BAY RESIDENTS ASSOCIATION (“SFBRA”) AND THE KOUGA MUNICIPALITY. (“KM ”)

B. THIS DISPUTE IS A DISPUTE REFERRED TO IN SECTION 102(2) OF THE MUNICIPAL SYSTEMS ACT 32 OF 2000.

C. THIS NOTICE OF DISPUTE IS SERVED IN RESPECT OF GROSS MISMANAGEMENT OF RATEPAYERS FUNDS AND FAILURE OF THE MUNICIPALITY TO DELIVER EFFECTIVE
SERVICES. MUNICIPAL SYSTEMS ACT 31 OF 2000 73 (1) & (2).

D. THIS NOTICE PROVIDES THAT UNLESS THE DEMANDS CONTAINED IN THIS MEMORANDUM ARE COMPLIED WITH BY THE MUNICIPALITY BY 1 DECEMBER 2010, MEMBERS OF THE SFBRA INTEND TO WITHHOLD RATES AND ONLY MAKE PAYMENT FOR SERVICES.

etc.

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to residents, yet in spite of the fact that SFB have thatch on the majority of homes, the SFB Fire Fighting Unit was withdrawn from the town.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.