‘Difficult times call for drastic measures’ – These are Joburg’s rate increases for 2023

Member of the mayoral committee (MMC) for finance in the City of Joburg Dada Morero used the I Blew It TV show to explain the city’s dismal financial standing.

Morero presented the 2023 Budget Speech on Tuesday.

“Difficult times call for drastic measures,” he said.

“Who is familiar with the phrase I Blew It? How would you feel, if you had to be in my shoes right now and have to tell society that in the financial year ended June 2022, the City of Johannesburg’s billing for services was below budget by R3.4 billion, while overspending on the purchase of bulk services was R342 million,” said Morero.

Electricity and water losses

According to Morero, the city is losing “a significant” amount in electricity and water losses, which peaked in June 2022 at 30% and 32% respectively.

“This reflects a deterioration in the management of losses as the city pays in full for these services but a significant part thereof is lost in technical and non-technical losses,” said Morero.

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The city also saw an increase in the number of key municipalities in overdraft positions.

“The city’s debt levels reached unaffordable levels and this led to financial institutions showing reluctance in providing funding to the city.”

In the 12 months ending June 2022, the city raised R1.5 billion in loans compared to the budgeted R2.1 billion.

As a result, in the current financial year ending June 2023, the city will be required to repay over R3 billion of its debt.

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“The current cash level and poor revenue collection has placed the repayment of the debt at a significant risk,” said Morero.

“At a financial level, we inherited a city that was in arrears with supplier payments; had no cash in the bank; was not servicing its long-term debt; low levels of operating and capital budget; had a deficit of R291m; and had wastage caused by fraud in housing, water, non-essentials and bad management.”

City of Joburg increases

The City of Joburg has an allocated R80.9 billion budget for the 2023/2024 financial year – an amount that saw Morero pleading with the private sector to help the city ensure “every cent counts”.

In the new financial year of 2023/2024, the property rates will increase by 2%, announced Morero.

The City of Johannesburg has also made some changes to rebates and relief measures offered to residents, including the introduction of a sliding scale on pensioner rebates.

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“The first R1.5 million of the property value (inclusive of the residential threshold value) for pensioners between the ages of 60–69 will be exempted from rating, and the first R2 million of the property values (inclusive of the residential threshold value) for pensioners aged 70 and above will be exempted from rating,” said Morero.

“All qualifying pensioners will receive the rebate and pay on the balance of values that exceed the above-mentioned thresholds.”

The electricity tariff increase applicable for the 2023/24 financial year is 14.97% based on the Nersa determination for local government.

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“Despite resources being limited, this budget has sought to increase allocations for electricity infrastructure renewal and maintenance to counter the effects of service disruptions,” said Morero.

The water tariff increase applicable for 2023/24 is 9.3%, based on the anticipated bulk water charge from Rand Water. The first 6 000 litres remains free for all residents, while additional provision has been made for indigent residents who will receive a monthly benefit of R307 compared to the previous R25 equivalent.

The sanitation tariff increase for 2023/24 is 9.3% and there is no change in the basis of charging using property size.

The refuse tariff increase applicable for 2023/24 is 7% which is informed by a cost recovery model for the entity.

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