ACDP rejects Drought Surcharge proposal

* The City has not sufficiently exhausted all other possible funding avenues
* Ratepayers should be the LAST resort to fund this shortfall.

In my speech to Council today on this proposal, I spoke on behalf of the ACDP and voted against the proposed surcharge.

1. The City has not exhausted all other funding sources before imposing this surcharge:
* In Jan 2017 the Mayor confirmed the City had raised R245 million from additional water revenue arising from the Level 2 water restrictions (at that time). Almost a year later and with Level 5 Water Restrictions, that figure ought to have doubled. Where is that money?
* The City’s much publicised Green bond raised R1 billion in mid 2017 and this was meant to fund water augmentation projects – why isn’t it all being used?
* The City already has a long term loan approved by Council, and over R1 billion of which remains available for the City to access.
* The Western Cape Government announced it had raised almost R300 million to assist drought stricken municipalities, some of it was promised to CT.

2. Cape Town is not the only City to face drought-related revenue shortfalls:
* Many South-California municipalities adjusted their water tariff model to prevent revenue shortfalls during drought periods. Yet Cape Town is following the herd and simply introducing a surcharge instead of looking for ways to avoid a surcharge to ratepayers. This is not the sign of a dynamic and innovative City, but rather a desperate and badly managed City.

3. Cape Towns 2017/18 Budget adopted in May painted a very different and confident picture about its readiness:
Quote: “The financial impact of the drought experienced within the City at present was factored in the MTREF. Contingencies or back-up plans are in place to meet financial losses.
The respective restriction levels are accompanied by tariff levels, which aim to maintain a revenue neutral status.
Should actual revenue be at a level lower than what was modelled, concomitant expenditure reductions will be effected within the Water& Sanitation department.”
The need for this surcharge confirms that this 6 month old statement was a reckless thumbsuck that mislead Council and the public.
This from the same Dept that built itself a new Head Office costing at least R295 million, R114 miliom over budget and overdue for completion by at least 6 months.

4. In May 2017 (just 6 months ago, at the time of level 4b Water Restrictions) Cape Towns expected water revenue was expected to GROW by R500 million per year from July 2017 to June 2020 (from R3,9 billion to R4,8 billion). Now suddenly there is a R1,7 billion loss amounting to say only 45% of expected revenue in one year.

Failure to explain all of these leads us to believe this surcharge is a penalty applied to ratepayers for the City’s poor planning.

The ACDP believes the savings ratepayers have realised by using less water, should remain in the ratepayers pockets so they can fund their own water saving projects for their households, and that the City should fund its water revenue shortfall from other sources – not the ratepayers.

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