Introduction
Speaker, it is with great pleasure that I motivate to and enlighten Council on the proposed tabled (draft) budget for the 2017/18 period, which must now be circulated to the public for public participation.
This budget is aligned to Stellenbosch Municipality’s Integrated Development Plan (IDP) with its vision statement, mission statement, corporate values, key performance areas and its key focus areas.
This budget was drawn up in line with guidelines set by political leadership and reflects our determination to reduce poverty, create jobs, expand our economy and build and maintain our infrastructure. We are indeed delivering to our people and it is our target this year to spend at least 95% of our capital budget in our program for Stellenbosch to become truly, a place of opportunity for all residents.
The South African economy is still struggling and with almost no growth in the economy at a national level, it has severely impacted our funds, as national government tries to curb government spending. We are however, part of the best run province in the country and this is a source of hope. The provincial economy has shown stronger growth than the rest of the country and the efforts of the various stakeholders, has ensured that the greater Stellenbosch area remain one of the most popular tourist attractions in South Africa and even on the continent, bringing investment and opportunities to the region and contributing to our GDP.
The legacy of the previous Council is a stable financial position and two clean audits.
This is a positive start for us as a New Council, but we also inherited many challenges, especially in infrastructure, an out-dated staff structure, many informal settlements that need to be upgraded, a huge backlog in housing (BNG and GAP Housing), serious safety issues in our towns, long overdue upgrades of roads and access routes, and many more.
This budget thus focuses on service delivery first, in order to create opportunities for all communities.
This is very much a “bread and butter” budget, with no room for extravagance. This budget deals with necessities and takes us back to our basic mandate: Service Delivery.
Speaker, I take pleasure in presenting this budget speech and the Tabled Medium Term Revenue and Expenditure Framework
(MTREF) Budget Report for the 2017/2018 to 2019/2020 financial
years – in laymen’s terms the capital and operating budget for the next three financial years.
The budget has been prepared in accordance with National Treasury’s circular guidelines and the Municipal Budget and Reporting Regulations, taking cognisance of scarce available resources. Section 152(2) of The Constitution of the Republic of South Africa, 1996 clearly determines that “a municipality must strive, within its financial and administrative capacity, to achieve the objects of local government.”
I also present the 2017/2018 financial year and the two outer years’ budget patterns. It has been a difficult task to find the necessary funding for all we have to do; however, we have set high service delivery standards for ourselves, and will have to work “smarter” with available financial and other resources.
Speaker, we intend to take the next four years entrusted to us, as Council to position Stellenbosch as one of the top Municipalities in South Africa.
Speaker, we acknowledge the fact that decisions taken today will either be to the benefit or the detriment of our children, grandchildren and great grandchildren. While individuals involved in current Council business may come and go, municipalities continue to render services perpetually for generation after generation.
Speaker, our beloved Nelson Mandela on two special occasions once said and I quote –
“What counts in life is not the mere fact that we have lived. It is what difference we have made to the lives of others that will determine the significance of the life we lead.” “Let it never be said by future generations that indifference, cynicism or selfishness made us fail to live up to the ideals of humanism which the Nobel Peace Prize encapsulates.”
Speaker, as to revenue of the tabled 2017/2020 forecast, I would like to make the following remarks: Affordable revenue streams through affordable property rates and service charges tariffs formed the basis of the operating budgeted revenue. The capital programme’s capital project expenditure was also reduced to affordable own funding and external borrowing levels.
In the 2017/2018 financial year, starting 1 July 2017, we will immediately start with the implementation of our capital projects to ensure that we spend our capital budget effectively, efficiently and economically so as to achieve the ultimate goal of acceleration of service delivery and infrastructure development. Planning has already started, and as soon as the budget is finally approved by Council, the bid processes through our Capital Projects Implementation Plan will kick into operation. Progress with these plans will be monitored on a monthly basis to limit future capital projects carry-overs to the minimum. We do our local community no favour by not implementing our capital projects approved in the capital budget – it is our job to implement.
Speaker, this IDP informs the budget and the Service Delivery and Budget Implementation Plan (SDBIP). The SDBIP with performance indicators with smart targets are developed to ensure that progress in achieving the objectives as set out in the IDP are achieved. Legislation requires from me to approve the high level SDBIP within 28 days after Council has approved the final 2017/2018 budget and I will adhere to this requirement. The Municipal Manager and her Executive Team will therefore have no choice but to implement the objectives of the IDP and the measurable performance objectives of the 2017/2018 budget as depicted in the 2017/2018 SDBIP.
