CDM Municipality
BUDGET SPEECH 2019/20 BY EXECUTIVE MAYOR OF CAPRICORN DISTRICT MUNICIPALITY CLLR JOHN MPE AT COUNCIL CHAMBER
25 May 2019
Honourable Speaker Cllr Monicah Mohale;
His and Her worships, Mayors of our municipalities;
Our Chief-whip Cllr Calvin Masoga
Members of the Mayoral Committee
Chairpersons of Section 79 and Section 80 Committees
Chairperson and leadership of the District House of Traditional Leaders; Kgosi Maleboho
Our esteemed traditional leaders
Leadership of the ANC, EFF and DA present here
Our Municipal Manager and municipal managers of locals municipalities
CDM management team and supporting staff
Representatives of SALGA, government departments, municipalities
the media; Distinguished Guests;
Thobela
It is my honour to present to this house, the Council meeting of Capricorn District Municipality, the Integrated Development Plan, the Medium-term Expenditure Framework and the budget for the 2019/20 financial year and related policies. We meet today after hosting a successful State of the District Address on the 9th April in Blouberg in which we outlined the developments we made in the year under review to change the people’s lives for the better especially in the context of 25 years of freedom.
We are pleased that this Council takes place exactly in a month that is more significant to all South Africans. We are just recovering from mobilising our people to go to the polls and vote and we all agree that our people have spoken and change is inevitable. We congratulate all the political parties who have made it to national parliament and provincial legislature. We await for the inauguration of the President of the country on the 25th May 2019 while welcoming the election of Premier of Limpopo Province, honourable Stanley Chupu Mathabatha by the Provincial Legislature yesterday, 22 May 2019. We also would like to send out gratitude to the former Speaker of this Council, Cllr Maria Lekganyane who has joined the Limpopo Legislature and equally Cllr Patricia Mahlo who has joined the National Council of Provinces.
Honourable Speaker
Through elections, we are reassuring our people, that the National Development Plan, our road map which outlines the type of society we envisage by the year 2030. Our Vision is to develop communities where households will have access to housing, water, electricity, sanitation, roads, safe and reliable public transport, health, education, security, recreational facilities, a clean environment and adequate nutrition to count a few.
As we are about to welcome the new leadership at the national level and also in provincial level, a call is upon all of us to work together to ensure that we create job opportunities for the jobless; that we accelerate the provision of water, electricity, prioritising and tarring of roads to the most needy in the vast rural communities and far-flung villages of our district. We need to ensure the empowerment of young people through quality education and training as you will note that the next month is youth month.
In the same vein, the creation of conducive conditions for business to thrive, and participation of our people in the mainstream economy is non-negotiable. We are about to host investment summit in June that will assist in getting investors in our district. In this regard, we are realigning our district to National Development Plan in order to put Capricorn on higher trajectory of economic growth and development with that of the Province and South Africa.
POLICY DIRECTIVE
In terms of section 16(1) of Local Government: Municipal Finance Management Act, No. 56 of 2003 (MFMA), the council of a municipality must for each financial year approve an annual budget for the municipality before the start of that financial year. Section 16(2) of the MFMA states that, in order for a municipality to comply with this subsection 1, the mayor of the municipality must table the annual budget at a council meeting at least 90 days before the start of the budget year. The Draft Budget 2019/20 MTREF was duly tabled on the 28th March 2018 where after it was subjected to public and stakeholder consultations.
Section 24 of the MFMA obligates municipal councils to approve their annual budgets before the start of a financial year, together with the adoption of resolutions as may be necessary:
(i) Imposing any municipal tax for the budget year;
(ii) Setting any municipal tariffs for the budget year;
(iii) Approving measurable performance objectives for revenue from each source and for each vote in the budget;
(iv) Approving any changes to the municipality’s integrated development plan; and
(v) Approving any changes to the municipality’s budget-related policies.
Section 34 of the Local Government: Municipal Systems Act, No 32 of 2000 (MSA), provides that a municipal council must review its integrated development plan annually in accordance with the assessment of its performance in terms of Section 41, and to the extent that changing circumstances so demand, and may amend its integrated development plan in accordance with a prescribed process.
