2010/11 BUDGET SPEECH

Presented by Executive Mayor Lulama Mvimbi

INTRODUCTION

Mr Speaker, Deputy Mayor, Members of the Mayoral Committee, Councillors, Ladies and Gentlemen

It is my privilege to present the last budget of my current term as Executive Mayor. As you all are aware, we are having local government elections in the year to come and it is therefore appropriate for me to reflect back to what the ANC government has accomplished during the past 5 years.

Our former president Nelson Mandela at a time said, and I quote:

“I am not a saint unless you think of a saint as a sinner who keeps on trying”.

Mahatma Ghandi went further and mentioned that “Freedom is not worth having if it does not include the freedom to make mistakes”.

During this term of Office we kept on trying to improve the living conditions of all the people staying within the municipal area. We are the first ones to admit that we made mistakes but every time it encouraged us to do better and to make our freedom worthwhile.

The past five year’s highlights can be summarised as follows:

• In 2006/07 we had a capital budget of R76 million of which 68 % was financed from Grants.
• In 2007/08 we had a capital budget of R71 million of which 44% was financed from Grants.
• In 2008/09 our Capital budget amounted to R 90 million of which 7% was financed from Grants.
• In 2009/10 Our Capital budget amounted to R129.7 million of which 46 % was financed from Grants.

All of the above expenditure was incurred with the intention to improve service delivery. We have improved our infrastructure with the help of National and Provincial government, but mainly financed the expenditure from our own sources. Where shortfalls existed, we took up external loans to ensure that more than just the minimum is being done.

Housing

We have outperformed all similar size municipalities in respect of housing delivery, a basic need of all of us.

• In 2007/08 we received R15 million for the building of subsidised houses;
• Based on the municipality’s excellent performance the 2008/09  allocation increased to R 29 million; and
• In 2009/10 our original allocation of R 11.8 million was adjusted upwards to R 51 million.

The above was all due to the municipality’s capability to deliver houses in time and spending even more than what was allocated to us. The quality houses that were build in Bossiesgif/Qolweni as well as the serviced erven in Kwanokuthula serves as proof that the ruling party in Council is really serious about service delivery. In the ensuing financial year, depending on the funds allocated to us by the Provincial Department of Housing, houses will be built on the serviced erven in Kwanokuthula and Bossiesgif/Qolweni.

Special Community Programs

Special attention has also been given to the addressing the following community needs:

• Financial contribution to the Bitou 10 Education & Development Foundation.
  • Bursaries to local scholars who want to further their education. The annual Mayoral Golf Challenge also contributes towards this worthy cause.
  • Annual allocation to early childhood development institutions and initiatives, and
  • Dedicated budgeted amounts to Youth, Gender and Disabled development in the past 5 years
  • Dedicated budgeted amounts towards grants in-aid

We have invited applications from charitable non-governmental organisations for grants in-aid in respect of the 2010/2011 financial year.  These applications are presently receiving attention and will be finalised during the month of June 2010.

Disasters

A number of disasters occurred within the municipal area during this term. It tested our ability to immediately respond to the needs of vulnerable people and we’ve passed that test. In 2007 the BITOU municipal area was hit hard by a flood. A lot of our infrastructure was damaged and the municipality had to utilise more than R40million to repair flood damages- out of its own resources. National Government allocated R 29 million to the municipality in order to address flood repairs.

Recent fires damaged agricultural land and a number of houses within Kurland and Kwanokuthua. The municipality repaired houses that were burned down due to the fires and lend a helping hand to those who were affected by this disaster. We estimated that the final expenditure relating to the above fires will amount to more than R 4 million. Only the cost relating to the rental of helicopters to fight the fires, amounted to R520 000, 00.

You will also recall that the world, (Including South Africa) was greatly affected by the world wide economic meltdown in 2009. Bitou was also affected by this economic crisis but we’ve managed to keep the doors of the municipality open and ensured that the institution stayed financially viable. Severe drought currently creates challenges to the municipality but with the assistance of national and provincial government we will overcome this.

