Speech by the Executive Mayor of Cape Town,
Alderman Patricia de Lille on the occasion of the
presentation of the City’s draft budget for the
2013/14 financial year on Wednesday, 27 March
2013
Good morning, goeiedag, molweni,
Mr. Speaker,
One of the great challenges of public administration in a democracy is
managing the ambitions of government with the realities of the world.
Governments, such as this one, often have expansive policy agendas that
seek to lead major stakeholders in society to transform critical
components of their socio-economic realities.
Those agendas, however, are bound by the possibilities of the resources
that are available to governments at any given time.
It is this relationship, between the aspirations of our ideals and the
practicalities of our lived experience that is the real life force of all
governments that aim to serve their people.
But this relationship does not need to be seen as a tension.
Instead, it should be seen as a dynamic exchange, one where we are
always testing the limits of what is possible and constantly raising the bar
of our own capabilities.
In so doing, we also raise the expectations we place on ourselves.
And it is in those high expectations that we find excellence in service
delivery.
Mr. Speaker, in keeping with our commitment to excellent and public
service, I will be tabling the draft budget for comment today.
It is this budget that provides the framework for managing the resources
that will work towards delivering the kind of public policy agenda this
government has committed to.
As this Council will appreciate, the draft budget will be tabled during
trying economic times.
While there are indications of slow recovery internationally, in some
markets more than others, our country is still experiencing sluggish
growth due to our high exposure to markets that were most adversely
affected by the recent financial crisis.
Furthermore, within our own borders, we have suffered low rates of
foreign direct investment and a level of disinvestment in certain key
sectors, factors which have combined to create a pressure in terms of
consumer power, savings potential and an increased demand on social
spending.
Indeed, according to the Bureau of Economic Research, GDP growth is
expected to drop to 1,6% in 2013, with the Consumer Price Index
projected to remain at the upper end of the 3% to 6% range due to the
costs associated with food, petrol and energy.
At the level of funding allocation, even though we have the Census figures
from 2011 available, metro municipalities find themselves with a lower
portion of the Equitable Share allocated by the national government
according to division, with a new formula that, for developmental reasons,
favours increased proportional allocations to poorer municipalities.
Therefore, while our equitable share rose, it did so in a new formula that
does not favour allocations to metros.
This portion should also be read with standard increases that are beyond
the City’s control, such as the rate of increases for salaries and wages
which are determined nationally and rates of interest on City borrowing,
we are bound by the regulations of the Municipal Finance Management
Act and the circulars on local government budgeting issued by the
National Treasury.
We believe that we have fully complied with all of the requirements of
these frameworks.
Indeed, as per National Treasury Circular No. 66, we have cut down on
non-essential activities such as: catering, public relations exercises, travel
and the use of consultants.
We have found further savings by reducing the number of vacancies by
R46 million on our staff budget, thereby streamlining the organisation for
delivery.
Within this context, we have been able to focus on certain key strategic
priority areas that are in line with our stated intention as a City to help
drive economic growth, development and inclusion.
Mr. Speaker, let me emphasis that this proposed budget is completely in
line with our City’s Integrated Development Plan (IDP) and the
programmes and projects built around the five pillars of the IDP: the
opportunity city; the safe city; the caring city; the inclusive city; and the
well-run city.
We are at all times conscious off the need to ensure that we provide all
possible assistance to the poor and the vulnerable and this is clearly
reflected in our spending priorities.
These include an expanded roll-out of the broadband network, to facilitate
connecting people in the metro and assisting in economic development. It
receives just under R20 million in Operating Expenditure (Opex) and just
over R84 million in Capital Expenditure (Capex).
Land acquisition for the purpose of housing provision has a proposed
allocation of just over R46 million in capex.
EPWP, which provides work opportunities for those most in need in the
city, will receive just over R150 million in opex. This is an unprecedented
funding commitment by the City and one which will have a material
impact on the lives of thousands of poor and vulnerable citizens.
Electrification of informal settlements has a proposed allocation of just
under R130 million.
Backyarders and janitorial services will receive R29 million in terms of
opex and just over R57 million in water and solid waste services. This
allocation will continue to rise over the MTREF and is indcaitve of our
commitment to delivery on our electoral mandate and to improve the
quality of life of a substantive section of our population.
The Mayoral Urban Regeneration Programme, which seeks to unlock the
economic potential of mini CBDs throughout the City will receive R17
million in opex and just over R44 million in capex.
Redress projects in previously disadvantaged wards will receive just over
R10 million in opex.
Planning, development facilitation and economic incentives for business
has a proposed allocation of just over R128 million in opex and just under
R3 million in capex. This with a view to ensure that we streamline our
planning processes through the use of improved technology and increased
capacity.
We are investing in human capital through an allocation of just over R 15
million in opex for Skills development..
And the IRT system, one the of the City’s flagship infrastructure projects
and one which is critical to the future prosperity of Cape Town has a
proposed R157 million in opex and just over R853 million in capex.
Mr. Speaker, these figures give some sense of the proposed balance
between opex and capex that we are placing before the Council today.
For almost seven years now, the City has been a national leader in terms
of its provisions for infrastructure and long-term spending as represented
by the capital budget. South Africa generally and our cities in particular
face a generation’s worth of backlogs in terms of maintenance of existing
infrastructure and the provision of new facilities.
This backlog has been identified by numerous sources, including the
World Bank and United Nations Development Programme, as being a
major obstruction to economic development, particularly in developing
countries.
I am pleased that, as the African continent is seeing something of an
economic revival with infrastructure provision in recent years, Cape Town
remains in the lead at a national and regional level in terms of the outlay
of public funds for infrastructure.
