2012/13 FINAL BUDGET
The Deputy Mayor,
Senior Managers and Staff,
Our distinguished and special guest (Traditional leaders, Treasury, COGTA),
Our friends from the media
Ladies and gentlemen
It is a great pleasure for me to stand in front of you and present the final draft budget on behalf of the executive committee to council for approval and adoption.
This is our first budget that we are tabling before council ever since our election in May 2011.
When we got into office last year already processes were concluded of preparing the budget and reviewing the IDP. Ours was to confirm the work of the previous council, use the reviewed IDP as our planning tool in this current financial year and implement the budget that was agreed upon in May 2011.
Before I deal with the budget and other related documents, allow me to start by locating my budget speech to a broader context.
We are here today exactly 4 years and 5 months after the historic national conference of the ruling party in Polokwane that gave us a broader mandate in transforming the society and speeding up service delivery. In 2007 conferences of the ruling party were emerged with 5 key priorities from this conference that we continue to serve as a guide for all our spheres of government:
- Creation of decent work and sustainable livelihoods,
- Rural development, land reform and agrarian revolution and
- The fight against crime and corruption
Our IDP and budget must then talk to these broad priorities of government. The above was elaborated further in our 2011 local government manifesto as the ruling party. Our preface to our manifesto was that:
“The fourth local government elections since the dawn of our democracy in 1994 bring another opportunity for South Africans to build on the progress we have made in realizing our vision of a better life for all. Our vision is that of profound transformation of society. As the ANC we know that political transformation without economic emancipation is meaningless, that is why we have to commit to economic freedom in our lifetime and the ANC will always be at the forefront of that economic transformation.
To continue making progress towards such a future we need an economy that creates more jobs, decent work and sustainable livelihoods. We need better quality local public services with access for all. We need to create more united, non-racial, integrated and safer communities, and to strengthen local participation, with effective, accountable and clean local government. The ANC is best placed to carry out this next phase of developing and transforming our cities, towns and villages because of our values and principles, our policies, what we have learnt from our experience in government, and our commitment to ensuring that each community is actively involved in creating better communities.”
The president then entered into performance agreements with Ministers and Premiers, Premiers and MEC’s, MEC for COGTA with Mayors, Mayors with municipal managers, Municipal managers with heads of departments etc. We will talk about this in details later when we deal with performance management system and alignment with IDP and Budget. Safe to say that our main focus area or outcome as the sector is outcome 9:
“A RESPONSIVE, ACCOUNTABLE, EFFECTIVE AND EFFICIENT LOCAL GOVERNMENT SYSTEM WITH 7 OUTPUTS”
- Implement a differentiated approach to financing, planning and support
- Improving access to basic services
- Implementation of the community work programme
- Actions supportive of the human settlement outcome
- Deepen community participation through a refined ward committee model
- Administrative and financial capability
- Single window of coordination
The January 8th statement of the ruling party that is done every year on the 8th of January which serves as marching orders for the respective year to all leaders and cadres of the ruling party details what needs to happen. The only significance about it this time around is that the ruling party is celebrating its centenary (100 years), oldest liberation movement in Africa. This has been celebrated in the United Nations, continental organisations (AU), National parliament, and different legislatures of our provinces, so let us not be shy also to talk about it in this chamber.
These are corridors of power, political institutions of government
We were also fortunate to host the centenary flame in the district where among others we have celebrated the lives of the following cadres:
- Reggie Hadebe
- Pass Four Dlamini
- Boy Gwagwa
- David Ndawonde and many more.
I want to take this opportunity and commend Umzimkhulu municipality for allowing the ruling party to erect its monument of fallen heroes and heroines. That constitutes the histand heritage of our country in general and our district in particular.
These activities have reinforced our resolve to rename the Sisonke District Municipality after one of the selfless servants of our people and a freedom fighter, the lion of the Midlands, our father and our leader comrade Harry Gwala.
As the executive committee we are targeting the month of September, the heritage month to secure the President of the Republic to launch the name change officially. We have followed all the processes as we are required by law.
The January 8th statement as presented by the President early this year in Mangaung among others state clearly that:
“A central aim of transformation in our country is to uplift the quality of life of all South Africans, especially the poor, the majority of whom are Africans and females. How we have set about this task, is outlined in the RDP (1993) when it states that we are committed to a programme of sustainable development, which addresses the needs of our people without compromising the interest of future generations. Without meeting basic needs, no political democracy can survive in South Africa. Attacking poverty is (therefore) the first priority of a democratic government
The strategy for meeting basic needs rest on four pillars namely: creating opportunities for all South Africans to develop to their full potential, boosting production and household income through job creation, improving conditions of employment, improving living conditions through better access to basic physical and social services, health care and education and training for urban and rural communities and establishing a social security system and other safety nets to protect the poor, the disabled, the elderly and other vulnerable groups”
We are also meeting here today exactly four months after the state of the nation address thatwas made by the President of the Republic, his excellence President Jacob Zuma on the 9th of February this year. The gist and essence of the state of the nation address was to continue to change the lives of our people for the better and fast track service delivery.
