City Of Johannesburg, 28 May 2003, Council Chamber
Madam Speaker;
MECs;
Members of the Provincial Legislature;
MMC for Finance, Strategy and Economic Development, Clr Kenny Fihla;
Members of the Mayoral Committee;
Fellow Councillors;
City Manager, Mr Pascal Moloi;
Executive Director for Finance and Economic Development, Mr Roland Hunter;
Managers and Officials of Council;
Members of the Media;
Distinguished Guests;
Ladies and Gentlemen:
Introduction
Madam Speaker, we meet at this Council Chamber to table the Johannesburg local government budget. We do so mindful of the fact that in June we will be two-and-a-half years in office. We therefore present this budget in the context of the mid-term review. To reflect on problems encountered, victories scored and cast our eyes to the future for we know that much, much more still needs to be done.
Experts tell us that Johannesburg is the only truly global City in Africa. A City of immense opportunities. This is also a City and continent that face so many complex challenges. We continue to be seized with matters of development, here and in all of Africa.
The New Partnership for Africa's Development (Nepad) is but one intervention that requires to be adapted to our Johannesburg municipal council reality.
The observers argue that Nepad makes for fascinating, if not intriguing, reading. That it is definitely so on paper but is not the blueprint that provides the path to real delivery.
The Ethiopian Prime Minister, Mr Meles Zenauri, noting the political, economic, social and cultural life of Nepad, makes the following comment:
"Nepad remains a framework not a blueprint … Nepad is a work in progress, where objectives and requirements cannot be implemented overnight at the same pace and same degree by African countries."
These critics dismiss Nepad as some vague Lagos Plan and many other similar failed initiatives.
They fail of course to realise that the core of African leaders coalesced around issues of poverty alleviation and socio-economic development for the entire continent of Africa. There is also, across the world, an understanding that the efforts being undertaken reflects a wider global consensus that Africa's time has come. There is no acknowledgement that the heads of African states are driving this process with strong political will.
I am raising the Nepad question, Madam Speaker, merely to say that the African reawakening and renewal affects both the City of Johannesburg and the entire continent of Africa. That it may help to understand that, even though there are many challenges ahead, we remain committed to building a better quality of life for all our people. It may also help to remember the Chinese saying that a journey of a thousand miles begins with the first step.
In December 2000, the citizens of Johannesburg mandated members of this Council to improve access to basic services, enhance the quality of services, maintain and build new infrastructure and work towards public services infused with the spirit of service and batho pele. Across the political spectrum we were urged to strive towards a City that would address the ravages of poverty, disease, homelessness and unemployment. Indeed, the people expressed their deep desire for a future characterised by freedom, equality, prosperity and human dignity.
While we are clear that these hopes for the future can only be achieved through sustained development endeavours over the long term, we have the historic responsibility to cast a solid foundation for a better tomorrow right now.
Madam Speaker, today I present a capital budget of R 1,1 billion and an operating budget of R 13 billion. Together this amounts to an annual investment in the City of over R14 billion.
In my 2002/03 budget speech, I indicated that the budget laid the foundation for a prosperous future, symbolised by the six-year old Tiyiselani Manganyi. Today, we continue with that commitment and are adding building blocks, certain that the foundation is well established.
Challenges
In its 117-year existence, the City has rapidly moved from being the epicentre of the gold mining industry to become the country's premier business location. Our location as the corporate headquarters and the nation's main centre for finance, business services and information and communications technology places an even greater responsibility upon us; a responsibility to help protect, consolidate and advance, South Africa's economic power-house.
Joburg is the hub of the country's road, rail and air infrastructure, with access to strategic facilities such as the City Deep container terminal and Johannesburg International Airport.
Its 2,8 million people generate 16% of South Africa's wealth and 12% of the country's employment opportunities. It is a City endowed with excellent road, telecommunication and commercial infrastructure. It is a vibrant, cosmopolitan and culturally diverse City.
