The massive budget overrun on Johannesburg’s flagship 2010 stadium, Soccer City, has forced the municipality to tighten its belt and prompted a cutback in services, council sources told the Mail & Guardian this week.
Against this backdrop, critics have questioned why the city is hosting Miss World, an extravaganza that will set it back more than R45‑million.
According to Neil Fraser, chairperson of the Johannesburg Heritage Trust, the cuts played a role in the burning down of the city’s historic Rissik Street post office building earlier in November. This week Fraser laid a charge of criminal neglect against the council and gave a list of reasons for the municipality to be held accountable.
‘Our members’ investigations showed that two days before the post office burned down, security was withdrawn from guarding the post office. This was a decision from the property company to cut rates,” he said.
The withdrawal of security had allegedly enabled vagrants to seek refuge in the building and start
the fire.
It was also learned that council cost cutting has led to the canning of a new R9‑million enclosure for the seals at the Johannesburg Zoo, as the zoo’s development budget has been trimmed.
The cuts have delayed infrastructure development and maintenance, including the repair of potholes
in roads.
The M&G learned from council sources this week that the cost of the stadium, which will host the opening ceremony and the final match of next year’s Fifa World Cup, has risen by almost R1‑billion, from R2,5‑billion to R3,4‑billion, forcing the city to slash its own budget by more than R1‑billion.
The council has been forced to go cap in hand to the national treasury for an additional R1,2‑billion for the completion of the project. But this will become available only in February next year.
The source said that until then the city would have to tighten its belt to make ends meet. The municipality’s departments have been forced to cut spending by a total of R670‑million from their capital budgets and by R477‑million from their operating budgets.
About R800‑million of the R1‑billion in savings is needed to keep construction going until the treasury grant comes through.
A council report tabled in September showed that Johannesburg’s budget was already in trouble, with an operating deficit of about R510‑million.
City council spokesperson Virgil James could not be contacted on Thursday for comment but city spokesperson Nthatisi Modingoane said last month that all departments would have to grit their teeth and, to the best of their ability, ‘not compromise on service delivery”.
DA councillor and finance committee member Don Forbes said a combination of problems had led to the escalating price tag of Soccer City, including delays because of the weather, subcontractors’ tender prices, exchange rates and a general underestimation of costs.
Forbes said that Johannesburg’s financial woes could be traced to its poor collection rate.
The city collected only about 62% of its rates and taxes, and the Johannesburg Metro Police also had a poor record in recovering money owed to it.
It is estimated the city is owed about R10‑billion.
‘This all resulted in the cash flow problems the city is experiencing,” Forbes said.
He said the council is ‘commercially” insolvent, as its liabilities exceeded its assets.
‘Once again Mr and Mrs Ratepayer will be those most affected by the budget cut,” Forbes said.
The city has said that because of the recession many residents are unable to pay service charges, leading to many defaulting on their bills. There has also been a 50% drop in property transactions.
On the canning of the seal enclosure, zoo spokesperson Louise Gordon said the current tank had become too small and there were worries about water quality. For now, though, the seals will have to remain in their existing tank.