City’s annual budget – prioritising effective service delivery and economic recovery

31 March 2021

Speaker, fellow councillors, city officials, residents, members of the media, and all guests, good morning.

Today I table the City of Cape Town’s proposed annual budget, which will be issued for public comment so that our residents can give their input before we approve the final budget.

Before we discuss the budget in more detail, I want to say a big thank you to every councillor who continues to do everything for our residents, to every city official, and let me repeat that - to every city official, I want to say a big thank you for all that you do for our residents. I know these have been tough times, but your hard work and dedication to this beautiful city is appreciated by our residents.

I know this for a fact because the results of the latest City of Cape Town Residents Satisfaction Survey were presented to me last week and what those results show is an improvement in every category on which we are rated. Our residents’ trust in our ability to deliver services has increased, satisfaction levels with the overall performance of the City has increased, residents believe we our fulfilling our role as a public service provider and when compared to other public service providers, we received the highest rating. This overall improvement in our ratings is proof that our residents believe we are raising the bar, because we are!

I want to thank our residents for placing their trust in us to deliver the best quality services in the country, and assure them that we will continue doing all we can to meet, and where possible, exceed their expectations.

Speaker, this brings me to the proposed 2021/22 budget, which was prepared during a time of global uncertainty as the Coronavirus pandemic continues to have an impact on all of us.

I want to thank our residents for their continued commitment to pay their rates on time. Because of this, we are in a much better financial position to deliver the necessary services to our residents.

The proposed annual budget for 2021/22 is R56,48 billion, of which R48 billion is allocated to the operational budget, and R8,4 billion is allocated to the capital budget. The budget outlines our funded commitments as the City, which will see us deliver on our Integrated Development Plan (IDP) and associated strategies in order to effectively support the lives and livelihoods of all our residents.

Speaker, the current Covid-19 global pandemic has placed huge strain on our residents and on the City’s capacity to deliver financially sustainable services.

Until such time as we reach herd-immunity, through the roll-out of an effective global vaccination programme, we anticipate that we will continue to operate within the constraints of some form of lockdown imposed through the National Government’s Disaster Regulations, which results in additional costs to deliver services within the public health response.

However, we will not allow these constraints to prevent us from delivering services, which sustain both lives and livelihoods. We are determined to continue charting a recovery path for the City, and ensuring that the appropriate levels of services are delivered as efficiently as possible. The investments made through this budget will not only help to ensure services are delivered and communities are protected, but they will also support the critical recovery of our local economy.

Having experienced the economic fallout from this crisis, and how it has impacted on the income levels of businesses and residents, we have placed significant emphasis on ensuring that this budget does not impose further economic hardship on residents and businesses.

We have therefore ensured that through extensive expenditure cuts, the rates and tariff increases have been kept to an absolute minimum with a 4.5% increase for rates, 5% increase for water and sanitation, and 3,5% for refuse removal.

The electricity tariff will be increased by 13%, with residents being spared the full increase of 15.6% imposed by Eskom.

It is important to note that 65% of the City’s electricity tariff goes toward buying bulk power from Eskom at great expense. The pressure on municipalities and customers due to these extreme Eskom increases are profound. But the City will continue to do all it can to protect its customers:

- By cushioning them from the highest Eskom increases as far as possible and to ensure that we are able to provide a secure and well maintained electricity service;

- By protecting them from a stage of load-shedding where we can, through our well-maintained Steenbras Hydro Pump Station

-and by continuing the fight to procure cheaper, cleaner and more secure power from independent power producers. 

Included in the proposed expenditure cuts in the 2021/22 financial year is a R460 million cut in staffing and contracting services. We have also committed that there will be a zero percent cost of living increase in the salaries and wages provision in the 2021/2022 financial year. To achieve this, the City will petition the Local Government Bargaining Council to not award any salary increases for staff and councillors.

We understand that this has been a hard year for everyone, including our staff and councillors, who I am very grateful towards for continuing to deliver services and support our communities under very trying circumstances, but we all need to make sacrifices to achieve longer term sustainability.

While the private sector continues to take strain, there is simply no way that the public sector, by virtue of being subject to collective agreements should impose further strain on the residents we serve. Should the bargaining council  not agree to our request, and bind us to making ill-advised increases, the City’s staff numbers will have to be decreased as there simply are not enough funds for both.

Our Cost Containment Policy continues to reduce our dependency on consultants and other contracted services, as we continue to re-assess our utilisation of office accommodation in response to the relative success that we have had in shifting some city functions onto electronic platforms.

Unfortunately, as a result of Eskom’s 15.6% increase in electricity prices, which applies to the whole country, we have not been able to fully mitigate this increase on the electricity tariff. We have however made additional expenditure cuts to ensure that residents and businesses don’t bear the full brunt of this tariff increase.

In light of the pressure on the National Budget, and the national government budget cuts, we will also have less funding available to fund our activities.

Despite these constraints, we have ensured the prioritisation of our Capital Expenditure programme, repairs and maintenance provision and expenditure that is required to ensure ongoing delivery of basic services to all residents.

