In an all but explosive public meeting about the City’s draft budget held at Brackenfell Civic Centre last Wednesday evening residents clashed with officials over what they claimed to be unfair and unaffordable tariff increases.
Similar meetings were held across the City’s various subcouncils last week.
Major tariff-based structural reforms and new fixed tariffs were proposed by the City of Cape Town for its massive R84,1 billion draft budget a fortnight ago to come into effect on 1 July. (See table)
- Overview of proposed tafiffs
- Fixed water charges will now be determined by property value rather than the connection size of the pipe, as was used when this water-pipe levy was first introduced during the drought back in 2018 to help cover the costs of the crisis.
- This is likely to result in a increase for the fixed charge on water consumption for properties valued at more than R1,5 million when examining the scale.
- The electricity Home User fixed charge will increase with 38.7% from R245,03 to R339,89.
- A new City-wide cleansing levy based on property values, raining from R93 to R12 021.
- A new sanitation fixed charge based on property values
In Brackenfell, where property values range between R1,5 and R3 million, municipal accounts will increase anywhere from 13 to 15%, using skyrocketing property values as a measure to determine tariffs. And whereas the City said it charged the lowest property rates per R1 million among the major cities of the country, yet there was no property in Brackenfell and other middle-class areas at all that reflected this.
Scenario to countless Capetonians
One resident said after paying his bond he had only R7 500 left to foot all his other bills, including education, food and transport, making it impossible to reach the 13% tariff increase he faced. This scenario applied to countless Capetonians, as high property prices shrunk disposable incomes.
In a video message screened at the meeting, Mayor Geordin-Hill Lewis stated property values were the fairest way to determine municipal tariffs in South Africa, but ratepayers attending the meeting held the view that proposed tariff reforms were a means to “…kick the people who vote for them in the teeth”, as one resident summed it up.
From the outset residents expressed their unhappiness, questioning the validity of the meeting as a box-ticking exercise to vote the budget in, rather than a sincere effort to gain insights from residents on how it will affect their lives.
Disparaging remarks to and fro saw a heated confrontation between Subouncil 2 chair Kyle Carls and some attending.
‘Budget was not balanced’
Sandra Dickson, founder of civic action group Stop COCT also present, said the proposed budget was not balanced and skewed to nail property owners with properties over R1,5 million.
She questioned whether the City did in fact do an affordability study for all the categories of home owners in the City to support the basis of the budget.
“You (the City) need to understand these tariffs are unaffordable. Your average middle-income residents will not be able to make ends meet anymore. A huge problem is for people who have lived in their properties for many years… their income will just not keep up with the higher values of the property, and are now used to fixed-levy charges.”
Food or municipal bill?
Pointing to the City’s actual 2024 expenditure of R62,8 million and the proposed budget of R84,1 billion for 2025, resident Wehahn Geldenhuys questioned whether this 33,9% increase was reasonable over a two-year period.
“Inflation over two years, population growth, expansion of services and major external factors like Eskom tariff hikes approved by Nersa will naturally cause budgets to increase. The debate isn’t about whether there should be an increase, but about the size and fairness of the proposed increases.”
While saying the property-value-based fixed charges are a major policy change, he questioned whether the impact of this on different households were considered, to make it equitable for all in a city where residential property prices had grown by 141% since 2010, determined in Stats SA’s residential property-price index released in 2023.
“By linking fixed charges to property value the intention is often to make higher-value properties contribute more towards the shared infrastructure costs, theoretically allowing for relief for lower-income households, which can weaken the direct financial incentive for many households to conserve resources.
Inflation
“If a large portion of your bill is fixed, the Rand amount you save by using, say, 1 kilolitre less water or 10 kWh less electricity becomes a smaller percentage of one’s total bill. For households whose fixed charges driven by property value become substantial the variable part of the bill may indeed become smaller than the fixed part. In such cases extreme conservation efforts might yield relatively small financial savings on the overall bill. This can feel counter-intuitive, especially after years of messaging, about such scares as the Day Zero onset of drought, emphasising that saving water directly saves money.
“While we acknowledge the need for some budget increases due to inflation and service demands, the proposed overall budget growth of 34% over two years seems significantly above inflation. We request that the City demonstrate how internal efficiencies are being maximised before passing such large increases onto residents. We advocate for increases closer to the general inflation rate.
Affordability test
Geldenhuys told TygerBurger the “affordability test” will take shape in July, when a class of residents will have to make a financial survival choice between paying the municipality or having enough money to buy food, or buying food first and falling behind on the municipal bill.
“Those who do not qualify for the COCT ‘need criteria’, who fall behind, can prove through a ‘means test’ that they cannot afford it, and it will be a new challenge for the City.”
Ending the meeting, Carls encouraged a more subdued audience to submit their comments on the budget before 2 May. “These are the types of comments we are looking for to make the City aware of your point of view. Looking at what the rest of the country looks like we should count ourselves lucky for having this administration with its strong leadership and political will.”
Also read: Cape Town Proposes New Tariff Structure in Draft Budget: What it Means for Your Municipal Bill.Visit www.capetown.gov.za, see the draft budget trending box on the landing page for all budget-related information.
