On 19 February people who had objected to the Proposed Drought Charge received a comprehensive response from the City of Cape Town. The essence of the City’s response is copied below in italic. It is highly likely that the new normal will include higher water tariffs going forward to encourage ongoing efficient use of water even after this drought has past. Some of ratepayers recommendations listed by the City below may hint at future tariff strategies.
We received more than 61 000 comments and wish to provide you feedback on the nature of the comments and the pertinent issues considered by Council on 19 January 2018 when it was resolved not to implement such charge.
Given consideration to the comments received, Council on 19 January 2018 inter alia agreed that:
- In light of the number of comments stating that the proposal for a drought charge is punitive and unaffordable to a community that is already overtaxed, no drought charge be implemented;
- Renewed efforts be made to pursue financial assistance from National Government or the Western Cape or any other relevant authority due to the declared disaster status of the City of Cape Town;
- The reprioritisation of the existing budget when preparing the Adjustment Budget to be considered by Council on 31 January 2018.
Above resolution was confirmed at the Council meeting held 31 January 2018, together with the approval of level 5, 6 and 7 water and sanitation tariffs with effect 1 February 2018, which involves higher payments based on consumption from the lowest level of water use.
The following deductions were made from the comments received:
Ratepayers were opposed to:
- The methodology of using property value as yardstick to determine the drought charge opposed to water consumption.
- For targeting only certain property owners and excluding others is regarded as unjust as all water users should take some responsibility for the water augmentation programme.
Ratepayers expressed the following opinions:
- The City of Cape Town has ignored warnings in this regard without taking pro-active steps, eg seemingly no provision in its MTREF budget for 2017/18.
- Bad planning by only reacting now with an expansive water augmentation programme which should have been gradually planned for, budgeted for and implemented over the past 5-10 years.
- Shortcoming in the 2017/18 tariffs by not making provision for the loss of revenue as expected from the reduced water consumption.
- It seems that the income planned from the drought charge is substantially higher than the anticipated loss due to reduced consumption.
- The drought charge is punitive for saving water and in some instances incurring costs in alternative methods, including water tanks, bore holes and grey water systems for both residential and commercial properties.
- Not all properties use water and the taxing of these would be disproportionate to the cause.
- The middle-class is yet again burdened with and tax, making it unaffordable, considering the basket of taxes confronted with.
- The drought charge is detrimental to the elderly with shrinking disposable income.
- Households falling in the under R400 000 property value category are also water wasters but are exempted from any contributions.
- The City is wasting money in other areas that should be reprioritised.
- The invite of comments during the festive season is a sign of bad faith and attempt to “push through” the drought charge without proper public participation.
- Negative and potential unaffordable impact on the economy in cases of large retail shopping centres where the tenants will be forced to pass on the drought charge to the customer.
- Exorbitant cost implications for commercial properties beyond R1bn.
- The implementation of a drought tax is incorrect as it undermines the legal requirement of utility services to be cost-reflective by means of their tariffs.
- Temporary taxes are a fallacy – they will remain.
- As a property tax, it will estrange ratepayers and there is no incentive for water savings during the coming dry summer period.
- Expression of retracting political support.
Ratepayers made the following recommendations
- National government should contribute.
- Scrap the proposed drought charge based on property value and to increase the existing water tariffs on the principle of cost-reflective and tariffs based on consumption.
- Institute a minimum flat rate across the board.
- Target visitors and tourists.
- Access funding from the bond market.
- Subsidise ratepayers with water tanks.
- Installation of water restrictors to all properties.
- Education campaign in all communities, about water saving and the dire situation.
- Transparent reporting on the various water augmentation projects, their costs, funding sources and time-lines as well as distinguishing between short-term emergency measures and long-term sustainability plans. This would include the ring-fencing of such funding and expenditure.
- Green buildings should contribute at a lower margin.
- The City should take cognisance of initiatives and measures implemented by individual ratepayers, ie large commercial entities to determine equitable charges.
- Closer attention of the management and reduction of non-revenue water.
- Remodelling of the water and waste water tariff structures by way of a fixed component based on property value and a variable cost based on consumption.
- Public provide partnerships and build operate and transfer projects.
- New developments should be compelled to prove water saving designs and measures.
- The pending of big water intensive developments during the drought period.
- Implementation of a cap on the drought charge for both residential and commercial properties above a certain threshold.
Acting City Manager