“Cape Town – Despite a continuing water crisis, and consumers slapped with hugely increased water bills, the City’s water department has under spent by a whopping R1.6 billion on its capital budget.
The huge under expenditure is included in the quarterly financial report of the City and another to leave was High Court rep”
#EveryDropCounts: City of Cape Town’s water dept underspends R1.6bn
Cape Argus 30/7/2018
There was considerable confusion last week when a sloppy, incendiary report from IOL implied wrongly that the City of Cape Town had inappropriately gathered surplus cash through the higher tariffs and then failed to spend this on the intended augmentation processes. As I reported separately at that time this IOL report was totally wrong and misleading.
Cape Water and Dams Report 6/8/2018
On 30 July a shock/horror article in the Cape Argus had Capetonians fearing the worst after the ‘Day Zero’ scare.
The Argus article stated as a fact that the Water and Sanitation Department at the Cape Town municipality had totally stuffed up its administration of finances and “under spent by a whopping R1.6 billion on its capital budget”.
Except it hadn’t. This was just another fake news article emanating from Newspaper House, the Cape Town CBD home of the Cape Times and the Cape Argus. The headquarters is now known – for obvious reasons – within the city’s small media community as ‘Bullshit House’.
Tom Brown is a fruit farmer who is fascinated by weather and climate. In a previous life he was an international businessman focusing on finance and IT.
“The situation was actually simple. CoCT received authority to spend up to R1.4bn capex and up to R2.9bn Opex (over 3 years) IF NEEDED to ensure water supply continuity to the Metro. The Capex would have to be raised in the form of interest-bearing loans. (I.e. It had nothing to do with tariffs whatsoever at this stage). Some small amounts were spent (mainly on pressure management systems to reduce demand and make Point-of-Distribution preparations should Day Zero have arrived) but when the emergency calmed in April/May the bulk of the anticipated expenditure could be avoided. Thus CoCT never raised the loans and never had the cash and didn’t misspend or under-spend anything, as had been alleged in the IOL and Argus articles.”
Since the Sekunjalo takeover of the Cape Times and the Cape Argus in 2013, these two newspapers have carried out a relentless fake news propaganda vendetta against the Democratic Alliance (DA) in the province and have not hesitated to propagate blatant falsehoods in that campaign. The “City of Cape Town’s water dept underspends R1.6bn” article was just another example of this ongoing program of brazenly-prejudiced reporting which contradicts the company’s own code of ethical news reporting conduct; specifically article 2.1:
- Independent Media will not publish inaccurate, misleading or distorted information
“I do not expect special favours or puff pieces to be written by any journalists. All our stories must adhere to the highest standards required.
This means they have to be balanced, fair and accurate. What they can’t be is one sided, inaccurate and prejudicial. I have always valued the principles of transparency, fairness and independence.”
This continuing pattern of fake news falsehoods against the DA and against UCT’s Max Price, which was characterised by lurid headlines, clearly carries not merely the imprimatur of the company owner but his manifest endorsement, because those egregious breaches of the basic tenets of ethical journalism have continued without respite since the Sekunjalo takeover in 2013.
Rather than give more publicity to yet more scurrilous Sekunjalo Independent Media anti-DA fake news propaganda, the Cape Town municipality did not respond to this biased reporting with the conventional rebuttal in a media release.
Instead, Councillor Xanthea Limburg, Mayoral Committee member for Informal Settlements, Water and Waste Services, and Energy, posted the following explanation on social media:
“I have noticed that there seems to be some apprehension and confusion about the City of Cape Town’s budget and tariff processes, so I’d like to use this opportunity to clarify some points and hopefully provide some reassurance about how your money is being spent.
First, the matter of the underspent budget for the New Water Programme. This was a special budget that we pulled together internally and secured through external loans at the end of last year during the height of the drought crisis. To put it more simply, the money did not come from tariffs. The funds were made available for water augmentation projects to ensure that these would not be held back for lack of funding. Through extensive consultation with industry experts, we managed to refine the program to avoid going ahead with some of the proposed desalination and groundwater extraction projects, which would have carried a very heavy cost.
That budget also comprised allocation for managing a Day Zero scenario with water collection points across Cape Town. This was also going to be massively costly. Through a combination of our refining of the New Water Program, the relief brought by some decent rain this season, and of course your massive water saving efforts, much of these funds were not needed to be released.
I am sure we can all agree that the fact that we avoided having to spend this budget is actually a very positive thing. It is important to note that the savings that were realised in this program ultimately reflected in lower tariffs for 2018/19.
The budget for the New Water Program is entirely separate to the City’s original budget for normal Water and Sanitation services, which has already achieved 85% of expenditure, the rand value of which (R1,72 billion) actually reflects a greater annual spend than ever before. That expenditure also does not reflect financial year-end entries.
The second point that needs to be addressed is that of over recovery of funds through tariffs. The City is not allowed to make a profit from the sale of water, and any revenue that is recovered beyond what was planned for in the budget goes back into providing water services.
During the budget process, the City has to estimate how much water will be sold and balance the cost of providing that volume of water with the tariff to be charged. In a City with over four million people, it is impossible to estimate the exact volume that will be used a year in advance.
The City also provides water and sanitation to just over 40% of its residents, who are recognised as indigent or residents of informal settlements, free of charge.
Tariff structuring is an extremely complex process, but in brief, we had to set the tariffs at a level that would ensure we still had sufficient funds to continue to operate and maintain the water network, despite less water being sold. Pipe repairs and the treatment of water to safe standards cost the same amount of money regardless of how much water is being used. So the price of water has to be raised when the level of restriction is raised.
We are still experiencing an unprecedented drought, and the response to reducing demand with the financial impact that comes with it, is also without precedent.
