Kouga Municipality - logoKouga Executive Mayor Budget Speech – 2019/2020 – 2021/2022 Budget – 30 May 2019

“Speaker,
Members of the Mayoral Committee
Councillors,
Municipal Manager and Directors,
Ward Committee Members who are present,
Members of the Public and Stakeholder Groups
Members of the Media,

Good morning, Ladies and Gentleman

INTRODUCTION

Allow me first and foremost to recognise our Republic for having had another peaceful election and the continuation of our democracy.

I further want to salute our President elect, Cyril Ramaphosa, the Democratic Alliance (DA) for retaining the Western Cape, as well as all our councillors who have been promoted to a higher calling.

I would like, in particular, to congratulate the former Speaker at the Sarah Baartman District Council, Nonkqubela Pieters, for her appointment as the Eastern Cape’s new MEC for Human Settlements, and former Kouga PR councillor Virginia Camealio-Benjamin, who will be serving as a Member of the new East Cape Provincial Legislature.

With the election behind us, it is time for us to refocus on service delivery and get back to grinding the wheel.    

The Integrated Development Plan (IDP) and Budget that we will be considering today have been long in the making.

Work on these documents started nine months ago in September 2018 after Council approved a timetable to guide the annual review of the IDP and the preparation of the 2019/20 to 2021/22 Medium-Term Revenue and Expenditure Framework, commonly known as “the budget”.

Community consultation lies at the heart of all we do and was an integral part of this process.

Two rounds of public meetings were held – the first from 1 October to 7 November 2018 and the second from 11 April to 16 May 2019 following the adoption of the draft documents by Council on 29 March this year.

At these meetings the municipality was praised for the visible improvement of service delivery in all wards and also made aware of problem areas, which we have re-committed ourselves to addressing through a budget that is pro-poor.

While the attendance at some of the meetings was disappointing, the inputs provided by our communities at these sessions and during our day-to-day interaction with them, guided us in determining which projects to prioritise for funding in the coming financial year.   

INTEGRATED DEVELOPMENT PLAN AND PERFORMANCE MANAGEMENT      

The reviewed IDP for 2019/20 sets out the five Key Performance Areas (KPAs) of the municipality, namely:

  • Service delivery and infrastructure development
  • Institutional transformation and development
  • Local economic development
  • Financial sustainability and viability
  • Good governance and public participation.

These five KPAs are supported by 52 Key Focus Areas (KFAs) which are, in turn, aligned to the Performance Management System of the municipality and Performance Agreements of the senior management.

Kouga Municipality has for many years struggled to get a credible Performance Management System in place. We have been working closely with our new senior management team to address the shortcomings.

A focus of this year’s IDP review and budget preparation was on establishing measurable performance indicators and targets. These are reflected in the draft Service Delivery and Budget Implementation Plan (SDBIP), which is also being tabled today.

The importance of the SDBIP is often overlooked, yet it is every bit as critical as the IDP and budget.

The SDBIP is a detailed plan that gives effect to the IDP and budget by setting service delivery targets and performance indicators for each quarter. In so doing, it enables the Council and communities to monitor the financial and non-financial performance of the municipality.

In terms of section 53 of the Municipal Management Finance Act (MFMA), an Executive Mayor has 28 days from adoption of the budget to approve the final SDBIP.

I will be scrutinising the document thoroughly over the next four weeks so as to ensure that we have a reliable monitoring tool in hand for the 2019/20 financial year.

OPERATING BUDGET

Every precaution has been taken to ensure that the budget in front of us is fully funded in line with the requirements of section 18 and 19 of the MFMA.

The available cash and investments available at the end of the year typically indicate to what extent a municipality will be able to meet its commitments. A surplus would indicate that sufficient cash and investments are available while a shortfall would indicate that inadequate cash and investments are available.

The forecast for Kouga for the next three years looks promising, with the municipality’s available cash-backed and accumulated surplus reconciliations reflecting surpluses of R31,008 million for the 2019/20 financial year and R24,115 million and R36,828 million for the two outer years respectively.

Kouga’s total operating revenue in 2019/20 will increase to R836,693 million. This is an increase of 10,06% or R76,46 million compared to the 2018/19 Adjustments budget.

For the two outer years, operational revenue will increase by 8,92% and 9,18% respectively, resulting in a total revenue growth of R234,740 million over the medium term.

Effectively, this means that Kouga will join the “billionaires’ club” by 2021, an indication of how steadily Kouga has been growing as a municipality.

The operating budget is dependent on the municipality maintaining a collection rate of 96% and will be funded from various sources, the major contributors being electricity (33,11%), property rates (23,51%), operating grants and subsidies (15,91%), water (9,1%) and refuse (6,42%).

The total operating expenditure for the 2019/2020 financial year amounts to R897,137 million, resulting in a budget deficit of R60,444 million. Compared to the 2018/19 Adjustments budget, this is an increase of 9,44%.

For the two outer years, operational expenditure will increase by 9,43% and 7,88%, with operating deficits of R70,435 million and R64,070 million being recorded.

