Madam Speaker, Clr Patricia Kumalo;
Executive Mayor of the City of Ekurhuleni, Clr Mondli Gungubele;
Chief Whip of Council, Clr Robert Mashego;
Chair of Chairs and the Chairpersons of committees
Members of the Mayoral Committee;
Leaders of All Political Parties in Council;
Honourable Fellow Councillors;
City Manager, Mr Khaya Ngema and the Senior Management of the Municipality;
The Leadership of Business, Labour and Civil Society
Fellow residents of Ekurhuleni
Distinguished Guests
Members of the Media;
Ladies and Gentlemen;
I am humbled by the opportunity to once more present the Medium Term Revenue and Expenditure Framework for the period 2014/2015 to 2016/2017 under the leadership of the honourable Executive Mayor, Councillor Mondli Gungubele. Of note is that this budget is presented in a year in which we are celebrating 20 years of a democratic government. The democracy we are enjoying today represents the will of the South African people, who came out in numbers on the 7th of May 2014 and re-affirmed their commitment to this country’s much hailed democracy.
They have, for the 5th consecutive time endorsed the ANC as the preferred leader of society and a party they believe to be capable of moving South Africa forward, through socio economic development.
In addition to the gratitude expressed by our National and Provincial leadership, as a city we also add our voice in thanking all voters who exercised their human right and citizenry responsibility. We further thank them for endorsing our realistic and achievable manifesto commitments for the next five years.
Madam Speaker, in these 20 years we have utilised the limited municipal resources to improve the lives of our people. Most importantly and through working together we have restored human dignity. In the State of the City address the Executive Mayor accounted in detail on our tangible and transformative services delivery track record.
Executive Mayor, during the State of the City address you narrated the story of Joe the White Afrikaner who was in love with a Tswana lady named Tshidi and whose story confirmed that our city has made tremendous progress. I am certain that the majority of our residents can also attest that Ekurhuleni is indeed a much better place than it was before 1994. Be that as it may, we are the first to admit that much more still has to be done towards 2016 and beyond.
Given the good story of 20 years of service delivery, we have thus crafted a budget with the following view:
* To continue providing sustainable services, with much more improved quality;
* To accelerate the broadening of services to areas where there is none; and
* To ensure that our city’s outlook enables us to be a preferred destination for growth and development
Today’s budget presentation is indeed a continuation of a journey that seeks to accelerate social, economic and infrastructure development. In his budget speech the former Minister of Finance, honourable Pravin Gordhan stated that “political emancipation is just the beginning of our journey towards justice and equality. In exercising the responsibilities that flow from democratic participation, we have the opportunity to create a better future for all”.
Judging from this, it is clear that our plans for the period ahead are anchored on transformation imperatives that will accelerate growth, create work opportunities and build a more equal society.
Fellow Councillors, Distinguished Guests
Our budget modelling continues to improve with much more and notable alignment with the Integrated Development Plan (IDP), a product of public participation. This maturing budget model is not only limited to responding to Ward priorities, but to the City’s developmental strategic priorities underpinned by the following:
*Broadening of basic services as our core area of focus,
* Intensification of job creation activities as one of the building blocks of a liveable city including support for the development of youth, women and people with disabilities,
* Development of a more efficient and competitive Infrastructure through our flagship projects,
* Good governance and clean administration and
* Social cohesion in pursuit of a prosperous city.
Madam Speaker, allow me to demonstrate an example of the power of public participation. During the 2013/2014 IDP-BUDGET consultation process, residents of Kwa-Thema Extension 5 raised the electrification of their area as a priority. As a result we integrated the need into the IDP and the area was electrified. During the 2014/2015 consultation process, we subsequently received a letter from the same community expressing their appreciation for being a listening and delivering municipality.
This is just but one of the demonstrations that our budgeting processes are certainly informed by the will of the people.
Furthermore, our budget gives expression to and supports the national outcomes as adopted by national government. This is contained in our institutional performance management as per the Service Delivery and Budget Implementation Plan targets.
In taking our city forward, we remain committed in pursuing the mandate given to us by the electorate in 2011, that of:
* Building local economies to create more decent employment and sustainable livelihoods
* Improving on the performance of our local public services and broadening of access to services
* Building social cohesion in pursuit of prosperity and to have safer communities
* Promoting more active public participation and
* Ensuring more effective, accountable and clean local government
For us to have a capable and prosperous city we cannot ignore the bold call by the Growth and Development Strategy 2055 (GDS 2055). We are practically Re-Urbanising, Re-Industrialising, Re-generating, Re-Mobilising and Re-Governing our city. Let me take this opportunity to assure the house and the community of Ekurhuleni that the GDS 2055 is one of the pillars in our budget planning.
