Mayor’s Council Speech Changes to Invested in Hope Budget 25 26
28 May 2025
Mayor’s Council Speech
Madam Speaker,
Today we table amendments to the City’s proposed Invested in Hope Budget for 2025/26, having listened carefully to Capetonians during the initial public participation phase.
It is most welcome that the City and the public are having this honest conversation about the direction of the Mother City, which we are working to build into a city of hope for all.
Today’s amendments include measures to reduce some of the tariff proposals made in March, and further extend Cape Town’s social relief net to even more homes.
Compared to the March tabled draft, the changes will result in meaningfully lower increases to bills.
The March proposed budget was designed to protect families living in lower value homes in particular, and was deliberately designed to cross-subsidise this protection from higher value homes.
The proposed amendments tabled today preserve that protection for families in lower value homes, but also considerably soften tariffs for the middle class whose feedback and concerns we heard.
We have thoroughly examined the budget to find ways to achieve this without compromising the critical and urgent investments required for infrastructure, and without punishing the whole city in years to come by kicking the can down the road instead of doing what is needed now.
It would have been much easier in March to table a budget that kicked the infrastructure can down the road.
That’s what all the other cities in South Africa do, and the results are plain to see for everyone.
But, because we all want a city that is an even better place to live in future, it is important to be honest with Capetonians about the two paths before us.
There is the well-trodden path of decline that so many of our country’s cities and towns have sadly followed, and which is now an undeniable daily reality in the form of failing services, collapsed water systems, broken traffic lights, potholed roads, and limping local economies.
This is the same malaise that afflicts South Africa as a country. There is no clear decision to move forward, and so our country drifts slowly ever backwards. Our country has no unity of purpose, and no clarity on what we are trying to achieve.
In Cape Town, we are choosing a different path, one of a functional, successful, working city. A path of progress and a better life for all, where hope flourishes and more residents are lifted out of poverty and into work.
Here in Cape Town, we choose not to allow malaise or decline to set in.
Madame Speaker, the primary function of government everywhere is to work to make the future better than the present.
If anyone here is interested only in kicking the can down the road, papering over what’s broken, or sweeping problems under the mat, let me say to them that the exits are clearly marked and they should please use them now.
As for us, we are deliberately choosing to do the right things now.
I will briefly set out some of the active choices we are making for a better future for Cape Town.
Firstly, we cannot cut or re-phase this City’s infrastructure budget. There are no luxury or optional major infrastructure projects in this budget that are not urgently needed.
Multi-billion rand upgrades to wastewater works, and to bulk sewers, such as SA’s largest project on the Cape Flats line, cannot be postponed. Nor can the wide-ranging sewer and water pipe replacement or pump station upgrades be delayed or slowed, if we are to live in dignified communities with working infrastructure.
We can’t avoid securing new water sources, and investing in bulk water resources as SA’s only city that directly owns and manages some of its own dams – this would be criminal for a metro that knows all too well the fickleness of rainfall, and the consequences of drought.
We cannot fail to upgrade our electricity grid, as a city that knows all about Eskom’s blackouts, and what it will take to build an energy secure future that protects the economy from job-killing outages.
Our roads, our ability to rely on public transport to get to work affordably, safely, and reliably – this is all critical infrastructure that we dare not play dice games with. So we’re investing in road upgrades, in congestion relief, and in pothole repair.
And we know that despite the growing momentum of our housing programme, the most important way we will break down the physical and economic exclusion that apartheid baked into our cities, is through working public transport. So, we are investing there too, in South Africa’s largest public transport project to connect communities across the metro’s south-east, from Khayelitsha and Mitchells Plain, to Constantia and Wynberg, via a new MyCiti bus route.
These are just some of the reasons why we must keep intact our South African-record R40bn infrastructure budget – 75% of which will directly benefit lower-income households.
In fact, this budget should even be larger.
Of course, it is not possible for ratepayers to bear the infrastructure burden alone, which is why we’ve worked for years to improve governance, financial stability, and the City’s credit rating, so that in future we can borrow more cheaply, and also tap into the limited national government infrastructure sources which reward merit.
It is also vital that we pursue our major safety and cleaning investments. Safety is the number one concern of every family, and this budget will deliver two critical improvements: first it will deploy over 500 new metro police officers, with a dedicated neighbourhood policing allocation to each and every ward, for the first time ever.
