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Opinionista

Budget comparison confirms Cape Town delivers the most for the poor while offering ratepayers value for money

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Geordin Hill-Lewis is the Mayor of Cape Town.

Comparing the newly tabled budgets of all of South Africa’s metros reveals Cape Town manages to out-spend the other big cities on pro-poor support and on infrastructure investment for better basic services.

One of the most common narratives I hear repeated about Cape Town – and by extension the party that governs in Cape Town – is that the city only looks after some (read affluent) communities and doesn’t do enough for the poor. Variations of this narrative are often trotted out without any substantiation, as though it were self-evidently true.

But is it?

The newly tabled budgets of all of South Africa’s metros gives us a chance to compare and contrast in detail what the cities are doing for poorer residents.

A detailed comparison of city budgets is useful in cutting through the noise, because budget allocations are not subjective opinions. They are facts, expressed in rands and cents, and these facts clearly set out a government’s priorities and vision.

How does Cape Town stack up against other cities?

Any metro budget has to find a balance between three factors: the needs of vulnerable residents, the scale and scope of future planning and the financial pressure on ratepayers. No easy task in today’s tough economy, with the rising cost of living and revenue being squeezed from all sides. 

But despite not being the largest metro in South Africa by either territory, population or budget, Cape Town manages to out-spend the other big cities on pro-poor support and on infrastructure investment for better basic services. And it does so while affording its ratepayers by far the biggest bang for their rates and tariffs buck.

Investing in infrastructure

So much of the present failure of South Africa’s major cities can be explained simply by looking at the data for infrastructure investment. This is literally the first job of city governments – to build bulk service infrastructure that supports city density growth and which drives the economy. And yet most of our cities aren’t doing it.

Cape Town has tabled a record R10.9-billion budget for infrastructure investment. This is our biggest ever, by some distance, and even outstrips our capex spend in the 2010 World Cup year. 

This year we will invest 35% more than eThekwini (R8.1bn) and almost 60% more than Johannesburg (R6.9bn). If you were to adjust this per capita, Cape Town will spend 145% more on infrastructure in the next financial year than South Africa’s biggest city, Johannesburg. In fact, over the next three years, Cape Town will spend more on basic infrastructure than Johannesburg and eThekwini combined.

The overwhelming majority of this R10.9-billion will be directed towards infrastructure projects in Cape Town’s poorer communities. Around 73% of it – or R8-billion – is for critical infrastructure that will serve lower-income households across the metro, most of which will go towards water and sanitation. We’ve all seen what happens in other cities when these investments don’t keep pace with urbanisation and population growth, and we have vowed to never let that happen in Cape Town.

Over the next three years, we’re increasing our water and sanitation spending by a massive 226%, including bulk sewer upgrades to the Cape Flats and Philippi lines, multibillion-rand upgrades to wastewater treatment works, new informal settlement water connections, pipe replacements and pump station upgrades. And despite all these investments, we have still tabled the second-lowest water tariff increase of all the metros.

All of this means real improvements for the lived experience of poor people in Cape Town, with more dignified sanitation and easier access to clean, piped water. 

Some of our other big investments include a major MyCiti bus service expansion linking Khayelitsha and Mitchells Plain with Wynberg and Claremont; a whole range of crime and safety technology such as dash-cams, body-worn cameras, drones, CCTV cameras and gunshot tracing tech; precinct upgrades in low-income business areas; informal settlement electrification and streetlight upgrades; and a range of social housing projects in various well-located parts of the city.

Expanding the safety net for the poor and vulnerable

Cape Town grapples with the same structural challenges arising from our past as all other towns and cities in South Africa. The spatial legacy of apartheid and unequal access to economic opportunities still scar our city, but we are working hard to unstitch this legacy and create a more equal society. This is evident in the way we shield the vulnerable from extreme poverty through our budget allocations.

Consider that a full 40% of households in Cape Town receive water and sanitation services free of charge. In Gauteng that number is 29%, according to the Stats SA non-financial census of municipalities. 

Our new budget introduces a raft of further measures to protect the poor. While no metro can possibly absorb Eskom’s massive 18.49% tariff hike, we have managed to keep our own increase to 17.6%, at a cost of R180-million to the city. Vulnerable households on the Lifeline electricity tariff will now also pay 50% less for electricity usage in the 350- to 450-unit band – at R1.84 a unit. Without this added  protection, these units would have cost R3.71 each.

Our total social safety net package in this year’s budget comes in at R4.3-billion – up from last year’s R3.75-billion – and we offer the most comprehensive support package of all the metros, all the way up to a property value of R450,000. This includes 100% rebates for property rates and refuse removal, the highest free water (15kl) and free sanitation (10kl) allocation in the country, and up to 60 free electricity units per month.

On top of this, we have proposed an unprecedented 50% increase in rates relief for all residential properties under R5-million, with the first R450,000 of property value now rates-free. We have also raised the upper qualifying limit for rates rebates for pensioners and social grant recipients from R17,500 to R22,000 total monthly income. On both scores, this is the most expansive protection offered to poor families in South Africa. 