2010 FIFA WORLD CUP

In the build up to the 2010 Soccer World Cup, the municipality in conjunction with Provincial Government hosted a successful Confederations Cup fanjol’s in New Horizons. We are currently involved in a number of initiatives that will benefit the community and especially the local football fraternity.

• Mayors cup for the past two years
• Easter Tournament
• Mini world cup
• Community viewing areas; Kwanokuthula, New Horizons, Bossiesgif/Qolweni, Kurland and Kranshoek.

Mr Speaker, I can continue on this subject ad nauseam. It is not possible to summarise what was accomplished by the ruling party in one report or in one meeting.

1. THE 2010/2011 BUDGET

In his opening of the National Budget Speech, our Finance Minister, Mr Pravin Gordhan felt it appropriate to remind us of what the former president of South Africa, Nelson Mandela said in his last visit in Parliament, and I quote:

“He reminded us of what we have achieved in our struggle for freedom and in our democratic journey. He reminded us that South Africans are capable of extraordinary things. “

Mr. Gorhdan went further by quoting from the State of the Nation address:

“None of us can rest or sleep peacefully until every South African can say:

• I can see a better future. I can find a job. I can learn a skill.
• Hard work will enable me and my family to have shelter and food.
• If my children work hard at school and college, they will have a better future and a thousand opportunities.

Our people need hope. Our people want government to lead. We will lead.Our people want government, business, labour and social organizations to work together to create a better economic future.

Our people want to be positively energised so that they can take the initiative to improve their own lives and communities. Our people want action on jobs, growth and poverty. We must build a new common purpose so that we can use all of our talents, skills and resources to tackle our economic and social challenges.

Mr. President, you have said we must do things differently. We cannot do the same old things and expect different results.”

The budget that I present to you today is aimed at addressing the above issues. It was compiled with the intention to deliver on what was raised by our President and to address the vision of the municipality, to be the best together.

2. BUDGET PROCESS

Section 21 of the Municipal Finance Management Act, Act 56 of 2003, requires from me to co-ordinate the processes for preparing the budget and to review the integrated development plan and budget related policies.  The process started with the approval of a time schedule of key deadlines for the budget and IDP by Council.  The new budget and reporting regulations that was published in April 2009, required from us to have a budget steering committee. We established this committee which was very active in providing advice and guidance during the budget process.

In preparing the budget we have to take the following into account:

• The Integrated Development Plan(IDP)
• Revenue and expenditure projections for future financial years
• The National and Provincial budgets
• National government’s fiscal and macro-economic policy;  and
• The Division of Revenue Act, 2009.

We went further and also considered the following economic factors when preparing our budget

• The  CPIX
• The Repo Rate
• The local economic conditions
• The tariff increase from Eskom
• Guidelines from National Treasury, more specifically Circular 51 of 2010.

The 2010 IDP Review and 2010/11 multi-year budget went through various consultative processes.   Firstly, we went out to the Ward Committees to get the input of the people into the draft IDP review and draft Budget. We consulted with National and Provincial Treasury through the LGMTEC platforms and raised issues that were not our core function with the different spheres of Government. The guidelines from National Treasury also played an important role in the preparation of the budget. We further made the draft budget public at all our offices and libraries and invited the public and other stakeholders to comment on the Draft Budget that served before council on 31 March 2010. We then went through an extensive public participation process in all the communities. The Draft Budget was presented via public meetings in all wards.  The comments on our draft IDP review and draft budget from Provincial Treasury at the LGMTEC 3 engagements were favourable. The Provincial Treasury made a thorough assessment of Bitou’s 2008/09 financial statements, the IDP, LED strategies and the draft 2010/11 multi-year budget.  It was concluded that in the main Bitou’s draft budget and IDP is sustainable, credible and responsive.

