Councillors, City manager, officials, colleagues, members of the media, ladies and gentlemen.

I wish you a warm welcome.

We meet today to decide on the final budget for the 2008/9 financial year.

This budget comes at a very challenging time for the City of Cape Town.

On the one hand we have to build up finances and capacity in our organisation to address backlogs in infrastructure and services in Cape Town.

We need to get local government delivery ahead of the curve of natural growth in the city, so that our economy is not constrained, and can deliver more jobs for more people.

As I stated last time we met for the tabling of our draft budget, we need to do the opposite of Eskom. We have to invest in time, in the infrastructure needed to attract more investment which is essential for growth.

At the same time, we have had to further extend our capacity to contain and manage the humanitarian crisis that has developed in the wake of xenophobic violence.

We now have around 20 000 displaced people in Cape Town, most of whom are staying in six safe areas in different parts of the metro region, as well as community halls across the city.

I was told late last night that the Province would open the Chrysalis Institute to help accommodate about 1000 displaced people. This is an important development and I appeal to them to open further venues where possible. It is now almost a week since the xenophobic violence erupted in Cape Town.

I have also approached the Minister of Defence asking him to open Fort Ikapa near Acacia Park and a section of Wingfield to accommodate displaced people. These are well located sites near transport routes and facilities, where displaced people understandably prefer to be. So far Minister Lekota has been extremely helpful, responding immediately to my requests to make Simonstown Naval Base and Youngsfield available to us. He has not yet responded to my request on Acacia Park.

In terms of its own resources, the City is investigating opening further resorts, in order to relieve pressure on the Soetwater site, which is full beyond capacity.

I note in the media today that there is a criticism of these sites and that some of the language has become rather emotive. This is understandable in the circumstances. Let me simply say this: we in the City would warmly welcome the assistance of the Province in making additional sites available, and particularly of the United Nations, in bringing its vast resources and expertise in the field of displaced people and refugees to assist us. We call on the national government to invite the United Nations into our country to help us deal with this crisis. The City's resources are stretched to the limit. So far the UN High Commission on Refugees have sent one officer, who arrived here on Sunday, and has held various meetings and a press conference. We require much, much more than that. We welcome Mr Arvind Gupta's criticism, and the contrasting words of support from the UN High Commission on Refugees Office in Pretoria.

But we would welcome the UN's assistance even more. I would also be happy to hear of sustainable and viable alternatives to those currently being implemented by the City.

It is also essential to make another thing clear about our safe sites: No-one is forced to go to them, or to remain there. 

Yet thousands of people are coming to them as a base from which they can exercise further options. 

From there they can decide whether to choose reintegration into their communities, or return to their countries of origin. 

We would like to support the choices they make but the process falls way outside local government competencies. We urgently need national government, the United Nations, and the embassies of the countries of origin of the displaced people to play a leading role in the process.

We share concerns about conditions that could lead to the outbreak of diarrhoea and influenza and our medical staff are doing everything possible to contain and prevent such outbreaks.

Our City health officials and NGOs are present in all sites to assist where necessary.

I was particularly impressed on my visit to Soetwater to see the field hospital in which people who become ill can be treated to prevent the spread of disease. The NGOs and volunteers there, and in all other places, are doing an outstanding job to assist us.

Our role, as a disaster management authority, is to provide safety, shelter and food for displaced persons, and to maintain stability in all our communities.

We will do whatever is necessary to support the Department of Home Affairs playing its role in the days ahead, in line with its mandate.

In particular, they need to help those foreign nationals who want to return to their home countries, and those who wish to return to their homes in Cape Town. So far the Department has not been able to mobilise the staff to do so. As a result, we have made available 45 City employees and other recruits to assist the Department in registering the displaced people to determine their situations and ascertain their needs. This is outside the City's constitutional mandate, but we wish to co-operate and provide additional capacity in this crisis.

Two teams started work yesterday.