At the same time, the City of Johannesburg confronts challenges relating to urbanisation and globalisation; safety and security; economic growth; the devastating social and economic impact of HIV/AIDS; social inequality; the delivery of services such as water, sanitation, electriCity, housing, health and education.
We are ever reminded that about one third of Johannesburg's residents live in less than adequate accommodation; that there are over 1 000 km of untarred roads in mainly township areas; that about 17% of people do not have access to a basic level of sanitation; that there is a 'digital divide' signifying those with and without access to information and communication technology and that unemployment is at least over 30%.
The need to engage organisations of civil society in governance remains critical in what we do. This enables communities to understand government and how it works. It also affords the managers and council officials an opportunity to become more sensitised to the concerns of communities.
World Class African City
In Joburg 2030, the vision statement for the City of Johannesburg is described as follows:
In 2030 Johannesburg will be a world class City with service deliverables and efficiencies which meet world best practice. It's economy and labour force will specialise in the service sector and will be strongly outward orientated such that the City economy operates on a global scale. The strong economic growth resultant from this competitive economic behaviour will drive up City tax revenues, private sector profits and individual disposable income levels such that the standard of living and quality of life of all the City's inhabitants will increase in a sustainable manner".
It is these features that provide the beacons that guide our policies, programmes and resource allocation.
Achievements
The last thirty months have allowed us to register significant achievements.
Firstly, the financial crisis that confronted the City over the last few years has been overcome.
Secondly, we have successfully negotiated the transition from the previous system to a new system of political governance. This has had the effect of unifying the City under a single political leadership and administration.
Thirdly, the establishment of new institutions of the City - the utilities, agencies and corporatised entities, the core administration and the eleven administrative regions.
Fourthly, and perhaps most crucially, the quantity and quality of service delivery is constantly being improved. In the current year, for instance, we have made substantial progress. I am happy to report that we have already achieved the following:
- Adoption of a resolution by Council and the initial implementation of the Revenue Shared Services Centre;
- Initiating the implementation of the Joburg 2030 strategy;
- Launch of Open for Business, in partnership with Investec Bank and Technikon SA to promote SMME development;
- Initiating the roll out of the informal trading development programme;
- Provision of a social package for the poor;
- Continuous provision of low income housing opportunities and service delivery;
- Major improvement to our call centre, Joburg Connect;
- Continuing our efforts to fight crime and enforce by-laws in the City;
- Rejuvenating the inner City through major public sector investments and the marked increase of private investment; and
- Redoubling our efforts to address HIV/AIDS, as evident by our Johannesburg AIDS Council's programme.
I am pleased to say that the City is on the threshold of getting the basics right. We have to redouble our efforts to improve the economy, efficiency and effectiveness of all our programmes.
Consultation Process
I want to spend a few minutes reflecting on the feedback that we have received from the consultation processes related to the IDP and the budget.
These extensive consultation processes involved no less than 13 separate meetings that were attended by more than 1 200 people. In addition, we also engaged with community organisations, religious groups, youth and women's formations, sports clubs, cultural groups, universities and technikons, trade unions, organised business and non-governmental social services organisations. The culmination of this process was the Joburg Stakeholder Forum that took place on 12 April 2003 at the Johannesburg City Hall, which was attended by over 1 000 representatives.
Furthermore, the process also involved verbal feedback on community radio stations, written feedback to the Office of the Speaker, responses posted on the City's website and 'Tips for the Mayor' published in The Star newspaper. On the whole, it generated a rich set of feedback, views, concerns and issues from the stakeholders and citizens that participated. Madam Speaker, please allow me to mention some of the issues raised:
- That the culture of nonpayment appears to impact on the percentage of revenue collected and therefore on the percentage of bad debt.
- That the proposed tariffs are exorbitant, especially in the light of poor delivery.
- That the processing of certain transactions such as building plans, clearance certificates, planning applications and rezoning, takes very long.
