Address by the City's Executive Mayor Patricia de Lille during the adoption of the budget for 2018/19
30 May 2018
Mr Speaker, in tabling the budget for adoption today, I would like to start by thanking our residents for taking the time to provide their comments on the proposed budget during the public participation phase.
During the public participation which spanned from 28 March until 4 May 2018 we received a record number of more than 50 400 comments from the public.
This was a mammoth increase from last year’s budget where we received around 1 700 comments and much lower numbers in previous years.
Of the more than 50 400 comments, 70% were received via email while the remainder was received via Have Your Say forms and public meetings.
This sharp spike in comments shows us that our residents are speaking and we must listen.
This must serve as a firm reminder to all of us as public servants to always keep the best interests of our residents at the forefront of our minds.
Speaker, overall the budget for the 2018/19 year before us today amounts to R47.7 billion of which R8.4 billion has been set aside for the capital budget and the remainder for operating spend.
I am thrilled that the City managed to resolve one of the biggest contentions in the budget with the proposed 26,9% and 55,1% water tariff increases.
Shortly after tabling the draft budget, I wrote to the City Manager, Executive Directors and Mayco Members to request that we investigate how these tariffs could be reduced.
One month into the public participation process, we had already received more than 24 900 comments of which approximately 80% were tariff-related objections, more specifically objections to the electricity, water and rates tariffs.
The City committed to listening to residents and to being a responsive administration and today I am pleased to say that we have reduced two key water tariffs from 26,9% to 19,9% and from 55,1% to 10,1%.
These changes show that we have listened to the public’s comments.
The proposed water tariffs were reduced following public input, review and discussion.
Since the tabling of the City’s draft budget for 2018/19 in March, a reassessment of the budget proposals for the Water and Sanitation Department took place.
As a result of the reassessment, the overall increase in the department’s budget requirement has been reduced from 26,96% to 19,9%.
This reassessment also led to a reduction in level 6 water tariffs for those residents using the least amount of water of below 6 000 litres per month.
These residents no longer face the proposed 55,1% increase but rather an increase of 10,1%.
Households using less than 6 000 litres per month will therefore pay R28,90 per kilolitre instead of R40,73 per kilolitre as initially proposed.
This was achieved primarily by reviewing and rephrasing the New Water Plan, including the savings realised in the current financial year.
The New Water Plan’s spend for the current 2017/18 financial year has been reduced by R1,1billion.
For the coming 2018/19 financial year, the New Water Plan’s budget has been reduced from R2,4 billion to R1,5 billion.
The City has amended the capital requirement for the New Water Plan that is under way to supplement our water resources as a water-scarce city.
The amended New Water Plan is now proposed to comprise R14,1 billion over the next five years instead of the originally proposed R19 billion.
The City’s finance teams have gone through the budget carefully to see how we could move funds, cut costs and adjust our loan book and capital replacement reserves.
For instance, we have reviewed our loan amounts which will reduce the external interest costs in the tabled budget by just over R300 million per annum over the next three years.
No changes have been made to the proposed fixed delivery charge for water which is based on the property’s meter size.
This remains necessary to counter the variations in water usage and to bring more stability to the water and sanitation revenue.
This is because the costs to operate the water distribution system remains the same regardless of the volume of water used.
The Deputy Mayor may also elaborate on the changes in the water tariff and the New Water Plan later.
· In terms of the other tariffs, the property rates tariff has also been reduced from 7,2% to 6,5%
· This will result in a reduction of R65 million on property rates revenue
· The electricity tariff increase remains at 8,1%
· The sanitation tariff has also been reduced from 26,9% to19,9%
· The refuse collection tariff increase also remains unchanged at 5,7%
As part of the budget process, our budget is also assessed by National Treasury to ensure compliance with national legislation.
Our budget was assessed against the following criteria:
· Credibility: to determine whether the budget is funded, evidence of political oversight and public participation.
· Relevance: to test if the budget is aligned to the Integrated Development Plan and the Spatial Development Framework and the extent to which national and provincial priorities are taken into consideration.
· Sustainability: to determine whether the budget gives effect to long-term financial and operational sustainability of the city.
The conclusion from National Treasury was that the budget assumptions are credible while our revenue estimates are realistic.
The IDP strategic objectives align to the National Development plan, the provincial agenda and is reflective of the current drought challenges.
In terms of sustainability, National Treasury concluded that we have positive cash flow projections over the three year MTREF cycle and that we have adequate cash-backed reserves.
The budget is therefore funded, credible and sustainable over the MTREF in terms of Section 18 of the Municipal Finance Management Act.
Some of the major capital spend planned for the 2018/19 financial year is as follows:
R4,1 billion for Informal Settlements, Water and Waste Services
R1,8 billion for Transport and Urban Development
R1,1 billion for Energy
The following are some of the most significant projects on the budget:
R253 million for dark fibre broadband infrastructure
R95 million for electrification
R53 milion for street lighting
R114 million for the Bellville Waste Water Treatment Works
R75 million for the Cape Flats Waste Water Treatment Works
R109 million for the upgrading of solid waste facilities
R9 million for CCTV installations
R21 million for cemetery developments
R9 million for the construction of the Dunoon Library
R10 million for the Manenberg Integrated Project
R14 milion for the new Fisantekraal clinic
R20 million for the New Pelican Park Clinic
R240 milion for congestion relief projects
R287 for Integrated Rapid Transit projects
R155 milion for land acquisition
Other key changes in the budget include an additional allocation of R45 million for the appointment of traffic and law enforcement staff.
There is also an additional allocation R7,5 million for the appointment of law enforcement officers funded from private institutions and Central Improvement Districts as a result of memoranda of agreement that were only finalised in April.
Speaker, I am proud to present yet another pro-poor budget which shows our commitment to being a caring city by assisting those who need help most.
Our social package of nearly R3 billion has been allocated to assist the poorest and most vulnerable in our city.
The social package financial relief is in line with our commitment to build a caring city and our Organisational Development and Transformation Plan’s objective to be a more customer-centric and responsive administration.
Many of our residents, especially pensioners, commented during the public participation phase about how they are struggling to make ends meet.
Our social package helps these vulnerable residents with rebates and free basic services such as electricity, refuse removal, water and sanitation to residents who qualify.
Where properties are valued at R100 000 and below, these households qualify for 100% rates and refuse removal rebates. These residents also receive 10 500 litres of free water and 7 350 litres of free sanitation.
In properties valued above R100 000 and below R150 000, these residents get a 100% rates rebate, 75% off refuse removal charges, 10 500 litres of free water and 7 350 litres of free sanitation.
Properties valued between R150 000 and R400 000 all receive 10 500 litres of free water and 7 350 litres of free sanitation; and between 50% and 25% off their refuse removal charges.
There is also relief with electricity charges for consumers on the Lifeline tariff. Where consumption is on average 250 units per month, these residents receive 60 units free per month. Where consumption is between 250 and 450 units, these households will receive 25 units free each month.
The City also uses household income as a factor to determine which residents qualify for assistance. For instance, where the gross monthly household income is R4 000 or below, these households can get a 100% rates rebate and receive the same benefits as if their properties were valued below R100 000.
There are also various levels of rates rebates available for where household income is between R4 001 and R6000.
Senior citizens and disabled persons also qualify for rates rebate where the household income is below R15 000.
I want to appeal to councilors to assist people to apply for indigent relief.
Mr Speaker, I hereby table the budget for debate and a vote.
Issued by Zara Nicholson, Spokesperson for the Executive Mayor – Patricia de Lille, City of Cape Town, 30 May 2018