Metro
The DA rejects the budget proposed by the ANC for the 2010-2011 year. We feel that the ongoing lack to deliver efficient services and the continued practice of doing the same incorrect things over and over with the same failing results does not result in the residents of Tshwane having to carry the cost of the ANC’s mistakes.
A budget must be balanced and must address the primary issues facing the metropolitan council. The following are our main differences in slashing the operational budget and the cost to residents by R479 million and increasing our capital budget by R804 million. If we do not increase capital expenditure vital development will continue to not be delivered and the residents will continue rioting.
Property Rates (0% increase as opposed to 10% of the ANC)
We propose that the residents of Tshwane should pay no increase in rates and taxes during the forthcoming budget year. The financial crisis faced by most residents requires government at all levels to step in and assist in aiding the transformation of the economy. By providing this relief to residents and by the city tightening its belt the long term financial stability of the region will be positively influenced. The DA acknowledges that this zero increase can not be maintained but out of necessity for the economy of the metropolitan area and as a way to apologise for the failed service delivery of the past, this token action for the forthcoming year will go a long way to re-storing confidence in the city in the eyes of residents. The effect of this zero increase is to reduce the cities revenue budget by R275 million.
Electricity (Increase of 15% as opposed to the 19% of the ANC)
The local government has little control of the ridiculous high tariff increases imposed from Eskom due to the inefficiencies in this parastatal who has failed to follow best business practice, efficient administration and management. The consequences of which are now reflected in the high tariff rates. The DA believes that the current 4% inclusive levy set in the prior budget to facilitate infrastructure development should as recommended by officials in the metro be funded in an alternate manner other than through rate increases to residents. There has traditionally been a large mark up on electricity and this has been an important revenue source to the metro. There are large quantities of unbilled power, poor maintenance of infra-structure and lack of control over the electricity and water has resulted in large wastage. The traditional high mark up of electricity in the past has allowed for the metro to carry these in-efficiencies. The time to tighten up control of this loss has come.
Our proposed 15% is in line with the increase as recommended by NERSA. We have also substantially increased the electricity infrastructure capital budget to ensure that this long term asset be paid for over a longer period of time. A basic business principle is to finance long term assets with long term finance and short term with short term cash flows. We have increased the capital budget for public works & infrastructure by R450 million.
Solid waste – Refuse removal (Increase of 5% as opposed to the 9% of the ANC)
The strikes of the last year have left a bad taste not to mention smell in the minds of residents. We are pleased that the ANC have at last realised the importance of controlling an important service centre such as service delivery and have taken action (even if arms may have been twisted by strikers) to employ workers engaged in this area of service delivery. We feel that the inefficiencies prevalent in this department leave much room for improvement and believe that a lower rate increase can be offset by reducing expenditure. Failure to sub-contract should result in savings to offset our lower revenue of R15.8 million as a result of the 4% lower increase.
Increase in revenue from Fines, licences and permits
We have increased the capital budget of the Community safety by 150 million more than the ANC. This is a necessity due to the large numbers of current metro police employees who do not have the assets to do their jobs. Large numbers of police vehicles, motor bikes and equipment is required to move a currently almost un-operative department to an efficient and important one. Under DA control we will utilise the metro police to better enforce by-laws and to assist in the important task of protecting employees of the metro when enforcing credit control in no-go and other areas. In addition we will utilise metro police to assist with debt collection and service of notices in order to recover the debtors which will in part finance the dramatically increased capital expenditure budget proposed.
A city can not grow and the economy can not stabilised if business are not able to operate efficiently. We are proposing a monthly business licence which will be automatically billed to all business accounts in the region of R100 per month. These increased funds will be utilised to fund the special customer service lines for business’s and to finance the expanded economic development expenditure which we have budgeted for. We believe that spending money on economic development in the form of entrepreneurial hubs and other projects aimed at helping the unemployed be self sufficient will assist the city grow in the medium term. A vital macro-economic development role which every local government should take seriously. An additional R20 million has been set aside in our budget for this purpose.
The total increased revenue from these interventions is budgeted at R16.5 million.
Balance
We have budgeted to keep the surplus at the same level set by the ANC, being R1.5 billion. This is important as the surplus is used in main to fund the capital budget. The shortfall must be financed by external loan’s. The ANC have budgeted for a R1billion external loan. We believe that if more is required then a larger loan can be justified taking the debt/ revenue ratio into account We do not believe that it will be necessary as the total council funding requirement of our capital budget amounts to R2.6 billion. This is covered by the R1 billion loan and the R1.5 billion surplus. Our additional spending on the finance department and collection mechanisms will result in the debtors collection of arrears increasing which will ensure that our cash position will improve over the 12 month period without having to take up additional external loans.
Our operational budget was slashed on account of the large wastage prevalent in many departments and the over reliance on expensive external consultants. Cost cutting exercise will result in the savings budgeted for with the largest saving coming from the improved control of the bulk services which are currently un-billed and lost due to theft and incorrect billing. We have increased the finance department employee remuneration budget by R10 million to ensure that suitably qualified persons are employed in the finance department. Terminating the outsourcing of debt collection at the high costs currently paid with poor results will result in a more efficient metro. The decrease in our operational budget results in a decrease across all departments in expenditure of a mere 3.23%. The result is zero percent increase in property rates and a relief to residents for a 12 month period. Inflationary increases will be however need to be levied in the future years.