- That water is being wasted by poor infrastructure. G Katz says in The Star: "I concur with Rosemarie Krantz that probably 40% of our water is lost due to the bad state of pipes.
- That there is a lack of enforcement of by-laws to buildings that do not comply with safety standards, especially in the inner City. Mabuza Shabalala in The Star says: "Most flats in Joburg are in a state of collapse. This is where a large part of our community lives, so can't you do something about them."
- Roger Chadwick of Orange Grove wrote via the City website that the Council should support and provide backing finance so that business can be revitalised and the strip of Louis Botha from Hillbrow to Alex become a vibrant and crime free area.
- That road safety needs to be addressed. Ramashia Nyadzani Kenneth wrote in to Tips for the Mayor. " On April 26 I was involved in a terrible accident … because the [traffic] lights were not working." Marianne Smith suggests a number of initiatives, including road safety awareness, pedestrian walkways and more mini-bus taxi pick-up points and their enforced use.
- That crime was related to socio-economic factors such as youth unemployment and the lack of sport and recreational facilities.
- That the far south experiences a shortage of recreational facilities.
- That open spaces and parks are not always maintained and properly lit at night which then become susceptible to crime and dumping areas for rubbish. Dr Steve Woollam, also in The Star, says: "I plead that some consideration is given in your budget to address claiming back the parks and nature reserves of Johannesburg for the enjoyment of all its people."
- That HIV/AIDS impacts on the economy and the quality of life of people;
- That urban sprawl is not being contained, for example, in the northwestern areas.
- That informal settlements, especially those on privately owned land, are illegally tapping into municipal services.
I wish to reiterate that these represent an important source of information to the entire leadership of the City and that we have paid particular attention to the issues and concerns that have been raised.
Integrated Development Plan
The IDP is the power tool for realising the vision of the City. It is the principal strategic instrument guiding all planning, management, investment, development and implementation decisions, taking into account input from all stakeholders, including the community and elected public representatives.
The IDP is underpinned by key delivery areas, which are derived from the Six Mayoral Priorities.
The City's Joburg 2030 strategy seeks to address the following:
Economic development and job creation:
- Implementing key Joburg 2030 projects, including safety and skills development,
- improved support to small and micro enterprises;
- regulation through the informal trading development programme;
- establishment of the Joburg Tourism Company; and
- the development of tourism packages.
Public safety: In terms of this priority, the City will continue to do the following:
- improve visible policing by increasing the number of metropolitan police officers;
- further increase the areas for surveillance cameras; and
- enforcement of by-laws strengthened by the introduction of the Municipal Court.
Service Delivery Excellence, Customer Care, Batho Pele: This priority focuses on ensuring that basic services are provided to all residents in the City. There is also an emphasis on maintenance and sustainability of key infrastructure services such as water and sanitation, electriCity, roads, waste management and parks.
In addition, the ethos of customer care will be promoted among council employees. This implies an improved service to the public and the treatment of everybody with dignity.
Good Governance: The City is placing a special emphasis on improving its interface with the community. These include continuous improvement to people's centres and the City's call centre, Joburg Connect. In addition, there are initiatives to improve the turnaround times of key business processes such as the time it takes to approve building plan applications and for the issuing of rates and service clearance certificates. The eradication of corruption as a key goal will continue to receive special attention.
Inner City Regeneration: The City will be extending the vigorous enforcement of bylaws and continue with flagship initiatives to upgrade the Inner City. These flagships include the launch of the Nelson Mandela Bridge, the development of Constitution Hill, and the rejuvenation of the Hillbrow and Joubert Park nodes.
HIV/AIDS: This epidemic poses a high risk to the well-being and development of the City. The City is in the process of extending voluntary counselling and testing for HIV/AIDS at our 101 City clinics. This supplements all the existing programmes related to condom distribution, the treatment of sexually transmitted infections and awareness programmes.
This work is being done in partnership with Gauteng Provincial Government and non-governmental organisations. AIDS work in the workplace will seek to maximise participation of employees of council as well as ensuring effective monitoring of leave/absenteeism. This data collection will help Council to grapple with this pandemic.