The IDP and Budget consultation process with the community will commence on 03 April 2017 and concluded by 30 April 2017. Soon thereafter, I and my Mayoral Committee will consider all the comments received on the reviewed IDP and Budget from the local community, stakeholders, National and / or Provincial Treasury, councillors and senior management before I will table the final budget before Council for final approval by Council before 31 May 2017.
Speaker, the Tabled 2017/2020 MTREF Budget Report clearly spells out the legislative requirements this budget is governed by. The capital and operating budget was compiled compliant with these legislative requirements, taking also the budget circulars guidelines received National Treasury into consideration.
Total Expenditure Budget Overview
Speaker, our 2017/2018 capital budget expenditure amounts to R 390 million and our operating budget expenditure amounts to R 1.477 billion. Our total budgeted expenditure therefore amounts to R 1.868 billion. This amount is estimated to increase to R 1.899 billion and R 1.905 billion, respectively for the two outer years of the MTREF.
Capital Budget Expenditure
The capital budget proposed for 2017/2018 decreases from R 464 million to R 390 million when compared with the 2016/2017 adjustments capital budget. The decrease is due to the huge investments necessitated by the upgrading of the Waste Water Treatment Works.
The MTREF proposes capital expenditure of R 319 million and R 226 million for the two outer financial years. I need to point out that capital projects amounting to R 1.025 billion cannot be accommodated over the next three years. Our community needs are simply just more than we can afford and that is why we prioritise our capital spending. A comprehensive list of all our capital programme needs is attached as Appendix 1, Section N to the Tabled 2017/2020 MTREF Budget Report.
Our Capital Budget for 2017/18 will be spent on creating opportunities for all communities, with a definite focus on provision for previously disadvantaged communities and job creation has been highlighted. Some of the projects are:
| Local Economic Hubs | 2, 000, 000 |
| Kayamandi Economic Corridor | 1, 500, 000 |
| Informal Trading Sites: Klapmuts | 900, 000 |
| Informal Trading Market: Cloetesville | 700, 000 |
| Informal Trading Sites: Groendal | 570, 000 |
| Informal Trading Sites: George Blake Street | 500, 000 |
| Adventure Tourism: Idas Valley Dam | 1,350, 000 |
| Adventure Tourism: Berg River Dam | 1,350, 000 |
Some of the projects to build the community assets are:
| Purchase of Land-Cemeteries | 900, 000 |
| New Community Hall: Klapmuts | 9,000,000 |
| Groendal Library | 2, 000, 000 |
| Extension of Cemetery Infrastructure |
500, 000 |
| Upgrading: Pniel Library | 400, 000 |
Basic Services to upgrade informal settlements have been addressed too:
| Improvements: Langrug | 6, 200, 000 |
| Water and sewer services: Jamestown | 2, 600, 000 |
|
Enkanini subdivision, consolidation and rezoning |
2, 000, 000 |
| Enkanini Access to Basic Services | 750, 000 |
| Langrug ABS | 750, 000 |
| Kylemore | 948, 400 |
|
Klapmuts ABS |
500, 000 |
Housing remains a challenge as allocations from National to Provincial decreases annually.
