Councillors, City Manager, officials, members of the media and the public.

Welcome to our council meeting for the draft 2008/2009 budget.

I hope that you have had a chance over the Easter weekend to enjoy some time with your families, and that you have taken the opportunity to rest.

I would also like to extend a special word of welcome to the delegation of senior government officials, politicians and parliamentarians from Nigeria that has joined us in the gallery today to observe this council's proceedings. I hope that you will find this an interesting experience.

At the same time, I would like to welcome today, Councillor Johnny Heuvel, and congratulate him on his victory in the Macassar by-election.

Speaker, before I table the draft budget and IDP I would like to make a few general comments.

Firstly, I ask this council to acknowledge the tragic loss of the City's Executive Director for Health, Dr Ivan Toms.

We will remember Dr Toms for his tremendous energy, commitment and enthusiasm for helping people and communities in Cape Town.

Under his leadership, his department exceed its own targets for reducing Cape Town's infant mortality, and containing HIV/AIDS and TB infection rates, some of the biggest crises that we face.  He was also committed to extending the network of clinics to all communities, giving people access to basic health care.

He will be remembered by the people of Cape Town for the work he did over the years to help build and support community structures in some of our most disadvantaged communities, where he worked tirelessly under difficult conditions to reduce gangsterism and domestic abuse. 

On a personal note, I will remember him particularly for the time we worked closely together as activists during the 1980s.

The City will sorely miss our colleague, not only for his talent as a leader, but also for his friendship.

I am proposing that we appropriately honour his memory and begin the necessary processes to do so as soon as possible.

Secondly, I would like to ask this council to acknowledge the loss of life in fires around the city this week, including the death of an elderly woman and her three grandchildren in Gugulethu - one of a number of horrific tragedies involving fires that have occurred since our last Council meeting.

Our thoughts and prayers are with the families of those who have died, and City officials have been working hard to control the fires and provide disaster relief.

I would like again to thank our fire fighters and disaster management teams for their efforts.

I would also like to announce that the City will offer substantial rewards to anyone who can provide information that leads to the conviction of arsonists.

This year we have had a number of devastating fires that have occurred under suspicious circumstances, and we must do whatever possible to apprehend people who deliberately set fires that so often destroy lives and property.

Finally, it is with some regret that I have asked for the item on the renaming of streets and public places to be withdrawn from the agenda today.

The policy drawn up and agreed to by all parties in the previous administration of Council includes two important points that we have had to consider in this regard.

Firstly, that names are focal points of symbolism, association and remembrance.

And secondly, that names provide opportunities either to promote community harmony or to perpetuate hurt and division. We obviously want to promote harmony and healing.

It is a sobering fact that many of the scars of our society run very deep and across the community spectrum strong views are still held about symbolic issues such as the names of streets and places. The process still has a way to go if we are to achieve its stated objectives and we would undermine these goals if we brought proposals here prematurely. This could perpetuate the hurt and division we want to avoid.

There is a very important task ahead that will assist all citizens to make informed and thoughtful choices and I hope that we can revisit the process in a way that will indeed provide Cape Town with opportunities to promote community harmony.

Turning to today's agenda, the draft budget that we table has a very clear objective.

That is: to invest, on time, for the future.

We intend to do the opposite of Eskom.

Our proposed budget prioritises spending on infrastructure and services to keep Cape Town 's economy growing.

It will allow us to act before there is a crisis, not after the fact.

This is in line with our Integrated Development Plan's continued focus on infrastructure led economic growth, and it builds on the priorities set out in last year's budget.

After last year's record R2 billion expenditure on capital projects, we propose to continue to increase spending on maintenance and new infrastructure in terms of the City's core constitutional mandate.

This includes roads, especially upgrades to major intersections, water and sanitation, electricity distribution, and public facilities.

We are therefore again proposing a large capital budget of R4 billion.

At the same time, we are also budgeting to fill vacancies that are causing shortfalls in service delivery, and budgeting for the next phases of the organisational realignment process.

The first phase of the realignment brought a proper organisational structure into the City administration, the first phase of pay parity and greater stability. We have also filled about 2800 critical vacancies so far this financial year and will fill more in the remaining months.

The result was an increase in spending on infrastructure and services in nearly every directorate.

Annual housing delivery, for example, went from about 3500 opportunities by mid 2005 to 7500 by mid 2007. And capital expenditure went from about R1 billion in 2004/5 to about R2 billion in 2006/7.

In addition, the Markinor staff survey that we recently commissioned taught us a lot, and we will learn from the results. Our staff are understandably reflecting the strain of many years of false starts in organisational restructuring and instability. On the positive side, it was gratifying to see that over 80% of staff have responded positively to their job definitions, and two-thirds expressed loyalty to the City.

