Durban, 26 May 2004
Meeting the challenges of a second decade of democracy: fulfilling the people's contract to fight poverty and create a climate for growth and development
Introduction
iNkosi B.F. Bhengu of KwaNgcolosi
iNkosi P.P. Luthuli of uMnini
iNkosi T.F. Gwala of Maphephetha
iNkosi B.A. Makhanya of Sobonakhona
iNkosi E.B. Shozi of Vumazonke, and
Acting iNkosi M.J. Ngcobo of Qinisela Manyosi, present
This is your City and your municipality. We are proud of you. You are exemplary. We thank you for gracing this important occasion.
As I begin my budget speech may I congratulate the province's new Premier, Cde. Sibusiso Ndebele. I have no doubt his election as our Premier heralds a new beginning for our province in which we focus on peace, democracy and development.
As His Majesty King Zwelithini Goodwill KaBhekuzulu said at the official opening of the first session of the third KwaZulu-Natal Legislature: "This province needs peace and reconciliation. KwaZulu-Natal has far too long been associated with violence. It is the responsibility of all our people, not only the leadership of this province, to shed this negative image."
The building of a non-racial, non-sexist, democratic and prosperous South Africa is central to the commitment we have always made to our people. This is a commitment whose roots lie firmly in the Freedom Charter and the Reconstruction and Development Programme.
Inherent in this commitment is the need to work tirelessly towards the objective of banishing poverty, ignorance and general want in our country.
As we look back at the progress government has made since the 1994 election breakthrough, we do so with a sense of satisfaction that the tide has and continues to turn. We look back with pride that, after 10 years of democratic rule in our country, the pendulum against poverty, despair and underdevelopment has begun to swing.
As we celebrate out tenth year of democracy and freedom and our successful World Cup 2010 bid I stand before you today with pride and honour to present to you the budget for the 2004/2005 financial year for the city of eThekwini. The overall size of the budget has grown to R10,849 billion which comprises R2,293 billion Capital and R8,556 billion Operating budget. The size of this budget is an indicator of the growth of this city and also of the Council's response and commitment to its residents, ratepayers and the business community which it serves.
This budget has been compiled in accordance with National Treasury's requirement of multi-year (three year) budgeting. Some of the main challenges we will face in the coming year are the impact of Municipal Finance Management Act, the preparation for 2005 local government elections and the impact of Property Rating Act.
The budget represents continuity and change. We continue to implement our policies of redressing backlogs in service provision, building our people and growing the economy. We must change and it has become even more urgent that we must transform our institutions to truly serve our people.
At present we have a relatively flat rates base growth, which means that the rates income is not growing fast enough. Enormous strain was put on the Council's coffers with the amalgamation of the various Operational Entities, many of which had poor accounting and management systems and unbalanced budgets.
The Council is committed to levying affordable tariff increases to benefit all the people of the city and in this regard we have once again managed to achieve single digit increases in Rates, Electricity and Water Tariffs.
We also, once again resisted the temptation to increase Business Service Levies. These rates have not been increased since the inception of Business Levies in 1991 and remain among the lowest in the country.
So, whilst the Budget will address all sectors, in particular, more than 200000 households will benefit from the City's life-line tariffs. In that regard, 67 000 households will benefit from the 6Kl of water per month free and 220 000 from the pre-paid electricity system with those consumers that utilise under 130KwH of electricity getting 50KwH free per month.
Furthermore, the Council continues to provide a life-line tariff for rates where all properties valued between R0 and R30 000 pay no rates and the sliding scale from R30 001 to R100 000 is also applicable. We have also written off arrears on properties valued less than R80 000 up to 2003-06-30.
We are pleased to announce that
We inherited an economy in a state of collapse, where for instance no South African firms were able to compete in global markets. It is therefore inescapable that as we continue to focus on the growth, development and modernisation of the First Economy, we must fight poverty and underdevelopment, disease and joblessness and focus our energies on integrating the Second Economy into the mainstream while providing the safety net of social services.
Our mandate remains to provide equitable service delivery to all our people, to service all our ratepayers equally and to do good business so that our residents can enjoy a good quality of life and our city can grow and develop.
It is simply good business to grow and support the middle class. This is our ratepayer base and the income generators of the city. From this group also comes the job creators and those who grow our economy and improve the skills level of our people.
