Johannesburg residents will soon have to dig deeper into their pockets as the municipality gears up to implement a raft of increases for basic services in July.
The water and sanitation tariffs will increase 6.8% in the 2021/2022 financial year, finance MMC Jolidee Matongo said during his budget speech in May.
The refuse tariff will rise 4.3% in the upcoming financial year, while the electricity tariff will rise 14.59% in 2021/2022, reflecting higher prices by supplier Eskom, which recently secured a 15.09% hike from the National Energy Regulator of SA (Nersa).
The City of Johannesburg, whose revenue collection has been hit by various levels of lockdowns imposed by the government to curb coronavirus infections, said the new tariffs coming into effect on July 1 will help raise the income it needs to deliver basic services.
Matongo said the metro wanted to keep the new tariff increases at the “most minimal rates”, following calls from ratepayers against an increase, while also confronting the reality of having to ensure the metro has the revenue to “continue delivering services to residents”.
On Saturday, Matongo’s spokesperson Gosebo Mathope told Business Day the metro collected R42,274,997 during the 2019/2020 financial year and R43,574,413 during the current 2020/2021 financial year ending on June 30. Estimated revenue collection for 2021/2022 starting on July 1 is R46,188,878, he said.
When asked about the effects of Covid-19 on the city’s revenue, Mathope said: “Under-collection due to ratepayers in financial distress [has resulted in] R11bn write off linked to [the metro’s] debt rehabilitation programme.”
The municipality seeks to increase the tariffs as it battles service delivery challenges pertaining to the fixing of potholes, refuse collection, the provision of water and electricity, and decent housing.
In September 2020 the city’s refuse collection agency, Pikitup, said it could be forced to “reduce waste collection frequency schedules in some areas in a bid to also cut costs”, amid low revenue collection due to Covid-19.
This led to heaps of rubbish left uncollected for several days in the Joburg CBD, a hub of commercial and retail activity. The metro was also forced to seek help from the private sector in May to repair close to 50,000 potholes.
Finance minister Tito Mboweni revealed recently that 163 of SA’s 278 municipalities were in “financial distress”, 40 were battling to deliver basic services and 102 had adopted budgets for this year which they cannot fund.
The auditor-general told parliament last week that the country’s municipalities, which are at the coalface of service delivery, reported R26bn in irregular expenditure in the 2019/2020 financial year.
The 2019/2020 financial report showed that the metro adds a mark-up of 101% for water, power and sanitation, which it buys in bulk, before sending bills to customers.
In the first six months of this financial year, the city paid R10bn for “bulk purchases” of power, water and sanitation, for which it billed customers R15.9bn. It collected R12.5bn in “property taxes” from residents last year.
Karen Heese, an economist at Municipal IQ, a web-based data and intelligence service which monitors and assesses SA’s municipalities, said it will be difficult for the metro to achieve its revenue collection targets “given the socioeconomic environment, and the burden of increases, especially electricity”.
“It will be important to ensure that billing systems and indigent lists work effectively. It is also critically important that Johannesburg works to build its credibility among ratepayers after numerous service delivery complaints [with regards to] potholes, electricity outages and other service delivery concerns,” said Heese. She said many households would likely “struggle to afford increases given unemployment”.
Saxonwold and Parkwood Residents Association chair Bill Haslam said the city is not “being realistic” as most people had had their salaries cut during the pandemic. “How they expect to collect all these increases during a pandemic is beyond me,” he said. “They are living in a fantasy world.”
Correction: June 28, 2021
This story has been edited to make information on tariff increases clearer in the second and third paragraph.
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