Conclusion
Whilst much more should be possible with time and better operational efficiencies being possible as new assets are deployed in the field, the current budget remains tight but the practice of passing on ineffectiveness to the residents must stop. This budget is an example of what is possible if an attitude of taking the resident best interest into account is adopted. A budget must serve the people and its needs. We believe that this budget will force more efficient departments, provide more effective crime prevention and will ensure that our infra-structure is developed to cater for a growing city’s needs.
| REVENUE BY SOURCE | ANC 2010-2011 | DA 2010-2011 | Change |
| | | | |
| | | | |
| Property rates | 3,021,874,644 | 2,747,154,644 | 0% |
| Electricity | 6,010,000,000 | 5,807,984,000 | 15% |
| Water | 1,618,399,760 | 1,618,399,760 | 10% |
| Sanitation | 392,543,113 | 389,007,113 | 10% |
| Refuse removal | 429,884,000 | 414,108,000 | 5% |
| Rental of facilities & equipment | 105,502,844 | 105,502,844 | |
| Interest earned - Investments | 120,080,230 | 120,080,230 | |
| Interest earned - Debtors | 351,148,098 | 351,148,098 | |
| Fines | 65,687,066 | 67,000,000 | |
| Licences & permits | 34,783,170 | 50,000,000 | Business licence |
| Other revenue | 920,893,790 | 921,000,000 | |
| Transfers recognised - operational | 1,976,514,000 | 1,976,514,000 | |
| Gains on disposals of PPE | 4,950,000 | 4,950,000 | |
| Transfer from government grant reserve | 1,325,026,000 | 1,325,026,000 | |
| | 16,377,286,715 | 15,897,874,689 | 479,412,026 |
| | | | |
| | | | |
| Expenditure | (14,831,720,270) | (14,352,308,244) | |
| Surplus | 1,545,566,445 | 1,545,566,445 | |
| | | | |
| Distributed as follows - Reserves | | | |
| Transfer to other reserves | (107,200,935) | (107,200,935) | |
| Depreciation off-sets | 326,345,480 | 326,345,480 | |
| Transfer to CRR | (439,684,990) | (439,684,990) | |
| Trf to government grant reserves | (1,325,026,000) | (1,325,026,000) | |
| Expenditure by vote | | | |
| | | | |
| Agriculture & Environmental management | 1,355,263,569 | 1,335,263,569 | (20,000,000) |
| City planning & economic development | 313,270,632 | 333,270,632 | 20,000,000 |
| Community safety | 1,036,377,731 | 999,377,731 | (37,000,000) |
| Corporate & shared services | 1,032,200,085 | 932,200,085 | (100,000,000) |
| Financial services | 801,453,829 | 811,453,829 | 10,000,000 |
| General & assessment rates | 504,279,314 | 493,279,314 | (11,000,000) |
| Health & Social development | 368,142,233 | 378,142,233 | 10,000,000 |
| Housing & sustainable human settlement development | 345,325,319 | 365,325,319 | 20,000,000 |
| Office of executive mayor, Chief whip, Speaker & City Manager | 336,207,356 | 300,000,000 | (36,207,356) |
| Public works & infrastructure development | 7,236,667,196 | 6,908,462,526 | (328,204,670) |
| Sports & recreation | 247,752,798 | 240,752,798 | (7,000,000) |
| Transport & roads | 1,254,780,208 | 1,254,780,208 | - |
| | 14,831,720,270 | 14,352,308,244 | (479,412,026) |
| Capital Budget | | | |
| | ANC Budget | DA Budget | Change |
| | 2010-2011 | 2010-2011 | |
| | | | |
| Council funding | 1,831,909,907 | 2,628,689,947 | |
| Provincial Transport Infrastructure Systems Grant | 804,180,000 | 804,180,000 | |
| Government Housing grant - Not yet finalised for 2011 | | | |
| Grants & subsidies | 46,878,000 | 46,878,000 | |
| Government Housing (Social infrastructure) | 5,400,000 | 5,400,000 | |
| Municipal Infrastructure Grant | 380,568,000 | 380,568,000 | |
| National electrification programme & DSM | 88,000,000 | 88,000,000 | |
| Capital replacement reserve fund | 38,039,040 | 45,000,000 | |
| | 3,194,974,947 | 3,998,715,947 | |
| Per strategic unit | | - | |
| Agriculture & Environmental Management | 63,964,640 | 83,964,640 | 20,000,000 |
| City planning & Economic development | 70,454,000 | 70,454,000 | - |
| Community safety | 38,610,900 | 188,610,900 | 150,000,000 |
| Corporate & Shared services | 101,717,000 | 101,717,000 | - |
| Financial services | 16,259,000 | 20,000,000 | 3,741,000 |
| Health & Social development | 30,216,000 | 40,216,000 | 10,000,000 |
| Housing & Sustainable Human settlements | 144,958,500 | 164,958,500 | 20,000,000 |
| Mayor, Chief Whip, Speaker, City Manager | 286,000 | 286,000 | - |
| Transport & Roads | 1,295,950,667 | 1,445,950,667 | 150,000,000 |
| Public works & infrastructure | 1,394,558,240 | 1,844,558,240 | 450,000,000 |
| Sport, recreation, Arts & Culture | 38,000,000 | 38,000,000 | - |
| | 3,194,974,947 | 3,998,715,947 | 803,741,000 |
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