3. CURRENT FINANCIAL POSITION OF BITOU

Although we are now feeling the effect of the economic meltdown, our financial position is still sound and therefore I can assure you that we will be able to fund this budget that I will present to you. The budget has been prepared using the new budget formats. National Treasury also required us to do a funding compliance assessment whereby the finances of the municipality are being looked at from different angles.

Sound financial control will have to be implemented in the coming years as we have to ensure that the municipality stays financially viable at all times. We will have to lower capital expenditure and focus on building our reserves to ensure that we have sufficient funding to invest in much needed infrastructure projects in the years to come.

4. VISION AND STRATEGIC OBJECTIVES OF BITOU    MUNICIPALITY

We are still committed to making our vision a reality in Bitou- ‘To be the best together ‘and will do everything in our power to realise this.

We furthermore commit ourselves to the following five national key performance areas for local government:

• Municipal transformation and organizational development;
• Basic services and Infrastructure development;
• Local economic development;
• Municipal financial viability and financial management;
• Good governance and public participation.

5. DISCUSSION OF IDP AND BUDGET

In evaluating the 2010/2011 Budget and Integrated Development Plan (IDP) Review, it is clear that Bitou has progressed quite substantially in complying with the principles of a second generation IDP.   The budget was compiled in accordance with the new Budget and Reporting Formats as prescribed by National Treasury. This multi – year budget covering the period 2010/2011- 2012/2013 will allow us to deliver on our strategic objectives.

Operating Budget:

The Operating revenue and Expenditure for the MTREF are as follow

The budgeted operating surplus is a result of conditional capital grants which are shown as revenue although it funds capital programs.

Operating Expenditure:

When compared to 2009/2010 the 2010/2011, operating expenditure increased by 7.3%. This is mainly due to the increase in bulk purchase price of electricity.

The expenditure per subsection in the Operating Budget can be divided as follow:

Operating Revenue

Our operating revenue is made up of the following sources

Capital Budget

The total capital budgeted expenditure for the 2010/2011 financial year amounts to R 113,4 million compared to R 129,7 million in 2009/2010 which is a 12,6% decrease year on year. I will elaborate later on in my speech on some of the highlights of the 2010/2011 capital budget.

The link between our operating and capital budget and the national key performance areas for local government reflects the following spending patterns:

Judging from this, it is clear that Bitou Municipality’s priorities lies with changing the lives of the poor by ensuring that the bulk of our monies are allocated towards basic service delivery.

6. SUPPORT FROM PROVINCIAL AND NATIONAL GOVERNMENT

The following Grant allocations will be received from National and Provincial Government for the 2010/11 Budget year:

6.1       National Transfers

6.2         Provincial Transfers

7.  TARIFFS

When revising rates, tariffs and other charges we took the following into account:

• the labour and other input costs of services provided by the municipality,
• the need to ensure financial sustainability, local economic conditions
• the affordability of services,
• The municipality’s Indigent policy.

National Treasury requested municipalities to keep tariff increases below 6%.

It was impossible to keep tariff increases below 6 % because of the increase in personnel related costs (8.6%), bulk purchase price of electricity (28.9% effectively) and other operating costs (10%). We will however reduce the effect of this tariff increase on consumers by limiting it to 21 %.That in effect mean that the municipality will subsidise residents with 7,9%. We attempted to keep increases to the minimum and the following tariff increases are proposed:

We will continue to provide free basic services to poor and indigent households and therefore we urge those households which qualify for indigent and other support to come forward and register for a subsidy.

8.  BUDGET HIGHLIGHTS

I now draw your attention to the following highlights in the 2010/2011 Budget:

Operating Budget

Capital Budget

9.  CONCLUSION

In conclusion, Mr. Speaker, I can without doubt state that the proposed 2010/11 multi-year budget attempts to support Bitou municipality’s strategic role and will definitely contribute to poverty alleviation and improving the lives of the poorest of the poor.

I thank you.

ALDERMAN L MVIMBI

EXECUTIVE MAYOR