The City's annual resignation rate of 4.4% is also well within the South African industry best practice benchmark of 8%.

In spite of this progress, many of our directorates do not yet have sufficient people with the right skills in the right places to spend all of our capital budgets and provide the necessary services. That is a serious matter and must get the attention it deserves.

And the Markinor survey indicated four areas of concern which we need to address, including the need for employees to receive more recognition, the need for better relationships with supervisors and managers, the need for greater care and concern from their employer, and the need for overall fairness.

This is not surprising given that Cape Town has been through six years of unguided restructuring since the amalgamation of 2000, and another 2 years of organisational realignment.

We are therefore working to identify and fill the gaps that remain, and to ensure that each of our staff members is optimally placed, appropriately paid and acknowledged according to their performance.  There are some acknowledged problem areas which are receiving our attention.

We want to make our organisation as efficient and as motivated as possible.

This process, together with hikes in operating costs (especially fuel and electricity) means we need to increase our operating budget by 11.7% from last year to R15.8 billion for 2008/2009.

An additional R120 million is provided for newly created posts to boost capacity.

And R90 million has also been allocated to address the second phase of pay parity.

Our total proposed budget for this financial year will therefore be R19.8 billion.

These figures comprise all income streams, including grants from central government.

Our IDP reflects our rationale for budgeting in this manner.

By investing in infrastructure and services across the city, and by investing in an organisation that can deliver, we intend to make Cape Town a more attractive destination for investors, both at home and abroad.

Across the city, but particularly in older regions, more will be spent on repairs and maintenance of existing infrastructure and on cleansing. 

In the outer ring of the city, where new development takes place, and in established areas where densification is occurring, capital projects will be aimed at reducing traffic congestion, increasing sewerage treatment capacity and extending the availability of services.

This will help to ensure that development is not constrained.

The principle that we are applying is simple.

Investors create jobs, and help to drive development. We must make it easy for them to do so.

To support this objective, our revised IDP for 2008/9 also incorporates proposals that were not in the first version, including the formation of a new Development Facilitation Unit to support investors and help to make investment in Cape Town easier, the development of a fibre optic network in the metropolitan area to bring down the cost of telecommunications, the development of the first phase of a Bus Rapid Transit programme with dedicated bus lanes to improve public transport, and the formation of district coordination teams reporting to Sub Councils on service programmes and responses to complaints from residents in order to make the City more accountable.

The revised IDP also contains a proposal for a new energy efficiency strategy to deal with mounting fuel costs and electricity shortage, the objective of gaining housing accreditation to accelerate housing delivery, and a plan to build stronger ties with tertiary education institutions in order to share information and encourage scarce skills development.

The bottom line is that we want there to be more opportunities for everyone, especially the poor and unemployed.

Without investment, our city will stagnate, the ranks of the unemployed will grow, and poverty will get worse.

South Africa 's shortage of electricity generation capacity shows what happens to employment and economic growth when government fails to invest on time.

Five years ago virtually no one worried about our electricity supply, not even cabinet, because it was always there.

Now it is near the top of everyone's agenda.

Thousands of mine workers are likely to lose their jobs because of Eskom's 90% to 95% rationing of production time.

Companies and their workers in most sectors are losing billions due to stock loss and production delays during power outages.

Foreign investors are being told not to establish operations in South Africa until after 2012. So projects like the R20 billion aluminium smelter that Rio Tinto was to build in Coega may no longer happen because of unreliable electricity supply, at a cost of 6000 temporary and 1000 permanent jobs.

Eskom's refusal to grant electricity permits is also thwarting new business ventures that would create thousands of jobs, and risks holding up delivery of social housing.

And, at the worst possible time, when our economy is struggling with high inflation due to global market turmoil and high oil prices, Eskom's proposed 53% hike in electricity tariffs could add an extra 2% to inflation.

This is the hard lesson that South Africa has had to learn from the Eskom saga.

And it is the poor that have suffered the most.

We will not let the same thing happen in Cape Town with the infrastructure for which we are responsible, such as water distribution, sewerage, electricity reticulation or municipal roads.

We are investing, on time, but only just.

Years of neglect of infrastructure, and years of populist budgets with below inflation increases, meant that last year we had to introduce radical changes to our budget in order to kick start our new programme.

We had to increase our rates and service charges substantially for this purpose and I would like to thank the vast majority of Cape Town 's ratepayers who have diligently paid their rates and service charges. They have enabled us to invest in the future and to provide generous subsidies to provide free basic services for all.

