DA BUDGET STATEMENT FOR CITY OF JOHANNESBURG (COJ) 2012-13
On Wednesday 23 May, Johannesburg's ANC Mayor Cllr Parks Tau presents the City's budget for the 2012/13 Financial Year. R31,87bn is being budgeted for Operational Expenditure and R4,2bn budgeted for Capital Expenditure.
While these figures represent the largest Operational and Capital spend of any South African municipality, Johannesburg's budget is as it stands, dull and unimaginative and unable to begin to tackle the most pressing issues which it faces. In the Mayor's State of the City address in March this year, he spoke of a massive program of capital spending in the City totalling R110billion over the next ten years.
This should equate to about R11billion of capital spending per year over the next ten years. Only R4, 2bn is available on Johannesburg's Capital Budget this year and in the next two financial years R4, 9bn and R7, 2bn respectively, are projected to be spent. What this fore spells for this financial year is a continued serious capital under spend on infrastructure development and Housing (the City now has the authority to build houses).
If, as Mayor Tau believes, the additional capital spending will be made up through Public/Private partnerships, we have yet to see the development of any such policies or plans that would make participation attractive for the private sector. At this rate there will be very little extra capital for additional housing projects to house' the majority of migrants to the City who are poor, unskilled and young, as pointed out by the Mayor in his March 2012 State of the City address, as well as the many shack dwellers still languishing in the 180 informal settlements scattered around the City.
The three most important issues that Johannesburg‘s Budget should be tackling are youth unemployment, housing, and maintaining and building new infrastructure.
The reasons for the City's lack of capacity to deal effectively with these problems do not bear any repetition, but briefly they are the City's poor Revenue collection rate and the ballooning size of the R14bn uncollected debtors book, which the City has made very little effort to effectively collect.
Despite ANC Finance MMC Geoffrey Makhubo's paid advertorial in yesterday's edition of a Johannesburg daily newspaper which painted a rosy picture of the City's Finances, the stark truth is revealed when one compares the Draft Budget published scarcely a month ago and the final budget which we see today.
Whereas, the draft capital budget provided R141million for Economic Development, the City will now only be spending R6million of its Capital Budget to this end. The Economic Development Department should be the vehicle in the City that helps to create the enabling environment for the reduction in unemployment in general, and youth unemployment in particular. The slashing of its capital budgets will hamper such efforts and call into question the ANC's commitment to creating an environment to reduce unemployment.
Were circumstances as ideal as that portrayed in the City's paid advertorial, the City's Health Department would not be cutting back so significantly on its health budget, and the Economic Development Department would not be dramatically slashing its spend on job creation. Both these measures have the most serious impact on Johannesburg's poorest communities, who need this assistance the most.
The DA wishes the City of Johannesburg to become an efficient engine for delivery and growth and to this end, propose six ideas that should appear in the City's Budget. The DA will highlight areas where revenue can be maximised, wastage can be cut and the resultant additional income be spent to benefit all the residents of Johannesburg.
Before looking at the six ideas that would improve the lives of all residents, how could COJ raise the money to fund these plans?
1. Improve COJ Revenue Collection
2. Collect Outstanding Arrears on the Debtors Book
3. Reducing Wastage from a decaying water and electricity Infrastructure
4. Reducing Theft and Corruption
5. Improving Staff Efficiencies and Motivation
The Six DA Budget Suggestion
Accelerated Program to renew Water and Sewerage Infrastructure :
While the present ANC administration is involved in a program to renew the water infrastructure around the City, the DA believes that this should be accelerated from a six year project to a two year project. At the moment a total of R800 million is budgeted for the project over the next six years, with targeted spending at R125million per year. Only R80million has been allocated in the most recent capital budget to this end.
The DA believes this program should be completed in two years, to realise the revenue savings from a reduction in water loss, earlier. To finance this accelerated program the City should make far greater use of the grants available from the underutilised Extended Public Works Program (EPWP) to pay for the labour component.
This would have the added advantage of significant job creation for unemployed residents. This accelerated program could also receive some of its funding from an additional loan to cover this project which could be repaid from the significant revenue savings that it would realise through a reduction in water loss.
An additional priority for a DA Administration would be to completely renew the sewerage infrastructure in the previously disadvantaged areas through the use of Public/Private Partnerships (PPP's) and International donor funding. We believe that far more emphasis needs to be placed on this by the City when looking at PPP's, as we believe this will have a significant effect on the quality of life of residents in previously disadvantaged areas.
Improve Revenue and Billing:
Johannesburg's most significant challenge has been its inability to collect sufficient revenue to meet its service delivery obligations. To alleviate this problem the City should consider enhancing revenue by implementing the following solutions.
