Austerity measures save Joburg almost R500 million
31 January 2018
City of Johannesburg Executive Mayor Herman Mashaba. (Picture: The Citizen)
The Executive Mayor of the City of Johannesburg, Cllr Herman Mashaba, tabled the Joburg’s Integrated Annual Report, including the findings from the Auditor-General (AG), for the 2016/17 financial year in council today.
The findings of the report are a reflection of how the City effectively used its R56 billion budget for the 2016/17 financial year to bring public services to the more than 4.9 million people in the City.
The AG has found that the City remains in a stable financial position, achieving a surplus of R2.1 billion and closing the year with cash and cash equivalents of R3.1 billion.
Five of the City’s entities received clean audits. This is an increase from the previous financial year and the first time where Johannesburg City Parks and Zoo has achieved this feat in its 15 years of existence. The City also maintained its unqualified audit opinion.
Despite being an area were improvements are still underway, as at the financial year end, total revenue collection had increased by 4% and the City had maintained its credit rating with Moody’s at Aa1.za/P-1.za.
The City achieved 52% of its key performance indicators as compared to 38% in the previous year and a 2% increase in customer satisfaction.
The City cut wasteful expenditure, resulting in a saving of almost R500 million through the introduction of austerity measures focused on reducing self-promoting advertising; marketing; domestic and international travel; consulting and professional fees; and conferences and seminars.
Budget Line Items
2015/16
2016/17
Austerity Achieved
Advertising
R252 279 000
R44 966 000
R207 313 000
Consulting & Professional Fees
R458 113 000
R341 775 000
R166 338 000
Marketing
R127 067 000
R57 907 000
R69 160 000
International Travel
R28 285 000
R3 594 000
R24 691 000
Conferences & Seminars
R32 496 000
R21 413 000
R11 083 000
Domestic Travel
R20 545 000
R11 460 000
R9 085 000
Total
R918 785 000
R481 115 000
R487 670 000
Other milestones achieved during the year under review include:
• The induction of an extra 1 500 JMPD recruits;
• The launch of the Inner City Revitalisation Programme to rehabilitate bad buildings through their release to the private sector for conversion into low-cost housing and SMME opportunities;
• The Revenue Enhance Programme that will see the City improve its revenue collections from residents and business owners who are able to pay;
• 1.6% increase in the City’s GDP growth target was achieved;
• R4.451 billion investment was attracted within the City;
• 11619 SMMEs were supported City-wide through our SMME Hubs;
• 97.89% of households in informal settlements have access to water;
• 4 850 new houses electrified city-wide;
• 1172 social housing units were developed;
• 520,09 lane km lane road were resurfaced; and
• 51 389 Rea Vaya and 42 775 of Metrobus passenger trips per working day are undertaken.
During the year under review, the City spent 78% of its R9.9 billion capex budget. The City decreased its unauthorised expenditure from R692 million in 2015/16 to R502 million in 2016/17. The AG recognised the fact that the City’s efforts to investigate corruption and maladministration, had played a key role in the increases recorded. The
City’s Group Forensic and Investigation Services has already uncovered over R17 billion in corruption and maladministration, precipitating the arrest of over 450 people.
City Power suffered cash flow problems as a result of a number of issues outside of its control, including:
• The disputed seizure of VAT refunds to the value of R314.5 million by the South African Revenue Service (SARS) due to an income tax issue, which has remained unresolved for years;
• Eskom’s termination of the subsidy to City Power for the purchase of power from the Kelvin Power Station, resulting in a loss of R268 million; and
• The failure of the Department of Energy to honour a grant allocation of R2.4 billion to City Power for the electrification of housing developments, despite the City having incurred R288 million in expenditure against the allocation during the 2016/17 financial year.
Other chronic challenges faced by the City include:
• The City’s infrastructure requires an unfunded investment of R170 billion over 10 years to address the backlog created by decades of under-investment and neglect;
• A housing backlog, conservatively estimated to exceed 300 000, and a high level of inequality with many of the residents of the City’s residing in more than 180 informal settlements many of which lack access to basic services;
• Institutionalised levels of corruption, and a failure to ensure consequence management have resulted in vital service delivery grinding to a halt; and
• Cash misalignments created by the previous administration’s campaign to deliver on R100 billion in capex expenditure over 10 years launched in 2011. When revenue did not materialise, borrowings against the future revenue have produced significant debt to be serviced and paid.