This year, we have to increase our rates and service charges again to continue the work we are doing.

But our proposed increases in rates and service charges are not as sharp as last year.

They remain relatively close to the projected inflation rate, which the South African Bureau of Economic Research has forecast at an estimated 6.5% for the 2008/2009 financial year. This may change as the economic outlook in South Africa shifts, particularly after yesterday's announcement by Reserve Bank Governor Tito Mboweni of a 9.4% inflation figure for February.

The draft budget tabled today recommends an average 7.3% increase in rates, bringing the new charge to 0.493 c/R for residential properties and 0.924 c/R for commercial properties.

This is less than half of last year's increase, and is only 0.8% above inflation. It is also consistent with Johannesburg 's new rates and approximately half those of Durban . We should further note that these other metropoles are now going through the challenging property valuations process that we initiated in 2002 and reviewed in 2006.

Our service charges similarly remain close to inflation.

For solid waste we have recommended an increase of 7.5%, which is 1% over inflation.

For water we have recommended an increase of 9.2%, which is 2.7% over inflation.

And our recommended sewerage tariff increase is 6%, which is 1.5% below inflation.

The only service charge that will have to increase substantially above the inflation rate is electricity, at a proposed 15%. This is based on Eskom's demands, not ours. And with Eskom's recent appeal to government for a hike in charges by as much as 53%, our proposal may still have to be adjusted accordingly.

Although Councillor Neilson will give more detail on the proposed allocation of funds in this budget, I would like to note a few key items here.

Our allocations for capital projects include R525 million for water distribution systems, R145 million for the Cape Flats Collector Sewer, and R92 million for the Fisantekraal wastewater treatment works.

We have also allocated R211 million for electricity distribution, R138 million for connection infrastructure, R68 million for the upgrade of the Roggebaai substation and R433 million for the development of new landfill sites.

We have proposed a R180 million allocation for land acquisition for new housing developments, over and above our funding for providing housing opportunities.  Contrary to what is sometimes implied, we do not own any substantial land parcels where the demand for housing is greatest, in the Eastern Metropole . All land that we have in this area is either already under development or the subject of statutory processes in preparation for development. We therefore have to acquire new land.

In the roads and stormwater directorate R69 million has been put forward for the Hospital Bend interchange, and R50 million for the Strandfontein Road Upgrade, among others.

And for 2010 a total of R1 billion has been allocated, with R30 million for Green Point Promenade, R15 million for the Grand Parade, R15 million for other 2010 public sites, R26 million for Athlone Stadium and R14 million for the Khayelitsha Athletics stand.

In line with our IDP focus on infrastructure led economic growth, we have also put forward a 10% increase in funding for repairs and maintenance to R1.2 billion.

This includes, among others, repairs to roads, water pipe leaks, street lights and electricity reticulation systems.

On the operating side, we are budgeting nearly R300 million for filling vacancies in Trading Services and R32 million in Transport Roads and Stormwater to support our repairs and maintenance initiative, and our new infrastructure projects.

We are also making large increases in the budget allocations for safety and security. We propose an increase for traffic control from R179 million last year to R254 million for 2008/9. We propose an increase for law enforcement from R75 million to R95 million, and an increase in emergency services, including fire fighting, from R322 million to R392 million.

And a further R85 million has been put forward to fill vacancies in the Economic and Social Development Department.

These are the departments that have received the largest vacancy allocations in this budget, although provision has been made for nearly every directorate in the City.

While we must acknowledge where vacancies have an impact on the spending of our budgets, it is equally important for us to expose the series of untruths, in fact outright lies, from Provincial Ministers and the Premier himself on our spending of budgets.

First we had the Premier's false claim that we are going to underspend our housing allocation from Province by R150 million.

In fact, we are projected to spend about 90% of our R450 million allocation for housing.

Then we had Local Government and Housing MEC Richard Dyantyi's false claim that we had underspent our Municipal Infrastructure Grant from Province by R46 million.

This claim was made in a letter that had my address on it, but that never arrived in my office.  It was sent directly to the media, and I had to get a copy of the letter from a journalist.

In fact, the allegation in this letter was entirely without foundation, which is probably why the MEC did not send it to me.  The truth is that the City of Cape Town 's MIG allocation will be fully expended this year.

The R46 million which Dyantyi mentioned is for bulk infrastructure work on the N2 Gateway project which has already been done under Thubelisha's watch.

We are ready to pay for it, but we can't because Thubelisha, for which Dyantyi is responsible as housing MEC, could not provide the City with contracts and invoices, as they are required to in law.

The third lie that we have had from Province about our budgets came from Transport MEC Marius Fransman.

