Cape Town's draft Budget sparks debate over rising fixed charges

While the City of Cape Town’s draft budget for the new financial year, starting July 1, seeks to invest in hope, some have taken issue with how it plans to do that - namely the introduction of fixed charges.

The budget, which was tabled at last month’s Council meeting, and is now open for public comment and seeks to prioritise cleaner vleis, resilient coastline, and upgrade public places.

Mayor Geordin Hill-Lewis said the “Invested in Hope Budget” considers the implications of climate change, population growth, in-migration, surge in informality, and the escalating need for indigent support and financial sustainability of City budgets.

GOOD councillor, Anton Louw, said that the draft budget signals a sharp increase in costs for many residents, “despite the city’s attempts to downplay the increases”. Louw highlighted that in the 2022/23 financial year, NERSA approved a 7.4% tariff increase, but Cape Town implemented a 9.6% increase. 

“In the 2023/24 financial year, NERSA approved a 15.1% increase, but the City implemented a 17.6% tariff hike on top of its hiked price from the previous year. This issue is still playing out in court, with the residents paying the City’s legal fees.

“So yes, this budget only has a 2% electricity tariff instead of the 12.74% NERSA approved for Eskom (corresponding municipal tariff increase of 11.32%), but residents are not getting the deal they are being sold,” Louw said.

“The new cleaning tariff is linked to property values, which have been seen to be skyrocketing in Cape Town. Stats SA’s residential property price index released in 2023 determined ‘since 2010, residential property prices have grown by 141% in the City of Cape Town’.”

“This is not a budget invested in hope, it is full of despair and concern for Cape Town residents who are struggling to make ends meet. Cape Town is becoming unaffordable to Capetonians,” Louw said.

He also urged residents to use the city’s rates calculator to better understand the impact of the new draft budget.

Founder of civic activist group StopCoCT, Sandra Dickson, said the draft budget is funded by the four fixed charges.

“After years of criticism about the Electricity Department ‘subsidising’ the Rates Department by 10%, this is now done away with. Leaving the Electricity Department to retain 10% of its revenue while the Rates Department is left with a hefty shortfall. 

“The retention of 10% of the Electricity Department’s revenue allowed the City to increase the electricity tariff by 2%. It also reduced the ‘unregulated’ portion of the tariff substantially. It is therefore clear that the City is attempting to return back to the rule of law and gradually stop setting tariffs above the approved NERSA tariffs,” Dickson said.

“Due to the lack of the 10% subsidy from the Electricity Department, the Rates Department now has a hefty shortfall which the public once again has to pay for.”

Also touching on the ‘City-Wide Cleaning’ tariff, Dickson said: “Is this a levy, a tax or a surcharge? This charge is also based on property value and again properties valued over R1.5 million is in for a hefty additional charge which go as high as R12 012.91 per month for high-end properties. Typically a property valued R2.5- R2.75 million will pay R210.24 per month. 

“The City labels this tariff as ‘equitable, affordable and fair’ and this charge is meant to be applied for street cleaning services, picking up litter, subsidising the indigent and the provision of waste facilities… It must be noted that these fixed charges linked to property values are designed to lay a heavy burden on properties valued more than R1.5 million in value.”

Louw added: “Based on preliminary calculations, it’s clear that residents are facing significant increases.”

Deputy Mayor and Mayco Member for Spatial Planning and Environment, Eddie Andrews said: “I encourage residents to peruse the draft budget, and submit comments. This is public money to be spent in the interest of our communities as we are building the City of Hope.

Comments can be submitted via email at budget.comments@capetown.gov.za, online at www.capetown.gov.za/collaborate; or www.capetown.gov.za/HaveYourSay or at sub-council offices.

Cape Argus