2018/2019 BUDGET SPEECH BY THE EXECUTIVE MAYOR OF METSIMAHOLO LOCAL MUNICIPALITY, CLLR SL TSHONGWE DELIVERED AT JJ KUBHEKA PRIMARY SCHOOL IN REFENGKGOTSO, DENEYSVILLE.
THE THEME: METSIMAHOLO AT WORK: -“We can, we must and we will.”
Honourable Speaker of the council of Metsimaholo, Cllr Mabasa;
Honourable Council Whip: Cllr Nyembe;
Members of the Mayoral Committee;
Senior Managers and other officials
Leadership of different political parties represented in Council
Leadership of Business and Labour
Residents of Refengkgotso and Metsimaholo in general
Ladies and Gentlemen,
Honourable Speaker, I rise before this august house and the beloved residents of Metsimaholo, this afternoon with a great sense of humility for the opportunity afforded to me to present the 2018/2019 budget speech.
Mr. Speaker, I believe that we all, when I say we all. I mean all political parties as well as the civic movements present today. We all went to elections with different mandates in our manifestos, above everything we were given a clear similar mandate by the community that we serve, and the mandate was to simply deliver sustainable services in accordance with the constitution and legal framework that regulates local government.
In the year 2018 in Metsimaholo we should say these words in unison, “We can, we must and we will”
“To deny people their human rights is to challenge their very humanity.” Nelson Rolihlahla Mandela
Honourable Speaker, 2018 is the year of Nelson Rolihlahla Mandela. We are the forces of this knight in shining amour, stalwart and what he strived for. He was a warrior of human rights. Those familiar to Tata Madiba would often describe him as a prophet, unifier, courageous, conversational strategist and one always willing to sacrifice for the good of all. We, like all across the length and breadth of South Africa who would dedicate in various ways throughout this year in honor of this giant of the revolution. We would like to dedicate the 2018/ 2019 municipal budget to his ideals and philosophy. We are stimulated by immense sacrifices he made his entire life, for we know that had he not sacrificed we would still be in the state melancholy. We would still be languishing in abject poverty, confronted by high levels of inequality and hopelessness.
Speaker this year, on the 2nd of April 2018 to be precise, we were caught unexpectedly by the sudden passing of the Mother of the Nation, Mama Nomzamo Winifred “Winnie” Madikizela –Mandela as if this was not enough, nature struck at home again when we received news of the passing of the Minister of Social Development, Dr. Zola Skweyiya. Their contribution to the liberation struggle and the supreme sacrifices they made are well documented in the history books and for this we salute them.
“In the history of the world and humanity, it is always men and women of courage who show the way and others follow.”
Fellow residents, we are 7 days away from the anniversary of the Democratic Alliance, 26 days from that of the Freedom Fighters, a day away from the commencement of the commemoration of the youth month. We are in the 96th year since the formation of the vanguard of the working class, the South African Communist party and the 106th year since the formation of the oldest liberation movement in Africa, the African National Congress. A word of gratitude goes to all other formations, the Metsimaholo Civic Association, African Independent Congress, Forum 4 Service Delivery and the Freedom Front plus for holding their own and thereby making a mark in the South African Politics. Although we have different views on how to tackle the challenges confronting our residents but we bound together by the common desire to serve our people. ”We can, we must and we will.”
Let us commemorate the month of June by remembering all the fallen heroes and heroines of 1976. I was raised up in a society where we were told where to stay and where to go to school because of the colour of our skin but because we were united we defied all odds and in the process we developed the courage that tempered a steel until victory was certain and freedom in our life time was achieved on the 27th of April in 1994 and the rest is indeed history. An advice I am willing to share with younger generations in Metsimaholo is; never to be ashamed of who they are. They must strive to be the best representative of who they are. I found through experience that this is the only way to happiness, the only way to retain one’s self respect, self-worth, and the only way in which one can ever make a meaningful contribution to the World and humanity at large.
Honourable Speaker, fellow Councillors and our beloved residents let us all join hands in a show of unity and support as we traverse the road that lies ahead of us. let us fasten our safety belts as we tackle head on all attempts which seek to undermine our collective effort to give expression not just in word but also in deeds to our theme ‘Metsimaholo at work” as we lay a solid foundation to turn the fortunes of this Municipality around for the good of all. We will spare neither courage nor effort during our term of office to give meaning to back to basics programme developed by the department of Cooperative governance and Traditional Affairs, to FastTrack service delivery.