The major operating expenditure items for 2019/2020 are employee-related costs (32,43%), bulk electricity purchases (25,9%) and depreciation (9,49%), the latter which has been informed by the Municipality’s Assets Register. 

The staff budget provides for a general increase of 6,5% in line with the approved Salary and Wage Collective Agreement. It is encouraging to see that employee-related costs are well below the 35% guideline issued by National Treasury.

The budget for repairs and maintenance amounts to R43,692 million, of which 66,27% will be spent on infrastructure assets, including, road and stormwater, electricity, water, sanitation, solid waste, community, sport and recreational facilities.

While this represents only 5,2% of the Operating Budget, it will be complemented by capital funding, with National Treasury having recommended that municipalities allocate at least 40% of their Capital Budgets to the renewal and rehabilitation of existing assets. In this regard the capital expenditure relating to the renewal and rehabilitation of existing assets will amount to 27,3% in the 2019/20 financial year.

In order to fund the 2019/20 Operating Budget, the following increases in property rates and service charges have been proposed, with effect from 1 July 2019:

Property rates:      6,5%
Water:                   7,5%
Sanitation:             7%
Refuse:                  7%
EMF:                       0%
Electricity               14,26% (average increase in income).

Every effort was made to keep tariff increases as low as is possible. In some instances, especially when it comes to electricity, this proved to be a challenge, with NERSA giving Eskom the go-ahead to increase its bulk tariff to municipalities by 15,63%, as from 1 July 2019. 

CAPITAL BUDGET

The Capital Budget for 2019/20 amounts to R93,11 million and shows a sharp decrease of 55,56% or R116,405 million compared to the 2018/19 Adjustments Budget. This decrease is due to the Water Services Infrastructure Grant (WSIG) which the municipality received in the 2018/2019 financial year for drought-intervention projects.

The Capital Budget once again reflects the strides Kouga has made in strengthening its financial position, with 45,1% of R41,994 million of the budget being funded from the municipality’s own income. The remaining 54,9% or R51,117 million will be funded through government grants and subsidies.

The following community priorities will be funded by the Capital Budget in the 2019/20 financial year:

SANITATION

The municipality’s greatest challenge regarding sanitation is to expand the infrastructure to meet future development requirements.

There are currently eight waste water treatment works in the Kouga. The plants at Kruisfontein and Jeffreys Bay recently received major upgrades to increase their capacity while the multi-year upgrade of the Sea Vista Waste Water Treatment Works, at a total cost of more than R50-million, is on track and will be completed in the coming financial year.

The KwaNomzamo Waste Water Treatment Works is also in dire need of an upgrade. I would like to congratulate the municipal administration for once again compiling an excellent business plan to secure an additional R8,695 million from the Water Service Infrastructure Grant to start this much-needed work in the 2019/20 financial year.

Other sanitation projects catered for in the Capital Budget includes:

  • R4,429 million for the upgrade of the sanitation system at Patensie
  • R750 000 to replace old pumps and minimise sewer spills, and
  • R434 783 to upgrade the sanitation system in old Hankey

A further R2,3-million per year will also be put towards the eradication of the bucket system, our highest priority, over the next three years.

A total of 3 885 buckets are still in use, the majority of these in Humansdorp (1112), Jeffreys Bay (787), Patensie (470) and Hankey (439).

While housing projects will eliminate the need for more than 50% of the buckets, not all residents currently living in informal settlements qualify for government-subsidised houses, making it essential for the municipality to provide them with an acceptable alternative.

One such alternative is containerised ablution facilities, with the first structure set to go up at the transfer site near Stofwolk in Hankey. In addition to Stofwolk, the target areas for this programme are Thornhill, Sea Vista, Ramaphosa Village, KwaNozamo and Ocean View.          

ELECTRICITY

Another IDP priority that was identified, is the eradication of illegal electricity. The municipality will be spending R1-million of its own income on LV networks for the formalisation of illegal connections in hot spots such as Sea Vista during 2019/20.

When discussing electricity, it is important to bear in mind that Kouga does not provide electricity to all towns. Patensie, Hankey and Loerie are serviced directly by Eskom while Thornhill receives electricity from the Nelson Mandela Bay Metro.

One of our great frustrations is that this limits to what extent Kouga can strengthen and expand the electrical network to these communities. This has, however, not stopped us from negotiating vigorously with Eskom and securing a promise from them that they will fund the electrification of the transfer site at Stofwolk in Hankey over the coming financial year.

The electrical projects to be funded by the municipality in 2019/20 are focused on Jeffreys Bay, Humansdorp, St Francis and Oyster Bay, where the municipality is the electricity provider. Highlights include:

  • R5,219 million, funded by the Integrated National Electrification Programme (INEP), to upgrade the electrical network at Humansdorp and increase the available capacity for upcoming government housing developments.
  • R3,2 million, from the municipality’s own funding, for the replacement of old cables and switch gear at the main Humansdorp and Saffery Street substations.
  • R2,7 million for improvements to the St Francis Bay network, including a new transformer and mini substation.
  • R1,8 million for the next phase in constructing new 66kv overhead lines from the Melkbos station to Jeffreys Bay, and
  • R1,2 million for high-mast lights.  

