30 May 2008

2008 Budget Speech presented by the Honourable Executive Mayor of Mogale City, Clr. Koketso Calvin Seerane of the Mogale City Local Municipality held at the Council Chamber, Krugersdorp Civic Centre, Mogale City

Speaker of Council: Councillor Noluthando Mangole;

In his 2008 Budget Speech, the Honourable Trevor Manuel, Minister of Finance shared these thoughts with us: “That we have to work together to overcome obstacles and achieve our ambitions is self-evident. That there is hard work ahead is equally clear. I would also wish to affirm that there is a place in this shared future for all of us – we are building an economy in which businesses can grow and prosper, in which productive work will be rewarded, in which community organisations have a place alongside government in delivering public services, in which there is respect and recognition of the skills, the talents, the diversity, the commonality that South Africans have in abundance. United in our diversity, with social solidarity as our rallying cry, we will work together to build a prosperous non-racial, non-sexist, democratic South Africa.

At the occasion of the Council debate on the State of the City address earlier this year, I thanked all councilors, irrespective of political affiliation, for the questions, comments and inputs, especially the many congratulatory words on the successes of the municipality over the past period.I made a statement there that at some point this municipality was referred to as a municipality in an Intensive Care Unit. I also said, as time went by, under our collective leadership, we got the municipality to walk on crutches. And now we are almost in good health. I am the first to accept that there are problems there is a litany of problems we must deal with, many huddles we must overcome going into the future. But it is certainly not doom and gloom. Although it is not a utopian environment where everything is hunky dory, there are many positives.

And so like Minister Manuel, we once again call upon all the people of this city to join hands in the quest to build this city. It will take our collective effort to achieve any meaningful growth for our city the City of Human Origin. The things that must and do occupy our minds are informed, properly so, by the needs of the people of Mogale City. These are contained in the ruling party's election manifesto of 2006. The things that we do, including the budget we are presenting this morning, are essentially about giving meaning to this manifesto. This budget is further informed by the city-wide roadshows we conducted to engage our people. Through these roadshows we were able to pick up issues which have been factored into this budget as far as possible. Some of the examples include streetlights, pot holes, Percy Stewart, just to name a few.

We have also engaged with the provincial government who can also assist us to realize some of our challenges. Their view, generally, is that our biggest challenge as the collective political and administrative leadership is to take the municipality to new heights. We think that this is spot on because as practitioners of development in local government we know that ours is not just about refuse removal and grass cutting. It is also about issues of economic and social development. We must be responsive to the needs of the people. We must do the things that will assist us to address unemployment, underdevelopment, homelessness and so on.

This, Madam Speaker, requires us to adopt a different approach to issues. It means that we must adopt policies and strategies that make it possible to succeed and take our rightful place in the community of vibrant cities. One of those is the ability to fertilize out city for investment attraction. We must continue to interact with business, reduce the cost of doing business in our city in line with our Business as Unusual motto. But policies and strategies alone will not be enough. Our mindset has to change. Decision making has to be both responsible and sensible, but prompt.

And so Madam Speaker, as I stood in front of you on the 4th of April 2008 to deliver the State of the City address, besides giving an account of what we have achieved, I also made commitments on further requirements in relation to our service delivery mandate to the citizens of our city. This is the same mandate referred to earlier, in a bid to better the lives of our people.

This Budget, together with the Integrated Development Plans tabled before this Council this morning, 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. We are conscious of the fact that these documents will not satisfy the needs of each and every one in our City. However, they are designed to satisfy the majority of the citizens of Mogale City.

In preparation of this budget all endeavors were made to ensure that it is guided by the needs of the communities we serve, as mentioned above. Furthermore, all endeavors have been made to comply with relevant legislation, namely: the Municipal Finance Management Act, Local Government Municipal Systems Act and all other relevant legislation.

Public participation is the cornerstone of our government. Both as politicians and administrators, we went to every single community engagement session to listen attentively to the needs and concerns of the people. The input given by communities during roadshows has been incorporated in both the Intergrated Development Plans and the Budget. We think that it is important to emphasize this point. It is something to be proud of because the people of our city never had things done this way. I am referring specifically to the period before the attainment of liberation in our country. We continue to refuse steadfastly to reduce the citizens of Mogale City to curious by-standers and continue to affirm them as actors on the governing stage.

