City of Joburg saves R500m through austerity measures

The City of Johannesburg was able to save almost R500-million through austerity measures in the 2016/17 financial year and at the same time reduce unauthorised expenditure.

On Wednesday‚ the Auditor-General’s report on the city’s finances was tabled before council for adoption.

The AG report showed that the city spent its R56-billion budget for its financial year under the Democratic Alliance administration.

The city was able to maintain an unqualified opinion and improve its revenue by 4%.

Austerity measures adopted by Johannesburg mayor Herman Mashaba paid off as the city saved R487.7-million by reducing self-promoting advertising‚ marketing‚ domestic and international travel‚ consulting and professional fees‚ and conferences and seminars.

“These savings continued into the 2017/18 financial year and will be redirected into critical service delivery areas such as maintenance of traffic lights and street lights‚ repairing potholes‚ informal settlement upgrading‚ and the capacitation of key City departments such as development planning and the valuations unit.

“This has put to an end the ANC’s culture of spending limited resources on luxuries while only 38% of residents in informal settlements in the City had access to basic sanitation services‚” Mashaba said in a statement.

The city achieved a surplus of R2.1-billion and closed the year with cash and cash equivalents of R3.1-billion.

A total of five of the city’s entities received clean audits - an increase from the previous financial year. It was the first time where Johannesburg City Parks and Zoo has achieved this feat in its 15 years of existence. During the year under review‚ the city spent only 78% of its R9.9-billion capital expenditure budget.

“We have already implemented steps to improve the planning‚ implementation and monitoring of capital projects‚ and to maximise spend and the quality of delivery through the use of a capex monitoring tool in the 2017/18 financial year‚” Mashaba said.

Unauthorised expenditure decreased from R692-million in 2015/16 to R502-million in 2016/17.

Mashaba said City Power suffered cash flow problems as a result of a number of issues outside of its control. These included:

- 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 at a loss of R268-million to the city entity; 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 in the city‚ despite the City having incurred R288 million in expenditure against the allocation during the 2016/17 financial year.

Mashaba said the city needs R170-billion for infrastructure over the next 10 years to deal with its current backlog.

He commended work done by the Group Forensic and Investigation Services led by Shadrack Sibiya which he said uncovered over R17-billion in corruption and maladministration‚ resulting in 450 people being arrested.