However the following was budgeted for housing projects over the next 3 years:
| Town Centre Stellenbosch (Social Housing) | 500,000 |
| Jamestown: Housing | 1, 060, 800 |
| Kayamandi: Watergang and Zone O | 18, 747,000 |
Klapmuts: Erf 2181 (298 serviced sites) 11,000,000
Idas Valley (440) IRDP / FLISP 16,010,800
Longlands Vlottenburg: Housing Internal Services 4,000,000
La Motte Old Forest Station IRDP 2,200,000
Smartie Town, Cloetesville 4,900,000
Cloetesville IRDP 1,000,000
Northern Extension: Feasibility 2,000,000
Bulk services in support of housing and development over the next 3 years are budgeted as follows:
| Longlands Vlottenburg: Infrastructure – Roads and Bridge | 10,600,000 |
| Bulk Water Supply Pipe Reservoir: Dwars Rivier
(Johannesdal / Kylemore / Pniel) |
38,000,000 |
| Bulk Water Supply Pipeline & Reservoir – Jamestown | 21,500,000 |
| Water Treatment Works: Paradyskloof | 26,000,000 |
| New 5 MI Reservoir: Cloetesville | 1,500,000 |
| Bulk water supply pipe and Reservoir: Kayamandi | 13,000,000 |
| Bulk water supply Klapmuts | 9,000,000 |
| Bulk Sewer Outfall: Jamestown | 30,500,000 |
| Idas Valley Merriman Outfall Sewer | 20,000,000 |
| Upgrade of WWTW: Klapmuts | 11,500,000 |
As safety is an important issue as identified during the IDP process the following has been budgeted over the next 3 years:
| Upgrading of Stellenbosch Fire Station | 1,500,000 |
| Upgrading and or Replacement of Fire Alarm System | 1,000,000 |
| Fire Services JoC | 800,000 |
| Install and Upgrade CCTV Cameras In WC024 | 2,000,000 |
As sports facilities are important to our communities the following has been budgeted over the next 3 years:
| Upgrade of Sport Facilities | 17,251,950 |
| Skate Board Park: CBD | 750,000 |
| Building Ablution Facilities: Lanquedoc Sports grounds | 350,000 |
| Upgrading of Parks | 2,100,000 |
Roads’ upgrades; reseal projects and intersection improvements of R68 million have been budgeted for over the next 3 years across the municipal area.
Non-motorised transport to improve the transport situation has been budgeted for as follows over the next 3 years:
| Bicycle Lockup Facilities | 500,000 |
| Kayamandi Pedestrian Crossing (R304, River and
Railway Line) |
5,000,000 |
| Pedestrian and Cycle Paths | 4,000,000 |
| Sidewalk Implementation | 1,800,000 |
To improve the access to public transportation the following have been budgeted for over the next 3 years:
Klapmuts Public Transport Interchange 5,286,930
Tour Bus Parking Study 1,000,000
Bus and Taxi Shelters 700,000
Taxi Rank – Franschhoek 3,500,000
Add Bays To Bergzicht Taxi Rank and Holding Area 3,000,000
Taxi Rank – Kayamandi 1,500,000
Sanitation poses a huge challenge as it is required to unlock development and the following substantial amounts have been budgeted for over the next 3 years over above the projects mentioned earlier in support of housing and development projects:
| Extension Of WWTW: Stellenbosch | 91,276,712 |
| New Plankenbrug Main Outfall Sewer | 50,500,000 |
| Sewer pipe Replacement | 4,500,000 |
The removal of solid waste and clean towns is a priority and the following has been budgeted over the next 3 years:
| Vehicles | 5,400,000 |
| Major Drop-Off : – Franschhoek | 10,000,000 |
| Stellenbosch WC024 (Material Recovery Facility) | 15,000,000 |
| Transfer Station: Stellenbosch | 5,000,000 |
| Upgrade Refuse disposal site | 3,500,000 |
| Waste Minimization Projects | 2,000,000 |
Electrical projects include:
Taking over the electricity supply to the Pniel area to the value of R10.3 million during 2017/18
Street lighting at the Kylemore entrance to the value of R500 thousand during 2017/18
Electrification of subsidy housing and informal settlements to the value R15 million over the next 3 years
Energy efficiency and demand side projects to the value of R29 million from specific grants will be implemented over the next 3 years to reduce energy costs of the municipality
Capital Budget Funding
Our capital budget is funded from the following funding sources –
Own reserves (Capital Replacement Reserve)
External loans to be taken up and Government grants.
Operating Budget Expenditure
The proposed operating budget expenditure for 2017/2018 increases by R 27 million to R1.477 billion compared with the 2016/2017 adjustments operating budget expenditure of R1. 450 billion. Our operating expenditure for the 2017/2018 to 2019/2020 outer financial years will increase by 6.9% and 6.3% respectively to R 1.678 billion.
The main contributors to the operating expenditure of the 2017/2018 financial year are –
Bulk electricity and water purchases Employee related costs;
Interest on external loans and depreciation costs; General expenditure;
Repair & maintenance costs;
Conditional grant expenditure; and
Provision for bad debt, leave and landfill sites rehabilitation; contracted services; collection costs; councillor remuneration; special projects; grants and donations represents the remaining operating expenditure.
Operating Budget Revenue
The proposed operating budget revenue for 2017/2018 increases by 0.44% to R 1.479 billion compared with the 2016/2017 adjustments operating budget revenue of R 1.472 billion. Our operating revenue for the 2017/2018 to 2019/2020 outer financial years will increase by 7.1% and 6.1% respectively to R 1.679 billion in 2019/2020. All of this budgeted revenue excludes capital conditional grants revenue to finance capital projects.
