EDITORIAL: Cape Town’s proposed rate hikes a necessary political risk for DA

Cape Town’s mayor, Geordin Hill-Lewis, is taking a calculated political risk as he seeks to reform the city’s tariff structure to help finance a set of ambitious new infrastructure projects.

With a municipal election due in a little more than a year, he dare not alienate too many middle-class DA voters with steep, inflation-busting rate hikes. But neither can he ignore his responsibility to ensure the rapidly growing city — now home to at least 4.8-million people — continues to function properly.

Cape Town’s roads have become notoriously congested, and much of the city’s sewage, electricity and water infrastructure is more than 100 years old and in desperate need of repair.

It thus makes sense to expand the MyCiTi public transport network, improve waste water systems, boost water security and strengthen the electricity grid. There are also plans to beef up security, with 500 extra law enforcement officers due to be deployed across the city.

The million dollar question of course is how to pay for these projects while funding from National Treasury is dwindling. Cape Town’s equitable share for 2025/26 has been cut by R243m compared with the allocation made in the 2023 budget, and now stands at R4.7bn.

The latest iteration of Hill-Lewis’ plan — open for public comment until June 13 — retains the changes he first flighted in the city’s March budget: in addition to increases in charges linked to consumption, there is a new cleaning levy, a new fixed electricity charge, and the flat rate charges for water and sanitation have been replaced with ones linked to property value.

His original scheme met such a furious backlash from middle-class property owners — some of whom were facing increases of more than 20% to their monthly rates bills — that he wisely softened the blow.  

The cleaning levy and fixed water charges have been reduced, pensioner benefits have been extended to include all property owners, and the “first R450,000 rate-free” benefit has been extended from homes up to R5m to homes worth up to R7m.

Now, he says, just 3% of homeowners will face rate increases of more than 20%, and these are all people who own high value properties with very low water and electricity consumption, probably due to their investments in boreholes and solar power.

This is an entirely sensible approach. It acknowledges that some middle-class property owners live in homes that have soared in value in recent years while their incomes have remained largely unchanged, and consequently reduces their projected rates bills. But at the same time, it retains the progressive principle of raising revenue with mechanisms that ensure wealthier property owners subsidise poor households.

Cape Town’s plan to spend more than R40bn on infrastructure projects over the next three years is hardly glamorous, but it is absolutely vital if it is to avoid sliding into the decay that plagues the Gauteng metros.

The city is far from perfect, but its roads are not littered with potholes, the traffic lights work, and municipal workers respond reasonably quickly to burst water pipes and power failures. Even so, infrastructure spending of the kind the city has in mind is not always an easy sell: while improvements in public transport have tangible benefits that the city’s inhabitants immediately recognise, many infrastructure projects are completed out of the public eye and only fully appreciated when they fail.

As Hill-Lewis has repeatedly pointed out, Cape Town can show its residents where the money goes. It was the only metro that received a clean audit from auditor-general Tsakani Maluleke for the 2023/24 fiscal year, its third consecutively.

While that doesn’t entirely rule out corruption, it offers the city’s inhabitants a reasonable degree of comfort that the money flowing into the city’s coffers reaches its intended destination.

Whether rate payers view the increased levies in the same light as the mayor will be put to the test in next year’s vote.