The president in his address acknowledge the triple challenges that continue to confront our country, poverty, unemployment and inequalities hence he announced an infrastructure revolution. In his words the President said addressing the joint sitting of parliament “ The infrastructure plan will be driven and overseen by the Presidential infrastructure coordination commission, (PICC) which was established in September, bringing together Ministers, Premiers and Metro Mayors under the leadership of the President and the Deputy President.”
Following our engagement with the President for intervention in the district, we have also been included in the 23 municipalities throughout the country that are receiving attention from the Presidential infrastructure coordination commission. Just yesterday I was invited to the PICC meeting in Pretoria.
During the state of the Nation address in February this year, President Zuma outlined a number of strategic integrated projects (SIPs) in the infrastructure plan adopted by Cabinet. One of these strategic integrated projects relates to Municipal Infrastructure to be implemented initially in 23 Districts municipalities across the country.
The aim of the Strategic integrated projects is to address all maintenance backlogs and upgrades required in water, electricity and sanitation bulk infrastructure and roads starting in the 23 least resourced district municipalities. It further aims to integrate municipal infrastructure in a way that shifts the apartheid spatial patterns to build sustainable and integrated settlements.
In the same month of February on the 21st this year we have also received a very progressive state of the province from the Premier DrZweliMkhize, who also took tune from the address made by the President earlier in that month. The state of the province address was effectively a continuation of the programs announced by the President in a more localized way in terms of the Province.
I was very happy to learn that almost all the issues that we raised in the Cabinet logotla of the Province found expression in the state of the Province address by the premier, The Premier made a commitment on the following projects that affect us as the district:
- Bulwer Dam
- Texas Valley
- Dawn Valley
- Nyala Valley
- Dairy Farming
- Small towns revitalization program etc.
Sisonke District Municipality is one of the ten districts in the province faced with challenges similar to other districts in providing basic services and addressing backlogs. The goal of the leading party is to enhance service delivery aimed at improving the quality of lives for all in the country.
The district council is on its third term since establishment from December 2000 and the current council is completing a year after May 2011 elections. It inherited a number of service delivery challenges and huge backlogs together with the 2011/12 approved budget which had to be ratified by this Council. As Local Government operates in the same area and service the same communities and as a sphere closer to people, it has to strengthen the link between citizens and government overall priorities and spending plans.
Budgeting is primarily about the choices the Municipality has to make between competing priorities and fiscal realities. With this in mind, the Finance Minister Mr. PravinGordhan, in his 2012 Medium Term Budget Policy Statement (MTBPS) said it was time for government to make difficult decisions as fiscal constraints force government to choose carefully between competing objectives. He noted that difficult decisions are required to ensure that scarce resources are directed towards economic development and more effective service delivery, while ensuring that debt levels are sustainable.
This 2012/13-2014/15 MTREF is the first budget which this council has vigorously engaged on. I would like to remind the council that in October/November 2011, the Council engaged with the communities prior to the 2011/12 adjustments budget in order to re-align the municipal activities with the mandate given to the current Council during the May 2011 Municipal elections. It is unfortunate that the Council has to adjust the 2011/12 budget downward due to financial constraints faced by the municipality some of which being the over expenditure in 2010/11 financial year and under collection in 2011/12 and some budget projections that we could not realize such as DBSA loan of R100m, That has caused a huge strain to our budget and resulting to the liquidity of the municipality to be questionable. We had to embark on belt tightening measures that were not very easy for some of our operations but it was a decision worth to take if we were to correct the mistakes and shortcomings of the past.
In preparing the 2012/13 budget we had to take into account the above mentioned circumstances. We were very conservative in the expenditure budget in relation to income to be derived. We needed to remain focused on the effective delivery of the core municipal services through the application of an effective and efficient service delivery mechanism.
The core functions of the District are Water & Sanitation. Increased spending on municipal services and stronger spending on infrastructure maintenance and investments, and support for economic development was also listed as high priorities on the Government’s agenda. The minister noted that the main challenge associated with increased fiscal support for the recovery lies in overcoming obstacles to the implementation of infrastructure and job-creating programmes, rather than budgeting for higher levels of expenditure.
As I present MTREF draft budget for the financial year of 2012/2013 we cannot expect to do the same old things and expect different results. Using the Local Government equitable share subsidy, the municipality should focus to support the low-income households while improved targeting. To overcome challenges relating to the Water infrastructure, the following issues need to be addressed;
i. Improved planning,
ii. Construction and,
With particular reference to Water Services Authorities, municipality requires an integrated approach to water provision, with reticulation supported by sufficient resources that are needed.
