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MOGALE CITY
City of Human Origin
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Contact us
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Budget Speech
Budget speech presented by Mogale City Executive Mayor the Honourable Clr. Koketso Calvin Seerane at the 30th special council meeting of the Mogale City local municipality held at the Main Hall, Commissioner Street, Krugersdorp, Mogale City
29 May 2007
Madam Speaker: Councillor Noluthando Mangole
Chief Whip of Council: Councillor Boyce Maneli
Members of Mayoral Committee
Leaders of Political Parties
Honourable Councillors of Mogale City
Municipal Manager: Mr. Dan Mashitisho and senior management team
Members of the Media
Distinguished guests
People of Mogale City:
INTRODUCTION
In the early hours of Sunday May 27 2007 three children in Kagiso lost their lives in a fire that engulfed their home. Ofentse Molefe aged 10, Johhny Ngubeni aged 7, and Lucky Modipane aged 7 are a great loss to their families, their community and our city. We would like to say to their families that we are with them. None can explain why this has happened, but we must pick ourselves up and carry on. In this dark hour, please take comfort in the fact that the people of Mogale City join you in the vigil throughout the night, and cry with you throughout the day. At this stage let me please ask that we stand and observe a moment of silence. [1 minute of silence]. May their souls rest in peace.
Speaking at the SALGA Conference on April 25 2007, our Minister of Finance, Honourable Trevor Manuel shared these words: "Gathered here tonight are the men and women whose actions (or inactions) touch the lives of all South Africans. You do this through the policies you make. You touch people's lives through the decisions you take on how to spend the Budgets you pass every year. You affect lives through the by-laws and regulations that you pass from time to time. So you have power. Your action can change things for better or for worse. Through your actions you can protect the poor and by failing to act you can cause irreparable harm to the most vulnerable."
The Budget we are delivering today, together with the Integrated Development Plan tabled before this Council are tools that will assist us to achieve this mandate. They are tools that will guide us in becoming responsive to the needs of the communities we serve. While they may not satisfy everyone now, they are meant to assist us to take the necessary leaps in order to ensure that we make maximum impact to the majority of the citizens of Mogale City in line with the sentiments correctly expressed by Minister Manuel.
METHODOLOGY FOLLOWED IN PREPARATION
Since our election into office in March 2006 a number of changes had to be made which may have affected the process of producing both the Integrated Development Plans and the Budget. The main changes concerned themselves with ensuring that there is committed and competent senior leadership within the administrative arm of the municipality.
(a) The Former Municipal Manager Ms. I. Mokate resigned in April 2006 and the New Municipal Manager Mr. D. Mashitisho assumed office in October 2006.
(b) The Former Chief Financial Officer Ms. C. Robinson also resigned in April 2006 and the new Chief Financial Officer Mr. Leslie Mahuma started in January 2007.
(c) The Deputy Director Performance Management resigned and the position is still vacant and
(d) The Deputy Director Budget and Treasury also resigned and the position is still vacant.
Despite the above mentioned challenges we have been able to produce the Budget as well as an IDP document that both speak to our response to the material conditions that the people of our city find themselves in. The following are milestones achieved in preparation of this Budget:
- Extensive Road shows were embarked upon immediately after our election into office in April 2006 in all the Wards to determine the needs of the people;
- The schedule of the Key Deadlines for the Budget Preparation process was tabled before Council on August 24 2006;
- The MFMA Implementation Steering Committee chaired by our MMC for Finance, Clr. Farouk Bhayat was reconstituted in July 2006 and is now operative;
- The Draft Budget was tabled before Council as required by the MFMA on the March 27 2007;
- Extensive Community Consultations processes took place between the April 22 to 26 2007 and the inputs thereof were incorporated as far as possible into this Budget.
All endeavours were made during this Budget process to comply with legislation, particularly the Local Government Municipal Systems Act and the Local Government Municipal Finance Management Act (MFMA) with regards to Public Participation and prescribed deadlines or due dates for production of the Intergrated Development Plans and the Budget. As we have said before, ours is an approach that is about carrying out our duty guided by the spirit of the law and not by minimal compliance.
Against this background, we are pleased to present this Budget because we know that it is true and accurate reflection of aspirations and desires of the people of our city. Although there is still room for improvement in terms of extending the level and quality of Public Participation, and this is a matter I addressed extensively in our State of the City address in March this year, we want to salute those in our city that took time to participate in this process, the youth, business, religious groupings and other community structures. We urge to continue in this direction so that you ensure that both as politicians and administrators we are kept on our toes. You give real meaning to the long-held freedom cry that THE PEOPLE SHALL GOVERN!
