Brett Herron|Published
The City of Cape Town’s three-year budget projection reveals that in 2028/29 residents will be asked to cough up an extra 36% extra for water and 24% for electricity than they were paying a few months ago in the 2025/26 financial year.
What that practically means is that R100 worth of electricity at June 2026 prices will cost R124,50 from July 2028, and R100 worth of water will cost R136.
While Cape Town sought to minimise price increases this year (an election year) the numbers in its own budget projections don’t lie. This year’s 5.83% electricity price increase rises another 8.49% next year – and another 8.39% the following year.
The country’s projected inflation rate is 3.4% this year, 3.2% next year and 3.1% in 2028/29. In other words, three years’ worth of inflation will add about 10% to the cost. That’s 14% less than Cape Town electricity increase, and a whopping 26% less than the City’s proposed water price.
These figures are disgraceful in a city that has become increasingly unaffordable for the vast majority of its people.
The figure underline the DA skewed prioritises. Just about affordable for middle-class semigrants, international property buyers and Airbnb owners, but totally unaffordable for just about everyone else.
According to Mayor of Cape Town Geordin Hill-Lewis, the City is working to make electricity more affordable by reducing its dependence on Eskom. I leave it to readers to judge the integrity of Hill-Lewis’ promise of affordability against his own proposed price increases.
Besides water and electricity costs, rates show a similar election year pattern: A 2% rate-in-the-Rand decrease to compensate residents for a premature general valuation that effectively asks them to pay more, anyway.
Vote for us this year, the DA is saying, but next year we’ll zap you with a 6% rates increase on the increased value of your property – and another 8.13% jump in 2028/29.
Affordability is not a slogan. It is the product of political choices made in the budgetary process. The DA’s choices are good for a very small minority of people who live and work in Cape Town.
The valuation windfall
The new general valuation implemented this year lifted the value of Cape Town's property roll by 16.65%, to R2.16 trillion. Property rates revenue rises from R13.9bn to R15.8bn this year, and by R19.3bn by 2028/2. That’s about a 38% increase in three years (remember, inflation goes up a total of 10% in the same period).
The cut in the rate-in-the-Rand hard-sold by Hill-Lewis this year is not a cut in your bill because your property value has jumped. It’s subterfuge; like putting lipstick on a pig. The City collects more money but residents don’t get better services.
Scrap accounting tricks
Cape Town has changed how it costs free basic services, from a tariff-based to an "average cost" method. The reported cost doubles in one budget, from R2.6bn to R5.2bn, but the number of households receiving free water and sanitation rises just 1.5%. Where does the rest of the money go?
Setting the R5.2 alleged cost against the R4.99bn equitable share that Cape Town receives from the national fiscus produces a R257m "shortfall", which the City's Indigent Fund definition says rates must cover.
What this amounts to is a manufactured deficit that ratepayers must fund, created by a dubious change in accounting method.
Cut waste before asking ratepayers for more
Four support departments (Corporate Services, Finance, Future Planning & Resilience and the City Manager) cost R10.4bn. That’s about 14% of the R74.6bn operating budget.
Each of these departments is growing faster than inflation. Future Planning is a new directorate with an operating budget of R675m this year, R1.6m of its own revenue and staff costs up 14.85% in a year.
IT costs R801m, and there is no published benchmarking against other metros.
Between R600m and R1bn a year could be saved across these votes (a 6 to 10% saving) without the need for frontline cuts.
Phase in zero-based budgeting
Budgeting that takes last year’s numbers and adds a percentage, that is not guided by the principles of funding the greatest needs and de-funding wastage, sustains lacklustre service delivery.
Zero-based budgeting is a process that starts from the desired outcomes - what does each programme cost, what does it deliver, and why keep funding it?
It is a process I’d phase into Cape Town’s budgeting over three years. Support votes first; then big programmes with no published results – and finally, the budget in its totality, with a published cost per outcome.
Housing is the test. R382.5m of grant balances was unspent at the end of 2024/25 and the Auditor-General reported just 38% of housing targets met. Money sits unspent while families wait…
Make rebates real
To qualify for indigent support, in the form of rates rebates and subsidised utility services, Cape Town households must bring in a monthly income of less than R7,500.
Two people working full time on the national minimum wage earn about R10 500 between them and this don’t qualify.
Cape Town’s grand-sounding lifeline electricity programme similarly benefits precious few people. The programme cuts the number of free units from 60 per month, to 25, to zero, depending on electricity consumption.
The poorest people in the most overcrowded homes and backyard dwellings, who share electricity meters, are excluded from relief.
Putting money back into ratepayers pockets
Rebalancing Cape Town’s budget to reduce unaffordability will save money without costing anything, but it requires a government that understands that its rates bills are not merely budgetary balancing items. They are critical to families’ cash flow and quality of life.
It requires a government that is committed to making Cape Town more affordable, and that’s simply not the DA’s priority because, instead of attracting more semigrants and digital nomads, it would risk attracting more poorer people (as Johannesburg does).
The following measures would return cash to empty pockets and increase the city’s accountability to the residents (all of them) it is meant to serve. .
- Commission and publish an independent audit of the free basic services costing method and beneficiaries..
- Publish a rates build-up every year itemising each cost on the bill and tracing it to the budget.
- Phase in zero-based budgeting over three budgets, starting with support costs.
- Return valuation gains to ratepayers through the rate-in-the-rand.
- Review the relief thresholds so working families can qualify.
*Herron is GOOD Secretary-General & City of Cape Town Mayoral Candidate