In our commitment to ensure that Ekurhuleni moves forward with the rest of South Africa, we also took into cognisance the imperatives of the National Development Plan (NDP). The plan lays a foundation for long term planning in pursuit of the radical socio-economic development of our country.
In this regard, our municipality will continue to embrace the plan particularly on the following aspects:
* Improving infrastructure that is poorly-located, inadequate and under maintained.
* Re-Industrialisation of our very own economy through revitalisation of manufacturing sector through the alignment of incentive initiatives such as the Manufacturing Competitiveness Enhancement Programme (MCEP) and speeding up the roll-out of the special economic zone incentive.
In the main, we embrace the NDP taking into consideration its critical objective of reducing poverty, increase employment opportunities for sustainable livelihood and to bring down the current levels of inequalities. The plan also guides our focus development in support of the national discourse.
THE 2014/15 BUDGET OVERVIEW
Socio Economic Outlook
Whilst our economy has shown resilience in the wake of recent economic difficulties, it was and still not immune from the consequences of instable global economy. Like the country’s economy, the City of Ekurhuleni’s economy is still characterised by slow economic growth. Despite our skills, job creation as well as economic empowerment initiatives, the unemployment rate remains a major concern, particularly the 36.9 per cent youth unemployment.
In response, our employment, training incentive schemes, empowerment in infrastructure and extended public works programme must target youth.
Working together with small and large businesses in various aspects of the economy we will radically change our economy.
Madam Speaker
According to the South African Cities Network State of the Cities Report the City of Ekurhuleni is part of the five largest Metros that accounts for 60% of the national economy. With just this fact alone, it is clear that the success of our city is critical to the national economic development and social well-being of our communities.
The Ekurhuleni Metropolitan Municipality has a duty to broaden opportunities for those who do not have secured income, formal jobs, houses, electricity, water and access to health care. We must create opportunities for growth so that those of our people who are most vulnerable and disadvantaged can say this economy is working for them.
In our quest to intensify job creation we clearly understand the important role of small business and the need to support that sector. That is why amongst others, the reviewed targeted procurement policy covers the promotion of local content in order to increase participation of smaller enterprises and co-operatives. Our intention is to realise 75 per cent procurement of local content.
In addition, we will also consider protecting well located public spaces for small businesses in support of our developmental growth path. As we unlock economic opportunities, it is fundamental that small business be integrated in the strategic land parcels programme whose objective is to promote investment and economic growth.
The intention is to package land for development depending on the nature and form of investment. Through this we intend to change the spatial landscape and optimise urban development through strategic partnership with the private sector. The desired outcome is centred on growth and job creation, densification of our city and to support industrial development.
Financial Overview
The conservative approach strengthened our financial position which enables us to meet our obligations for more than two months. We intend to sustain and improve our financial position.
Since 2011, we have accumulated just under R1 billion reserves to fund future replacement of the infrastructure requirements and we intend building sufficient reserve to maintain our infrastructure.
The recent rating by Moody’s Credit Rating Agency, maintained a Aa3.za credit rating which indicate low exposure to credit risk for servicing long term debt and the best ability to pay our short term debt.
Medium Term Revenue and Expenditure Framework
Our revenue is R85 billion which is made up of R28 billion in 2014/15 representing an increase of 5.7 per cent year on year. The main contributors to the R28 billion are:
* R4 billion from assessment rate
* R12 billion from electricity sale
* R1 billion from refuse collection
* R4 billion from water and sanitation
* R5 billion from government grants
* R2 billion from other revenue
Proposed Tariff
In ensuring that we continue providing sustainable services, we are proposing the following tariff increase:
* 0 per cent increase on cemeteries and recreational halls
* 7.5 per cent on assessment rates;
* ESKOM’s national tariff increase is 8.06 per cent, however Ekurhuleni is absorbing at least 1.3 per cent of ESKOM charges by only passing the increase of an average of between 6.3 per cent to 7.6 per cent on electricity.
* 8.1 increase increase on water for both residential and business which is the same increase by Rand Water.
* 8 per cent on sanitation for both residential and business.
