By Antoinette Slabbert and Liesl Peyper.
The City of Cape Town confirmed on Friday that it will introduce rates relief measures and other amendments to its 2025/26 budget, which will be open for public comment for a 14-day period.
Residents will be able to submit their comments on the proposed changes from 28 May to 13 June.
The announcement follows Moneyweb reporting earlier that the city is preparing to revise its draft budget – a move confirmed by two sources with direct knowledge of the matter.
City of Cape Town’s decision comes in the wake of receiving more than 14 000 submissions during the initial public participation process. The amended budget will be tabled at a city council meeting scheduled for Wednesday, 28 May.
“We’ve listened carefully to Capetonians and will propose expanded relief measures to further soften monthly bill increases in addition to the major electricity price relief for all households,” Cape Town Mayor Geordin Hill-Lewis said in a statement issued on Friday morning.
The city’s mayoral committee has considered a report on public participation, including a petition calling for the raising of residential electricity prices instead of a city-wide cleaning charge, he adds.
“Our modelling shows this will negatively impact households and that it is better to pursue other relief measures. It is also not feasible to phase out critical and urgent infrastructure upgrades as the petition requests,” he said.
“Cape Town will not follow the path of decline seen in other cities, and there are no non-urgent major infrastructure projects in our capital budget,” added Hill-Lewis.
“We’ve thoroughly examined the budget to find innovative means to further soften the impact on monthly bills and will table these amendments at council.”
The city will also table amendments to commercial tariff structures, Hill-Lewis notes, while amendments resulting from Budget 3.0, which was tabled on Wednesday 21 May, will also be adopted before the start of the financial year.
Tight timeframe
Municipalities are legally permitted to revise tariffs only once per year, on 1 July. Therefore, time is extremely limited to secure approval of the budget, especially in light of a renewed public participation process.
Normally, the budget is approved by the end of May, allowing the administration sufficient time to update systems in preparation for the implementation of new tariffs on 1 July.
Should the budget be approved later in June, the administration will have only a limited window to make the necessary system adjustments.
Under fire
Over the past six weeks, the city has had to contend with growing pressure from ratepayers over its proposals for sweeping tariff reforms and service charges.
The current tariff proposals include fixed charges for water and sanitation and the introduction of a city-wide cleaning tariff – all based on property values. These proposals have drawn widespread criticism from ratepayers, some of whom will see monthly municipal bills increase by between 20% and 30%.
In a report prepared for the council sitting, which Moneyweb has seen, the city notes that it has received 14 161 comments on the budget, of which 12 391 were concerns over the planned tariff increases.
The City of Cape Town Collective Ratepayers’ Association (CTCRA), which represents more than 45 residents’ and ratepayers’ organisations, also compiled and distributed a petition that garnered over 10 000 signatures from Capetonians.
The city’s previous proposals for a tariff overhaul – particularly the city-wide cleaning tariff and linking certain charges to property values – have drawn fire for what opponents call a “backdoor” increase in municipal charges.
The City of Cape Town has frequently explained that it was compelled to remove the cleaning charge from electricity bills following guidance from National Treasury. According to the city, it is realigning the tariff structure to comply with fiscal regulations and ensure each service is billed transparently.
The city has repeatedly stated that the impact of the cleaning tariff will be mitigated in that the proposed electricity tariff increase for 2025/26 is “only 2% – well below Eskom’s average increase of 11.32%”.
“[The] electricity price relief for households … has been achieved specifically by discontinuing the 10% cost embedded in electricity purchases as a contribution to other services such as city-wide cleaning.”
Not the full picture
Municipal tariff specialist Hendrik Barnard notes that the city’s claimed lower electricity tariff increase is not the full picture.
He explains that the City of Cape Town purchases electricity from Eskom at high-voltage rates under the new Municflex tariff, which means its actual cost increase from Eskom will be lower than the 11.32% national average.
“Cape Town should show the calculation of the impact of Municflex [tariff] and then put their 2% increase in perspective,” Barnard notes.
He takes specific issue with the proposal to link the city-wide cleaning tariff to property values.
“You can’t just charge more because the house is more expensive. Municipal legislation clearly says the charge must match the service being delivered.”
Bas Zuidberg, spokesperson of the CTCRA, says that although the city technically removed cleaning charges from electricity bills, the effect is the same.
“The city got a slap on the wrist for having subsidised cleaning under electricity. They’ve taken out the cleaning but put it in as a separate levy. And as a result, they are able to keep the increase of electricity at 2%.”
Zuidberg says the city’s so-called “only 2% electricity increase” is also of no use to residents in Eskom-supplied areas and to households with solar installations, who do not benefit from the “low” increase.
“And it’s a perverse incentive to increase electricity consumption, which just places an extra burden on the environment.”
Relief for households
Cape Town Mayor Geordin Hill-Lewis announced recently that the city is considering mitigating measures to “soften” the impact of the city’s tariff reforms.
These include:
- Expanding property rates relief by extending the “first R450 000 rates-free” benefit to more homes beyond the current R5 million cut-off;
- Raising the pensioner rebate qualifying criteria higher than the current R22 000 monthly income; and
- Reducing the city-wide cleaning charges for properties from R2.5 million to R7.5 million.
“It must be pointed out that Cape Town offers the lowest monthly bill for ratepayers compared to other cities across a range of common household scenarios, while delivering the best services and South Africa’s biggest infrastructure investment of R40bn to ensure our city is an even better place to live in the future,” he said.
The CTCRA and its partners are not opposed to infrastructure upgrades or assisting indigent households, Zuidberg emphasises.
“As ratepayers, we are not blind to this – we know we need to support people who don’t have the means. But why do the infrastructure upgrades all need to happen at once?”
In the statement issued on Friday morning, Hill-Lewis emphasises that there are no “no non-urgent” major infrastructure projects in the city’s capital budget.