We have also appealed to the Provincial Safety and Security Ministry to request a SANDF peace-keeping force to facilitate the peaceful re-integration of displaced people that wish to return to their homes in Cape Town. Minister Lekota has told me that without a direct request from the relevant authorities, he cannot take this step.

In order to assist people staying in the safe areas with getting to work or to school, we have approached taxi operators requesting that they set up temporary routes.

So far the operators have been very cautious because of the volatile nature of their industry. We cannot force them to come on board, and we do not want to add a taxi war to the current situation.

We would greatly appreciate the assistance of Province, as custodians of the current subsidised bus service in the City, to extend their service during this emergency.

I would like to thank all of the City officials, councillors, other spheres of government, security forces, NGOs, churches and members of the public who have worked so hard to ensure that our disaster relief efforts have been carried out with maximum efficiency under the circumstances.

The people of Cape Town have been magnificent. For every person who has attacked a foreigner, there have been scores who have supported the relief effort. I wish to thank those communities from Table View to Atlantis, Bothasig, Nyanga, Richwood, Summer Greens, Khayelitsha and Kuils River , who have accepted our use of their community halls to deal with the immediate aftermath of the emergency and have done everything possible to assist. I gave them an undertaking that this would be a temporary measure to deal with a situation that could genuinely be described as a disaster.

Capetonians in general have done much to restore South Africa's dented image in the international community, and our sense of humanity and self-worth.

This month's outbreak of violence must be taken by our country's leaders as a clear warning sign.

The state's failure to deal with illegal immigration and the almost total incapacity to process the wave of refugee applications have been among the short term catalysts for the violence.

But xenophobia is also driven by deepening poverty and the perception that every foreign national's opportunity comes at the expense of a South African's.

In the past, frustration with poverty, fuelled by unmet expectations of government delivery, has sparked service delivery protests and land invasions. Now it has sparked these attacks on soft targets.

This situation underlines the urgency of our project of infrastructure led economic growth in Cape Town , a project that seeks to maximise opportunity, self reliance and sustainability through job creation.

We cannot resolve the crisis of poverty and inequality in South Africa by extending state patronage to selected beneficiaries.

The state will never have enough to fully satisfy everyone - as the N2 Gateway has so vividly shown.

We have to retain, attract and grow investment and skills in Cape Town , and do so in the context of a competitive global economy where these commodities are highly mobile.

The terrible events of the past week are all the more tragic because many of the people who have been driven out of Cape Town have skills and can add value to our economy.

We cannot even begin to estimate the extent of the skills and capital that will now migrate from our shores of be deterred from coming.

In South Africa we must encourage people with skills and capital to come here, not chase them away.

And we should build investors' confidence in our city, not break it down through social upheaval.

It is precisely to boost investor confidence and accelerate development, that the City has embarked on its programme of massively increased investment in services and infrastructure. Sustained economic growth is also the only pathway out of poverty.

In order to kick-start our programme of infrastructure led economic growth, last year we had a sharp increase in rates and service charges, while simultaneously expanding our support for the indigent.

We committed a substantial portion of our budget to filling critical vacancies in the City, bringing our staff contingent from 21 000 to 23 000 and boosting our administration's capacity to deliver.

We also sharply increased our capital budget from R2bn to R4bn to ensure that we could fund the ambitious new infrastructure projects included in our IDP.

Since then, we have made good progress with both operating and capital expenditure, and we have again received the highest municipal credit rating in SA from Moody's, as well as an unqualified Audit Report. This is crucial when it comes to public confidence in our bond issue, which will mean additional billions for development.

I am especially pleased to note that we have already exceeded last year's record R2bn capital expenditure, in spite of the fact that it will be some time before our final capex figures come through - it will be substantially higher than the current figure.

Today we will therefore again propose a R4 bn capital budget.

And, to continue our programme to boost staff capacity and address hikes in operating costs (especially fuel and electricity) we will increase our operating budget by 11.7% from last year to R15.8 billion for 2008/2009.

The increases in tariffs last year have brought our funding for tariff based municipal services (water, electricity, sanitation, and solid waste) up to the right level.

