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.
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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.
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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.
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.
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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.
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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.
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.
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 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.
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.
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.
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 90% 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.
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.
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.
This is the
prepared text of a speech delivered by the Mayor of Cape Town, Helen Zille, on
the tabling of the draft budget 2008/2009, Council Chamber March 26 2008