The 2018/2019 IDP/Budget Process Plan was approved by Council on the 30th July 2018 with milestones and activities towards approval of the Reviewed 2019/2020 – 2020/2021 IDP; Draft 2018/2019 MTREF Budget; and Budget Related Policies in accordance with the dictates of Section 34 of the MSA as discussed above. The following milestones and activities were subsequently achieved in compliance with the Process Plan:
- The 1st IDP Representative Forum took place on the 24th July 2018;
- Departmental Strategic Planning Sessions took place between the 22nd January 2019 and the 5th February 2019;
- Management Strategic Planning Session took place on the 21st – 22nd February 2019 (Management , Local Municipalities and Stakeholders);
- The 2nd IDP Representative Forum took place on the 5th March 2019;
- Draft IDP/Budget engagement session with Councillors was held on 12th March 2019;
- Draft IDP/Budget approved on the 28th March 2019;
- Public consultations took place from 9th -18th April 2019;
- District Lekgotla and Organisational Strategic planning session took place from the 3rd to 5th of May 2019;
- State of the District Address(SODA) was delivered on the 9th April 2019; and
- The 3rd IDP Representative Forum was held on the 13th May 2019.
CONSULTATIVE PERIOD
Honourable Speaker, let me remind this council that this budget speech is a culmination of a long consultative period with all partners in service delivery and it is based on the mandate they gave to us, the inputs from communities, and stakeholders in the Integrated Development Plan and budget.
We want to thank all stakeholders and residents who participated in the processes, including representatives of non-profit organisations, business, the youth, women, people living with disability and the faith-based sectors. We also acknowledge the inputs and advice from various experts, especially from the universities and research institutions in the district that augmented the work of our management.
FINANCIAL VIABILITY AND AUDIT PERFORMANCE
Ladies and gentlemen, I’m proud to announce that we are the only municipality in the province that is doing well in terms of financial performance and audit issues. It is a wish of every institution to want to achieve good audit performance, but there is a lot of work, skill and commitment that go into achieving it. It is more than just about accounting. It is about compliance and accountability.
We are therefore pleased that we have for the 5th consecutive year, retained unqualified audit outcome with one material finding despite the challenges of instability or vacancies in key positions and support staff; The Municipality was able to resolve all the audit findings by the Auditor General of South Africa (AGSA) for the 2016/17 audit. This hard work in getting things rights was even rewarded when CDM was conferred with two awards at the SALGA Municipal Audit Awards – for sustaining unqualified audit opinion and 100% spending of Municipal Infrastructure Grant (MIG). The awards meant all budget that was allocated has been accounted for; there was no wasteful or fruitless expenditure and that no money was returned to National Treasury as a result of under-spending the Municipal Infrastructure Grant.
The budget for the 2019/20 financial year builds on the achievements we outlined in the State of the District Address and allocates resources to the priorities that we believe will unite us to extend basic services to more of our people.
This budget will enable us to substantially break the back of poverty as we progressively extend quality services to all residents and create a business-friendly environment. We remain mindful of the need to take into consideration the diverse aspirations of our people to have universal access to water and other basic services and live a better life.
Honourable Speaker, a lot was outlined during the SODA, and we won’t spend too much time in this budget speech to give elaborate details and long explanations about the plans and programmes. The purpose and business here today is to actualise the Vision we presented on the 9th of April at Marobjane and make allocations to all plans and ensure that we implement programmes contained in the IDP. However allow me just to give key highlights and comparison of the 2018/19 and the proposed budget of 2019/20:
WATER SUPPLY
In Lepelle Nkumpi, we will be investing R237.8 million for MTREF period as compared to R299 million which was budgeted for in 2018/19. This is for the implementation of regional water schemes which will benefit 4070 households.
The MTREF budget of R168 million was put aside for water projects in Blouberg in the previous financial year and in the new financial year we are investing R213.1 million for MTREF to implement water projects to benefit 4872 households. In embracing partnerships with private sector in water supply, we signed an agreement with Waterberg JV Resources Pty Ltd Mine operating in Blouberg to jointly develop a water supply management plan to increase the water supply and infrastructure capacity for both the local community and the Mine.
