City of Cape Town to write off debts worth R4bn owed by qualifying residents

The City of Cape Town will write off around R4 billion in debt owed by qualifying residents, organisations and businesses.

But the scrapping of debt will do little to reduce the burden placed on consumers by steep water tariffs, implemented during the drought, opposition party Good has said.

On Thursday, the Council approved the debt write-off for those who qualified to begin immediately, in a phased rollout.

The debt write-off was a first for the City, said Mayco member for finance Ian Neilson, and was being done due to the impact of Covid-19 on people’s livelihoods and the slower than expected economic recovery over the past year.

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There are several categories of customers eligible for a debt write-off. R1.36 billion of outstanding interest on debtors’ accounts (residential and commercial), as of 31 May, will be scrapped, while R2 billion worth of arrears older than three years (as of 30 June) will be eligible for write-off.

The City will offer relief on debts of indigent residents for rental stock, low-cost housing or the breaking of new ground. Relief will also be given to 20 550 pensioners who are currently registered with the City for rates rebates.

Punitive water tariffs

Good party secretary-general and MP Brett Herron said the City’s proposal would be welcomed by hard-pressed consumers, but would do little to “alleviate their struggles to pay monthly bills that will continue to include punitive water tariffs”.

“These tariffs, introduced in February 2018 during the drought, are a primary cause for ratepayers’ debt. Within a year of introducing this tariff, the City’s debtors book grew to nearly R10 billion in unpaid municipal accounts. The vast majority of this debt is not being written off, as the write-off relates to debt incurred prior to March 2018,” Herron said.

The City’s debtor book would quickly grow again, Herron added.

“The proposed write-off, therefore, acknowledges that the water tariffs resulted in unaffordable bills, and that residents have been buckling under the strain – but doesn’t really change anything. Residents who have been unable to keep up with their payments will continue to struggle.

“Writing off old debt that is difficult to collect, while retaining and increasing the tariff structure that created the circumstances of debt and hardship in the first place, is an anti-poor exercise in shifting deck chairs.”

R162 million of debt will be written off for religious organisations, cemeteries and crematoria, non-profit organisations, animal shelters, accommodation for the vulnerable, local community museums, old age homes, public benefit organisations, social housing, youth development organisations, and sports clubs registered with the City.

“We can’t do this without our loyal residents and without the support of those who are able to pay and continue to do so. We are very grateful to them. Importantly, there is also assistance available to those who have been paying, but need help now due to the lingering impact of Covid-19 on their finances,” Neilson said.

“These cases continue to be considered on application to the City, on a case-by-case basis via the Covid-19 relief initiatives. The City will continue to operate in a manner that is sustainable, that does not jeopardise service delivery and that sees to it that those who qualify for support are provided with relief,” said Neilson.

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