We have built up, over many years, a foundation of good governance and stable finances, and this has enabled us to make these unrivalled expansions to the safety net. We still have much work to do, but we are steadily chipping away at the legacy of the past, and we are doing so for more people than any other city in the country.

Fairness for ratepayers

But any budget is only as good as its revenue. Our ongoing efforts to build an inclusive and resilient Cape Town, where all residents can live lives of dignity and opportunity, is entirely dependent on the contribution of our ratepayers. It is crucial that they are treated with fairness and respect, that their money is spent responsibly, and that they know they are contributing to a public good.

I can say, with absolute certainty, that we have achieved this in our 2023/24 budget, and that Cape Town ratepayers will receive real value for their money. 

If you compare the statutory measure to calculate property rates – what is known as the cent-in-rand (c/R)  – between the big three metros, Cape Town emerges as a clear value-for-money winner. Commercial property rates in Cape Town (0.014742c/R) are 35% lower than in Johannesburg (0.022689c/R), and 54.6% lower than eThekwini (0.032473c/R). When it comes to residential property rates, Cape Town (0.006273c/R) is 31% lower than Johannesburg (0.009076c/R) and 51% lower than eThekwini (0.012890c/R).

All the while, property prices are rising markedly, with a clear payoff for homeowners from all the city is doing to expand care for the poor and invest for future growth. Indeed, this is actually how public finances are supposed to work – taxes remain reasonable, investment is attracted, and the growing base funds more support for the poor. This is how a society of shared prosperity is built, slowly but surely. 

When you piece all these elements of the budget together – the widest safety net and pro-poor spending, the most ambitious infrastructure investment plan, and the best value for ratepayers – you emerge with a recipe with which you can build a City of Hope for All. 

And when people elsewhere see this, Cape Town becomes a beacon of hope to the country – a sign that decline is not inevitable. It can be halted and it can be turned around. DM

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Comments - Please in order to comment.

  • Willem Boshoff says:

    Financial soundness is the key to uplifting communities – not politically correct narratives and empty promises. This rests on the competency of the key individuals in the municipality. Geordin Hill-Lewis and Chris Papas are setting the pace for mayors in South Africa. Bongani Baloyi was up there with them. The ANC and EFF delivered yet another gem in JHB – all the best to them.

  • Robert Pegg says:

    All looks good on paper, but by bragging about it will only lead to an influx of poor and unemployed people, placing a larger strain on revenue in the future. Wherever services are given free, people will migrate to these areas, as is happening in Europe with thousands of illegal immigrants flocking to some countries.

    • Fanie Rajesh Ngabiso says:

      That’s one view. In this case one doesn’t need to migrate to the Cape to improve your life. Simply vote DA – its much easier.
      Against this backdrop, spreading truth and reality to reinforce awareness of a better alternative makes perfect sense.

    • Brendan Murray says:

      Dude. Please update your sociobigotry? “Thousands of illegal immigrants” don’t “flock” to places where “services are given free”. People flee failed states to where life is better. And yeah, you’re right, the provision of free basic services to the poorest amongst us is a sign of a high quality of life. For everyone in that space. This logic of yours that implies we should never attempt to undo the massive difference in quality of life because it will draw an influx of those similarly impoverished is selfish, lacks empathy and a cogent understanding of our past. No wonder the future looks scary to you. Prescription: A little education and a lot of empathy- taken daily.

    • Glyn Morgan says:

      People have been flocking to CT for centuries! Still coming! The People are not dumb.

  • John Smythe says:

    One has to wonder what percentage of the people moving to Cape Town in search of a better life contribute to the tax base. The city (and its rates contributors) can’t carry the poor forever. So, it’s refreshing to read that the mayor has a vision to make Cape Town the best place to live in SA and so doing brings in investment and income for the city. Puppet mayors and flip-floppers don’t have a vision for the people.

  • Glyn Morgan says:

    This puts small-party-jabber to bed. Any comments from the “Good Party”? Nah! From PA? Nah! The rest? Nah!

  • Andries Breytenbach says:

    Congratulations on beating other dysfunctional cities in SA, that is in terms of budget allocation. If you want CT to be a world class city, I recall you expressing this goal, then set benchmarks for actual service delivery based on world class standards, and measure and report your effectiveness to the full spectrum of citizens, those who are paying the rates and taxes, as well as those who get (very limited) services for free. My guess is that finding the balance is a massive challenge, especially considering the huge and constant inflow of destitute people, hoping to find a better life. It would be interesting to know which world class city you would like to emulate.

  • John Whitehead says:

    Hopefully the DA’s Head Office/Federal Executive’s PR gurus, well in advance of next year’s election, will realise that life in Cape Town and the Western Cape, rather than coalitions and moon shots, should be in the forefront of its campaign and that the Mayor (and those of other municipalities) and Premier should be the focus of attention !!

  • John Smythe says:

    Of course, rampant corruption and pigs feeding at the trough is kept to an absolute minimum and is instantly dealt with. No beating around the bush with cover-ups, sweeping under the carpet, turning a blind eye, etc.

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