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In August 2016, the DA and its alliance partners took over leadership of the City of Johannesburg, and with it a nightmare.
The party took over financial statements which it commented on arising to all the negative DA buzz words you hear of regularly.
In this instance, one should take what was said about ruling Johannesburg in connection with ruling South Africa and a R180 billion infrastructure maintenance backlog seriously.
Keeping the mast of the sinking ship above water, claiming every few hundred million saved here and there, and manipulating the public into thinking that things were improving makes sense from a political point of view.
So does omitting the maintenance backlog from the balance sheet. Is it not an accrued expense after all?
The audited accounts should give one a realistic view of the financial position of the city, but although what is published is according to the applicable standards they do not give one this realistic view.
The fact is that within the current financial structure, the City of Johannesburg is insolvent.
It has been for the past 10 years and is impossible to refloat, no matter what austerity measures are put in place.
This deficit has risen because very little austerity was practiced in the past 10 years, and is increasing by at least R20 billion per year.
Only R4.5 billion is spent on reducing the deficit and therefore the net degradation is about R15 billion per year. It’s like pouring 5l into a bucket leaking 20l.
Accounting for the infrastructure maintenance deficit fully, not as it is done currently, will introduce an extra liability of R195 billion to the balance sheet, which will result in a negative net asset position of around R200 billion.
The profitability of the city will also decrease from R3.5 billion to a negative R15 billion for this financial year.
The lie lies in the fact that a sincere intent to rescue our city would have resulted in the restructuring of its assets through privatisation in 2016.
Infrastructure could have been leased and the business of managing the supply of services could have been sold on tender, while showing respect for potential jobs lost.
Such measures were not impossible though.
This would have ensured a lump sum and monthly cash injections for the city, which it could have spent on its other decaying infrastructure.
The window for this is over because if the reality is declared, it will lead to huge political damage for the ruling party.
Instead, a strategy of incorporating the utilities on to the city is being promoted, and this is sure to cause even more reality being hidden.
The money spent by residents since 2016, which was in effect wasted, could have been used in a vastly more efficient manner.
And please don’t forget the 40% to 80% more you will be paying on your council bill in August to fund the mast staying above the water; meanwhile all our infrastructure will continue degrading.
Hold on to your pants, you’re gonna s**t yourself!
– Oscar Plange is a former investment banker and chairman of the Northcliff Residents’ Association
