CAPE TOWN - The City of Cape Town will offer certain additional financial relief measures, effective immediately, to people severely affected by the coronavirus (Covid-19) disease, the city said on Saturday.
Over the past few weeks, the city had been looking at how additional financial relief could be offered to property owners and businesses, mayoral committee member for finance Ian Neilson said in a statement.
This needed to be done in a sustainable manner that would allow the municipality to continue providing essential basic services, which were primarily funded from rates and services income.
These measures also needed to be balanced against the very substantial cost that the city faced to carry out its health response to the virus and support for vulnerable people, which expense was likely to exceed R1 billion of additional expenditure that was not previously budgeted for, he said.
At this stage, the City was offering additional relief measures, effective immediately:
- Due to the economic impact of the Covid-19 emergency, many individuals and businesses had had sudden reductions in their incomes. The city had adjusted the processes of its indigent, disabled, and pensioner rebate applications to enable those severely affected to qualify more quickly for these rebates. Normal processes required the assessment of income over three months to enable qualification. This was now reduced to an assessment of one month of income so that people could qualify more quickly for the benefits.
- The rebate would be backdated to April 1 or the month in which the income was lost. It would be valid for 12 months, unless there was a change in the person’s income or they were re-employed, in which case they needed to notify the city.
"The additional measures are over and above the R3 billion in rates and service relief the City already offers. For instance, water at 350 litres per day is already provided free of charge to 40 percent of the metro’s population," Neilson said.
Further relief steps were being considered for implementation in the 2020/21 financial year and would be announced at a later stage.
The City helped where it could, but could not risk a breakdown in essential basic service provision by offering blanket relief for all. Rates and service charges comprised an amount equal to 72 percent of the city’s income per month. "Take this away for some months and the city ceases to be able to deliver its services," he said.
All local governments were in this position. Even though the city was perhaps stronger for its sound financial management over the years, it could not afford to have months of no income from rates and services.
Covid-19 costs were set to rise over the weeks and months ahead and cash flow could reduce by between R1 billion to R3 billion per month, depending on how it was managed. A reprioritisation of budgets and programmes was under way.
"The City does not have funds sitting in bank accounts that don’t have a specific purpose. We ensure that we have enough cash to cover working capital needs and the rest is used to fund budget needs. This ensures that rates and tariff increases are kept as low as possible.
"I must emphasise the city is not the government of last resort in this crisis. It is the national government which should be in the position to look at bailouts and broad based interventions, not a city government which is mandated to provide basic services, funded from rates and taxes.
"In addition, we must always be careful that the decisions we take today and the impact that it has on rates and tariff income does not place an unnecessarily high burden on our residents and businesses in the future," Neilson said.