Local Government, Environmental Affairs and Development Planning

.(1)a)     The Parliamentary Question should have been directed to the Provincial Treasury as this is their mandated responsibility.

            The Department of Local Government, however, has reviewed previous research conducted on a ‘Comparative Analysis on the Basket of Services provided by Western Cape Municipalities’, to enable a dignified life for all. The research is aimed at ensuring that all residents have access to essential services and opportunities, to live safely and healthily. The ‘basket’ refers to the quantity of basic services, water, electricity, sanitation, and refuse removal, required to ensure a dignified life for its residents.

The Department is also responsible for:

• Assessing 24 Local Municipalities’ Indigent Policies in the 2025/26 financial year, to ensure that the Municipal Indigent Policies are credible and in line with the National Department of Cooperative Governance Indigent Framework and Joint Circular on the implementation of Free Basic Services. It will thus continue to monitor the provision of Free Basic Services by municipalities to qualifying indigent households, including water, sanitation, electricity and refuse removal; and
• Through the Thusong Programme, the Department of Local Government further provides information to residents in the Western Cape, to enable them to access social assistance grants, administered by the South African Social Security Agency (SASSA) and Social Services, provided by the Department of Social Development; rendered directly or through non-profit organisations.

The Provincial Treasury has provided the following response to the Department with regard to this Parliamentary Question: It exercises its constitutional and legislative oversight responsibilities through the monitoring and assessment of municipal budgets, financial performance and compliance with applicable legislation.

As part of its annual budget assessment processes, Provincial Treasury reviews municipal budgets and tariff proposals to identify potential fiscal, affordability and governance risks and engages municipalities on these matters. These engagements seek to promote transparency, sustainability, affordability and compliance with the legislative framework governing municipal finances.

In undertaking this role, Provincial Treasury recognises that municipalities are required to strike an appropriate balance between affordability for consumers and the long-term financial sustainability of municipal services. Municipal tariffs should be affordable, equitable and transparent, while at the same time generating sufficient revenue to fund the provision, maintenance and renewal of essential infrastructure and services.

The Western Cape Government is particularly mindful of the pressure of affordability facing households, especially poor and vulnerable residents. In this regard, the most important protection available to indigent households is access to free basic services, funded primarily through the local government equitable share. Across the Western Cape, municipalities provide free basic services to more than 370 000 registered indigent households, ensuring that vulnerable residents continue to have access to essential municipal services.

At the same time, affordability must be considered alongside the financial sustainability of municipal services. Many of the cost drivers affecting municipal tariffs are largely outside the control of municipalities and provincial government, including bulk electricity costs and municipal wage agreements. Municipalities are therefore required to carefully balance these increasing input costs against the need to maintain affordable and reliable service delivery.

In this regard, trading services reform remains a key national priority. The objective of these reforms is to improve the financial sustainability of municipal trading services through the implementation of more cost-reflective tariff structures. Cost-reflective tariffs seek to ensure that the costs of providing a service are appropriately recovered from the users of that service, while making provision for the subsidisation of poor and vulnerable households through transparent and targeted mechanisms. This supports both the sustainability of municipal services and the protection of vulnerable consumers.

b)     The Following the judgment, the WCG engaged the City regarding the implications of the ruling for the municipal budget process and service delivery planning.

As part of the 2025 Strategic Integrated Municipal Engagement (SIME) process, the WCG (Provincial Treasury, Department of Local Government and Department of Environmental Affairs and Development Planning) engaged the City on the proposed City-wide Cleaning tariff and proposed reforms to the water and sanitation tariff structure and highlighted a number of risks associated with the proposed approach. These included considerations relating to the allocation of costs across different consumer categories, the disclosure of subsidisation arrangements, the potential impact on households and businesses, and alignment with the tariff principles contained in section 74 of the Local Government: Municipal Systems Act, 2000 (Act 32 of 2000). [DC2.1] The WCG specifically cautioned against the concurrent implementation of these changes across several services within a single MTREF budget cycle.

At the same time, Provincial Treasury acknowledged the need to improve the long-term financial sustainability of municipal trading services through more cost-reflective tariff structures. The proposed reforms formed part of the City's broader trading services reform agenda and were aligned with the objectives of the national Metro Trading Services Reform initiative, as outlined in MFMA Circular No. 130. The reforms were also consistent with recommendations made by Provincial Treasury during previous budget assessment processes regarding the need to strengthen the financial viability of trading services through more stable and predictable revenue streams.

The WCG again engaged the City during the Western Cape Government's annual budget assessment engagements in April 2026. At the time of these engagements, the court judgment had not yet been handed down.

Following the judgment, the matter was discussed during National Treasury's benchmarking engagement with the City in May 2026. At that stage, the City was still considering its options in response to the judgment. Provincial Treasury subsequently engaged the City regarding the potential budgetary implications arising from any changes to the City-wide Cleaning tariff, including how any resulting funding shortfall could be accommodated within the budget and the potential impact on consumers should the City be required to recover these costs through alternative revenue sources.

The City indicated that significant amendments to the budget would be required should changes be made to the tariff structure and that further public consultation would be necessary. Provincial Treasury supported this position and subsequently supported the City's application for an extension of the statutory budget timetable to enable meaningful public consultation on the revised budget and tariff proposals. The decision to extend the deadline was made in consultation with the Department of Local Government and National Treasury.

Provincial Treasury continues to monitor developments and engage with the City as part of its ongoing oversight responsibilities.

c)    Provincial Treasury's oversight role is aimed at promoting transparency, affordability, financial sustainability and compliance with the legislative framework governing municipal finances. However, Provincial Treasury does not approve municipal tariffs, as the determination and adoption of tariffs are the responsibility of municipal councils. Similarly, questions relating to the legality of municipal decisions are ultimately matters for determination by the courts.

2)   Yes. Provincial Treasury was aware of concerns raised by residents, civil society organisations and ratepayer associations regarding aspects of the proposed tariff reforms, including arguments relating to affordability, tariff design and the legality of certain elements of the proposed tariff structure.

In response, Provincial Treasury considered these matters as part of its ongoing budget assessment and oversight processes and engaged the City through established forums, including the Strategic Integrated Municipal Engagement (SIME) These engagements included discussions on the potential impact of the proposed reforms on different categories of consumers, implementation risks, affordability considerations and compliance with the legislative framework governing municipal tariffs.

Provincial Treasury also monitored the City's budget to assess whether the prescribed legislative requirements governing municipal budgeting and tariff setting were being followed.

However, Provincial Treasury's role is not to make determinations on the legality of municipal decisions or to adjudicate disputes between municipalities and stakeholders. The responsibility for considering and responding to public submissions rests with the municipality, while the determination of the legality of municipal decisions ultimately rests with the courts.