Tariff increase not warranted

Ivor van der Ross, Garlandale Rondebosch East Residents’ Association

The recent proposed municipal tariff increases are not warranted.

The unembellished truth is that Capetonians are being ripped off. This is worse than the Great Train Robbery of 1964 in England. All the increases are above inflation which averages out to about 4%. The average wage increase for 2018 is about 3%. Where is the balance?

Residents have invested thousands in water-saving technologies and now they are being punished.

To add insult to injury, the preposterous water tariff increase from R4/Kl to R26/Kl is aggravated by a proposed fixed basic water charge of R56 per month, in addition to R150 per month for properties valued at more than R1 million.

The Institute of Security Studies has revealed that 60% of domestic water is used by the affluent.

Wealthy residents can absorb the extra financial burden. Despite the fact that South Africa is the most unequal society in the world according to the GINI coefficient, the municipality has the audacity to sanction astronomical tariff increases-beyond the reach of most working people. These increases could lead to dire consequences.

The City should become innovative and revisit its accounting strategies in order to balance its books. The 39% underspend in capital projects in 2017/2018 budget year could be used to fund the water income shortfall, according to (now former) Mayor Patricia de Lille. This is a practical way of cancelling the shortfall. It boggles the mind why simple, honest accounting cannot be applied.

Our civic organisation, Garlandale Rondebosch-East Residents’ Association, rejects the 2018/2019 draft budget in its current form because we believe there is a flaw in the municipality’s accounting process. To be fair, we further believe that they have the necessary expertise and resolve to correct this consumer-unfriendly budget.

The City of Cape Town’s Acting Mayor, Ian Neilson, responds:

“The City of Cape Town always values input on financial and governance proposals. Provision has been made for residents to comment on the draft budget, and the comments received will be taken into consideration.

It is unfortunate that the writer makes such sweeping allegations against this City which has a sound record of financial management and which has operated in a transparent manner during the worst crisis that Cape Town has ever experienced. The drought and uncertainty around future weather patterns have presented new challenges.

Proposed tariff changes are aimed at securing the resources necessary to overcome these challenges.

The City has drastically reprioritised existing funds to try and minimise how much of this burden is passed on to residents, but there is a limit to what can
be achieved with existing resources and tariffs. Work to increase water security, although it will be costly, will serve to protect the City against future droughts, and minimise to what extent the City will need to implement water restrictions and accompanying tariff level increases in future.

There are two tariff changes: one being an increase in the price per kilolitre and the other being the introduction of a delivery charge.

Importantly, indigent people are indeed protected from the increases in the first two steps of the tariff and from the delivery charge. For other users, the proposed price increase is between R14.48 for step 1 and R2.88 for step 2 of the tariff.

Note that council committees and caucuses have been workshopping the budget proposals, and it is now clear that a lower increase is likely in the final budget.

Details will be communicated over the coming weeks.

The first two steps of the tariff have always been heavily subsidised and the price of water has been too low.

The proposed new tariff is a reflection that the cost to provide the service remains the same whether one uses more or less water.

The City makes no profit from the sale of water. All money is used to invest in water services.

While Level 6 tariffs remain in place, the City would like to move to a lower tariff as soon as it is possible to do so, i.e. dam levels recover adequately, for instance.

While our daily demand has decreased by around 40% in the past year, operational costs have not decreased.

To be resilient to future droughts, our tariff structure requires greater income certainty and better diversification which is not based on whether more or less water is being used.

We are therefore proposing fixed delivery charges for water. Most customers would not pay more than R100 (excl. VAT) delivery charge for water. Indigent customers are exempt from this charge.

Interestingly, the cost of municipal water is currently 5.8c per litre as compared with the R12 per litre that one pays for bottled water.

This picture is simply not sustainable.

As for the remarks about the City’s capital budget underspend, it must be noted that the current financial year ends at the end of June 2018 and thus invoicing for projects and payments are still under way, as always.

The City’s expenditure trends for the past five years confirm that our spending usually spikes in the last 60 days of the financial year.

Thus, in past years, we still achieved 90% expenditure four out of the five financial years and we expect this trend to continue.