In Molemole in the last financial year, we set aside the budget of R48m to complete water projects that benefited 2 387 households. This time we will be investing MTREF budget of R107.4 million for implementation of Regional Water Supply projects which is going to benefit 5,499 households once completed.
OPERATIONS AND MAINTENANCE
We have attended to breakdowns and repairs of infrastructure and boreholes to 44 villages in Blouberg, 23 villages in Molemole and 24 villages in Lepelle Nkumpi to ensure that residents are not short-changed because of breakdowns. For the financial year 2019/20, we are putting aside R24.9 million to continue operating and maintaining our water infrastructure
SANITATION
In 2018/19 we set aside R21m that was used for sanitation projects. To continue on this delivery, we have not deviated from the previous year budget. We are planning to roll out more rural sanitation projects with R21.7 million for 2019/20 financial year.
ELECTRICITY AND ENERGY
Honourable Speaker, in the year 2000, 41% of our population did not have access to electricity. In the previous financial year, 89% of our households were connected to the grid. We are pleased to report that today, 96% of households in the district are connected to the grid to enjoy the convenience of cooking, refrigeration, heating and lighting – thanks to partnership with Eskom and local municipalities.
ROADS AND TRANSPORT
In further reducing backlogs in proper roads that for aesthetic appreciation and to unlock the economic potential, our local municipalities supporting, Roads Agency Limpopo (RAL) which is the implementing agent continue to upgrade and maintain various roads while implementing new ones. During the District IDP/Budget Lekgotla, RAL has yet again emphasized that the District need to submit a list of priority roads for upgrading in consultation with Local Municipalities, Traditional Authorities and all other relevant stakeholders. That is going to be done after our special IGR meeting. The budget allocation for roads is sitting with RAL.
SPATIAL PLANNING, LAND USE AND ENVIRONMENTAL MANAGEMENT
In 2018/19 we allocated R500 000 towards implementation of the SDF and R17, 4 million for Environmental Management. Going forward, we have allocated R15, 9 million for the two key performance areas to position us to be a planning theatre that will speedily shape the perfect spatial pattern for development to flourish.
ECONOMIC DEVELOPMENT AND TRANSPORT PLANNING
As you know, the foregoing financial year was characterised by tough economic times – increasing job losses, occasioned by technical recession, low investor confidence and general negative global outlook on our economy. This posed a threat to the object of our economic transformation agenda. This is because a true test and essence of sound economic transformation is job creation and reduction of unemployment. Every promise of a job is an answer to a call by young people, whether economic times are tough or not. Looking forward, in the coming financial year, an allocation of R2.9 million as compared to the R3.7 million that was allocated in the previous financial year has been made to implement local economic development programmes and transport planning.
EMERGENCY SERVICES AND DISASTER MANAGEMENT
To this end, we have put aside R18.9 million for disaster management and emergency services – in the previous financial year it was R10 million. In terms of emergency services, we allocated R15.5 million for the completion of the TT Cholo Fire Station.
SOCIAL TRANSFORMATION
We have allocated R1 million towards social transformation programmes to continue addressing empowerment of special groupings and creating an institutional framework that will facilitate the effective implementation of our social responsibility programmes.
INSTITUTIONAL TRANSFORMATION
We have also allocated to Corporate Services a budget of R17 946 000 that will cover Information Technology (IT) related expenses, purchase of furniture, vehicles, and refurbishing some O&M and fire services fleet, the parking shades and installation of air conditioners, fire extinguishers and offsite storage.
BUDGET RELATED POLICIES
Fellow councillors, let me also highlight that the Division of Revenue Act (DORA) is issued to show the allocations in terms of each grant, either conditional or non-conditional. We are experiencing more strain in this MTREF budget 2019/20. Most money is channelled towards water, sanitation and Operations & Maintenance, as water is generally our core function, hence from the equitable shares portion and WSIG Grant, it shows an increase allocated for repairs and maintenance that basically talk to O&M. So the overall budget includes the R 932 627 000 of grants plus the revenue from water sales, the interest on investment and the other income from sale of tenders. The budget is 91% grant funded.
