Cape Town rates and tariff increases excessive – Cape Chamber

THE Cape Chamber of Commerce and Industry has expressed great concern at the battery of proposed City Council rates and tariff increases for the new municipal year as all of them are well above the current official CPI rate of inflation of around 4,0 percent.

This was made clear by Chamber members after a presentation on the draft budget by the deputy Mayor, Mr Ian Nielson.

The proposed increases are 10.83 percent for property rates, 8.33 percent for refuse removals and 11 percent for both water and sanitation. Electricity tariff increases will be even higher but this depends on a pending decision by NERSA on Eskom’s latest application for a further tariff increase.

Ms Janine Myburgh, President of the Chamber, said that we had experienced above-inflation increases in the past and more were projected for the next three years. “How long can the City continue with these huge rates and tariff increases? It is not sustainable and the City should expect some strong resistance from both business and residential ratepayers.”

Mr Jeremy Wiley, chairman of the Chamber’s Economics and Financial Affairs Committee, said the biggest cost, at more than 30 percent of the operating budget, was the City’s 27 000 staff who earned an average of R30 000 a month in salaries and benefits. This was much higher than private sector salaries. It was unaffordable and required urgent attention.

Mr Neilson explained that salaries were negotiated at national level and that the City’s mandate to SALGA was an 8 percent annual increase, which in itself was well above inflation. Mr Wiley pointed out that the draft budget indicated a 10% increase in salary costs or nearly 10 percent and that the City should, like the private sector, be looking for ways to reduce staff costs, increase productivity and improve the delivery of services to ratepayers.

Mr Charles Scheltema, a member of the Chamber board, said that businesses had opted to create some 32 city improvement districts and to pay additional rates in order to supplement services the City was unable to provide. These improved services increased property values and, as a result of their own success, businesses in the improvement districts found that their overheads increased as property rates went up thus contributing even further to the city’s income. He said that just as businesses had to reduce their costs to survive the City should find ways to do the same.

“The core problem is that the City decides how much money it needs and then sets the tariffs. That’s a sure way to lose control of rising costs. The correct way would be to decide that rates and tariffs could not go up by more than the inflation rate and then instruct departmental heads to work within those limits. We know that it will be hard but good financial management is never easy,” said Ms Myburgh.

The Chamber also expressed concern about the high operating costs of the My-City bus service. It also called for a better to plan bring down refuse removal costs and to roll out the solid waste recycling programme throughout the city.

In spite of these reservations, Cape Town was arguably the best managed city in South Africa and compared favourably with other world class cities. The Chamber still expected the City to deliver better value for every rand paid in rates and tariffs.

Ms Janine Myburgh, President of the Cape Chamber,

Mr Jeremy Wiley, Chairman of the Chamber’s Economics and Financial Affairs Committee

Mr Charles Scheltema, Chamber Board Member

Issued by the Cape Chamber of Commerce and Industry, May 4 2015

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