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SPEECH BY HELEN ZILLE
MAYOR OF CAPE TOWN
TABLING OF THE DRAFT BUDGET 2008/2009
COUNCIL CHAMBER – 10H00 THURSDAY 26 MARCH 2008
Release: Embargoed against delivery
Councillors, City Manager, officials, members of the media and the public.
Welcome to our council meeting for the draft 2008/2009 budget.
I hope that you have had a chance over the Easter weekend to enjoy some time with
your families, and that you have taken the opportunity to rest.
I would also like to extend a special word of welcome to the delegation of senior
government officials, politicians and parliamentarians from Nigeria that has joined us
in the gallery today to observe this council’s proceedings. I hope that you will find
this an interesting experience.
At the same time, I would like to welcome today, Councillor Johnny Heuvel, and
congratulate him on his victory in the Macassar by-election.
Speaker, before I table the draft budget and IDP I would like to make a few general
comments.
Firstly, I ask this council to acknowledge the tragic loss of the City’s Executive
Director for Health, Dr Ivan Toms.
We will remember Dr Toms for his tremendous energy, commitment and enthusiasm
for helping people and communities in Cape Town.
Under his leadership, his department exceed its own targets for reducing Cape Town’s
infant mortality, and containing HIV/AIDS and TB infection rates, some of the
biggest crises that we face. He was also committed to extending the network of
clinics to all communities, giving people access to basic health care.
He will be remembered by the people of Cape Town for the work he did over the
years to help build and support community structures in some of our most
disadvantaged communities, where he worked tirelessly under difficult conditions to
reduce gangsterism and domestic abuse.
On a personal note, I will remember him particularly for the time we worked closely
together as activists during the 1980s.
The City will sorely miss our colleague, not only for his talent as a leader, but also for
his friendship.
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I am proposing that we appropriately honour his memory and begin the necessary
processes to do so as soon as possible.
Secondly, I would like to ask this council to acknowledge the loss of life in fires
around the city this week, including the death of an elderly woman and her three
grandchildren in Gugulethu - one of a number of horrific tragedies involving fires that
have occurred since our last Council meeting.
Our thoughts and prayers are with the families of those who have died, and City
officials have been working hard to control the fires and provide disaster relief.
I would like again to thank our fire fighters and disaster management teams for their
efforts.
I would also like to announce that the City will offer substantial rewards to anyone
who can provide information that leads to the conviction of arsonists.
This year we have had a number of devastating fires that have occurred under
suspicious circumstances, and we must do whatever possible to apprehend people
who deliberately set fires that so often destroy lives and property.
Finally, it is with some regret that I have asked for the item on the renaming of streets
and public places to be withdrawn from the agenda today.
The policy drawn up and agreed to by all parties in the previous administration of
Council includes two important points that we have had to consider in this regard.
Firstly, that names are focal points of symbolism, association and remembrance.
And secondly, that names provide opportunities either to promote community
harmony or to perpetuate hurt and division. We obviously want to promote harmony
and healing.
It is a sobering fact that many of the scars of our society run very deep and across the
community spectrum strong views are still held about symbolic issues such as the
names of streets and places. The process still has a way to go if we are to achieve its
stated objectives and we would undermine these goals if we brought proposals here
prematurely. This could perpetuate the hurt and division we want to avoid.
There is a very important task ahead that will assist all citizens to make informed and
thoughtful choices and I hope that we can revisit the process in a way that will indeed
provide Cape Town with opportunities to promote community harmony.
Turning to today’s agenda, the draft budget that we table has a very clear objective.
That is: to invest, on time, for the future.
We intend to do the opposite of Eskom.
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Our proposed budget prioritises spending on infrastructure and services to keep Cape
Town’s economy growing.
It will allow us to act before there is a crisis, not after the fact.
This is in line with our Integrated Development Plan’s continued focus on
infrastructure led economic growth, and it builds on the priorities set out in last year’s
budget
After last year’s record R2 billion expenditure on capital projects, we propose to
continue to increase spending on maintenance and new infrastructure in terms of the
City’s core constitutional mandate.
This includes roads, especially upgrades to major intersections, water and sanitation,
electricity distribution, and public facilities.
We are therefore again proposing a large capital budget of R4 billion.
At the same time, we are also budgeting to fill vacancies that are causing shortfalls in
service delivery, and budgeting for the next phases of the organisational realignment
process.
The first phase of the realignment brought a proper organisational structure into the
City administration, the first phase of pay parity and greater stability. We have also
filled about 2800 critical vacancies so far this financial year and will fill more in the
remaining months.
The result was an increase in spending on infrastructure and services in nearly every
directorate. Annual housing delivery, for example, went from about 3500
opportunities by mid 2005 to 7500 by mid 2007. And capital expenditure went from
about R1 billion in 2004/5 to about R2 billion in 2006/7.