Let us now turn to the Budget for 2007/2008 Financial Year:
OPERATIONAL BUDGET
The Total Operational Expenditure proposed for Mogale City Local Municipality for 2007/2008 is R727, 506 million which is 5.4% or R37, 439 million more than the approved Expenditure Budget for the current financial year. The Total Revenue Budget forecast for 2007/2008 is equal to the Expenditure Budget meaning that there is no Budget deficit or surplus. Mogale City Local Municipal proposed Budget is a Balanced Budget.
The Operational Expenditure per vote Allocations is made up as follows:
- Infrastructure Management - 56% = R407 million
- Environmental Management - 13% = R92 million
- Social Services - 11% = R83 million
- Financial Management - 9% = R65 million
- Corporate Support Service - 5% = R35 million
- Economic Services - 3% = R24 million
- Political Office Support - 2% = R14 Million
- Municipal Manager's Office - 1% = R7 million
TOTAL EXPENDITURE R727, 506 million
The Operational Budget per Expenditure Type is made up as follows:
- Employee Remuneration Cost - 33% = R253 million
- Bulk Purchase of Water & Electricity - 31% = R229 million
- General Expenses - 12% = R91 million
- Working Capital - 9% = R65 million
- Repairs and Maintenance - 5% = R33 million
- Interest on External Borrowing - 5% = R33 million
- Depreciation - 1% = R10 million
- Remuneration - 2% = R13 million
TOTAL 100% = R727, 506 million
CAPITAL BUDGET
Madam Speaker the Capital Budget represents our unwavering commitment to ensure superior service delivery. The Mogale City Local Municipality's Capital Budget amounts to R90 782 million which is only confirmed or secured funding for Capital Projects in the financial year 2007/2008. An amount of R29 696 of the total forecast Capital Expenditure is rolled over from the current year to the following financial year namely 2007/2008 financial year.
The proposed Capital Expenditure Budget of R90 782 million is R8, 395 million above the 2006/2007 financial year approved Capital Budget and R12 053 million (15% above) the 2006/2007 adjustment Budget.
The amount of the Capital Budget is unlikely to be the final figure as we anticipated to receive additional funding during the year, and this amount will be added to the current Budget through Adjustment Budgets.
The Details of Funding confirmed to date are as follows:
- R32, 287 million from Municipal Infrastructure Grant;
- R5, 717 million from Department of Water Affairs and Forestry;
- R1, 548 million from Gauteng Department of Sports, Recreation, Arts and Culture;
- R16 million from the sale of land by Council;
- R5, 371 million from service reconnections arising from recoverable income from the Operational Budget;
- R29, 696 million is Capital Projects rolled over from the 2006/2007 Financial Year.
An additional capital grant funding of R11, 684 million may also be available from the following sources: Department of Water Affairs and Forestry (R3.432 million), Department of Sports, Recreation, Arts and Culture (R950, 000), West Rand District Municipality (970, 000), and the Department of Housing (R6, 332 million). Officials are currently trying to obtain confirmation on whether these grants will be given to Mogale City Local Municipality for the coming financial year (2007/08). These grants would be used to fund specific capital projects agreed by the grant-donor organisations and will be added to the capital budget once the funds are secured through an Adjustments Budget process.
In addition to capital grant funding discussed above, the municipality is looking at
raising a further R81 million from additional land sale proceeds to fund the capital
budget. We are also looking at the restructuring of existing loans from the
Development Bank of Southern Africa with the amount of R16 million which may
assist in securing more funding. A list of possible capital projects that could be
funded from these potential funding sources is found in Schedule 3b of this
Budget Report. These capital projects will be added to the capital budget once
the funding sources are approved and confirmed through an Adjustments Budget
process.
Council also supports investment projects within the municipality's boundaries
that are totally funded by other government sectors and/or private sector
partners. These projects are termed 'out -of-books' projects since the funding for
the projects does not flow through Mogale City's bank account. A list of these
projects, including the Housing Development projects funded by our Gauteng
Department of Housing, is shown in Schedule 3c of the Budget report.
