Budget Speech 2010/2011

Madame Speaker

Executive Mayors, speakers and other leaders in local government

Members of Mayoral Committee

Councillors

Acting Municipal Manager, Executive Managers and Manager

NGO, S

Faith Based organisations

Distinguished guests

Comrades and Friends

 

Madame Speaker, it is a great privilege and an honour to address this sitting of Council for the last time- as the Executive Mayor of Westonaria Local Municipality during the Budget presentation of the 2010/11 financial year. In Westonaria Local Municipality, we see the budget as an instrument through which public funds ensures that we improve the quality of life. We see the budget as an instrument of development and we do this through planning, allocation, control and proper accounting for every cent entrusted to us as local government.

 

Madame Speaker, today marks exactly fourteen days before the official kick-off of the 2010 FIFA World Cup and as Westonaria, we are looking forward to the Bafana Bafana versus Mexico opening match on the 11^th June 2010, and finally winning the soccer world cup.

 

In December 2009, Cabinet approved the Local Government Turnaround Strategy (LGTAS). This plan aims to restore the confidence of the majority of our people in our municipalities. It seeks to ensure a functional, responsive, accountable, effective and efficient developmental local government.

 

Five strategic objectives have been identified that will guide the Local Government Turnaround Strategy are as follows:

 

 

Through this, Westonaria Local Municipality shall be transformed into an institution that has tangible, visible, realistic and implementable plans of action. The outcomes thereof shall include the creation of jobs, to enhance revenue, clean audit, institutional transformation and stability amongst others.

 

In his Budget speech of 17^th February 2010, Pravin Gordhan, the Minister of Finance said: “Our people need hope. Our people want government to lead. We will lead. Our people want government, business, labour and social organisations to work together to create a better future. Our people want to be positively energised so that they can take initiative to improve their lives and communities”

 

Our mandate remains to provide equitable service delivery to all our people, to service all our ratepayers equally and to do good business so that our residents can enjoy good quality of life and our town can attract more investment.

 

It is simply good business to grow and support middle class. This is our ratepayer base and the income generators of our town. From this group also come the job creators and those who grow our economy and improve the skills level of our people.

 

Madame Speaker

 

In his 2010 State of the Nation Address, the President signalled that government intends to deliver more and better services in a caring and efficient manner, hold political office bearers and public servants accountable, shift resources to new priorities, move from debate to effective implementation and decisive action and lastly to work with communities, labour and business to achieve our shared objectives.

 

These objectives are directly relevant to municipalities. The challenge for each municipality is to do more within its existing resource envelope.

 

 

The national Budget Review 2010 notes that over the next few years, government must deliver more services – and deliver them more efficiently – within a tight resource envelope. Achieving this objective requires a new way of working ensures that the budget has been reprioritised so that money is moved from low-priority programme to high-priority programmes and a

performance culture where people are held accountable for their actions, accompanied by clear measurable outcomes related to key development priorities. The municipality will achieve all these priorities through its quarterly Service Delivery Implementation Plan.

 

This is particularly important as we approach the 2011 local government elections, councillors, management and employees, business community and  all community members need to remain focused on the effective delivery of core municipal services, because Working Together we can do more. The municipality ought to focus on maximizing its contribution to job creation by:

 

The Department of Cooperative Governance and Traditional Affairs issued regulations, eeffective from 1 July 2009 prescribe the ratio for non-residential categories public service infrastructure and agricultural properties relative to residential properties. Processes are underway to also prescribe a ratio with respect to public benefit organisations relative to residential properties from 1 July 2010.

 

 

 

The Minister for Cooperative Governance and Traditional Affairs (COGTA) during December 2009 hosted an Indaba where the State of Local Government Report was considered. A framework was adopted. Provincial Turn Around strategies are to be developed and implementation plans are to be put in place. 

 

The national and provincial frameworks were discussed at a meeting held on 4 February 2010. Municipalities were given time until end of March 2010 to adopt the implementation plans which informs the 2010/11 Budget and IDP process. Details of this strategy will be outlined later.

 

Madame Speaker

 

The South African economy is slowly recovering, with economic growth of 2.3 per cent projected for 2010. However, it will take some time for the economic upturn to flow through to increased municipal revenues and better cash flows.

 

Consequently, municipal revenues and cash flows are expected to remain under pressure in 2010/11. With the compilation of this Budget we adopt a conservative approach when projecting expected revenues and cash receipts. The Turn around strategy (TAS) also pays particular attention to managing all revenue and cash streams effectively, especially debtors.

 

Given the constraints on the revenue side, the budget process forced us to make some very tough decisions on the expenditure side this year. Priority ought to be given to ensure that basic services meet the required quality standard at all times and to protect the poor from the worst economic downturn.