As such, we are physically building the economic enabling environment in
which investment grows and jobs are created.
In that regard, Mr. Speaker, we propose that of a budget totalling R31,8
billion, that R26,4 billion is allocated to operating expenditure and R5,4
billion is allocated to capital expenditure.
That is a split of 83% for opex and 17% for capex.
Within that spending, we have continued our commitment of support to
poor people through indigent grants. This includes the Free Basic Services
Package and rates rebates for indigent households, the elderly and the
handicapped and certain types of organisation such as churches and other
places of religion.
To deal with the proposed spending by directorate vote for the 2013/2014
financial year in the three year Medium Term Revenue and Expenditure
Framework, we propose that just under R1,4 billion is assigned to
Community Services for opex and RR223 million for capex. Such spending
will help us build an inclusive city where people come together to use
shared facilities and amenities.
It is proposed that R1,5 billion is allocated to Corporate Services for opex
and just under R264 million for capex. This will go a long way to ensuring
that the administrative structure that allows us to deliver a well-run city is
adequately resourced.
Economic, Environmental and Spatial Planning will receive a proposed
opex budget of R495 million and capex of just over R66 million. This will
allow us to plan for and respond to the kind of urban space that
accommodates ever-changing population and economic needs.
It is proposed that the Finance Directorate will receive R1,8 billion in opex
and just under R11 million in capex. These funds will enable us to
maintain a level of financial support in the City that has come to be
accepted as the national gold standard.
City Health will receive just over R800 million in opex and just over R23
million in capex to continue to provide a comprehensive environmental
and primary health care service for the entire city, especially catering to
those most in need of assistance.
It is proposed that just under R1,2 billion is allocated to Human
Settlements for opex and just over R600 million for capex. These
allocations will help us build the kind of integrated communities that are
the answer to overcoming the spatial legacy of apartheid.
The Office of the City Manager will receive just under R15 million for opex
and just over R200 000 for capex, spending that goes to support the
administrative and compliance nerve centre of the organisation.
The Office of the Deputy City Manager will receive just over R700 million
in opex and just under R50 million in capex , funds that will enable this
directorate to continue with our transversal approach to integrated
service delivery and project planning.
Safety and Security will receive just over R1,5 billion in opex and just
under R41 million in capex to ensure that our residents live and feel safe
in the city.
It is proposed that Social Development and Early Childhood Development
receive just under R77 million in opex and just over R8 million in capex to
assist this relatively new directorate in fostering community development
and inclusion.
Transport, Roads and Stormwater will receive just under R2 billion in opex
just under R1,4 billion in capex. These funds go directly towards
maintaining the road network that is the foundation of our urban
geography and rolling-out the most expansive public transport system yet
seen in South Africa.
It is proposed that Utility services receive just over R13 billion in opex
and just over R2,7 billion in capex. This money goes directly towards
making sure that as many people as possible have access to clean water,
electricity, sanitation and refuse removal services.
Utilities is by far the biggest portion of the budget, which confirms our
commitment to ensuring that basic services continue to be delivered to all
and which further supports the operation and expansion of the city
economy.
And last of the votes, the draft budget proposes that Tourism, Events and
Marketing receive just over R500 million in opex and just over R26 million
in capex, which will ensure that our city remains the premier destination
for major attractions in the region in the year to come.
Mr. Speaker, in terms of tariff and rates figures, I believe that our
proposals will help off-set the potential difficulties the new formulas for
Equitable Share from national government might have had on our
residents.
Indeed, our average tariffs and rates increases have been calculated only
after we exhausted every plausible cost-cutting strategy at the corporate
level to minimise the financial burden on our residents.
Considering that rates and tariffs have different scale structures on a
block basis, which is done to ensure a basic allocation of free or
subsidised services to our poorer citizens, the proposed increases are
given in the form of averages.
For property rates, an average increase of 6,10%; for electricity an
average of 7,86%; for water an average of 9,53% and sanitation also an
average of 9,53%; for refuse, an average of 6,32%; and for disposal an
average of 7,06%.
Indeed, we have restructured electricity tariffs in terms of the expected
requirements of NERSA and we further propose an increase in free basic
electricity for households using less than 150kilowatt hours per month, an
increase from 50 kilowatt hours to 60 kilowatt hours per month.
Furthermore, we are also proposing a package of support for businesses
in Atlantis in order to protect jobs and grow job opportunities in the new
financial year. Specifically, an electricity tariff for Atlantis businesses is
proposed where the tariffs will remain constant at this year’s prices
without any increase. Consideration will also be given where appropriate
to the waiving of development contributions for the development of
industry and commerce in Atlantis.
Mr. Speaker, I believe that the average tariff increases, which have only
been agreed to after exhausting all other budgeting measures, will allow
the City to maintain a solid financial position to deliver to its residents
without unjustly shifting the majority of our financial or cost burden on to
the shoulders of the individual consumer.
In conclusion, I believe that are presenting Council with a draft budget
that speaks to our priorities.
It works towards unleashing the massive economic potential of this city
while focusing heavily on the needs of our poorer residents, a delicate
balance which I believe we continue to find.
It is the expression of a government that tries to push the limits of the
possible in its business every day.
While the resources we allocate here today may not completely empower
us to meet the ambitious goals that we have set for ourselves in terms of
our policy agenda, they represent the very limit of everything we
currently have at our disposal.
And so we will use these funds to immediately deliver what we can, ever
mindful of the fact that as we reach immediate deliverables, we will revise
the expectations we place upon ourselves ever upward.
Mr. Speaker, I table the draft budget for consideration and to mandate a
process of public participation.