The exact percentage increase or decrease of each tariff type is reflected in the Tariff List that will available for inspection at municipal offices and all libraries during the public participation process.
As set out in the budget assumptions in the 2017/2018 MTREF Budget Report of the reviewed IDP, the 2017/2018 revenue streams increase approximately with the following percentages –
Property rates are expected to increase with 7.3% due to increased property evaluations, new properties being
registered and property improvements. This increase in revenue has made it possible for us to decrease property
rates with 24.67% for residential property, 24.30% for agricultural property and 17.28% for business property.
Revenue for electricity is expected to increase with 4.2% due to amongst other things; an increased number of users. The tariffs for electricity will however only increase with 2.2% Revenue for water is expected to increase with 11.5% due to an increase in collection as a result from the applicable water restriction tariffs. The water restriction tariffs will remain in place for the foreseeable future as the drought continues. The normal water tariff will increase with only 7%. Sanitation revenue is projected to increase with 11.6%. The tariff for this service will increase with 9%.
Refuse removal revenue will increase with 10.3% and the tariff for this service will increase with 9%.
Speaker, Stellenbosch Municipality does provide free basic services to poor households as a means of poverty alleviation. We mainly provide support to households who are unable to pay or struggle to pay for their basic services. This includes households with an income base below a determined threshold (two times the government social grant paid to a pensioner plus 25%), to the unemployed, child-headed households, retired persons and disabled persons. These consumers should apply to be registered as an indigent household on our indigent register in order to obtain this benefit or to qualify for rebates from their municipal basic services or property rates levied.
Speaker, some more good news: Indigent households will in 2017/2018 receive 100 units of free electricity per month;
previously 60 units per month, 10 kilolitres of free water per month, free refuse removal services, free sanitation services. This indigent subsidy will be credited to the customer’s account during the monthly billing run.
The value of the above basket amounts to an indigent subsidy of R544 per month (VAT included).
The indigent subsidy is funded through our equitable share allocation. It is important to note that it is expected from indigent households only to pay for electricity consumption above 100 units of electricity per month and only for water consumption above 10 kilolitres of water per month.
For the 2017/2018 financial year the qualifying criteria for indigent status is households (main bread winner/s) earning less than R 6 000 per month. Speaker this is a substantial increase from the current, R5 000 per month.
Furthermore, pensioners and disabled persons also qualify for a 100% rebate on property rates if their earnings are also less than R 8 000 per month. Rebates of 75% can be given to pensioners and disabled households who earn less than R 10 000 per month; 50% to those who earn less than R 12 000 per month; and, 25% for those who earn less than R 15 000 per month.
Speaker, we also acknowledge that all citizens struggle in the present economic climate. Households also receive a property rates rebate on the first R200 000 value of their property. This is currently only R95 000.
Conclusion
Speaker, the proposed budget of the Municipality is responsive to the economic growth, strategic objectives and the socio- economic needs of the residents of Stellenbosch. We have paid particular attention to the difficult economic climate. The Municipality’s strategic objectives are furthermore aligned to the national and the provincial priorities as articulated by the national outcomes and provincial strategic objectives.
The budget assumptions are realistically based on available information and the projected cash flow budget is credible and sustainable over the MTREF.
In conclusion, Speaker, I place on record my sincere appreciation to members of the Mayoral Committee and all other councillors who sacrificed long hours and meetings, sometimes at short notice, to put this budget together. I thank the Municipal Manager, Senior Management and all the Officials, including my Support Staff, who worked long hours and assisted in facilitating and putting this budget together.
Especially I want to thank the Portfolio Holder of Finance, Cllr Salie Peters, the Chief Financial Officer and his Budget and Treasury Office for their highly appreciated effort to compile this budget in the required format under difficult circumstances.
I also want to thank the family members of councillors and officials who were involved in the budget process and who had to work late and over weekends; for excusing them from home in not fulfilling their roles as fathers and mothers of families.
Through hard work, focus and simplicity we have already achieved many possible outcomes and we will continue to do so in our quest to become a place of opportunity for all residents.
Speaker, with these remarks, I herewith present Stellenbosch’s Tabled 2017/2020 Medium Term Revenue and Expenditure Framework Budget Report with its recommendations to Council for consideration and approval.