So indeed, this Budget is a product of intense consultation. A public participation advisory forum lead by you Madam Speaker is one such tool that ensures consultative governance. The following are some of the things undertaken:

1.    As mentioned earlier, extensive roadshows were embarked upon in November and May 2008 in all the Wards to determine the needs of the communities;

2.    The schedule of the Key Deadlines for the Budget Preparation process was tabled in the Council meeting of  August 2007;

3.    The MFMA Implementation Steering Committee Chaired by MMC for Finance Councilor Farouk Bhayat continued to hold meetings in implementation of their oversight role on implementation of the Budget and ensuring compliance to legislation;

4.    The Draft Budget for 2008/2009 financial year was tabled in Council as required by the MFMA on the 30th March 2008; and,

5.    Further extensive community consultations took place between November 2007, April 2008 and May 2008.

I now turn to the budget:

OPERATIONAL BUDGET
The total operational expenditure budget proposed for MCLM as balanced to the total revenue forecasted for 2008/09 is R933, 087 million. This budget is R133 231 million (or17 %) above the Adjusted Budget for the current financial year (2007/08). The Original Budget as approved by Council for the 2007/2008 financial year is R 727 506 million which is R 205 581 million lesser than this proposed expenditure budget.

The Operational Expenditure per vote Allocations is made up as follows:

• Infrastructure Management 52% = R486 million
• Environmental Management 10% = R95 million
• Social Services 11% = R101.6 million
• Financial Management 13 = R117.3 million
• Corporate Support Service 6% = R57.2 million
• Economic Services 4% = R32.5 million
• Political Office Support 2% = R21.5 Million
• Municipal Manager’s Office 2% = R21.6 million

The Operational Budget per Expenditure Type is made up as follows:

• Employee Remuneration Cost 31% = R295 million
• Bulk Purchase of Water & Electricity 25%& = R257 million
• General Expenses 23% = R220 million
• Working Capital 9% = R82.7 million
• Repairs and Maintenance 5% = R51 million
• Depreciation 0.5% = R4.6 million
• Remuneration of Councillors 2% = R15.7 million
• Departmental charges 1% = R3.98 million

CAPITAL BUDGET
The Capital Budget is allocations with which visible service delivery can be attributed to. The total capital budget proposed for Mogale City Local Municipality for 2008/09 is R114,570 million.  This is R33, 610 million above the 2007/08 Adjusted Budget (42% above) and R23, 788 million above the current year’s Original Budget (26% above).

The amount of the Capital Budget is unlikely to be the final figure as we anticipate to receive additional funding during the year of which will be added to the current Budget through Adjustment Budgets.

The Details of Funding confirmed to date are as follows:

• R24 487 million from MIG (Municipal Infrastructure Grant) The amount gazetted for MCLM in 2008/09 is R42, 475 million. However 5% (R1,789 million) of this amount is allowed to be used for operational expenditure and R16 198 545 will be spent in the 2007/2008 financial year;
• R3, 051 million from Department of Minerals and Energy Affairs (INEP);
• R11, 650 million from the Gauteng Department of Social Development;
• R3, 240 million from the Gauteng Department of Housing;
• R30 million from a new capital long-term loan;
• R18, 606 million from the sale of land at Rangeview; and,
• R 23,536 million from surplus cash mainly anticipated from sales of Land.
• It should be noted that within this Budget Council approval will be sought to go onto the Capital Market to seek a Long Term loan of R30million for Infrastructural and Capital Expenditure.

• 9% or R10.9 million for Corporate Support Services
• 12% or R13.6 million for Social Services
• 3% or R2.9 million for Environmental Management
• 76% or R83.1 million for Infrastructure

The 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 Province, are shown in Schedule 3b of the Budget report.