Extend the implementation of Pre Paid metering:
The City needs to work towards a goal whereby at least 66% of all electricity accounts to be billed by prepaid metering. The City could follow a similar program to that run in Cape Town, whereby arrears on electricity and water accounts would be written off on a once off basis in return for the installation of prepaid meters. By writing off uncollected debt, a future income stream would become more assured. All new houses and buildings would also require prepaid meters.
Smart meters installed:
Regarding larger post paid customers; the City should ensure that smart meters are installed so that meters can be read remotely and accurately.
Both of the above interventions would also have a significant effect on reducing Billing Queries, as incorrect meter readings have been one of the main culprits in inaccurate Billing.
Establishment of an Anti Corruption Directorate:
Very significant amounts of City Revenue are lost through corruption, and recent reports of a case of R10million fraud in the City's Department of Development Planning are but the tip of an iceberg. The recent Auditor Generals' report on the City of Johannesburg also pointed to missing revenue in the COJ licensing department, among others. The DA believes that the City needs to take the issue of fighting corruption more seriously, and calls on the ANC to set up an independent anti corruption directorate in the City to ensure this serious problem is bought under control.
Considerable amounts of money that could be spent on improving the City's infrastructure for all residents or providing housing for many of our poorer citizens are lost due to corrupt practices in the City.
Establishment of a one stop investment centre and the closing of Metro Trading Company (MTC) and Johannesburg Property Company (JPC) :
One of the main structural changes the DA would like to see within the City's budget would be the closing of two independently financially unsustainable entities, namely Metro Trading Company (MTC) and Johannesburg Property Company (JPC). These two separate businesses should be incorporated into the City's core administration, which will achieve significant economies of scale and enhance overall business controls. Significant expenditure could be saved by this move.
The DA calls on the City's Economic Development (ED) department to become a facilitator of investment into the City rather than the unsuccessful and costly driver of investment projects it presently is. Given that many of the costly legacy projects of the previous administration have been either abandoned or restructured as joint venture or independently funded programs, the Economic Development department is clearly overstaffed with salaries accounting for the bulk of budget allocated.
A skills audit should be undertaken by the department and a reordering of staff costs can take place. Resources should be redirected to creating a "one stop shop" to assist entrepreneurs and business owners with establishing businesses in Johannesburg. By assisting with the reduction of red tape and speeding up the process to open businesses, this will have a far greater effect on job creation within the City than any project run by the City.
Increased Spending on Roads Maintenance:
A direct consequence of the poor revenue collection levels experienced by the City has been the reduction in JRA budgets. In particular road maintenance has been negatively affected. With roads being a vital asset to the City, a proper accelerated roads repair program is as important as restoring the City's water reticulation system. Another factor driving an accelerated roads repair program is the possibility of E Tolling implementation on main routes which will have the consequence of moving more cars to the roads maintained by JRA.
At the beginning of the present mayor's term of office he launched a 90 day service delivery program that resulted in a significant increase in road maintenance albeit over a very short period. The DA believes that this 90 day program as far as road repair is concerned should be extended and made a permanent feature of JRA's responsibilities.
A decaying road infrastructure has major consequences for all citizens of Johannesburg in the effects that it has on Economic Development within the City. A well maintained infrastructure assists in the efficient conduct of economic activity and the resultant positive effect this all has on job creation.
The additional funding required by the City for this program should come partly from the increased use of the EPWP allocation, public private partnerships and a more efficient reallocation of resources within the City.
Improved Provision of Housing for Johannesburg Residents:
This is one of the areas the City can make the most significant difference in the lives of many of our poorer residents. With the responsibility for building houses devolved to municipalities, the City needs to urgently establish PPP's to help deal with the massive housing backlog that is evidenced by the more than 180 informal settlements around Johannesburg. An example of successful PPP's would be the Inner City Partnership that has provided clean and safe housing within the CBD in formerly derelict buildings. A successful house building project within the broader City would also be a significant job creation vehicle for many of the City's unemployed residents. Income created by these jobs would also have a positive impact on economic activity within the City.
In conclusion, the DA believes that through efficient revenue collection, and the repair of the City's infrastructure, rates increases for all residents can be held lower than the rate of inflation and significantly lower than the present rates increases proposed by the ANC administration. These additional revenues should also be directed to measures to reduce unemployment within the City, particularly youth unemployment, to building infrastructure for all and the provision of housing to the City's poorest residents.
Statement issued by Johannesburg DA Councillor Patrick Atkinson, May 23 2012
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