He released a statement saying that we have only spent 60% of our Transport allocation from Province. A made a similar allegation in the Provincial Legislature last week.

Of the R158 million that the Provincial Department of Transport and Public Works has transferred to the City since 2002/2003, R124.5 million has already been spent, and the balance of R33.6 million has been committed to Non Motorized Transport projects along Klipfontein Corridor, which are currently under construction.

However, we should note that MEC Fransman's department has failed on a number of occasions to transfer funds for transport projects, even where it has signed agreements with the City to do so.

In fact, the Province has not transferred any funding for public transport infrastructure since 2005/2006.

As a result, a number of projects have been delayed, including Claremont Public Transport Interchange, Mitchells Plain Interchange, Lenteguer Interchange and the Khayelitsha Rail Extension Public Transport interchange.

Fortunately, these projects are now on track through the allocation of Neighbourhood Grant Funding from National Treasury.

R20 million that Province was supposed to transfer to the City for infrastructure upgrades along the Klipfontein Corridor has also not materialised, in spite of a signed agreement that this funding would be transferred in 2007/2008.

And there has been no contribution from the Province for safety and security at public transport interchanges for the past 5 years, since 2002/2003.

Particularly worrying is the fact that Provincial contributions for 2010 transport projects are also still outstanding.

As a result there have been delays in delivering these projects.

I am concerned at this situation, which comes on the back of delays created by MEC Essop on the approval process for the reconfiguration of the Green Point Common ahead of 2010. While our stadium is on track, we need to have all of our other preparations in place on time.

I am deeply concerned at this pattern of dishonesty coming from the Provincial Government. And this is not a row with Province. We do not want to fight, we want to co-operate but we are being blocked at every turn and this dishonesty is part of the pattern.

Another example appeared last week, with the Premier claiming at a press conference that he had decided to extend his re-incarnated Erasmus Commission to probe Cllr Badih Chaaban because the Speaker of the City had failed to act against him. This is completely untrue.

As everyone here knows, council recommended to MEC Dyantyi five months ago that Chaaban be removed from this council following an investigation initiated by the Speaker and followed through by the disciplinary committee.

It looks like deliberate misinformation is going to be the stuff of the ANC's election campaign ahead of 2009.

Even government bodies that are supposed to be apolitical, like Thubelisha Homes, have become involved in this, perhaps seeing themselves as part of the ANC's election campaign. Thubelisha's job is supposed to be building houses, but it has also been publishing ANC propaganda in glossy publications at taxpayers' expense.

Their N2 Gateway News publication carries propagandistic headlines and articles that the taxpayers are funding.   They make entirely false claims about the City's role in the Delft tragedy, when they know very well that I have warned all along of the predictable outcome of the N2 Gateway policy approach, and when the problems arose, did my best to help address them.

It is ironic in the extreme that while Thubelisha spends hundreds of thousands of rands on glossy propaganda handouts, they cannot even produce the invoices the City needs to pay them for R46 million worth of bulk services.

Returning to the draft budget, I would like to look briefly at the support that our indigency policy proposes for Cape Town 's poor.  And this is a crucial component of our budget.

In the first instance, our draft budget proposes an increase in the household income threshold for rebates for pensioners and the disabled to R6000. At present, those earning R5000 or less per month per household are eligible for rates rebates on our sliding rebates scale.

The salary threshold for a 100% rebate for senior citizens has also increased to R1860 per month per household, up from R1740 in 2007/8.

The threshold for those registered on our indigency policy has likewise increased to R1860 per household per month.

I am happy to say that 19 000 senior citizens and disabled persons now receive our rebates. 

In addition, retirement villages and life-rights schemes will now pay the residential rate rather than the commercial rate that they paid in the past.

The monthly subsidy on water and sanitation will continue to be available to houses valued up R199 000.

And all existing free services will remain in place, including six thousand litres of water free each month, and a R30 per month contribution to water and sanitation applicable to all properties under a value of R88 000. 

We will also continue to exempt the first R88 000 of all properties from property value rates.

I am mindful that in spite of these measures, many people in Cape Town will still feel the impact of the rates and tariff increases.

Let me reiterate: if we want to avoid disaster, and if we want our City to get ahead, we have to invest now.

I must also stress that this is a draft budget. The public will be able to comment on it, and all of the Council's portfolio committees will assess it in detail over the weeks to come.

These inputs will be used to finalise the budget for the 2008/2009 financial year (starting 1 July 2008) in Council at the end of May.

I thank you.

This is the prepared text of a speech delivered by the Mayor of Cape Town, Helen Zille, on the tabling of the draft budget 2008/2009, Council Chamber March 26 2008