Former mayor claims Joburg council faces financial ruin

The City of Johannesburg was “on the brink of collapse due to the financial ruin it is in”, former mayor Parks Tau and the ANC’s greater Johannesburg region alleged on Sunday.

The “imminent collapse” of the country’s largest metropolitan municipality was indicated by revenue underperformance, an inflated budget for financial 2017-18, the decline in expenditure and its liquidity position, Tau said during a media briefing in Johannesburg.

The party conceded it had not seen the financial statements on which it based its allegations, but learnt about them from sources and from creditors who had not been paid. Geoffrey Makhubo, former member of the mayoral committee for finance, said reports tabled in council had also shown a deterioration in the city’s finance.

Member of the mayor committee for finance, Rabelani Dagada denied this, saying the allegations “are nothing more than the ANC’s attempt at reviving councillor Parks Tau’s political career from the ashes.

“The city’s finances are in a sound position.”

Dagada said the DA-led administration had “made tremendous progress since taking office to ensure that we run a clean administration following acceptable governance practices”.

The financial state of affairs at the city will be revealed by the auditor-general when he issues his report in November.

The ANC plans to ask the Treasury to do an analysis of the 2017-18 budget and to ask the Gauteng MEC for co-operative governance and traditional affairs to keep an eye on the financial position of the city over the next few months.

Dagada emphasised that the 2017-18 budget was assessed by the Treasury and it was found to be funded.

The ANC was unseated in Johannesburg after the local government elections in August 2016. It is almost a year since Herman Mashaba took over the reins as mayor of the city in the DA-led coalition.

Tau said the city experienced underbilling of R2.4bn and under collected by more than R3bn by the end of June 2017.

“This means the city is now only able to deliver services in the short term using borrowed funds,” he said.

“This position is not sustainable and it will show in a few months’ time when a drop in service-delivery levels becomes visible,” said Tau.

Based on the unaudited financial report that will be sent to the auditor-general, Dagada said, revenue collection for the year showed a reduction in the variance between the budgeted and the actual revenue compared with 2015-16. Total revenue in 2015-16 was R34.9bn against R35.2bn in 2016-17.