Critics slam Cape Town's ‘record-breaking' R36. 8bn budget for deepening inequality

IOL News

29-05-2025

The City of Cape Town unveils its amended 2025/26 budget, promising relief for households while maintaining record infrastructure investments aimed at building a safer, more inclusive, and future-ready city.
Image: Unsplash
Cape Town's R36.8 billion 2024/25 capital budget has been hailed by the City as a record-breaking investment in infrastructure and future-readiness. But critics argue that beneath the impressive graphics and modern catchphrases lies a deeply unequal plan that entrenches apartheid-era spatial and economic divides.
Faiez Jacobs, former MP and local governance and inclusive development advisor, argues that Cape Town's budget is not failing; it is succeeding selectively, serving the affluent while sidelining the poor.
Jacobs described the city's strategy as a 'green gentrification' project cloaked in smart city and sustainability language.
'Budgets reveal priorities,' he said, and this one 'reveals a city that is still hostile to the poor, performative to the public, and generous to the privileged.'
His sector-by-sector analysis highlights what he calls systemic exclusion: inner-city social housing projects remain unfunded, township electrification is under-resourced, sanitation in informal settlements is largely ignored, and most major transport and ICT upgrades are concentrated in wealthy, already-connected areas.
Councillor Siseko Mbandezi, the City's Mayoral Committee Member for Finance, disputes these claims.
He said that a full 75% of Cape Town's infrastructure investment directly benefits lower-income households, and calls Jacobs' article 'woefully inaccurate and misleading.'
According to Mbandezi, Cape Town's pro-poor portion of the four-year R40 billion budget surpasses the total capital budgets of other South African cities.
In response to growing public criticism and pushback, the City amended its 2025/26 capital budget on Wednesday, May 28, introducing what it calls targeted relief without compromising the long-term infrastructure agenda.
Mayor Geordin Hill-Lewis described the updated budget as the 'Invested in Hope' budget, reaffirming the City's commitment to long-term infrastructure investment while addressing affordability concerns. The City claims it has listened to Capetonians during the public participation phase and made adjustments that will significantly reduce household bills compared to the March draft.
Among the most notable changes are the extension of the rates-free threshold from the first R450,000 of property value to homes valued up to R7 million, an increase in the monthly income threshold for pensioner rebates from R22,000 to R27,000, and reduced fixed water charges for homes valued between R1 million and R25 million.
The City has also reduced its new City-Wide Cleaning charge for residential properties below R20 million and introduced a full rebate on this charge for pensioners. At the same time, the per-unit electricity price will decrease starting in July, as the City removes a 10% cost previously embedded in electricity tariffs to fund cleaning services.
The result, the City claims, is that monthly bills will be meaningfully lower for the majority of ratepayers than initially proposed. A home valued at R1.2 million could see bills reduced by up to 15%, while a R5 to R7 million property might experience reductions of up to 40%.
According to Hill-Lewis, these changes mean that 97% of ratepayers will not see increases exceeding 20%, and very few will experience anything close to the 30% or 40% spikes cited in some recent reports. The mayor framed the changes as not just financially pragmatic, but morally necessary, saying, 'If anyone here is interested only in kicking the can down the road, the exits are clearly marked.'
On the controversial absence of major inner-city social housing projects over R50 million, Mbandezi reiterated that these are not typically funded through the City's main capital plan.
Instead, they rely on a combination of subsidies from the Social Housing Regulatory Authority, private developer investments, and new incentive schemes.
He highlighted that the City has released more land for affordable housing in the past two years than in the entire previous decade and has introduced by-law reforms to support micro-developers.
Yet critics remain unconvinced. Brent Herron, secretary general of the GOOD Party, argued that only two of the city's sixteen major energy projects directly affect Cape Flats communities, and even those are merely replacing aging transformers in Mitchell's Plain and Gugulethu.
He accused the City of failing to address spatial inequality in any meaningful way and points to the long-delayed MyCiTi Phase 2 rollout as further evidence. Originally promised in 2016, the network's expansion has been so slow that, in Herron's words, 'the MyCiTi network will not be completed in our lifetimes.'
Fadiel Adams, a former MP and member of the National Coloured Congress, said: 'It's not a tale of two cities. It's a tale of two shades of cities.''
Adams claims that residents in working-class areas like Grassy Park pay higher rates than affluent constantia, despite receiving worse services.
He also criticised what he calls 'poor planning' in roadworks and upgrades that are hurting small businesses by increasing congestion during peak hours. In his view, high-end suburbs continue to be 'heavily subsidised by the state and the poor.'
Jacobs draws sharp comparisons between infrastructure allocations, asking, 'Why do Camps Bay's sewers get R427 million, but Gugulethu's sewer backlog only R154 million?'
Mbandezi has directly challenged this, stating that the R4.25 billion has been earmarked for pro-poor water and sanitation projects, with major upgrades recently completed in low-income areas like Gugulethu and Masiphumelele.
GOOD Party councilor, Anton Louw, recognised that the amendments offer some meaningful relief.
He welcomed the expanded pensioner rebates and the restructured property tax thresholds, but noted that these measures are only a partial fix.
'This is a textbook case of people power in action,' Louw said.
He praised the role of public participation. However, he cautioned that 'modest relief for some ratepayers' still does not resolve what he describes as the City's habit of shifting funds between tariff structures while extracting large surpluses from electricity and levies.
'Cape Town can be both world-class and inclusive.
'But it must place the poor and working majority at the centre of capital planning,not on the outskirts, or at the bottom of funding tables,'' said Jacobs.
The City's amended 2025/26 budget is now open for a new round of public participation until June 13.
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