Electricity increases have been lower than inflation over the 10 year period. This has been a magnificent achievement considering the extension of this service to the historically disinvested areas, with the provision of electricity to an additional 250 000 houses. The first 50kwh of electricity is free to residents using less than 130 kwh of electricity per month. (Qualifying households will have to make application for the concession)
Water increases are only 5% over CPI over a 10 year period notwithstanding the take on of township areas and Umgeni Rural Areas which had very poor and little infrastructure. We have provided water to approximately 25 000 additional consumers per annum and provision of 6 kl free to 67 000 consumers. Households with property values at R 30 000 or less will not pay a fixed charge for water.
But we do have a serious problem with water that is lost within the system. We hope to reduce these losses from 31 % currently to approximately 25 % of water purchases. Investigations are ongoing in an attempt to reduce this percentage further and measures are in place to reduce losses to an acceptable level.
We are also appealing to the residents and councillors to report any leaks or burst pipes they see, especially in the townships, so that the problem can be fixed.
We have also made huge progress in the provision of basic health care to all our people including the construction of clinics.
As local government, we have set ourselves the objective of ensuring that all our people, have access to proper health care. In the past six months we opened 2 new clinics which brings the total in eThekwini to 56.
They key challenges we face in our quest for a healthier city are:
Because we want eThekwini to be exceptional, not just average and the best city in Africa in which to live, we have moved from being the deliverer of services to being the driver of growth and development.
In the process of drafting this Budget, public hearings were held as part of the process of consultation and in compliance with the requirements of the Municipal Systems Act. A number of meetings were also held with the Durban Chamber of Commerce and Industry at which salient aspects of the Budget were explored.
We continue to be accountable to the people of our city. Over 65 Masakhane Roadshows were held and over 270 organisationss benefitted from our Grant in Aid programme.
As government we are committed to finding appropriate responses to our economic challenges. We certainly confirm the strategic link between BEE, job creation and poverty alleviation.
I have asked the City manager to begin to record all BEE firms benefiting from the procurement of services from the city and each year I would like to see that list growing and new organizations emerging which will benefit from the city's procurement process.
We must prioritise job creation and poverty alleviation over self-enrichment and uncontrolled greed.
The eThekwini Municipality continues to pursue, aggressively, the policy of preferential procurement as part of our ongoing attempt to boost BEE and job creation.
Our efforts to create jobs require a partnership between the private sector, and ourselves and in some instances this has proved useful. We have developed an excellent working relationship with organized business in our province.
As a cadre of the ANC I am proud of what my party has achieved over the past ten years, especially and I believe that now that we have a direct alignment between all three spheres of government we will see more action. We have a dynamic team of MEC's and the Chairs of the provincial Portfolio committees will certainly keep matters moving in the province, which will impact on us here at local level. In this regard I am committed to ensuring we don't have such sizeable unfunded mandates.
Our achievements in building a non-racial and non-sexist South Africa can be seen from the growing number of Africans and women who occupy senior position in government and in the corporate sector.
We are committed to: Clean governance, equity and the fight against corruption.
Our Integrated Development Plan (IDP) was approved by Council on 25 June 2003. The IDP is a clearer reflection of our responsibilities as a municipality and contains a more robust Spatial Development Framework. Once again detailed community needs assessments were conducted across the Municipal area, during the IDP review workshops held in November and December 2003.
In compliance with the Municipal Structures Act, our budget is aligned directly to the IDP which means that the Council's long term vision is supported by specific action plans and objectives which have been incorporated into both the Capital and Operating Budgets.
So, in order to make the IDP more effective it is imperative that both the operating and capital budget are aligned to the programmes of the IDP.
At the World Summit on Sustainable Development the existence of a link between poverty eradication and sustainable development was reaffirmed. This means that economic growth should be accompanied by a qualitative change in the lives of the poor. That is where our Flagship projects have been performing so perfectly. Besides the job they create and skills transfer that occurs during their construction, they create ripples of energy that stimulate growth and development.
The following provisions have been made in the 2004/5 Capital Budget towards "flagship" projects.
The River Horse Valley development will pump millions into a particularly poor region of Durban. It is close to major residential areas of Kwa Mashu, Newlands and Inanda, where unemployment is unacceptably high and standards of living are desperately poor. We are planning that River Horse be developed as plus/minus 15 separately identified mixed-use business parks, residential parks and these two direct access service stations. This is presently the largest road project undertaken by the eThekwini Municipality - the R320-million construction of the Nandi Road Arterial is fast on track - with completion estimated for 2006.
And of course, uShaka Marine World -our treasure on the beachfront-- is living up to its expectations and will become one of our greatest tourist attractions. But much more than that this flagship development has had a ripple effect that has sent property prices in the South Beach area soaring and has made that whole area costly and sought after for investors and developers alike. And all this means jobs for our people and rates for the city so that we can do even better to serve our people.