And second, it will deploy over 200 officers to protect frontline service delivery and infrastructure from criminals disrupting the delivery of basic water, sanitation, electricity, and waste services to the poorest and most vulnerable. It is a situation we must push back against.
Likewise, the new visible cleaning unit for highways and CBD’s will ensure our main routes and public places are cleaner, and more attractive places for investment. This is a basic thing any city needs to get right in order to thrive.
Delivering on these priority investments and major long-term infrastructure does require certain basic sustainability measures.
This includes an element of fixed charges to ensure that all Capetonians make a contribution to infrastructure and stable services.
Cape Town would not have a working electricity or water service to speak of if the City only charged people for consumption, and not for a contribution to the costs of building and maintaining the network of infrastructure that make those services possible.
Many costs are fixed in nature – pipelines, trucks, chemicals, cables, staff to service it all. These costs remain no matter how much people consume, and so fixed costs must be met with a portion of fixed revenue.
Municipal infrastructure must be available for everyone, and must always work. To achieve this, costs must be borne by all ratepayers, and not only those who can’t afford to invest in alternative water and electricity sources.
This is a well-established principle in infrastructure finance the world over, and there is a broad literature on it. In fact, globally cities are increasingly collecting more and more of their revenue from fixed charges. In Sydney for example, fixed charges make up the majority of city revenue.
In Cape Town, consumption charges will still make up by far the largest portion of revenue, and only a relatively small portion will be fixed.
So, the incentive and choice to decide your own consumption pattern remains, with low consumption customers benefitting from lower per unit costs for water and electricity as part of the step-tariff system.
Cape Town also cannot sustainably fund infrastructure with lower-income and affluent households making equal contributions.
Hundreds of thousands of households between R500 000 – R1.5m do make meaningful fixed contributions within their means. But we cannot sustainably run a city where a R50 million household makes the same fixed contribution to water and sanitation infrastructure as a R500 000 household.
If a flat charge of say R500 is billed, and one household earns R20 000 while the other earns R100 000 a month, this charge represents 2,5% and 0,5% of their monthly income respectively.
This means the impact on the lower-income household is actually five times more than on the higher-income household. Let’s call that what it is - regressive taxation - and we oppose it for the same reason the DA recently opposed the VAT hike, because it hits the poor hardest.
Cross-subsidising – where the better off among us help to fund services for the less fortunate – is the only sustainable way to ensure a working city of hope for all.
All households – whether low-income or affluent – also contribute 15 cents in every rand of rates paid towards free and basic services to indigent households valued under R500 000.
While this budget is designed to protect households under R2.5m, we have listened carefully to ratepayers in higher value properties, and do agree that not everyone in higher value homes is wealthy or cash-flush.
And so Speaker, I am pleased today to table several tariff reductions that will meaningfully reduce monthly bills compared to the March tabled budget.
In summary these measures are:
Extending the ‘first R450 000 rates-free’ benefit to all homes up to R7 million property valuation (up from R5m)
More pensioners to benefit by raising qualifying threshold to R27 000 monthly income per household (up from R22 000), regardless of property value, SA’s widest criteria for pensioner support.
Significantly reducing City-wide Cleaning charges for all residential properties under R20m compared to the tabled March 2025/26 budget. A pensioner rebate for City-Wide Cleaning has also been included which will offer up to 100% off this charge.
Lower fixed water charges for property value bands between R1m and R25m compared to the March tabled budget draft
The above relief measures will lead to lower total monthly bills compared to the March budget approximately as follows, and based on average consumption patterns:
o R1.2m home: up to 15% lower
o R2m home: up to 24% lower
o R3m – R4m homes: up to 33% lower
o R5-7m homes: up to 40% lower
For pensioner rebate beneficiaries, the relief will be even greater.
These additional measures will complement the existing wide-ranging relief already contained in this budget.
For instance, getting rid of the former ‘pipe levy’ based on pipe size, and basing it now on property value, means that all homes under R2,5m will pay less for their fixed water charges than they would have on the pipe-size system for 25/26.
Even when adding the new sanitation charge, 200 000 families in homes under R2,5m will pay less fixed charges for Water and Sanitation together this year, compared to what they would have paid on the pipe-size system.
This is alongside electricity price relief, which will benefit households across the property value spectrum. From July, the per unit electricity charge for customers on the Home User and Domestic tariffs is going down. This is made possible by discontinuing the 10% cost embedded in electricity prices that previously paid for city-wide cleaning.