PROPOSED PROPERTY RATES, TARIFFS, AND
USER CHARGES FOR 2007/08
The increases being proposed for 2007/08 are as follows:
Table 3: Increases in rates, tariffs and charges
| | 2007/08
Proposals |
| Property Rates | 6 % |
| Electricity tariffs | -20.71% to 12.46% |
| Water tariffs | 6 % |
| Sanitation tariffs | 6 % |
| Refuse collection tariffs | 6 % |
| Other user charges | 6% average |
It should be noted that National Treasury's guideline growth parameters for municipal rates and tariffs is 3% to 6% for 2007/08 (MFMA Circular no. 41 - 31st January 2007). Mogale City Local Municipality's proposals for tariffs are thus within National Treasury's recommendations except for electricity and refuse collection. The proposed electricity tariffs have varying rates of increase/decrease, but the average increase is 4.8%, as they are still being restructured to be in line with the National Electricity Regulator tariff guidelines. Other user charge increases average 6%. It should also be noted that the Property Rates will be based on the current valuation roll for 2007/08 with the implementation of the Property Rates Act taking effect from 2009/10 onwards.
One of the issues that were to be investigated was the possibility of negotiating with the relevant stakeholders within and outside of the Mogale City Local Municipality to reduce the proposed domestic electricity tariff increase. The proposed domestic electricity tariffs are based on a study undertaken by consultant Stewart Scott and have taken a number of factors into account, which are:
- The need for electricity tariffs to be cost effective. A mark-up must be placed on the Eskom tariffs in order for Mogale City Local Municipality to fund the costs of the Electricity Service. A mark-up of 15% was recommended by the Stewart Scott Study. In addition, Mogale City Local Municipality purchases electricity at a voltage of 33000 kWh. This carries an additional 10% extension charge cost should Mogale City Local Municipality not consume its full voltage demand, as Eskom cannot reverse the amount made available to Mogale City Local Municipality. Such costs also have to be absorbed by the tariff charged by the municipality;
- The need for maintaining the electricity sales surplus in order to fund the delivery of other essential Council services;
- Reduced Non-Residential tariffs have resulted in increases to Residential tariffs which have previously been subsidised by Non-Residential tariff payers. The National Electricity Regulator (NER) requires the charging of a fair tariff for all consumers, whether residential or commercial/industrial. Thus residential users over the last few years have seen higher increases in their tariffs compared to commercial and industrial users in order to level the field and to create a fair tariff policy. This should also help to encourage commercial and industrial investment within our municipal area.
In a Discussion Document entitled "The State and Social Transformation", the ruling party said in part:
"The most important current defining feature of the South African democratic state is that it champions the aspirations of the majority who have been disadvantaged by the many decades of undemocratic rule. Its primary task is to work for the emancipation of the Black majority, the working people, the urban poor, the rural poor, the women, the youth and the disabled. It is the task of this democratic state to champion the cause of these people in such a way that the most basic aspirations of this majority assume the status of hegemony which informs and guides policy and practice of all the institutions of government and state.
"However, there is a need to recognize that the South African democratic state also has the responsibility to attend to the concerns of the rest of the population which is not necessarily part of the majority defined above.
"To the extent that the democratic state is objectively interested in a stable democracy, so it cannot avoid the responsibility to ensure the establishment of a social order concerned with the genuine interests of the people as a whole, regardless of the racial, national, gender and class differentiation. There can be no stable democracy unless the democratic state attends to the concerns of the people as a whole and takes responsibility for the evolution of the new society."
Ever since the introduction of our system of developmental local government seven years ago, the Mogale City Local Municipality has been guided by these considerations in terms of the responsibility we have to ensure the fundamental social transformation of our city. The above excerpt has served to remind us that unless we attend to the concerns of the people as a whole and take responsibility for the evolution of the new society, a stable democracy will just be a pipe dream. So as we accelerate towards to achievement of 10 years of developmental local government, we table this Budget and IDP fully mindful that it concerns itself with the aspirations and desires of the city's people as a whole.
CONCLUSION
Madam Speaker in conclusion I wish to state that this Budget Speech represents as an Executive Summary of our city's 2007/2008 to 2009/2010 Financial Years Budget and captures only key factors. Details are distributed with the Budget Report and it is presumed that all members of this Council have acquainted themselves with details thereof.
On behalf of the people of Mogale City, I move that the Budget of Mogale City Local Municipality for the year 2007/2008 to 2009/2010 Financial Years be approved.
I thank you.
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Mayor Koketso Calvin Seerane
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