Date: 27/05/04
Source: City of Cape Town
Title: S Mowzer: Speech Notes on the Budgetary Provisions for Consumptive Triffs and Rates
SPEECH NOTES ON THE BUDGETARY PROVISIONS FOR CONSUMPTIVE TARIFFS AND RATES. PRESENTED BY COUNCILLOR SALEEM MOWZER, MAYORAL COMMITTEE MEMBER FOR TRADING SERVICES "AFFORDABLE BASIC SERVICES AND RATES TO ALL"
The 2004/2005 budget proposals are for the first time in the history of our city aligned to a comprehensive IDP and an IDP that responds to all community's needs and the socio-economic challenges of our city and its people.
The consumptive tariffs and property rates proposals have been set in accordance with the Municipal Systems Act, the City's Indigent Policy and Equitable Services Framework. They have been inflationary linked and aim to recover the cost of basic municipal services and finance investment in the service delivery infrastructure base to our city's growing economic and social needs.
Property rates have been reviewed by the Tariff and Rating Political Advisory Committee established by the Executive Mayor and have been based on property values indicated in the General Valuation Roll. The Roll is updated annually for properties affected by sub-divisions, alterations, demolitions and improvements through the Additional Valuation Roll. All values on the General Valuation are set at January 2000.
The Rating Policy of Council is consistent with the new Property Rates Bill of Parliament.
In this regard inflationary linked Property Rates increases of 5% is proposed for all categories of ratepayers with the cent-in-the Rand for residential properties set at R0, 01132.
The first R50 000 of property value will be rebated for:
* Residential properties of not more than two dwelling units;
* Properties for which a Share Block Register has been opened; and
* Properties used for educational purposes, including staff residences of no more than two residential units.
Sectional title developments will also receive a R50 000 rebate per unit.
Persons with disabilities and retired property owners with a household income of less than R2600 per month qualify for rates rebates.
Disabled and retired property owners with an income:
* Less than or equal to R1300, will receive a rates rebate of 88% compared to 75% in this financial year;
* Between R1501 and R1600, will receive a 59% rates rebate compared to 50% in this financial year; and
* Disabled and retired property owners with an income between R2301 and R2600, will receive a rates rebate of 11% compared to 10% in this financial year.
These income brackets have been adjusted to benefit retired and disabled persons by taking into account inflation-linked increases in pensions and disability grants.
The Tariff and Rating Political Advisory Committee has also overseen the modelling of the Total Municipal Account, whereby the tariffs and rates for tariffs for electricity, water, sanitation and solid waste have been modelled to ensure affordability to all residents.
These tariffs are cost reflective, pro-poor and have been modelled against the impact on the Total Municipal Account, the impact of Property Rates and the R20 Indigent Grant applicable to properties up to R100 000, with the aim of ensuring affordability in the cost of the Total Municipal Account through a basket of municipal services to all households.
This tariff modelling was undertaken on the basis of median or typical household consumption in a range of property values ranging from informal settlements to properties greater than R2 million.
Through inflation targeting which is consistent with National Government policy, the impact on the Total Municipal Account has been kept to a minimum. The very poorest households will experience a decrease of 5% in their Total Municipal Account, with other households across the socio economic spectrum receiving an inflationary linked increase of 5% in their Total Municipal Account.
While the impact of the tariff modelling on the Total Municipal Account is based on typical consumption patterns, the impact per individual household will differ depending on the amount of water and electricity consumed.
The average Electricity Tariff increase is 5%. Individual consumer categories such domestic users will experience an increase of 4,6%;
Small and Large Power User 2,5% and Very Large Power Users 3,5%
Households consuming less than 500 kWh of electricity a month will qualify for an increase in the amount of Free Basic Electricity from 30 to 50 kWh a month. In a typical informal settlement where the average consumption is 120 kWh a month, the cost will be reduced by approximately R5 a month.
Restricting the supply of Free Basic Electricity to poor households consuming less than 500 kWh a month, has prevented a 7% increase in Property Rates, compared to the 5% proposed and will result in more effective targeting of poorer households in the provision of Free Basic Electricity, consistent with National Government policy.