 

It is also important for this municipality to support Local Economic Development initiatives that foster micro and small business opportunities and job creation; and secure the health of our assets base, especially the municipality’s revenue generating assets by increasing spending on repairs and maintenance; and expediting spending on capital projects that are funded by conditional grants.

 

 

Special attention was also given to control unnecessary spending on nice-to-have items and non-essential activities, such as travel expenses, telephone costs, overtime payments, legal expenses, public relations activities, consultancy and other outsourced services.

 

This year, the municipality presents a total budget of R325, 9 million for the 2010/11 financial year, an expenditure of R324,9 and budget surplus of R1,0 million.

 

 The operating budget outlines the activities, services and functions carried out within the municipality. Each department’s budget is characterised by programmes and activities and includes both financial and personnel resources necessary to carry out the functions as outlined in the IDP.

 

The capital budget includes funding for the ongoing maintenance, upgrading and replacement of the municipality’s infrastructure.

 

Madame Speaker, preparing this budget has not been an easy task, the past financial year presented financial challenges to the municipality as a result of the global economic meltdown. Mindful to the envisaged slow economic recovery, we developed a financial strategy to mitigate the financial pressures. The strategy aims at maximisation of revenue and curtailing of expenditure.

 

These challenges include the increasing demand for services with limited financial resources. When putting this budget together, the easy thing would have been to use the financial challenge as an excuse to stop investing in infrastructure.

 

The capital budgets reflect consistent efforts to address the backlogs in basic services and the refurbishment of existing network services.

 

Operational Income of R325,9 million consist of income from services charges which totals to R175,3 million, representing an increase of 15%, Property Rates income which total to R26,2 million and represents an increase of 7%, grants and subsidies of R101,5 million and lastly other income which totals to R22, 9 million representing an increase of 9,5%

 

The estimated operating expenditure for 2010/2011 amounts to R324, 9 million indicating a 8,2% growth.

 

In order to strengthen the financial resource base of municipalities and as a follow up on current year’s allocation, the National Government has allocated category one to three Municipalities, an equitable share for 2010/2011 in line with the framework for the remuneration of Councillors.

 

Madame Speaker, let me also mention that for the past 5 years Westonaria Municipality received four (4) unqualified audit reports. For the past 10 years we received 8 unqualified audit reports. This is an important and great achievement for the municipality which must be sustained, and develop new energy that will assist the municipality to obtain a clean Audit report between now and 2014.

 

A classification of operating expenditure is as follows:

 

Personnel cost will be R90, 5 in next financial year to fill critical positions in order to improve service delivery. The budget also provides for general salary increase as per Salga/Labour agreement which is linked to the inflation rate.

 

Personnel expenditure represents 27,9% (2009: 30%) of total income which is less than the set target of 37% and within the expected norm of between 27% and 35%.

 

Bulk Water and Electricity purchase costs is R122, 3million including the Rand Water tariff adjustment of 14, 3% and Eskom tariff adjustment of 22% subject to NERSA approval.

Capital Cost (Interest on external borrowings): will be R11, 6 million and it represents 3, 6% of the Budget which total Expenditure Budget which reflect a conservative approach to external borrowing

 

General expenditure: R27, 0 million, which reflects an increase of only 2, 7% as a result of the Turnaround strategy and the impact thereof on certain expenditure votes.

 

Provision for Bad debts: R30, 5 million, which reflects 9,4% of the total Budget

 

Impairment of assets (depreciation of assets), contracted services and other amounts to R43, 0 million.

 

 As indicated during the State of the Town Address that capacity building and development for the vulnerable sectors that include Youth, Gender, the Elderly, People with Disabilities and Children will play centre stage. We promised to make early childhood development our priority.

 

According to Gauteng Social Development Strategy Gauteng Province has a relatively high prevalence level among young women of child bearing age, who live in informal settlements and bear the brunt of this scourge. Gender power relations and social stigma are major barriers to the control HIV/AIDS. Women and girls typically, face inadequate and unequal access to primary health care-especially reproductive health care-to food and nutrition to sustain a healthy life. Education is another area of gender inequality.

 

Among children requiring special protection, gender based discrimination contributes to specific problems for girls, including sexual exploitation and violence.

 

 

The following amounts have been made available in the 2010/11 financial year:

 

Youth:                                           R400 000

Women:                                       R300 000

Disabled:                                     R150 000

Children:                                     R150 000

 

Government communication is not a stand alone or self serving discipline. It is a strategic and planned process aimed at supporting the implementation of the policy and programmes designed by government to better the lives of our people. As a Municipality we must have a dedicated communication capacity which puts in place an intentional and planned communication programme.

