Speech by Alderman Ian Neilson, Executive Deputy Mayor
Budget debate, 28 May 2012
Mr Speaker,
The Mayor has addressed the broad themes of this budget and the some of the
key numbers. Broadly, the city continues to focus on the provision of basic
services to all our citizens and that which is required to enhance economic
growth. Thus sustainable and improved water, sanitation, electricity and
refuse removal for the whole city remains a top priority. The key issues of
connectivity which address the integration of the city and improved economic
activity also have a high priority. Thus the Integrated Rapid Transit System and
the Broadband project are high on the list of priorities.
Putting a budget together in order to drive our objectives is the place where
we face the realities of resource limitation, the impact of prior decisions and
the need to limit future risks.
Key internal drivers include that our salary budget is around one third of the
total budget. Over the past 5 years, that budget has grown much more than
the rest of the city budget, due to salary settlements at the national local
government bargaining council. This growth in salaries is putting pressure on
the remainder of the budget and limiting our options for delivery. At this point
we do not know what the increases will be for the coming financial year, as the
bargaining process is still underway.
We have allowed for a 7% increase in our salary budget, excluding notches.
Should the salary settlement come in above that level, the City will have little
option but to reduce the number of posts. But as the City needs to grow the
number of posts in order to better service a growing population, we actually
need the salary settlement to be lower so that we can staff new libraries and
other facilities. Elsewhere in the organisation, we require better productivity
from all the staff so that they justify the above-inflation increases they have
received over the past 5 years.
These salary numbers have now become one of the key drivers in the increase
in property rates and service tariffs.
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Mr Speaker, another key area where the city is facing a strong push that is
finding its way into above-inflation tariff increases, is in the Water and
Sanitation Department. The City has very successfully, for over a decade,
managed to delay the implementation of the new major water supply scheme.
Water demand management measures, leak reduction, pipe replacement and
pressure reduction measures have limited the growth in demand for water.
But we can no longer delay the project to bring water from the Berg River Dam
into the city’s water system. This is a major project of a treatment plant,
major, long distance pipelines and storage reservoirs, which will cost the City
some R1.7 billion over the next few years.
While we understand the impact that tariff increases have on household
pockets, it is essential that the income streams for the Water department are
enhanced to ensure that the system upgrades can be afforded. We do not
want to leave the next generation with an Eskom-type scenario, where
decades of popular low increases drive towards a crisis where excessive tariff
increases are required to prevent failure of delivery. While we are mindful of
the needs of the current generation, we also do not want to leave
intergenerational problems.
Mr Speaker, since the tabling of the budget and draft IDP by the Mayor at the
end of March this year, there has been a period of consultation involving the
public and Councils’ portfolio committees and subcouncils. The budget
committee has considered these inputs and has in many cases made changes
to the budget where the responses have been of value.
From the public input, we have especially made changes to detailed tariffs.
Submissions from organisations and individuals representing body-corporates
have claimed horizontal inequity between tariffs for domestic single residential
and domestic cluster developments. We have thus adjusted both the water
and sanitation tariffs for Domestic Cluster to bring it closer to that of our
Domestic Full tariffs. In subsequent years we will look to amalgamation of
these tariffs.
We have also made a small change to the Domestic electricity tariff to enable a
future move towards amalgamation of this tariff with the Life-line tariff.
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We have also made changes to the electricity Net-metering tariff due to the
numerous submissions received on this tariff. The City does not yet have any
customer on this tariff, which is for those wishing to generate electricity where
they would feed surplus energy back into the city’s system. This innovative
area will require considerable further attention in the years ahead.
One organisation complained that we had not highlighted the 10% levy that
the city places on electricity sales. This is an established levy that has been on
place since the formation of the new City of Cape Town in 2000. Our practise
is to generally only highlight where changes have been made. This levy is an
important source of income and diversifies our income sources to ensure
broad contribution to the costs of running the city from all its citizens who can
afford to pay.
Input from the portfolio committees was primarily around the capital budget.
We have accommodated most requests where these have not changed the
overall budget requirement as well as a marginal additional expenditure on EFF
where imbalances were shown, such as in the Safety and Security Directorate,
where the capex provision is excessively low compared to their operating
expenditure.
The major change between the draft and final budget has been the addition of
a further R500 million capital provision of the IRT project in the coming year so
that the City can accelerate the roll-out of this project to the South East of the
city. This is towards the fulfilment of the undertaking that the DA gave during
the election campaign, and will be more fully addressed by my colleague, the
Mayco member for Transport.
Mr Speaker, as we constantly drive to improve services in the city, so that the
economy can flourish and provide jobs to our citizens, so that social stability,
inclusion and progress is obtained, so that we can all go about pursuing an
active and fulfilling life in safety, we have to be constantly mindful of the costs
to our citizens. It is essential that in all areas of the City organisation that
improved productivity is attained to that citizens get the best value for money.
This is also critical so that we can continue to afford the high level of free
services to the poorer citizens that we are fortunately able to afford. Only
economic growth will enable us to make progress. This City government has
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set its vision for its term-of-office, as detailed in the IDP before Council today
for adoption. That in turn is a reflection of the undertaking that we gave to the
public in our election manifesto.
We intend to drive that to success, and this budget is but an initial step down
that road. We will succeed and make this great City even greater.
Thank you very much.