We therefore expect to be able to keep further annual utilities tariff increases close to inflation from here onward, with the exception of electricity - for reasons that fall outside of council's control.

For solid waste we propose an increase of 7.5%.

For water we have propose an increase of 9.2%.

And our recommended sewerage tariff increase is 6%.

In the case of electricity tariff increases, we face a complicated situation. We still have no idea what the National Electricity Regulator (NERSA) is going to decide to do with Eskom's proposals for further hikes.

By law we have to pass the budget by the end of May, but NERSA's decision is only coming on 18 June.

Today's proposed 20% increase is therefore based on the 15% increase approved by NERSA on 20 December 2007, plus compensation for the lower sale of electricity as the result of the national electricity savings targets.

In its submission to NERSA on Friday the City appealed to the regulator to prevent any further increase above 15% this year. I repeat that appeal today.

A further increase could create severe financial, administrative and legal problems for the City - and far worse for many other cities and towns.

Eskom's proposed bulk electricity increase would affect all municipal services, such as sewerage pump stations, water processing and municipal buildings.

It will also increase the expenses related to the provision of free basic electricity.

Legally speaking, the MFMA prohibits the adjustment of tariffs during the financial year once the municipal budget is approved.

The Minister of Finance may be able to override the timing of the tariff increase for local government, but it is a complex and lengthy process to review tariffs.

We would then have to determine the impact of further increases on our overall municipal budget, determine the additional cost of providing free basic electricity and therefore reprioritise budgetary required funding, meet legislative requirements for public participation and transparency, await NERSA approval of our new tariffs, adjust municipal billing processes/prepayment vendor tariffs and so on.

Apart from impacting the municipality, if NERSA allows an increase over and above the approved 15%, it would also negatively affect the overall economy and the livelihood of our citizens, especially the poor.

We therefore believe that the tariff increases Eskom needs must be smoothed over an extended period of time, preferably five years.

As far as rates are concerned, our proposed increase today is 7.3%, the same as that contained in our draft budget, bringing the new charge to 0.493 c/R for residential properties and 0.924 c/R for commercial properties.

While we have brought tariff funding up to the right level, income for rates funded services remains a challenge.

If we really want to unlock development potential everywhere in Cape Town , we need additional funding sources.

Since the scrapping of the Regional Services Council levies that used to bring in about R1bn annually, we have no certainty about the long term status of the subsidy that the National fiscus has made available in its place.

We are currently waiting for decisions from the National Treasury about the replacement income for RSC levies. We understand that they are currently considering a business tax or alternatively the possibility of the City gaining a share of fuel levies, which currently only go to spending on national roads.

We have also appealed to National Treasury to make levies available to cover the cost of all roads in the municipal boundaries, in order to avoid the introduction of toll roads on the N1 and N2.

If these toll roads are introduced, many commuters will be motivated to use alternative routes on secondary roads, creating increased maintenance costs for the City and its ratepayers.

In spite of the challenges around funding for road maintenance, we are making provision in today's budget for the upgrades to Hospital Bend and other key routes.

This will help relieve traffic congestion at the major bottlenecks in Cape Town , a major constraint to our economy.

Our capital investments in electricity distribution, water and sewerage in this year's budget will also help to unlock development and growth.

For example, the new Fisantekraal Sewerage Works will address the current restrictions on the natural growth of the City in Kraaifontein and Durbanville area, where for years no major rezonings have been allowed.

The Potsdam sewerage works upgrade is also coming to completion, which will enable development in the greater Table Bay and Milnerton area.

The budget also makes provision for continued work on the second and third tiers of the 2010 Stadium, following the completion of the first. So far the stadium is on schedule, with over 35% complete, and this week the main support columns reached their full height.

We will continue to negotiate with National Treasury over the approximately R500 million gap in funding.

The gap is due to cost increases in building material and sub contracts, as a result of the booming construction industry. This is a national, not just a Cape Town problem.

The City's contribution for the stadium will remain at R500 million, as initially agreed.