2003/04 Budget
Today, we present to the citizens of Johannesburg a sound budget. The consolidated operating budget for the 2003/04 financial year stands at R13 billion, which represents a 15% increase from the current budget. In addition, Council intends to spend R1,1 billion on capital expenditure for the year. We will therefore be spending a total amount of R14 billion over this period, which represents a substantial investment in service delivery and infrastructure development for the people of this City.
Tariffs
It should be remembered that the proposed increases are not happening in a vacuum but are part and parcel of a long-term economic development plan that will deliver a City which is effectively and efficiently run, with well maintained services and facilities. The City, however, is affected by all sorts of external factors like inflation, to an extent by some national government policy decisions, certain international factors as well as the employment and affordability demographics of the City's residents.
The City has been very conservative in its annual review of tariffs since its inception. The City has in fact absorbed cost increases in excess of tariff increases for three years in a row.
Residential tariffs for electricity will rise by 13,57%, while commercial tariffs will increase by 12,57%. In respect of water, the increase is 10% across the board. Residential and commercial waste removal will also increase by 10%. Assessment rates will go up by 13%. Minor tariffs will generally increase by 10%.
In other words, a resident of Dobsonville will pay an additional 9,6% on her monthly bill, compared to 11,8% for Malvern, 11,9% for Lenasia South, 12,4% for Northcliff, 9,7% for Alexandra East Bank and 11,9% for Bassonia.
Social Package
The total social package increases in 2003/04 by some R95 million to just over R450 million. About 278 000, or a third of households throughout the City will benefit. The cost to the City for free water increases from R36 million to R47 million. Similarly, the cost of free electricity increases from R27 million to R36 million and where applicable, the cost of free refuse and sanitation increases from R48 million to R58 million.
The City's tariff policy procedures provide adequate relief for the poor, aged and the unemployed. The proposals for 2003/04 results in an increase in the package from R335 million last year to R450 million in 2003/04. The social package includes the following:
- 100% rebate on properties where land value is less than R20 001. This means for example that the majority of the residents in Soweto, Orange Farm, Ivory Park, Alexandra, Eldorado Park, Newclare, parts of Lenasia South and other similar areas do not have to pay assessment rates.
- 6 kl of free water per household per month.
- 50 kwh of free electricity per household per month in all areas supplied by the City's utility, City Power.
- Additional subsidies for refuse and sewer for households whose total monthly income is less than R1100.
- The unemployed, orphans, pensioners, HIV/AIDS patients and persons with disability grants, are also catered for.
This very substantial allocation is an indication of the seriousness with which Johannesburg approaches the problem of poverty and social deprivation. However, there is always a risk whenever there is any kind of price hike that some consumers will find it harder to pay their accounts, Council is always conscious of this and strives for affordability for its citizens.
Operating Income
Council derives its operating income from the following sources:
- Electricity 29%;
- Property rates 23%;
- Water and sewerage 23%;
- Regional Services Council levies 13%;
- Refuse 3%;
- Subsidies 3%;
- Fines and licences 2%; and
- Other 4%.
During the 2003/04, 2004/05, and 2005/06 financial years, the City anticipates to receive revenues of R13 billion, R14 billion and R15 billion respectively over the medium term. Expenditure of the City for these years is expected to be in line with income.
Operating Expenditure
The total operating expenditure for 2003/04 is R13,1 billion, which will rise to R14,2 billion and R15,1 billion in the next and following financial years respectively. The lion's-share of operating expenditure comprises bulk purchases of water and electricity in the amount of R3,1 billion. This is followed by salaries and allowances at R2,9 billion. Contracted services, for mainly information technology and fleet, amounts to R1 billion. These represent 24% for bulk purchases, 22% for salaries and 8% for contracted services.