We need to ensure that we can deliver these services as cost effectively as possible and will continue to pursue actions, which mitigate service delivery cost increases – including a concerted effort to minimise the incidence of unlawful land occupation and vandalism, which places an inordinate burden on service delivery. While these phenomena call for an effective application of the rule of law, they also require that we ensure sufficient and proactive protection of land and infrastructure as well as double-down on our efforts to create opportunities for well-located and serviced settlements.

Our budget has been a careful balancing act between meeting the service delivery needs of all businesses and residents in these trying times, and stemming further economic decline in this constrained context.

As the Mayor, and on behalf of my colleagues, we acknowledge and thank all residents and businesses for their continued high-level of payments which is key to ensuring that the municipality can continue to provide services to all who seek a livelihood in our City.

Speaker, I would like to take this opportunity to address what is going to be a tough few months. Not just because of the coronavirus and the pressure on budgets across the board, but because of the upcoming local government elections and the political shenanigans we are already starting to witness.

Some call this silly season, and I want to call on the media to be extra vigilant when reporting on political matters over the coming months. We have already seen some political opportunists get away with the media blindly carrying their propaganda as if it was legitimate. Instead of prioritising clicks and ad revenue, is it too much to ask that the basic principles of journalism be observed? Fact checking? Investigation?

We know about the ANC’s dirty politics and ‘Bell Pottinger’-like tactics. I want to call on the media to be extra vigilant and do not fall for their games.

In relation to this, I want to reiterate what we communicated last week as a result of more violence and destruction of city infrastructure by land invaders demanding free services. Last year, Cape Town experienced an unprecedented increase in especially large-scale, orchestrated unlawful land occupations during the Covid-19 national lockdown periods.

Various City line departments are still making assessments, however the information strongly supports the following conclusion: That although many claim evictions of backyarders as the cause, the evidence on the ground shows that they are a far minority of the cases. Economic profit for certain self-proclaimed landlords, ‘shack-farming’ and illegal electricity connection syndicates have been the main drivers of the spike in unlawful occupations experienced in 2020.

In addition, many of the areas that have been unlawfully occupied have been politically driven.

It is a fallacy to think that all the invasions are primarily because of a need for land. They are not. They are criminal and these criminals prey on the poor, who are charged for living on wetlands and other inhabitable spaces where no services can be provided, yet some NGOs and others want to defend these invasions.

While assessments of all new settlements are under way, it is completely unreasonable to demand immediate services, especially in areas where human settlements were never meant to be formed, such as in nature reserves.

I want to make it clear to those burning and destroying city infrastructure while calling for free services on the land they have illegally invaded – there simply is not enough budget to provide more services to those who invade land where no services exist. Thank you to the police for making arrests during the Kraaifontein and Delft protests last week. Those carrying out the violence and destruction must know that there will be consequences.

Almost all of the longer established informal settlements in City-supplied areas are electrified, where it is possible to do so and approximately 50 000 toilets are provided to service residents in 181 000 households in informal settlements across the city, which includes the servicing of toilets and janitorial services, which has continued throughout lockdown.

We have a limited budget that is already fully committed, so no amount of arson and destruction can change this. If the national government want to make more funding available to provide limited services to newly invaded land, then President Cyril Ramaphosa and the national parliament is where you want to make your voices heard, because there simply isn’t enough budget to keep providing services to those on newly invaded land. Perhaps if the national government stopped spending billions on bailouts they would have more funding to allocate to local governments.

Speaker, I want to conclude today by acknowledging that this week one year ago we were all housebound during the first week of the national lockdown. We have come a long way since then, and I want to acknowledge some of the successes that we have achieved in spite of the global coronavirus pandemic.

Firstly, we rapidly adapted our systems to ensure continued service delivery to our residents and we implemented a range of interventions including PPE provision for our front line staff, innovative remote-working solutions, and we were the first city in the country to take council meetings online, which we continue to do today.

Secondly, we implemented and continue to run a major humanitarian relief project, largely due to the national government’s shortcomings in this regard. We allocated R35 million towards critical food aid relief and supported 250+ soup kitchens with equipment and food to feed over 200 000 residents in need every single day during lockdown.

Third, we provided thousands of Covid-19 safety-kits, masks, hand-sanitisers, and safety-signage for local business and lobbied national government to scrap their race-based financial aid for businesses, but unfortunately they refused.

Fourth, our staff worked overtime and on weekends to clear service-delivery backlogs created by national government’s disaster regulations, which prevented many staff from working. We processed a year’s worth of vehicles licenses in six months – no other city in South Africa achieved this. We hired additional contractors and rolled out an extensive pothole repair campaign.

Fifth, between March and July 2020, which became known as the hard lockdown, we approved R5,2 billion worth of building plans to ensure the construction industry, a major employer in Cape Town, could return to work without any delays once the national government lowered lockdown levels.

Sixth, by working with our strategic business partners, we facilitated investments worth a phenomenal R11,27 billion into Cape Town, created 7 631 jobs and trained approximately 3 000 people during 2020 – all of this in the year of the global coronavirus lockdowns.

Speaker, thank you.

Issued by Greg Wagner, Spokesperson to the Executive Mayor, 31 March 2021