But we will do our part by selling the naming rights of the stadium, cost-saving engineering, sale of corporate suites and a share of ticket sales.

An international tender to sell the naming rights and find an experienced and successful operator post 2010 was issued earlier this month. The closing date is 31 July 2008.

I am also pleased to announce that FIFA has officially awarded Cape Town the prestigious final draw event to determine the 32 teams that will be taking part in the 2010 Soccer World Cup. The televised event will take place on 4 December 2009 in the CTICC, with an estimated audience of 8 000 guests. More than 100 broadcasters from across the world will cover it, substantially raising the profile of our city in the international arena.

I welcome this vote of confidence in our City's readiness to host major international events.

Today we are also proposing an increase in funding for repairs and maintenance across the board, with R1,27 billion allocated for this purpose. This represents an increase of 58% over 2 years, showing our strong intention to maintain the city's assets adequately.

But there is still a significant backlog, and it is going to take us some years to address this. We appeal to residents to be patient while we do so.

In the capital budget we are also proposing the inclusion of an extra R21 million for ward allocations, which will add R200 000 per ward. This is a new addition that was not in our draft budget.

In terms of our operating budget, we have proposed some additional provisions to fill critical vacancies in various departments over and above the amounts put forward for this purpose in the draft budget.

For example, we have proposed to an extra R24 million to the draft budget's increase of R165 million for safety and security, bring the total allocation for filling vacancies in safety and security to R189 million. These funds will increase critical staffing levels in disaster management, traffic police, law enforcement and special units, like the Copperheads, who have achieved remarkable results on the proverbial smell of an oil rag.

Extra funds are also being made available to hire more land use and building inspectors and more personnel for our unit to prevent land invasion.

Additional funding is being provided for our economic development and substance abuse programs. I would also like to mention that as part of the City's Alcohol and Drug strategy being run by the Executive Deputy Mayor , the City of Cape Town has launched a 24/7, anonymous substance abuse helpline, which is toll free on landlines. The number to dial is 0800 H E L P  4 U (0800 43 57 48).

In finalising today's budget we have taken note of the public comments that have been submitted in response to our draft budget.

In particular, we noted the impact of the rates increases and inflation generally on the elderly and disabled, who are on a fixed income.

As a result, we want to increase rates rebates to these households.

We are proposing to lift the upper limit for rates rebates to the disabled and elderly from a monthly household income of R5000 per month to R7000 per month.

All of the rebate steps below this threshold have shifted accordingly to give greater relief.

Households with a monthly income of less than R1880 will receive 100% rates rebates, up from the R1760 cut-off last year.

This is a dramatic improvement in the City of Cape Town 's indigency policy.

When we came to office in March 2006 there was no 100% rebate, and the upper limit for the partial rebate was a maximum household income of R2 400 per month.

I am happy to say that 19 000 senior citizens and disabled persons now receive our rebates. That is a significant improvement for the vulnerable of this city.

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.

Our whole package of subsidies and rebates for the indigent also remain in place.

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. Free or subsidised refuse collection will also continue for such properties. Low consumption households will continue to receive 50 kwhours/month free electricity.

We will also continue to exempt the first R88 000 of all properties from property value rates.

If residents cannot pay for rates or services, they can come forward and get registered on our indigency database, and we can assist them.

We also have generous free basic services, as I have outlined.

But it is also important to note that this year's moderate increases in the water and sanitation tariffs are partially due to the significant improvement in rates of payment for those services over the past two years.

In calling for a moratorium on the City of Cape Town's debt management system Premier Ebrahim Rasool has disregarded his constitutional duties toward local government.

Section 155(6) of the Constitution states that a provincial government must "promote the development of local government capacity to enable municipalities to perform their functions and manage their own affairs".

By pressuring the City to abandon debt management measures, and by effectively encouraging residents to resist default, the Premier is actively undermining the functioning of the municipality.

In terms of his constitutional obligations, the Premier should be encouraging people to register on our indigency database so that we can assist them.

Instead he is encouraging them to break the law.

