SPEECH BY THE EXECUTIVE DEPUTY MAYOR, ALDERMAN IAN NEILSON DURING THE  BUDGET DEBATE AT THE COUNCIL MEETING OF 28 MAY 2012

Mr Speaker,

The Mayor has addressed the broad themes of this budget and some of the key numbers. Broadly, the City continues to focus on the provision of basic services to all our citizens and that which is required to enhance economic growth. Thus sustainable and improved water, sanitation, electricity and refuse removal for the whole city remains a top priority. The key issues of connectivity which address the integration of the city and improved economic activity also have a high priority. Thus the Integrated Rapid Transit System starting with the implementation of the MyCiTi service and the Broadband project are high on the list of priorities.

Putting a budget together in order to drive our objectives is the place where we face the realities of resource limitation, the impact of prior decisions and the need to limit future risks.

Key internal drivers include that our salary budget is around one third of the total budget. Over the past five years, that budget has grown much more than the rest of the City budget, due to salary settlements at the national local government bargaining council. This growth in salaries is putting pressure on the remainder of the budget and limiting our options for delivery. At this point we do not know what the increases will be for the coming financial year, as the bargaining process is still underway.

We have allowed for a 7% increase in our salary budget, excluding notches. Should the salary settlement come in above that level, the City will have little option but to reduce the number of posts. But as the City needs to grow the number of posts in order to better service a growing population, we actually need the salary settlement to be lower so that we can staff new libraries and other facilities. Elsewhere in the organisation, we require better productivity from all the staff so that they justify the above-inflation increases they have received over the past five years.

These salary numbers have now become one of the key drivers in the increase in property rates and service tariffs.

Mr Speaker, another key area where the City is facing a strong push that is finding its way into above-inflation tariff increases, is in the Water and Sanitation Department. The City has very successfully, for over a decade, managed to delay the implementation of the new major water supply scheme. Water demand management measures, leak reduction, pipe replacement and pressure reduction measures have limited the growth in demand for water. But we can no longer delay the project to bring water from the Berg River Dam into the City's water system. This is a major project of a treatment plant, major, long distance pipelines and storage reservoirs, which will cost the City some R1.7 billion over the next few years.

While we understand the impact that tariff increases have on household pockets, it is essential that the income streams for the Water and Sanitation Department are enhanced to ensure that the system upgrades can be afforded. We do not want to leave the next generation with an Eskom-type scenario, where decades of popular low increases drive towards a crisis where excessive tariff increases are required to prevent failure of delivery. While we are mindful of the needs of the current generation, we also do not want to leave inter-generational problems.

Mr Speaker, since the tabling of the budget and draft IDP by the Mayor at the end of March this year, there has been a period of consultation involving the public and Councils' Portfolio Committees and Subcouncils. The Budget Committee has considered these inputs and has in many cases made changes to the budget where the responses have been of value.

From the public input, we have especially made changes to detailed tariffs. Submissions from organisations and individuals representing body-corporates have claimed horizontal inequity between tariffs for domestic single residential and domestic cluster developments. We have thus adjusted both the water and sanitation tariffs for Domestic Cluster to bring it closer to that of our Domestic Full tariffs. In subsequent years we will look to the amalgamation of these tariffs.

We have also made a small change to the Domestic electricity tariff to enable a future move towards amalgamation of this tariff with the Life-line tariff.

We have also made changes to the electricity Net-metering tariff due to the numerous submissions received on this tariff. The City does not yet have any customer on this tariff, which is for those wishing to generate electricity where they would feed surplus energy back into the City's system.  This innovative area will require considerable further attention in the years ahead.

One organisation complained that we had not highlighted the 10% levy that the City places on electricity sales. This is an established levy that has been in place since the formation of the new City of Cape Town in 2000. Our practise is to generally only highlight where changes have been made. This levy is an important source of income and diversifies our income sources to ensure broad contribution to the costs of running the City from all its citizens who can afford to pay.

Input from the Portfolio Committees was primarily around the Capital Budget. We have accommodated most requests where these have not changed the overall budget requirement as well as a marginal additional expenditure on External Finance Fund where imbalances were shown, such as in the Safety and Security Directorate, where the Capex provision is excessively low compared to their operating expenditure.

The major change between the draft and final budget has been the addition of a further R500 million capital provision of the MyCiTi project in the coming year so that the City can accelerate the roll-out of this project to the South East of the city. This is towards the fulfilment of the undertaking that the DA gave during the election campaign, and will be more fully addressed by my colleague, the Mayco Member for Transport, Roads and Stormwater.

Mr Speaker, as we constantly drive to improve services in the city, so that the economy can flourish and provide jobs to our citizens, so that social stability, inclusion and progress is obtained, so that we can all go about pursuing an active and fulfilling life in safety, we have to be constantly mindful of the costs to our citizens. It is essential that in all areas of the City organisation that improved productivity is attained to that citizens get the best value for money.

This is also critical so that we can continue to afford the high level of free services to the poorer citizens that we are fortunately able to afford. Only economic growth will enable us to make progress. This City government has set its vision for its term-of-office, as detailed in the IDP before Council today for adoption. That in turn is a reflection of the undertaking that we gave to the public in our election manifesto.

We intend to drive that to success, and this budget is but an initial step down that road. We will succeed and make this great city even greater.

Thank you very much.

Issued by the City of Cape Town, May 28 2012

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