Budget is ‘more of the same’

Capetonians reeling from salary cuts, job losses, soaring inflation and the pandemic’s other financial ills will need to dig ever deeper into their pockets after the City’s new budget kicked in on Thursday July 1.

It hits ratepayers with a 4.5% average increase for rates, 5% increase for water and sanitation, 3.5% for refuse removal, and a whopping 13.5% electricity-tariff hike.

JP Smith, mayoral committee member for safety and security, told an online meeting, hosted by Frances Lombard, branch chairman for the DA in Ward 71, on Wednesday July 7, that the City had “done everything” to soften the blow.

However, the City had been unable to wholly absorb Eskom’s 17.8% increase on the cost of electricity it supplies to municipalities, and other increases were needed to cover the cost of providing services.

Bergvliet Meadowridge Ratepayers’ Association chairman Mark Schäfer said they we are concerned that the City wrote off huge amounts of debt every year for “non-payers” yet sought to justify to the “payers” that the increase was reasonable – in the circumstances – compared to other metros.

“Yet we, in established areas, increasingly see a lack of maintenance of infrastructure – be it sewerage pumps or pavements and roads, street lighting, garbage removal vehicles etc.”

“Whilst the budget gets spent on staffing costs and non-payers, there is no point in trumpeting clean audits (which we expect) and the lowest increases – when the City is not delivering at various levels on its mandate,” said Mr Schäfer.

“Whilst we appreciate that the poorest of the poor need to be subsidised to ensure a level of basic services, and even to bring about a level of equalisation, it seems that inordinate amounts are repeatedly spent in some areas whilst other areas are neglected. If you don’t maintain what you have, it eventually needs to be replaced at greater cost,” said Mr Schäfer.

Ms Schäfer also asked why pre-paid electricity customers paid the same as those who were billed monthly. Even though the City had an additional cost of reading meters and billing and recovery.

We asked the City if there were people who still got their electricity without a prepaid meter. They said yes, but there was a programme to replace the old credit meters and install prepaid ones.

The are also residents who are supplied by the City directly and residents who are supplied by Eskom directly. According to the City, this is due to legacy distribution licence agreements.

Constantia Ratepayers’ and Residents’ Association (CRRA) manager John Hesom responded to questions from the Bulletin after the virtual meeting, saying every business in the province had been hit hard by the pandemic.

Businesses and employees had made sacrifices, some people had taken salary cuts or been retrenched, but that was not the case for fortunate municipal staff, including managers and councillors, who had benefited from negotiated increases.

“There were no reductions in any of our tariffs,” said Mr Hesom. “Be it rates or other tariffs. The basic electricity or water fixed charges remain firmly in place, and there is little or no visible improvement in delivery.”

“There is talk of threatening to suspend rates payments by some residents. It has been shown that we are one of the highest taxed cities in the world. A rates boycott is not the way to iron out differences.

“This is a budget of ‘more of the same’. There is little attempt to curb expenditure as the City remains confident that its residents will be happy for the privilege of living in Cape Town and meeting the financial demands placed on them.”

Zwaanswyk Association of Property Owner’s (ZAPO) vice chair John Green also responded to questions from the Bulletin after the virtual meeting.

“The rates, refuse and water increases appeared to be reasonably in line with inflation, particularly given the challenges all local authorities were facing with a burgeoning informal sector, influx into the city and population growth at a time when the economy was under pressure because of Covid-19,” said Mr Green.

The real concern for Zapo was the City’s property valuations. Many of Zapo’s members had objected to the “very inflated valuations” in the 2018 general valuation in a period when there had been very few property transactions to assess reasonable market valuations, said Mr Green.

“Many of those appeals had only been finalised late last year and several still seemed very high, he said. Since 2018, the property market in areas like Zwaanswyk had been very dormant, but rates and the increase in rates were still determined by those valuations, many of which were probably well in excess of their market values in today’s depressed conditions,” said Mr Green. “The real question is, will the City apply realistic current market values as the basis on which rates have to be paid in future?”

Mayoral committee member for finance Ian Neilson said the existing general valuation cycle had been extended in an effort to protect ratepayers. “Property valuations are valid until June 30, 2023,” said Mr Neilson.

He added: “If your property has a municipal value of less than R300 000, you can apply for indigent rates relief if you earn between R4501 and R7500.”