While Level 6 restrictions require that the City reduce consumption to 450 million litres per day, we have only been below 500 million litres per day a couple of times since January 2018. The consumption volume was matched with the tariff to sell water of 6kl/household per month. While Cape Town has been amazing in reducing consumption, households have generally still used considerably more than 6kl/month and thus revenue at the tariff will be higher than that budgeted.
Financing water and sanitation services with seven restriction levels and a stepped tariff with four steps is a complicated matter and not easily explained, but I hope that this has gone some ways to providing reassurance about the management of budgets.
We will continue trying to communicate clearly and transparently, and we are committed to continue to provide residents with the information they need to understand where we are, and how decisions have been made. You are free to get in touch to request a more in-depth explanation of the tariff process in the comments section below.
Thank you Cape Town. You have already achieved what no other city in the world has managed to. Let’s keep it up.”
In other words, the Cape Argus/IOL article seeking to besmirch the relevant City of Cape Town bureaucracy as incompetent was devoid of truth. But perhaps this typically-misleading Cape Argus article was not written with malice aforethought. Perhaps the situation was simply too complex for the reporter to understand. That is a distinct possibility because there has been an unprecedented exodus recently of long-term and loyal employees with expertise, institutional knowledge and corporate memory from the Sekunjala Independent Media company of Iqbal Survé.
The Cape Argus is a case in point.
In the past two years or so, the following experienced Cape Argus staffers have opted for early retirement, have resigned or have been retrenched in a cost-saving exercise which would not have been necessary if the company was profitable:
Philip Weideman (chief sub-editor Weekend Argus);
Di Caelers (news editor Weekend Argus);
Dennis Cavernelis (deputy editor Weekend Argus);
Yunus Kemp (editor Weekend Argus Saturday edition) and
Chiara Carter (editor Weekend Argus Sunday edition).
Michael Morris, a senior features writer for Weekend Argus also left, as did two experienced reporters, Warda Meyer and Caryn Dolley. Helen Bamford was another senior reporter who chose to leave after a 20 year career, and High Court reporter Fatima Schroeder also left.
Together these skilled media practitioners probably constitute a century and a half of collective career experience and even if people of equivalent skill were available and would want to work for the totally discredited Sekunjalo, the company would not be willing to pay the salaries they would be entitled to.
This is ironic because in a media release on 9 December 2013, Survé said:
“As executive chairman I, together with the senior management and editorial leadership, intend to arrest this decline through, inter alia, reinvestment in technology and human resources, as well as articulating and driving a new vision for the group which will allow for greater enhancement of our editorial content so as to become attractive to the groups consumers and advertisers.”
For a company to prosper – and it is imperative that Sekunjalo does prosper because its purchase was part-funded by a billion rand loan from the Public Investment Company – it must recruit as many talented people as possible.
Subsequent to the above-mentioned purge, and despite assurances to the contrary from Survé, Sekunjalo has not recruited a single high-profile and credible news person of acknowledged substance and the Sekunjano website is proof of that. It mentions only one recruitment from outside the company: Steve Motale.
Motale,who had left The Citizen under a cloud, is a business associate of ‘New Gupta’ Kenny Kunene. He started off his Sekunjalo career with a fake news article in the Sunday Independent for which Survé immediately apologised and then came up with his fake news article about Cyril Ramaphosa being a ‘blesser’. Shortly after that he resigned — under duress if this un-denied report is correct.
Until October 2016 the Cape Town municipality could have referred an untrue article like the Cape Argus example to the ombudsman of the Press Council. At that time, however, Survé followed the example of the Guptas and withdrew from the Press Council system to evade accountability for the growing number of fake news stories his newspapers were publishing. At the time, an enraged public had filed an unprecedented number of complaints against Sekunjalo Independent Media newspapers.
In 2016, one of Survé’s newspapers, The Daily Voice, was found guilty of defamation in the Cape High Court. It was ordered to pay R70 000 to a teetotal policeman with an exemplary career record after it had falsely described him as being drunk and belligerent on duty. The court found that the newspaper had made no attempt to contact the plaintiff in terms of the audi principle, had not apologised for its falsehoods and never offered a retraction. Costs were awarded against The Daily Voice on the High Court scale.
This was yet another and typical example of how the lives of people — innocent of any wrongdoing — have been unnecessarily harmed since Sekunjalo took control of the largest group of English newspapers in the country in 2013. Does this case not provide conclusive proof of the fact that ethical journalism has been abandoned at Sekunjalo?
The ordeal of dedicated career policeman Charles Muller – so unjustly maligned — is the reality, not the self-aggrandising puff pieces in praise of the ‘Fearless Leader’ and one of the ‘top minds’ of international business that have been such routine fare in the Sekunjalo newspapers since 2013.
The good news though is that the dams supplying Cape Town are 60.5 % full, with more rain and snow expected. Furthermore, water desalination plants are coming on-stream and residents have shown an encouraging commitment to reducing their personal and business water consumption and investing in water-conserving technology.
Capetonians are nevertheless indebted to truth-seekers like Tom Brown and Alide Dasnois and Helen Zille and Max du Preez and Terry Bell and Peter Flack and Ricky Stoch and Sam Sole and Dewald van Rensburg and Ann Crotty and Tim Cohen and Ivo Vegter and Marianne Thamm and Anton Harber and James Myburgh and Donwald Pressly and Craig McKune and Micah Reddy and David Benatar and Chris Whitfield and Michael Mpofu and Dr Julie Reid and Cosatu and noseweek and R2K and ODAC and Zapiro who have comprehensively exposed the unprecedented but routine fictions of Sekunjalo Independent Media.