Water tariff hikes undermine city’s vision
Cities bring people together in what become very crowded spaces. They help employees connect with employers and, as important, help customers and clients connect with the suppliers of the important services they choose, who also benefit from serving them.
Physicians are helped to connect with patients. Lawyers, accountants and consultants of great variety can connect with clients who rely on their skills and experience, for which they are willingly paid and make practice possible. Restaurateurs connect with the many they feed, and artists connect with the audiences they may only find in a large city.
Cities offer valuable choices to all their citizens, rich and poor and those in-between, that are not available outside.
We complement each other and combine to ensure our crowded space serves our purpose to connect well. We establish and maintain a grid to deliver essential services — water, energy, roads and other forms of transport — much more cost effectively than if we had to do it for ourselves.
The essential purpose of local government is to maintain — better still, improve — the quality of the vital connections by providing the grid efficiently. And its elected civic leaders compete on this basis for the votes that elect them to office.
Successful cities will attract migrants from outside to join in and share in the success. They manage the growth well enough to preserve the advantages of city life for all who choose to live there, including the poor, who cannot or will not pay enough to be connected to the grid.
Yet it is essential to keep them connected, for the sake of the city and the well-off who live nearby. Making these connections possible is not charity – it is good sense.
South African cities would surely do better if they were given much fuller responsibility for policing and schooling and securing bulk supplies of water and energy for their grids, which has proved not nearly secure or capable enough when provided by the central government or by proxy provincial governments.
City success will be revealed in the value attached to the buildings of the city: the houses, offices, factories and warehouses. More accurately, it is revealed in the value of the land under the buildings and the vacant land or nearby land that can be put to more valuable uses over time.
Development and redevelopment increase the supply of buildings, so helping hold down land values and the rentals attached to them. They help keep more people flowing in rather than out of the city.
There is a virtuous civic circle to be sustained. The better the city delivers, the more its land will be worth and the more revenue it can collect to maintain and improve its connections and grid. Failure to deliver soon shows up in deteriorating property values and increasing financial strain, which harms all, perhaps especially the poor of the city.
Based on the flow of migrants, rich and poor, and the growing value of real estate that supports its balance sheet and income, Cape Town has been the success story of SA’s cities. It borrows very little and its net interest bill, after investment income, is tiny compared to its revenue and expenditure.
Yet, the city budget proposes to fund the significant capital expenditure needed to guarantee sufficient water with much higher tariffs.
Lower tariffs would serve the city far better by helping preserve on-grid demands. This would generate enough extra revenue to pay the extra interest and repay the necessary loans, which would in no way threaten financial stability.
More sustainable debt would help by improving the growth potential of the city and the number of people who depend on its grid — especially if it is competitively priced.