* Refuse removal increase ranges between 2.4 per cent to 7.1 per cent for residents and 6 per cent for business.
Factoring these proposed tariff increases, the average increase on an accounts will be about 7.3 per cent compared to the 9.3 per cent average increase in 2013/2014 budget. This is a clear demonstration that we are committed in providing affordable services and to broaden access.
SOCIAL SUPPORT PACKAGE
In view of the proposed tariffs, the municipality will provide the following social package relief:
* The first R150 000 on property value is exempted from assessment rates
* For pensioners, an additional rebate for property assessments ranges from 10 per cent to 100 per cent.
* Churches and NGO’s are exempted from assessment rates
* All households will still enjoy 6 Kilolitres of water and sanitation service for free.
* We will continue to give an additional incentive of 100 Kilowatts of free basic electricity to low end users
INDIGENTS
The people of Ekurhuleni will be pleased to know that we have allocated just under R800 million, therefore all our registered indigents will continue receiving the following services:
* 100 per cent rebates on assessment rates
* Free 9 Kilolitres of water
* Free 9 Kilolitres of sanitation
* Free refuse removal
* 100 Kilowatts of free basic electricity and
* Free burial
Madam Speaker,
Allow me to make a clarion call to all our people who qualify for indigent’s packages to come forward and register so that they also can benefit from this package.
In our continued effort to build social cohesion, R17 million has been set aside for the Grant in Aid programme.
Madam Speaker,
All of these we provide in understanding the city’s current socio-economic conditions. The ANC led municipality will continue being a caring government with special attention accorded to those who are underprivileged. This is what we have been advancing in these 20 years of a democratic government.
Based on National Treasury assessment during May 2014, Ekurhuleni remains the most affordable metro to live in, at an average household bill of R1,265 per month with the highest being R1,626. Ekurhuleni is still below the average of all the metro’s which is R1,472 per month.
Honourable Councillors, Distinguished Guests
We remain very concerned by the fact that we are still collecting below our target of 93 per cenet, whilst there is high capital pressure for service delivery. However, through the implementation of the revised revenue protection and enhancement project, we will continue with the battle of improving on collection. The elements of the project include amongst others:
* Further intensify awareness campaign through Siyakhokha Siyathuthuka
* e-Siyakhokha registration drive to maximum exploitation of E-service platform to improve revenue collection.
* We will apply aggressive credit control measures to recover outstanding debt. Critical to this campaign will be government departments, business and all those residents who can afford to pay.
* The other critical aspect is that of engaging into public private partnership to eradicate the unacceptable levels of water losses and to progressively install meters where stands are unmetered.
* We will re-open the interest waiver scheme on outstanding accounts for business and residents.
EXPENDITURE FRAMEWORK
Our expenditure is R85 billion which is made up of R28 billion in 2014/15 representing an increase of 5.7 per cent year on year. The main contributors to the R28 billion are:
* R10 billion for Bulk Water, Electricity and Sewer
* R2 billion for repairs and maintenance
* R5 billion for personnel costs
* R1 billion for bad debt provision
* R2 billion for depreciation
* R8 billion for general and grants expenditure
Our expenditure increase of 5.7 per cent is in line with the inflation. However we strive to contain our operating costs by focusing on the following cost elements:
* Consultancy and legal fees
* Uncontrolled overtime
* Printing and production of t-shirts.
In addition, we will be implementing full strategic sourcing and entering in long term contracts and centralise the procurement process. This is necessary if we are to be a financially resilient institution. We will on a regular basis track the pattern of cost drivers.
CAPITAL INVESTMENT
Ekurhuleni will be investing R12 billion over the Medium Term Revenue and Expenditure Framework period which is informed by our capital investment framework (CIF). R3.6 billion has been allocated for urban restructuring, R4.8 billion for upgrading and renewal and R3.6 billion for economic development.
Madam Speaker, our long term infrastructure investment is projected to be R85 billion and this will be funded through our long term funding strategy to be tabled in Council in the next few weeks.
Our current spending pattern is a point of concern. It is the responsibility of both the political and administrative heads to ensure that we spend as per the Service Delivery and Budget Implementation Plan (SDBIP) targets.
In the previous budget speech I made a call that there must be consequences for none spending as this impact on the acceleration of service delivery and economic growth of the city. In this regard, failure to spend will result in no compensation for performance bonuses.