This communication programme will include internal and external communication, public participation, media and stakeholder liaison, publication and content development; and marketing and branding. An amount of R300 000 will be budgeted to ensure that a vigorous marketing strategy is developed and implemented       

 

Development of Wards (Service Delivery Programmes): R225 000 (R15 000 per ward)

 

In support of Provincial and National Programmes towards this development and the fight against HIV/AIDS, an amount of R814, 971 has been budgeted for this unit’s programmes.  Furthermore in line with the Municipality’s commitment to promote participatory democracy and communication, an amount of R318 000 has been set aside for this purpose.

 

An amount of R500 000 has been allocated for training, community participation and vulnerable sectors. Other items catered for under operating expenditure are, Community Development, Sports Development.

 

Poverty Alleviation through the implementation of the National Government’s Policy on free basic services, indigent support to those who are really poor, has been provided for, in the 2010/2011 budget. The Budget provision to provide free basic services and Indigent support is a total amount of R38, 2 million.

 

 

As I stated during the State of the Town address that our challenge is to strive towards sustainable and effective service delivery to our communities through the implementation of effective plans and hard work, and that positive results are the only way to install confidence and hope in our communities by investing and maintenance of old infrastructure, this is the route we wish to take.

 

An amount of R15, 3 million has been allocated for repair and maintenance of infrastructure and this includes maintenance of essential services. We also want this meeting to note that some of the projects will be rollover projects from 2009/2010 financial years. Some of the projects and programmes are not completely new, and I wish to state that some of them were projects which were to be implemented in 2009/2010 financial years, but because of poor service delivery payment by communities these could not be achieved

 

The capital Budget amounts to R72, 7 million and will be funded as follows:

 

External Loan                                     : R21, 7 million

DWAF                                                        : R 3, 3 million

MIG                                                    : R38, 6 million

DBSA                                                 : R 6, 7 million

Provincial Gov. (DAC Funding)        : R 3, 0 million

 

Our staff members received training on Cipal, which its purpose is to manage documents effectively and efficiently. This programme will also assist in developing SMMEs in the Greater Westonaria. The amount set aside for this programme is R300 000 and it is a grant receives from Department of Housing and Local Government.

 

Grant: CIPAL Project (Roll over from 2008/2009):   R300 000

 

Madame Speaker, in order to comply with the legislations minimum requirements for disposal of waste by land filling, an amount of 11million has been set aside to realise this goal.

As indicated during the State OF the Town Address that the Simunye communities will realise developments such as the new construction of a multipurpose community centre phase 1 that will cost 1,769,687 and phase 2 that will cost 1,831,148 respectively. An amount of 3,294,348 has been allocated in the 2010/2011 financial year for the Simunye community for enhancing   the culture of learning within the said community.

 

The municipality has set aside an amount of 3,390,247 for construction of Simunye Internal Roads. The Simunye community has been without a proper clinic since its establishment, and in the 2010/2011 financial year Westonaria in partnership with Gold Fields will construct a new clinic at a cost of R6 million. In this project the municipality has availed land at the value R164 000, provide an access road and parking for an amount not exceeding R402 000, construct palisade fencing with an entrance and pedestrian gate for an amount not exceeding R200 000, provide a guard house for an amount of R50 000 and lastly construct landscaping and beatification of the stand, for an amount of R90 000.

 

The Simunye community will also realise another new and important development of a construction of a Police Station, Magistrate Court and staff Quarters, and we are hopeful that these developments will reduce high levels of crime currently experienced by these communities.  

 Mr Speaker, during this current financial year it was reported that, our sewer network infrastructure can no longer cope with the capacity it has to carry from both the communities of Greater Westonaria and Randfontein municipal jurisdiction respectively. Because of this capacity challenge, the municipality experienced pipe burst thus causing sewer spillage on land that did not belong to the municipality and creating serious environmental health threats. In order the address this problem the municipality has allocated an amount of 6,902,705 for the replacement of sewer pipelines and pump station in Venterspost which is a development that will accommodate the two above mentioned towns and townships.

  

The Zuurbekom community has been hoping for developments such as a Multipurpose Purpose Sport Centre and Recreational Community Centre, and for this purpose, an amount of 1,959,000 has been allocated for the 2010/2011 financial year.

Madame Speaker, an amount of 200.000 has also been allocated for a construction of a Taxi Rank in the Westonaria CBD.

 

It is also important to indicate that Hannes van Niekerk Mechanical Refurbishment will be done at a total amount of R13 million and the upgrading of Westonaria Solid Waste Disposal Site at amount of R5 million.

 

The Municipality has been battling with the ageing vehicle fleet and a result services such as waste removal have been affected in Greater Westonaria. We have budgeted a total amount of R10 million to replace vehicle fleet in order to optimise service delivery in our area.

 

Water network systems will be upgraded at a total amount of R7million and the sewer network and plant will be refurbished at a total amount of R792 000.

 

Madame Speaker, municipalities are expected to comply with National Treasury Regulation in respect with GRAP 17 in essence to identify, control and dispose assets as prescribed by asset management policy. In order for the municipality to achieve these goals, we have budgeted a total amount of R7 million.