I would also like to respond to the Premier's statements in his budget speech about the breakdown in relations between us.

Because this is not about egos, as the Premier said.

It is about his party's abuse of state organs to fight party political battles.

This is unconstitutional.

The Premier claims that the breakdown in our relationship is the result of the Erasmus Commission.

In fact, the Erasmus Commission was simply the last straw in a long line of attempts by the Provincial Government to undermine the DA and the Multi-Party Government of Cape Town since the ANC lost the local government election in 2006.

The first time Province openly tried to abuse its power to serve ANC ends was several months after the election when Local Government MEC Richard Dyantyi (with the support of the Premier) tried to change the system of governance in the City from an executive mayoral to an executive committee system in order to unseat our multi-party government and get the ANC back into office.

Among various other deliberate attempts to undermine us, Provincial Government tried to retard the City's efforts to deliver housing more efficiently by refusing to grant the City housing accreditation. Clearly the ANC wants to retain control of this function for patronage purposes.

Housing accreditation would allow the City to speed up housing delivery by cutting red tape and accessing funds for housing directly from National Government.

We estimate that with full accreditation the City will be able to approve housing projects within 2 to 3 months, as opposed to the current 18 months (at least) that it takes the Provincial Department of Housing.

National Housing laws state that Province must grant local government housing accreditation. The Provincial Government's refusal to abide by the law has meant we have had to enter a formal intergovernmental dispute to resolve the matter. This is a very long and laborious process.

Furthermore, we have encountered additional obfuscation and delaying tactics.

We have therefore now set a deadline for the process, after which we will have fulfilled all of our obligations under the inter-governmental relations framework Act, and will proceed to court.

The MEC's refusal to grant us accreditation is particularly ironic in light of the collapse of Thubelisha, which was supposed to be managing the N2 Gateway Project under the Provincial Government's watch.

They kicked us off the project when we warned of problems and now their delivery arm has collapsed as a result of bad management.

Then we had Province trying to take over our public transport operating responsibilities through its proposed Public Transport Operating Entity.

The Constitution makes public transport, that starts and ends within municipal boundaries, a municipal responsibility. The National Land Transport Transition Amendment Bill, and Cabinet's National Public Transport Strategy likewise give the responsibility for municipal public transport to municipalities.

We therefore could not legally hand this responsibility over to Province. Our legal advice was that this was unconstitutional.

Provincial government's proposal for a Public Transport Operating Entity would have made Cape Town the only city in South Africa to have municipal public transport under control of a Provincial Government, putting it out of step with national policy. Again, the Premier is profoundly misleading the public when he claims that the City has refused to work with Province.

Now we have the Erasmus Commission, which is an attempt to smear the City government ahead of the 2009 General Elections.

Our argument is that in launching the Erasmus Commission the Premier has tried to take on powers he does not have - he is trying to play policeman by falsely alleging that the City has conducted illegal spying and then setting up a commission to investigate when the police could find no wrongdoing on the part of the City, after months of exhaustive investigation.

Ironically, the interim report of the Erasmus Commission itself supports this view - it states that the Commission could find no evidence of illegal spying by the City.

It is clear that we cannot expect the Province to stop its assaults on the City in the medium term. We have seen examples in the tragic events of the past week, but we have refused to respond in kind.

I only hope that next year's elections put an end to this one way or the other.

As the current upheaval in our communities shows, our young democracy is vulnerable and cannot be taken for granted.

We must not allow abuses like this to undermine the stability of our body politic.

Before I finish, I would like to mention an important item that this council will consider later today.

That is the proposed naming of the new clinic at Mfuleni after our former Executive Director for health, Dr. Ivan Toms.

Doctor Toms died tragically before his time, and we wish to honour his memory, and his enormous contribution to our organisation and the people of Cape Town.

I trust that this decision will meet with the full support of council.

I thank you.

This is the prepared text of the speech by Mayor of Cape Town, Helen Zille, on the budget for the City of Cape Town 2008/2009, City Council Chamber, May 28 2008. Issued by the Mayor's Office