Honourable speaker during this financial year we will focus on investigating ways of insourcing some of the services which were outsourced in previous years in order to address the issue of unemployment in our municipality.
Fellow Councillors, the budget I am about to table is a product of various interactions we have had with our beloved residents. The process started when we criss-crossed the length and breadth of Metsimaholo Local Municipality in order to hear inputs from our residents and how best we can accommodate those inputs in this budget during the process of its compilation.
Honourable Speaker, those interactions were so enriching I must say, and if we were to start this process all over again I will be the first to declare my willingness to participate once again, and the same I hope goes for all Councillors, especially the ward Councillors who have been part of this process as leaders of all 21 wards that make up this municipality.
Fellow Councillors, ‘’the budget is the municipality’s financial plan which indicates how much money will go towards each of the activities outlined in the IDP of the municipality” I would like to add that it is also a management tool with which we measure the performance of our senior managers.
After the adoption of this budget it will now become the financial plan of the municipality for the next twelve months until we start with the similar process in March 2019 for the financial year 2019/2020. Throughout the twelve months we will all be expected to spend within the financial limits or allocations as contained in this budget for us to be able to get a favorable audit opinion for the financial year under review.
Fellow Councillors according to the survey conducted in recent time by Africa ratings on all 205 local municipalities in the country moving from province to province our Municipality is at the pole position as the best performing municipality in the whole of the Free State province at 33 points. We are indeed humbled by this achievement and all thanks to those from whom we have taken the reigns and we commit that we will do all within our means to improve on this great achievement.
Colleagues just as a matter of emphasis, we have to ensure that how we spend, accords with the parameters set out in this budget. We must resist the temptation of spending money we did not budget for, as this will result in an authorized expenditure.
The budget I am about to table this afternoon comes at the aftermath of the dissolution of the then Council by the Provincial Executive Committee of the Free State provincial government by invoking section 139(4) of the Constitution of the Republic on the 29th of June 2017 for failure to adopt the budget for the 2017/2018 financial.
Honourable Speaker, throughout this period of intervention by the Free State provincial government our residents went through a period of uncertainty when the Councillors they had elected in August 2016 local government elections. Whom they were beginning to forge good relations with, were no longer a call away to attend to their needs something they had become accustomed to since the new system of local government was established in the year 2000. I hope this chapter is closed and we have put it behind us for good.
Honourable Speaker, I would be failing in my responsibility not to assure our residents that we are committed to working together as Councillors of this Municipal Council to find ways of mutual co-operation amongst us in order to propel this municipality forward. We will focus on the things which bring us together for the good of our community than to pay attention to the things that set us apart.
Honourable Speaker, I believe that all parties which carry the people’s voices in this council have come to some realization that the voices they represent in this council matter not just in word but indeed then this council is surely destined to greater heights.
We commend our residents that despite challenges they are confronted with on a daily basis, they have not been lured into engaging in service delivery protests with the hope that their challenges will receive immediate attention as opposed to engaging meaningfully with their Councillors to find lasting solutions to their challenges. Our doors are open for any resident to call at any time for the municipality’s intervention on case by case basis should the need arise.
Honourable Speaker the budget process presents us with an opportunity as Councillors to interact intimately with the people in order to enhance existing trust and recompense the trust deficit which may have been occasioned by one reason or the other.
Mr. Speaker, Councillors and members of our community, our Revenue budget for the 2018/2019 financial year amounts to 1,202 billion rand and it increases over the medium term to 1, 351 billion rand in 2020/2021. Our revenue budget for the 2018/2019 financial growth as compared to the adjusted budget of the 2017/2018 financial year amounts to 34 million rand or 2.93 percent.
I need to indicate that electricity and water are the major source of income and records an average of 24 percent for electricity and an average of 31 percent for water per year over the medium term, whereas property rates contribute an average of 12 percent to our own income for the next three years.
Our 11 thousand registered indigents in our area will continue receiving - 6 kiloliters free water, 50 kilowatt of free electricity, sanitation and free waste removal once a week, free basic charges on water, sewer and electricity, as well as R 50.00 subsidy on property rates as per our indigent policy.