The 2012/2013 Total Revenue is R 460, 4m broken down as follows;
• Government Grants and Subsidies – Capital R183, 7m
• Government Grants and Subsidies – Operational R217, 6m
• Own Revenue R59m
Allocated as follows;
• Operational budget R 230 m,
• Capital budget R 209, 3 m, and
• Total Budget surplus R 20, 9 m.
The staff salaries budget has been budgeted at R81m, representing 35% of the operational budget. Councilor’s allowances have been budgeted at R5.5m.
Local government equitable share
The equitable share for 2012/2013 financial year as gazetted from the Division of Revenue Bill is as follows:
Equitable share R 181 591 000
RSC LEVY R 18 799 000( That impact to municipal grading)
Special support to Councilors R 3 166 000
Total Equitable Share R 203 556 000
Over the last years several adjustments havebeen made to the equitable share formula resulting to increased allocations to poor rural municipalities. We have to provide further input in this respect and support the National Government to review the formula. Further work will be done to review the formula, with revisions making use of the data from the Census, due to be released in March 2013. We expect the revised formula to be introduced from 2014/15 financial year.
For 2012/13 Draft Budget capital projects amounting to R 208 274 553 have been planned under the following categories;
• Water R 137 593 764,
• Sanitation R 58 289 472,
• Electrification R 5 000 000 and
• Other Assets R 7 391 317.
TOTAL R 208 274 553
In accordance with the MIG formula for allocating this funding to municipalities
Budget or breakdown allocation per local Municipality is as follows:
- Umzimkhulu R 76 063 086 37% Has a huge number of stand
alone water schemes
- Ingwe R 62 522 741 30% Huge Backlogs
- Ubuhlebezwe R 40 252 734 19% Backlogs has been reduced
- Kokstad R 10 522 199 5% Few backlogs in outlying
- Kwasani R 5 000 000 and 2% No Backlogs
- SDM R 13 913793 7%
- Local Economic Development and Tourism
Sisonke District Municipality has developed a number of local development related strategies and plans that seek to enhance its economic growth. These plans and strategies were circulated to councilors. We’ve also had an LED Summit in March 2012 which was very strong in context. The district has recently reviewed its led strategy with more emphasis on both growth and redistribution with the aim of reducing poverty and unemployment.
The Sisonke District Municipality has allocated R 7,7m towards LED projects in 2012/13 and a total of R24million in the MTREF in line with this National priority. We are hopeful that our partners, the first and second sphere of Government, in economic development will support in this Endeavour. We also intend to attract private sector investment to our district through the strengthening of our Sisonke Development Agency (SDA). The Board of directors will be in place in July, while the post of the CEO has been advertised. Our LED unit will soon be seconded to be part of the SDA. We will also engage through the Mayoral forum to drive towards having one LED vehicle for the district including LMs being the SDA.
- Agricultural Sector
In terms of the Provincial Growth and Development Strategy (PGDS), the Sisonke District Municipality has strong potential for agricultural growth. The District has to drive towards food security and commercial agriculture. The district is well known for its high agro-ecological potential due to abundance of high quality soils, high altitude, abundant water, commercial farms etc. The major significant agricultural sub sectors within the district are dairy and livestock, forestry, crops and vegetables. Currently the municipality is preparing an agricultural plan to unlock agricultural potential. In the R7.7m budget, there is provision for support to our co- operatives.
- Promoting efficient revenue and expenditure management in local government
The minister said municipalities, just like national and provincial governments, needed to closely examine their budgets to ensure they are using their available resources to maximise service delivery and this was centred on both;
i. Cost-effective spending, and
ii. Revenue collection.
Looking at this budget it will be noticed that we were very conservative on the expenditure but we will also explore all possible means to recover as much potential revenue as we could collect.
While we have to focus on our mandate and uplifting skills related to our mandate but we cannot overlook the development of youth towards scarce skills in our area as they have a negative impact on the quality of life for our people. Without supporting and building of these skills like health and education, we cannot fully claim to have contributed to sustainable communities.
Sisonke Municipality is committed in developing community and youth residing within the District in the above mentioned skills. A number of projects have been budgeted for in the special programmes unit to ensure that the special groups existing in the Sisonke community are sufficiently catered for.