We have further considered the petition by the Cape Town Collective Ratepayers Association, which calls for the raising of electricity prices instead of a City-Wide Cleaning Tariff.
Our modelling shows this will negatively impact households, and that it is better to pursue other means of relief.
For commercial customers, we have heard the points raised by major commercial property owners like SAPOA. The City will allow commercial customers more time to adapt to the phased-introduction of the City-wide Cleaning Tariff. Therefore, in 25/26 commercial customers in particular will continue to contribute to funding the city-wide cleaning service in the way they currently do - via a percentage of their electricity price.
For households on the other hand, the reduction in the per unit cost of electricity will be especially meaningful for larger families with high consumption. We know this is the case in many lower income homes, where one often finds not one, but multiple families staying together, and so consumption is high.
For example, when using 750 electricity units in a month – and water between 10-30KL - total monthly bills for homes valued R1m – R3m will decrease by as much as -5%, up to a maximum overall increase of 3%.
Given this positive impact of electricity price relief for households, it is important to take electricity usage into account for an accurate calculation of your potential total monthly bill increase.
On that note, the City’s online rates and tariffs calculator is now updated and available for new calculations from today.
Special ‘Lifeline’ electricity protection also continues for indigent households and pensioners.
Lifeline customers using 600 units will still pay roughly the same in 2025 as they did three years ago in 2022/23.
This is thanks to the City raising the number of cheaper, subsidised electricity units that can be bought from 350 to 600 units per month.
Speaker, today’s changes and the existing relief, will ensure that we not only protect households under R2.5m as this budget was designed to do, but that we also bring meaningful relief to more homes, with bills lowering by up to 35% compared to the March budget for households under R7m in value.
Following the relief measures we are tabling today, 97% of ratepayers won’t experience the often-repeated +20% increase in monthly bills, and virtually no one will experience a 30% increase on any reasonable household consumption scenario, let alone the fabled 40% of a recent click-bait report.
The 3% of cases where this year’s tariff reforms may lead to an unusually steep increase of over 20%, relate to homes of high value with very low electricity and water usage well-below the average household, likely due to large solar and borehole investments.
These are exactly the customers who the City encourages to sell us as much of their excess solar power that they can generate, in exchange for municipal bill credits, and even cash once the total bill reaches zero. They could reduce their overall increases significantly, or even lead to paying no bill at all, if they sold all their excess electricity back to us. We are ready to pay cash for power.
We also understand the additional impact of tariff reforms on ratepayers who own higher value properties in Eskom-supply areas.
City-wide cleaning is not a new charge for the over 70% of residents living in City-supply areas, who have for decades been funding cleaning and other services via a 10% cost embedded in electricity purchases. However, this is an entirely new charge for Eskom-supply area residents, who in the past have been subsidised by other ratepayers. It is especially these customers who we have kept in mind in developing the additional relief measures to soften the impact of the City-wide cleaning charge.
Speaker, from a value for money perspective for residents, it is worth noting that Cape Town’s infrastructure spend is larger than all Gauteng metros combined. This budget also includes major investments in policing and cleaning operations, electricity price relief, SA’s widest social relief net for households, and still, Cape Town maintains the lowest monthly bills among SA’s cities.
This important finding is sometimes dismissed due to higher property values in Cape Town, but consider this: a R1m asset holds the same value regardless of its location. The difference is that in Cape Town, the municipal account for this home will be the lowest in the country, and the asset is more likely to grow in value.
Sure, one could buy a bigger property elsewhere for the same price, but your Cape Town asset is in a city that works, that invests to be even better in future, and still you’re paying less than everywhere else.
Consider also that, even when adjusting for a 25% higher property value, Cape Town’s monthly bills still come out significantly lower than Joburg for properties all the way from R1m to the upper-middle range. This picture will only further improve with the additional support measures announced today.
To sum it up: while ratepayers pay more in other cities and get failing services and infrastructure in return, here in Cape Town they pay lower bills and get a functional, successful city in return.
It is no accident that this is titled the Invested in Hope budget. Now with this fourth budget of this administration, we are well on the path of raised infrastructure investment. We are also making the necessary reforms to ensure sustainable services for a growing city long into the future, and together with ratepayers who we most warmly thank for their contributions, we are truly on the path to building a city of hope for all.
I hereby table these budget amendments for further public participation from today, 28 May until 13 June.
I thank you
End
Published by:
City of Cape Town, Media Office