Mr. Speaker, our electricity tariff increase is subject to approval by NERSA and it has made an announcement with regard to the revised bulk electricity pricing structure. NERSA has announced an increase of 7.32 percent in the Eskom bulk electricity tariff to municipalities starting from the 1 July 2018. Based on the Eskom increases, our consumer tariff will increase by 6.84 percent to offset the additional bulk purchase cost starting 1 July 2018.
Fellow Councillors and our beloved residents, we are proposing an increase of only 6 percent in the waste removal tariff starting from the 1 July 2018.The tariffs in our different areas of the municipality are uniform.
Our sanitation tariff for households increases with 6 percent – this is to have a uniform tariffs on water borne sewer. We are proposing a tariff increase of also only 6 percent for property rates with effect from 1 July 2018.
Since the introduction of an inclining block tariff in July 2014, the cost of buying bulk water from Rand Water including the cost of other inputs is 12.2 percent. As we are all aware that water is a scarce commodity, the water tariff will increase by 5.2 percent up to 14 percent. Our businesses, schools and industries will pay a flat tariff, increased by 12.2 percent.
Mr. Speaker, I would like to indicate that in all instances the overall impact of the increases of tariffs on households’ bills have been kept to an average of 6.3 percent.
Our grants from government, Mr. Speaker - the main one is the equitable share, other operating grants and also capital grants amount to 276 million rand for the 2018/2019 financial year and will increase to 326 million rand for the 2020/2021 financial year. These grants represent an average of 23 percent of our total budgeted revenue over the next three years.
THE OPERATING BUDGET
Mr. Speaker allow me to break down our operating budget according to its significance and indicate that our operating budget makes provision for operating expenditure of 1.1 billion rand for the 2018/2019 financial year, showing an increase by 10.5 percent to 1.2 billion rand for the 2020/2021 financial year.
I want to emphasize that our expenditure for the 2018/2019 budget and Medium Term Revenue Expenditure Framework is informed by the following:
The budget must be balanced, which means that operating expenditure should not exceed operating revenue unless there are existing uncommitted cash-backed reserves to fund any deficit;
• Funding of the budget over the medium-term as informed by Section 18 and 19 of the MFMA;
• Zero based budgeting combined with incremental budgeting based on historical information, plus inflation in line with Treasury guidelines;
• The filling of vacancies should support challenges identified and key priorities as reflected in the Integrated Development Plan (IDP).
Mr. Speaker, our budget allocation for employee cost for the 2018/2019 financial year is 307 million rand. It must be noted that our employee cost equals 28 percent of the total operating expenditure as opposed to the average of 30 percent norm highlighted in the MFMA circular 71.
I must emphasize that bulk purchases of water and electricity remain the largest expenditure items on the budget. Purchases of water and electricity from Rand Water and Eskom respectively have been budgeted 386 million rand or 35.4 percent of the total operating expenditure in the 2018/2019 financial year and will increase in 2020/2021 financial year to 444.9 million rand or 36.9 percent.
• Aligned to the priority given to preserving and maintaining the municipality’s asset base and current infrastructure, the 2018/2019 budget and MTREF provide a total expenditure of the next three years of 116.1 million rand, not taking into account the labor cost.
THE CAPITAL BUDGET
Honourable Speaker, we prioritized our budget into both basic, infrastructural and social services. Allow me to indicate that our total Capital Budget increases from 170.7 million rand in 2017/2018 financial year to 777.8 million rand in 2018/2019 financial year. For the 2019/2020 financial year our capital budget increases to 1.1 billion rand and it reduces to 938.6 million rand in 2020/2021 financial year, this is as a result of the delays in the confirmation of funding from some external sources and inadequate planning by departments of their capital projects over the medium term.
Fellow residents, our municipality will be receiving allocations of 325.7 million rand over the next three financial years from the national fiscus, in terms of the Division of Revenue Act (DORA) as our Municipal Infrastructure Grant (MIG), Department of Water and Sanitation and Department of Energy’s conditional capital grants to speed up the rolling out of basic municipal infrastructure to households.
An amount of 50 million rand has been allocated by the Department of Energy and this allocation of money will mainly be utilized for the installation of bulk electricity supply services to Leitrim and Themba Khubeka areas.
The total budget for MIG over three financial years amounts to 128.7 million rand and will be spent on the following projects:
• For the high mast lights at Amelia, we have budgeted 4.4 million rand for the 2018/2019 financial year.