WATER

The Kouga region remains in the grip of a devastating drought and water restrictions have become our “new normal”.

While the Capital Budget does not include any significant water-related expenditure for the 2019/20 financial year, water conservation and augmentation projects will be ongoing as we complete the work we started with the R151,2 million in disaster funding that the municipality secured last year.

On completion, these projects will have a significant impact on the quality of life of our communities, especially at Hankey and Patensie where water rationing is still being implemented.

While early indications are that the national Department of Water and Sanitation will not increase the towns’ quota, which necessitated the water rationing, the municipality has had  tremendous success with its borehole programme and will be connecting at least two boreholes to both the Patensie and Hankey water treatment works over the next few months to augment the water supply.   

ROADS 

The municipality has started making a dent in the tremendous road maintenance backlog throughout the region. The repair of potholes is ongoing while several streets at Hankey, Humansdorp, Jeffreys Bay and St Francis Bay have been resealed and tarred.

The resealing and tarring of roads will continue in the new financial year, with R1,5 million having been budgeted for this purpose.

A further R363 355 has also been budgeted for the upgrading of gravel road in Jeffreys Bay, most notably for Ocean View.

REFUSE COLLECTION

The roll-out of wheelie bins to households has been met with great excitement by all communities.

More than 3 200 wheelie bins have already been procured and distributed to Hankey, Patensie and Loerie, with the procurement and distribution of more than 7 000 more bins for Loerie, Thornhill and Humansdorp under way.

Our ultimate aim is to supply all households across Kouga with free wheelie bins to replace black bags. A further R2-million has been budgeted for this project in the 2019/20 financial year, as well as an additional R4-million in the two outer years.

COMMUNITY AND SPORT FACILITIES

Community and sports facilities across Kouga have been receiving much-needed TLC this past year.

While we will be improving all facilities with the Repairs and Maintenance allocation, funding has also been made available on the Capital Budget for this purpose.

Highlights include:      

  • R5,413 million for the upgrade of the KwaNomzamo sportsgrounds
  • R4,437 million for the upgrade of the Pellsrus and Sea Vista sportsgrounds, the clubhouses at Loerie and Thornhilll, and the Newton Hall and Aston Bay Hall in Jeffreys Bay
  • R800 000 for improvements at Yellowwoods in Hankey and the beach parks at Pellsrus, Kabeljous and the Cape St Francis.

A further R1,221 million has also been included for the establishment of fresh food and craft markets at Jeffreys Bay and Hankey to boost the region’s informal economy.

HUMAN SETTLEMENTS

Access to affordable and suitable accommodation remains one of the greatest challenges facing the Kouga area.

While most of our population lives in formal dwellings, there remains about 5292 informal households.

The provisioning of housing is the Constitutional mandate of Provincial and National Government, however, by virtue of the structure and location of local government, the municipality has a supportive role to play.

In addition to the establishment of a transfer site at Hankey to prepare for the installation of internal services for government-subsidised housing in the area, R1,7 million has been set aside in the new financial year to purchase land at KwaNomzamo and Loerie for the building of houses. This is in addition to the R1-million that was budgeted for this purpose in the current financial year. 

SUSTAINANBLE SERVICE DELIVERY

Kouga’s fleet replacement plan will continue in the new financial year A total of R8,315 million has been included on the Capital Budget for the acquisition of new vehicles.

The current focus is on purchasing new TLBS, essential for everyday service delivery. The municipality is already in the process of procuring five new TLBS. At least two more will be purchased in the 2019/20 financial year.

Theft and vandalism of service delivery infrastructure has been an ongoing challenge in the municipality’s efforts to provide reliable and sustainable services to all our communities.

Funding has been made available on the Capital Budget for additional security measures to be implemented in the new financial year. This includes:

  • R2-million for security cameras
  • R1,6 million to fence the Hankey Fire Station and Kruisfontein Civics Centre
  • R1,5 million to fencing the Jeffreys Bay and Kruisfontein reservoirs.

CLOSURE

The Speaker and I were observing a litter picking from afar yesterday and wondered if she would do a good job, as there was no supervisor or other workers in the vicinity. We were pleased to see that indeed she did.

I was reminded that good ethics are not what we do when others can see us but what we do when they cannot.

In spending the budget and giving effect to the IDP, it is on the back of workers such as her that success will become possible.

In the same way “it takes a village to raise a child”, it takes a united effort from all roleplayers to build a municipality capable of delivering “Good Governance through Service Excellence”.

I would like to thank every councillor, official, community member and stakeholder group who contributed to the compilation of the documents before us today.

I believe we can maintain this projected growth if we adhere to the prescripts of a capable state, stay accountable and abide by the rule of law.

In the words of Henry Ford: “If everyone is moving forward together, then success takes care of itself.”

TABLING OF THE BUDGET

Speaker, with these remarks, I herewith present Kouga’s final 2019/20 to 2021/22 Medium Term Revenue and Expenditure Framework.

I also respectfully submit the recommendations in the budget item through the Speaker to Council for consideration and approval.

I thank you. 

Media Release Kouga Municipality