This targeted approach reduces the cost of supplying Free Basic Electricity from R156,1 million to R112,2 million in the 2004/2005 financial year.
The cost of supplying Free Basic Electricity to indigent consumers will be funded from the Indigent Fund by a contribution of R93, 4 million from the Rates Account, with the balance funded by the Free Basic Electricity component of the Equitable Share Allocation of R18,7 million.
Our electricity tariff structures are for the first time compatible with Eskom's. This creates favourable conditions for the establishment of a Regional Electricity Distributor for the Western Cape to be fully operational by 2007, as stated by President Thabo Mbeki in his State of the Nation Address.
The average Water Tariff increase of 7,5% incorporates a 5% contribution to finance the Upper Berg Water Supply Scheme as part of the large investment in the Berg River Project, which includes the construction of the Skuifraam Dam, to cater for Cape Town's future water supply needs. Thus, the service increase is only a modest 2,5%.
The progressive stepped Water Tariff will be retained to allow for the needs of the poor to be met and to discourage high and excessive water consumption. Cape Town is a water scarce region and the Water Tariff structure encourages residents to conserve water and reduce excessive consumption patterns, to assist in water demand management.
All households will continue to receive the Free Basic Supply of 6 000 litres of water a month.
For domestic consumers water will cost:
* R2, 15 per kilolitre from 6 to 12 kilolitres;
* R4, 30 per kilolitre from 12 to 20 kilolitres;
* R5, 48 per kilolitre from 20 to 40 kilolitres;
* R6, 67 per kilolitre from 40 to 60 kilolitres; and
* R8, 60 per kilolitre for consumption above 60 kilolitres.
Domestic clusters such as bulk metered flats, cluster developments such as sectional title and single title unit will pay R3, 98 per kilolitre, although the allowance of 6 000 litres of free water per month will be considered based on the submission of affidavits.
Commerce and industry will pay R4, 25 per kilolitre of water and the educational and sports sector R3, 75 per kilolitre of water.
The existing Sanitation Tariff structure whereby 50% of the sanitation charge is included in the rates account and 50% based on water consumption will be retained. The charge recovers the cost of waste water treatment and sewerage infrastructure, which is in the public good from an environmental and health perspective.
The 50/50 sanitation tariff and rate structure benefits the majority of households and divergence from this tariff regime would be burdensome to poor households. All households will continue to receive 4 200 litres of Free Sanitation a month.
After listening to residents, the sanitation rate is to be capped at R250 a month for residential properties, each sectional title unit and places of worship.
The key challenge households face in managing the affordability of their sanitation charges, is to manage the amount of water consumed as the national guideline indicates that 70% of all domestic water consumption enters the sewerage system as waste water.
Waste water from dish washing, domestic cleaning and washing of cars can be innovatively reused for garden irrigation to assist in water demand management and reducing the water consumption component of the sanitation charge.
The average Solid Waste Tariff increase is 5%.
The existing refuse collection rebate system applicable to properties valued below R125 000 will remain in place, whereby:
* Properties valued below R50 000 receive a 100% rebate;
* Properties valued between R50 000 and R75 000 receive a 75% rebate;
* Properties valued between R75 000 and R100 000 receive a 50% rebate; and
* Properties valued between R100 000 and R125 000 receive a 25% rebate.
Refuse collection to informal settlements on Council land remains free and as from 1 July 2004 non-serviced informal settlements on private land will also receive a free refuse collection service, subject to approvals by landowners and access to settlements.
The inflationary linked consumptive tariffs and rates for electricity, water, sanitation, solid waste and property rates is the basis for the implementation of a basket of affordable municipal services.
This affordability together with improve service delivery meets the needs of the poor and vulnerable and creates the conditions to enable all households to realize savings in their Total Municipal Account, by reducing and managing their electricity and water consumption and thereby assist in resource conservation.
The installation of water and energy efficiency mechanisms will assist in this regard, and is highly encouraged for residents to realize the benefits of the tariff structures which enables them to manage their demand and consumption at the household level.
With a package of below-inflation average increases for basic services and for property rates, this a good news budget for all residents and sectors. Once again it is a proudly pro-poor budget and one that supports improved quality of living, growth and development across the socio-economic spectrum.
It is a budget for all our people.