In addition, the Markinor staff survey that we recently commissioned taught us a lot,
and we will learn from the results. Our staff are understandably reflecting the strain of
many years of false starts in organisational restructuring and instability. On the
positive side, it was gratifying to see that over 80% of staff have responded positively
to their job definitions, and two-thirds expressed loyalty to the City.
The City’s annual resignation rate of 4.4% is also well within the South African
industry best practice benchmark of 8%.
In spite of this progress, many of our directorates do not yet have sufficient people
with the right skills in the right places to spend all of our capital budgets and provide
the necessary services. That is a serious matter and must get the attention it deserves.
And the Markinor survey indicated four areas of concern which we need to address,
including the need for employees to receive more recognition, the need for better
relationships with supervisors and managers, the need for greater care and concern
from their employer, and the need for overall fairness.
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This is not surprising given that Cape Town has been through six years of unguided
restructuring since the amalgamation of 2000, and another 2 years of organisational
realignment.
We are therefore working to identify and fill the gaps that remain, and to ensure that
each of our staff members is optimally placed, appropriately paid and acknowledged
according to their performance. There are some acknowledged problem areas which
are receiving our attention.
We want to make our organisation as efficient and as motivated as possible.
This process, together with hikes in operating costs (especially fuel and electricity)
means we need to increase our operating budget by 11.7% from last year to R15.8
billion for 2008/2009.
An additional R120 million is provided for newly created posts to boost capacity.
And R90 million has also been allocated to address the second phase of pay parity.
Our total proposed budget for this financial year will therefore be R19.8 billion.
These figures comprise all income streams, including grants from central government.
Our IDP reflects our rationale for budgeting in this manner.
By investing in infrastructure and services across the city, and by investing in an
organisation that can deliver, we intend to make Cape Town a more attractive
destination for investors, both at home and abroad.
Across the city, but particularly in older regions, more will be spent on repairs and
maintenance of existing infrastructure and on cleansing.
In the outer ring of the city, where new development takes place, and in established
areas where densification is occurring, capital projects will be aimed at reducing
traffic congestion, increasing sewerage treatment capacity and extending the
availability of services.
This will help to ensure that development is not constrained.
The principle that we are applying is simple.
Investors create jobs, and help to drive development. We must make it easy for them
to do so.
To support this objective, our revised IDP for 2008/9 also incorporates proposals that
were not in the first version, including the formation of a new Development
Facilitation Unit to support investors and help to make investment in Cape Town
easier, the development of a fibre optic network in the metropolitan area to bring
down the cost of telecommunications, the development of the first phase of a Bus
Rapid Transit programme with dedicated bus lanes to improve public transport, and
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the formation of district coordination teams reporting to Sub Councils on service
programmes and responses to complaints from residents in order to make the City
more accountable.
The revised IDP also contains a proposal for a new energy efficiency strategy to deal
with mounting fuel costs and electricity shortage, the objective of gaining housing
accreditation to accelerate housing delivery, and a plan to build stronger ties with
tertiary education institutions in order to share information and encourage scarce
skills development.
The bottom line is that we want there to be more opportunities for everyone,
especially the poor and unemployed.
Without investment, our city will stagnate, the ranks of the unemployed will grow,
and poverty will get worse.
South Africa’s shortage of electricity generation capacity shows what happens to
employment and economic growth when government fails to invest on time.
Five years ago virtually no one worried about our electricity supply, not even cabinet,
because it was always there.
Now it is near the top of everyone’s agenda.
Thousands of mine workers are likely to lose their jobs because of Eskom’s 90% to
95% rationing of production time.
Companies and their workers in most sectors are losing billions due to stock loss and
production delays during power outages.
Foreign investors are being told not to establish operations in South Africa until after
2012. So projects like the R20 billion aluminium smelter that Rio Tinto was to build
in Coega may no longer happen because of unreliable electricity supply, at a cost of
6000 temporary and 1000 permanent jobs.
Eskom’s refusal to grant electricity permits is also thwarting new business ventures
that would create thousands of jobs, and risks holding up delivery of social housing.
And, at the worst possible time, when our economy is struggling with high inflation
due to global market turmoil and high oil prices, Eskom’s proposed 53% hike in
electricity tariffs could add an extra 2% to inflation.
This is the hard lesson that South Africa has had to learn from the Eskom saga.
And it is the poor that have suffered the most.
We will not let the same thing happen in Cape Town with the infrastructure for which
we are responsible, such as water distribution, sewerage, electricity reticulation or
municipal roads.
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We are investing, on time, but only just.
Years of neglect of infrastructure, and years of populist budgets with below inflation
increases, meant that last year we had to introduce radical changes to our budget in
order to kick start our new programme.