In terms of Cash flow management, we will initiate quarterly budgeting and cash flow management as part of driving capital expenditure.
Our Capital investment of R12 billion will be spent in the following manner:
TRANSPORT, ROADS AND STORMWATER
R4 billion allocated on transport, roads and stormwater. The main investments are:
Transport
* R1.7 billion (R441 million 2014/2015) for the Integrated Rapid Public Transport Network of which construction has commenced.
* R173 million (R93 million 2014/2015) for the construction of intermodal transport facility in Germiston in support of PRASA, Taxi ranks such as a new Natalspruit Hospital, Bluegumview, Palm Ridge
* R80 million (R40 million 2014/2015) for the replacement of municipal buses
Roads and Stormwater
* R379 million (R135 million 2014/2015) for continued rehabilitation of roads
* R259 million (R78 million 2014/2015) for roads infrastructure in the low cost housing areas
* R171 million (R63 million 2014/2015) for the construction of tertiary roads
* R280 million (R100 million 2014/2015) for stormwater upgrades
ENERGY
R1.9 billion will be spent on electricity network infrastructure, main projects are:
* R102 million (R26 million 2014/2015) for increasing the provision of public lighting covering street and 72 high mast lighting.
* R491 million (R161 million 2014/2015) towards corporate electrification.
* R228 million (R47 million for 2014/2015) for the installation of protective structures and pre-payment meters to prevent electricity theft, vandalism and for safety.
* R852 million (R92 million) for substation and to minimise network downtime and unnecessary electricity outages.
WATER AND SANITATION
R1.3 billion will be spent on water and sanitation network infrastructure, main projects are:
* R450 million (R150 million 2014/2015) water loss programme
* R284 million (R100 million 2014/2015) upgrading water networks
* R66 million for human settlements essential services
* R9 million in respect of emergency water and sanitation services to informal settlements
HUMAN SETTLEMENT
Ekurhuleni is geared for the full accreditation of providing houses to the residents. R4.3 billion will be added to Ekurhuleni’s capital investment programme as soon as the full accreditation is assigned.
R1.2 billion will be spent:
* R102 million (R7 million 2014/2015) for land acquisition
* R182 million (R94 million 2014/2015) for development of social housing and upgrading of Council rental stock
* R467 million (R102 million 2014/2015) urban renewal, this will include among others Tembisa, Germiston
* R250 million (R80 million 2014/2015) for mixed use housing development
REAL ESTATE
R891 million (R266 million 2014/2015) is allocated for development and renewal of public facilities such as densification of Council buildings, Germiston Civic Precinct, upgrading of community parks and cemeteries.
COMMUNITY SAFETY
R661 million (R235 million 2014/2015) is set aside for the safety of our residents.
Ekurhuleni Metropolitan Police Department (EMPD)
* R66 million (R14 million 2014/2015) for the construction and upgrading of Benoni, Edleen, Tokoza, Tembisa and Kempton Park Precinct.
* R186 million (R92 million 2014/2015) for additional vehicles.
Disaster and Emergency
* R174 million (R57 million 2014/2015) for fire stations, this will cover among others Albertina Sisulu Corridor, Duduza, Kwa–Thema, Germiston, Thokoza and Katlehong.
* R96 million (R29 million 2014/2015) for specialized vehicles
INFORMATION AND COMMUNICATION TECHNOLOGY
R556 million (R177 million 2014/2015) is allocated:
* R274 million (R78 million 2014/2015) towards the digitising of Ekurhuleni, providing youth with broadband connectivity.
* R276 million (R97 million 2014/2015) allocated for the system enhancement such as network and server
ENVIRONMENTAL RESOURCES MANAGEMENT AND WASTE MANAGEMENT
R512 million (R138 million 2014/2015)
Environmental Resources Management
* R18 million (R6million 2014/2015) towards rehabilitation of Payneville Ext 3,Boksburg Lake, Natalspruit Catchment and degraded Wetlands
* R12 million (R4 million 2014/2015) for upgrading the Ambient Air Quality Monitoring Stations
Waste Management
* R238 million (R63 million 2014/2015) for the upgrading of the Simmer & Jack and Platkop waste fill sites as well as and other public offloading facilities.