I thank you.
Source: City of Cape Town
Title: S Mowzer: Speech Notes on the Budgetary Provisions for Consumptive Triffs and Rates
SPEECH NOTES ON THE BUDGETARY PROVISIONS FOR CONSUMPTIVE TARIFFS AND RATES. PRESENTED BY COUNCILLOR SALEEM MOWZER, MAYORAL COMMITTEE MEMBER FOR TRADING SERVICES "AFFORDABLE BASIC SERVICES AND RATES TO ALL"
The 2004/2005 budget proposals are for the first time in the history of our city aligned to a comprehensive IDP and an IDP that responds to all community's needs and the socio-economic challenges of our city and its people.
The consumptive tariffs and property rates proposals have been set in accordance with the Municipal Systems Act, the City's Indigent Policy and Equitable Services Framework. They have been inflationary linked and aim to recover the cost of basic municipal services and finance investment in the service delivery infrastructure base to our city's growing economic and social needs.
Property rates have been reviewed by the Tariff and Rating Political Advisory Committee established by the Executive Mayor and have been based on property values indicated in the General Valuation Roll. The Roll is updated annually for properties affected by sub-divisions, alterations, demolitions and improvements through the Additional Valuation Roll. All values on the General Valuation are set at January 2000.
The Rating Policy of Council is consistent with the new Property Rates Bill of Parliament.
In this regard inflationary linked Property Rates increases of 5% is proposed for all categories of ratepayers with the cent-in-the Rand for residential properties set at R0, 01132.
The first R50 000 of property value will be rebated for:
* Residential properties of not more than two dwelling units;
* Properties for which a Share Block Register has been opened; and
* Properties used for educational purposes, including staff residences of no more than two residential units.
Sectional title developments will also receive a R50 000 rebate per unit.
Persons with disabilities and retired property owners with a household income of less than R2600 per month qualify for rates rebates.
Disabled and retired property owners with an income:
* Less than or equal to R1300, will receive a rates rebate of 88% compared to 75% in this financial year;
* Between R1501 and R1600, will receive a 59% rates rebate compared to 50% in this financial year; and
* Disabled and retired property owners with an income between R2301 and R2600, will receive a rates rebate of 11% compared to 10% in this financial year.
These income brackets have been adjusted to benefit retired and disabled persons by taking into account inflation-linked increases in pensions and disability grants.
The Tariff and Rating Political Advisory Committee has also overseen the modelling of the Total Municipal Account, whereby the tariffs and rates for tariffs for electricity, water, sanitation and solid waste have been modelled to ensure affordability to all residents.
These tariffs are cost reflective, pro-poor and have been modelled against the impact on the Total Municipal Account, the impact of Property Rates and the R20 Indigent Grant applicable to properties up to R100 000, with the aim of ensuring affordability in the cost of the Total Municipal Account through a basket of municipal services to all households.
This tariff modelling was undertaken on the basis of median or typical household consumption in a range of property values ranging from informal settlements to properties greater than R2 million.
Through inflation targeting which is consistent with National Government policy, the impact on the Total Municipal Account has been kept to a minimum. The very poorest households will experience a decrease of 5% in their Total Municipal Account, with other households across the socio economic spectrum receiving an inflationary linked increase of 5% in their Total Municipal Account.
While the impact of the tariff modelling on the Total Municipal Account is based on typical consumption patterns, the impact per individual household will differ depending on the amount of water and electricity consumed.
The average Electricity Tariff increase is 5%. Individual consumer categories such domestic users will experience an increase of 4,6%;
Small and Large Power User 2,5% and Very Large Power Users 3,5%
Households consuming less than 500 kWh of electricity a month will qualify for an increase in the amount of Free Basic Electricity from 30 to 50 kWh a month. In a typical informal settlement where the average consumption is 120 kWh a month, the cost will be reduced by approximately R5 a month.
Restricting the supply of Free Basic Electricity to poor households consuming less than 500 kWh a month, has prevented a 7% increase in Property Rates, compared to the 5% proposed and will result in more effective targeting of poorer households in the provision of Free Basic Electricity, consistent with National Government policy.
This targeted approach reduces the cost of supplying Free Basic Electricity from R156,1 million to R112,2 million in the 2004/2005 financial year.
