BUDGET FOR THE 2011/12 MEDIUM TERM REVENUE AND EXPENDITURE FRAMEWORK [MTREF]

This budget, both capital and operating, is presented in the context of:

High unemployment

Escalating costs (Raw water, Electricity, etc)

Guidelines of National Treasury

Conditionality of Grant Funding

SALGA Bargaining Council agreement

Financial Recovery

Economic trends

Stagnant revenue streams

Changing consumption trends

The need to collect debt owing to Council – the current average collection rate is 93.72% - this must be improved

The challenge of integrated planning between the 3 spheres of government

The development of the MTREF was undertaken with political oversight but considering that Budget would have to be approved by the incoming Council. This decision and practice will enforce ownership of the budget but the current Council.

Post the tabling of the budget for approval on 31 May 2011 the Executive Mayor appointed a task team to ensure the linkage between the priorities established in the IDP and the budget.

The priorities are included in the IDP and focus on 5 key themes:

Ward transformation and development;

Service delivery and infrastructure development;

Local economic development;

Financial sustainability and viability; and

Good governance and public participation.

This budget realises the importance of maintaining infrastructure assets, the importance of creating jobs, the implementation of the water disaster plan linked to the National Funding formalised in the Division of Revenue Act (R 450 million) and creation of accountable and clean governance. The budget is reflective of the priorities established in both Outcomes 8 and 9 which emphasises sustainable human settlements. The budget further encourages, with assistance of the IDP, that this municipality is at the forefront of community participating, ward committee work done and still to be done and stakeholder interaction. This finally places the municipality at the corridor for interaction with its representative communities as envisaged by the Local Government Turnaround Strategy.

Speaker and Council, this budget is pro-poor with the emphasis of the 80/20 principle applied when allocating capital budgets and operating progammes to various wards. In addition, the average tariff increase for a small household is set at 12.6% compared to the average tariff increase for a large household that is set at 16.4%.

Speaker and Council, the sustainability of this municipality will be dependent on continuous engagement with our various stakeholders and communities. Business has an important role to play by contributing to the economic growth of our metropolitan municipality. Business is a recorded stakeholder of our municipality. All stakeholders are encouraged to continue to engage our municipality in an endeavour to provide suggested solutions to our continued challenge of providing services to the poor and sustaining our economy.

The budget presented to Council is reflective of R 6.6 billion operating budget and a R 1.360 capital budget. The operating budget has been significantly reprioritised by the task team appointed by the Executive Mayor which was successful in reducing the draft tariffs for Property Rates, Water, Refuse and Sewerage to 11.5% across the services list. Council has agreed to consume partial cash risk but at the same time providing for financial sustainability. The main consideration must be affordability of services by the consumers.

Electricity tariffs will be informed by the NERSA application which has now been agreed to as per a formal notification dated 27 June 2011. The approval indicates that the application was approved in full except for the domestic tariffs which will be reduced by approximately .02%. The financial impact of this reduction over the financial year is approximately R 1.9 million. This revenue reduction will be absorbed into the operating budget of Council.

The capital budget funding thresholds and projects are part of the budget submission today. The allocation to wards will take place over the next 7 days and will be included in the Service Delivery and Budget Implementation Plan to be approved by the Executive Mayor within the MFMA stipulated timeframe of 28 days after the budget has been approved.

Speaker, I hereby now seek the approval of the operating and capital budget by Council. The budgets are included in the Agenda circulated for this meeting, dated 28 June 2011.

I wish to thank the officials and the politicians that assist me at the task team level. The interaction with the relevant directorates added quality and responsibility to the deliberations.

There is a lot of work to be done to source additional funding to support our growing community needs.