We had to increase our rates and service charges substantially for this purpose and I
would like to thank the vast majority of Cape Town’s ratepayers who have diligently
paid their rates and service charges. They have enabled us to invest in the future and
to provide generous subsidies to provide free basic services for all.
This year, we have to increase our rates and service charges again to continue the
work we are doing.
But our proposed increases in rates and service charges are not as sharp as last year.
They remain relatively close to the projected inflation rate, which the South African
Bureau of Economic Research has forecast at an estimated 6.5% for the 2008/2009
financial year. This may change as the economic outlook in South Africa shifts,
particularly after yesterday’s announcement by Reserve Bank Governor Tito
Mboweni of a 9.4% inflation figure for February.
The draft budget tabled today recommends an average 7.3% increase in rates,
bringing the new charge to 0.493 c/R for residential properties and 0.924 c/R for
commercial properties.
This is less than half of last year’s increase, and is only 0.8% above inflation. It is also
consistent with Johannesburg’s new rates and approximately half those of Durban.
We should further note that these other metropoles are now going through the
challenging property valuations process that we initiated in 2002 and reviewed in
2006.
Our service charges similarly remain close to inflation.
For solid waste we have recommended an increase of 7.5%, which is 1% over
inflation.
For water we have recommended an increase of 9.2%, which is 2.7% over inflation.
And our recommended sewerage tariff increase is 6%, which is 1.5% below inflation.
The only service charge that will have to increase substantially above the inflation
rate is electricity, at a proposed 15%. This is based on Eskom’s demands, not ours.
And with Eskom’s recent appeal to government for a hike in charges by as much as
53%, our proposal may still have to be adjusted accordingly.
Although Councillor Neilson will give more detail on the proposed allocation of funds
in this budget, I would like to note a few key items here.
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Our allocations for capital projects include R525 million for water distribution
systems, R145 million for the Cape Flats Collector Sewer, and R92 million for the
Fisantekraal wastewater treatment works.
We have also allocated R211 million for electricity distribution, R138 million for
connection infrastructure, R68 million for the upgrade of the Roggebaai substation
and R433 million for the development of new landfill sites.
We have proposed a R180 million allocation for land acquisition for new housing
developments, over and above our funding for providing housing opportunities.
Contrary to what is sometimes implied, we do not own any substantial land parcels
where the demand for housing is greatest, in the Eastern Metropole. All land that we
have in this area is either already under development or the subject of statutory
processes in preparation for development. We therefore have to acquire new land.
In the roads and stormwater directorate R69 million has been put forward for the
Hospital Bend interchange, and R50 million for the Strandfontein Road Upgrade,
among others.
And for 2010 a total of R1 billion has been allocated, with R30 million for Green
Point Promenade, R15 million for the Grand Parade, R15 million for other 2010
public sites, R26 million for Athlone Stadium and R14 million for the Khayelitsha
Athletics stand.
In line with our IDP focus on infrastructure led economic growth, we have also put
forward a 10% increase in funding for repairs and maintenance to R1.2 billion.
This includes, among others, repairs to roads, water pipe leaks, street lights and
electricity reticulation systems.
On the operating side, we are budgeting nearly R300 million for filling vacancies in
Trading Services and R32 million in Transport Roads and Stormwater to support our
repairs and maintenance initiative, and our new infrastructure projects.
We are also making large increases in the budget allocations for safety and security.
We propose an increase for traffic control from R179 million last year to R254
million for 2008/9. We propose an increase for law enforcement from R75 million to
R95 million, and an increase in emergency services, including fire fighting, from
R322 million to R392 million.
And a further R85 million has been put forward to fill vacancies in the Economic and
Social Development Department.
These are the departments that have received the largest vacancy allocations in this
budget, although provision has been made for nearly every directorate in the City.
While we must acknowledge where vacancies have an impact on the spending of our
budgets, it is equally important for us to expose the series of untruths, in fact outright
lies, from Provincial Ministers and the Premier himself on our spending of budgets.
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First we had the Premier’s false claim that we are going to underspend our housing
allocation from Province by R150 million.
In fact, we are projected to spend about 95% of our R450 million allocation for
housing.
Then we had Local Government and Housing MEC Richard Dyantyi’s false claim
that we had underspent our Municipal Infrastructure Grant from Province by R46
million.
This claim was made in a letter that had my address on it, but that never arrived in my
office. It was sent directly to the media, and I had to get a copy of the letter from a
journalist.
In fact, the allegation in this letter was entirely without foundation, which is probably
why the MEC did not send it to me. The truth is that the City of Cape Town’s MIG
allocation will be fully expended this year.
The R46 million which Dyantyi mentioned is for bulk infrastructure work on the N2
Gateway project which has already been done under Thubelisha’s watch.
We are ready to pay for it, but we can’t because Thubelisha, for which Dyantyi is
responsible as housing MEC, could not provide the City with contracts and invoices,
as they are required to in law.