The UACs command 57% of the City's total expenditure. City Power accounts for 43%, Joburg Water for 37%, Pikitup for 8% and Joburg Roads Agency for 4%. Certain entities receive a net subsidy from the City. Of the total subsidies of R1,229 billion, 34% goes to Pikitup, 14% to Metrobus, 24% to the Johannesburg Roads Agency and 23% to City Parks.
The core administration receives 43% of the City's total operating budget. This is made up of finance at 34% (this includes depreciation and debt servicing cost), contract management unit at 25% (includes transfer payments to the UACs), metro police at 9%, emergency services at 5%, corporate services at 4% and health at 3%.
The City set aside an amount of R141 million for strategic development initiatives that are in line with the Mayoral Priorities. Some of these initiatives are an injection or a seed that will yield economic and financial results for the City in the future. Some of these are indicated below.
For the third year in a row, support functions have been receiving below-inflation allocations. In real terms, they have experienced a decline in allocations. This approach has enabled the City to re-direct additional resources to the programmes mentioned above and to focus spending on external service delivery.
Noteworthy features of the operating budget include:
- Emergency Management Services budget has grown by 18,8%. This is due to the new shift system and fleet costs.
- Johannesburg Metropolitan Police Department, in line with the Joburg 2030 strategy, has again been allocated an above-inflation budget. R14 million has been set aside to increase police capacity. An additional R8 million goes towards increasing the much needed CCTVs.
- R8,5 million has been allocated for HIV/AIDS programmes.
- Central to achieving key investments supporting the IDP and the long-term strategy is the generation of a sustainable income base. Revenue enhancement initiatives have been allocated R40 million.
- R27 million will be spent on programmes to implement the Joburg 2030 strategy.
Capital Investment
On the capital expenditure side, the plan is to fund capital borrowing for an amount not exceeding R529 million for the next three years. This is in line with the debt to income ratio of 38% set by the City. It therefore translates into a total capital budget of around R1 billion per annum, including funding from other sources.
Specifically, the City will generate capital income from other sources such as the Consolidated Municipal Infrastructure Programme (R137 million), provincial transfers (R418 million) and housing transfers (R18 million).
A capital investment plan was developed to ensure that three components receive the necessary attention, namely, the maintenance of current resources such as environmental assets and infrastructure, to address the needs of historically disadvantaged areas in a programmatic fashion and lastly to plan for future investments based on desirable development scenarios.
In line with the strategy, infrastructural development remains the key focus. R392 million will be spent by City Power and Johannesburg Roads Agency on both new and replacement capital spending.
The Johannesburg Development Agency's capital allocation was revised from R30 million to R60 million, in line with the City's priority to continue the upgrading of the Inner City.
Furthermore, capital expenditure will comprise the following:
- Development of parks, environmental areas and cemeteries - R20 million
- Key projects such as Constitution Hill, Braamfontein Regeneration, Kliptown and the Drill Hall - R60 million
- Upgrading and development of waste facilities - R14 million
- Expansion of the CCTV programme - R8 million
- Water and sewerage related projects - R192 million
- Roads upgrading and construction programme - R102 million
- Electricity projects and programmes - R84 million
- Upgrading and development of community facilities such as the upgrading of the Hillbrow Library, the Protea South Clinic and the Poortjie Library - R11 million
- Clinic upgrades - R5 million
Conclusion
Madam Speaker, on 5 December 2000 we undertook to reinvent and reinvigorate the City, and to set it on a new path. We now have the basics right and look set to engage to a higher gear in our quest to create a better life for all.
The budget we present this afternoon is not simply a numbers game. It is guided by the Joburg 2030 strategy and underpinned by the Integrated Development Plan that we are simultaneously present to this Council.
The consultation process has taught us that if we are to succeed in transforming our society, (a) we need to take our people along with us, and (b) we need to remain inspired by our people.
I believe that the plans and budget for the City that have been outlined provide a solid basis for the World Class African City.
Thank You.
Councillor Amos Masondo
Executive Mayor
City of Johannesburg
28 May 2003
