Why the drought charge is needed - Patricia de Lille

Cape Town Mayor says this is needed to make up for revenue shortfall due to residents' water savings

Proposed drought charge needed to ensure functioning of water network

In the last few days of the public comment period for the proposed drought charge, I would like to again inform and remind residents on why this proposal is being made and why it is needed.

The drought charge is needed to make up the deficit in the City’s revenue which has come about due to residents’ water savings and paying significantly less for water and sanitation.

As I have stated before when tabling the proposed drought charge to Council last year, it is not intended to be punitive.

The reality is that because of reduced consumption, the City’s Water and Sanitation Department has projected that it will see a deficit in the region of R1,7 billion for 2017/18.

Without this vital income, the City will not be able to undertake the basic operations required to provide water and sanitation services to the people of Cape Town. There is a vast amount of infrastructure and systems making up the City’s water reticulation network which is operated daily by staff. This network also requires constant maintenance to ensure that water and sanitation services are supplied to consumers.

The drought charge will be a temporary additional charge based on existing property valuations that will assist with the City’s budget shortfall.

The income from the drought charge is needed to ensure that we can operate the reticulation network that supplies drinking water to residents.

If the drought charge is approved in the January 2018 adjustment budget, it will raise approximately R420 million in the 2017/18 financial year and approximately R1 billion per year for the next three years.

A charge based on property valuations has been deemed the most progressive of the options, while being the most equitable and fair to poor households.

This is the fairest way to recover the City’s revenue shortfall by distributing the charge in such a way that those who can afford it will pay an amount based on their properties’ valuation.

Only 464 200 households in the city out of a total of around 707 800 households will be affected by the charge.

Of these, only around 52 500 will pay more than R150 per month. The rest will pay less than this. The average charge per month for non-indigent households will be R73.

We remain committed to lessening the burden on our most vulnerable residents while at the same time ensuring that every Capetonian receives basic services.

For this reason, the drought charge will only be applied to residential properties with a valuation of R400 000 and above, and to commercial properties with a valuation of R50 000 and above.

It is important to note that the cost of running the water and sanitation network does not increase or decrease in proportion to the amount of water used or sold. The fixed costs are independent of the volume of water being used. The same goes for constant repairs and maintenance needed on the water system to keep water and sewage flowing reliably.

We have listened to our residents and have decided to extend the comment period to midnight on Monday 15 January 2018 and encourage residents to bear this understanding in mind and submit their comments by this date.

The proposed drought charge will be tabled at Council for its consideration at the end of January as part of the adjustments budget. It must also be noted that the proposed drought charge is also subject to approval by the Minister of Finance.

Statement issued by Executive Mayor of the City of Cape Town, Patricia de Lille, 11 January 2018