 

Westonaria have been affected by few power outages and an amount of R4 million have been budgeted to upgrade electricity network and systems

 

 

 

In support of the local economic development and job creation initiatives, the Municipality will continue to implement its various programmes that are geared towards the creation of decent work and addressing unemployment, especially amongst the youth, women and people with disabilities.

 

The Office of the Executive Mayor held discussions with Rand Uranium Mining Company for a land to be used by emerging farmers, including other developmental project in the Simunye and Zuurbekom areas. We believe that such initiatives will assist in reducing high level of unemployment in our area. A memorandum of understanding will be signed in due course.

 

Ezulwini Uranium Mine is also in the process to develop their Social Labour Plan as required by the Mining Charter, and they are keen to invest in LED projects identified in the IDP document.

 

Westonaria Local Municipality through it LED strategy is in a process of renewing CBD in order to attract investment in our area.

 

Madame Speaker, the municipality is also in partnership with provincial government to implement Plato Gauteng SMMEs Mentorship programme. The Plato concept originated in 1988 at Janssens Pharmaceuticals in Belgium. A study by Deloittes in 2005 showed that SMMEs that joined the Plato Programme improved their finances, liquidity, return on capital and labour costs.

In Westonaria twelve SMMEs are participating in this programme and the discussion topics include business plan development, requirements for finance and partners in finance. The municipality is optimistic that this programme will assist emerging business organisation to participate in the market economy.

 

Madame Speaker, the debt owed to Council, remains one of our major challenges to service delivery. Consumers in Westonaria owed the Council over R90 million at the end of February 2010, of which 70% is older than 120 days. The debt owing has increased from 28.9 million in June 2008 to R90 million in February 2010, which is very concerning indeed. If the said amount was to be collected from communities, this would make a huge fiscal contribution towards infrastructure development, to mention a few, sewer system upgrade, tarring of roads and other community amenities.

 

The areas owing the most debt are Simunye – R31.3 million; Bekkersdal – R22.2 million and West Rand Agricultural Holdings R7 million. 43% of the debt is for water; 13% is for electricity; 12% is for rates and 32% is for refuse removal and sewer. The indigent policy is being reviewed and the registration will be strictly applied with the active involvement and assistance of Ward Councillors, Community Development Workers and Ward Committees to ensure that only those who are genuinely indigent, will benefit as policy prescribes.

 

As part of the Municipality’s debt collection efforts, the installation of pre-paid water meters has started and will be across the municipal area. This programme is yielding good results and it will continue to assist the municipality to regulate water usage and also ensure that our clients’ accounts are charged accurately. Up till end April 2010 nearly 800 meters were installed. Due to increased credit control and debt collection strategies the rate of payment improved from a low 67% to and average rate of 77% and a projected rate of 80% for 2009/10 In the 2010/2011 financial year an amount of 11mil has been allocated for continued installation of Prepaid water meter system. The Turnaround strategy will maintain and improve this payment levels. As a result of the TAS the total operating budget increase by 8% despite huge increases in Eskom and Rand Water Tariffs

 

It is important that we find ways and means to recover these monies which are currently creating budget allocation constraints; the Municipality does not have the resources to continuously finance this debt. The current over growing debt that the municipality is experiencing, needs to be drastically reduced if we are to realise and sustain services that are to be provided.

Of great concern is that not only the poorest sections of our communities owe the municipality, but also the wealthy sections of our communities, individuals and other provincial government departments.   

 

In balancing the budget for the current financial year, special care was taken in making sure that the municipality’s resources are managed, as a result of 14, 3% increase in Rand Water tariffs, refuse removal and solid waste tariffs will increase by 7%. Property Rates will in general increase by 6%. Provision has been made for an electricity tariff increase of 15, 3% pending NERSA’s approval.

 

Spending on these Grants are regulated and the Municipality needs to comply with relevant conditions and terms and reporting requirements.

 

Let me indicate that we have succeeded in attaining a balanced budget attributed to stringent fiscal discipline as well as the commitment of all Heads of Departments, Mayoral Committee and Council to the process.

 

Madame Speaker, the municipality will continue to strive towards higher and quality standards of service delivery. This includes mobilising other government departments, business and other stake holders to come forward and assist in completing the uncompleted roads and sewer network upgrade in Bekkersdal during the 2010/2011 financial year. The roadmap is clear and we are confident that this budget is in line with our vision and the commitments that we have made to the citizens of Greater Westonaria.

 

In conclusion, I thank my comrades and colleagues, the councillors, especially Mayoral Committee and lastly my Office Manager and my office staff. I thank you all for your hard work and efforts. We have been elected to serve our people, and to provide them with a better quality of life. Together we can do more