City’s budget speech shocks with tariff increases

The City of Joburg presented its 2016 budget speech at the Turbine Hall in Newtown.

The speech was delivered by Councillor Geoffrey Makhubo who spoke at length about the state of the City of Joburg’s coffers.

He started off the speech by pointing out the commitment that the City had to increase their financial capacity, build an economy that created jobs as well as the City’s commitment to investing in infrastructure.

“Economic growth remains constrained as GDP growth for 2015 was 1.3 per cent and for this year it has been forecast at 0.7 per cent. Thus the City’s revenues will face increased pressure due to diminishing household income levels and cash flow challenges for business customers…” Makhubo said.

In total the City’s budget for the 2016/17 financial year stands at R54.8 billion representing an operational budget of R45.3 billion and a capital budget of R9.5 billion.

“Of the R9.5 billion capital budget around 71 per cent will be funded by the City through loans and internally generated funds and the remaining 29 per cent will be received from grants and public contributions,” Makhubo added.

He pointed out that after the City consulted with residents through the public participation process they took the residents voices into consideration when implementing the new tariff increases for the next financial year.

Waste removal services (Pikitup) which was a contentious issue with reports stating that the tariffs would increase by over a 100 per cent, saw Makhubo announce a year on year increase capped at 6 per cent with the maximum year on year increase not exceeding R30 per month. In addition the City will not introduce the domestic City cleaning levy this year. Businesses should expect not to pay more than a 7.5 per cent increase.

Makhubo explained that tariff revenue was one of the primary sources of income collected by the City which then went into the City’s capital expenditure and maintenance budgets.

Water and sewerage services (Rand Water) would increase by a whopping 13.2 per cent as announced by Makhubo who indicated that Rand Water had proposed a 13.9 per cent increase. He elaborated that the setting of the water tariff was determined by the need to ensure the conservation of the scarce resource particularly in the context of the recent drought conditions experienced. The new tariff factors in the cost of maintenance, renewal of water networks and reticulation of infrastructure.