If you look at the Operating Revenue, apart from revenue from grants, there is an increase of 7% on the interest on investments, totalling to R 27 542 000. Another increase of about 6% on the water sales, totalling to R 68 027 000.
Coming to the Operating Expenditure, our salaries will increase to R 312 371 000; while the councillors allowances increased to R 15 467 000; general expenses is R 129 085 000. However the operating projects has decreased to R 68 020 000; the repairs and maintenance is seen increased to R 55 614 000; while the bulk water purchases is at R 85 428 000 and the depreciation is R 65 626 000
If we go down to the Capital Budget which is at R 309 134 000, it has projects funded by equitable share and Municipal Infrastructure Grant (MIG). The Capital budget includes Operations & Maintenance of R 16 220 000;
Honourable Speaker, budget related policies form greater part of the budget process as it gives guidance towards the direction on the financial management within an institution. We have the Credit control and debt collection policy, to document the processes and procedures that must be followed to ensure accounts receivable are collected in a timely, fair and cost effective manner. In this policy we have not made any changes.
On Cash and investment policy, that ensures an appropriate, prudent and effective cash management and investment, again we were satisfied with the content in the policy and no changes were made
On Tariff policy that seeks to prescribe the accounting, administrative policies, and procedures relating to the determination and levying of tariffs for services we render to our people, no changes were made. The tariff for 2019/20, 2020/21 and 2021/22 were increased by 6% as per the guidelines in the budget circular issued by Treasury.
On Virement policy that provides guidelines to be followed, to effect virement of approved budget during the course of the financial year, no changes were made.
We have effected changes on Petty cash policy where we have increased the maximum amount from R4000 to R10 000 per month, due to the historic spending of departments and the respective units and the introduction of e-wallet cards. Petty cash policy’s purpose is to ensure the cost-effective and efficient use of petty cash funds while maintaining the required level of control in the municipality.
On the Supply chain management policy that enables municipality to manage the supply of goods, services and works in a manner that is fair, equitable, transparent, competitive and cost effective. No changes were made.
To ensure that all assets are effectively and efficiently controlled, utilised, guarded and managed is the Asset management policy. It focuses on the planning, acquisition, operations and maintenance and disposal activities. No changes were made to the policy.
The Delegations of financial powers policy which purpose is to establish a framework for delegating authority within the municipality. The policy is designed to facilitate efficiency and effectiveness and increase the accountability of staff for their performance. The policy applies to formal delegations were the individual to whom authority has been delegated can commit the municipality and/or incur liabilities on behalf of the municipality and no changes were made to this policy.
On the Indigent policy that allows municipalities to target the delivery of essential services to citizens who experience difficulties of life and below a minimum income threshold, this policy ensures that such citizens have access to package of essential services, no changes were made,
Bad debts provision and write off policy that ensures that sufficient provision for bad debt is provided for, no changes were made.
Budget 2019/20
Honourable Speaker, the budget we present here today will ensure that we fundamentally change the financial structure of the District in order to change our course towards the type of a District we desire. We desire a District that is developmental in nature, spatially integrated and united, liveable, embraces inclusive economic growth and allows us to remake ourselves in the medium term and beyond.
Honourable Speaker, if you look at the 2018/19, the total budget was at R949 million, which comprised of R251 million for capital budget and R752 million for operating budget, which represents a 76/24 ratio.
All the outlined programmes in the IDP for the new financial year will be implemented with a total budget of R1, 029 billion, which comprises of R720 million operational expenditure and R309 million capital expenditure which represents a 72/28 ratio. This total budget includes the R932.6 million of grants plus the R96.9 million revenue from water sales, the interest on investment and the other income from sale of tenders.
It is therefore my honour to table this reviewed IDP 2019/2020 – 2020/2021, budget 2019/20 for MTREF period and budget related policies to you, the Council and to the people of Capricorn district – for adoption.
Thank you.