The cost of supplying Free Basic Electricity to indigent consumers will be funded from the Indigent Fund by a contribution of R93, 4 million from the Rates Account, with the balance funded by the Free Basic Electricity component of the Equitable Share Allocation of R18,7 million.
Our electricity tariff structures are for the first time compatible with Eskom's. This creates favourable conditions for the establishment of a Regional Electricity Distributor for the Western Cape to be fully operational by 2007, as stated by President Thabo Mbeki in his State of the Nation Address.
The average Water Tariff increase of 7,5% incorporates a 5% contribution to finance the Upper Berg Water Supply Scheme as part of the large investment in the Berg River Project, which includes the construction of the Skuifraam Dam, to cater for Cape Town's future water supply needs. Thus, the service increase is only a modest 2,5%.
The progressive stepped Water Tariff will be retained to allow for the needs of the poor to be met and to discourage high and excessive water consumption. Cape Town is a water scarce region and the Water Tariff structure encourages residents to conserve water and reduce excessive consumption patterns, to assist in water demand management.
All households will continue to receive the Free Basic Supply of 6 000 litres of water a month.
For domestic consumers water will cost:
* R2, 15 per kilolitre from 6 to 12 kilolitres;
* R4, 30 per kilolitre from 12 to 20 kilolitres;
* R5, 48 per kilolitre from 20 to 40 kilolitres;
* R6, 67 per kilolitre from 40 to 60 kilolitres; and
* R8, 60 per kilolitre for consumption above 60 kilolitres.
Domestic clusters such as bulk metered flats, cluster developments such as sectional title and single title unit will pay R3, 98 per kilolitre, although the allowance of 6 000 litres of free water per month will be considered based on the submission of affidavits.
Commerce and industry will pay R4, 25 per kilolitre of water and the educational and sports sector R3, 75 per kilolitre of water.
The existing Sanitation Tariff structure whereby 50% of the sanitation charge is included in the rates account and 50% based on water consumption will be retained. The charge recovers the cost of waste water treatment and sewerage infrastructure, which is in the public good from an environmental and health perspective.
The 50/50 sanitation tariff and rate structure benefits the majority of households and divergence from this tariff regime would be burdensome to poor households. All households will continue to receive 4 200 litres of Free Sanitation a month.
After listening to residents, the sanitation rate is to be capped at R250 a month for residential properties, each sectional title unit and places of worship.
The key challenge households face in managing the affordability of their sanitation charges, is to manage the amount of water consumed as the national guideline indicates that 70% of all domestic water consumption enters the sewerage system as waste water.
Waste water from dish washing, domestic cleaning and washing of cars can be innovatively reused for garden irrigation to assist in water demand management and reducing the water consumption component of the sanitation charge.
The average Solid Waste Tariff increase is 5%.
The existing refuse collection rebate system applicable to properties valued below R125 000 will remain in place, whereby:
* Properties valued below R50 000 receive a 100% rebate;
* Properties valued between R50 000 and R75 000 receive a 75% rebate;
* Properties valued between R75 000 and R100 000 receive a 50% rebate; and
* Properties valued between R100 000 and R125 000 receive a 25% rebate.
Refuse collection to informal settlements on Council land remains free and as from 1 July 2004 non-serviced informal settlements on private land will also receive a free refuse collection service, subject to approvals by landowners and access to settlements.
The inflationary linked consumptive tariffs and rates for electricity, water, sanitation, solid waste and property rates is the basis for the implementation of a basket of affordable municipal services.
This affordability together with improve service delivery meets the needs of the poor and vulnerable and creates the conditions to enable all households to realize savings in their Total Municipal Account, by reducing and managing their electricity and water consumption and thereby assist in resource conservation.
The installation of water and energy efficiency mechanisms will assist in this regard, and is highly encouraged for residents to realize the benefits of the tariff structures which enables them to manage their demand and consumption at the household level.
With a package of below-inflation average increases for basic services and for property rates, this a good news budget for all residents and sectors. Once again it is a proudly pro-poor budget and one that supports improved quality of living, growth and development across the socio-economic spectrum.
It is a budget for all our people.
I thank you.
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