- DAC Sukumasakhe HIV and AIDS : R1 million (2012/13) and R1,7 million for
(2013/14 and 2014/15),
- Cuba students bursary (Doctors) : R 480 000 (2012/13) and R 1 million for
- Disability awareness : R 80 000 (2012/13) and R 172 607 for
(2013/14 and 2014/15)
- Women’s Programme budget : R 250 000 (2012/13) and R 539 399 for
(2013/14 and 2014/15)
- Men’s forum in rural sector etc. : R 80 000 (2012/13) and R 172 607 for
(2013/14 and 2014/15)
In relation to the above stated points, the Local Government Budgets and Expenditure Review, published by the National Treasury in September 2011, highlights 5 important considerations:
- Revenue management – To ensure the collection of revenues, the municipality should maintain accurate billing systems; timeously send out accounts to residents and strive to collect as much revenues owed as we can.
- Collecting outstanding debts – This requires political commitment, sufficient administrative capacity, and pricing policies that ensure that bills are accurate and affordable, especially for poor households. In this regard, Sisonke has recently completed a data cleansing exercise and is reviewing its Indigent Policy.
- Pricing services correctly – The full cost of services should be reflected in the price charged to residents who can afford to pay. Many municipalities offer overly generous subsidies and rebates that result in services being run at a loss, resulting in funds being diverted away from other priorities. This is a major area in which should pull our socks. Running services at a loss affects the extension of services to other areas and impact negatively on operations and maintenance.
- Under spending on repairs and maintenance – Often seen as a way to reduce spending in the short-term, under spending on maintenance can shorten the life of assets, increase long-term maintenance and refurbishment costs, and cause a deterioration in the reliability of services. This lack of Operations and maintenance also causes uprising by communities due to inadequate supply of services and the questing of democracy.
- Spending on non-priorities – Many municipalities spend significant amounts on non-priority items including unnecessary travel, luxury furnishings, excessive catering and unwarranted public relations projects. Consultants are often used to perform routine tasks. Major attempts would be made to reduce use of consultants. A number of capacity building programmes have been undertaken to improve the capacity which has to result to improved quality of work
- Funding local government -The functions performed by local government rely largely on self-financing. The minister noted that Substantial progress has been made in overcoming the service disparities of the past through transfers from the national fiscus, but large backlogs remain. The major need is to provide municipal infrastructure to poor households and, increasingly, to pay for the institutional and governance needs of poor municipalities. This situation requires us to put more emphasis on job creation and economic development in order to create more opportunities for self-income.
- Other strategies documents to be linked with the budget are
- Integrated Development Plan ( IDP)
- Strategic Development Budget Implementation Plan ( SDBIP)
- Performance Management System ( PMS)
- Policies and By-Laws
- In Conclusion
As I conclude I would like to congratulate our country for its successful bid to host the world biggest SKA radio telescope. Though we are co-hosting with Australia but the huge part of this work is going to be done in South Africa. This is going to help our country, the continent and the whole world in science, technology, education and research. Indeed it is a victory for our country and for our continent.
This huge and significant announcement was made while our country is hosting African Global Diaspora conference that seeks to unite all the people of African origins across the world and explore all possibilities for the African renaissance and development.
In conclusion I would like to take this opportunity and thank the following people and stakeholders
(a) The honourable speaker for a strategic role that you and your office have played in the community consultation process,
(b) The executive committee as the principal committee of council for the team effort, unity and commitment that they continue to demonstrate in the work of the municipality,
(c) The council as the highest decision making body of the municipality for the continued focused and stable leadership and strategic direction that they give to all of us,
(d) The MM and senior management for their commitment to work under pressure to change things around and more especially to understand us as the political leadership that when we fight with them it’s not that we are being personal but we want things to be done, when we began the term we said “ongentlaukhabaongezantsikwakhe,” and we were very particular to say we won’t accept mediocre and underperformance in our team. Thank you for the good work and understanding.
(e) The IP unit and budget unit for the good work that have done in formulating these very important strategic documents without any help of consultants, there is light at the end of the tunnel that if our staff members are pushed to the right direction, motivated by their senior managers and inspired by their political leadership can really de better and do wonders,
(f) On that note allow me Somlomo baba to also acknowledge and thank the support that we are receiving from treasury and COGTA, it is immeasurable,
(g) The district municipality has no wards, the kind of support and cooperation that we continue to receive from local municipalities really put cooperative governance into practice, and it is no longer a theory in this district, colleagues thank you and lets continue to support one another, after all we are one government, advancing one objective “a better life for all.”
(h) KoNdabezitha, amakhosiasendlunkulu, we are always humbled with your support and in this district very few if any contradictions at all between councilors and the traditional leaders, you are all progressive.
(i) To all my friends from the media, thank you for the positive reporting about our government. I have no doubt in my mind that even today you will report very progressively about the state of the district address by the mayor. On a more serious note we welcome the role that you continue to play in educating and informing our communities for as long as it is objectives reporting. Let’s all join hands and build the nation.
Together we can build better communities.
I thank you
Cllr. M.E Ndobe: District Mayor