City of Joburg defends R47.1b budget

CoJ says most of its budget will be for new housing developments and infrastructure.

Tremor has joburg residents concerned

JOHANNESBURG - The City of Johannesburg says the lion's share of its R47.1 billion budget for the current financial year will be used for new housing developments and the upgrading of old infrastructure.

Finance MMC Geoffrey Makhubo delivered the city's budget for the 2014/2015 financial year on Tuesday and reiterated the need to attract investors.

Makhubo also announced domestic tariff increases across the board with property rates up five percent, electricity by just over seven percent and water and sewage tariffs by 8,9 percent.

The budget also shows waste removal services will be increased by six percent for domestic customers and eight percent for businesses and commercial customers.

Makhubo said the city will spend R2.6 billion on housing in the next three years to upgrade existing informal settlements, hostel refurbishments and the development of precincts for all sectors of the population in the inner city.

He also announced that the Gauteng provincial government would no longer be in charge of the city's housing needs which will now fall on the City of Johannesburg.

City Power has been given R13.3 billion to rollout prepaid electricity meters and to improve infrastructure.

Pikitup, the city's waste removal agency, has received a R1.8 billion cash boost while Joburg Water has been allocated R6.4 billion to provide water and sanitation.

But economists say the municipality should've cut expenditure instead of hiking rates.

Efficient Group Director and Chief Economist Dawie Roodt on Tuesday said the increases are disproportional.

"Most of these hikes are increasing at a rate stronger than the inflation rate and that is simply unacceptable. There's no reason why a local authority can or should increase above the inflation rate."

Roodt said taxpayers' money needs to be better handled, suggesting certain services should be privatised to ease the burden.

Economist Mike Schüssler agreed, adding many people simply can't afford to pay for services they need.

"The higher they increase the rates, the less people can afford it and the worse the bad debt figures become."

He said cities throughout the country will have to find ways of reducing costs rather than increasing rates.

However, as part of his announcement, Makhubo noted that the 2014/2015 financial year's "record budget" was in fact a sign of the city's "determination to confront the social deficits in various areas".