• For sanitation and yard connections in Gortin, we have budget 29.7million rand in 2018/2019 financial year and also 2019/2020 financial year,
• We have budgeted 5 million rand for the purchase of landfill site in the 2019/2020 and 2020/2021 financial years.
• For the construction of roads we have budgeted an amount of 45.4 million rand in the 2018/2019, 2019/2020 and 2020/2021 financial years.
• There will be an upgrading of Zamdela cemetery and we have budgeted 6 million rand spread over 2018/2019 and 2019/2020 financial years. We have also budgeted 22 million rand in 2019/2020 and 2020/2021 financial years for a new cemetery.
• We have budgeted 3.4 million rand for the building of a Sports complex in Refengkgotso for the 2018/2019 and 2019/2020 financial years and 962 thousand rand for the sports complex in Metsimaholo at Oranjeville for the 2018/2019 financial year to be finalized.
• The Department of Water and Sanitation has budgeted 132 million rand for waste water treatment rehabilitation at Refengkgotso over the medium term.
Furthermore, the Department of Water and Sanitation has budgeted 15 million rand for water treatment works at Oranjeville.
I would like to indicate to our community that, all these above mentioned projects will be labour intensive. Furthermore, we have budgeted 1.5 million rand in 2019/2020 financial year and 2 million rand in 2020/2021 financial year for installation of electricity in non-electrified areas.
Mr. Speaker, for our Directorate of Social Services, we have made a total allocation of 80.5 million rand of the total capital budget over the next three financial years, mainly for the finalization of the landfill sites and the sports complexes in Refengkgotso at Deneysville and Metsimaholo at Oranjeville, and Zamdela cemetery.
Honourable speaker as we all know that land has become the topical issue in our country, and as the municipality we have identified the following sites for residential purposes;
- 300 approved stands in Zamdela
- 140 stands in Vaalpark
- 2980 for mixed development for Mooidraai township
- 700 stands for Sasolburg Ext 58
- 60 serviced sites in Oranjeville
Furthermore Mr. Speaker the municipality will investigate the possible ways of implementing the public private partnership (PPP) concept and acceleration projects as contemplated in (PPP) manual guideline. And Dora in achieving some of the projects in the IDP. In this regard the accounting officer will establish a special project team that will report to council on quarterly basis.
Honourable Speaker, this is in line with our theme Metsimaholo at work.
On average projects to be undertaken in both Technical Services and Social Services departments will make up approximately 11 percent of the total capital budget over the medium term.
Councillors and residents, the largest part of the capital budget is allocated to our Human Settlement Unit due to the mega project from the Department of Human Settlement amounting to 2.4 billion rand over the medium term.
Mr. Speaker, it is also important to highlight that in the 2018/2019 financial year just over 96 percent of our capital budget will be financed through grants, and decrease to 94 percent in 2020/2021 financial year. This shows that unlike with the operating budget, we are over-reliant on external sources for the funding of our capital budget.
Mr. Speaker, councillors and officials, if we are not able to collect our revenue effectively and efficiently we will be placing key projects financed by own revenue at risk over the medium term.
Honourable speaker let me take this opportunity to thank MMC Finance Cllr Makhefu who worked tirelessly during IDP and public participation process, special thanks to the administrative staff who gave a good support during this process and similarly our special thanks goes to the then acting Municipal Manager, Mr Mashiane for ensuring that we succeed in our work during the budget processes. Last but not least our appreciation goes to all political parties for their cooperation and support, particularly to my beloved party, the SACP.
Honourable Speaker, fellow Councillors and residents allow me to conclude by remitting special thanks to different stakeholders who invariably come to our aid in our moment of need to proffer us with the much needed support. Your association with our municipality and all manner of support enables us to continue to be the economic mainstay of the Free State Province and for this we are forever thankful.
To fellow councillors and officials at large and all sectors which make up the community of Metsimaholo I would like to leave you with this parting shot which says; “Time is like an oxygen you will never notice it until it is missing, therefore the perfect time to take this municipality to greater heights is now, don’t miss it.”
Metsimaholo at work-we can, we must and we will!!!
Honourable Speaker I now table the 2018/2019 financial year’s budget for adoption by this august house.
I thank you
Cllr: Lindiwe Tshongwe
Hon. Executive Mayor