The third lie that we have had from Province about our budgets came from Transport
MEC Marius Fransman.
He released a statement saying that we have only spent 60% of our Transport
allocation from Province. A made a similar allegation in the Provincial Legislature
last week.
Of the R158 million that the Provincial Department of Transport and Public Works
has transferred to the City since 2002/2003, R124.5 million has already been spent,
and the balance of R33.6 million has been committed to Non Motorized Transport
projects along Klipfontein Corridor, which are currently under construction.
However, we should note that MEC Fransman’s department has failed on a number of
occasions to transfer funds for transport projects, even where it has signed agreements
with the City to do so.
In fact, the Province has not transferred any funding for public transport infrastructure
since 2005/2006.
As a result, a number of projects have been delayed, including Claremont Public
Transport Interchange, Mitchells Plain Interchange, Lenteguer Interchange and the
Khayelitsha Rail Extension Public Transport interchange.
Fortunately, these projects are now on track through the allocation of Neighbourhood
Grant Funding from National Treasury.
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R20 million that Province was supposed to transfer to the City for infrastructure
upgrades along the Klipfontein Corridor has also not materialised, in spite of a signed
agreement that this funding would be transferred in 2007/2008.
And there has been no contribution from the Province for safety and security at public
transport interchanges for the past 5 years, since 2002/2003.
Particularly worrying is the fact that Provincial contributions for 2010 transport
projects are also still outstanding.
As a result there have been delays in delivering these projects.
I am concerned at this situation, which comes on the back of delays created by MEC
Essop on the approval process for the reconfiguration of the Green Point Common
ahead of 2010. While our stadium is on track, we need to have all of our other
preparations in place on time.
I am deeply concerned at this pattern of dishonesty coming from the Provincial
Government. And this is not a row with Province. We do not want to fight, we want to
co-operate but we are being blocked at every turn and this dishonesty is part of the
pattern.
Another example appeared last week, with the Premier claiming at a press conference
that he had decided to extend his re-incarnated Erasmus Commission to probe Cllr
Badih Chaaban because the Speaker of the City had failed to act against him. This is
completely untrue.
As everyone here knows, council recommended to MEC Dyantyi five months ago that
Chaaban be removed from this council following an investigation initiated by the
Speaker and followed through by the disciplinary committee.
It looks like deliberate misinformation is going to be the stuff of the ANC’s election
campaign ahead of 2009.
Even government bodies that are supposed to be apolitical, like Thubelisha Homes,
have become involved in this, perhaps seeing themselves as part of the ANC’s
election campaign. Thubelisha’s job is supposed to be building houses, but it has also
been publishing ANC propaganda in glossy publications at taxpayers’ expense.
Their N2 Gateway News publication carries propagandistic headlines and articles that
the taxpayers are funding. They make entirely false claims about the City’s role in
the Delft tragedy, when they know very well that I have warned all along of the
predictable outcome of the N2 Gateway policy approach, and when the problems
arose, did my best to help address them.
It is ironic in the extreme that while Thubelisha spends hundreds of thousands of
rands on glossy propaganda handouts, they cannot even produce the invoices the City
needs to pay them for R46 million worth of bulk services.
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Returning to the draft budget, I would like to look briefly at the support that our
indigency policy proposes for Cape Town’s poor. And this is a crucial component of
our budget.
In the first instance, our draft budget proposes an increase in the household income
threshold for rebates for pensioners and the disabled to R6000. At present, those
earning R5000 or less per month per household are eligible for rates rebates on our
sliding rebates scale.
The salary threshold for a 100% rebate for senior citizens has also increased to R1860
per month per household, up from R1740 in 2007/8.
The threshold for those registered on our indigency policy has likewise increased to
R1860 per household per month.
I am happy to say that 19 000 senior citizens and disabled persons now receive our
rebates.
In addition, retirement villages and life-rights schemes will now pay the residential
rate rather than the commercial rate that they paid in the past.
The monthly subsidy on water and sanitation will continue to be available to houses
valued up R199 000.
And all existing free services will remain in place, including six thousand litres of
water free each month, and a R30 per month contribution to water and sanitation
applicable to all properties under a value of R88 000.
We will also continue to exempt the first R88 000 of all properties from property
value rates.
I am mindful that in spite of these measures, many people in Cape Town will still feel
the impact of the rates and tariff increases.
Let me reiterate: if we want to avoid disaster, and if we want our City to get ahead, we
have to invest now.
I must also stress that this is a draft budget. The public will be able to comment on it,
and all of the Council’s portfolio committees will assess it in detail over the weeks to
come.
These inputs will be used to finalise the budget for the 2008/2009 financial year
(starting 1 July 2008) in Council at the end of May.
I thank you.
MEDIA LIAISON: ROBERT MACDONALD 084 977 9888