* R114 million (R49 million 2014/2015) for waste removal trucks
HEALTH AND SOCIAL DEVELOPMENT
R423 million has been allocated of which R329 million will be for construction and upgrading of the clinics in the following areas among others Villa Lisa, Dukathole, Selope Thema, Esangweni ,Tsietsi, Chief Albert Luthuli, Crystal Park, Khumalo, Motsamai and Bonaero Park
SPORTS, RECREATION, ARTS AND CULTURE
We have allocated R330 million (R122 million 2014/2015):
* R161 million (R46 million 2014/2015) for the construction and rehabilitation of sport, art and other recreational facilities. It includes among others Duduza, Tembisa, Zonkizizwe, Eden Park and OR Tambo Precinct Narrative Centre
* R30 million (R20 million 2014/2015) towards the construction of Germiston Theatre
* R63 million (R31 million 2014/2015) for the construction of new libraries in Tsakane and Brakpan as well as rehabilitation of other libraries.
CITY PLANNING AND ECONOMIC DEVELOPMENT
We have allocated R174 million (R63 million 2014/2015) to spearhead planning and to facilitate the City’s economic development, growth and job creation. The following form part of the broader economic development trajectory:
* The Integrated Aerotropolis development,
* Utilisation of strategic land to increase investments,
* Facilitation of Extended Public Works Programme and increasing public and large scale private sector investment through efficient investment facilitation processes
Part of the total budget has been allocated as follows:
* R48 million (R13 million 2014/2015) has been allocated for the refurbishment of Springs Fresh Produce Market
* R40 million (R10 million 2014/2015) will be invested towards the development of township economy
* R18 million (R8 million 2014/2015) towards township enterprise hubs
* R25 million (R11 million 2014/2015) for township industrial parks
The investment will be used towards skills development programme and the mainstreaming of small business as well as co-operatives into economic opportunities, all of which must largely target youth, women and people with disabilities. A piece of exciting news in this regard is that we have allocated R120 million for skills development and bursaries.
Our people will be pleased to know that we shall continue with the Lungile Mtshali Community Development Programme as part of closing service delivery gaps, improving social urbanisation and job creation. In this regard we are allocating R330 million towards this program. We must derive value for money out of this programme. The choice we make in respect of Ward projects must be informed by the ideology of bringing positive change in the infrastructure in our communities.
CUSTOMER RELATIONS MANAGEMENT
The manner in which we interface with our communities is important for the image of our municipality. This requires professionalism and customer relations facilities that are properly resourced. In response to this we have allocated R60 million of which R44 million relates to 2014/2015. R33 million for upgrading and construction of Nigel, Tembisa1 & 2, Vosloorus, Benoni, Brakpan, Boksburg, Germiston, Kempton Park, Daveyton and Springs customer care centres. An additional R25 million is allocated for Unified Command Centre.
CONCLUDING REMARKS
Our 20 years journey of democracy has not only been characterised by the attainment of political freedom, but also the acceleration of services delivery. Having worked together with our communities, today we pride ourselves for having changed their conditions and must continue to do so.
Ekurhuleni municipality has within the 20 years invested so many billions towards the betterment of our people and that is why today our people affirm that Ekurhuleni, like South Africa, is a much better place than it was in 1994. As this municipality we will in our outmost best continue to serve the residents of our city.
We remain strongly committed to the principles of accountability, transparency, anti-corruption, proper financial management and effective internal control systems.
The journey of fast tracking socio-economic development continues and we invite residents to rally alongside. At the centre of this journey is the creation of jobs for sustainable livelihood, reduction of poverty levels, closing down inequalities and building a capable, developmental, cohesive and prosperous city. Through our continued partnership with community members, business sectors, religious and other stakeholders we are capable of moving our city forward.
I wish to thank you, members of this august house, various office bearers as well as the City Manager and Senior Management of our city. Let me make a special mention of our budget team led by the Group CFO and the budget steering committee members for the great work of putting the budget together under immense pressure in terms of time.
We further thank our strategic stakeholders and communities for their active role during the consultation processes.
It is through our collective wisdom and unity of purpose that we can serve our communities much better.
In closing let me borrow your quote from the State of the City Address Executive Mayor:
“These are the humble steps to account on our efforts to re-inforce, entrench and consolidate conditions of perpetual maturation since it is the only way our dream of a common destination as South African Humanity can be realised. This is the cause of which great men and women of our country, regardless of colour or creed, made sacrifice. This is cause for which our generation cannot afford to fail.”
With these words – Madam Speaker, I hereby table the budget and related budget policies.
I thank you,