The distribution thereof will be as follows:

• R28.7 million for Social Services;
• R350.5 million for Economic Services, specifically Housing; and,
• R10 million for Infrastructure, specifically Roads
• This translates into a total Out of Books Capital Expenditure of R389.2 million

The increases being proposed for 2008/09 are as indicated hereafter:
2008/09 Proposals

• Property Rates 8 %
• Electricity tariffs 15%
• Water tariffs 0-6 Kilolitres free
• 7-30 Kilolitres 8% stepped tariff
• 30 and above 10% stepped tariff
• Sanitation tariffs 8 %
• Refuse collection tariffs 8 %
• Other user charges 8%

National Treasury has not set growth parameters as they have done for previous financial years. However, National Treasury advises that municipalities are expected to levy their rates and tariffs taking into account their local economic conditions, affordability levels and remain broadly in line with the macro- economic policy determined by government. It should also be noted that the Property Rates will be based on the current valuation roll for 2008/09 with the implementation of the Property Rates Act taking effect for 2009/10 onwards.

Council needs to note that in the resolutions it is being requested to approve the tariffs for electricity now in order to get final approval from NERSA in time to implement the new tariffs at the beginning of the financial year.

We propose with this Budget presentation that the free basic water of 6 kilolitres that was given to all residents of Mogale City still be given free to all consumers in line with our drive to ensure that the poor enjoy the fruits of what it means to have a government of the people for the people. An increase of 8% on the stepped tariffs for consumption between 7-30 kilolitres in proposed whilst on consumption of 30 kilolitres and upwards the increase proposed is 10%. I need to point out that there is constitutional obligation on the municipality to provide free basic to all the residents. And therefore we could have taken a decision to provide this free water only to registered indigents. Legally, this would have been permissible. However, this would be contrary to our tried and tested agenda and commitment to the poor. So our approach is premised on the need to conserve a finite resource. If we are reckless and we allow the usage of water as we see today to continue, by 2030 we will have a major water crisis on our hands.

It is also said that traditionally wars have been fought over land and precious commodities such as oil. In future, this is said to be changing because predictions are that wars will be fought over things like water. So we are doing our bit as a city to put in our hand in a quest to preserve a natural resource which is already under pressure.

We propose with this budget a 15% increase on the electricity tariff which is the increase effected by Eskom in April 2008. It should be noted that Council has absorbed the additional increases from April until June when the increase will be effected by MCLM.

We further propose with this budget that any further increase that might be approved by NERSA in respect of the application by ESKOM to increase tariffs by the proposed 53.6% will have to be reluctantly passed on to the consumers.

A draft Rates Policy, in line with the Property Rates Act to be implemented for 2009/2010, is currently in process of consultation with stakeholders and will be tabled shortly at Council for approval.

Conclusion
Madam Speaker it is important to restate that I am privileged to present this Budget as a statement of collective municipal responsibility. Achieving this requires leadership and attention to detail. The detail is contained in Mogale City’s 2008/2009 – 2010/2011 Financial Years Budget, while this speech must be accepted as an executive summary as it captures only the important factors. Details are distributed with the Budget Report and it is presumed that all members of this Council have acquainted themselves with details thereof.

At the same occasion of the Council debate on the State of the City address earlier this year, I also took time to pay tribute to our predecessors – they had the presence of mind to say that this is Mogale City. It is not some dorpie in an obscure corner somewhere. This is key because reference to a city conjures in a mind vibrancy in terms of the community, the economy, images of hope and success. It is through this, in part, that we have been able to achieve the ideal of a R1 billion budget. We did say that this was not a pie in the sky. It has been achieved. So we must salute those that took the decision.

In conclusion Madam Speaker, allow me to call upon the wisdom of the President of the Republic of South Africa, Thabo Mvuyelwa Mbeki, who gave the annual Africa Day speech on 25 May 2008 and in part said: “Never since the birth of our democracy have we witnessed such callousness. We must view the events of the past two weeks as an absolute disgrace.” We want to add our voice, as we did throughout the past two weeks, that we are against this inhumane and misguided behaviour. It is behaviour we will not accept. My office has been working with communities in Munsieville, Tarlton and Kagiso, as well as with the Office of the Director of SAPS in our city and other stakeholders to send this message loud and clear: NO TO XENOPHIBIA!

With those words, I now move that this Budget of the Mogale City Local Municipality for the year 2008/2009 to 20010/2011 financial years be approved as recommended in the Budget report.

I thank you.

Kagiso Krugersdorp Magaliesburg Hekpoort Maanhaarrand Munsieville