May I take this opportunity to thank all those who made uShaka Marine World possible: the ANC's political leadership, the former North Central, South Central and Metropolitan Transitional Councils, the present Council, the residents of eThekwini, the project managers, the contractors and all who believe in the work we are doing. Thanks!
Several measures have been taken to make the municipal account more affordable to poorer households, including rates exemptions, and water and electricity concessions.
It is one of our key challenges in the Thekwini municipality to integrate skills development and to shift development activities from in the classroom to on the job. I also believe that it is essential to instill in all individuals a sense of responsibility for their own development.
Over the past two years we have trained more than 11 000 employees as part of an on-going process and we are very much involved in the Siyaya programme where we have committed ourselves to training 1 000 graduates in a learnership agreement with the SETAs. A further 4 000 unemployed matriculants will be accommodated in learnerships via the Durban Chamber of Commerce and its members.
We play a major role in the Durban Technology Hub, an integrated incubator model, provides relevant training, business support and shared resources to ensure that a stream of appropriately skilled ICT practitioners and entrepreneurs are developed, in order to address the shortfall that presently exists in Durban. In other words, we are ensuring that Durban becomes a smarter city and also contributes to Nepad.
Whilst the Transport Service has been disposed off to a private consortium, there is still an obligation to subsidise the "in city" routes. It is anticipated that the National Department of Transport will fund this subsidy of R144 million p.a., however, only R100 million has been committed at this stage. High level liaison will continue for the balance of funding of R44 million.
In addition to the core functions that the eThekwini Municipality has to carry out in terms of the Constitution, other non-core functions and services are being provided, which in terms of the Constitution fall under the responsibility of National or Provincial Authorities. These functions include Health Services, Libraries, Museums, Housing and Hostels.
The reduction or non - payment of subsidies for these services require the municipality to allocate its own resources to make up the shortfall. With the political leadership at Province level changing, we anticipate a more inclusive approach to issues from a social and economic point of view.
Treasury is spearheading the drive to identify and implement cost improvement strategies throughout the municipality. The overall approach is to undertake a systematic scrutiny of the largest items of expenditure and look for alternative, less expensive ways of achieving the same or enhanced outcome.
The Equitable Share received from national Government has increased from R 348,7m in 2003/4 to R366.2m in 2004/5, an increase of R17.5m or 5 %, which is well below macro. The bulk of the increase is being directed towards the provision of Basic Services.
In order to facilitate collection of arrear amounts, the services to the defaulting consumers are terminated in the case of Electricity service and a restriction of supply in the case of Water, after sufficient notice has been given to the consumer. The outstanding debts are handed over to the Debt Collection Department for collection and procedures are in place to try to recover the debt.
The increase in the number of days of debt outstanding is alarming. The council is stringently applying measures to recover outstanding debt and has confirmed it's policy of Sale-in-Execution of property for non payment of property taxes.
Rates payable by properties under the control of the Ingonyama Trust have still not been paid for the period up to 1 October 1998. With respect of period w.e.f. 2 October 1998 in terms of Ingonyama Second Amendment Act all deeds of Grants, Leases and Private Treaty Owners are rateable and the occupiers of these properties are the deemed owners. The total amount owing for the period up to 31 March 2004 amounts to approximately R 93m.
The Global Credit Rating Company in its latest analysis of South African Local Government has upgraded the domestic, local currency credit rating of the Municipality and has awarded the Council a credit rating of AA (up a step from last years AA) which reflects the Council's very high credit worthiness supported by good fundamental protection factors. This new rating will provide the Municipality with a sound financial basis to meet its economic development and service delivery challenges.
The most significant benefit of a high credit rating is the ability of the Council to raise loans at a much lower rate than would otherwise be possible, thus reducing its debt obligations.
That we have succeeded in attaining a balanced budget is attributable to stringent fiscal discipline as well as the commitment of all Heads of Departments, the Executive Committee and Council to the process.
I would like to thank the City Treasurer, Mr Krish Kumar and his Team for preparing this budget and also for keeping us all on our toes throughout the year. I also want to thank City Manager, Dr Michael Sutcliffe and all of our staff for the work they do to bring a better life to all the people of eThekwini.
And last, but not least, my comrades and colleagues, the councillors, especially Exco. I thank you all for your hard work and efforts. We have been elected to serve our people, and by providing them with a better quality of life. I think we are fulfilling that mandate.
I thank you.